Wind energy - The facts. Vol. 5: Market development

Wind energy is becoming increasingly competitive with conventional sources. However, it is likely that some form of incentive will be required for the foreseeable future, at least until environmental costs are fully internalised or increased economies of scale and technological development makes wind power fully competitive with conventional sources, such as coal and gas, without the need to consider externalities. 'There are currently five main systems to support electricity from renewable energy sources in the EU member states: investment subsidies, fixed price systems, fixed premium systems, auctions, and certificates systems. The idea behind the mechanisms is to offset at least some of the competitive disadvantage for renewable as a consequence of electricity markets neglecting the environmental cost of production from conventional technologies. Low electricity prices are of little benefit if they lead to high costs to society as a whole through higher health care costs and environmental costs levied on current and future taxpayers and citizens. If the environmental costs of power production were reflected in European power prices, wind power and many other renewable energy technologies would not need support, as pointed out in the European Commission's Green Paper on Security of Supply. (au)