‘New deal’ for European energy consumers

The New Deal for Europe’s energy consumers envisages empowering them to become active participants in the energy markets.
Published: Wed 01 Jun 2016

In almost 9 pages of densely packed text with paragraphs starting “Believes that…”, “Considers that…”, “Calls on…”, “Recommends that…”, “Insists that…”, close on 40 major actions are detailed that the European Parliament considers necessary for delivering a ‘new deal’ for the region’s household energy consumers.

The intention is clear: to move towards a consumer-centric, competitive market with citizens and communities empowered to become active in producing and managing their energy requirements. And while the text from the European Parliament is non-binding, as input to forthcoming Energy Union legislation to be tabled by the Commission, most if not all of the wide-ranging recommendations are likely to become so either directly or indirectly in the near future. Upcoming measures include a Renewable Energy Directive for 2030, reviews of the Energy Efficiency Directive and Energy Performance of Buildings Directive, legislation on a new energy market design, an EU strategy for heating and cooling and a report on energy prices and costs.

According to a briefing document, the New Deal is founded on three key points – consumer empowerment, smart homes and networks, and data management and protection.

The recommendations are broadly divided into four areas.

Towards a well-functioning energy market

The Third Energy Package is supposed to provide a “truly competitive, transparent and consumer-friendly retail energy market” and the Commission and member states are called on to ensure its full implementation. Further its revision in the form of a new energy market design should include improving the frequency and transparency of bills and improving the clarity and functionality of price comparison tools.

Switching provisions should also be fully implemented and collective switching schemes should be promoted. As customers cannot switch their DSO there needs to adequate market monitoring to protect against sudden increases in distribution bills. Further the benefit of raising the interconnection level of the national networks should not be transferred to DSOs, but be directly transformed into benefits for final consumers.

Empowering citizens to take ownership of the energy transition

The MEPs believe that in the context of a well-functioning energy system, local authorities, communities, cooperatives, households and individuals have a key role to play and should be encouraged to become energy producers and suppliers if they choose to do so. Net metering schemes should be introduced by member states as should incentives such as new business models, collective purchasing schemes and innovative finance options, while the administrative burdens are minimized.

Investor certainty also should be guaranteed and grid tariffs and other fees should be reflective of the impact of the consumer on the grid in order to guarantee sufficient funding for the maintenance and development of the distribution grids.

Development of demand response management

Demand response is key to managing demand and in order to incentivise demand response, energy prices must vary between peak and off-peak periods, and therefore there should be development of dynamic pricing on an opt-in basis. This should be matched with easy and timely access by consumers to their consumption data and the related costs.

Smart technologies are seen as playing a key role and the development of smart grids and appliance should be facilitated. However, only 16 member states have committed to large-scale rollout of smart meters by 2020 and in these cases the benefits should be shared fairly between grid operators and users.

Addressing energy poverty

The MEPs believe that the Energy Union should contribute to eradicating energy poverty and provisions for vulnerable customers run throughout the document.

A common definition of energy poverty is needed and there needs to be enhanced coordination, including better data availability and collection, at EU level to combat it. Energy efficiency measures should be central to any strategy and social tariffs are also vital.

Between 50 and 125 million people in the EU are currently suffering from energy poverty, according to a 2014 report from the Buildings Performance Institute Europe (BPIE).

In the next steps according to EV vice-president Maroš Šefčovič, the Commission will present the first legislative proposals in September on energy efficiency and market design, followed by those on renewable energy and the report on energy prices, and proposals in 2018 for an energy poverty observatory.

Further reading

European Parliament: Delivering a new deal for energy consumers

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