Memorandum from the Solar Energy Promotion Association

The European Commission has submitted a draft directive to the Parliament and the Council moving towards a single mechanism for the promotion of the generation of electricity from renewable sources throughout Europe. It is based on a reduction of CO2 emmissons by encouraging the GENERATION of electricity using renewable sources of energy. This goal is clearly stated in the title and in Article 1 of the proposal. The Solar Energy Promotion Association agrees with this approach. Unfortunately the draft directive attempts to promote the consumption of electricity along with the generation of it, either jointly or alternatively. This is unnecessary and leads to considerable problems. In Part I of the memorandum we explains the reasons why we question the wisdom behind the move away from the objective of supporting the GENERATION towards the CONSUMPTION of renewable electricity. In Part II of the memorandum we warn against using a form of words that would erroneously liken state regulations governing compensation for renewable electricity fed to the grid to a state subsidy. In Part III of the memorandum we make specific proposals for amendments. *** I. Why we disagree with support for the consumption of electricity from renewable sources. ** 1. It is impossible to sell "electricty from renewable energy". There is a fundamental problem with the very object of the proposal. Once electricity is fed into the grid, there is no way to determine if it has been generated by renewable sources or not. Electricity is not a commodity that can be isolated. ** 2. Environmental discharge is a result of GENERATION. The GENERATION of electricity from renewable energy has three consequences. - Electricity is produced, not of any superior value, just ...electricity. - Production of electrcity from conventional sources is reduced. - A contribution is made towards the marketability of renewable energy technologies. Only the last two of these results deserve to be encouraged. In economic terms they can be seen as "services", and if we seek to create an incentive for them, we should act on the GENERATION of electricity from renewables. ** 3. When determining consumption levels, GENERATION must be measured anyway. A pragmatic consideration: Assuming there were 2 EQUIVALENT possbilities - either measuring and supporting the generation of renewable electricty or measuring and supporting the consumption of this electricity, we could then argue the relative merits of either approach. In either scenario, however, the amount of current GENERATION must be established in any event, so it is preferable to base the system on support of electricity GENERATION. ** 5. Supporting consumption would affect imports and exports. If support is limited to renewable electrcity GENERATION, one only needs to consider the legal relationship between producers and operators of electricity networks at the national level. If support is based on consumption, this brings imports and exports into the picture leading to additional complications with jurisdiction. ** 6. Local potential for renewables would not be used to the same extent everywhere. If consumption were supported instead of producton, a more prosperous country could simply "buy" its contributon. Without a single solar, wind or biomass installation, such a country could fulfill its obligation through green electricity trading. Rooftops, favourable sites for wind energy, and biomass potential would go unused. ** 7. Importing renewable electricity from outside the EU would not necessarily reduce CO2 levels. An example: A German power company using exclusively coal-fired plants sells 100 GWh to a Russian hydro-power producer. At the same time the German power company buys 100 GWh of hydro-power from the Russian producer and receives a certificate attesting to this purchase. The German company can then sell 100 GWh of hydro-power in Germany and statistics on renewable energy use in Germany increase by 100 GWh. No actual flow of electricity would take place. The transmission wires could even be disconnected. ** 8. Possibilities for fraud with use of "green electricity" Given the great number of participants present on the market for electricty, as well as their international interests, and considering the various possibilities for fraudulent practices ("greenwashing" of electricity, ficticious deliveries, double-counting), one can safely state that it is virtually impossible to even come close in ascertaining reliable renewable electricty consumption figures in a given member state. The Commisson's comment that this would partly be a matter of trust (top of page 8 in the German version) speaks tomes. ** 9. The success of German feed-in legislation would not be reflected in the statistics. If support is based on consumption instead of generation of electricity from renewables, countries such as Germany and Spain get a "raw deal". Countries with a quota system could improve their quota at little expense by buying electricty from large German hydro-power plants. German figures for consumtion of renewable electricity would sink from 6% to 2%. *** II. Further reason for amendment (German feed-in legislation (EEG) does not represent a state aid) ** Article 2 Para 3. Article 2 defines the terms used in the directive. In paragraph 3 on the term „support scheme„: „it refers to „indirect goverment support schemes, such as... fixed feed-in prices.„ This wording is incorrect, and if it were to be adopted, German feed-in legislation would have to be notified as a state aid, as direct or indirect public support is tantamount to state aid. *** III. Proposed amendments The comments in Part I of this memorandum clearly illustrate why the directive should only cover the GENERATION of and not the consumption of electricity from renewable energy sources. This could be achieved through the following amendments. ** 1. Amendments for the Annex In the Annex, the word „consumption„ should logically be replaced by "generation". ** 2. In the introductory recitals, "Whereas" In Recitals No. 6, 11, 12, 13 the word "consumption" should be replaced by the word "generation". * Recital 15 should be reworded: "Supporting the production of electricity from renewable sources of energy aims at reducing the cost of renewable energy technologies through mass production, and in the long term enabling them to become cost-competitive." * Recital 16 Paragraph should be introduced with the following addition: "In member states wishing to promote the generation of electricity with renewable sources of energy by stimulating demand:" * Recital 18 Add at the end of the paragraph "or electricity feed-in schemes" ** 3. Wording of individual Articles Article 1, Article 4, Article 6, Article 8, Article 9, Article 10, Article 11 no proposed amendments! * Article 2 Para 3 Delete "public support" full stop after the words „per kWh provided and sold„, delete the words in the two sets of parentheses afterwards Replace the word "and" with "or" between "feed-in prices" and "fixed premium schemes" * Article 3 The word „consumption„ should be replaced with the word "generation" in four instances here. The change is not necessary however in the reference to "total EU electricity consumption" * Article 5 The title and Paragraphs 1 through to 5 should be deleted and replaced by the following text: "The amount of national electricity production from renewable sources of energy shall be calculated as the sum total of all electricity from renewable sources generated and fed into the grid in that country. National obligations described in Article 3 shall be deemed satisfied when the percentage of total electricity consumption is reached or exceeded." Comment If Article 5 of the current version proves essential, our proposal for Article 5 should be added as Paragraph 6. * Article 7 After the word “territory“ add the words “grant priority access to electricity fed-in from renewable energy sources“ On behalf of the Solar Energy Promotion Association