Environmental Engineering Reference
In-Depth Information
country to pursue liberalization of the electricity market. In the UK, the production
of energy from RES is supported by strategies based on quantity. Since 1999, the
system has adopted a quota system with tradable green certificates bond. The objec-
tive is that obligation increases over years, and power companies that do not comply
with the obligation have to pay penalties.
However, the prevalent mechanism in the EU is the feed-in tariff scheme and it
has also provided good results; green certificates, on the contrary, have had their
heyday in the past and then interest has decreased because of the problems linked to
the higher uncertainty that they leave in the tariff market.
RES technologies like wind and solar have been heavily subsidized since the EU
set a target in 2008 of sourcing 20% of energy from RES by 2020. Critics say this
has led to market distortions in the energy market which have raised prices, most
notably in Germany. The difference between the market price for electricity and the
higher fixed price for RES is passed on to consumers, whose bills have been rising
for years. Household electricity prices have risen by 4 % a year between 2008 and
2012 as a result of levies and taxes linked to RES, according to the European Com-
mission.
From 1970 to 2012, RES power has received 3.4 c/kWh of financial support
on the average. RES electricity is largely paid for with feed-in tariffs per kilowatt-
hour of power. The specific rates paid depend on the kind of technology used: in
2012, the average feed-in tariff was 8.8 c/kWh for wind power onshore, 8.5 c/kWh
for hydropower, and 36.5 c/kWh for photovoltaic; the figures include older instal-
lations that still receive higher rates than are paid today, especially in the case of
photovoltaic (Table 3.3 ).
The implementation of new policies to promote RES has a considerable impact
on the amount of investments made in this sector.
In order to reach the RES target, an investment of € 443 billion in RES is needed
over the period 2001-2020, of which € 303 billion from 2010 to 2020. The EU
countries and unit support levels on final electricity consumed varied between 0.12
and 20.61 €/MWh, while the average level of support was found to be approxi-
mately 7 €/MWh in 2010 (CEER 2013 ).
Currently, cuts in RES incentives have been widespread in the EU in recent
years, and particularly since 2012 as governments realized that subsidies had been
incorrectly set. Germany and the UK both brought in sudden, unscheduled cuts to
solar support last year, while Spain, by far the world's largest photovoltaic market
back in 2007 and 2008, suspended all incentives for new projects at the start of
2012. Italy, the largest solar market in 2011, set an overall 6.7 billion € cap on
subsidies for that technology in 2012. More damaging to investor confidence than
new caps or sudden reductions are retroactive cuts in support, which reduce the
revenues of RES projects that are already operating. Spain was the first to announce
retroactive cuts at the end of 2010; in its case, as part of an attempt to address a
multibillion-euro energy system deficit that was technically a government liability.
It has since been followed by the Czech Republic, Greece, and Bulgaria. In some
cases, these curbs on existing wind and solar plants have taken the form of monthly
basis and the UK followed in 2012. The UK also has a levy control framework
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