A strange concept for competition?

A few years back the European Commission decided that it was time to eradicate all frameworks and mechanisms promoting or hiding state aid or obstructing pure electricity market competition. The task was entrusted to DG Comp, but it appears that it has taken a wrong turn, raising questions as to the fair treatment of Renewables.

The attainment of a fully competitive electricity market without any support whatsoever to any energy sector, hence fair to all energy sources, would have to satisfy the following two fundamental criteria:

First of all, it should ensure the complete internalization of any and all external costs associated with any given energy source. This is a necessary and essential prerequisite for achieving par level competition terms between renewables and fossil fuels. Especially today, where on top of the external cost associated with environmental and ecosystem destruction as well as the external cost associated with public health damage (along the whole chain of fossil fuel exploitation), the external cost directly associated with climate change catastrophes ought to be seriously considered. The total cost calculated thus runs in the trillions .

Secondly it should affect the complete eradication of all financial subsidies to fossil fuels , which according to IMF and IEA are enormous. Recent disclosure by IMF’s Christine Laggard, estimates the total subsidies to fossil fuels at 5.3 trillion dollars . EWEA estimates that for every euro given to Renewables within the framework of current support mechanisms (e.g. FIT) six euros go to fossil fuels. Fossil fuels are subsidised at the rate of 10 million dollars per minute! Does the European Commission consider this in its plans to improve competition?

Therefore, any effort to establish full and fair competition rules that fails to take into account the above will be null and void, acting against Renewables. As otherwise the Commission will appear to be of the opinion that establishing healthy competition rules in the electricity market, requires the eradication of the RES stable support mechanism and NOT the abolishment of the trillions of subsidies directed in this day and age towards fossil fuels, not to mention the external fossil fuel cost. This surely seems to be a strange concept for competition.

* Dr Ioannis Tsipouridis
Chairman & CEO Hellenic Wind Energy Association