Electricity from Renewables in CEE:

Support Mechanisms and Conditions for Feed-in

Preliminary Note

This article is planned as a work in progress:

Firstly, the information we collected – and continue to collect – about existing support mechanisms for electricity from renewables in Central and Eastern Europe is incomplete in some cases. Despite our efforts to keep this page up to date, we cannot give guarantees that the information presented here is in each case correct.
Secondly, the described matter itself is subject of steady change. The legal basis for feeding electricity from renewables into public grids changes frequently, not only concerning the height of possible feed-in tariffs, but also concerning the support schemes applied generally.
Currently we do not have exact data for all countries of the area in question. We try to bridge this gap in the near future.
Not least, we ask you as those who are in search of information to provide us with information reversely. We are in search for information about the countries which are not listed currently, and for information about missing or wrong data in country profiles which are already online.

General Remark: Support Mechanisms

In history, most of the new energy technologies which were introduced into the market received support in different ways for the process of market penetration. Nuclear energy, for example, was granted – and is still being granted – support from side of the states and international institutions, which amounted to at least 1.000.000 million US$ between 1945 and 2003 (Scheer 2004). Support schemes for market introduction are not exotic features, but common instruments. There is not space to discuss the different support schemes in detail; this has been done elsewhere . It is just to shortly mention the main schemes which currently are under discussion and implemented.

Feed in tariffs: this model guarantees a long term minimum price for electricity obtained from renewable sources and obliges e.g. system operators to purchase it. It has for example been introduced in Czech Republic, Denmark, Germany and Austria and has shown to be superior to other methods which have been tried in the EU. Here, the price is dictated and it is left to the market to supply the quantity.
Investment subsidies can support the installation of plants. They are generally not related to production and therefore considered being economically inefficient.
Tender system: this model was developed and tried in the UK. Within this system, calls for tenders for a limited quantity of renewable power produced or tenders with a price limit are carried out. The providers of the lowest asking prices within the announced contingent or underbidding the price limit respectively, are given the contract.
Certificates trading model: producers of electricity from renewables receive a total payment consisting of the market price for their electricity supplemented by the market price for the green certificate which is thought to be produced simultaneously with the electricity. Thus, the price of the green certificates should represent the additional costs of producing renewable electricity compared to conventional sources. Green certificates could also be traded on an international market. This system is in place, e.g. in Poland.
Quota system: under this system, governments set quotas per source (for example in percent of electricity from wind of total supply of electricity) and set the requirements to meet this quota. A variety of market actors can be obliged (producers, suppliers, consumers;..). In other words, the quantity is dictated and it is left to the market to determine the price.

In practice, there can also be models which contain elements of more than one such scheme.

Scheer (2004): Kernenergie gehört ins Technikmuseum. Die Zeit Nr. 32, 29. Juli 2004

For example, in:
Niels I. Meyer, Energy Policy 31 (2003) 665-676
Communication from the Commission: The support of electricity from renewable energy sources.{SEC(2005) 1571}
REACT: An EU Project which analysed the relation between actual deployment of Renewable Energy based on the extensive monitoring activities initiated by the Commission and the applied policies.

Framework for EU Member States and Accession Candidates

The Directive 2001/77/EC of the European Parliament set a framework to increase the share of green electricity to 21% of gross electricity production in EU by 2010. The directive and the respective accession treaties of the new member states contain indicative national targets, as shown in the table below:

Which target in which country?
	Renewable Electricity Production 1999 [TWh]	% 1999	% 2010
Bulgaria	-	0.05	11.0
Czech Republic	2.36	3.8	8.0
Estonia	0.02	0.2	5.1
Hungary	0.22	0.7	3.6
Latvia	2.76	42.4	49.3
Lithuania	0.33	3.3	7.0
Poland	2.35	1.6	7.5
Romania	-	-	22.0
Slovakia	5.09	17.9	31.0
Slovenia	3.66	29.9	33.6
EU 25	355.2	12.9	21.0

It is up to the member states to consider which mechanisms they use to increase the share of RES in electricity production. In December 2005, the European Commission carried out an evaluation of the mechanisms implemented by the member states and assessed whether a harmonisation would make sense. In the field of renewable energy this was accounted as not feasible in the short-term, also because it might disrupt some markets. Anyhow it is focused for the future. For the successful implementation of uniform rules, the EU concluded, that there have to be several preconditions would have to be met in order to achieve the potential benefits of harmonisation and at the same time avoiding possible disadvantages.

Prerequisites for achieving the benefits of harmonisation would be:

a more competitive RES-E sector (integration of RES on the internal market)
creation of a wide-ranging system of green certificates (more liquid, therefore greater price stability) - feed-in tariff system for the whole of Europe (with attention to local availability of resources; could lower the cost of all RES technologies once installations are no longer reserved for only some states)

Prerequisites for avoiding the disadvantages of harmonisation would be:

absence of any significant fluctuation in the price of green certificates to avoid increasing investor uncertainty
providing information on RE technologies at low costs
development of competitive technologies only

Sources and further reading

European Commission, Directorate-General for Energy and Transport, December 2005: "How to Support Renewable Electricity in Europe? An Assessment of Different Support Schemes"
Communication of the Commission: The Support of Electricity from Renewable Energy Sources. COM (2005) 627 final Impact Assessment SEC (2005) 1571
available at: http://ec.europa.eu/energy/res/legislation/support_electricity_en.htm

Which Schemes in Which Countries?

In the following, the basic facts for each country are listed briefly. The links lead you to the country-specific detailed data.

Bulgaria

Feed in tariffs
Purchase obligation: energy distribution company

Croatia

The feed-in tariffs for electricity from RES are set according to the energy source it is generated from.
Green electricity producers which have signed a contract with the market regulator are eligible for these tariffs.