Ahead of this week’s summit of European leaders, which will cover the energy price crisis, the European Commission has adopted a Communication setting out the options for energy market intervention at European and national level.
The Communication on security of supply and affordable energy prices sets out all the options on the table, for the consideration of European leaders (see below chart).
In response, SolarPower Europe has issued the following statement:
The current energy prices harm EU citizens and businesses. Measures must be taken in the short term to lower the extreme gas prices impacting consumers. As of now, it is equally important that Europe prepares for an accelerated deployment of renewable energies. Failing to do so will slow down investments in renewables and lock Europe into costly fossil fuels for coming winters.
The solar industry is ready to deliver necessary volumes at the rapid pace required by the crisis. SolarPower Europe has identified that at least 10 GW* additional capacity can be already deployed by the end of 2022 by unlocking the rooftop PV potential, and accelerating ground-mounted PV projects in the pipeline. By 2025, an ‘Accelerated Scenario’ can deliver 100 GW of solar PV in the year 2025, bringing total European solar capacity to 450 GW. By 2030, in a pre-war scenario, the market was already set to deliver 672 GW, well above the REPowerEU target of 525 GW. With an ‘Accelerated Scenario’, our modelling shows that we can deliver 1 050 GW, bringing Europe into the solar terawatt era.
To unlock these investments, the industry needs political signals now. So far, recent developments have shown scattered and uncoordinated actions by national governments, and an absence of vision on the role of renewables in the medium to long term.
It is essential to propose a cohesive European approach. Action must be taken in a coordinated manner at EU level, building on the solid foundation of the EU internal energy market and under the strong leadership of the European Commission, which has played a decisive coordination role during the pandemic. Co-ordination is critical to avoid unacceptable market distortion and to provide coherent investment signals to investors.
Without a clear vision on the next steps, short-term market intervention could destroy investment signals in renewables. Some proposed measures translate into significant interventions on market pricing without a clear end date. While this may provide a short-term relief on energy prices, this will impact the market, as well as CO2 price signals, and ultimately preserve investment conditions for a fossil-fuel based system, disincentivising the necessary investment into large volumes of renewables.
We therefore call on the European Commission and the European Council to:
Refrain from taking national-level measures and show coordinated action at EU level under a strong leadership of the Commission, which should provide clear guidance on the options. Any option must be in line with the internal electricity market.
Tackle Gas Prices
Prioritise measures that provide support to affected consumers and tackle the root problem of the crisis, i.e. the explosion of gas prices, without penalising electricity players.
Set Time Limits
Ensure that market intervention preserves long-term prices and CO2 signals, and is time-bound and limited to what is strictly necessary.
Immediately provide visibility on the renewables volumes that will be delivered in the short- and medium-term (2025 – 2030), and outline how the EU will develop an enabling regulatory framework to realise this ambition.
* Disclaimer: Unless otherwise mentioned, all SolarPower Europe wattage refers to DC, where 1 GWac = 1.25 GWdc.