2017 was another record year for Europe's wind power industry, according to a report released in February by WindEurope. However, Central and Eastern Europe (CEE) accounted for a mere 1% share of the wind capacity installed last year, down from 10% in 2016.
With 16.8 gigawatts (GW) installed in 2017, wind has become the second largest source of power generation in Europe after gas. The figure represents a 20% y/y increase in newly built capacity, and 55% of the total power installed last year.
Most of it — 15.7 GW — was installed in the European Union (EU). Yet of the EU member countries in CEE, only Romania, Poland, Czechia and Croatia had any new wind power capacity added to their grids in 2017, and only Croatia saw a significant amount of wind power development — 147 MW, compared to Romania's 5 MW, Czechia's 26 MW and Poland's 41 MW. In fact, most of the development in wind power in the EU last year came from three countries, Germany, the UK and France, which accounted for almost 80% of all the new installed power.
As bne IntelliNews noted in a feature in March 2017, the appetite for investments in wind and solar power in CEE has subsided over the years, along with the scaling back of the generous government subsidies that supported their fast uptake in 2011-2013.
While the context differs from country to country, CEE's wind frontrunners of yesteryear — Romania and Poland — have been plagued by frequent regulatory changes in recent years, which made investments in renewable energy unpredictable, and by reduced financial incentives for renewable energy developments enacted by fossil-fuel friendly governments.
This contrasts with regulatory changes in Germany and the UK, which encouraged investment into wind power. The development of wind capacity in Germany last year was boosted by a change in the regulatory regime, namely by the replacement of a decade-long feed-in-tariff (FiT) with feed-in-premiums with auctions, according to WindEurope. "Similarly, the UK experienced the largest growth of installations with 4,270 MW as the support framework (ROCs — Renewable Obligation Certificates) came to an end and developers rushed to ensure applicability for the outgoing regime (onshore installations)," the report added. "The French onshore market, supported by a favourable regulatory regime, continued to grow steadily for its fourth consecutive year,” it continued.
Under a FiT system, eligible producers of renewable energy are guaranteed stable prices through long-term contracts and grid access for the power they produce. The system incentivises investments in renewable energy by ensuring cost recovery for investments, even if market dynamics change.
First introduced in Germany in 2000, the system has since been copied with varying degrees of success in other countries. The German government's success with the system stems from the fact that it was set up so that regular electricity consumers would pay a variable monthly fee to subsidise the sometimes higher than average cost paid to producers of renewable energy. Meanwhile, governments that chose to subsidise FiTs from their own budget, like Spain and some CEE countries, found that it was difficult to support the additional costs over time and either dropped the system altogether or ceased to offer similar contracts to new market entrants.
The regression in CEE's interest in wind power takes place at a time when technological advances have made the technology cheaper than ever, and therefore the investments needed to develop it lower than ever. Case in point, the 20% y/y increase in installed wind power capacity in 2017 took place concurrently with a 19% y/y drop in investment, according to WindEurope.
Not only that, but CEE countries will have held three of the four terms of the rotating presidency of the Council of the EU in the next two years. This period is particularly sensitive for the bloc's climate policies and CO2 reduction targets, as recent studies have revealed that they can be revised upwards in a cost-effective manner and there is growing pressure for the bloc to set more ambitious targets for 2030 in the areas of renewable energy and especially energy efficiency.
Estonia's presidency in the second half of 2017 fell short of displaying leadership in the area of climate change mitigation; after lengthy negotiations on capping CO2 emissions from power generation in December, the Estonian leadership proposed a solution favouring fossil fuels that only benefitted itself and coal-dependent Poland, and that was widely criticised by the delegations of most other member countries.
Bulgaria, which holds the current presidency of the EU, has vowed to promote energy efficiency and the integration of renewable energy in the electricity mixes of member states as part of the programme for its presidency. Just under two months into its term, negotiations in the two legislative branches of the EU — the European Parliament and the Council — are still ongoing. Much of the push for more ambitious targets is coming from the European Parliament, and not from the Council of the European Union, over which Bulgaria presides.
Meanwhile, Romania, which will hold the rotating presidency of the Council in the first half of 2019, has listed "green, sustainable and secure energy" as a "secondary priority" of its agenda, noting that it will strive to contribute to "better energy interconnectivity" by building on a landmark EU energy policy, the European Energy Union.
The jury is still out regarding the future of wind power — and renewable energy in general — in CEE. Recent developments indicate that regional governments are dragging their feet at home and failing to steer ambitious policies in Brussels. Whether or not this state of affairs changes depends on the level of importance CEE countries attach to clean energy and climate change mitigation in the years to come.
CEE's contribution to installed wind capacity has declined abruptly since 2013
Source: Wind Europe