Responses to fossil gas price volatility

The first ten months of 2021 have seen dramatic increases in energy prices in Europe and elsewhere. Experts now agree that the surging international demand for liquified natural gas and the rise in gas prices are driving electricity prices to seldom-seen heights. The fact that fossil gas accounts for 45% of household energy for heating is real reason for concern, with winter just around the corner.

Governments around Europe are scrambling to find ways to help families struggling to pay their energy bills this winter. The European Commission has now issued a toolbox of short-term recommendations to mitigate the effects of this crisis. RAP also offers guidance on this dynamic situation, with a focus on the current circumstances. Authors Bram Claeys, Michael Hogan and Dominic Scott explore near-term relief measures for Europe’s most vulnerable consumers as well as long-term solutions to ensure this crisis does not repeat.

Analysis of the root causes of the electricity price ‘roller coaster’ shows that the best and most durable solution to alleviate the social and economic impact of volatile fossil fuel prices is tackling the demand for fossil gas. Reducing Europe’s appetite for this fuel requires prioritising energy efficiency, ensuring a massive rollout of solar and wind, electrifying end uses currently served by natural gas, and limiting the use of hydrogen to green hydrogen solutions devoted strictly to hard-to-reach applications.

Ladeblockade Netzentgelte

Sowohl das Thema Elektromobilität als auch das Thema Ladeinfrastruktur haben im vergangenen Jahr unglaublich an Fahrt aufgenommen. Der Absatz von Elektrofahrzeugen hat in Deutschland Ende 2020 erstmals zweistellige Prozentanteile erreicht, die Marke von einer Million E-Autos kommt in Sichtweite. Dadurch rückt auch das Thema Ladeinfrastruktur noch stärker in den Fokus der politischen Debatte.

Wie bei keinem anderen Thema treffen hier aus Energie- und Verkehrssicht unterschiedliche  Perspektiven aufeinander. Der nun von der Bundesregierung vorgelegte Entwurf für ein Schnellladegesetz versucht, den gordischen Knoten bei der Ladeinfrastruktur zu zerschlagen und ein Rückgrat an Ladeinfrastruktur staatlich gesteuert aufbauen zu lassen.

Der Gesetzentwurf greift aber zu kurz: Wenn das Thema der beim Schnellladen zu zahlenden Netzentgelte nicht mitgelöst wird, dann entsteht gleich die nächste Hürde für den Aufbau der Elektromobilität. In diesem Diskussionspapier nehmen Agora Energiewende, Agora Verkehrswende und Regulatory Assistance Project diesen Aspekt in den Fokus und schlagen Lösungen vor.

Energetische Mindeststandards für eine sozial gerechte Wärmewende

In einem gemeinsamen Factsheet empfehlen Buildings Performance Institute Europe (BPIE) und Regulatory Assistance Project (RAP) die Einführung von Mindeststandards für Mietgebäude.

Allgemein ist ein Haushalt von Energiearmut betroffen, wenn es sich die Mitglieder nicht leisten können, die Wohnung ausreichend zu heizen. Die Kombination von niedrigem Einkommen, steigenden Energiepreisen und ineffizienten Wohngebäuden führt zu Energiearmut.

Dieses Hintergrundspapier ist die Zusammenfassung einer längeren Auswertung einschlägiger Literatur. Zwar lässt die Datenlage nicht das ganze Ausmaß der Energiearmut erkennen, die Befunde sind dennoch eindeutig: Es gibt Energiearmut in Deutschland, betroffen sind fast ausschließlich Mieter. Das bedeutet, dass ausgerechnet jene Gruppe am meisten von den Folgeproblemen der Energiearmut wie Atemwegserkrankungen oder erhöhte Schlaganfallgefährdung betroffen ist, die den kleinsten Hebel zum Handeln hat.

Mindeststandards für Mietshäuser können tiefgreifende Sanierungen auslösen. Werden sie flankiert mit Anforderungen an Innenraumparameter können sie ein wichtiges Instrument zur Bekämpfung von Energiearmut, zur Linderung von Gesundheitsbeeinträchtigungen und zum Erreichen der Klimaschutzziele im Gebäudesektor sein, ohne dabei zu Verdrängung der Mieter zu führen. Entsprechende Finanzierungsmodelle können eine Mieterhöhung verhindern, so dass Sanierungen tatsächlich sozialverträglich durchgeführt werden können. Eine Verbesserung der Datengrundlage ist wichtig, um die Mindeststandards zielgruppenspezifisch auszugestalten.

Eine Englische Version des Factsheets finden Sie hier.

Tamil Nadu Electricity Sector: The Subsidy Narrative (1989 – 2016)

For the past quarter-century, the electricity sector in the Indian state of Tamil Nadu has been defined by subsidies: free or reduced-price power granted to various groups of customers for both political and socioeconomic reasons. This paper, part of the Mapping Power series, explores the history of the subsidy narrative in Tamil Nadu, the reasons behind it, and the problems it has created for utilities’ financial viability and the reliable supply of power.

Political Economy of Electricity Distribution in Maharashtra

The Indian state of Maharashtra is the country’s second largest in terms of population and third largest in terms of geography. It is one of the most industrialized and urban states in India, but its economic development is marked by wide regional disparities. The story of electricity development in Maharashtra is one of a balancing act between industrial interests and the powerful farming class that has produced many of the state’s political leaders. This paper, part of the Mapping Power project, examines how the state in Maharashtra has historically played a mediating role between these conflicting interests. It discusses the impact that two key developments have had on the political management of electricity: the establishment of the Maharashtra Electricity Regulatory Commission (MERC) and the rise of civil society advocacy surrounding the sector. Finally, it looks at the emergence of new interests in the sector in the form of private power producers and the changing scenario in Mumbai, where private utilities dominate the sector.

Extractive States and Layered Conflict: The Case of Jharkhand’s Electricity Sector

Despite its considerable resource endowment, and a relatively “clean slate” during the formation of the state, Jharkhand has severely underdelivered on most aspects of its electricity mandate. It is hard to blame a beleaguered Jharkhand State Electricity Board exclusively for these problems; the weak relative bargaining power of the state vis-a-vis central actors—particularly Central Public Sector Undertakings, or PSUs—and the short-sightednesss of most politicians are just as much responsible for this underdelivery of public services. A large amount of the financial agency traditionally associated with control of the state has been taken away from the Jharkhand electricity sector because of these disputes. Ultimately, Jharkhand’s electricity system has still not been able to extricate itself from the multiple disputes both within and outside the state. Until this happens, it is hard to see the electricity system improving considerably.

Stalled Reform in a Politically Competitive State: Uttar Pradesh’s Electricity Distribution Sector

The electricity distribution sector in Uttar Pradesh has, since the late 1980s, faced the persistent problem of poor performance by its public electricity distribution companies (discoms), which are crippled by high levels of debt. Following years of discussion and at a time of fiscal crisis, in 1999, the government of Uttar Pradesh, supported by the World Bank, initiated a reform programme for the distribution sector. Multiple discoms were to be set up, which were to operate commercially and independently before being quickly privatised. Investment in infrastructure was planned, and the process of tariff-setting was to be depoliticised. While five new discoms were created, they have not since been privatised, and the state of the distribution sector has seen little improvement. A gap has opened between how the sector should operate on paper and how it operates in practice.

A number of factors help to explain the situation in Uttar Pradesh, and suggest that improvements in the financial performance of public discoms will be difficult in the coming years. First, in the context of competitive state politics, successive governments have pursued populist policies in regard to the electricity sector, and have been unwilling to see tariffs increase significantly for agricultural and domestic consumers, or to oversee a crack down on theft. While governments have at several times pushed for the privatisation of discoms as a solution to the sector’s problems, union opposition and practical challenges have stalled any plans. Second, the structural mix of domestic, agricultural, and industrial consumers served by public discoms has become increasingly unfavourable for any attempted financial turnaround. Over the last 30 years, large numbers of domestic and rural consumers have been connected to the electricity grid, from whom discoms collect little revenue. At the same time, industrial consumption, which provides the revenue that cross-subsidises domestic and agricultural customers, has flatlined at a low overall level.

Uttarakhand: The Golden Combination of Cheap Energy and a Large Industrial Base

Uttarakhand currently enjoys an energy sector where power cuts are limited, electricity tariffs are some of the lowest in India, full electrification is close to being achieved, and the state’s public power distribution company (discom) has low levels of debt and does not require government subsidies. This position has been achieved because Uttarakhand has a large base of cheap hydro power capacity, and rapid growth in industry over the last 16 years has delivered large, paying customers to the state’s public discom. Despite this relatively strong position, over the last 16 years aggregate technical and commercial losses at the state’s discom, whilst falling rapidly as a percentage of overall sales, have remained high in the state’s “plains” districts and among all consumer groups other than large industry. There are persistent, unresolved problems with deficient meters and revenue realisation. Were it not for the golden combination of cheap hydro power and a large industrial base, Uttarakhand’s distribution sector would likely resemble that of its neighbour, Uttar Pradesh, where discoms are struggling financially. Looking forward, Uttarakhand’s ability to rely upon cheap power and industry looks fragile. In recent years, agreements to buy more expensive gas and renewables have been made, industry has increasingly been using open access regulations to buy electricity from providers other than the state’s discom, and incentives that brought industry to Uttarakhand are coming to an end.

Poverty Amidst Plenty: Limits of Generation Bias and State Allocation in Madhya Pradesh’s Power Sector

Despite phenomenal growth in power availability, Madhya Pradesh continues to struggle with high-level energy poverty. Two decades after the state-initiated distribution reforms, the power utilities are still grappling with past problems. Institutional restructuring, which unfolded over 11 years, resulted in a complex institutional architecture that provides the state government with systematic control over the sector. By prioritizing an increase in the amount of power available, the state has undermined access and affordability and thus reinstated an economic divide in society. On the operational side, the utilities still face high losses and poor billing and collection, which results in high dependency on the state government for bailouts.

Against this backdrop, this paper for the Mapping Power project analyses the power sector reform trajectory in the state to examine policy choices and outcomes. It also looks at the political-economic drivers for these policy choices and how they deviate from or comply with signals from India’s central government. Drawing on the findings, the paper seeks to explain the limits of generation bias and state allocation, and examine how intensive institutional restructuring has resulted in consolidated state control over the sector. Finally, it analyses the implications of past experiences and the prevailing context for ongoing and future reforms.

From Gloom to Boom: Bihar’s Electricity Sector

The state of Bihar is one of the poorest in India, but in recent years its economy has been showing signs of improvement. The electricity sector has also seen significant progress since 2005, and more so after 2012. Since mass protests prompted by the dismal performance of the power sector in the state in 2011, the government has been pumping huge sums of money into increasing the supply of and access to electricity. This paper for the Mapping Power project shows that the electricity sector’s performance is intimately linked to the political context of the state. During the Lalu Yadav/Rabri Devi regime from 1990 to 2005, which was mainly supported by lower castes and Muslims, the economy stagnated and so did the electricity sector. This was a direct result of Yadav’s hostile attitude towards the bureaucracy and corporate sector; in his view, the upper-caste-dominated bureaucracy was the main reason for the continued impoverishment of the lower castes. The political and social empowerment of lower castes during Yadav’s rule has since made it difficult for any Bihar government to survive without addressing the basic needs of the population at large. This is a clear deviation from previous governments, which allowed most resources to routinely be appropriated by the upper castes. After 2005, Nitish Kumar’s government, which came into being due to an alliance between upper castes and some lower castes that did not benefit much under Yadav’s regime, began to seriously explore bureaucratic solutions to improving various public services, including electricity.