18 Nov (NucNet): The largest barrier to investment in the European energy sector is regulatory uncertainty, the director-general for energy at the European Commission (EC), said yesterday at a conference on shaping the EU’s energy policy to boost competitiveness.
Dominique Ristori said at the Brussels conference that Europe should have an “adequate legal framework” to give investors certainty and encourage them to put their money into the market.
He said a €300 billion investment plan to be put forward by EC president Jean-Claude Juncker next month, a significant portion of which will be dedicated to energy projects, is a “unique opportunity” for investment in the energy sector and can help provide certainty.
The adoption last month of new targets for tackling climate change, in which member states agreed to reduce greenhouse gas emissions by 40 percent compared to 1990 levels by 2030, is an example of the EU’s attempt to provide investors with certainty on the direction energy policy is heading, Mr Ristori said.
The targets include an increase in the use of renewable energy sources to 27 percent of the energy mix. Marie Donnelly, director for renewables, research and innovation at the EC, said the EU has the most advanced legal framework in the world for providing certainty for investors in renewable technology.
The adoption in July 2014 of EC guidelines for energy and environmental projects which receive state aid, such as subsidies or financial guarantees, is another example of providing certainty, said the EC. Nuclear energy was excluded from the guidelines.
“It is clear that the current market arrangements do not deliver the necessary signals for long-term investment in low-carbon technologies, especially nuclear,” Brussels-based nuclear industry association Foratom said in response to the guidelines.
The recent approval of state aid for the construction of a new nuclear power station at Hinkley Point in the UK shows that certain support measures for nuclear projects are consistent with EU competition rules and “future nuclear programmes should be given the same opportunities within the entire EU,” Westinghouse Electric Company told NucNet.
Miguel Arias Cañete, commissioner for climate action and energy, said at the conference that the EU needs to “complete the common set of rules for the internal market to ensure remaining regulatory barriers to a well-integrated market are removed.”
This means engaging with regulators to fully implement and expand the existing legal framework where needed, he said.
According to the EC, the EU’s internal energy market for gas and electricity aims to ensure that “no EU member state should remain isolated from the European gas and electricity networks after 2015”.
On 14 November, the Presidency of the Council of Ministers of the EU told member states’ permanent representatives that the regulatory framework for the internal energy market “is in place and largely transposed”.
But further steps need to be taken to ensure that “countries follow a market-based approach and avoid interventionist measures”. The Presidency called for an increase in planning coordination between states on projects to be developed in the next 10 years.
Ron Cameron, former head of the Organisation for Economic Cooperation and Development’s Nuclear Energy Agency, said regulatory certainty for the nuclear sector includes issues surrounding approval processes before large investments are made.
He said the nuclear industry has to satisfy multiple criteria which banks consider when deciding whether to invest in large infrastructure projects.
“Banks look for long-term certainty on price, stable government policy, industry reputation, regulatory certainty, the process for addressing planning and environmental issues and public acceptance, in addition to the economics of the project,” Mr Cameron said.
In an interview for NucNet in November 2012, Mr Cameron said the nuclear industry needs “market regulation with long-term prices” and priority must be given to long-term guarantees to investors.
In April 2014, Czech Republic utility ČEZ cancelled a tender for the construction of two new reactor units at the Temelín nuclear power station, saying the European Union had failed to clearly define long-term parameters for energy policy.