CEE states need to do more for renewables

CEE states need to do more for renewables

London (Platts Energy in East Europe)--25Mar2004

The eight central European accession states must pick up their game and
quickly if they are to attract the necessary inward investment to realize
their renewable energy potential and attain EU targets, according to a report
published by environmental NGO, WWF. Failure to do so could see them miss out
on up to Eur40-bil in investment over the next 16 years, based on estimates by
the EBRD up to 2020.

Central Europe's potential for new renewable energy capacity is not in
question. Indeed, if the full technical potential of the EU's new continental
member states were reached by 2020, installed capacity would increase by 50%
over current levels, according to the EBRD.

However, its ability to exploit its resources and achieve individual targets
is, unless significant changes are made to the support schemes and rules that
currently operate, says WWF. "Financial incentives should be urgently
refined," said its report, "to provide the predictability of return on
investments that project developers need." Administrative procedures must also
be streamlined and renewable energy developers given priority access to the
grid.

By signing up to the EU, the accession states have agreed to enact the EU's
renewables directive [adopted in 2001] - which includes an indicative target
for the region of increasing power from green sources from 5.4% in 1999 to 11%
by 2010. This may seem paltry in comparison to the target of 22% for existing
member states. But, as WWF, points out, given the current low level of
deployment this target will require a greater increase in the use of
electricity from renewable sources than for existing member states.

The CEE 8 must also enact the second EU electricity directive, which comes
into force in mid-2004 and includes clauses promoting renewables, such as
requiring all members to allow distributors to give priority access to
renewable power and requiring retailers to inform their customers of the
source of their electricity and the environmental impact of producing it.

But, according to a survey carried out by WWF, in cooperation with other
regional NGOs and independent institutes, problems exist in each of the eight
CEE states. According to WWF's ranking, Lithuania and the Czech Republic
perform best and Slovenia worst, but none of the states score highly.

A key issue is providing a stable investment climate. Investors needed medium-
term - at least 10-15 year - predictable financial incentives to stump up the
cash, said WWF. The main support mechanisms for renewables production in the
EU are feed-in tariffs, which give generators a guaranteed price for their
power, and renewables obligations on producers or customers to produce or buy
a given percentage of green electricity. The quota-based obligations approach
generates green certificates, which represent the market value of the
renewable quality of the electricity.

The full version of this story was published in Platts Enery in East Europe.