Photo voltaic PV vegetation throughout the European Union (EU) may very well be topic to a short lived income cap beneath new proposals aimed toward serving to vitality customers cut back their payments.
The European Fee (EC) has proposed a short lived income cap on ‘inframarginal’ electrical energy producers – applied sciences with decrease prices, similar to renewables, nuclear and lignite – that are offering electrical energy to the grid at a price beneath the worth degree set by costlier marginal producers.
These inframarginal producers “have been making distinctive revenues” as fuel vegetation have pushed up the wholesale electrical energy value, the EC claimed.
“These corporations are making revenues they by no means accounted for, they by no means even dreamt of,” EC President Ursula von der Leyen stated throughout her State of the Union speech at the moment.
The fee has proposed to set the inframarginal income cap at €180/MWh (US$180/MWh) till 31 March 2023, which it stated will permit producers to cowl their funding and working prices with out impairing funding in new capacities.
Nonetheless, Kristian Ruby, secretary common of electrical energy business physique Eurelectric, stated proposed measures to cap revenues for renewable and low-carbon electrical energy producers “threat damaging investor confidence”.
Based on EC projections, EU member states would have the ability to acquire as much as €117 billion from the cap on an annual foundation, with the excess revenues to be channelled to ultimate electrical energy customers uncovered to excessive costs.
The EC stated these revenues can then be used to offer revenue assist, rebates, investments in renewables, vitality effectivity or decarbonisation applied sciences.
The proposals, which may be found here, stipulate that the cap ought to be restricted to market revenues quite than encompassing whole era revenues (together with as an example these stemming from assist schemes), to keep away from considerably impacting the preliminary anticipated profitability of a undertaking.
Based on commerce physique SolarPower Europe, the income cap safeguards photo voltaic PV vegetation that don’t earn further earnings on electrical energy markets, similar to these backed by feed-in tariffs, contracts for distinction and company energy buy agreements.
Nonetheless, member states do have the chance to introduce additional caps with out the approval of the EC. “This creates excessive uncertainty for buyers and endangers the integrity and unity of the EU market,” stated Naomi Chevillard, head of regulatory affairs at SolarPower Europe.
“The European Fee ought to set a European-wide base-level of proportionality for the brand new cap measures.”
To keep away from extreme administrative burdens, the EC proposal says member states ought to be allowed to exclude producing services with a capability beneath 20kW from the income cap.
The EC has additionally proposed what it calls a “non permanent solidarity contribution” on extra earnings generated from actions within the oil, fuel, coal and refinery sectors that aren’t coated by the inframarginal income cap.
This could be collected by member states on 2022 earnings which might be above a 20% enhance on the common earnings of the earlier three years, with revenues to be redirected to vitality customers, specifically weak households, hard-hit corporations and energy-intensive industries.
The solidarity contributions of the fossil sector can be utilized for one 12 months after coming into into drive and will herald an estimate of round €25 billion of public revenues.
Moreover, with the EU confronted with the consequences of a extreme mismatch between vitality demand and provide, the EC has proposed that member states intention to cut back total electrical energy demand by at the least 10% by 31 March 2023.
The EU’s local weather coverage chief, Frans Timmermans, stated the vitality disaster “underlines that the period of low-cost fossil fuels is over and that we have to speed up the swap in direction of homegrown, renewable vitality”.