Keynote from the EC

1. CLEAN ENERGY FOR ALL EUROPEANS
Win Wind Brussels
17 June 2019
CLEAN ENERGY FOR ALL
EUROPEANS and SOCIALLY FAIR
TRANSITION
Eero Ailio
Adviser on Energy Transition, DG Energy

2. CLEAN ENERGY FOR ALL EUROPEANS
Unique opportunity to modernise our economy and to
WHY DO WE DO THIS?
SUSTAINABILITY: ENERGY SYSTEM DRIVES CLIMATE CHANGE, MUST LEAD TRANSITION
2030
50 % of electricity to come
from renewables
2050
Electricity completely
carbon free*
EU has the most ambitious climate commitments in the world
Leadership brings responsibility
create growth and jobsboost competitiveness
Eero Ailio 170619

3. CLEAN ENERGY FOR ALL EUROPEANS
2020
2030
I. State of Play
PolWHY DO WE NEED NEW LEGISLATION?
Framework
-20%
GHG
EMISSIONS
20%
RENEWABLE
ENERGY
20%
ENERGY
EFFICIENCY
10%
INTER
CONNECTION
-40%
GHG
EMISSIONS
32%
RENEWABLE
ENERGY
-32,5%
ENERGY
EFFICIENCY
15%
INTER
CONNECTION
GOALS IN LAW FOCUS ACTION
Eero Ailio 170619

4. CLEAN ENERGY FOR ALL EUROPEANS
WHY DO WE NEED NEW LEGISLATION?
THE CLEAN ENERGY FOR ALL EUROPEANS Package
adapting our regulations creating an inclusive enabling environment
SIGNALLING TO INVESTORS: CLEAN ENERGY TRANSITION IS A GROWTH SECTOR BOTH THROUGH:
Eero Ailio 170619

5. CLEAN ENERGY FOR ALL EUROPEANS
HOW DO WE GET THERE? (1)
THE RIGHT ENABLING ENVIRONMENT FOR POST – 2020 VISION
5

6. CLEAN ENERGY FOR ALL EUROPEANS
WHAT ARE OUR INVESTMENT GOALS?
Investment needs:
+177bn EUR p.a. from 2021 to meet 2030 climate & energy targets
+ additional 175 to 290bn p.a. to meet 2050 net zero GHG economy
6

7. CLEAN ENERGY FOR ALL EUROPEANS
HOW DO WE GET THERE? (2)
TECHNOLOGY + FLEXIBILITY TO THE MARKETS
Eero Ailio 170619

8. CLEAN ENERGY FOR ALL EUROPEANS
500MW
0MW
-500MW
250MW
-250MW
Ensuring secure
energy supplies
HOW DO WE GET THERE?
TURN SUSTAINABILITY INTO JOBS & SECURITY
Adapting
markets for
renewables,
renewables for
markets
Delivering a
fair deal for
consumers
Putting
energy
efficiency
first
Eero Ailio 170619

9. CLEAN ENERGY FOR ALL EUROPEANS
Energy
Performance
of Buildings
• Clear vision for a decarbonised
building stock by 2050;
• Smart & Efficient buildings
through use of Information and
Communication Technologies
and Smart Technologies;
• Smart Finance for Smart
Buildings initiative:
o More effective use of
public funding
o Aggregation of funds
o De-risking
• Protect vulnerable groups &
address energy poverty.
Ecodesign
Working Plan
• List of new product groups;
• Outline on how ecodesign will
contribute to circular
economy objectives;
• Specific measures on air
conditioning;
• Guidelines on voluntary
agreements.
ENERGY EFFICIENCY
ACHIEVING THE BINDING 32% ENERGY EFFICIENCY TARGET BY 2030
Energy Efficiency
Directive
• Binding 32% energy efficiency
target for 2030;
• Create 400,000 new jobs;
• Reduce gas imports by 12%;
• Save € 70 billion in fossil fuel
imports;
• Empower consumers by
granting access to information
on their energy consumption.
Eero Ailio 170619

10. CLEAN ENERGY FOR ALL EUROPEANS
Stenghthened role
Regulatory
oversight
Better
information
Protection
Empowerment
Information
sharing &
transparency
Common
principles
Level-playing
field
Liquid,
integrated
markets
Sharing
generation
adequacy
Regional
Operation
Centres
Flexibility
X-border
capacity
allocation /
bidding zones
NEW MARKET DESIGN
Electricity Directive
Electricity Regulation

11. CLEAN ENERGY FOR ALL EUROPEANS
A FAIR DEAL FOR CONSUMERS
NEW MARKET DESIGN
• Right to fit-for-purpose
smart meters
• Certified price
comparison tool
• Clearer energy bills
• Right for individuals &
energy communities to
generate, consume,
store or sell electricity
back to the market
• Easier to switch contract
or supplier
• Reward shifting of
consumption (demand-
response)
• Right to dynamic price
electricity contract
• Right to independent
aggregator service
• Indicative criteria,
monitoring of energy
poverty (EC guidance)
• Information on
alternatives to
disconnection
• More secure electricity
supplies
• Sound data
management
• Out-of –court dispute
settlement
BETTER INFORMED EMPOWERED PROTECTED
Eero Ailio 170619

12. CLEAN ENERGY FOR ALL EUROPEANS
12
General price regulation not an effective means of protecting vulnerable
and energy poor consumers. It disproportionately benefits high-income
households
GENERAL PRICE REGULATION, REGRESSIVE MEASURE

13. CLEAN ENERGY FOR ALL EUROPEANS
REGULATED RETAIL PRICES - RESULTS
Principles:
• Free supply prices
• Effective competition between suppliers
Exceptions:
• Regulated prices for vulnerable customers and households in energy
poverty (social tariffs)
• Regulated prices for other household customers and micro-
enterprises during transition to a competitive market, subject to:
• Additional requirements to mitigate negative market impacts,
including setting prices at a level where effective price
competition can occur, ensuring the non-discriminatory
treatment of suppliers, and being accompanied by measures to
achieve effective competition.
• Reporting in 2022 and 2025, Commission review by 2025,
which may lead to a proposal for an end date for price
regulation
Eero Ailio 170619

14. CLEAN ENERGY FOR ALL EUROPEANS
CHEAPER, TRANSPARENT ELECTRICITY
Consumer pays only wholesale market price + margin, no hedging fees to keep
traditional monthly bills constant (until settling balance…)
EXAMPLE: DYNAMIC RETAIL TARIFFS
Price
22-70% saving on energy component of bills (EC Price & Cost report , 2019)
Right to:

15. CLEAN ENERGY FOR ALL EUROPEANS
• Identification, monitoring, addressing
(“significant number”)
• Energy efficiency obligations schemes, long term
renovation strategies
• Alternatives to disconnection
• Electricity Directive
• Energy Performance in Buildings Directive
• Energy Efficiency Directive
• Energy Union Governance Regulation
ENERGY POVERTY PROVISIONS
Eero Ailio 170619

16. CLEAN ENERGY FOR ALL EUROPEANS
Making energy saving appliances affordable for people in energy poverty
• 10 year rental contract
• Service / guarantee included for 10 years
• fridge, freezer, washing machine, dryer, dish washer
• product service combination / Circular economy
• first experiment with up to 100 appliances
• our initial focus is the ‘Westhoek’ region
• All rental prices are < 9 €
BSH Samenlevingsopbouw consumer
rent sub rent
Service & guarantee
yearly payment monthly payment
Local risk
fund
INNOVATIVE ENERGY POVERTY PROJECTS
stefan.goemaere@samenlevingsopbouw.be

17. CLEAN ENERGY FOR ALL EUROPEANS
WHAT
• Association, cooperative, partnership, NGO, other legal entity
• Controlled by members or shareholders
• Value driven, as opposed to profit maximising
• Supply, distribution, aggregation
HOW
• Recognised for generation, distribution, supply, aggregation, storage
• Non-discriminatory, fair, proportionate and transparent treatment
• Subject to same rules as other market players
Level-playing field
• Access to all electricity markets and balance responsible
• Participation voluntary, members retain rights as active customers
• DSOs to facilitate electricity transfers within communities
• Right to share self-generated electricity with members
Market and system integration
CITIZENS’ ENERGY COMMUNITIES RECOGNISED

18. CLEAN ENERGY FOR ALL EUROPEANS
HOW WE ENGAGE MUNICIPALITIES?
18
 8000 active signatories in
EU (9000+ worldwide)
 Strong political
commitment to reach EU
climate/energy targets
 Need for know-how and
financing of plans
 Mitigation, adaptation,
energy poverty
 Nearly 6.000 members
 Clear implementation &
replication target and
focus on matchmaking
 Knowledge and support
to capacity building

19. CLEAN ENERGY FOR ALL EUROPEANS
HOW WE ENGAGE ISLANDS
6 pilots: Sifnos (EL), Cres (HR),
Aran (IE), La Palma (ES), Culatra
(PT), Salina (IT)
20 pioneers: Hvar (HR), Brač (HR),
Korčula (HR), Kökar (FI), Marie-
Galante (FR), New Caledonia (FR),
Crete (EL), Samos (EL), Cape Clear
(IE), Favignana (IT), Pantelleria (IT),
Azores (PT), Ibiza (ES), Mallorca
(ES), Menorca (ES), Illa de Arousa
(ES), Gotland (SE), Öland (SE),
Orkney (UK), Group of Off-Grid
Scottish Islands, (UK)
Goals: accelerate energy transition, reduce import dependency, better air quality, lower GHG emissions
Eero Ailio 170619

20. CLEAN ENERGY FOR ALL EUROPEANS
Opportunity to
speed up
decarbonisation
and to speed up
growth and job
creation.
WHAT CAN WE EXPECT IN TERMS OF RESULTS?
Economic growth*:
• 1% increase in GDP
• 190bn EUR into the economy
• 900,000 new jobs
*Upper end of estimates
2016 2030
Investment:
• extra 177bn EUR euros per year
of investment
• Crucial role for EFSI
Decarbonisation:
• Carbon intensity of the economy
57% lower in 2030 than in 2015
• 72% share of non-fossil fuels in
electricity generation in 2030
20
Eero Ailio 170619

21. CLEAN ENERGY FOR ALL EUROPEANS
Thank you
Covenant of Mayors ceremony February 2018

22. CLEAN ENERGY FOR ALL EUROPEANS
Energy efficiency
HOW DO WE GET THERE?
Active consumers can generate, own, store, consume or sell electricity
Consumers’ right to free switching , dynamic tariffs, aggregator & smart meter
No switching fees
DEMAND SIDE: INFORMATION, EMPOWERMENT AND PROTECTION OF CONSUMERS
Certified price comparisonsCitizens’ Energy Communities
Right to
Limits to price regulation

23. CLEAN ENERGY FOR ALL EUROPEANS
 Actively manage the network and
improve efficiencies
 Avoid unnecessary grid expansions
 lower grid costs and tariffs
Use of flexibility services in networks
 DSOs and TSOs should not own or
operate storage facilities
 Member States may allow
operators to get involved is such
activity in case of market failures
CHANGING ROLE OF ELECTRICITY DISTRIBUTION COMPANIES
NEW MARKET DESIGN

24. CLEAN ENERGY FOR ALL EUROPEANS
WHAT ARE OUR INVESTMENT GOALS?
• Level playing field + strong short-term markets + demand response = €9.5
billion/year of cost savings by 2030
• Coordinating resource adequacy = capacity savings ~80 GW (4.8 b€/year of
investments!)
COST EFFICIENT RENEWABLES: SAVINGS FROM SHORTER MARKET + CROSSBORDER TRADE

25. CLEAN ENERGY FOR ALL EUROPEANS
25
WHAT ABOUT LIFE AFTER 2030? (LTS)

26. CLEAN ENERGY FOR ALL EUROPEANS
26
WHAT ABOUT LIFE AFTER 2030? LTS

27. CLEAN ENERGY FOR ALL EUROPEANS
27 #EnergyUnion
2030202320212019
Governance
(reporting & monitoring)
Sector specific measures
(transport, H&C, support schemes, self-consumers…)
Flexible Gap filler
If gap, MS decide on measures incl.
voluntary contribution to financing platform
Enabling framework incl. enhanced use of funds
Planning, reporting and monitoring
2020 targets as the baseline
Governance
RED II
HOW TO MAKE IT HAPPEN: ACHIEVING AT LEAST 32.5 % RES EU-WIDE

28. CLEAN ENERGY FOR ALL EUROPEANS
Integrated
national energy
and climate plan
Periodic progress
reports
Periodic State of
the Energy Union
MS planning MS reporting EC monitoring /
reporting
TODAY
NEW
GOVERNANCE
Synchronised with the Paris Agreement's review cycle
ENERGY UNION GOVERNANCE
STREAMLINING AND INTEGRATION OF ENERGY AND CLIMATE PLANNING AND REPORTING
National Integrated Energy and
Climate Plans (2021 to 2030)
(preparation well before 2020)
National progress reports
(from 2021, every two years)
European Commission monitoring
(State of the Energy Union)

29. CLEAN ENERGY FOR ALL EUROPEANS2. How?
Overview
• Clearer energy bills
• Certified price
comparison tool
• Access to fit-for-
purpose smart
meters
• Easier switching
conditions
• Reward demand-
response
• Active customers and
Citizen Energy
Communities
• Monitoring of energy
poverty (governance)
• Information on
alternatives to
disconnection
• Out-of-court dispute
settlement
BETTER INFORMED EMPOWEREDPROTECTED
COMPETITIVE RETAIL MARKETS
- A framework for regulated prices
- Fair market access for new market players such as new services providers (e.g.
aggregators)
- Distribution operators become neutral but active market facilitator / Establishment
of the EU DSO body
- Flexible network management

30. CLEAN ENERGY FOR ALL EUROPEANS3. How?
2.2 – Demand Response
• Price Based Demand Response
• Right to request a fully functional smart meter (Art 20-21)
• At least one and all suppliers with more than 200,000
customers must offer a dynamic price contract (Art 11)
• Incentive Based Demand Response
• MS to develop framework for independent aggregators (Art 17)
• Consumer can contract indpendent aggregators without consent
of their supplier (Art 13)
• Access of flexibility to all electricity markets (Regulation)
• Strict limits to compensation payments (Art 17.4)

31. CLEAN ENERGY FOR ALL EUROPEANS
1,135 Trillion € in commitments for 2021-2027, 1,11% of EU GNI
HOW DOES EC ACCELERATE TRANSITION? MFF 2021-2027
31

32. CLEAN ENERGY FOR ALL EUROPEANS
• Budget enables and accelerates the needed shift in
investment. It can have a catalyze action to meet the
additional €180 billion p.a. 2021-2030 needed for
climate policy
• EU energy, transport, buildings etc. legislation drives
the change
• EU financial sector legislation can also support (by
helping mobilise e.g. banks and insurance)
->Sustainable Finance Action Plan
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HOW DO BUDGET AND POLICY INTERACT?

33. CLEAN ENERGY FOR ALL EUROPEANS
Establish an EU classification system for
sustainable activities
1
Create standards and labels for green
financial products
2
Foster investment in sustainable projects
3
Incorporate sustainability in providing
investment advice
4
Better integrate sustainability in ratings
and market research
6
Clarify institutional investors' and asset
managers' duties
7
Incorporate sustainability in prudential
requirements
8
Strengthen sustainability disclosure and
accounting rule-making
9
Develop sustainability (low-carbon)
benchmarks
5
Foster sustainable corporate governance
and attenuate short-termism in capital
markets
10
COMMISSION SUSTAINABLE ENERGY ACTION PLAN

34. CLEAN ENERGY FOR ALL EUROPEANS
HOW DO WE GET THERE? (2)
THE RIGHT ENABLING ENVIRONMENT FOR POST – 2020
Setting the right
incentives for
investment in the
energy transition
and maximising the use
of public funds
Delivering on social
concerns and job
training to ensure a
socially fair energy
transition
Driving
digitalization
forward to enable
new energy
technologies
Delivering on key
energy
infrastructure
projects
Accelerating research
and innovation to
support leadership in
advanced RES
Ensuring regional
cooperation: Making
the energy transition a
multi-level
government and
stakeholder project
External dimension:
Fostering security of
supply and promoting
clean energy measures
abroad
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ENABELING
FRAMEWORK

35. CLEAN ENERGY FOR ALL EUROPEANS2. How?
2.4 – Regulated Retail Prices (Article 5 Electricity Directive)
Principles:
• Free supply prices
• Effective competition between suppliers
Exceptions:
• Regulated prices for vulnerable customers and households in energy
poverty (social tariffs)
• Regulated prices for other household customers and micro-
enterprises as transition to a competitive market, subject to:
• Additional requirements to mitigate negative market impacts,
including setting prices at a level where effective price
competition can occur, ensuring the non-discriminatory
treatment of suppliers, and being accompanied by measures to
achieve effective competition.
• Reporting by Member States in 2022 and 2025 and Commission
review by 2025, which may lead to a proposal for an end date
for price regulation.

36. CLEAN ENERGY FOR ALL EUROPEANS
WHAT ARE THE NOVELTIES?
EU: 1€ IN EVERY 4 € TO HAVE POSITIVE CLIMATE IMPACT
Smarter use of public money
European Investment Plan
(EFSI2 , WBIF…)
206B€ to 320B€ to Climate
mainstreaming (1,6x)
Infrastructure: CEF2: 42,3B€ (9.3b Digital Europe)
R&D: HORIZON EUROPE 97,6B€, (transfers)
Invest EU Fund (15,2B€) to finance strategic
investments (incl sustainability proofing), groups all
fin instruments into one structure
Bridging instruments: LIFE (5,45B/+60%), Smart
Finance Smart Buildings etc
ETS Modernisation Fund for 10MS (<60% GDP) & free
allocations to decrease
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37. CLEAN ENERGY FOR ALL EUROPEANS
1. Sustainable
2020
20% of RES
2030
32% of RES
(50% electricity)
2050
Electricity
completely
carbon free
-20%
20%
50%

38. CLEAN ENERGY FOR ALL EUROPEANS
WHAT CONTINUES/ EVOLVES
Facilities financed from
different funds (H2020, ERDF,
ESIF, Cohesion Fund, CAP…)
Smart Cities and Communities, City Facility
European Urban Initiative: Urban Innovative
Actions (371M€ current MFF), capacity building,
knowledge, policy development and
communication
Smart Specialisation Strategies (Cohesion
policy)
ELENA PDA (110M support->4,4B investment)
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39. CLEAN ENERGY FOR ALL EUROPEANS
Making the market fit for Renewables
• Full market access for Renewables and Demand Response
• Shorter term markets:
• Gate Closure Time <= 1 hour before real time
• Imbalance settlement period of 15 min
New in the regulation
Forward market
Day-ahead market
Intraday market
Balancing
real timedelivery-24 hoursyears/months
before delivery
gate closure
Weather forecast accuracy
• Increased market flexibility and access, enabling renewables to
become the backbone of our electricity system
Benefits

40. CLEAN ENERGY FOR ALL EUROPEANS
3.2 – Making Renewables fit for the market
• Phase out priority dispatch
• Phase in balancing responsibility
*Derogations for existing installations and new small RES
New in the regulation
Benefits
Old:”produce and forget” New: Market orientation
• Eliminating market distortions for mature technologies…
• …whilst ensuring feasibility of smaller RES installations