The countries of the European Union, which are among the most affected by the energy crisis, are facing difficult challenges.

Will renewable energy pay the price for the EU energy crisis?

Before the start of autumn, the tension and uncertainty in the European Union are growing. The war in Ukraine has no prospect of ending soon, and new war hotspots are opening in countries that also affect energy prices. The countries of the European Union, which are among the most affected by the energy crisis, are facing difficult challenges. The choice to overcome or bridge the lack of energy is small, so the options are making decisions that are surprising. Decisions that have never been made before. Although they aim to create better conditions to spend the winter and ensure energy solidarity, they are not exactly good news for everyone. The creators of such policies certainly have an argument for them, which is that these are not decisions that should be liked, but to enable equal access to energy in difficult times.

But the real business is paying and will pay the price of the war in Ukraine and the political moves related to it. The latest decision of the European Commission (EC), which among other things refers to renewable energy sources, will create a certain stagnation in the development of this sector. Namely, the Commission adopted measures to deal with the energy crisis, which limited the income of producers of renewable energy sources, nuclear energy, and other advanced technologies to 180 euros per MWh. The idea is for renewable energy producers to cover their costs with this revenue cap, without disrupting the investment cycle in new capacities.

Although producers of renewable energy sources will have limited profits, the analysis of the EC shows that it will still be possible to fulfill the energy and climate goals set for 2030 and 2050. Revenues above the cap will be collected by member state governments and used to help energy consumers reduce their bills. The system of determining the price per kilowatt hour will not undergo changes for the time being. But one thing is certain, with this measure of the Commission, the profits of investors and companies from renewable energy sources will go to the Governments of the EU member states.

There is no doubt that the energy crisis is dramatic, but definitely, such policies, which also mean direct intervention in the market, will create a partial stagnation in the development of the capacities for renewable energy sources. In addition to that, the challenging and increasingly expensive transportation of materials puts additional pressure on investments in renewable sources before the coming winter.

The European Union is not giving up on its green agenda, but the dramatic situation before the beginning of winter is shifting priorities. All sectors will pay the price. But the fact remains that it is not only risky but also short-term, creating a climate in which the industry of renewable energy sources will stagnate.

Renewable energy sources are the basis for energy independence and obtaining cheaper energy, which no one will just give up. Neither investors nor governments. Hence, these measures before the dramatic winter challenges will have short-term coverage. The creation of a good business climate and the encouragement of investments in renewable energy sources will continue. This is exactly why the Commission in its latest education encourages continued investments in renewable energy sources and energy efficiency according to the goals of REPowerEU.