Coal power receives the same subsides as onshore wind in Europe

Interim report looks at levelised costs and subsidies for power generation

Figures published by the European Commission (EC) have shed light on the size and effect of government interventions in the European energy sector for different energy technologies, as well as investigating their levelised and external costs. One of the most striking revelations from the data is that the most carbon intensive form of generating electricity – coal – received a total of €10bn in subsidies in 2012, the same amount as onshore wind.

Consultancy Ecofys carried out the study for the EC to quantity the extent of public interventions in energy markets in the EU’s 28 Member States. The interim report was commissioned to help facilitate progress toward an integrated European electricity market.

The dataset shows that in 2012 the total value of public interventions in energy (excluding transport) in the EU28 was between €120bn and €140bn. As a collective group of technologies, unsurprisingly the largest amount of this subsidy went to renewables. Solar power received €15bn, onshore wind €10bn, biomass €8bn and hydropower €5bn.

However, a significant amount also went to conventional power generation technologies. Of these, coal received the most – €10bn, followed by nuclear (€7bn) and natural gas (€5bn).

The data also do not include the support across technologies from the free allocation of emission certificates, or tax support for energy consumption. Including these factors would reduce the gap between support for renewables and other power generation technologies, says Ecofys. The study then discusses the order of magnitude of historical interventions for different technologies, which are considerable for coal and nuclear.

Coal, despite receiving the largest fossil fuel subsidy, is also the cheapest generation technology with a levelised cost of €75 per MWh. The levelised cost of onshore wind was only slightly higher, at €80/MWh. The cost of power from nuclear and natural gas are comparable at around €100/MWh. Solar power costs have fallen considerably since 2008 to around €100–115/MWh, says the report.

The interim report also presents estimates on external costs across power generation technologies, a figure estimated at somewhere between €150bn and €310bn in 2012, mainly resulting from fossil fuel generation.

In the context of the report, critics have argued that the EC’s decision that the UK’s Hinkley Point C nuclear power project subsidy agreement does not breach state aid rules is a setback for an internal European electricity market; and that it will hinder progressive discussions around fair energy prices.

A significant amount [of subsidy] also went to conventional power generation technologies. Of these, coal received the most – €10bn, followed by nuclear (€7bn) and natural gas (€5bn).