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Paicu&Sons’ response to the EU Commission initiative to revise the Directive (EU) 2018/2001

byPublicist

October 2020

In September 2020, Paicu&Sons consulting has offered a written position for the European Commission’s public consultations meant to revise the EU 2018/2001 Directive. We face nowadays the challenge of another transition that should transform the whole energy ecosystem at the global and European level.

The promotion of the use of energy from renewable sources as well as the increasing of the 2030 European Union climate ambition level are important steps in achieving the aim of the European Green Deal, namely the European Union to become the world's first “climate-neutral bloc” by 2050. Below is Paicu&Sons Consulting’s proposal submitted for the EU Commission consultation.

Background

The European Union’s target to become the world’s first climate-neutral economic and political union is an ambitious goal that could turn into a daunting one for many. In this respect, the public consultation initiated by the EU Commission regarding the adjustment of the Renewable Energy Directive, adopted in 2018, could offer valuable contributions for supporting the EU measures to implement the energy transition.

In order to set a framework, we would like to start by referring to a World Energy Council’s analysis according to which the 2020s will be the transition decade from activism to action. Within this context, the EU is among the pioneers on introducing policies and regulations that urges its citizens towards action in achieving the community goals. This is a key strategy in the ambition to establish an ‘Energy Union’ that is not just clean, but should also be fair, by empowering citizens to actively interact with the energy market as self-consumers or prosumers. The concepts put forward for the first time a shared understanding among EU Member States of what collective renewable energy prosumers are.

However, the transposition of the EU Directives, which offer one-size fits all definitions of collective prosumers, may pose specific challenges at the national level. For instance, the formula ‘shared understanding’ has a certain idealist weight that might be misleading when devising measures across all EU states. It induces a certain levelling among member states and, we would maintain, can’t serve as a valuable premise for action. Consequently, in order to enhance the effectiveness of the actions, out of our experience mostly in South Eastern Europe, we propose an adaptation, localization of the measures in order to achieve a higher EU climate target. We ordered our proposals into a taxonomy of soft and hard actions.

Soft actions:

Even though there are regulated support schemes and investment projects for the energy conversion, the lack of information across Europe is still a problem that needs to be solved. And in some countries the problem is more serious than in others.

Access to finance or grants and knowledge of policies and legislation in RES production are critical to the global green initiative’s development. In this respect, we consider that an important step is for the members states to take the proper measures to increase the level of information, awareness, and knowledge of the consumers. However, since the national authorities might not be able to implement such measures, we would advise the Commission to take the leading initiative. From our experience, this gap is felt at the level of all stakeholders from big producers to household consumers.

Therefore, the EU Commission should manage the process of initiating information and awareness campaigns in the member states and differentiate the intensity of these campaigns based on particularities of each country.

The increase of the level of information, awareness and knowledge should begin with an assessment of the situation. This should be done through quantitative and qualitative research and analysis. To conclude, instead of offering general guidelines, the EU should strive to give support for each country to localise a set of mandatory recommendations. Based on our experience in working with companies on different markets, we appreciate that there is significant difference between members states related to the level of information and understanding of the new energetic policies and these differences should be strategically addressed. In this regard, the EU Commission could offer noncompetitive grants to support national authorities SMEs and NGOs to develop and implement raising awareness and education campaigns.

Hard actions:

We foresee that in the following years the European Union should provide through its directives and regulations a transition from the activism, that has been promoted through the policies and EU measures in the last years, to action.

For instance, the regulations adopted until now, provided a definition for prosumers and active clients, aggregation or individual aggregator. Also, it provided for the member states the obligation to regulate in their national legislation a fair, non-discriminatory treatment, prohibition of additional fees or special fees for aggregators, free access directly or through aggregation to the energy market for the energy communities. However, the EU must take new steps in regulating all the prosumers categories and to offer a legal and unitary framework to be applied in all member states.

In the context of voluntary carbon footprint reduction, we welcome the existence of various unregulated projects that enable flexibility, speed of implementation and originality. Nevertheless, we do acknowledge the need of soft touch regulation at least covering the following risk prone areas:

  • regulatory and digital interconnectivity or connection protocols of various voluntary standards and certificates to enable traceability and transparency throughout the entire value chain (production-assembly-distribution-consumer) regardless of the standard used by each stakeholder in the value chain;
  • regulatory measures to establish that such schemes are carbon reduction centric rather than deviate toward a solely consumer PR or solely CSR centric actions or even solely sales/marketing focused.

Last but not the least, in order to meet the goals, EU directives should be quickly and efficiently translated into national legislation, understood, and put into practice. From our work experience on the Romanian market, the implementation of the EU Directives in the national laws is not always an easy task. And is not always done in the spirit of the respective Directives. As a case in point, the Romanian National Regulatory Authority has recently submitted for public debate a draft of the aggregation license. Despite the fact that the EU Directive has provided a good definition, the definition provided by the Romanian draft restricts the establishment of energy communities as defined in Directive 944/2019. In this regard, the aggregation is possible only between the same category of market participants, namely only between producers, consumers or storage units, without the possibility to aggregate as a mix. Another relevant case is the provision of the Regulation (EU) 2019/943, that allows the market participants to negotiate long-term power supply products over the counter. The application of this provision in the national market is still covered in uncertainty, as the proposed amendments to the National Energy Law are not very clear if these contracts can be concluded  outside the centralized market and the secondary legislation defines long-term contracts as the ones exceeding 1 year of supply.

The delay of the local authorities in transposing the EU Directives and in aligning the national laws to the EU Regulations, due to extensive formalities of the public sector, is almost a rule. We would advise that the EU should implement a communication platform or other manners in order to assist Member States in the transposition of the directives, by encouraging knowledge sharing and dialogue among the national legislative bodies and communities in order to ensure the implementation of the Directives in accordance to their core purpose.

Next steps/Conclusions

In our +20 years of experience in the South Eastern Europe and especially Romanian energy market we have witnessed the transition from a state controlled towards a free market and it was not an easy journey. Now we face the challenge of another transition that should transform the whole energy ecosystem at the global and European level. It’s not an easy endeavor. At least in south eastern Europe in order to achieve this we argue that the priority would be the understanding of the new paradigm since many state owned actors or public authorities are adapting to and upgrading the framework at a reduced pace than the private sector stakeholders needs.

We argue that this could be done starting with a deep comprehension of the new challenges and the ways of addressing them. This is the first step to be tackled. And the needs are not the same across Europe. Therefore, the EU Commission should make bridges with institutional stakeholders that understand the transition and are fully committed to do it. We at Paicu & Sons are ready to contribute by sharing our experience and knowledge, in order to implement this transition to a low carbon economy from which all EU countries and citizen will benefit.

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