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Energy, Climate change, Environment
Energy

Support schemes for renewable energy

National support schemes can help EU countries facilitate the deployment of renewables and the implementation of specific policy objectives, and provide certainty and predictability for investors.

Renewable energy projects become increasingly competitive. Decreased investment costs and evolving energy market conditions, coupled with continuous EU and national efforts for promotion have consolidated the trend over the past years. Even without public financial support, energy markets alone can deliver most of the required level of additional renewable energy capacities in the EU. 

At the same time, given the increased ambition under the European Green Deal and REPowerEU, national support schemes remain an important tool to spur further investment in the sector. These public interventions need to be designed carefully, so as not to distort the functioning of the energy market and lead to higher energy costs for European households and businesses.

Support schemes for electricity from renewable sources

In line with Article 4 of the Renewable Energy Directive, EU countries are obliged to allocate support for electricity from renewable sources in an open, transparent, competitive, non-discriminatory and cost-effective manner. Exemptions exist for small-scale installations and demonstration projects as well as peripheral regions and small islands.

The banner visual displays 3 steps in the process. First and icon showing a hand holding stacks of money. second a magnifying glass, and information icon and a verification check mark representing an allocation process and third an icon of a wind turbine and solar panel on a sunny day

According to the directive, support schemes shall incentivise the integration of electricity from renewable sources into the electricity market in a market-based and market-responsive way. EU countries may also consider establishing mechanisms to ensure regional diversification in the deployment of renewable electricity, in particular to ensure cost-efficient system integration.

Moreover, the directive requires EU countries to publish a long-term schedule outlining the expected allocation of support (including indicative timing, frequency, expected capacity, budget and eligible technologies, if applicable).

Tenders for renewables

Across the EU, operational support for utility-scale projects, such as certificate schemes, tariffs or premiums, is most often allocated on a market basis through competitive tenders (auctions).

In May 2024, the Commission published a Recommendation (C/2024/2650) and guidance document (SWD/2024/300) to support EU countries in improving the design of their tenders, by including objective, transparent and non-discriminatory qualitative criteria and measures to maximise the delivery of such projects. 

Announced as part of the European Wind Power Action Plan in October 2023, the Recommendation and Guidance document are informed by feedback received in response to a month-long Call for Evidence. 

Before that, a study published in November 2022 analysed how tendering procedures, as one of the forms of public support, are fostering the deployment of renewables as part of the wider transition of the energy system. It served as a basis for the Commission Report on the performance of support for electricity from renewable sources granted by means of tendering procedures in the EU, also published in November 2022.

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