Energy bosses call for end to renewable subsidies

The CEOs of 10 utilities companies which, together, own half of Europe's electricity generating capacity, are calling for an end to subsidies for wind and solar energy, which they say add too much power to a market already struggling with overcapacity, report EurActiv and Reuters. The CEOs in the so-called Magritte Group also call for a Europe-wide capacity mechanism that would pay utilities for keeping electric power generating capacity on standby and want the EU to boost its carbon emissions scheme, whose low prices have failed to boost low-carbon fuels like natural gas and nuclear energy. First gathered this spring in the Brussels museum dedicated to surrealist artist Rene Magritte, the informal group has lobbied the European Commission and national governments to change EU energy policy, which they say has failed to achieve its triple goal of lowering prices, reducing carbon emissions and securing energy supply. The group – which includes top utilities such as France's GDF Suez, Germany's E.ON, Spain's Iberdrola and Italy's Enel – has made an impact, as several countries, including Spain, Germany and France, have reviewed or are reviewing support schemes for renewable energy. With an unprecedented joint press conference of 10 CEOs in Brussels today, the Magritte group hopes to put pressure on EU policy makers ahead of an energy summit early next year, and wants to press its case for considering wind and solar as a mature industry that no longer requires subsidies. "European energy policy has run into the wall," GDF Suez CEO Gerard Mestrallet said.

With power demand falling due to the economic crisis and the EU's energy efficiency drive, wholesale power prices have dropped by about half since 2008, but retail prices for consumers have remained near record levels. The group said that in the past four years energy bills for domestic consumers have risen by 17%, while bills for industrial users have gone up by 21%. Energy companies argue that in a European power market already struggling with overcapacity, overly generous subsidies for renewables led to a wave of investment in solar and wind, which enjoys priority grid access at fixed, above-market prices and which is making existing thermal capacity uneconomical to run. "In sectors like steel, cars and refining, when there was overcapacity, capacity was closed. But in the energy sector, we have massively subsidised additional capacity in solar and wind, which has led us to the absurd situation in which we find ourselves today," Mestrallet said.