Renewable energy continues to revolutionise the electricity landscape of Europe. While this is in part due to concerns over global warming, public expectations, a desire to encourage indigenous industries and enhance security of power supplies, the overwhelming drivers behind this transformative period for the electricity sector have been the arrangements national governments have put in place to encourage and direct the development of renewable energy projects and technologies.
This publication is the latest in CMS’s market leading comparative studies, and with each new edition the complexity of the arrangements in each of the jurisdictions seems only to increase. There are financial subsidies in the form of feed-in-tariffs, green-bonuses, and green certificates and also many ‘non-financial’ support arrangements such as priority grid access, mandatory off-take, building codes and tax reliefs. With each country seeking to employ its own approach adapted to its circumstances and aspirations, and address its own unique issues, it is important to recognise the often subtle differences in both detail and effect between the various support arrangements. Knowledge of one country’s or one technology’s renewable energy support mechanisms has become a less useful guide to the proliferation of support mechanisms in other jurisdictions or for other technologies. This guide seeks to give readers an ‘at a glance’ ability to understand the frameworks that have been implemented across Europe.
The main policy driver at the European Union level remains EU Directive 2009/28/EC which is founded on a mandatory target of 20% of Europe’s energy (i.e. not only electricity) coming from renewable sources by 2020. Each Member State must fulfil an individual target tailored to the pre-existing penetration of renewable energy in that jurisdiction and other factors such as availability of domestic renewable energy resources.
The resulting increase in investment in renewable projects has been significant in most countries. If the momentum is to be maintained, the renewable energy industry now needs to grapple with the no less thorny issues of security of supply and affordability. The former plays out in a complex series of interactions between the types and levels of renewables on the system against other industry players, the mix of other technologies, price signals in wholesale markets for investment and ensuring capacity is made available, consenting, land use and regulatory obstacles, and new technological innovations that may help to smooth intermittency concerns. The latter principally requires the costs of investments to come down, at least in relative terms, as the promise of significant scale benefits are realised. One of the longer term objectives of the industry could, therefore, be to seek to make the support mechanisms described in this publication increasingly less relevant in investment decisions.
Bosnia and Herzegovina