Strengthening of regional cooperation – new measures for European energy policy

The European Commission has presented its “Clean energy for all Europeans” package. The proposals seek to chart the course of the European energy transition to the horizon of 2030 and beyond. The Commission addresses current weaknesses in energy systems with a view to identifying opportunities for more cost efficiency in climate protection. BDI will set out its position on this legislative package.

Energy efficiency is the first prerequisite

In its “clean energy” package, the European Commission sets out binding energy and climate objectives for the EU over the coming decade. In this regard, a Europe-wide increase in energy efficiency of 30 percent will have top priority. The share of renewable energies is set to rise to 27 percent in 2030. The Commission refrains from defining national targets in both cases. Rather, a governance system with national integrated energy and climate plans, national reporting obligations and regular verification by the European Commission will secure the contributions of the Member States to meeting objectives at European level. National governments are also expected to involve stakeholders as well as neighbouring countries when drawing up their energy and climate plans.

Make markets fit for the increase in variable energy

The European Commission is aiming for more market-oriented solutions for decarbonising electricity markets and wants to integrate renewable energies more strongly in the market. For example, it proposes the greatest possible elimination of the priority for feed-in electricity from renewable sources and highly efficient combined heat and power (CHP). Existing installations are excluded from this. All market participants will be expected to take responsibility when there are disruptions in the balance of supply of and demand for electricity (balancing responsibility). Wholesale markets are to be further developed in order to take better account of the requirements of the growing share of variable electricity. In addition, national support schemes should be progressively opened to suppliers of renewable electricity from other EU Member States; this will first relate to 10 percent of newly-supported capacity and 15 percent from 2026.

Limit state interventions to a minimum and involve end consumers

National capacity mechanisms may only be introduced on the basis of a Europe-wide resource adequacy assessment and also only when it is not possible to remedy the market disruption in any other way. EU countries should focus priority on removing remaining regulatory barriers, developing the necessary infrastructures and increasing flexibility in demand. State capacity mechanisms may not impede cross-border trade in electricity and must take cross-border suppliers into consideration in tender procedures. Only power stations which emit less than 550 g CO2/kWh can participate. The threshold value applies initially for new installations and will be extended to existing installations five years after the electricity market regulation enters into force.

Furthermore, end consumers are to be encouraged to exhibit more individual commitment in the area of energy efficiency and renewable energies, inter alia through dynamic electricity contracts, smart meters and the right to produce their own electricity and feed it into the grid.

First discussions in Council and Parliament

The first discussions at ministerial level started on February 2017 in the Energy Council. On this occasion, the European Commission underlined the key role of integrated national energy and climate plans as an instrument for implementing the 2030 objectives. Many Member States called for more flexibility for achieving the energy efficiency objectives and developing renewable energies. Criticism was expressed about the upper limit of 550g CO2/kWh for capacity mechanisms, above all from Poland.

The current Maltese EU Council Presidency wants to work intensively on the legislative proposals for energy efficiency and building efficiency in the first half of 2017, and to reach a common position in the Energy Council in June. Discussions on the other dossiers of the winter package are also expected to move forward under the Maltese. The European Parliament has set an ambitious tempo. The rapporteurs in the lead Industry, Research and Energy Committee (ITRE) have been selected. The first deliberations in ITRE were held at the end of February. The votes in ITRE have been pencilled in for September – November 2017; the votes in plenary have not yet been scheduled.

Positive incentives from Brussels

BDI is concerned that national interventions in energy markets have been increasing over many years. The measures proposed by the European Commission comprise valuable initiatives for dismantling state interventions and integrating renewable energies more strongly in the market.

In addition, BDI assesses positively the Commission’s initiative of calling for a higher degree of regional cooperation in the electricity sector. The 2030 targets can only be reached cost-efficiently if EU countries organise the security of their energy supply across borders and coordinate better with each other. The progressive opening of support schemes for renewable energies to cross-border suppliers offers a first step. However, consistent harmonisation of the development of renewable energies could deliver annual efficiency gains of up to 16 billion Euros according to a study by the European Parliament.