Europe pursues energy market reforms

The drive for major changes in Europe's fragmented energy market continues, with a call for a coordinate approach to boosting solar energy projects, and yet another call from the UK for a single energy market.

The International Energy Agency, Paris, reported that a group of prominent business leaders had asked it to co-ordinate international efforts to stimulate growth in the solar energy market.

Meeting recently in Venice at the third IEA Executive Conference on Photovoltaics, senior executives from the electricity, buildings and solar energy industries and the financial community called upon the IEA to co-ordinate a worldwide market expansion effort.

Erik Lysen, chairman of IEA's Power Systems Implementing Agreement, summarized the conclusions of the conference participants: "The potential and value of solar power in the building and electricity sectors can be harvested now through collaboration of everyone involved."

Lysen stressed solar energy's potential contribution in meeting the challenges of climate change mitigation and economic development, and noted that conference participants described international co-operation as the key to expanding the solar power market.

The IEA said it was identified as the appropriate agency to undertake such co-ordination, in collaboration with the private sector parties and national governments. Recommended activities to enlarge the market included marshalling financial resources, reducing market barriers between countries, and evaluating non-monetized benefits.

James Dawson, Chief Executive of Shell Renewables, said: "If all stakeholders - customers, industry, financial institutions, NGO's (non governmental organizations), and governments - work together, we will really be able to convert the solar electricity business into a viable commercial reality."

Hosted by Italy's state electricity utility ENEL at the Cini Foundation on the island of San Giorgio Maggiore in Venice, the three-day conference brought together more than 160 senior executives from the private sector and government.

Subtitled Il Valore del Sole, the conference was convened by the IEA to consider and consolidate strategies to accelerate growth of solar electricity markets. "People have an aspiration to do the right thing," concluded the conference report, "and people really want solar energy".

Meanwhile, the new UK energy minister addressed a gathering of the UK Electricity Association on a theme familiar from the speeches of numerous predecessors - the need for a single European energy market, and ideal approached only tentatively in the European Union's energy directive, which envisages opening less than one third of the market to competition.

Helen Liddell, Minister for Energy & European Competitiveness, told the electric power industry gathering that a single market in energy within the EU would bring real prizes for consumers across the region.

"It is crucial," said Liddell, "for national governments and the (European) Commission to work together with the (European) Parliament, to force the pace of liberalization.

"A true single market in energy is a classic example of Europe working for people. Every business and household will notice the difference on their bills. That's good news - particularly those for whom energy costs represent a large part of their weekly expenditure.

"In the United States, low energy prices have also fuelled prosperity for nearly a decade. Our ambition should be to drive costs down close to similar levels. But these benefits require a competitive market.

"Some of our European partners have made gestures towards the ideal of competition but failed to deliver on these commitments. For competition to be beneficial, we must all play by the same rules.

"The current wave of mergers and acquisitions in energy companies across Europe could create dangers if market power is concentrated in too few hands. If new players face obstacles in the market place, tensions arise between member states. We want what is best for consumers."

Whatever the UK government's view, the EU is likely to approach a single market sideways rather than full on, with a single market for electricity from renewable resources apparently a greater likelihood than the sort of single market the UK would like.

In May the EU slated debates on the creation of an internal market for electricity generated from renewable resources and on raising public awareness of the need to reduce emissions of greenhouse gases.

In mid-April the European Commission adopted a working paper providing detailed analysis and a review of options for potential EU action to create a competitive market across member countries for electricity generated from renewable energy sources.

The EU's working paper on creation of a market for "green" electric power suggests that there were two options for the creation of a Europe-wide market.

In the short term the EU anticipates that legislation, probably in the form of a directive, could be created to help establish a market; alternatively, in the medium term the EU might develop a renewable electricity business through "the operation of the EU treaty rules on the internal market and state aid rules."

The EU said the working paper, noted that no conclusion has been reached on the question of which of these two avenues to pursue. These options were slated to be examined further in the light of comments received following publication of the report, said the EU: "This working paper is to be sent to the Council and European Parliament and published for widespread consultation."

The paper was viewed "as the next step in the goal to creating a large, important and competitive European Union renewable electricity market, which will produce major benefits for our citizens in environmental, employment and regional terms."

The EU said that renewable electricity from hydro-electric, wind, solar, biomass and photovoltaic sources had been increasing in the EU years at a rate of 15-30% a year, excluding large-scale hydro-electric schemes, since 1990.

"This trend is strongly expected to continue," said the EU. "The increased use of renewable generated electricity will play an important part in the overall package of measures that each member state and the EU as a whole will have to take in order to meet the climate change commitments accepted by the EU at Kyoto.

"In order for renewable generated electricity to continue to develop, financial support schemes will play a vital role in the coming years. It appears likely that such electricity will continue, at least in the medium term, to cost more to produce than 'traditional' sourced electricity. All member states have such support schemes in place. However, the nature of the schemes differs considerably between countries."

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