With climate change progressing at rapid pace, it is imperative to rapidly reduce power sector emissions. Fortunately, wind (both onshore and offshore) and solar photovoltaics can today be realized in many regions of Europe at lower cost than any other type of generation technology.
However, not all EU Member States stand to fully reap the benefits of low-cost renewables. Particularly in Central and South-Eastern Europe, high financing costs stand in the way of unlocking the vast low-cost renewable energy potential. Indeed, in some countries in the region renewables still seem un-competitive vis-à-vis new investment into coal-fired generators – just because the capital costs are too high. Innovative thinking to unlock the full potential of low-cost renewable energy across the European continent is thus needed.
The draft EU Renewable Energy Directive recognizes this. Article 3.4 of the proposed Directive would oblige the Commission to create an enabling framework for reducing the cost of capital of renewable energy projects and thereby support high ambition of Member States. Against this background, Agora Energiewende organized a Multi-Stakeholder Dialogue with representatives from EU institutions, public and private finance, project development and think tanks. Building on our report from September 2016, “Reducing the cost of financing renewables in Europe”, the dialogue concentrated on the concept of a European Renewable Energy Cost Reduction Facility that would help to lower the financing costs for renewable energy investments in select EU Member States with high cost of capital. This report is the result of that dialogue. It presents a concrete proposal for placing the Renewable Energy Cost Reduction Facility into the EU legislative framework and the EU budget.
We look forward to discussing this proposal with decision-makers and stakeholders involved in the Clean Energy for All Europeans-Package and the future EU-budget.
