Clean Energy Package stimulates market integration and cost-efficient renewables – lacks consistency on market design and consumer empowerment

30 November 2016

EURELECTRIC welcomes the release of the long-awaited Clean Energy Package which aims at better engaging consumers in the energy transition through a raft of new legislative proposals and initiatives covering retail and wholesale market functioning, European Union governance, renewable energy and energy efficiency.

The publications clearly underpin market integration and the removal of some regulatory interventions which distort the functioning of the market. “Market designs are not carved in stone and they are bound to evolve, but it is crucial that energy, flexibility and capacity are adequately valued to ensure cost-efficiency and security of supply,” said Hans ten Berge, EURELECTRIC Secretary General. “EURELECTRIC therefore supports the ambition to provide overarching legal coverage to further integrate all wholesale market timeframes through the electricity regulation, as well as proposals to ensure that energy prices truly reflect scarcity situations,” he said. In this context, EURELECTRIC also welcomes the Commission’s proposals to move towards a regional approach to system operation, renewables and security of supply.

We believe that consistency should be ensured across the national, regional and European security of supply analysis to inform Member States’ decisions in this regard. EURELECTRIC supports the Commission’s ambition to define EU design principles for capacity mechanisms which should be market-based, technology neutral and open to cross-border participation. While dedicated legislation and tools are there to ensure the achievement of climate and environmental targets, well-designed capacity mechanisms’ should not include additional criteria unrelated to the objective of achieving security of supply in a cost-efficient way.

EURELECTRIC supports the Commission’s proposal for all market participants to be responsible for their imbalances as well as the removal of priority of dispatch for all technologies, and relevant exemptions should be considered carefully. We also applaud the common principles for the design of support schemes that will encourage Member States to further develop RES across borders.

The proposed Regulation on Governance of the Energy Union has the potential to help national policies and measures converge closer and quicker around the adopted 2030 Climate and Energy targets and the shared Energy Union vision. However, the regional approach will only deliver if Member States implement their planning and cooperation obligations.

The Package features key legislative proposals to improve consumers’ active participation through the end of regulated prices, transparent price comparison tools and easy switching processes. EURELECTRIC nevertheless regrets that the key issues of policy support costs weighing on consumers’ electricity bills and evolving pricing structures are not tackled. EURELECTRIC supports the development of competitive retail markets in the best interest of EU electricity consumers. To achieve this, a more flexible regulatory framework is needed to ensure that dynamic pricing and billing requirements truly empower European consumers and provisions on demand response aggregation should not hamper the level playing field.

We welcome the acknowledgement of the new prominence of distribution operators (DSOs) in the energy transition and the importance of modernised remuneration schemes to incentivise innovation and to encourage more active management of the grids. The challenges posed by the energy transition demands an integrated approach across the entire value-chain.

“We would like to see the development of more integrated solutions including strong collaboration with retailers, DSOs and generators, while always respecting the relevant unbundling requirements,” said Hans ten Berge. EURELECTRIC believes that together with the other well-established associations representing DSOs in Brussels, we can continue to lead on this matter and provide integrated solutions.

On energy efficiency, EURELECTRIC calls for a comprehensive assessment of the impact that the proposed energy efficiency target will have on the EU ETS. In this context we reiterate our preference for an ambitious but cost-efficient indicative target for 2030, the achievement of which will largely depend on maintaining sufficient flexibility for Member States to address their individual challenges in energy efficiency. We also think that the EU’s energy efficiency ambition for 2030 must fully recognise and take into consideration the numerous environmental benefits that the electrification of key sectors such as transport, heating and cooling will bring in parallel with the decarbonisation of the power sector.

“A successful coupling of the power and heat sector in the context of electricity’s decarbonisation pathway cannot be achieved without removing obstacles such as the outdated Primary Energy Factor in both the Energy Efficiency Directive and the Energy Performance of Buildings Directive. In this respect, we welcome the review of the Primary Energy Factor as this policy instrument has major influence on whether Europe’s future fuel choice will be fossil fuel based or carbon-neutral.” concluded Hans ten Berge.

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