Trick or treat? EU energy deal is both


October 31, 2014

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Trick or treat? We saw both at last week’s EU energy summit.

Last week, nations in the European Union agreed energy reduction targets for the years to 2030 at a summit in Brussels. This commits the EU to emissions cuts of 40% by 2030 compared to 1990 levels; and that 27% of energy should come from renewables by 2030.

The EU says these targets send a clear message to the world that Europe is serious about renewable energy — and should, to use the parlance of Halloween, be a treat for the wind sector. France’s president Francois Hollande called them “conclusive and definitive”.

But we can’t help but feel this is more of a trick. These targets just aren’t all that great. For one, they are only binding at EU-wide level and not on individual countries. The 27% target is also weaker than the 30% favoured by the European Council and bodies like EWEA.

And there is a “flexibility clause” that lets the European Council revisit the targets after the United Nations climate change summit in Paris in December 2015. A target that can be changed in a year’s time isn’t long-term and, frankly, isn’t worth the paper it’s written on.

So the wind industry doesn’t gain much from these targets, but it does still gain from the EU summit.

The biggest treat was an agreement on energy interconnectivity, where EU leaders renewed their commitment to increasing energy trading via electricity connectors between countries to 10% by 2020, with an intention to increase that to 15% in future.

This may not seem significant, but it was a key part of the talks.

Let’s return to Hollande. He wants something substantial to come out of next year’s UN summit in Paris, so needed agreement on EU targets to discuss with the US and China.

But in order to reach that agreement on targets he had to cave in on energy trading.

You see, the French government is in a long-running dispute with Spain and Portugal over energy exports. Spain has a lot of excess wind power due to its financial crash, and wants to sell this to the rest of Europe. But France has rejected this because of the risks it says Spanish wind would pose to the nuclear power stations that provide 75% of French power.

The result is that France has been reluctant to grant consent for more interconnects at the France-Spain border in the Pyrenees. But Spain and Portugal threatened to veto the new targets at last week’s summit if they didn’t get an agreement on energy trading.

The result? The French simply had to back down for Hollande to get the deal he wanted.

What this all means for wind therefore, is pretty good. Operators across Europe have more chance to sell excess power to other countries; while any single country’s electricity grid need not be so reliant on the fluctuating domestic wind production..

This is the treat behind the trick.

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