Figures compiled by the environmental pressure group Greenpeace highlight the lack of transparency about the amount of cash disbursed by national governments to support back-up power plants – mainly fossil fuels and nuclear.
€58 billion – this is the total amount of money thrown at so-called “capacity mechanisms” across the EU, according to new research by Greenpeace, published on Thursday (13 September).
If the figure looks big, it’s because it covers both past, existing and planned “capacity mechanisms” – or national support schemes put in place across the 28-country bloc to remunerate power plants for remaining on standby in case of demand peak.
According to Greenpeace, countries handing out the most capacity mechanisms are Spain and Poland (€17.9 billion and €14.4 billion respectively), followed by Belgium, Ireland and the UK (all around €6 billion) and Germany (around €3 billion).
The overall numbers are based on public data, and are therefore “quite robust”, says Greenpeace. But the figures could actually be bigger. Or smaller. In fact, astonishingly, nobody really knows for sure.
“Lack of transparency and the availability of data is one of the big problems,” said Sebastian Mang, a clean energy campaigner at Greenpeace. This, he added, “is the main reason we undertook this research”.
Legislating in the dark
Capacity mechanisms are considered state aid by the European Commission because they can distort competition in Europe’s fledgling internal market for electricity. The EU executive looked into the issue as part of an in-depth state aid inquiry, which concluded in November 2016.
However, the EU executive could not verify the figures provided in the Greenpeace study, admitting it doesn’t have a clear picture of how much money is being spent on capacity mechanisms across the 28-country bloc.
The purpose of the EU’s state aid inquiry was “not primarily to provide statistics,” said Anna-Kaisa Itkonen, a Commission spokesperson. Pressed by EURACTIV to elaborate, she declined to comment further on why harmonised statistics weren’t available.
EU lawmakers are currently debating a European Commission proposal to reshape Europe’s fragmented electricity markets, which still largely operate along national lines. These include a proposal to reform capacity markets by opening them to cross-border bids and placing a limit on the amount of CO2 that beneficiary power plants are allowed to emit – a move intended to speed up the phase out of coal.
But as the Greenpeace study shows, lawmakers are legislating in the dark, with no clear idea of where the money went in the past or where it will go in the future.
“One of our asks regarding the new regulation and directive is indeed full transparency,” Mang said.
No reporting from member states
The stats compiled by Greenpeace came from a variety of publicly available data about capacity payments in different EU countries. Here’s how Greenpeace came up with the €58 billion figure.
- From 1998 to 2018, capacity payments have amounted to €32.6 billion, according to the research.
- A further €25.7 billion was committed until 2040 by a number of governments, with Belgium and Poland allocating the largest sums to date.
About half of the payments could be clearly identified as going to a particular fuel source. Of those, 66% go to coal plants alone, while gas receives 25% and nuclear 4%. Renewables, including hydro and bioenergy, receive 0.5%, while demand-side response (energy efficiency) and power interconnectors receive less than 0.5% each.
And although nuclear gets only 4% of funds across Europe in total, France and the UK – which have large-scale nuclear production – provide 31% and 14% to nuclear respectively.
Greenpeace admits that the figures might not be fully accurate but that it was the best it could come up with based on publicly available data.
“We could find no evidence of transparent reporting from any country with capacity mechanisms that included the fuel sources being supported, as well as the specific utilities and plants receiving the funds,” Mang explained.
“Without governments and TSOs officially publishing complete data, there is no way to verify 100% accuracy,” Mang said. “We would welcome them doing so to shed more light on the situation.”
Overcapacity
If there is little transparency on where the money goes, it is also unclear where it comes from. According to Greenpeace, most countries that use capacity mechanisms collect the funds through “an invisible levy on electricity bills”.
In any event, the Greenpeace research will give the European Commission added ammunition in its attempt to regulate capacity mechanisms in the face of reluctant member states. It will also give credit to those arguing they are mere subsidies that distort competition and create overcapacity in the European power market.
“Because fossil fuels and nuclear energy are propped up by capacity mechanisms, their price is kept artificially low. This penalises renewable energy and distorts the market,” Greenpeace says.
There is currently 39% surplus capacity on the European market, according to figures from the European power grid operators association (ENTSO-E) cited in the research.
