Renewables at risk of losing priority dispatch status on European grids: report

The priority dispatch status enjoyed by solar and wind power on European electricity grids could soon be over if leaked documents seen by British newspaper the Guardian are acted upon.

The newspaper reports that it has seen documents modeling four confidential impact assessment scenarios that could see carbon emissions rise by 10% if renewable sources lose their priority status.

The EU’s renewable energy directive has been charged with becoming more flexible and cost-competitive, and is currently being redrafted to cover the period after 2020. According to the Guardian, one strong suggestion doing the rounds in Brussels is to strip priority dispatch for renewable energies in order to meet these cost-cutting goals – a move that many see would be to the detriment of the EU’s carbon reduction targets.

"We believe that priority access must be given for renewable energy sources," SolarPower Europe CEO James Watson told pv magazine. "We are concerned that the European Commission seems to be moving to becoming less ambitious than the Member States, but we also know that there is still time for the Commission to change sentiment."

"Removing priority dispatch for renewable energies would be detrimental to the wind sector, which would face more curtailment across the continent," WindEurope spokesman Oliver Joy told the Guardian. "It also seems to be at odds with Europe’s plans to decarbonize and increase renewables penetration over the next decade."

Joy added that many clean energy investors in both the wind and solar industries would have taken the technologies’ priority dispatch status into account when calculating funding decisions. Thus, removing them from the agreement – or adding to the general air of uncertainty around clean energy policy support on the continent – could further undermine investor support and confidence in renewables.

One senior source told the Guardian that should priority dispatch be rescinded, they would push for financial compensation from the EU, as well as access to balancing markets in an attempt to offset the expected industry contraction.

"We have had enough instability and retroactivity in Europe and going forward, the difference between existing and future assets should be well distinguished," the anonymous source said. "I would be extremely worried if they just removed priority of dispatch and did not touch other key issues around market design. It would mean that the Commission was taking measures against the same renewable industries that they defend in public."

The push back

Lobbyists among the fossil fuel industries argue that priority dispatch status for clean energy sources are unfair, and have pushed the EU to "level the playing field" for years, arguing that due to the low operating costs of solar and wind, priority access to the grid is a natural byproduct for these technologies.

But that viewpoint ignores other realities. Solar and wind plants are far easier to switch off than coal or nuclear plants, and energy sources that have low marginal costs, such as renewables, are usually the first in line when grid operators need to shut down certain power sources.

At SolarPower Europe’s 100 GW celebration in Brussels in September, MEP Claude Turmes warned that the EC needed to be stronger in its support of renewables. "Priority dispatch in a world of overcapacity leads to solar being the cheapest energy to curtail," he said. "The EC will not and cannot reform the EU Emissions Trading System to expose coal or nuclear to the market, so they target renewables."

"I would be extremely worried if the Commission removed priority of dispatch and did not touch other key issues around market design," added the industry insider. The leaked documents discuss various capacity market system reforms intended to end the practice of paying gas generators to remain idle when wind and solar is given grid priority.

Some insiders argue that, should solar and wind be subjected to the same idle fate, then there could be legitimate arguments among these industries to demand similar fall-back options of access and remuneration for the role these sources play in the balancing markets, essentially switching out idle costly gas for idle (but less costly) wind and solar.

The papers show that ending priority dispatch for renewables would have the biggest impact in Denmark, the U.K. (both leaders in wind energy) and Finland, where biomass holds a large share of generation capacity. However, the U.K., along with Sweden and the Netherlands, does not actually comply with supposedly mandatory priority dispatch rules.

The Guardian adds that in each of the four scenarios proposed, CO2 emissions would increase by between 45 million to 60 million tonnes.

Already both the French and German governments have called upon the Commission to ringfence renewables and ensure that their priority dispatch status is protected, making them the very last energy source to be curtailed.

"We fully support the stance taken by the French and German governments," added Watson. "We hope the Commission heeds our advice and that of the German and French governments."