Energy Community’s new guidelines remove barriers to prosumer development, experts say

The inclusion of prosumers to help achieve the goals of national energy and climate plans, the introduction of financial incentives, the possibility of acting jointly, but also the option to store energy, are some of the important new features of the Energy Community’s policy guidelines on prosumers, according to experts from Bosnia and Herzegovina, North Macedonia, and Serbia.

The Policy Guidelines on Integration of Renewables Self-Consumers (prosumers), prepared by the Energy Community Secretariat, are designed to align the 2018 guidelines with the EU Clean Energy for All Europeans package (CEP). Adopted in 2019, the CEP introduced the obligation for member states to adopt a legally binding regulatory framework for the connection and treatment of prosumers.

The guidelines aim to encourage contracting parties to enable end-consumers to produce and consume green energy

The aim of the guidelines is to encourage contracting parties of the Energy Community to allow consumers to generate, consume, store, and sell self-generated renewable electricity – to be prosumers.

Thanks to decreasing costs of installing solar photovoltaic panels, by about 70% in the last ten years, a large number of consumers have decided to install their own PV panels and produce electricity for self-consumption. However, the Western Balkans region is lagging behind in creating a legal framework to make this possible.

Balkan Green Energy News has asked experts from Bosnia and Herzegovina, North Macedonia, and Serbia to explain the difference between the new guidelines and those from 2018 and talk about their expected impact in the Energy Community contracting parties.

Answers came from Sasho Saltirovski, executive director of Elektrodistribucija DOOEL (EVN Group), North Macedonia’s distribution system operator (DSO), Professor Aleksandar Janjić of the Faculty of Electronic Engineering at the University of Niš, Josip Dolić, an energy lawyer from BiH, and Ajla Mehinović of the Regional Center for Sustainable Energy Transition – RESET.

In this article you can read their answers to the first question, while answers to the second one will be published in the next article.

Sasho Saltirovski: More options to support prosumers

The main difference between the 2018 guidelines and the 2020 guidelines is in that the former were primarily aimed at establishing the prosumer concept within the contracting parties, while the latter focus more on facilitating the integration of prosumers and removing the barriers identified in the last couple of years.

In this context, some of the key recommendations to be highlighted are:

The possibility for prosumers to act jointly in cases when they are using the same infrastructure (for example, several prosumers in a single residential building). This should strengthen their market position and support their penetration in the distribution systems.

The previous guidelines favored the net billing remuneration scheme, while the new ones recommend more options for supporting prosumer integration including through direct financial support to investment, other netting schemes (however, net-metering only during the initial phase of deployment and for a limited period of time, due to its negative effect on cost reflectivity), feed-in tariffs, a reduction of or exemption from taxes and levies, etc.

The threshold for exemption from balancing responsibility for prosumers has been lowered

The deployment of smart metering systems is emphasized as something that will promote a more active role of prosumers, meaning that all of them should be entitled to smart meters in a non-discriminatory and transparent manner, either through a smart meter roll-out or on request. Anyhow, the prosumer should bear the costs of installing or upgrading the smart meter, in accordance with transparent, non-discriminatory, cost reflective and published rules.

The new guidelines put greater focus on market aspects, providing recommendations on dynamic pricing schemes and demand response, the energy services business model, supplier switching, balancing responsibility (here, there is a slight decrease of the threshold for exemption from balancing responsibility for prosumers with an installed production unit, from < 500 kW to < 400 kW).

The explicit recognition of the distribution system operator’s (DSO) risk in terms of cost-recovery has resulted in a recommendation on the use of network tariffs for self-consumption, which should consist of a capacity component in addition to the energy component.

Aleksandar Janjić: Instructions for setting a legal framework

While the 2018 guidelines were practical recommendations for the treatment of prosumers, the new ones are much more oriented towards setting a legal framework in line with the EU’s new CEP.

The first set of recommendations in the guidelines insists on the inclusion of prosumers in the national energy and climate plan (NECP) of each country, as well as on assessing their contribution to national goals by 2030. Countries also need to introduce as many incentives as possible, and to incorporate incentive policies in NECPs in order to speed up prosumer integration.

Establishing single points of contact to provide customers with information on the rights, obligations and benefits of becoming prosumers

A particularly important provision of the new guidelines relates to access to information. It is recommended to establish single points of contact on the websites of national or local bodies responsible for the promotion of renewables and energy efficiency, providing final customers with all the necessary information regarding their rights, obligations, and potential benefits of becoming a renewables self-consumer.

The guidelines have also been adapted to new technologies, especially to energy storage installations. The change stems directly from the provisions of the CEP, which supports the implementation of storage in a manner to maximize the integration of renewable energy sources and increase the benefits to the market, grid, and customers.

Regarding the technical part of prosumers’ connection, it is recommended that technical characteristics of renewable sources (primarily small power plants) be defined. Advanced electricity metering schemes and smart meters are now an obligation, due to the need for greater system flexibility, but also the exchange of information.

Ajla Mehinović: The introduction of feed-in tariffs is recommended

The CEP introduces the concept of a local energy community for all Europeans, so the new guidelines suggest that prosumers act individually or jointly through aggregators or simply as a group when they are in the same building, including multi-apartment buildings.

Following the provisions of the EU’s new Renewable Energy Directive, which promotes the active participation of prosumers in the electricity market, including power purchase agreements (PPAs) and peer-to-peer trading, the guidelines call for the inclusion of peer-to-peer trade opportunities in legislation.

The use of demand-response mechanisms and time-of-use tariffs is recommended

The guidelines instruct DSOs how to assess locations where prosumers with energy storage could most effectively support the network. It is recommended to use demand-response mechanisms and time-of-use tariffs to increase the flexibility of the system, facilitate the optimal integration of small renewable generator units, and reduce the need to provide reserve capacity.

When it comes to support schemes for the integration of renewable energy sources into the energy system, the new guidelines recommend the introduction of feed-in tariffs for small producers, including vulnerable customers. For others, the guidelines recommend separate accounting of electricity consumed from the grid and electricity fed into the grid in line with market principles. In underdeveloped markets, the obligation to purchase surplus electricity from prosumers may be imposed on one or more electricity suppliers.

Josip Dolić: Assistance in the implementation of directives

The first guidelines, from 2018, were based on a study which was later confirmed by the Energy Community itself, and it is only natural that changes to the CEP created the need to adapt the guidelines, which is what has now happened.

The guidelines have been changed in terms of terminology and the volume of recommendations has been reduced. However, in essence, the recommendations have remained the same. It is just that their number has been reduced, and they are now called differently, but their scope is the same.

The guidelines have been amended in terms of terminology

Obviously, EU Directive 2018/2001 offered many different terms and elaborated on EU Directive 2009/28/EC, which is also a part of the Energy Community acquis, and that is why the guidelines have been amended.

Guidelines should serve as an aid to transposing and implementing specific EU directives and drafting regulations.