13 October 2014: The European Commission has released a report that quantifies public interventions in energy markets. As the first study to provide data on energy costs and subsidies for all 28 EU member States and power generation technologies, the report seeks to enhance understanding on the functioning of energy markets and the size and effect of government interventions across the Union.

The study, commissioned by the European Commission’s Directorate-General for Energy (DG Energy), follows the publication of a communication from the Commission in November 2013 on ‘Delivering the Internal Electricity Market and Making the Most of Public Interventions,’ which provides guidance to the EU member States on: designing and reforming support schemes for renewables; ensuring adequate generation capacity; and enhancing the role of consumers in the market.

The report, titled ‘Subsidies and Costs of EU Energy: An Interim Report,’ presents: historical and current data on public interventions in all EU member States; monetary values for external costs on the environment from the energy system; and energy cost data covering capital and operational costs of electricity and heat technologies. Annexes to the report contain detailed information on: definitions of subsidies; interventions; external costs; costs; and a review of literature on subsidies in the EU.

On public interventions in energy, excluding transport, the free allocations of emission reduction certificates and tax support to consumption, the study calculates their total value in 2012 at €120-140 billion, with the largest amounts directed at solar energy (€14.7 billion), onshore wind (€10.1 billion) and coal (€10.1 billion). While the largest amounts of public support went to renewables, the study points out that: including emission allowances and consumption tax support would reduce the difference compared to support to other power generation technologies; and the scale of historical interventions directed at coal and nuclear energy is considerable.

The study calculates levelized costs for different technologies: €75/MWh for coal; “only somewhat higher costs” for onshore wind compared to coal; approximately €100/MWh for nuclear power and natural gas; and €100-115/MWh for solar energy. The report also estimates the total external costs of the EU’s energy mix in 2012, at €150-310 billion.

According to European Commission Vice-President for Energy Günther Oettinger, the study, together with an earlier report on drivers for energy prices, provides a dataset on energy-related subsidies and costs that is “more solid and comprehensive” than any previous one. He noted that the report, however, constitutes a first step, and called for more research, in particular on historical subsidies in the energy market in all EU member States and the EU.

With an eye on advancing the debate and improving the methodologies, analyses and data, the Commission invites energy sector experts, stakeholders, and representatives of the academia and member States to comment on the study’s results. [European Commission Press Release] [Publication: Subsidies and Costs of EU Energy: An Interim Report] [Subsidies and Costs of EU Energy – Annex 1-3] [Subsidies and Costs of EU Energy – Annex 4-5] [European Commission Communication on Delivering the Internal Electricity Market] [IISD RS Story on the European Commission Report on Energy Prices and Costs]