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Further analysis of the final NER300 Decision PDF Print E-mail
Thursday, 04 February 2010

The text of the NER300 Decision now having become available, some further commentary is possible on the new provisions.

A key change that will affect the ranking of renewable energy and “distributed renewables management (smart grid)” project proposals is the way in which the cost of the project is assessed. Before yesterday’s meeting, the ranking would have been affected by the total cost of the project net of subsidy from market support systems like feed-in tariffs or the selling of green certificates. Now total cost is the cost before these subsidies are taken into account. This means project developers are less constrained in their choice of where to site their project. If Member State support happens to be miserly in their chosen location, then – within the limits set out in the relevant State Aid Guidelines – the project’s business plan can assume whatever support is necessary from NER300 for it to be adequately profitable, without the project being penalised in the rankings. 40 MW of innovative photovoltaics on the Black Sea, anyone?

But if NER300 funding is oversubscribed, a negative consequence of this change is that the procedure for striking proposals from the “RES Group” list for having a total cost / MWh that is too high is now blind to the intrinsic differences in cost and maturity of different categories and subcategories of technology. Whereas a definition of total cost that is net of market support schemes would be one that allows for intrinsic differences (since these are compensated for by greater support from feed-in tariffs and green certificates), the new system does not. 6 MW wind turbines are safe from deletion. 10MW of ocean thermal energy conversion are not.

EUREC considers the new "total cost" definition to be poorer than the previous one for this reason and hopes that the proposal "deselection procedure", if it must be applied, will deselect evenly across all renewable energy and D. R. M. (smart grids) projects to compensate.
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