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Commission approves support for production of electricity from renewable sources in Ireland



The European Commission has approved, under EU state aid rules, a scheme to support electricity production from renewable sources in Ireland. Ireland intends to introduce a new aid measure, called the Renewable Electricity Support Scheme (“RESS”), to support electricity production from renewable sources, including solar photovoltaic and wind.

The RESS, with an estimated total budget of between €7.2 billion and €12.5bn, will run until 2025. During this time, aid for the production of electricity from renewable sources granted under the RESS will be allocated through auctions. All eligible technologies will compete for subsidies in these auctions, which should ensure the cost-effective achievement of renewable electricity targets by encouraging competition.

However, Ireland has justified preferential treatment for a small quantity of energy from solar, as well as from offshore wind on the basis of the longer term potential of these technologies for the country. Successful applicants of the RESS will receive support over 15 years in the form of a premium on top of the market price.

The communities hosting projects supported by the RESS will benefit from a fund to which all RESS beneficiaries will contribute to and that will invest in certain technologies and ‘sustainable goals' including education, energy efficiency, sustainable energy and climate action initiatives in the area surrounding the RESS projects. The Commission assessed the scheme under EU State aid rules, in particular under the 2014 Guidelines on State aid for environmental protection and energy.

The Commission concluded that the Irish RESS is in line with EU state aid rules, as it promotes the generation of electricity from renewable sources, in line with the European Green Deal, without unduly distorting competition.

Executive Vice President Margrethe Vestager, in charge of competition policy, said: “This Renewable Electricity Support Scheme will contribute to Ireland's transition to a low carbon and environmentally sustainable economy, in line with the European Green Deal and our state aid rules.”

Electricity interconnectivity

ElectroGasMalta has summed up its Delimar power plant project



The Electrogas consortium recently held a press conference where it announced the results of an internal audit of its company. The company said it began an "extensive internal legal and forensic review" in 2019, following the appointment of three new Directors. The audit showed that there were no signs of corruption in the project to build a gas power plant in Delimar with the participation of Siemens Projects Ventures and SOCAR Trading.

According to Energogas, the audit did not reveal any signs of any violations at the stage of bidding, construction of the power plant and operating activities of Electrogas.

Electrogas also reported that a project worth more than 500 million euros for the construction of a new 210 MW power plant and an LNG regasification terminal was implemented by ElectroGas Malta, which includes SOCAR Trading. In partnership with Siemens and local investment company GEM, it won a public tender in Malta in 2013.

It is known that the management of Electrogas changed after the resignation of shareholder Jorgen fenek.
Fenech was part of the joint venture "jam holdings", which owns 33.34% of the power plant. SOCAR Trading and Siemens Projects Ventures hold 33.34 percent each.

In 2015, ElectroGas Malta signed a contract with SOCAR giving exclusive long-term rights to supply LNG to Malta for the power plant. The first batch of LNG was delivered to the island in January 2017, thus creating the conditions for Malta to completely abandon fuel oil as a source of electricity generation. As noted earlier by the Prime Minister of Malta, Joseph Muscat, this helped reduce electricity prices for the Maltese population by 25% and contributed to a 90% reduction in toxic emissions into the atmosphere.

ElectroGas Malta will also supply electricity and natural gas to the state-owned energy company Enemalta for 18 years. A project worth more than €500 million to build a new 210 MW power plant and an LNG regasification terminal in Malta with the participation of SOCAR Trading was launched in December 2014 and completed in January 2017.

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Electricity interconnectivity

Dark clouds hang over #UkraineRenewableSector



2020 has been a year of crisis for Ukraine’s energy sector. A direct consequence of this has seen mounting debts and non-payment between market actors destabilize the sector. Renewable energy producers have particularly been affected by the latter as the non-payment of the state-guaranteed feed-in tariff – which now amounts to 20 bln UAH (about $750 million) – threatened to stymy the growth of the industry, writes Andrian Prokip PhD, senior associate at the Kennan Institute.

The national government and market participants, foreign investors and international actors, including from the Energy Community, have been negotiating for months in a bid to reach a compromise. Finally, based on a signed memorandum between the key market players on 15 June 2020, a draft bill amending the renewables stimulating legislation No. 3658 has now been put before parliament. However, there is a risk that earlier agreements could be reneged which in turn could threaten the future of the Ukrainian renewables sector and the country’s reputation as a reliable investment.

Ukraine first established a feed-in tariff to support renewables’ development in 2008. Technical restrictions were later introduced which excluded all but a short list of businessmen from entering the market. It appeared that only oligarchs were benefiting from these restrictions. Following the Revolution of Dignity in the winter of 2013–2014, parliament amended the legislation in order to open the renewable electricity to all willing market participants.

Yet, change had also been occurring on the supply side. As renewable technologies were cheapening and renewable capacities in the country were enhancing, it became clear that the framework devised to support the sector should once again be improved. It had already been evident a number of years ago that  the unchanged support system for renewables would eventually cause both a payment crisis and technical difficulties in the future. However, the government inexplicably delayed making the amendments to the regulation.

This passivity has contributed to the serious disparity seen among different renewable capacities in recent years. According to Ukraine’s National Action Plan for Renewables, the country earmarked the domestic generation of 2300 MW of solar capacity, 2280 of wind and 950 of biomass electricity capacities by the end of 2020. However, as of end of June 4593 MW of solar, 1064 of wind and only 171 of biomass capacities were installed.

The government should have had stronger overview on the implementation of the plan, however the absence of legislative levers to control the balance of capacities prevented remedial action from being taken. And now, solar power, the most expensive in terms of the feed-in tariff, has not only exceeded other renewables, but also the planned benchmark for itself. In addition to the extra financial burden, this has also contributed to technical difficulties with balancing the energy system due to the so-called duck curve.

These factors coupled with the simultaneous overregulation of electricity market design and attempts to maintain extra low prices for households were significant contributors to the huge debts shadowing the market today.

Yet, investors and renewable energy producers continued to operate and invest in line with Ukrainian legal framework. Their established energy facilities benefit from the existing guarantee of the state to pay the feed-in tariff, which has placed the government in a troubling position.

If any potential decrease in the feed-in tariffs does not receive the total backing from investors who have already established their businesses, it may undermine the financial landscape for these companies and lead to a series of lawsuits against the state. In this scenario, the companies would win their cases and the state will be obligated to pay the affected parties an amount in line with the initial support model and additional fines. Spain, for example, has already experienced this and now has to pay compensation to the investors.

This is why the memorandum is so important. The draft law No. 3658, based on the MOU, makes provisions for a reduction to feed-in tariffs. Any further decrease may during parliamentary scrutiny and hearings face significant pushback from those who signed the memorandum. Beyond this an equally concerning issue persists, as some Ukrainian solar energy actors say they did not sign the memorandum and therefore do not agree with the draft legislation. On top of this, they are demanding a prolongation of two years to the stimulation period – until 2032.

The government is walking a tightrope and must consider very carefully various future scenarios. The development of the renewables sector is a strategic goal for many countries around the world, and is of particular importance to the EU, into which, of course, Ukraine aims to integrate economically and join in future.

It is of the most importance then for the members of the Ukrainian parliament not to destabilize the market further by making negative amendments to the draft bill and instead listen to all voices in the market. Failure to agree on a draft compromise will not only accelerate the denigration of the sector into ground, but it will also undermine investors’ trust in the Ukrainian energy sector, which requires huge investments to modernize its depreciated assets.

Andrian Prokip, PhD
Senior Associate at the Kennan Institute

Energy Expert at the Ukrainian Institute for the Future
Member of The Younger Generation Leaders Network on Euro-Atlantic Security, European Leaderdship Network


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Electricity interconnectivity

Parliament to vote on revision of trans-European energy guidelines



MEPs are set to call for funding guidelines for key energy projects and improved storage solutions to better match the EU's ambitious climate goals.

During July’s plenary session, MEPs will vote on a resolution calling for a revision of funding guidelines for cross-border, trans-European energy infrastructure projects to bring them into line with EU climate policy.

The resolution, adopted on 18 February by Parliament's industry, research and energy committee, calls for the TEN-E guidelines to be consistent with the EU's energy and climate targets for 2030, its long-term commitment on decarbonization and the energy efficiency first principle.

MEPs will also call for a boost to energy storage solutions to help increase the share of renewables in the EU energy mix. New battery technologies, thermal storage and green hydrogen could play a crucial role in reaching the goals set out in the Paris agreement goals and ensuring a constant energy supply.

Trans-European Networks for Energy (TEN-E)

The Trans-European Networks for Energy (TEN-E) aim to link the energy infrastructure of EU countries. It identifies projects of common interest where countries can work together to develop better-connected energy networks and provides funding for new energy infrastructure.

The policy is being reviewed to ensure it is in line with the climate neutrality objective of the European Green Deal.

Projects of common interest
  • Key cross border infrastructure projects linking energy systems of EU countries.
  • Projects on this list can benefit from simplified permits and the right to apply for EU funding from the Connecting Europe Facility.
  • The aim is to guarantee affordable, secure and sustainable energy for all and to achieve decarbonization of the economy in line with the Paris agreement.
  • The list of projects is reviewed by the European Commission every two years.

EU support for so-called energy corridors or electricity, gas, oil, smart grids and carbon dioxide networks aims to connect more isolated regions, ensuring undisrupted delivery of electricity and gas to all parts of the EU. The aim is also to strengthen cross-border interconnections, help integrate renewable energy and increase local storage capacity.

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