EMERGING MARKETS DIRECT

 | 

IULIAN ERNST

  |  25.03.2013

Renewable energy – ideas for balancing the books

The surcharge for renewable and co-generation support schemas hit 20% of the electricity price for typical residential users starting January 2013.

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EMERGING MARKETS DIRECT

IULIAN ERNST

IULIAN ERNST

RESEARCH ANALYST INTELLINEWS at EMERGING MARKETS DIRECT

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The burden must be heavier for industrial users that pay same surcharge per MWh but lower electricity prices. The rise in surcharge last year, to 15% for residential users, already prompted vocal comments from energy-intensive industries. Higher electricity bills pushed into losses Alro aluminium smelter and made Mechel abandon its Romanian steel plants. ArcelorMittal also accused excessive green energy support. For now, households use electricity for heating only marginally and their electricity bills are within the supportability region. The natural gas and district heating prices are still low* and this prevented social tensions as those that overthrew the government in Sofia over this winter. The industry is government’s main concern now.
 
Tensions between industrial energy consumers and renewable energy producers are growing tenser and the market regulator, possibly helped by the government, have to balance the books. The long term objective is securing a substantial share of energy from renewable sources and developing vibrant national industry. 
 
 
The answer to this problem is:
i. wisely negotiate the support mechanism with investors and
ii. accelerate integration of regional day-ahead electricity markets such as to grasp the benefits of a larger market and reduce the cost of volatile renewable generation.
 
 
Steps toward the latter target were taken earlier this year when Romania discussed regional integration with the CZ-SK-HU CEE market, at the same time with Poland. Giving access to off-shore renewable energy producers to the nations support schemas might diminish the pressure on end-consumers by bringing the price of a tradable green certificate down quicker and more sustainable than initially envisaged. The renewable energy support systems are designed across whole Europe and this is not necessarily a sign of government’s financial constraints -- as suggested by renewable energy associations, but a sign of the maturity reached by renewable energy markets that are continuously optimised to reach both goals: industrial development and sustainable renewable energy development. 
 

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