Are Support Schemes for Renewable Energies Compatible with Competition Objectives? An Assessment of National and Community Rules

Renewable energies have undergone a spectacular growth in recent years. In order to promote renewables Member States employ different support mechanisms. In this connection, the problem of distortion of competition has dominated the discussion on renewable energy in Europe. The EC emphasises that the schemes should be compatible with the competition policy. The issue was also adjudicated by the ECJ. In PreussenElektra the ECJ scrutinised the German obligation to buy energy derived from renewable sources at minimum price. The main thesis put forward in this paper is that temporary but effective assistance, also carrying with it the danger of momentarily distorting the competition, serves the achievement of premises of competition (and environmental protection) in the long term. Energy derived from renewable sources, temporarily supported, can in future effectively compete with conventionals, strengthening therefore the competitiveness of the European energy market as such. The analysis unfolds in four parts. It begins with the question of whether the support for renewable energy can be justified. It analyses the relation between environmental protection objectives and competition. It asks whether the inability of renewables to compete with conventionals could justify state intervention. In the second part the German, British and Polish support schemes are analysed. The third part deals with the most controversial issue discussed in Europe, i.e. whether the support for renewable energies constitutes state aid (Preussen/Elektra judgment). The fourth part examines the provisions of the 2001 RES Directive