Europe: The future of energy is RED!

On November 16th, the European Union has approved the new energy package started with the Commission Communication CLEAN ENERGY FOR ALL EUROPEANS ( issued ony two years before (30th of November 2016). aimed at providing the necessary stable legislative framework – and thereby taking a significant step towards the creation of the Energy Union and delivering on the EU’s Paris Agreement commitments.

The new policy framework brings regulatory certainty, in particular through the introduction of the first national energy and climate plans, and will encourage essential investments to take place in this important sector. It empowers European consumers to become fully active players in the energy transition and fixes two new targets for the EU for 2030: a binding renewable energy target of at least 32% and an energy efficiency target of at least 32.5% – with a possible upward revision in 2023. These ambitious targets will stimulate Europe’s industrial competitiveness, boost growth and jobs, reduce energy bills, help tackle energy poverty and improve air quality.

When these policies are fully implemented, they will lead to steeper emission reductions for the whole EU than anticipated – some 45% by 2030 relative to 1990 (compared to the existing target of a 40% reduction).

To strive towards a long-term greenhouse gas reduction objective, the framework also sets up a robust governance system for the Energy Union and outlines specific measures for the building sector – the largest single energy consumer in Europe with considerable potential for gains in energy performance.

These new targets also played an important part in the Commission’s preparations for its long-term vision for a climate neutral Europe by 2050, published on 28 November 2018.

The package includes 8 different legislative proposals (each with a linked impact assessment), with political agreement having been reached on five of the eight files, as shown below (as of December 2018):

The package also include three communications and a report

These proposals build on existing EU policies and funding opportunities, such as research, development and innovation projects under the Horizon 2020 Programme, and ongoing EU-financed investment programmes, for example  the Connecting Europe Facility, the European Energy Programme for Recovery and other European Structural Investment Funds (ESIF), as well as funding through the European Fund for Strategic Investments (EFSI), where there are more projects related to energy than any other sector.

Among the Directives, by now the first four of the previous list of eight proposals have been approved, including the Directive for the promotion of the use of energy from renewable sources, (in Brussels shortened in Renewable Energy Directive, acronimous: RED)

It is not an exaggeration to say that this ground breaking directive is a real revolution because it gives official legal recognition and aknowledgement to the “prosumer” and to the “energy Communities” as portraid in his visionary work of 2011 by professor Livio de Santoli. Here following one can  read articles 21 and 22, that we reproduce here below:

Article 21

Renewables self-consumers

1.  Member States shall ensure that consumers are entitled to become renewables self-consumers, subject to this Article.

2.  Member States shall ensure that renewables self-consumers, individually or through aggregators ?, are entitled ?:

(a)  to generate renewable energy, including for their own consumption, store and sell their excess production of renewable electricity , including through renewables power purchase agreements, ?electricity suppliers and peer-to-peer trading arrangements, without being subject ?:

(i)  in relation to the electricity that they consume from or feed into the grid, to discriminatory or disproportionate procedures and charges, and to network charges that are not cost-reflective;

(ii)  in relation to their self-generated electricity from renewable sources remaining within their premises, to discriminatory or disproportionate procedures, and to any charges or fees;

(b)  to installing and operating electricity storage systems combined with installations generating renewable electricity for self-consumption without liability for any double charge, including network charges, for stored electricity remaining within their premises;

(c)  to maintaining their rights and obligations as final consumers;

(d)  to receiving remuneration, including, where applicable, through support schemes, for the self-generated renewable electricity that they feed into the grid, which reflects the market value of that electricity and which may take into account its long-term value to the grid, the environment and society .

3.  Member States may apply non-discriminatory and proportionate charges and fees to renewables self-consumers, in relation to their self-generated renewable electricity remaining within their premises in one or more of the following cases:

(a)  if the self-generated renewable electricity is effectively supported via support schemes, only to the extent that the economic viability of the project and the incentive effect of such support are not undermined;

(b)  from 1 December 2026, if the overall share of self-consumption installations exceeds 8 % of the total installed electricity capacity of a Member State, and if it is demonstrated, by means of a cost-benefit analysis performed by the national regulatory authority of that Member State, which is conducted by way of an open, transparent and participatory process, that the provision laid down in point (a)(ii) of paragraph 2 either results in a significant disproportionate burden on the long-term financial sustainability of the electric system, or creates an incentive exceeding what is objectively needed to achieve cost-effective deployment of renewable energy, and that such burden or incentive cannot be minimised by taking other reasonable actions; or

(c)  if the self-generated renewable electricity is produced in installations with a total installed electrical capacity of more than 30 kW.

4.  Member States shall ensure that renewables self-consumers located in the same building, including multi-apartment blocks, are entitled to engage jointly in activities referred to in paragraph 2 and that they are permitted to arrange sharing of renewable energy that is produced on their site or sites between themselves, without prejudice to the network charges and other relevant charges, fees, levies and taxes applicable to each renewables self-consumer. Member States may differentiate between individual renewables self-consumers and jointly acting renewables self-consumers. Any such differentiation shall be proportionate and duly justified .

5.  The renewables self-consumer’s installation may be owned by a third party or managed by a third party for installation, operation, including metering, and maintenance provided that the third party remains subject to the renewables self-consumer’s instructions. The third party itself shall not be considered to be a renewables self-consumer.

6.  Member States shall put in place an enabling framework to promote and facilitate the development of renewables self-consumption based on an assessment of the existing unjustified barriers to, and of the potential of, renewables self-consumption in their territories and energy networks. That enabling framework shall, inter alia:

(a)  address accessibility of renewables self-consumption to all final customers, including those in low-income or vulnerable households;

(b)  address unjustified barriers to the financing of projects in the market and measures to facilitate access to finance;

(c)  address other unjustified regulatory barriers to renewables self-consumption, including for tenants;

(d)  address incentives to building owners to create opportunities for renewables self-consumption, including for tenants;

(e)  grant renewables self-consumers, for self-generated renewable electricity that they feed into the grid, non-discriminatory access to relevant existing support schemes as well as to all electricity market segments;

(f)  ensure that renewables self-consumers contribute in an adequate and balanced way to the overall cost sharing of the system when electricity is fed into the grid.

Member States shall include a summary of the policies and measures under the enabling framework and an assessment of their implementation respectively in their integrated national energy and climate plans and progress reports, pursuant to Regulation (EU) 2018/… (36) .

7.  This Article shall apply without prejudice to Articles 107 and 108 TFEU.

Article 22

Renewable energy communities

1.  Member States shall ensure that final customers, in particular household customers, are entitled to participate in a renewable energy community while maintaining their rights or obligations as final customers, and without being subject to unjustified or discriminatory conditions or procedures that would prevent their participation in a renewable energy community, provided that for private undertakings, their participation does not constitute their primary commercial or professional activity .

2.  Member States shall ensure that renewable energy communities are entitled to:

(a)  produce, consume, store and sell renewable energy, including through renewables power purchase agreements;

(b)  share, within the renewable energy community, renewable energy that is produced by the production units owned by that renewable energy community, subject to the other requirements laid down in this Article and to maintaining the rights and obligations of the renewable energy community members as customers;

(c)  access all suitable energy markets both directly or through aggregation in a non-discriminatory manner.

3.  Member States shall carry out an assessment of the existing barriers and potential of development of renewable energy communities in their territories.

4.  Member States shall provide an enabling framework to promote and facilitate the development of renewable energy communities. That framework shall ensure, inter alia, that:

(a)  unjustified regulatory and administrative barriers to renewable energy communities are removed;

(b)  renewable energy communities that supply energy or provide aggregation or other commercial energy services are subject to the provisions relevant for such activities;

(c)  the relevant distribution system operator cooperates with renewable energy communities to facilitate energy transfers within renewable energy communities;

(d)  renewable energy communities are subject to fair, proportionate and transparent procedures, including registration and licensing procedures, and cost-reflective network charges, as well as relevant charges, levies and taxes, ensuring that they contribute, in an adequate, fair and balanced way, to the overall cost sharing of the system in line with a transparent cost-benefit analysis of distributed energy sources developed by the national competent authorities;

(e)  renewable energy communities are not subject to discriminatory treatment with regard to their activities, rights and obligations as final customers, producers, suppliers, distribution system operators, or as other market participants;

(f)  the participation in the renewable energy communities is accessible to all consumers, including those in low-income or vulnerable households;

(g)  tools to facilitate access to finance and information are available;

(h)  regulatory and capacity-building support is provided to public authorities in enabling and setting up renewable energy communities, and in helping authorities to participate directly;

(i)  rules to secure the equal and non-discriminatory treatment of consumers that participate in the renewable energy community are in place.

5.  The main elements of the enabling framework referred to in paragraph 4, and of its implementation, shall be part of the updates of the Member States’ integrated national energy and climate plans and progress reports pursuant to Regulation (EU) 2018/… (37) .

6.  Member States may provide for renewable energy communities to be open to cross-border participation.

7.  Without prejudice to Articles 107 and 108 TFEU, Member States shall take into account ?specificities of renewable energy communities when designing support schemes in order to allow them to compete for support on an equal footing with other market participants.

This piece of European legislation takes way forward the most advanced ideas on energy production and distribution and starts a new process in the European democratic access to energy production and use, recognizing new figures that until just a couple of years ago were completely unknown to the European baggage of knowledge and terminology: prosumers (consumers and producers of energy) and energy communities.

The EU paints its energy policy  RED.

Red like the sun.

RED as the Renewable Energy Derective.