CEOs from 10 utilities representing half of Europe’s power-generating capacity have urged the European Union recently to adopt reforms to prevent blackouts and help the indebted sector adapt to future demand.
The CEOs, who call themselves the Magritte Group after an initial meeting in an art gallery, said EU energy and environment policy was failing in its objectives and had raised the risk of the lights going out.
Rising electricity bills that are damaging Europe’s international competitiveness were the fault of political charges and misguided subsidies for solar and wind, rather than the fault of the energy companies, they said. Without action, the CEOs said the sector would remain unworthy of investment and reliable power would be a thing of the past.
Europe’s electricity bills, burdened by subsidies for renewables, are around double those in the US, where shale gas has lowered costs, the CEOs noted.
EU policy stretches out to 2020 with a set of policy goals to encourage sustainable, secure and affordable energy supply. They include a target to increase the use of renewables to 20 per cent, cut carbon emissions by 20 per cent and increase energy savings to 20 per cent of projected levels. Policymakers are expected to announce proposals for 2030 goals around the year-end. They are expected to propose two goals, one for greenhouse emissions and one for renewables, while the CEOs want a single climate goal.
The European Commission is also revising guidelines on support schemes, which could limit government subsidies for green power. Environmentalists say targets for renewables, energy savings and the climate are all essential and have been proved to work. Yet the utilities argue generous feed-in tariffs have distorted the market, while they have been forced to mothball gas-fired power plants because they cannot compete.
The Magritte Group says utilities have closed 51 gigawatts of modern gas-fired generation assets – the equivalent of the combined capacity of Belgium, the Czech Republic and Portugal – and the risk is more will be shut. To help maintain the gas-fired capacity as back-up to intermittent renewable power, the CEOs want a Europe-wide mechanism to pay utilities for keeping capacity on stand-by.
The CEOs set aside their differences in May at a meeting in the Brussels museum of Belgian surrealist artist Rene Magritte. The Magritte Group includes France’s GDF Suez, the UK’s E.ON, Germany’s RWE, Spain’s Iberdrola and Gas Natural, Italy’s Enel and Eni, Sweden’s Vattenfall, Czech utility CEZ and GasTerra from the Netherlands.
EU energy policy and its costs will be debated by heads of state and government at a summit early next year.