Market Stimulation of Renewable Electricity in the EU: What degree of harmonisation of support mechanisms is required? CEPS Task Force Reports No. 56, 1 October 2005

Over the last two decades, renewable energy sources (RES) have attracted heightened interest for a number of different reasons. RES promise strategic improvements in the security of supply, reduce the long-term price volatility to which the EU is subjected as a price-taker for fossil fuels and could offer an enhanced competitive edge for the EU RES technology industry. Renewables also reduce air pollution and greenhouse gas emissions. The cumulative effect of these and other benefits makes a robust case for renewables support. The EU aims at having electricity generated from renewable sources (RES-E) reaching 21% of the total in its 25 member states by 2010. This target has been formulated in the EU Renewables Directive, which sets out differentiated targets for each member state and framework conditions for market support for renewable generation. In the background of the European Commission’s autumn 2005 review of member-state support mechanisms for RES penetration, this report of a joint CEPS-ECN Task Force analyses the state of play of the EU’s renewables policy and reviews the support mechanisms to achieve the 2010 target. It develops a medium- to long-term strategy for support and provides a blueprint for a viable framework for beyond 2010.