Policies have a major impact on the speed and extent of renewable energy development. The International Energy Agency observed that significant market growth has always resulted from combinations of policies, rather than single policies, that longevity and predictability of policy support is important, that local and state authority and involvement are important, and that individual policy mechanisms are evolving as countries gain more experience.
By mid-2005, all EU 25 countries had a national target for renewable energy supply. The European Commission has set a Europe-wide target for renewables of 21 percent of electricity and 12 percent of total energy by 2010. However, present European energy policies are still far away from being sustainable.
With respect to a renewable energy policy, during analysis and simulation of the renewable energy scenario’s we have come to the following observations:
a. Diversification of the energy portfolio with renewables is a key to energy security.
b. Quickly reacting, gas-fired plants for peaking power combine well with renewables, while investments into constant base load power capacity should be reconsidered carefully.
c. Energy RD&D budgets in Europe must be reallocated, RD&D for the cost reduction of renewables must be extended considerably and more emphasis must be given to renewables and storage technologies that can provide firm power capacity.
d. Feed in tariffs for electricity from renewable energy sources that cover the cost difference to present market prices are very effective, as they foster energy diversification and reduce the risk surcharges on private investments. If tariff additions are gradually reduced to zero, they can be considered a public investment rather than a subsidy.
e. An EUMENA free trade zone for renewables should be established in the medium term, political work in this direction should start immediately.
f. The planning and evaluation of EUMENA electricity highways based on HVDC technology to increase the redundancy of power supply should start immediately.
g. As a general principle, the subsidisation of energy technologies should be limited to a reasonable time span and should in all cases be subsequently reduced to zero.
h. Present electricity pricing is not sustainable. With the growing, over-due need for new investments in the power sector, market prices will increasingly reflect full and not only marginal costs.
i. European support for MENA for the market introduction of renewables can attenuate the growing pressure on fossil fuel resources that would otherwise origin from the economic growth of this region, thus helping indirectly to secure fossil fuel supply in Europe.