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The UK will Trade Renewable Energy in order to Achieve 2020 Targets

By Environmental Finance | Thu, 26 April 2012 22:28 | 0

The UK government is looking at joint financing of renewable energy projects or trading with other EU countries to help meet its renewable energy targets.

The government claims it can reach its 2020 target of meeting 15% of energy consumption from renewable sources through domestic action alone. However, for reasons of cost effectiveness, commercial opportunity and contingency, it could also make use of the ‘flexibility mechanisms’ in the EU’s renewable energy directive.

A 2009 report from consultancy Pöyry and trade association Eurelectric said that using flexible mechanisms could save the EU €17 billion ($23 billion) by 2020.

The UK’s Department of Energy and Climate Change this week launched a consultation on using the three mechanisms, which are:

•    Statistical transfers, where the ‘renewable value’ of the energy is traded between states;
•    Joint projects, where one member state finances a project in another state and shares the renewable value. Greece has suggested the mechanism could help finance Project Helios, a large-scale scheme to install solar farms.
•    Joint support schemes, where two or more states decide to cooperate on their support schemes. For example, Sweden and Norway have a joint ‘green certificate’ programme to encourage renewables development. However, the UK government has already ruled this out, saying “we do not believe that a joint support scheme is appropriate at the current time”.

Greek Sunset
Greek sunshine: helping the EU meet renewables targets?

Ali Lloyd, a principal consultant in the renewable energy team at Pöyry Management Consulting in Oxford, said EU member states have been reluctant to use the flexible mechanisms, because only one or two countries expect to have a surplus of renewable energy, and they also do not want to undermine domestic efforts to install more renewables capacity. However, he added that the European Commission has recently been exhorting member states to make use of the mechanisms.

“We are not aware of any formal proposals [for cooperation], but we do believe that countries are talking to each other,” Lloyd told Environmental Finance.

Countries are most likely to favour joint projects, he noted. The downside of relying on statistical transfers is that countries will not be sure of their surplus or deficit until the last minute, and most countries are likely to be in deficit.

The UK’s call for evidence will close on 11 June.

By. Christopher Cundy

Source: Environmental-Finance

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