Call to empty European renewable subsidy trough


Energy CEOs call for end to renewable subsidies with Reuters
Published: 11 October 2013

The CEOs of 10 utilities companies, which together own half of Europe’s electricity generating capacity, are calling for an end to subsidies for wind and solar energy, which they say add too much power to a market already struggling with overcapacity.


As most renewable energies are still more expensive than fossil fuels, a variety of support schemes have been put in place to accelerate their uptake and meet the EU’s goal of sourcing 20% of its energy from renewable sources by 2020.

Support schemes remain a national prerogative under the EU’s Renewable Directive, adopted in April 2009.

A 2011 progress report on the national support schemes, published by the European Commission, called for investment in renewable energy to be doubled from €35 billion to €70 billion to meet the EU’s 2020 target to source 20% of its energy from renewables.

The CEOs in the so-called Magritte Group also call for a Europe-wide capacity mechanism that would pay utilities for keeping electric power generating capacity on standby and want the EU to boost its carbon emissions scheme, whose low prices have failed to boost low-carbon fuels like natural gas and nuclear energy.

First gathered this spring in the Brussels museum of Belgian surrealist artist Rene Magritte, the informal group has lobbied the European Commission and national governments to change EU energy policy, which they say has failed to achieve its triple goal of lowering prices, reducing carbon emissions and securing energy supply.

The group – which includes top utilities such as France’s GDF Suez, Germany’s E.ON, Spain’s Iberdrola and Italy’s Enel – has made an impact, as several countries, including Spain, Germany and France, have reviewed or are reviewing support schemes for renewable energy.

With an unprecedented joint press conference of 10 CEOs in Brussels on Friday, the Magritte group hopes to put pressure on EU policy makers ahead of an energy summit early next year, and wants to press its case for considering wind and solar as a mature industry that no longer requires subsidies.

“European energy policy has run into the wall,” GDF Suez CEO Gerard Mestrallet said.

With power demand falling due to the economic crisis and the EU’s energy efficiency drive, wholesale power prices have dropped by about half since 2008, but retail prices for consumers have remained near record levels.

The group said that in the past four years energy bills for domestic consumers have risen 17%, while bills for industrial users have gone up 21%.

Utilities say that in a European power market already struggling with overcapacity, overly generous subsidies for renewables led to a wave of investment in solar and wind, which enjoys priority grid access at fixed, above-market prices and which is making existing thermal capacity uneconomical to run.

“In sectors like steel, cars and refining, when there was overcapacity, capacity was closed. But in the energy sector, we have massively subsidised additional capacity in solar and wind, which has led us to the absurd situation in which we find ourselves today,” Mestrallet said.

Risk of blackouts

Critics say the traditional utilities industry has ignored solar and wind for too long, with the result that these new power sources are mainly owned by non-utility players: solar panels by private citizens and wind turbines by smaller energy companies, municipalities and citizens’ cooperatives.

The power generation overcapacity has been aggravated by the U.S. shale gas boom, which has led to a flood of cheap U.S. coal to Europe as U.S. utilities switched to gas-fired plants.

That has forced European utilities to close 51 gigawatt of modern gas-fired power plants – the equivalent of the combined capacity of Belgium, the Czech Republic and Portugal.

The closing of these flexible gas plants is jeopardising Europe’s energy security, Mestrallet said, as these plants are essential back-up for intermittent wind and solar.

Mestrallet said that while Europe can deal with long and cold winters like in 2012-13, a two-week stretch of very cold weather with temperatures below minus 10 Celsius could lead to blackouts because of lack of standby capacity.

The group – which also includes Germany’s RWE, Italy’s Eni, Spain’s Gas Natural, Sweden’s Vattenfall, Czech CEZ and Dutch GasTerra – calls on the EU to set up capacity remuneration systems that would pay utilities for standby capacity.

Efforts towards an EU-wide capacity mechanism have had little success so far but there has been a variety of national efforts to build standby systems. with Reuters

If you’re looking for a foretaste of a future where meaningful employment is limited to asking whether “you want fries with that?” and receiving a power bill is like being handed an invitation to the poor house, then keep an eagle eye on Europe.

European manufacturers are bailing out and heading for America where its shale gas revolution has resulted in cheap energy and an upsurge in manufacturing activity.  German manufacturers have already signalled their plans to head for the US in order to escape crippling power prices at home. And that spells BIG TROUBLE for Europe as the Germans have been carrying the can, economically, for passengers like Greece and Spain since the GFC.

The Master-Mind of Central Planning would be proud of what Europe’s masters have achieved in less than a decade.  It took Jo a lot longer than that to snuff out all suggestion of economically productive industry and to put his people into Stone Age poverty – and he was trying.

Josef Stalin

Dear Angela, I am impressed with how little time it took you to destroy the most productive economy in Europe. Your renewable policy worked a treat.

About stopthesethings

We are a group of citizens concerned about the rapid spread of industrial wind power generation installations across Australia.


  1. Jackie Rovenksy says:

    I agree the wind industry should be seen as a mature industry, with no further financial backing by public money needed.
    They have failed to meet their stated economic and production prophesies.
    Their answer to everything is to increase the size of turbines and the number required and still they’ve not met the energy need of one country or even a small city.
    It’s an industry which has no vision other than making money for its investors, and that money is coming from the public purse – everywhere.
    They have nothing to offer in the way of new technology to meet the needs of communities to any satisfactory level. They have no technology which can silence the cries of those in pain.
    It’s an industry that needs to have the ‘apron strings’ cut, and cut immediately everywhere.

  2. The way the wind industry is going, price and reliability wise, it will be much cheaper and more reliable to have our own little power plants the way we use to have in the country areas, as we have inventors now which makes it a breeze now.

    It won’t take too many people to do it to upset the apple cart as far as the wind industry is concerned.

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