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Application package for the implementation of Art. 15 Directive 2009/28/EC – combining GoO system and support scheme – crucial considerations

Already under the Directive 2001/77/EC,[1] the instrument of “guarantee of origin” was introduced. Such guarantees of origin (GoO) were intended to facilitate trade in electricity from renewable sources and to increase transparency for consumers. In the following years and up to date with the Directive 2009/28/EC (Renewable Energy Directive)[2] the instrument was further improved and placed into a context. Nowadays, such GoO are used within the system of electricity disclosure, i.e. electricity suppliers have to regularly state from which sources the electricity they supplied was generated and which share renewable energy sources had therein.[3] Within that system, GoO should function as proof towards final customers and increase transparency, as once in the grid, the renewable character of the electricity can no longer be traced.[4] In order to allow or at least facilitate cross-border trade of renewable electricity, the Member States have to recognize GoO which accord to the requirements of the Renewable Energy Directive. “A Member State may refuse to recognise a guarantee of origin only when it has well-founded doubts about its accuracy, reliability or veracity. The Member State shall notify the Commission of such a refusal and its justification.”[5] Thus suppliers in one Member State can by acquiring GoO not only from production within their own Member State but also from other Member States for the electricity they supply in their supplier mix to be disclosed under the system of electricity disclosure “proof” the share of renewables. This might allow them creating e.g. “100%” renewable energy products to be sold to consumers who have a special interest in that. With the completion of the internal energy market and the integration of renewable energy therein, this system allowing cross-border trade of renewable electricity through mutual recognition of GoO is getting more and more important, it appears.[6] However, the systems for the issuance, administration and recognition of GoO differ to considerable extent among the Member States. Maybe most striking, some Member States give GoO a certain role and combine them within their renewable energy support schemes,[7] while others strictly separate.[8] Therefore, in the following, some guidance shall be given on the design of such GoO systems, focussing more in particular on their potential combination with renewable energy support schemes.

 

[1] Directive 2001/77/EC of the European Parliament and of the Council of 27 September 2001 on the promotion of electricity from renewable energy sources in the internal electricity market, OJ L 283, 27.10.2001.

[2] Directive 2009/28/EC of the European Parliament and of the Council of 23 April 2009 on the promotion of the use of energy from renewable sources and amending and subsequently repealing Directives 2001/77/EC and 2003/30/EC, OJ L 140, 5.6.2009, p. 16–62.

[3] Compare Directive 2003/54/EC of the European Parliament and of the Council of 26 June 2003 concerning common rules for the internal market in electricity and repealing Directive 96/92/EC, OJ L 176, 15.7.2003, p. 37-55. Today replaced by the Directive 2009/72/EC, which continues the electricity disclosure system. In Art. 3(9) it reads: “Member States shall ensure that electricity suppliers specify in or with the bills and in promotional materials made available to final customers: (a) the contribution of each energy source to the overall fuel mix of the supplier over the preceding year in a comprehensible and, at a national level, clearly comparable manner; (b) at least the reference to existing reference sources, such as web pages, where information on the environmental impact, in terms of at least CO2 emissions and the radioactive waste resulting from the electricity produced by the overall fuel mix of the supplier over the preceding year is publicly available; (c) information concerning their rights as regards the means ofdispute settlement available to them in the event of a dispute….” (emphasis added).

[4] This function – i.e. of a proof, not as such as giving right to any financial support – was recently explicitly confirmed by the European Court of Justice (ECJ), See: Joined Cases C-204/12 to C-208/12 Essent Belgium NV, short note available here: http://keepontrack.eu/virtual-legal-helpdesk/faq/lorem-ipsum-dolor-sit-amet-3/.

[5] Directive 2009/28/EC, Art. 15(9).

[6] See e.g. the European Commission’s communications on the completion of the internal market, e.g. “Progress towards completing the Internal Energy Market” COM (2014)634 final, available at: http://ec.europa.eu/energy/gas_electricity/doc/2014_iem_communication.pdf.

[7] E.g. Austria, where the GoO are used to claim support and the agency responsible for administering the support scheme auctions the GoO to suppliers to contribute to financing the renewables support scheme.See the upcoming progress report on the implementation of the Renewable Energy Directive, expected spring 2015, then to become available at: http://ec.europa.eu/energy/renewables/reports/reports_en.htm

[8] E.g. under the German Renewable Energy Act (Erneuerbare-Energien-Gesetz; EEG, Version of 01.08.2014), §80 provides that renewable electricity may not be sold more than once – and may not benefit from more than one support scheme. To that end, producers who received GoO and benefit from support at the same time, thus who posess GoO with the according information content, cannot transfer those GoO, so that they cannot at the same time benefit from support and from the sale of the GoO.

How to design tendering procedures for renewable electricity

I.               Introduction

On July 1, 2014, the new Guidelines for environmental and energy aid 2014-2020[1] (Guidelines) entered into force. As regards operating aid for renewable electricity, the Guidelines provide that the Member States - shall as a rule transition towards supporting such renewable electricity based on a competitive bidding process, where possible and at least in the longer term. Some Member States, such as the United Kingdom (UK) and Germany have already implemented such competitive bidding procedures into their national legislation. In February 2015, the UK has published the results of the first bidding round and Germany will hold the first round in April 2015. Poland has just introduced a new law as well, and France and Denmark for examples have already been using bidding procedures for certain technologies such as offshore wind.

However, such competitive bidding processes are relatively new and based on little experience in Europe, while there is some experience from e.g. the United States and Brazil. Studies suggest that their success generally depends on the concrete design features which need to meet the requirements of the specific market of a given country.[2]

It is therefore the purpose of this paper to discuss how the provisions of the Guidelines as regards operating aid to renewable electricity, i.e. competitive bidding processes, can be implemented in a meaningful way. Therefore, first the respective provisions of the Guidelines will be presented, and their applicability briefly explained. Then the UK and the German implementations of those provisions will be discussed, followed by the design chosen in Poland. In a third part, critical issues will be addressed and where possible reference will be made to the respective solutions the UK, Germany and Poland have chosen. Instead of a conclusion, thus, a summary of the different aspects to be considered will be presented, rather than presenting a “one size fits all” system.

 

[1] Official Journal (O.J.) of the European Union C 200/1, 28.6.2014 –   Communication from the Commission Guidelines on State aid for environmental protection and energy 2014-2020 (2014/C 200/01)

[2] Eg. Ecofys, Fraunhofer ISI, TU Wien, Becker Büttner Held et. al., “Design features of support schemes for renewable electricity”, available at: http://www.ecofys.com/files/files/ec-fraunhofer-isi-ecofys-2014-design-features-of-support-schemes.pdf; German Cooperation, GIZ, ECOFYS, “Lessons for the tendering system for renewable electricity in South Africa from international experience in Brazil, Morocco and Peru”, September 2013, available at: http://www.ecofys.com/files/files/ecofys-giz-2013-international-experience-res-tendering.pdf.