Unregulated green energy subsidies in the EU may come under scrutiny

Is Europe preparing cuts in the green energy sector?, Presseurope wonders. EU Energy Commmissioner, Günther Oettinger, is about to send “an electric shock from Brussels,” headlines Süddeutsche Zeitung. According to the Munich daily, Oettinger wants “to review national subsidy systems for certain energy resources”.

“The commissioner, annoyed by the provincialism of the 27 EU member states, rails at every opportunity against growing nationalism in the electricity sector.”

“And much to the dismay of environmentalists, he particularly disapproves of the unregulated proliferation of green energy subsidies. Member states may soon face a ban on domestic subsidy initiatives, including some that are already well established.”

For Germany, the law on the promotion of alternative energies, which prompted a boom in wind and solar power as well as a hike in electricity prices in recent years, could be at stake.

According to the Munich daily, the examination of state subsidies will form part of a “prestigious project to provide the EU with an internal energy market” by 2014, which member states have been slow to embrace. The market is supposed to safeguard power supplies everywhere in Europe, and also to lower the cost of energy to consumers.

Coincidentally, Fitch Ratings confirmed a negative outlook for the electricity supply sector in Spain. The risk agency said there is a high probability that costs sparked by the soon-to-be-introduced regulation end engrossing customers’ bills, and cutting down demand.

ACF analysts in Madrid added that renewable power generation has increased due to the injection of sizeable public subsidies, causing more onerous retail prices. Operators Endesa, Iberdrola and Gas Natural are graded as BBB+ by Fitch.

Bankia Bolsa experts noted today that German electricity companies will need lower their minimum dividend per share and offered worse perspectives as “they didn’t anticipate that renewable energy competitors have taken up to 30 percent of their share market, which could rise to 50 percent.” The Bankia report highlighted in contrast the stability of other European brands, namely Gas Natural, GDF and Iberdrola, which would have “better geographical diversification.”