The European Commission published it framework strategy for an “Energy Union” today, outlining key measures including an overhaul of the power market, greater transparency in gas delivery contracts and more coherent support for renewable energies.
What started as a push by then Polish Prime Minister Donald Tusk in spring 2014 to improve the negotiating position of eastern European countries vis-à-vis Russian fossil fuel suppliers, provided basis for the Commission’s future energy and climate policy. The Energy Union framework now includes guidelines on the internal market for energy, efficiency standards, renewables and e-mobility, as well as concepts for the “collective purchasing of gas during a crisis”.
Every EU member state is viewing the Energy Union through the lens of its own national interests. For Germany, the country’s Energiewende – the transition to a energy system based largely on renewable sources and simultaneous phase-out of nuclear power – and its on-going reform of the power market, provide the key context, Götz Reichert, head of the energy division at the Centre for European Policy (CEP) told the Clean Energy Wire.
“It’s really an old conflict between EU Member States, including Germany, and the Commission: the Commission wants to achieve more cooperation and convergence of national support schemes for renewable energies, while the German government doesn’t want to see the Commission interfere with its national support for renewables,” Reichert said.
The EC tried in 2008 and 2009 to introduce a common European support system for renewables, but many member states rejected the plan. Now, referring to “badly designed, fragmented and uncoordinated public interventions” and “divergent national market arrangements such as capacity mechanisms and uncoordinated renewables support schemes,” Juncker’s team is again pushing for reduced national regulation of power systems and greater compatibility with the European internal market.
In its most recent reform of the Renewable Energy Act (EEG), Germany was forced to adjust its support for renewable development and introduce a bidding system to replace guaranteed feed-in tariffs, in order to conform with the EU’s 2014 Environmental and Energy State Aid Guidelines.
And to some in Germany’s rapidly expanding green energy sector, the commission’s approach seems at odds with the goal of shifting from a system of centralised power supply by high-capacity power stations to one that incorporates a multitude of smaller, renewable sources.
“The Energy Union should pave the way from the old, centralised energy system based on fossil fuels to an increasingly decentralised and flexible energy supply, which puts clean energy sources at the centre,” the German Renewable Energy Federation (BEE) said in a statement, adding that the commission's “state aid guidelines create a framework that undermines decentralisation.”
Still, Brussels-based environmental organisation E3G welcomed the framework’s focus on the active role of citizens, decentralised energy and self-generation – features familiar from the German energy transition.
Germany's large industry associations meanwhile applauded the idea of an European energy market. “A common approach to sufficient supply security in the electricity market is absolutely necessary," said Hildegard Müller, chairwoman of the German Association of Energy and Water Industries (BDEW). "It has become clear for some time that a reform of power market design is not a national, but a European challenge."
Power market reform twice over
So far, both the German energy ministry and the Commission have voiced scepticism over the introduction of capacity markets, with the Energy Union framework calling such mechanisms a “last report” are a last resort to ensure security of supply.
Speaking at the Smart Renewables conference in Berlin (organised by the German Association of Energy and Water Industries – BDEW), Mechthild Wörsdörfer, director of energy policy at the European Commission, said the EU was closely following the German legal process for a new power market design.
Collective action on gas?
Rainer Baake, state secretary in the Ministry for Economic Affairs and Energy, said security of supply for power and gas could only be realised efficiently through cross-border connections. Like the EU Commission, the German government supports more “hardware” – meaning cross-border grid connections – to secure and stabilise an energy system with a growing share of renewables.
Still, the German position looks to diverge from European Commission proposals for collective gas purchases at times of crisis, as well as the Commission’s involvement in member states’ negotiations over gas buying contracts. The German government has always maintained that it doesn’t see the need to interfere with private energy suppliers’ contracts. Europe currently imports 53 percent of its energy.
In a recent non-paper on the Energy Union, the German government took the view that a “common mechanism for the purchasing of gas run(s) against the liberalisation of gas markets in Europe.”
“The wording on gas supply in the final Energy Union framework is very restrained,” said Reichert. “The Commission will assess options on how such an instrument could work, but unlike eastern European countries like Poland, Germany has not much interest in collectively purchasing gas.”