Smart regulation is an approach to regulation that can help address key challenges in the energy sector around decarbonization, security of supply, and competitiveness. It involves streamlined, meaningful, adaptable, relevant, and transparent rules that empower stakeholders and consumers. Smart regulation can increase competition through energy market integration, give agents and consumers a voice, and motivate self-regulation by companies. If designed well, smart regulation provides a predictable framework to enhance the energy sector's performance while balancing costs and economic growth.

1. SMART REGULATION FOR ENERGY SECTOR CHALLENGES

2. 2
Power
Sector
Challenges
Decarbonisation
Security of Supply
Competitiveness
Smart
Regulation
POWER SECTOR CHALLENGES

3. 3
Smart
Regulation
Optimal way to design
and implement the rules
of regulation
SMART REGULATION
What is Smart regulation?
Smart regulation is not a form of
regulation it is a method to regulate

4. 4
SMART REGULATION: PRINCIPLES
Preference for a mix of policies, tools and institutions
Low-key flexible regulation
Gradual response mechanism
Empowerment of stakeholders
Encouraging companies to embrace self regulation
Smart Regulatory Design Principles

5. 5
SMART REGULATION: MAIN FEATURES
S
M
A
R
T
Streamlined
Meaningful
Adaptable
Relevant
Transparent
Source: World Bank (2013). Doing Business Report
Regulation should be clear and accessible to
anyone who needs to use it

6. 6
What are the main challenges
in the power sector that a
smart regulatory approach can
help to meet?
How can this approach meet
energy sector challenges?
Two questions arise:
SMART REGULATION

7. 7
Source: IEA (2013). Redrawing the Energy Climate Map
World Energy-Related CO2 Emissions
World Power Sector emissions reduction is central in order to
achieve the 2 degree scenario by the IEA.
CO2 EMISSIONS

8. 8
Energy dependence 2011
(Energy imports in % of energy use)
Source: World Bank Data & Eurostas (for EU28)
Energy
dependence
puts at risk
energy
security in
Europe,
Japan, Turkey
and Korea
ENERGY DEPENDENCE

9. 9
Source: EC (2014) Commission Staff WD. Energy Prices and Cost Report. SWD (2014) 21 Final/2
High industrial energy prices affect competitiveness…
Retail electricity prices 2012 - Industrial consumers
ENERGY PRICES

10. 10
How can these three
challenges be met through
smart regulation?
SMART REGULATION

11. 11
Smart regulation is expected to play a key role in the
future development of the instruments that will help
to meet the Power Sector Challenges
Competition through Energy Market
Integration
Empowering stakeholders
Consumers in the driving seat
SMART REGULATION

12. 12
• Increase competition
• Lower prices
• Regulatory Harmonization
COMPETITIVENESS
Energy Market Integration

13. 13
EMPOWERING STAKEHOLDERS
• Transparency: public consultation
• Agents need to be involved in the
regulation processes
• Complete information
Empowerment Stakeholders

14. 14
CONSUMERS
Consumers Participation
In the driving seat of regulation:
Participation in electricity markets
Flexibility
Demand Side Response

15. 15
SELF-REGULATION
Examples of Self-Regulatory Mechanisms:
• Enlightened self-interest
• Customer/Supplier requirements
• Third-party certification and management systems
• Sectorial guidelines
• Self-interest augmented by government incentives
Smart Regulation involves regulated companies
embracing the objectives set by themselves
Self-Regulation

16. 16
SELF-REGULATION: EMPIRICAL EVIDENCE
Self-Regulation
Recent empirical study Costa-Campi et al. (2015) on
energy efficiency determinants has pointed out in regard
to self-regulation:
Self-Regulation can be supported by smart regulation measures
Regulation has a multiplier effect on the actions companies set
out on the way to accomplish that regulation (Self-regulatory
actions)
This is valued by smart investors

17. 17
Conclusions
CONCLUSIONS

18. 18
CONCLUSIONS
The energy sector is facing important
challenges (Decarbonisation, Security of
Supply and Industrial Competitiveness) :
Smart regulation should help to
meet them

19. 19
CONCLUSIONS
• To motivate self-regulation
• To consider the impact on the cost of energy,
on economic growth and job creation.
• To ensure a predictable regulatory framework
through transparency and empowerment of
agents and consumers.
• To keep legislation low-key to avoid overlaps

20. 20
Smart Regulation should be the
path chosen by policy makers and
regulatory bodies…
CONCLUSIONS
…to enhance the performance of
the energy sector and help achieve
the important objectives set for it.

21. 21
Thank you for your attention
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