Editorial: Small is Beautiful

By: Aurélie Beauvais, Policy Director 

As EU institutions aim to strike a deal on the Clean Energy package by the end of the year, the debate is still vivid over Europe’s political ambitions on the 2030 renewables target, and the needed re-design of the European electricity market.

Amongst other ‘hot topics’, EU policy makers seem to stumble over a well-known chicken and egg dilemma: ‘RES fit for market or market fit for RES’ - which should come first?

The current debate on renewable small installations perfectly illustrates this dilemma.

The argument has run on and on whether small installations should be subject to a specific framework in Europe, or be exposed to the same market requirement as their larger kin. The exemption from balancing responsibilities and the possibility to benefit from a priority dispatch regime post-2020, are the main factors put into question.

However, if you ask the opinion of Europe’s solar leading companies, the answer is clear - a specific framework for small installations is key to a ‘consumer-powered’, decentralized energy transition.

We need to reflect on the commitment that has been made regarding the energy system that we want to see emerging in Europe. The new energy market design should aim at sending the right signals towards more flexibility, new market actors, and maintain a balanced approach to enable the advent of a diversified energy transition.

In today’s state of play, the European Parliament’s proposals for a re-designed electricity market fail to address this issue. By exposing small renewable installations to the same market and balancing requirements than for utility-scale ones, the current market environment clearly hinders the business case for small renewable producers (and consumers!) in Europe.

In some EU Member States, the lack of transparency and openness of markets will make it hard for new players with specific characteristics, among which small solar installations, to compete on a level-playing field with conventional producers. When it comes to balancing, the mature development of aggregation market must be a pre-condition for a phase out of any specific regime, to avoid the stifling of small renewable installations in a ‘captive energy market’.

The Renewable era is here, but European energy markets still have some way to go to empower small renewable installations, and enable them to fulfill their market obligations without hampering their business model.

A smart re-designed electricity market will have to consider the strengths and specificities of each technology. This is the key to a diverse Energy Transition - building on the commitment of small and bigger game-changers to a clean, and hopefully sunny future.