EU new electricity market design with strong support for citizens energy communities

12/27/18, 10:35 AM -

The EU’s new electricity market design contains brand new provisions to support the development of ‘citizens energy communities’ throughout Europe, but holes remain.

The European federation of renewable energy coooperations, Rescoops, draws a mixed picture of the EU new electricity market design.
The European federation of renewable energy coooperations, Rescoops, draws a mixed picture of the EU new electricity market design.

But the legislation also contains significant flaws, Rescoops, the European federation of renewable energy cooperatives, says. The market design is incoherent with the Renewables Directive concluded earlier this year, particularly on the respective definitions of energy communities. Furthermore, the new legislation funnels subsidies at fossil fuels for at least another decade, undermining the fundamental changes that Europe’s energy market needs to help us meet our Paris Climate Agreement objectives.

What’s good?

Most importantly, a new definition of ‘citizens energy communities’ is clearly aimed at supporting European citizens, small businesses and local authorities. Citizens energy communities will have a right to a level playing field and proportionate regulations so they can have fair access to all areas of the electricity market. Energy communities will also be able to share energy, providing opportunities for innovation and local renewable energy supply. The European Parliament was able to guarantee that energy communities can get their renewable energy into the market by keeping priority dispatch for small renewables installations.

What’s bad?

Despite these important wins, the political agreement on citizens energy communities is far from perfect. The Electricity Directive is inconsistent with rules on renewable energy communities under the Renewables Directive, mainly on the definition. Eligibility requirements, and more importantly the rules for the internal governance of energy communities, will be more relaxed for citizens energy communities compared to renewable energy communities. This inconsistency will create legal uncertainty for energy communities, while more lax governance requirements could allow larger companies to set up and indirectly control citizens energy communities. There could also be differences in how network charges are calculated for citizens energy communities versus renewable energy communities. Furthermore, the Council made it optional for Member States whether or to give energy communities the right to own and operate grids.

Controversial capacity mechanisms for inflexible fossil fuels

Finally, the political agreement waters down Commission and European Parliament proposals to limit, and have EU oversight over, the creation of capacity mechanisms in order to prop up dirty, inflexible fossil fuels. This will shoulder consumers with even more financial burden while benefiting energy companies that are holding back the energy transition. It will also create more market obstacles for citizens energy communities that want to invest in and drive the clean energy transition.

Dirk Vansintjan, President of Rescoops explains: “The legislation that was just agreed will provide many opportunities to energy communities across Europe – opportunities they don’t have today, as energy communities are not even mentioned in EU energy policy. It is encouraging that the EU now acknowledges and supports the valuable role that citizens and communities can play in the energy transition.” He continues, “While we are far from where we need to be, we need to continue working at national level and in our communities to ensure the energy transition happens.”

Next steps for implementation

With this agreement, the final pieces of the EU’s Clean Energy for All Europeans legislative package are now in place. The next step is that the political agreement must be signed off by both the European Parliament and the Council through their respective procedures. Once the legislation enters into force, Member States will begin the task of writing the new rules into national legislation. (HCN)

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