COMMENTARY: EC’s Energy Market Report Emphasises Market Liberalisation and LNG Terminal for Croatia

LNG120 October 2014, LPJ Croatia Issue 105

Last week, the European Commission (EC) published their comprehensive interim report – “Progress Towards Completing the Internal Energy Market” – that collects a hitherto not existing set of data on costs and subsidies across the various power generation technologies in the electricity sector and across all EU Member States.

In the report’s country profiles, Croatia’s key issues are identified as being continued need to liberalise and de-regulate their wholesale energy prices and the laggard progress of the LNG terminal on the island of Krk with “contradictory signals are being conveyed” to investors.

Cost of Renewables Still Lagging Behind Conventional Technologies

The results show that in 2012, the total value of public interventions in energy (excluding transport) in the EU28 were between €120-140 billion. Unsurprisingly, and given the efforts to expand the share of renewable energy in the EU’s overall energy consumption, the largest amounts of current public support in 2012 went to renewables, in particular to solar (€14.7bn) and onshore wind (€10.1bn), followed by biomass (€8.3bn) and hydropower (€5.2bn).

Among conventional power generation technologies, coal received the largest amount in current subsidies in 2012 with €10.1bn, followed by nuclear (€7 bn) and natural gas (about € 5.2 bn).

The interim report also presents figures on the cost competitiveness of the different power generation technologies. The estimated ranges reflect costs of new power generation without public intervention (levelled costs). Costs for producing one MWh of electricity from coal are in a range around €75. Electricity from onshore wind is generated at only somewhat higher costs.

Costs for power from nuclear and natural gas are in comparable ranges around €100/MWh. Solar power costs have fallen considerably since 2008 to about €100-115/MWh depending on the size of installations…

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