New RAP/BPIE assessment of Winter Package efficiency provisions

(eceee news, 17 Feb 2017) A new paper by the Regulatory Assistance Project and the Buildings Performance Institute Europe provides a preliminary review of the proposals in the winter package and what they mean for energy efficiency.

The European Commission’s so-called ‘Winter Package’ of energy legislation will provide the framework for energy policy in the European Union for many years to come. It contains proposals for a whole range of energy-related issues including energy markets, energy infrastructure, renewable energy, climate policy, and energy demand.

The European Union has adopted the principle of “Efficiency First” through the launch of the Energy Union Communication in February 2015. The authors assess the extent to which the Winter Package keeps the promise of putting energy efficiency first. More specifically, they analyse the revised Energy Efficiency Directive (EED), the Energy Performance in Buildings Directive (EPBD) the Directive on common rules for the Internal Energy Market for electricity (IEM), the Regulation on the electricity market, and the Regulation on Governance of the Energy Union. While there are many improvements across the different pieces of legislation, the Winter Package falls short of comprehensively reflecting the Efficiency First principle. The paper provides a number of concrete policy recommendations in order to incorporate the Efficiency First principle more fully into the proposed set of European energy legislation.

Key recommendations

  • Further Strengthen the Energy Efficiency Directive: The target has been changed from initially 27 percent non-binding to 30 percent binding by 2030. Analyses of the cost-effective potential of energy efficiency shows that a target of 40 percent is justified even if we ignore the multiple societal benefits of energy efficiency. Two options for strengthening the EED are 1) rectifying the lack of clarity regarding new buildings and whether savings from building codes can fully be counted, and 2) linking the current period with the new period.
  • Strengthen the Energy Performance in Buildings Directive and Harmonise with the 2030 Framework: The proposed reforms to the EBPD are unambitious and consist mainly of streamlining existing legislation, albeit leaving a number of gaps such as not directly aligning the obligation to renovate public buildings with the building renovation strategy. The main innovative change is the introduction of a smartness indicator, which is supposed to ensure that buildings are ready to connect and interact with the occupants and the grid. In principle, this is a promising approach, but the EPBD does not yet specify what exactly this will mean in practical terms. In order to make the Directive more effective, fundamental revisions are required that harmonise the targets for buildings set out in the EPBD with the new 2030 framework.
  • Establish incentive frameworks and cost recovery for efficiency in energy markets: New provisions introduced into the Electricity Directive and regulation strengthen the recognition of energy efficiency as a resource for the electricity system, but fall short of delivering a policy framework to stimulate planning and investment in energy efficiency on a level with supply-side resources. Energy efficiency is recognized as a reliability resource, yet there is no requirement that capacity remuneration mechanisms allow energy efficiency to compete on a comparable footing with supply-side resources. Regulators must provide incentive frameworks and cost recovery for innovative measures to raise the energy efficiency of their networks. This could be a strong stimulus for investment in energy efficiency; however, clarification is needed to ensure that the framing includes end-use efficiency. Distribution system operators are enabled to invest in energy efficiency, but not required to do so. Simply creating an enabling framework is unlikely to stimulate investment beyond what is required under energy efficiency obligations.
  • Enhance governance regulation to include enforcement provisions: The governance regulation recognizes the crucial role that energy efficiency must play in meeting the Union’s 2030 and 2050 climate and energy goals, and sets out a planning process that would chart a path to meeting energy efficiency goals in each Member State. However, the regulation reveals a striking gap between assessment and enforcement. It does not chart governance rules that would cause Member States, utilities, and system operators to invest in efficiency where it is less expensive or more valuable than supply-side options; nor does it contain specific enforcement tools to pay for and deliver energy savings if Member State efficiency programs were to underperform.


A free link to download the article is available here 

This paper was originally published in the journal Energy Research & Social Science.