The “active participation” of citizens and local communities in the supply and demand of electricity will be “the leitmotiv” of new energy proposals the European Commission is preparing for the end of the year, according to a senior EU official who ruled out harmonisation of national support schemes for renewables at this stage.
As the European Commission prepares a much-awaited update of its renewable energy directive, officials are gradually providing clues as to what shape the future EU regime will take.
Marie Donnelly, one of the most senior officials at the Commission’s energy directorate, said the new directive won’t include a harmonisation of national support schemes for renewables, adding that further “regionalisation” of energy markets will be pursued instead.
“In a single energy market you could envisage a single support mechanism but I don’t think we’re at this stage yet,” Donnelly told industry delegates at a breakfast event in the European Parliament last Thursday (29 September).
Energy companies have universally condemned retroactive cuts to national support schemes for renewables, such as those imposed by Spain in 2010 following the bursting of the solar bubble. French President François Hollande even called for some kind of “harmonisation” at European level in order to prevent countries from changing the rules along the way.
But the differences between national markets “remain very significant,” Donnelly explained, adding that coming up with “a single support scheme for renewables in such a context would be very complex.”
“So the Commission is pursuing regionalisation as a milestone to achieving a single energy market,” she told the Parliament event, which was supported by Fortum, a Finnish energy company.
The renewables industry has long opposed harmonisation of national subsidy schemes, arguing European markets are too fragmented to allow it. The Commission has followed the same line although it noted in a January 2011 communication that harmonisation could be envisaged in the longer term.
Power to the people
On the other hand, Donnelly did reveal that the executive’s upcoming energy market design initiative, also expected in December or January, will include measures to encourage citizens to produce, store and sell their own electricity.
“One of the things we are very keen on is to support individuals – consumers, communities – to be active participants in the energy system. And that’s a leitmotiv that you will see coming through in all of our proposals,” Donnelly said.
Pressed to elaborate on whether this meant priority grid access for renewable energies generated by small producers, she repeated: “That’s a leitmotiv that you will see coming through in all of our proposals”.
Citizen’s participation in energy supply and demand has become a central issue in the quest for a decentralised, low-carbon energy system based on renewables.
In a public consultation for its Market Design Initiative earlier this year, the Commission said “consumers need to be able to act as buyers and sellers” and called on citizens to “leverage their great bargaining power” through collective schemes such as energy co-operatives.
A recent study by Dutch consultancy CE Delft found that half of EU citizens could produce their own renewable electricity and meet 45% of the EU’s energy demand by 2050, provided the right regulatory framework is put in place.
This includes individual households placing solar panels on their rooftops, but also local communities, schools and hospitals producing their own energy, storing the surplus and selling it back to the grid at a guaranteed price.
A key means of supporting the development of renewables is to make better use of public tenders for renewable energy projects, Donnelly said.
“One of the fundamentals of the Single Market is that public procurement is based on tendering because this is what delivers the best value for the taxpayer,” Donnelly said.
But public tendering is currently not used to its full potential, said Claude Turmes, a veteran Green MEP from Luxembourg who was speaking at the Parliament event.
Today, local authorities are obliged to open public tenders even for relatively small renewable energy projects, where large energy companies are able to make the cheapest offers. That tends to exclude small local energy co-operatives, which tend to be more expensive but enjoy greater support from the local population because they are owned by citizens.
“We are moving towards tendering, which is good for investors,” Turmes said. “But if we only do tendering without having citizen participation, then we might lose the onshore wind potential because there will be no buy-in from the citizens” on such projects, which are often met with resistance by the local population, he said.
In a recent case, French energy giant EDF launched legal action against two municipalities in the German-speaking part of Belgium where local energy cooperatives were awarded a contract to install four new wind turbines – despite EDF having made a cheaper offer.
For Turmes, municipalities shouldn’t be obliged to issue a public tendering process for such small renewable energy projects. “Because for example a citizen who wants to install PV on his rooftop cannot compete with EDF to win a public procurement!” said Turmes, calling for a revision of “de minimis” exemptions for public tenders.
Even though energy co-operatives may be more expensive, supporters say that in the long run, they bring back eight times more revenue to the region than when they are owned by a big utility.
Tendering for ‘flexibility services’?
Turmes also called for public tendering obligations to be opened up to other types of energy services, not just when local authorities decide to build new energy generation capacity.
“What we do today is tendering for renewables. But there is a second tendering that we don’t do, which is tendering for the ancillary services of TSOs,” Turmes said, referring to so-called “flexibility services” provided by Transmission System Operators, which include demand-side management of electricity.
At this stage, the participation of demand-side management in balancing services contracted by TSOs is not allowed in many markets, explained Jérémie Zeitoun, an energy policy advisor to Claude Turmes. Demand-side management is also penalised by the fact that operators need to have prior authorisation from electricity providers before they can flexibilise the demand of “their” customers, he explained.
“We need a market for flexibility services,” said Turmes, explaining that this market is expected to boom in the coming years, as wind, solar, battery storage, power-to-gas and other demand-side services grow in popularity.
“But the problem is that the TSOs don’t want this. That’s one of the issues that nobody discusses in Brussels. Who is now the biggest lobby in Brussels? – It’s ENTSO-E,” he said, remarking that the European TSO organisation has “three times more lobbyists than Eurelectric”, the trade association representing energy producers.
“What we need to do is impose market-based flexibility services on TSOs,” Turmes stressed.