The sustainable energy week has become a regular feature on the EU’s policy agenda and a coveted mingling opportunity for the sector’s stakeholders. Bringing together the whole range of EU (and beyond) energy experts, the event has gained notoriety as an annual milestone – but rarely in its 11 years of existence has it so directly tied into actual political discussions.
Under the theme of the Clean Energy for all Europeans package, this year’s event was distinctive in its timeliness, essentially becoming an amplifier of negotiations which are currently taking place in the institutions. Not without reason: the Clean Energy Package is huge, it is game-changing, and vested interests are high. And as the EUSEW has now wrapped up, five conclusions can be drawn on what to expect from the Winter Package in the second half of this year.
For Brussels, the electricity market has already changed
A subtle but distinct shift has taken place over the past few months in Brussels, brought about by the policy activeness and debate which has ensued from the Package’s release. A few months ago discussions overwhelmingly focused on a renewables VS fossil fuels clash, with capacity mechanisms and subsidies taking centre stage. Flexibility and decentralisation are the new buzz words. The Winter Package has shed light on whole new parts of the energy value chain which were previously little heard of: aggregators, prosumers and demand-response, local energy communities. The programme and speaker line-up of last week’s events cemented a trend which has formed since November, with these new parts of the value chain represented across all panels alongside the policy-makers they are seeking to influence.
The final Package will need to be forward-looking
EUSEW also highlighted the need for the Package to look beyond current developments and be future-proof: discussions have shifted from ‘if’ aggregators and storage to ‘when’ aggregators and storage. Incumbents have begun to invest in new technologies and open clean energy subsidiaries to compete with new players, which they were eager to showcase at last week’s event. While coal, nuclear, fuel and gas are still clearly key players in the energy game (and will be for some time), it is undeniable that discussions are looking more and more at how to make space for new integration models. The push to create a level-playing field for all market participants (removing any form of subsidies and avoiding picking technology winners) stands testament to the fact that yesterday’s emerging innovations are almost market-ready. The draft Parliament report from MEP Krisjanis Karins already suggests the market design package should be reviewed in 2025.
Digital and energy are becoming inseparable
Another trend which marked EUSEW this year was the overwhelming presence of digital players from the energy field, with more than 10 events dedicated to smart solutions and how they could help the energy transition. This is perhaps unsurprising, as digital is taking root in almost every aspect of our lives – and this on a global scale. For the energy sector though, it is very good news. Smartness is a key link between energy efficiency, sustainability, security of supply, consumer empowerment and integration of the electricity markets – all priorities the current Package is seeking to achieve.
Prosumers still need some time to fully emerge
A report by Cambridge economometrics presented at EUSEW highlighted that while the Package has the empowerment of consumers as its core, it will still take a major shift in mentalities to actually make this happen. According to the report, the group of consumers which are both willing and able to integrate solar panels onto their roofs is small. At the same time, customer reactivity to supplier switching is struggling to fully take off. Consumers remain relatively passive, and motivated by factors such as hassle-free, on-demand supply and comfort, more than by cost. But as noted above, the Package needs to be forward-looking: the market is evolving at record speed and setting out rules to accommodate this change, first and foremost to accommodate the flexibility which active consumers will bring, is a fundamental prerequisite to the change taking place.
Market design and Governance are up for tough negotiations
Last but not least, possibly the biggest take away from last week is that the Estonian Presidency is gearing up for a rocky few months on the energy front. Just today, EU energy ministers have shown that the two files which were supposed to go through processes the most smoothly – the Energy Efficiency Directive and the Energy Performance of Buildings Directive – are coming up against major stumbling blocks at Member State level. In Parliament, the draft EPBD report has collected no less than 629 amendments, and we expect similar numbers, if not more, for EED later this week. Estonia indicated at the EUSEW that it is aiming to reach a common position on the outstanding files by the end of the year, but in light of the sheer amount of ground and technicality of market design, the industry impact of RED and Member State sensitivities around Governance, this seems ambitious. This all the more so in view of the number of stakeholder alliances springing up: since last week we have witnessed the launch of an electrification alliance, a network of independent energy retailers & solution providers and a “make power clean” initiative. The Estonian presidency will certainly be colourful.
#EUSEW17 leaves us with sense of optimism for our energy transition and our Winter package: although negotiations will be tough, things are moving ahead. Legislation is essentially cementing into law what is already happening in practice. The small players are at par with the incumbents and – considering that size will always matter in a lobbying game – are building alliances and coalitions to take their advocacy to the next level. What will ensue is a forward-looking and future-ready agreement, which has the potential to dramatically change the EU’s energy landscape.