REGION: South Eastern Europe Energy Community Treaty Signed

Helene Ryding — Mon, 07 Nov 2005 01:27:00 GMT

2005-10-26 13:20:58

Eight Balkan countries will join forces in Athens with the European Union today to establish a single regulatory framework for transporting energy in Southeastern Europe, in a bid to advance the region’s position on the world power map.
A treaty was signed by British Trade and Industry Minister Alan Johnson on behalf of the EU and by ministers from Albania, Bosnia, Bulgaria, Croatia, the Republic of Macedonia, Romania, Serbia and Montenegro and Turkey.

It will help ensure that countries in the region adopt EU single market regulations on energy regarding petrol, natural gas and electricity markets.

Development Minister Dimitris Sioufas described the treaty, which Greece also signed, as an historic agreement that will help unify the energy sectors. “The signing of this treaty creates new conditions for the economy, peace, stability and security in the wider region,” Sioufas said.

The treaty also aims at creating a stable regulatory environment that will boost energy investment in the region.

The World Bank has estimated that 21 billion euros will be poured into energy investments in the region because of the pact. The unification process has also drawn the interest of countries that are not directly part of it.

According to the Development Ministry, the United States and Canada have also given financial support to the treaty. Greece has played a central role in the issue as the country pushes ahead with plans to develop its link with different energy grids.
Apart from agreeing to run a natural gas pipeline from Turkey to Greece, which will then go on to Italy, the government has also signed a deal for a pipeline to carry Russian oil through Bulgaria to northern Greece.

www.seeurope.net

EU Target for Renewables May Not Be Met

Helene Ryding — Wed, 21 Sep 2005 21:18:00 GMT

2005-09-07 10:47:39

The development of renewable energy is growing, though not as fast as many governments and EU organisations would like. Indeed, it seems extremely unlikely that the EU's 2010 target will be met of 22% of electricity being produced from renewables. The key questions relate to the obstacles facing these
technologies, and the role they can play in meeting Europe's future energy needs.

Renewable energy has always been a significant source of electricity in the EU. Hydroelectric plants, often on an extremely large scale, have been central to power generation in many states for much of the industry's history. In some countries, other technologies -- such as tidal power in France, geothermal power in Italy and biomass in Ireland and parts of Scandinavia --
have also contributed to the power supply portfolio. However, it has only been in the last 30 years that small-scale renewable sources such as wind power have been pushed as a major component of a sustainable and environmentally friendly
energy source, and only in the last 15 that they have begun to make a tangible contribution to electricity supply.

Small-scale renewables

The International Energy Agency (IEA) estimates that for
the EU-19 (EU-15 plus Czech Republic, Hungary, Poland and Slovakia), renewable energy as a whole accounted for 13.7% of electricity production in 2004. However, hydroelectric plants produced the majority of this -- the contribution from non-hydroelectric renewables was an estimated 3%. While the overall share of small-scale renewables is small, it has been growing rapidly: in 1990, the share of non-hydro renewables was only 0.6%. Wind power generation has since grown rapidly: the annual average rate of growth has been 36% in the period 1990-2003, while biomass and waste generation has averaged 13% annually over the same period.

Renewables shortfall

However, even if these rates of growth were to be
sustained, they would not be sufficient to ensure that the EU as a whole meets its indicative target of 22% by 2010. Assuming that hydroelectric generation has been developed as far as it can be, this requires a fourfold increase in the contribution from small-scale renewables. In a report last year, the Commission
estimated that a share of 18-19% -- that is, an increase in small-scale renewables to 8-9% -- was more likely. In the same report, the Commission identified only four countries -- Germany, Denmark, Spain and Finland -- as being on track to meet their target. Others were failing to meet their goals
because of a failure to develop, or implement effectively, national strategies to encourage the development of renewables.
Moreover, the pace of development of renewables varies considerably from technology to technology. By far the greatest progress has been made with wind power, and it is likely that more extensive wind capacity will be built across
the EU than was envisaged. Falling costs, larger turbine sizes and the possibilities of offshore operations have made wind power highly competitive with other fuels. By contrast, some technologies (such as biomass) have not grown as fast as was anticipated, while others (such as wave power) remain at
relatively early stages of development.

Investment support

A central factor in explaining why renewables are not being
exploited on a more extensive scale is the basis on which renewable operators are paid for the power they generate. In most countries, some form of guarantee is given to suppliers to facilitate investment and secure finance. The mechanisms
available vary considerably, and include support for research and development, capital investment aid, and various tax breaks. However, the two most frequently used forms of operational support are: quotas (whereby suppliers bid for tranches of capacity); and guaranteed prices (where set prices are offered to suppliers).

The different systems have their supporters and critics:
Many of the major electricity utilities claim that feed-in tariffs have led to the creation of often uneconomic renewable projects and are not sufficiently market-oriented.

Supporters of the guaranteed price system argue that it has fostered the development of renewables on a large scale and at lower prices than elsewhere. For example, Germany and Spain have adopted feed-in tariff systems, and Spanish
and German wind power operators claim that their prices are much lower than those enjoyed in countries where quotas operate.

Given these entrenched positions it is not surprising that it has not been possible for the EU to recommend -- let alone legislate for -- a standard mechanism across the Union.
Planning systems. Another factor that determines the pace of development is the planning system prospective operators face, including the possibilities for opponents of such investments to oppose and block their development. This issue
has become particularly acute in some member states where planned wind farms -- often in remote areas -- have attracted fierce popular opposition. It is clear that this factor has slowed the development of a number of wind farm projects in
the United Kingdom and in Italy. In France, a new law was adopted this year, devolving decision-making on renewable investment. Supporters of renewables fear
this move will slow down France's modest take-up of this technology: by the end of 2004, there were only 386 megawatts (MW) of wind power there, compared with
16,629 MW in Germany, 8,263 MW in Spain and 3,117 MW in Denmark.

While these disparities reveal the effects of national policy conditions on encouraging or discouraging the development of renewables, the record of the best performers suggests that wind and other technologies could make a sizeable impact on meeting future energy needs. However, the extent of that contribution, and the costs and uncertainties associated with it, have become a new focus for contention between supporters and sceptics.

Wind power debate

Several alleged shortcomings of wind power are also slowing
the rate of its development:

1. Intermittency
Those who oppose a large-scale expansion of wind power point to problems of availability, reliability and predictability associated with the conditions under which power generation is possible.

According to these critics, the need for back-up power for periods when the wind does not blow undermines the economic competitiveness of this resource. By contrast, supporters argue that the "portfolio effect" of having many turbines in different locations provides a level of availability and reliability not dissimilar to conventional power stations.

2. Grid integration
Critics also point to the extra transmission costs associated with wind power. This is partly the cost of new lines -- often in remote locations. It is also the additional cost of ensuring system stability. Earlier this year, the Union for the Coordination of Transmission of Electricity --the organisation representing transmission system operators -- announced that further expansion of wind power
generation would require significant new investments to prevent grid instability and power cuts. For their part, the supporters of wind energy argue that any additional costs will be marginal, and a more decentralised grid network is not without advantages.

There is considerable scope for the expansion of renewable energy as a source of electricity in the EU. However, the rate of growth of renewable energy as a part of total energy production will depend on the right economic incentives and planning procedures.

Source: Oxford Analytica