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E. Ailio_Keynote Presentation

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Keynote from the EC

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E. Ailio_Keynote Presentation

  1. 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. 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. 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. 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. 5. CLEAN ENERGY FOR ALL EUROPEANS HOW DO WE GET THERE? (1) THE RIGHT ENABLING ENVIRONMENT FOR POST – 2020 VISION 5
  6. 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. 7. CLEAN ENERGY FOR ALL EUROPEANS HOW DO WE GET THERE? (2) TECHNOLOGY + FLEXIBILITY TO THE MARKETS Eero Ailio 170619
  8. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 21. CLEAN ENERGY FOR ALL EUROPEANS Thank you Covenant of Mayors ceremony February 2018
  22. 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. 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. 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. 25. CLEAN ENERGY FOR ALL EUROPEANS 25 WHAT ABOUT LIFE AFTER 2030? (LTS)
  26. 26. CLEAN ENERGY FOR ALL EUROPEANS 26 WHAT ABOUT LIFE AFTER 2030? LTS
  27. 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. 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. 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. 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. 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. 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 32 HOW DO BUDGET AND POLICY INTERACT?
  33. 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. 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 34 ENABELING FRAMEWORK
  35. 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. 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 36
  37. 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. 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) 38
  39. 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. 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

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