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Assessment of Potential and Promotion of New Generation of Renewable Technologies ____________________________________________________________________________________________ Table 20: CIP Financial Instrument Source: CIP Financial Instrument Brochure, European Commission 3.5. The additional role of the EU budget in promoting the spread of new technologies The budget on R&D is not the only EU budgetary instrument to promote the development and deployment of renewable energy technologies. The EU budget could be instrumental to create the right incentives and space for those technologies to spread. For renewable technologies to increase their share of energy supply in the European Union it is of central importance to complete the single market of energy, by ensuring cross border interconnectivity. In closed regions, without cross-border energy flows, energy sources compete for a reduced local market and fluctuations in energy from renewables require a high level of backup in power production capacity (see [Ummels 2009] on wind power). This limits the attractiveness of the deployment of large-scale renewable energy sources. This problem can be resolved largely by linking the EU regional power structures to high-voltage direct current (HVDC) lines, which allow long distance energy transportation with little loss. In this respect, the EU TEN-E funding and the Cohesion Fund can be of particular importance to finance those links which would not develop in the absence of support. Without EU intervention and some burden sharing, some member states do not have the incentives to participate in the development of interconnectivity, as the benefits are not spread equally among member states. The European Commission’s (DG Competition) enquiry into the energy market [European Commission 2008a] and many other energy sector studies48 have pinpointed the difficulties of creating a genuinely integrated energy market. The Cohesion policy could also play an important role. Especially in the new member states, the energy grid is out of date and requires upgrading. Through its cohesion and structural funds, the cohesion policy could promote the creation of low carbon zones and co-finance new interconnectors and smart grid systems with the involvement of national authorities and energy companies. It is important to take note of the potential synergies between the structural funds and the EIB funding mechanisms. There are investments which have successfully used a combination of grants by the EU and loans backed by the RSFF facility, e.g. CSP projects in Spain. 48 See for example, Attiyas and Núñéz Ferrer (2008), Durant (2006), Egenhofer and Gialoglou (2006), Jamasb and Pollitt (2005), CPB (2006) or the national reports of the PIQUE FP7 project (Pond, 2006). IP/A/ITRE/ST/2009-11 & 12 103 PE 440.278PDF Image | Policy Department Renewable Technologies
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