London, 2 February 2011

European Federation of Energy Traders ( EFET) welcomes this week’s Communication of the European Commission on the progress of renewable energy in the EU. It is good to see expressions of optimism about the achievability of an important strand of the EU 20-20-20 energy and environment goals.

We have noted the Commission’s attempt to explain how cooperation mechanisms between Member States should be possible in the future. On the other hand, as we have pointed out in our recent position paper Effective integration of renewable energy in the European power market , there are severe limitations in the new EU Renewable Energy Directive upon the scope for cross border linkages.

EFET doubts whether purely national financial support schemes for renewable electricity, backed only by the limited inter-State coordination foreseen in the Directive, can offer an efficient way to maximise the role of renewable sources in European energy consumption.

The absence of any EU programme to harmonise current national schemes means that exporters of electricity are unlikely to be eligible for subsidies paid in an importing country, while new entrant suppliers in a particular country will invariably be precluded from importing renewable electricity from another Member State, unless they forego any subsidy.

EFET medium term vision

EFET member companies are convinced that a harmonised transition to market mechanisms for the allocation of financial support will best guarantee cost savings across the EU, while preserving the integrity of the internal market in electricity from other sources.

The prolongation of fixed feed-in tariffs paid even to new investors, combined with absolute priority dispatch, will tend to block the advent of market mechanisms, of harmonisation and of the tradability across Europe of renewable attributes.

EFET solutions for the short term

Some measures to promote a closer integration of renewable power sources in the overall European wholesale electricity market can be taken immediately, with the cooperation of national authorities and TSOs. We suggest these solutions should include:

• Adjusting the conditions for priority dispatch of intermittent wind power in countries with fixed feed-in tariffs

• Revising congestion management procedures, so that involuntary flows caused by out-of-the-market renewable output do not automatically block international transactions in the wholesale power market for significant periods

• Making certificates already issued in countries with quota schemes eligible for credits in other EU Member States

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