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.

Creating a playground for RES-E

General remarks on support mechanisms

Re-organizing and adjusting markets to the special needs of green power, a very demanding task in the present context of already poorly operational markets in brown power, is a crucial factor in order to achieve a change towards a low-carbon energy economy.

In the absence of additional supporting policy measures many countries fail to iintegrate electricity from renewable energy sources in their market economically and efficiently.

The bundle of different technologies in the RES sector is very diverse hence there is no single and universally applicable support mechanism or policy that can be applied to all of them. As a matter of fact RES technologies are not at the same level of development. Some, such as wind, are almost competitive on the electricity market, others might only be viable in niche markets or are still in the very early stages of development.

The magic formula has to be tailored the specific mix of technologies and the given national framework conditions. Moreover not only the choice of support system but also the monitoring is very important to guarantee stability and continuity.

Lauber, V., Verbruggen, A.(2009): Basic concepts for designing renewable electricity support at a full-scale transition by 2050. Energy Policy, doi:10.1016/j.enpol.2009.08.044

Haas, R. et al. (2004): How to promote renewable energy systems successfully and effectively. Energy Policy 32, Issue 6, 833-839. Elsevier Science Ltd.

Below you will find a short introduction to the main tools and instruments that are currently at hand to support green electricity.

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.

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 from the Commission (2005): The Support of Electricity from Renewable Energy Sources. COM (2005) 627 final Impact Assessment SEC (2005) 1571
Communication from the Commission (2007): Renewable energy road map - Renewable energies in the 21st century: building a more sustainable future”. [COM(2006) 848 final – not published in the Official Journal].
Communication from the Commission (2007): Green Paper follow-up action Report on progress in renewable electricity [COM(2006) 849 final – not published in the Official Journal].

A summary of Directive 2001/77/EC (and its respective amendments) as well as links to the Communications from the Commission can be retrieved on the website of the EU Comission on Renewable Energy.