ESMIG: Europe’s energy sector needs fair competition

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A level playing field is needed for fair competition for EU and non-EU technology providers to Europe’s energy sector, ESMIG has indicated.

In a recent position paper, the smart energy solution provider organisation has pointed to increasingly unfair competition that European companies are facing from third country producers in the EU market.

In particular, the issue has arisen over subsidies from the foreign governments, which has enabled the companies to deliver products or services into the region at a much lower cost than their EU counterparts.

For example, in the context of procurements for national smart meter rollouts, bids below market price or even below the hardware cost, most likely as a result of subsidy, have enabled non-EU companies to secure contracts that they would not have obtained otherwise.

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Commenting on the issue with Smart Energy International, Tomás Llobet, Managing Director of ESMIG, said that offering products below cost can be a legitimate commercial strategy but not when it is done on the back of subsidies well in excess of those permitted by EU State Aid rules.

While there is suspicion that such strategies are taking place, there is, however, no evidence for them.

The smart energy sector is not the only one to have competition concerns. The ‘Made in China 2025’ strategy is known to be targeting a number of key industries including energy. Others more public in the EU have included aviation with for example fingers pointed to the heavily subsidised Gulf region airlines and the railways. However, in terms of scale it is much smaller than these.

Nevertheless, from ESMIG’s perspective, it is no less significant as it concerns mission-critical infrastructure and comes with data and privacy requirements that are at risk from practices that may be opaque and unregulated.

ESMIG’s position outlined in the paper is that the European Commission should introduce mechanisms whereby bidders would have to notify the contracting authority of financial contributions received from non-EU countries.

In addition, there is an urgent need for legislation and reinforcement of high-level standards on corporate social responsibility, environmental requirements, and buyer accountability. This is in addition to that to safeguard the infrastructure and data requirements.

New action from the European Commission, such as the draft Regulation on Foreign Subsidies published in May, has gone some way to meeting ESMIG’s position, with the proposal of a set of three new tools, although prior notification of foreign financial contributions is set only for higher-value procurements of €250 million ($297 million) and upwards.

However, the Commission has proposed with one of the tools to start on its own initiative a procedure and request ad hoc notifications when it suspects that a foreign subsidy may be involved in a procurement below the threshold.

“These are positive developments, but we feel they don’t go far enough for our sector due to the smaller size of procurements and its strategic importance,” Llobet says.

“We believe these foreign subsidy practices are not fair and that they distort competition, impact innovation and undermine the principles the single market is built on.”