EU Court of Auditors says more renewables auctions are needed

Around half of the EU member countries will be unable to hit their 2020 renewable energy targets, according to the Wind and solar power for electricity generation: significant action needed if EU targets to be met report published by the European Court of Auditors (EAC).

To bridge the gap and enable further renewables development in sight of more ambitious 2030 targets, the audit agency – which oversees how the EU budget is applied – has made recommendations to an EU market that, the report notes, has seen a deceleration in solar and wind deployment since 2014.

More auctions needed

While the authors of the paper admitted solar and wind were over-subsidized in Europe in the early stages of the renewables era – negatively affecting public finances – they warned decreasing incentive levels have prevented more investment being made.

“Encouraging auctions and … citizen participation are crucial for increasing investment and enhancing conditions for deployment, such as overcoming restrictive spatial planning rules, lengthy administrative procedures and grid insufficiencies,” stated the report.

The paper cites Germany as a case study in how to implement renewable energy procurement exercises with lower state budget costs. “The results of auctions held in 2016 and 2017 have shown that some wind and solar PV investments in Germany (and, according to DG ENER, in the Netherlands) are now undertaken without state support — although grid connections are state-funded,” said the report. The latest auction in Spain, held in July 2017, was also highlighted as it awarded projects without public support other than a guarantee to cover electricity price falls below a certain threshold.

Transparent bidding

The EAC paper stressed the importance of having transparent bidding terms for the success of auctions and indicated the latest procurements held by the Greek government as a good model to follow, although the country is still having issues attracting investors. The Greek regulator created an online platform for contracting by auction which enables participants to bid in real time and see rival bids during a 30-minute procurement exercise. “In the wind auction held in July 2018, a total of 14 participants submitted 342 bids; during the auction the price dropped from €90/MWh [€0.09/kWh] to €68.20,” stated the study.

Cross border trade

The EAC also mentioned the importance of cross border renewables trade, highlighting how rarely such initiatives have occurred in the EU. “Cooperation mechanisms have been used only three times: a joint tender procedure for solar PV investments between Germany and Denmark; a joint certificate scheme operated by Sweden and Norway; and statistical transfer agreements between Luxembourg and Lithuania and Estonia,” the report noted. According to the authors, the EU faces a challenge in getting local, regional and national energy markets to work together for the development of an internal energy market.

Who will fall short?

The report states Bulgaria, Czechia, Denmark, Estonia, Croatia, Italy, Lithuania, Hungary, Romania, Finland and Sweden have already achieved their 2020 renewables target and Greece, Latvia and Austria only need to increase the percentage of renewables in their energy mix by up to 2% to be on track. For Belgium, Germany, Spain, Cyprus, Malta, Portugal, Slovenia and Slovakia the missing share ranges from 2-4%, meaning they are likely to miss their goal. The Netherlands, France, Ireland, Luxembourg, Poland and the U.K. all have percentage shortfalls significantly above 4% and are considered unable to reach next year’s targets.

“Looking ahead to 2030, we found that the commission’s 2016 clean energy package lays the groundwork for a better investment environment,” added the EAC report. “However the lack of national targets might jeopardize the achievement of the EU target of at least 32% [renewable energy] for 2030.”