Funding green energy will be harder under new EU rules

Funding green energy will become harder under EU rules published on Wednesday. The executive said the guidelines, which will be gradually phased in, strike a necessary balance after fierce political debate about the cost of green subsidies.

“Politically, it’s the best balance possible. We were obliged to establish a lot of trade-offs,” the Commission’s competition chief, Joaquin Almunia, told reporters. But green energy campaigners said the rules were a victory for industry and a blow to the renewables sector as well as ordinary consumers.

The rules take effect from July 1 this year and from 2017 all member states will have to hold tenders to support new green power facilities following a pilot phase from 2015-16.

The idea is to replace feed-in tariffs, which have little or no relation to market reality but have spurred renewable development, with auctions or bidding processes open to all green energy generators competing equally for.

The European Union’s leading economy, Germany, has the biggest interest in the new rules as it seeks to enact its Energiewende, or shift from nuclear to green fuel. The Commission had been investigating whether Germany helped its industries unfairly by exempting them from green surcharges. However, the German government expects its renewable sector to grow as technological improvements make sources such as more competitive.

Renewable power already accounts for 25 percent of Germany’s electricity and the German government has set targets to increase the share to 40-45 percent by 2025. The 28-country European Union as a whole has a target to get 20 percent of energy from by 2020, which it is likely to achieve.

Environmental groups and the renewables lobby are concerned the EU’s renewed emphasis on increasing energy security and weaning itself off Russian gas because of instability in transit nation Ukraine will lead only to more use of coal and efforts to develop shale gas, not more green power.

“Citizens will lose twice: they will pay for industries’ new free ride and will continue to suffer from an outdated energy system.” Claude Turmes, a member of the European Parliament representing the Green Party, told Reuters.