The coming squeeze on European renewables

Energy & Commodities
  • Generous price subsidies and supportive legislative frameworks have led to an explosion of renewable energy in the EU, especially in Germany, Spain and Italy. However, in the past eighteen months subsidies regimes across Europe have been significantly pared back.
  • This change in the weather is driven by three things: attempts to lower costs for consumers, a growing sense of the longer term gas alternative and falling cost of some renewables, particularly solar photovoltaic and onshore wind.
  • This confronts European policy makers with the distinction between supporting renewables electricity generation in the EU and supporting the manufacture of renewables technology in the EU. The competitive challenge from China in particular makes the latter look increasingly like an uphill battle against Chinese cost competitiveness. The EU’s posture on Chinese competition will be an important signal of how it sees this particular fight.

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