Renewable energy sector: a study on excessive subsidies ‘ignoring reality’

Energy Minister Saturn Demir (N-VA) wants to tackle excessive subsidies for large solar collectors in order to save €1.2 billion in green energy certifications. A study commissioned by the Flemish Energy and Climate Agency had to show that there are good reasons for this, because current subsidies lead to returns of up to 59 per cent.

But according to ODE, the sustainable energy organization in Flanders, the study by Oxera’s office is nothing like it. “This study ignores Flemish reality and starts from a number of assumptions, which means that the study’s outcome, and in particular the demonstration of excessive support, is predetermined,” says van Everkoren. Moreover, the study is based on purely theoretical models, in which no market survey was conducted. There was absolutely no consultation with the sector.

In the study, for example, local self-sufficiency was estimated at 100 percent, whereas this never occurs. The calculated price of electricity is three times higher than the real price. According to the ODE, this alone means an overestimation of the project’s total income by 33.5 percent.

In addition, it was not taken into account that half of the targeted installations were on rented roofs, where electricity is usually sold at a low fixed price for twenty years. ODE expects such combinations to have trouble repaying their loans and go bankrupt within six months through third party financing.

Demir’s plans may be presented to the Flemish government on Friday. According to the ODE, the legal basis is also flawed. The stricter rules of state aid for solar gardens only apply to new gardens, not to existing ones.