Renewable generated electricity, notably produced via hydro, wind, solar, biomass and photovoltaic sources, has been rapidly increasing within the European Union (EU) in recent years; 15-30% per year excluding large hydro since 1990. This trend is strongly expected to continue. It is clear in this respect that the increased use of renewable generated electricity will play an important part in the overall package of measures that each Member State and the EU as a whole will have to take in order to meet the climate change commitments accepted by the EU at Kyoto.
In order for renewable generated electricity to continue to develop, financial support schemes will play a vital role in the coming years. It appears likely that such electricity will continue, at least in the medium term, to cost more to produce than "traditional" sourced electricity.
In 1999, the European Commission adopted a Working Paper containing a detailed analysis and options regarding possible future European Union (EU) action with respect to the progressive creation of a competitive EU-wide internal market for electricity generated from renewable energy sources. The Working Paper suggests that there are two possible options for the creation of such a market. First in the medium term through the operation of the EU Treaty rules on the internal market and state aid rules, or second, pro-actively, in the short-term, through EU legislation, probably via a Directive.