International Feed-in Tariffs?

The German newspaper “Die Welt” reports (in German) on plans for renewable energy policies at the EU level.

One is a proposal by a Member of the European Parliament to introduce an EU-wide renewable portfolio standard. That proposal will be given a vote some time next year.

On the other hand, the European Parliament can’t initiate any legislation on their own, they would need the Commission to propose a Directive.

The article also says that the Commission favors some kind of EU-wide renewable portfolio standard.

It remains to be seen what will become of these ideas. I don’t necessarily object to an EU-wide renewable portfolio standard, as long as Member States are free to keep their existing feed-in tariff legislation.

Right now most Member States have feed-in tariffs, and some have renewable portfolio standards. Page 6 of this Commission Staff Working Document from this summer gives an overview.

According to that, there are only four Member States that don’t have some kind or other of feed-in tariff, and eight Member States have a renewable portfolio standard (including Italy and the United Kingdom).

Right now, there is neither a renewable portfolio standard nor a feed-in tariff at the EU level. And Germany, probably the most important feed-in tariff country, actually restricts the feed-in tariff to electricity produced in Germany. You can’t build a wind farm in France close to the German border and sell into the German feed-in tariff. That is an exception to the general principle of the EU that people are free to sell everywhere at non-discriminatory conditions.

There is, however, the possibility for two or more Member States to join their feed-in tariff systems (or any other support policy) under Article 11 of Directive 2009/28. That article allows the Member States concerned to count the resulting renewable energy in a way decided by them on their targets for 2020 under the Directive.

It says nothing on the question how a joint feed-in tariff for example between France and Germany would work. That is left for the Member States introducing such a joint support scheme to figure out.

Until this summer, there have been zero joint feed-in tariffs, see the Commission Staff Working document at page 14. There is however an organization called “International Feed-in Cooperation”, a joint project between Germany, Spain, Greece and Slovenia. That cooperation is limited to discussions and exchange of information at the moment.

Germany is helping Greece financially over the various new stability mechanisms. In contrast, there is still no framework in place to buy solar energy generated in Greece under the German feed-in tariff.

I don’t think that international feed-in tariffs even with only two EU member states under Article 11 of the Directive will come any time soon. A feed-in tariff at the EU level would be impossibly difficult to negotiate. There is a good case to leave this to the Member States legislation, since there are large differences in the resources and the already developed capacity. One size fits all would never work.

However, one might discuss some burden sharing mechanism at the EU level. Recently Germany records increasing exports of electricity because massive German investments in solar and wind under the extremely successful feed-in tariff system have reduced whole-sale prices of electricity.

If this kind of trend continues, one might ask if it is fair that neighbors get the cheap electricity, without contributing to the feed-in tariff costs. That question would not necessarily be welcome to such neighbors, so one may want to discuss it together with the various schemes to burden German tax payers with the results of excessive deficit spending by other Member States.

So, to sum up, right now the renewable energy support schemes are all on the Member State level, and there are good reasons for keeping it that way. But that might change, eventually, and at least some kind of financial burden-sharing agreement might be an interesting topic of discussion for the future.

And there would be nothing wrong with adding an EU-wide renewable portfolio standard, as long as it doesn’t interfere with the extremely successful feed-in tariff system at the Member State level.

Published by kflenz

Professor at Aoyama Gakuin University, Tokyo. Author of Lenz Blog (since 2003, lenzblog.com).

4 thoughts on “International Feed-in Tariffs?

  1. In my opinion, if you pay it, you own it.

    So if the neighbors accept to pay the FIT for some of the electricity they import, then that electricity should be incorporated into their renewable electricity target, and removed from Germany’s one.

    This being said in the case of solar, physically it’s not the solar electricity that’s exported. That’s because there’s the transportation network and the distribution network, with a higher voltage used on the transportation network. And the electricity (almost) always goes from the high voltage to the low, not the inverse, because the required equipment is costly and also it’s very inefficient to do it that way, you have a lot of energy loses. So the solar energy will not go further than the network branch covered by the voltage at which it’s injected.

    When there’s a lot of solar, the exportation come from the large size fossil power plant that inject at high voltage, whilst the electricity is not needed on the lower voltage branches because the solar has already been injected there. As they are not able to reduce their production fast enough, they prefer to export it even at a very low price through the long-distance/high-voltage lines.

    It’s probably easy then to just point fingers at fossil power.
    But actually fossil power is quite inflexible in it’s ability to produce at a low load factor, for example gas plants become a lot less efficient, more polluting, and at some point, reach the max NOx level they are allowed to emit, so aren’t able to reduce further. They could be stopped, but restarting consumes quite a bit of gas, so is economically feasible only if you stop for a significant number of hours (and there’s not just economical factors here, the extra-gas burnt is so much CO2 emissions for no power generated). So they’re not evil, it’s just that they can’t do better. That’s how when solar production becomes larger that the mid-day consumption peak, it can start to be a problem instead of helping.

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  2. That’s also the opinion of the Directive, which allows for counting German solar electricity for some neighbors renewable target. However, that is only if there is an agreement between Germany and that neighbor on some kind of cooperation under Article 11, and there is no such agreement in place right now.

    With greater market shares of renewable energy, some kind of cooperation on the European level will probably be necessary, since the grids are all interconnected. But it is a difficult question how to do this best.

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