Monday 20th January 2014


January 20, 2014

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Wind Watch

This week, one of the EU’s most visible environmental achievements will come into question.

It’s a situation that’s come about following concerns over high European energy costs, which are undermining support for binding 2030 European energy targets.

Following an intense period of international lobbying, new goals are due to be proposed on Wednesday. The results of which will have a profound and long lasting impact on the shape of the European energy market in the future.

Indeed, while the UK has been talking up the potential of nuclear power and shale gas, the Germans have been shutting down legacy infrastructure and pushing for an obligatory target.

And there’s more. For while pushing for a more stable domestic energy mix that would see the introduction of a 27% renewable power generation target could make sense, eyebrows are now being raised.

Why? Primarily because, although the generation target is a laudable one, if it’s non-binding, it’s toothless.

All the more reason, therefore, for further proposals to prompt further discussion and action, regarding the subsequent impact that this would have on network efficiency. And by proxy, the potential establishment of legislative guidelines to protect related energy infrastructure such as storage, grid and cross-border interconnectors.

Of course, there’s a deep irony to all of this. And it’s not been missed.

For while many within the market may disagree, the recent renewable energy growth has been built on the back of generous subsidies. That in turn has fostered significant growth – creating jobs, safeguarding and protecting future energy demands and providing the base for a potentially valuable export market.

However, at the same time, many increasingly argue that this government-backed support has shielded the market from global competitiveness, especially when looking to the recent and ongoing North American shale gas boom.

Indeed, with gas prices estimated to have fallen by almost two thirds within the US over the past ten years alone, many market analysts argue that they have a point.

Especially when you consider that within the same time period, European gas prices rose. By 35%.

Collectively, Britain, Spain, France, Italy, Germany, Holland and the Netherlands all agree on supporting the 2030 target of cutting emissions by 40% based on 1990 levels.

Nevertheless, with Germany and UK energy policy increasingly at odds with one another there’s a danger that all this talk will come to nothing.

Utilities such as Eon have long campaigned against the need for a target, while manufacturers that include Vestas and such like have continued to champion the cause.

Whatever the case, legislative policy bigwigs in Brussels might not set the entrepreneurial hearts racing, but this week their discussions will have a profound impact on the future shape of the market, whether they realise it or not.

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