Support Policies for Renewable Energy in Europe: Convergence Towards Auctioning

Support policies for renewables have primarily consisted of three key instruments: feed-in tariffs, green certificates and auctions. From 2000 to 2010 feed-in-tariffs, which give everyone the right to feed electricity into the grid and receive support, were particularly popular in Europe. In this decade there were also quite a few countries that had green certificate schemes, which impose a renewable energy target on power producers, who can trade their certificates. Since 2010 auctions have gained increasing popularity. Auctions are currently starting to become a predominant feature in support policy for renewables in Europe. The fact that auctions have been strongly promoted by the European Commission makes it relevant to study whether and how the EU has influenced the developments of the national support policies for renewables. This question is interesting because the EU has never been fond of feed-in tariffs. The revised state aid guidelines from 2014 prescribe a competition-oriented approach, which means that feed-in-tariffs are no longer compatible with the state aid guidelines. Therefore, it could be expected that coercive pressures from the EU affect what type of support instruments Member States choose to introduce. To analyse this expectation, we compare the development of renewable energy support instruments in three countries: Sweden, the United Kingdom and Germany. We find that the EU has influenced the support policies for renewables in different ways and to various extent. In Sweden civil servants, who were engaged in ongoing discussions about the development of a pan-European certificate scheme, brought the green certificate idea to Sweden. This instrument fitted with the liberalisation approach that was dominating domestically. In 2001 Sweden implemented a green certificate scheme. Officials in the European Commission were directly involved in writing the draft recommendation. Like Sweden, the United Kingdom has had a green certificate instrument since 2002, but decided to phase out this quota system and instead introduce an auction-based Contracts-for-Difference, implemented in law in 2013. The EU has not been particularly influential in affecting the introduction of auctions in the UK, which was primarily driven by domestic concerns: Politicians and bureaucrats have to a large extent aligned with the big six power utilities, which have been pushing for instruments that would provide support for nuclear power. Auctioning gave an opportunity to not only support renewable energy, but also nuclear and carbon capture and storage. In Germany, there has been a controversy related to state aid since 1990, when a feed-in instrument was first introduced. The European Commission never approved of the feed-in tariff, perceiving it as illegal state aid. The PreussenElectra verdict in 2001 settled the dispute, ruling that the German feed-in tariff scheme was not considered as being state aid. However, the many amendments that Germany had made gave the European Commission an opportunity to again address state aid issues. While the European Commission was pressuring Germany to make changes, there was already increasing political will in Germany to change the support scheme. Procurements by tender gave an opportunity to control the volume and reduce the costs.