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Efficiency first in Europe’s new electricity market design – how are we doing?

Panel: 3. Policy and governance

This is a peer-reviewed paper.

Pató Zsuzsanna, RAP, Hungary
Richard Cowart, RAP
Jan Rosenow, RAP


Efficiency First is now a principle of EU energy policy. It has been embedded in the EU’s electricity market design following intense negotiations in 2018. There are many instances where power market rules can and should reflect the Efficiency First principle.

Key questions by which to assess its applicability include:

– Are capacity markets being designed to reward the value of energy efficiency and demand response?

– Are demand response resources enabled to participate fully in the new markets, or are restrictions such as supplier compensation requirements standing in the way?

– Are transmission and distribution investment plans open to alternative (and more cost-effective) “nonwires” solutions? Do reliability rules reflect the high value of demand response options? – Are the national regulatory agencies (NRAs) and Agency for the Cooperation of Energy Regulators (ACER) empowered to require equal treatment for demand-side resources?

With these and like questions in mind, we provide guidance and recommendations for Member States, relevant ministries, and NRAs on what actions they can take in their jurisdiction to implement the brand-new European legislative framework so that it creates opportunities for energy efficiency and demand response.


Figure 1 and the references to that figure have been corrrected.


Download this presentation as pdf: 3-117-19_Pato_Presentation.pdf

Download this paper as pdf: 3-117-19_Pato_rev.pdf