The European Union will scrap green energy subsidies in a bid to reduce electricity prices for consumers

EU to reduce green energy subsidies

The EU will phase out green energy subsidies due to concerns of market distortion.

The European Commission (EC), the EU’s executive body, has outlined a plan that will see the tariffs designed to help renewable energy producers to be gradually stopped and replaced with auctions or bidding processes open to all green energy generators competing equally for government funds.

The EC hopes the move will help reduce electricity prices as it believes the continuously falling renewable energy production costs don't justify the ongoing governmental intervention. The EC said the generous subsidies for renewable energy generation "caused serious market distortions and increasing costs to consumers" over the past years.

According to the new guidelines, owners of existing small-scale renewable installations - such as solar panels on roofs - will be exempt from the curbs.

The rules, coming into force on 1 July this year, will also allow exemptions for particularly energy intensive manufacturers to keep them internationally competitive.

Starting in 2017 all EU member states will have to hold tenders to support new green power facilities following a pilot phase from 2015-16.

The European Wind Energy Association said it is appropriate for the increasingly competitive wind industry be integrated into the market, but suggested the EC should eliminate all fossil fuel subsidies as a priority.

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