Clean Power eu-flag

Published on April 14th, 2014 | by Dr. Karl-Friedrich Lenz


EU Guidelines Regarding Renewable Energy — Harmful & Useless

April 14th, 2014 by  

Originally published on Lenz Blog.

The EU Commission has adopted a useless and harmful Communication titled “Guidelines on State aid for environmental protection and energy 2014-2020“. Here are a couple of  remarks.

1. How To Work Around the Useless and Harmful EU Commission Guidelines

These guidelines are on “State aid”. Therefore, they don’t apply to a feed-in tariff system like the German one that isn’t State aid in the first place.

It would have been helpful if these guidelines discussed the relation between feed-in tariffs and State aid, so as to enable Member States to steer clear of anything that triggers application of these useless and harmful guidelines.

Unfortunately, the guidelines offer no such discussion. The document has a section on “scope of application”. The words “feed-in tariff” are not to be found in that section. Nor do these words appear anywhere in the section on renewable energy (section 3.3).

The only place this term shows up is at Paragraph 19-21, in the definition of the term “operating benefit”. That reads:

´operating benefit´ means, for the purposes of calculating eligible costs, in particular cost savings or additional ancillary production directly linked to the extra investment for environmental protection and, where applicable, benefits accruing from other support measures whether or not they constitute State aid, including operating aid granted for the same eligible costs, feed-in tariffs  or other support measures;

I have no idea what exactly that is supposed to say. That sentence is much lacking in clarity. But clearly the last part assumes that feed-in tariffs may constitute State aid, or may not (“whether or not”).

They got that right. Under Court of Justice case law Member States can mess up and build their feed-in tariff law as State aid (like France did), which triggers application of these useless and harmful guidelines. Or they can successfully avoid such a mistake, and avoid this Commission power grab.

It remains to be seen if there is a fight at the EU Court of Justice between Germany and the Commission over this. And it remains to be seen if the Commission succeeds in dictating their useless and harmful ideas about feed-in tariffs to the German legislator. And then it remains to be seen if this act, which is ultra vires, stands to a challenge before the German Federal Constitutional Court.

As far as I am concerned, the German feed-in tariff is not State aid. Therefore, these useless and harmful guidelines do not apply in the first place.

2. Increasing Cost of Renewable Energy

The Commission seems to be motivated by a desire to decrease the cost of the transition to renewable energy.

Unfortunately, the ideas they propose will work in the exact opposite direction.

The German experience with over ten years of feed-in tariffs shows one thing. There is not much risk building a project  under a feed-in tariff. Investors know exactly what return they can expect.

That point is very important for reducing cost. Capital costs (interest) will go up with more risk. And capital costs are the main cost factor for renewable energy. Once you have your solar panels or wind parks deployed, the fuel is free and operating costs are very low.

The risk for investors will go way up under the “competitive bidding process” the Commission favors. In such a competition there will be losers. And of course small scale citizen projects, which have been essential to the German renewable transition, won’t have the resources to participate in those bidding processes in the first place.

The risk for investors will also go up under the idea of paying premiums over market prices (Paragraph 125 of the Communication). Selling electricity directly to the market brings the new risk of not finding a buyer. And it of course adds new marketing costs, which again will be difficult for small citizen projects.

3. What Germany Should Do

There are several possible courses of action to deal with this power grab.

One is of course to fight the EU Commission at the European Court of Justice. I think the German government should defend the right of Member States to decide on their energy policy, and strongly resist this illegal Commission power grab with full force.

Another one is to actually introduce a State aid system for renewable energy on top of the existing feed-in tariff, which is not state aid.

Find a modest amount of public funds, let’s say one million euros. Then pay those out in “premiums” to installations of geothermal electricity generators, which is still a very small sector in Germany. Of course keep the feed-in tariff payments (not from public funds and not State aid) in place as well.

There would be two points in building such a system. One would be a contrast to the feed-in tariff system, which is not state aid. And the other one would be to empirically study, as a pilot project, if there is any chance that the model the Commission favors will be of any use for getting things done faster in the geothermal sector. 
Get CleanTechnica’s 1st (completely free) electric car report → “Electric Cars: What Early Adopters & First Followers Want.”
Keep up to date with all the hottest cleantech news by subscribing to our (free) cleantech newsletter, or keep an eye on sector-specific news by getting our (also free) solar energy newsletter, electric vehicle newsletter, or wind energy newsletter.


Tags: , , , , , , , , , ,

About the Author

is a professor of German and European Law at Aoyama Gakuin University in Tokyo, blogging since 2003 at Lenz Blog. A free PDF file of his global warming science fiction novel "Great News" is available here.

  • We can use this law to our advantage.

    By the absence of laws and/or proper enforcement, the fossil industry is free to dump in our atmosphere and leave the health care and environmental bills for others to pay. This is ‘state aid’. Start a process of the EU court of justice for any country allowing such covert state aid to continue.


  • Will E

    In Spain there is a ban on Solar by law now. Solar under police control Spain has begun war on Solar .
    tax law on Solar Panels import, EU import laws for Solar Panels.
    States can tax Solar as they want.
    Solar made illegal by law is also a possible guideline.
    there are many possible guidelines

Back to Top ↑
  • Advertisements

  • Top Posts & Pages

  • Cool Cleantech Events

    Low Voltage Electrification Event, April 25-27. Detroit, Michigan (US)
    Delve deep into the benefits and challenges associated with EV power supply.

    Offshore Wind Market Development USA, May 11-12, Boston, Massachusetts (US)
    Network and establish your business in one of North America’s largest energy industries.

    Energy Storage USA, June 15-16, San Diego, California (US)
    Only event in the United States focused exclusively on the commercialization of storage.

    More details are on: Cleantech Events.

  • Advertisement

  • CleanTechnica Electric Car Report

    Electric Cars Early Adopters First Followers
  • Tesla Model 3 Review by EVANNEX

    Tesla Model 3 Review from EVANNEX
  • Tesla Model 3 Exclusive Video

    Tesla Model 3 Video
  • Tesla Model 3 Exclusive Pictures

    Tesla Model 3 Video
  • Tesla Model X Review #1 (Video)

    Tesla Model X Review from new owners Zach Shahan
  • Tesla Model X Review #2 (Pictures)

    Tesla Model X Review from Kyle Field
  • Tesla Model S Long-Term Review

    Tesla Model S Long Term Review from Kyle Field
  • Nissan LEAF Long-Term Review

    Nissan LEAF Long Term Review from Cynthia Shahan
  • Interview with Michael Liebreich

    Interview with Michael Liebreich
  • Interview with Akon (Teslas & Solar)

    Interview with Akon Tesla Model S Tesla Model X Solar Power Africa
  • Interview with Dr Nawal Al-Hosany

    Interview with Dr Nawal Al-Hosany
  • Interview with Gro Brundtland

    Gro Brundtland
  • Interview with President of Iceland

    President of Iceland Ólafur Ragnar Grímsson
  • Interview with Nick Sampson

    Faraday Future VP Nick Sampson
  • Interview with Dipal Barua

    Dipal Barua 1st ZFEP WInner
  • Interview with Jonathon Porritt

    Jonathon Porritt
  • Interview with Clint Wilder

    Interview with Clint Wilder
  • Interviews with Solar Impulse Pilots

    Bertrand Piccard Andre Borschberg
  • Check out more CleanTechnica Videos.

  • Join The Solar Revolution!

    Edison-solar-energy solar-energy-spill-nice-day
  • Cost of Solar Panels

  • Search the IM Network