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Boosting the EU energy savings obligation

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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.

Power System Blueprint

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Accomplishing climate neutrality by 2050 requires a zero-emissions power sector by the mid-2030s. Securing a decarbonized power system early will unlock pathways for the whole economy. One of the biggest challenges to accomplishing this ambitious goal is time—we have a need for speed if we want to meet decarbonization goals by 2035.  

This is why RAP has created the Power System Blueprint, an interactive website that allows visitors to view different options for decarbonizing Europe’s power system. The Blueprint lays out how to design the regulatory context to achieve a clean, reliable, equitable and affordable European power system by 2035. RAP pulled together the latest insights for supporting regulators, NGO’s, governments and anyone interested in the decarbonization pursuit. 

The Blueprint is designed as a schematic of regulatory solutions linked to six important central principles. In the suite of regulatory solutions (also known as factsheets),you will find comprehensive information, the most important regulatory steps and further reading. 

The decarbonization of the power sector can be done by 2035 but will require a rapid and systemic rethink of the existing European power system regulatory landscape. Within the Power System Blueprint website, you’ll find solutions to some of the some of the largest tasks we face working within this tight timeframe.   

Blueprint logo

The joy of flex: Embracing household demand-side flexibility as a power system resource for Europe

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To meet its 2050 climate goals, Europe will need to purge its power sector of carbon emissions by the mid-2030s. This means integrating renewable energy resources such as wind and solar at an unprecedented scale and pace. Only one path allows for rapid decarbonisation while maintaining a reliable energy system, minimising system costs and increasing energy democracy. We must ensure that customers have the incentives and tools they need to adjust the flexible portion of their electricity use in ways that are beneficial for the system.

Flexible resources are essential to balance supply and demand and make best use of renewable generation.

In addition to climate impacts, the most recent energy price crisis has underscored the urgent need to release Europe from gas dependency — and therefore from exposure to gas price volatility — by progressing swiftly to a clean, efficient and electrified energy system.

This paper focuses on the greatest untapped source of flexible demand across Europe: household flexibility. Households can increasingly shift how and when they use electricity, without compromising utility or comfort, thanks to new digital technologies and storage. Yet, as the users with the lowest individual electricity use, they often face the greatest barriers. If enabled effectively, through inclusive access to flexible assets, markets and retail offers, there is an opportunity to improve energy services and reduce costs, which is particularly important for low-income and vulnerable households.

For household demand-side flexibility to take its rightful place in the energy transition, swift and concurrent effort is needed on multiple levels of policy and regulation. Underpinning this process is the principle that demand-side flexibility is more than an individual customer right; it’s a vital, cost-effective power system resource that should be valued as such.

Europe needs a cohesive regulatory strategy to create the infrastructure that will enable large-scale, aggregated customer flexibility. As a starting point, this paper presents a five-point action plan for scaling up household flexibility in Europe, with specific recommendations for carrying out each action.

  • Action 1: Create robust tools for measuring and valuing customer flexibility.
  • Action 2: Incentivise flexibility through energy market price signals.
  • Action 3: Ensure a level playing field for demand-side resources.
  • Action 4: Accelerate installation of flexible assets in homes.
  • Action 5: Make flexible actions easy and safe for customers.

By investing now in strategies that wholeheartedly embrace household demand-side flexibility as a power system resource, Europe can avoid paying a much higher price later.

The time is now: smart charging of electric vehicles (Webinar)

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European policymakers and car manufacturers are increasingly committing to the phaseout of internal combustion engine vehicles. With this shift to electric transport, tariffs and services for so-called smart charging of EVs bring significant value to consumers and the power sector. Now is the time to build a robust regulatory framework to expand the markets for these offerings consistently across the entire continent. 

On 25 May, the Electrification Academy welcomes Jaap Burger and Julia Hildermeier of the Regulatory Assistance Project (RAP) to share the findings of their study The time is now: smart charging of electric vehicles. The authors, who analysed 139 smart charging tariffs and services across Europe, will share: 

  • A brief overview of the benefits of smart charging for users and the power system. 
  • Innovative approaches and best practice examples of dedicated EV tariffs and services. 
  • Recommendations to accelerate the use of smart charging.

For an introduction to smart charging, check out our earlier Electrification Academy webinar with Frank Geerts and Michael Hogan, Smart charging puts the pedal to the metal on emobility. 

We will allow ample opportunity for participants’ questions following the presentations.  

 

Owning the future: A framework of regulations for decarbonising owner-occupied homes in Scotland

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Scotland’s recent Heat in Buildings Strategy sets out a plan to achieve the ambitious target for all Scottish buildings to be decarbonised by 2045. In practice this means replacing the heating systems of nearly 90% of Scotland’s 2.5 million homes that are currently heated with fossil fuels. As part of its regulatory framework, the Strategy states that all homes should achieve a minimum energy performance, defined as Energy Performance Certificate (EPC) C, by 2033. And all fossil fuel boilers will be phased out beginning in 2025. In short, there’s a lot to do over the next 20 years.

In Owning the future: A framework of regulations for decarbonising owner-occupied homes in Scotland, authors Dr. Catrin Maby and Louise Sunderland take a deep dive into the Strategy, focusing specifically on the owner-occupied building stock. The proposals in this report aim to identify and fill gaps in the framework of regulations, as well as ensure that implementation is well timed and staged so that fabric improvements are completed before heating systems are changed. The proposals also take into account different building types and the need to decarbonise higher carbon fuels first. Regulations alone, however, do not guarantee successful renovations, so the report outlines essential funding, finance, practical support and safeguards for affordability that must come alongside.

The authors put forth a number of recommendations on how to best strengthen the Strategy. Although specifically designed for Scotland, these recommendations may be applicable to any government designing an efficient, effective and fair regulatory framework:

  • Remove uncertainty on the decarbonisation options for buildings to ensure all actions are no regrets
  • Enable effective standards through changes to EPCs and the Standard Assessment Procedure (SAP)
  • Introduce a fabric energy efficiency standard to enable efficient, flexible heating
  • Phase out fossil fuels for heating through early incentives, and regulatory triggers and backstops
  • Enable alternative compliance routes for more complex, multi-occupancy buildings
  • Utilise existing compliance structures and resource local authorities to enable and enforce

You can find the report’s executive summary here.

How much insulation is needed? A low-consumption, smart comfort standard for existing buildings

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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.

The time is now: smart charging of electric vehicles

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The transition to zero-emission mobility and a decarbonised energy system are best planned in tandem, and electric vehicles will play a key role in both shifts in the coming years. Automakers are already committing to phasing out internal combustion engine vehicles, making Europe’s transport future electric. EVs are more than a cleaner vehicle; they are a powerful resource for consumers and power sector actors. It is critical, therefore, to draw the most value from charging electric vehicles through so-called smart charging. Smart charging means charging a vehicle flexibly to lower costs for EV drivers and grid companies, to accommodate the integration of renewable energy sources and to minimise EVs’ collective impact on the power system.

Now is the perfect time to lay the groundwork for a robust regulatory framework that fosters a market for smart charging tariffs and services. By designing policy measures in a consistent manner across Europe, legislators can help ensure that the EV services market can prosper and capture the benefits smart charging offers. To this end, RAP analysed 139 tariffs and services available across Europe that specifically involve smart charging to highlight best practices and innovative approaches.

To ensure that all Europeans can charge smartly wherever they are on the continent, RAP recommends that policymakers:

  • Make smart charging the default everywhere.
  • Make public charging smart too.
  • Empower consumers to make informed choices.
  • Improve rewards for consumer flexibility.
  • Stack multiple services for smart charging to increase individual and system benefits.
  • Make local grids ‘smart charging ready.’

Grid Operations and Why They Matter for Air Quality — Part 2

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In the second part of a training for the Mid-Atlantic Regional Air Management Association (MARAMA), Nancy Seidman explored the air quality and health benefits of energy efficiency and electrification.

EU can stop Russian gas imports by 2025

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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.
  • Remove any 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.