November 28, 2017
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BRUSSELS INSIDER #1 by Clare Taylor
Who is afraid of energy communities and prosumers? EU Member States, that’s who
November 28, 2017
For the first time in the history of European energy legislation, the rights of energy cooperatives and “prosumers” are recognized, in the European Commission’s Clean Energy for All proposals. The potential for a transformation is huge: half of European households could produce their own energy. Most EU’s Member States, however, don’t like to see their markets upset. “We have been shocked to see how many attack these proposals”, says one NGO. Even countries like Denmark and Germany have been “unconstructive”. There is one exception: Greece.
Speaking earlier this year at the European Parliament’s Committee on Industry, Research and Energy (ITRE) on the Clean Energy Package and the 2nd State of the Energy Union Report, Maroš Šefčovič, Vice-President of the European Commission, in charge of Energy Union, said: “We are ensuring the right of every individual to produce renewable energy, self-consume, store and/or sell it into the grid and earn fair revenue from this; we are boosting energy cooperatives. In an unprecedented way, we are empowering energy consumers. We encourage citizens, communities, and prosumers to take advantage of their new power.”
That may be true – as far as the European Commission and the European Parliament is concerned. The Member States, represented in the European Council, are much less enthusiastic about having to change their existing structures.
Under the proposals, Member States must ensure that individuals, or groups of citizens, are entitled to generate, consume, store and sell renewable energy, without being subject to disproportionate procedures and non-cost-reflective charges. The proposals also introduce specific rules for renewable energy communities, which are defined as small, medium, cooperative or not-for-profit organisations of which the shareholders or members co-own the generation, distribution, storage or supply of energy from renewable sources.
Currently there are about 3000 renewable energy cooperatives operating in Europe, mostly west and northern Member States. Around half of these, from twelve Member States, are represented at the European level in REScoop.eu, the European federation of renewable energy cooperatives. They have jointly invested €2 billion in renewables production, with production capacity of about 1,250 MW, and 1,100 employees.
In 2013, 5% of European households were producing renewable energy, according to a European Commission survey. Although there is limited data on the current number of individual ‘prosumers’ (people who both produce and consume electricity), there is a lot of potential, according to a 2016 report from environmental consultancy CE Delft. It estimates that about half of European households (113 million) could produce energy. Even more could provide demand flexibility with their electric vehicles, smart e-boilers or stationary batteries.
There are other signs too of market appetite. For example, “76% of French citizens want to generate and consume their own energy,” Virginie Schwarz, director for energy at France’s ecological transition ministry, said recently.
“Many European citizens are willing to produce and consume their own electricity”, confirms Mercè Almuni, Renewable Energy Project Officer at BEUC, a European-level association of consumer rights organisations, in an interview with Energy Post. “They are interested in protecting themselves from changing, and often soaring, prices in the market.”
But, Almuni adds, “the current energy landscape is not adapted to prosumers. Fair market access for consumers who produce renewable electricity is urgently needed.”
Defining energy citizens
In what could be regarded as a new low for Eurobabble, the Commission’s legislation proposes the term “renewable self-consumers” for those producing and consuming electricity. Almuni says: “It might sound banal to dwell on such definitions, but it will help establish who is covered by certain rights. We would like to see more distinctions between the residential consumers that install small generation in their households from the larger industrial consumers – very different groups that require different policies.”
The necessity of getting the definitions right was highlighted in the recent results from the German onshore wind tenders, where bidders created community projects in order to participate in the auctions, even though they would not necessarily qualify as renewable energy cooperatives.
In an interview with Energy Post, Josh Roberts, advocacy officer at REScoop.eu, explains: “Germany’s experience shows just how important it is to have robust EU criteria for ‘renewable energy communities’ in the Renewable Energy Directive, that clearly distinguish them from traditional energy companies. Renewable energy cooperatives are small, consumer-owned, democratically governed businesses that operate based on the seven International Cooperative Alliance Principles. They see that the energy transition has more to offer than profits – it can and should contribute to local social, economic and environmental community needs.”
Despite these worthy goals, energy incumbents are not so keen on making special provisions for renewable energy communities. Industry association Eurelectric’s proposed amendments to the Commission’s proposals state that “support schemes should ensure a level playing between market players independent of their size, ownership structure or legal form.” Eurelectric, along with the Council of European Energy Regulators (CEER), also seeks to ban virtual net metering, a billing mechanism (currently operating in Greece as well as in more than a dozen US states) that allows users to credit kilowatt-hours from one meter to another.
Dragging their heels
This kind of resistance may perhaps be expected, but there is more: EU Member States also seem to be less than enthusiastic about letting their citizens get more involved in the energy market – unlike the European Parliament. Commenting on the progress of the negotiations over the Clean Energy Package, due to be voted on by the key ITRE committee on 28 November, Roberts says: “We’re cautiously optimistic that [the ITRE Committee] will come out with a good text. But the real battle lies ahead in Council, particularly drastic limitations that would place energy communities at a competitive disadvantage and prohibit prosumers from using the grid. The discussion in Council has centred on costs, and on the biased assumption that prosumers add cost to the grid, ignoring the fact that they also provide value to the grid, society and environment.”
System costs include grid access and investments, and support schemes to ensure that renewable self-consumers receive a fair market price for feed-ins.
Along with Spain, Ireland is dragging its heels on enabling prosumers, and, “surprisingly, Denmark and Germany have been some of the most unconstructive voices in the debate,” says Tara Connolly, energy policy advisor for Greenpeace EU, in an interview with Energy Post.
As an example, she cites the most recent submission from Germany on the proposals, which seeks that “member states retain the right to exclude the use of public grids from self-consumption,” despite the fact that grid fees already make up around a quarter of a German household’s electricity bill.
On the question of cost, Connolly says: “Yes, prosumers and renewable energy cooperatives will mean that electricity is being used in a different way that may require grid investment – but they can also bring significant system cost reductions in terms of reduced investment in transmission lines (as power is used locally), reduced losses of electricity in transmission lines, reduced need to build peaking plants, and others”, pointing to an overview of sixteen US studies that testifies to the system benefits of distributed solar PV.
“If the networks (both prosumers and network operators) don’t invest in smart technologies, like ICT and smart meters, or have the right price signals from the market, it will cause problems for the system in the future,” says Roberts. “Frequently, the ‘cost-shift’ issue is raised, meaning the more money that self-consumers save, for example on grid charges, the larger the bill that all other consumers have to pick up. The problem is, we’ve seen no actual data from anyone that proves this is really happening.”
Of all the Member States, Greece has been the most vocal supporter of energy communities and self-consumers. Says Roberts: “They’ve just about finalised their own national legislation on energy communities and virtual net metering and they want to make sure this is not threatened by EU legislation. Member States like Finland, Sweden, and Denmark are fairly accepting of the text we have now. By and large, however, there are no other Member States I would really call strong supporters.”
Molly Walsh, Climate Justice and Energy Campaigner at environmental NGO Friends of the Earth Europe, is closely following the negotiations at Council level. In an interview with Energy Post, she says: “We have been shocked to see so many Member States attacking these provisions and riddling them full of loopholes. National governments are stepping away from serving the interests of their own citizens. This is about creating a framework that allows citizens and communities to benefit from the energy transition.”
The final rules of the game, as well as local energy prices, will greatly influence the popularity of energy citizenship, and with it, the degree of buy-in at local level for Europe’s clean energy transition. If policy makers succeed in establishing citizens’ rights to operate as prosumers, consumption and production models throughout Europe will change — and so, gradually, will the average person’s attitude, and commitment to clean energy, observes expect.
“We know that citizens want to be an active part of the energy transition, contributing to curb climate change and the environmental impacts from traditional energy generation”, says Almuni of BEUC. “The energy transition can only go so far with a top-down approach. We hope that Parliament is willing to put consumers at the centre of the transition – and that the Council will follow suit.”