Comments Off on Boosting the EU energy savings obligation
As part of the Fit for 55 legislative package, the European Commission proposed a recast of the Energy Efficiency Directive in July 2021. The recast includes significant changes to the Directive’s cornerstone article on the energy savings obligation, Article 7 (now Article 8). As a next step, EU legislators – the European Parliament and the Council of the EU – have to agree on a common text. The energy savings obligation in Article 8 requires EU Member States to trigger a certain amount of energy savings among end users. Getting the specifics of this obligation right is vitally important for Europe’s energy transition.
RAP’s Marion Santini, Samuel Thomas and Louise Sunderland analysed the negotiations on Article 8 on 15 June 2022, to assess three critical requirements: the energy savings rate, the exclusion of fossil fuel technologies and the energy poverty sub-target. They identify the important issues and options for decision-makers who are looking to align the Energy Efficiency Directive with climate neutrality, energy security and equity goals.
Comments Off on How much insulation is needed? A low-consumption, smart comfort standard for existing buildings
National and local governments are increasingly turning to regulated minimum standards for the energy performance of buildings to kick-start the renovation of the stock. But how can these standards be used to define the most efficient pathway for buildings to fully decarbonise? RAP outlines a standard that defines the minimum insulation, airtightness and ventilation levels needed to enable a building to be heated efficiently with renewable sources, via lower flow temperature water.
The zero-emissions heat solution for the majority of buildings will be either a heat pump, district heating or shared heating. Heat pumps run much more efficiently when they deliver lower flow temperature water. Running district heating at lower flow temperature could result in cost reductions of 14 billion euros a year across Europe. Buildings meeting the standard can also have their heating schedules operated flexibly at different times of the day to provide flexibility benefits to the electricity grid and cost savings to the occupiers.
This briefing draws on the recently developed Dutch home insulation standard that is designed to support households to adapt their homes in advance of the area-based phaseout of the fossil gas system, and transition to sustainable heat sources, by 2050.
Comments Off on Transit Electrification: Challenges and Opportunities
In recent years, states embracing transportation electrification have come to realize that different parts of the transportation sector come with their own challenges and needs. Electrifying the transit sector is no different. Here we focus on the electrification of public transit and highlight some of the major topics that both transit agencies and public utility commissions can expect to confront as they endeavor to electrify transit services. The goal of this paper is to help utility regulators begin appreciating some of the fundamental challenges faced by transit agencies as they start to use electric buses, this relatively new electric end use. The paper also seeks to help transit agencies better understand electrification opportunities. Sharing these perspectives should be useful as states seek to secure the benefits of electrifying public transit fleets.
Comments Off on Price shock absorber: Temporary electricity price relief during times of gas market crisis
European policymakers are weighing possible responses to the extraordinary surge in energy prices and the consequences for citizens and industry. The European Commission expects to issue additional guidance in May, following analysis due in April from the Agency for the Cooperation of Energy Regulators. Targeted relief to vulnerable consumers should be undertaken in any case. Whilst RAP would urge caution in considering possible broader interventions in the electricity markets, if such a course of action is under serious consideration, we offer this proposal of a ‘price shock absorber’ for reflection as a measure best fit for purpose, designed to acknowledge and address the essential aspects of the current crisis:
This is a gas market crisis — it is an extraordinary event that is adversely affecting all sectors of Europe’s economy. The priority for the electricity sector must be measures that allow the electricity market to ride through this shock to the system, and similar future shocks, preserving its functionality whilst avoiding undue harm to consumers.
The midst of a crisis is the wrong time to take decisions with long-term implications that will be difficult to walk back once the crisis has passed. Our proposal acknowledges that the fundamental design of the electricity market is sound; whilst improvements are certainly needed, they have no direct bearing on the causes of or remedies for this crisis.
This crisis has revealed in stark terms the true cost of dependence on a volatile fossil gas market, including the risks inherent in the prominent position Russia will continue to occupy in global supply.
Consumers and industry have the power to contribute to the response to these risks, by procuring the energy services they need more efficiently and flexibly.
When responding to the crisis, policymakers should preserve and even intensify the electricity market’s role in mobilising and empowering consumers rather than concealing the true cost of ‘business as usual.’ The value of the only durable response — an accelerated transition away from fossil fuels — must remain visible to consumers in an equitable fashion.
The authors outline this price shock absorber mechanism as an additional market feature to bring consumers some measure of relief whilst preserving the market’s essential functions. These include valuing energy efficiency, rewarding beneficial demand and resource flexibility and ensuring a ‘normal’ level of expected inframarginal rent to incentivise and compensate investors in the energy transition for the value of their investments. If a decision is taken to intervene broadly in the electricity market, we suggest this approach offers a significant measure of relief whilst doing the least harm.
Comments Off on EU can stop Russian gas imports by 2025
The Russian government’s decision to invade Ukraine puts into sharp contrast the deep entanglement between energy, security and geopolitics. Now more than ever, the European Union needs unity and resolve in its response and a focus on resilience in the face of interlinking crises.
Authors from Ember, E3G, Bellona and RAP have collaborated to identify the indispensable role clean energy solutions play in rapidly ending the EU’s reliance on fossil gas imports from Russia.
Key findings of our analysis:
Clean energy and energy efficiency can replace two-thirds of Russian gas imports by 2025. Europe can cut Russian gas imports by 66% by delivering the EU’s Fit for 55 package and accelerating the deployment of renewable electricity, energy efficiency and electrification. This is equivalent to a total reduction by 101 billion cubic meters. An urgent uplift in policy is now required to achieve the necessary level of implementation.
New gas import infrastructure is not required. Security of supply and reduction of Russian gas dependence does not require the construction of new EU gas import infrastructure such as liquified natural gas terminals. Alternatively sourcing 51 billion cubic meters of gas imports via existing assets is sufficient.
Coal power does not need to be extended. The above measures would enable the EU to achieve the necessary decrease in fossil gas demand without slowing the decline of coal-fired electricity generation.
To achieve urgent reductions in the use of fossil gas in Europe, it is important for decision-makers to identify and tackle counterproductive policies. The authors recommend 10 key measures to realise the additional potential for reducing gas use identified in this analysis:
Increase ambition and fast track adoption of the “Fit for 55” package. This is relevant in particular for the Renewables Directive, Energy Efficiency Directive, Emissions Trading System and the Energy Performance in Buildings Directive.
Clarify financial resources to support clean energy solutions. Ensure that allocated funding under the EU’s Recovery and Resilience Facility is used to that effect. Establish a facility for early, front-loaded release of Multiannual Financial Framework funds where the delivery of gas savings can be accelerated.
Make energy efficiency an energy security priority and scale action. Energy efficiency has the largest potential to reduce cost impacts on consumers. Consider opening existing funding resources such as the Connecting Europe Facility for scaling national energy efficiency programmes.
Removeany incentives that currently deepen or perpetuate gas consumption. Examples include financial support for gas heating systems and special tax regimes or exemptions for industry. Replace them with investment support for clean heating, in particular for low- and middle-income families. Innovative schemes such as on-bill financing, tax credits or heating appliance lease schemes should be supported.
Support the rollout of renewables and heat pumps. Establish concrete investment programmes, reduce administrative burdens and accelerate support for critical enablers such as grid infrastructure, demand-side flexibility and better use of transmission networks and storage. Integrated regional markets can buffer fluctuating renewable resources across larger regions.
Make low-carbon supply chains an energy security priority. A skilled workforce and input materials to the low-carbon supply chain are critical to delivering this vision. The EU can enhance and scale Member States’ efforts and can establish a cooperative approach with the United States and other partners on scaling supply chains.
Ensure equity in the energy response. Governments must ensure the costs and benefits of the transition are shared fairly among consumers. Increased carbon revenues or windfall profit taxes can be earmarked for investments in renewables and efficiency, as well as bill support for vulnerable customers. Enabling access to energy services can unlock bill savings for low-income families. Regulators should address energy poverty by designing fair network tariffs and ensuring suppliers of last resort are properly financed.
Put in place a European Commission task force. This could drive and monitor a whole economy approach so that supply chain bottlenecks can be anticipated and efforts streamlined across different parts of the Commission.
Conduct analysis to identify latent potential that can be fast tracked. In particular, analysis should be identified for industrial end use of gas, or inefficiencies in gas use (transformation losses, methane leakage) to line up even higher gas savings post 2025.
Avoid gas infrastructure or contractual gas lock-in. The “substitution” effect from Russian gas to other sources is expected to decline sharply after 2025, meaning that additional import or other gas infrastructure will face rapidly declining utilisation.
Comments Off on Rate-Making Principles and Net Metering Reform: Pathways for Wisconsin
A growing number of states have considered reforms to their net metering practices in recent years, a period of decreasing prices for distributed energy resources, rapid changes in technology and evolution of the electricity system.
Depending on its design, a net metering program can advance specific policy goals while maintaining sound principles of rate design. Trade-offs in rate design are inevitable as regulators balance different priorities, such as rates that accurately reflect cost causation and rates that are simple for customers to understand. Reliance on long-standing rate-making principles will be key to prudent decision-making.
This paper was produced for the Wisconsin Public Service Commission as part of its review of the state’s net metering practices.
The authors examine net metering approaches in the context of general rate-making principles and policy goals. They then explore considerations associated with specific design components of net metering tariffs — including eligibility, metering, netting intervals and customer buyback credits — and the methods used to calculate fixed, energy-based and demand-based charges. The final section details recent net metering reforms in seven states: North Carolina, South Carolina, California, Arizona, Minnesota, New York and Michigan.
Comments Off on Measuring and increasing impact: The next challenge for EU energy efficiency policy measures
The European Union is entering a crucial decade in its energy transition, with the 55% climate goal representing a step change in ambition. Energy efficiency is expected to play a major role in achieving necessary reductions in energy consumption across buildings, transport and industry. Enacting the Energy Efficiency First principle will require reliable data on the costs and benefits of energy efficiency actions, to ensure that policy measures are as effective as possible. Providing this reliable data is the role of evaluation, measurement and verification.
Yet the current reporting obligations on Member States under the Energy Efficiency Directive (EED) — and Member States’ compliance — do not supply reliable and timely information on the key performance indicator for energy efficiency policy measures: energy savings. This paper recommends improvements in evaluation, measurement and verification practices as a way of increasing the impact of the EED and enabling implementation of the Energy Efficiency First principle.
The paper gives clear guidance for the European Commission and Member States to implement seven recommendations for:
Independently evaluating energy savings reported under the EED energy savings obligation.
Focusing impact evaluation efforts on assessing the costs and benefits of meeting policy goals.
Mandating the piloting of pay-for-performance using metered savings in the buildings sector.
Providing clear pathways for accessing individual dwellings’ smart meter data.
Mandating the publication of verification reports by Member States every two years, alongside the reporting of energy savings.
Facilitating knowledge and expertise sharing on evaluation, measurement and verification across Member States.
Regularly assessing the accuracy and consistency of energy savings estimates across Member States.
With the EED being renegotiated, now is the time to make the changes that will enable energy efficiency to play its full role in the energy transition.
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