The European Union is navigating a crucial phase in its shift towards a more sustainable, low-carbon economy. The Net Zero Industry Act (NZIA), essential for reinforcing clean energy supply chains and ensuring an equitable transition, is under intense scrutiny. Potential exclusion of Chinese products from public tenders looms large.
Amidst this, WindEurope and the European Solar Manufacturing Council (ESMC) have directed two appeals to Members of the European Parliament. Their aim: to garner support for the text, previously approved by the Industry, Research, and Energy Committee (ITRE), now up for today's decisive vote.
According to the WindEurope Chief Policy Officer Pierre Tardieu, "the EU wants to deliver its Green Deal with wind made in Europe. The Parliament can agree tangible measures to do just that, by boosting the European wind supply chain. Indexing auction tariffs to reflect higher input costs, ensuring fair competition on the European market, and pushing back against ‘race to the bottom’ auctions will all help. This is the right course of action. It’s a matter of security, jobs and autonomy."
Moreover, according to the European Solar Manufacturing Council (ESMC), this endorsement could potentially generate 600 billion euros annually from zero-balance technologies worldwide by 2030.
ESMC highlights that 40 European PV manufacturers have directly appealed to Members of the European Parliament, strongly urging their endorsement of the text previously approved by the ITRE Committee ahead of the imminent Plenary voting.
According to the European PV industry, extending the sustainability and resilience contribution, coupled with considering the cost difference, remains pivotal. Additionally, upholding the pre-qualification criteria, which stipulates that no more than 50% of net-zero technology can be imported from third countries, is deemed indispensable and should not face compromise.
Expressing confidence in the Members of the European Parliament, their backing of these crucial aspects is paramount. Such support would notably bolster the competitiveness of European net-zero industries.
ITRE's big bet
The ITRE position includes important changes to wind energy auction design. It sets clear and mandatory prequalification criteria for auctions. This includes new rules for cybersecurity and data residency which will guarantee that Europe’s critical energy and grid infrastructure cannot be an easy target for cyberattacks.
The ITRE Committee also proposed an inflation indexation mechanism. Inadequate indexation is a big problem right now. Wind developers have had to cancel large offshore wind projects because of it. They had won an auction with a given price. But high inflation then made turbines and components much more expensive – putting the economic viability of wind energy projects at risk. Indexing wind energy auctions to reflect input costs will help bridge this financial gap and make sure projects can go ahead. Such indexation mechanism would apply for the time required to sign all supplier contracts.
The ITRE Committee further wants Member States to stop using negative bidding in their auctions. This is when wind farm developers have to pay the Governments for the right to build a wind farm. Some Governments have introduced negative bidding to their auctions as a way to make a quick buck. But negative bidding just makes the EU’s energy transition more expensive. It creates additional costs for developers which have to be passed on to the supply chain or the electricity consumers. And the money paid in negative bidding rounds is money companies cannot invest in other wind energy projects.
The Council now also needs to finalise its negotiating mandate on the Net Zero Industry Act. Trilogues, i.e. negotiations between the European Parliament and Member States with the support of the European Commission, on a final deal will take place in Q1 2024. In the final negotiations it will be critical that the adopted measures are fine-tuned, and that the supply chain resilience approach is technology specific and fit for purpose.