European countries seem torn between the costs and benefits of renewable energy

The European cold snap in February couldn’t have come at a worse time. With the threat of disrupted oil supplies from the Persian Gulf and gas supplies critically short as Russia’s Gazprom diverted 10% of exports to meet domestic demand, Europe’s policymakers should have been bending to the task of energy security.

Instead, some UK politicians railed against onshore wind subsidies, the European commission issued a disappointingly watered-down draft energy efficiency directive, and Spain’s newly elected government, faced with financial meltdown, indefinitely suspended its feed-in tariff for all renewable energy new builds, post-2013.

This does not augur well for France, which turned to Spain for energy imports when temperatures plunged to -10C. As the big freeze gripped Europe, Italy, Greece and Austria were also hit by critical energy shortages due to Russia’s tightened gas supply, while concerns relating to the UK’s gas link with Norway pushed gas prices to a six-year high.

Surely, then, this should have been a time to set about supercharging Europe’s alternative energy strategy? Not so, according to IHS Emerging Energy Research. Worsening economic conditions in the eurozone have prompted ongoing policy readjustments, undermining the EU’s commitment to its 2020 RES-E energy targets, say IHS analysts. 

In a bid to reduce its deficit in 2012, Spain, for example, initiated sweeping spending cuts, which included its renewable energy programme – despite renewable energies having met 33% of Spain’s electricity demand in 2011.

“In the wave of the budget crisis, policymakers are challenged to implement [renewable energy] support that is economically sustainable for governments and consumers, while profitable enough for investors,” explains IHS analyst Marianne Boust.

According to Spain’s energy minister, José Manuel Soria, the current renewable energy tariffs – expected to reach €7.2bn in 2012 – are unsustainable. Admittedly, unlike its EU counterparts, Spain can probably afford some breathing space when it comes to renewable energy. “Spain has a significant surplus in installed power capacity given the collapse in economic activity, the resulting lower power demand, and the boom in new wind capacity,” Boust says.

Others, however, suggest the tariff suspension is short-sighted in view of foregone jobs, inward investment, and energy export potential. Javier García Breva, of the Spanish Renewables Foundation, for one, has accused the government of wiping out a potential 300,000 jobs and €62bn in investment.

Spain’s solar thermal industry association ProtermoSolar says the government is missing the opportunity to make prudent cuts elsewhere. Removal of subsidies worth €3.5bn to Spain’s coal and nuclear sectors, for example, would make a respectable dent in the budget deficit.

Leaning into the wind

UK ministers, by contrast, seem to be holding their ground against rising dissent from the backbenches and beyond.

The new energy secretary, Ed Davey, has dismissed concerns of a growing backlash against renewables in the face of spiralling costs. “We are not going to change direction. Renewable energy is critical to the UK’s energy security,” he stressed at the launch of the Walney offshore wind farm, adding: “The cost of wind energy will come down.”

UK deputy prime minister Nick Clegg has not only reiterated the UK’s commitment to wind energy but also placed it firmly at the heart of the country’s economic growth strategy. “Going for growth means going green. Low-carbon markets are the next frontier in the battle for global pre-eminence,” he says.

And Clegg’s words rang true when Samsung Heavy Industries announced its decision to invest £100m in a 7MW turbine test site in Fife, Scotland, in February. Samsung joins an increasing number of industry heavyweights investing in the UK’s offshore wind sector, including Mitsubishi Power Systems, Siemens, GE and Gamesa.



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