Renewables groups dispel myth of effective competition in power markets

The European Wind Energy Association (EWEA) and the European Renewable Energy Council (EREC) have dismissed calls for more competition in the renewables sector, saying it would be inappropriate when competition is far from being effective in the conventional energy sector.

The groups say that 95% of the European Internal Electricity Market is based on conventional power sources, while 5% is based on renewables. However, they claim that there are numerous distortions in the conventional sector and that those distortions discriminate against renewable energy growth.

“Given the many interactions between the market for renewable electricity and the internal electricity market, effective competition in the latter must be a precondition for fair and effective competition in renewables,” said Corin Millais, EWEA CEO.

The EREC compares the current state of the European electricity and gas markets to a monopoly, with several large producers owning not only the means of production, but also the means of distribution. For smaller scale producers to utilise this is, say the groups, nigh on impossible without subsidy and support.

They quote Loyola de Palacio, European Commission Vice President responsible for energy and transport, who, in October, said: “Much work still has to be done to deal with the dominant and even monopolistic positions of the incumbent operators and investments will be needed to guarantee the interoperability of grids and networks, interconnection and an adequate level of capabilities and infrastructure.”

The renewable groups say that the energy oligopolies are gradually recognizing that their position is threatened by liberalization and new entrants, so seek to focus attention on creating competition where it hurts them the least – in the small, but growing segment of electricity generation where the conventional power sector does not have a dominant position, renewables.

Oliver Schafer, EREC Policy Advisor said: “It seems premature to call for competition in the renewables power segment at a time of non-competition in conventional power. Renewable energy technologies could already be competitive if they had gotten the same attention in terms of R&D funding, subsidies, building up of monopolistic structures while taking external costs into account. Applying the ‘polluter pays’ principle alone would go a long way to level the currently non-level playing field.”

Article 4 of the European Renewables Directive gives the Commission until 27th October 2005 to present a report on support systems to promote the consumption of electricity produced from renewable sources.

The EWEA supports the intention to adopt support mechanisms but only after effective competition in the internal electricity market has been achieved.

By David Hopkins

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