Shaping the role of renewables self-consumers in the Energy Community
Author: Jasmina Trhulj, Head of Electricity Unit, Energy Community Secretariat
At the start of the new decade, denial of the energy transition in the Energy Community is fading away and a path to the decarbonization of the energy sector is taking shape. While the days of opted-out thermal power plants are numbered, carbon pricing and renewables auctions, resulting in increasingly cheaper electricity, are gaining momentum.
In creating this new energy landscape, the Contracting Parties should recognize and embrace the role end-consumers play in the energy transition. Giving consumers a right to generate, consume, store, and sell self-generated renewable electricity can accelerate the energy transition, whilst allowing renewables self-consumers to reap the benefits of technological development and lower their electricity bills.
In this light, the Energy Community Secretariat is preparing updated Policy Guidelines on the Grid Integration of Prosumers. The new Policy Guidelines will aim to provide advice to Contracting Party policy-makers on the development of legal and regulatory frameworks conducive to renewables self-consumption in line with the ‘Clean Energy for all Europeans Package’ (CEP), still to be adopted in the Energy Community.
All stakeholders are invited to participate in the public consultation on the draft Policy Guidelines on the Energy Community website until 17 July 2020.
National Energy and Climate Plans – promoting renewables self-consumption
The potential of renewables self-consumers to contribute to achieving wider climate and environmental goals should be identified and promoted by the Governments through the development of National Energy and Climate Plans (NECPs).
The Secretariat’s Policy Guidelines recommend that the Contracting Parties set targets for the deployment of renewables self-consumption in the NECPs
The NECPs, which should outline how the countries are expected to reach their 2030 targets in energy efficiency, renewables and greenhouse gas emissions, are currently being drafted by the Contracting Parties. The 2030 targets, which should be as ambitions as the EU’s, and the relevant legislative package are expected to be proposed by the European Commission in the first half of 2021.
The draft NECP of North Macedonia has already identified a potential of 400 MW of solar rooftop PVs
The Secretariat’s Policy Guidelines recommend that the Contracting Parties set targets for the deployment of renewables self-consumption in the NECPs. The targets should be clearly set, such as the share of rooftop PV capacity in the overall renewable capacity, and backed up by adequate policies and measures, including support schemes.
The draft NECP of North Macedonia has already identified a potential of 400 MW of solar rooftop PVs to be deployed by households and commercial renewables self-consumers as a contribution to its renewable target.
The Policy Guidelines further recommend for the Contracting Parties to establish a monitoring and reporting system, including key performance indicators. For the solar rooftops defined in the NECP of North Macedonia, the increase in installed capacity and in electricity generation as well as the contribution to emissions reduction are defined as key performance indicators.
Legal and regulatory framework – supporting renewables self-consumption
The key precondition for renewables self-consumption investments to take off is a stable, transparent and comprehensive legal and regulatory framework. Such a framework is yet to be established in the Energy Community. In fact, the majority of the Contracting Parties are still to extensively define renewables self-consumption in their national legislation.
The procedures, terms, and conditions for grid connection and market integration of self-consumption need to be addressed in detail. And this is where the Secretariat’s Policy Guidelines aim to contribute.
Covering issues from the rights and obligations of renewables self-consumers, administrative procedures, technical requirements, access to the network, market and information, as well as related charges and taxes, they will support Contracting Parties in harmonizing their legislative and regulatory frameworks with the CEP.
In June 2020, the Montenegrin Government adopted amendments to the Energy Law, including a detailed framework for renewables self-consumers.
In Republika Srpska, CEP-compliant definitions of individual and jointly-acting renewables self-consumers were introduced into the new Electricity Law adopted by the Parliament at the end of June 2020. This could give rise to citizens living in the same multi-apartments buildings to engage collectively in renewables self-consumption and share the benefits based on an agreement.
Making the grid and market fit for renewables self-consumption
Making the grid and market fit for the increased share of renewables self-consumption is equally important.
To ensure this, the Policy Guidelines recommend for system operators to properly address renewables self-consumption in network planning, and analyze how combined with energy storages, it can best support the network.
Regulators should put in place an adequate tariff design that incentivises renewables self-consumers to optimally use the network
At the same time, regulators should put in place an adequate tariff design that incentivises renewables self-consumers to optimally use the network, while ensuring that they contribute in a non-discriminatory and cost-reflective manner to the overall network costs. As a necessary technical prerequisite, the Policy Guidelines also underscore the roll-out of smart metering systems, which is lagging behind in the Contracting Parties despite the legal obligations in place.
The Policy Guidelines promote the participation of renewables self-consumers in the market through different business models
The Policy Guidelines promote the participation of renewables self-consumers in the market through different business models. The supplier should actively facilitate self-consumption through new pricing models and energy services, such as dynamic pricing and peer-to-peer trading.
However, to which extent energy consumers will use these opportunities will depend on the financial benefits from engaging in self-consumption. Having in mind the current low level of market competition and retail electricity prices for households in the Energy Community, it is to be expected that the facilitation of renewables self-consumers among non-commercial customers will have to be underpinned with support mechanisms.
The document recommends policy-makers in the Contracting Parties to consider support to households
Given that, the Policy Guidelines recommend policy-makers in the Contracting Parties to consider support to households including through direct financial support to the investment, netting schemes, feed-in tariffs, reduction or exemption from taxes, and levies.
Building on the EU’s experience, where net-metering proved to be an efficient tool in boosting small-scale renewables self-consumption in the initial phase of its development, the Policy Guidelines suggest that net-metering could be available for a limited period of time and up to a certain level of capacity.
Self-consumption could shield consumers from price increases, including from carbon pricing
Finally, consumers should be made aware of new opportunities and be empowered to make their choices. In the post-covid era, which has witnessed a radical shift in consumer behavior, an opportunity for renewables self-consumption to become the consumers’ choice should be given. Self-consumption could shield consumers from price increases, including from carbon pricing once introduced in the Contracting Parties.
Benefits from renewables self-consumption
Renewables self-consumption has a clear place in the Energy Community’s transition. Its successful deployment will require all stakeholders, from governments, regulators to system operators, suppliers and civil society, to work together to reshape the energy landscape.
The Contracting Parties’ citizens should not have to wait until renewables self-consumption is formalized under the Energy Community Treaty to start reaping the benefits.