Aiming to bring together industry leaders to raise awareness about the grids’ crucial role in the energy transition and develop input for EU-level policy discussions, the immense investment needed to reinforce the grid stood out as a key topic.

“Let’s make no mistake: investments in the grid will be needed,” said Damian Cortinas, chairman of the board of ENTSO-E, the European Network of Transmission System Operators for Electricity.

“Even if we (fully leverage) digitalisation and coordination with and between TSOs; even then we will need massive investments to connect new generation, for the solidarity between regions and countries of Europe and, in particular, for the sharing of flexibilities we will need for tomorrow.”

The grids forum is the latest initiative coming from European Associations to spotlight the state of the grid and the initiative needed to get it ready for a net-zero scenario.

Earlier this week, Eurelectric reported the need to prioritise grid expansion to meet Fit or 55 and REPowerEU goals, and the European distribution system operator (DSO) association E.DSO set out key pledges for the future grid with a call for investment to be high on the EU’s future agenda.

Investment first

According to Simson, one of the keynote speakers during the forum, although there are several key topics to tackle in readying the power grid, “the first one is investment.

“Europe needs to invest €584 billion ($624.6 billion) by 2030 to modernise and expand its grids. This is huge. But we can get there.”

Referencing an announcement from the European Investment Bank (EIB) back in July of additional financing of 50% (€15 billion ($16 billion)) to the REPowerEU Plan, Simson pointed out how there has been initiative to fast track financing.

“The proposed new electricity market reform will also make a difference. We expect it to change the remuneration mechanism for grid projects and boost anticipatory investments.”

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Regulation and interconnection

The second key issue to address, adds Simson, is that of regulatory barriers. Namely, the potential offered by breaking them down and fast tracking procedures.

Third was that of the importance of cross-border interconnection, as highlighted by the energy crisis.

Stated Simson: “Europe stands to gain much if we revitalise regional cooperation and make progress on cross-border interconnections.

“ENTSO-E’s latest 10-year network development plan 2022 shows how Europe needs to invest €6 billion ($6.4 billion) per year to 2040 on cross-border infrastructure; the 15% interconnection target is not just a benchmark – it is the best way to bolster our security of supply and competitiveness.”

Digitalisation and industrialisation

As the fourth point, Simson emphasized that we need to have more efficient grids by digitalising our energy system and investing in smart grids.

“With increasing shares of solar and wind, it’s becoming more important to match demand and supply. This requires real time data and pricing, allowing consumers, business and smart energy appliances to respond to the system’s needs.”

The fifth and final point that Simson highlighted is that of industrial and commercial opportunities for the grid.

“We all read the reports of project delayed or suspended because waiting times for components go beyond 2030, or because of rising costs.

“But let’s not forget that the three largest cable manufacturers in the world are based here in Europe. If we are to boost out industrial capacity, expand the pool of skilled labour, improve supply chain, all of this would turn into jobs , growth and opportunities.”

Simson here referred to the Net Zero Industry Act, one of many tabled back in March 2023 that aim to drive Europe’s prowess within the energy transition by, among other points, boosting European supply chains and upskilling the workforce.

Further conclusions to each of the discussed topics will be released in the coming weeks.

The scheme, which was approved under the State aid Temporary Crisis and Transition Framework, seeks to accelerate investments in strategic sectors in Hungary, in line with the Green Deal Industrial Plan.

The measure will be open to companies producing relevant equipment, namely batteries, heat pumps, solar panels, wind turbines, electrolysers, equipment for carbon capture usage and storage, as well as key components designed and primarily used as direct input for the production of such equipment or related critical raw materials necessary for their production.

Under the measure, the aid will take the form of direct grants and tax advantages.

Aid under the scheme aims to incentivise the production of equipment needed for net zero and will be granted no later than 31 December 2025.

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Europe’s green industry

The State aid Temporary Crisis and Transition Framework will help speed up investment and financing for clean tech production and manufacturing in the continent and will assist Member States in delivering on specific projects under National Recovery and Resilience Plans.

Under the Framework, the following types of aid will be granted by Member States:

• Liquidity support through state guarantees and subsidised loans.
• Aid to compensate for high energy prices.
• Measures accelerating the rollout of renewable energy. Member States can set up schemes for investments in all renewable energy sources, including renewable hydrogen, biogas and biomethane, storage and renewable heat, including through heat pumps, with simplified tender procedures that can be quickly implemented.
• Measures facilitating the decarbonisation of industrial processes, including investments to phase out from fossil fuels, in particular through electrification, energy efficiency and the switch to the use of renewable and electricity-based hydrogen.
• Measures aimed at supporting electricity demand reduction.
• Measures to further accelerate investments in key sectors for the transition towards a net-zero economy, enabling investment support for the manufacturing of strategic equipment, namely batteries, solar panels, wind turbines, heat-pumps, electrolysers and carbon capture usage and storage as well as for production of key components and for production and recycling of related critical raw materials.

Sanctioned Russian-controlled entities will be excluded from the scope of these measures.

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The Green Deal Industrial Plan, announced earlier this year in March, is Europe’s response to increasing global competition in the energy sector and is hoped to enhance the competitiveness of Europe’s net-zero industry.

Also in March, the Commission adopted a new Temporary Crisis and Transition Framework to foster net zero support measures that are aligned with the Green Deal Industrial Plan.

This marks the second tranche of aid for clean tech manufacturing aligned with Europe‘s tabled Green Deal Industrial Plan.

A week before the announcement, a €3 billion ($3.9 billion) German scheme was announced by the Commission under the same category.

The European Council’s newly adopted Alternative Fuel Infrastructure Regulation (AFIR) puts in place specific deployment targets that will have to be met in 2025 and 2030 across the transport sector.

Specifically, the regulation will see extensive recharging and refuelling stations for alternative fuels deployed across Europe to support the transport sector in reducing its carbon footprint.

“The new law is a milestone of our ‘Fit for 55’ policy providing for more public recharging capacity on the streets in cities and along the motorways across Europe. We are optimistic that in the near future, citizens will be able to charge their electric cars as easily as they do today in traditional petrol stations,” commented Raquel Sánchez Jiménez, Spanish minister of transport, mobility and urban agenda.

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Main deployment targets for 2025 and 2030

The regulation provides for the following specific deployment targets:

• From 2025 onwards, fast recharging stations of at least 150kW for cars and vans need to be installed every 60km along the EU’s TEN-T network
• Recharging stations for heavy-duty vehicles with a minimum output of 350kW need to be deployed every 60km along the TEN-T core network, and every 100 km on the larger TEN-T comprehensive network from 2025 onwards, with complete network coverage by 2030
• Hydrogen refuelling stations serving both cars and lorries must be deployed from 2030 onwards in all urban nodes and every 200km along the TEN-T core network
• Maritime ports welcoming a minimum number of large passenger vessels, or container vessels, must provide shore-side electricity for such vessels by 2030
• Airports must provide electricity to stationary aircraft at all gates by 2025, and at all remote stands by 2030
• Users of electric or hydrogen-fuelled vehicles must be able to pay easily at recharging or refuelling points with payment cards or contactless devices and without a need for a subscription and in full price transparency
• Operators of recharging or refuelling points must provide consumers full information through electronic means on the availability, waiting time or price at different stations

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The AFIR is part of the Fit for 55 package, which was presented by the Commission in July 2021. The package aims to enable the EU to reduce its net greenhouse gas emissions by at least 55% by 2030 compared to 1990 levels and to achieve climate neutrality in 2050.

The EU’s TEN-T policy aims to develop high-quality transport infrastructure across the EU, consisting of railways, inland waterways, short sea shipping routes and roads linking urban nodes, maritime and inland ports, airports and terminals.

The announcement of the AFIR coincided with the conclusion of negotiations surrounding the newly adopted Energy Efficiency Directive, which sets new binding targets for EU member states to reduce energy consumption.

The amended Energy Efficiency Directive will set energy-saving targets for both primary and final energy consumption in the EU.

With the directive, member states will have to collectively ensure a reduction in energy consumption of at least 11.7% at EU level by 2030.

A monitoring and enforcement mechanism will accompany this objective to make sure member states deliver on their national contributions to this binding EU target.

EU Commissioner for Energy, Kadri Simson welcomed the adoption: “Another milestone has been achieved today towards completing the Fit For 55 objectives. Our increased ambition and stronger measures on energy efficiency will accelerate the energy transition.”

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With the directive, EU countries will now be legally required to prioritise energy efficiency in policymaking, planning and major investments.

EU countries also agreed to almost double their annual energy savings obligation in the coming years.

Under the recast directive, EU countries will be required to achieve an average annual energy savings rate of 1.49% from 2024 to 2030, up from the current requirement of 0.8%, driving energy savings in critical sectors like buildings, industry and transport.

With the definition of energy poverty included in the legislation, EU countries are compelled to prioritise energy efficiency improvements for vulnerable customers, low-income households, and individuals in social housing, including within the scope of the energy savings obligation.

Public sector

The recast directive aims to strengthen the role played by the public sector in enhancing energy efficiency practices.

A significant advancement, states the European Commission, is the introduction of an annual energy consumption reduction target of 1.9% for the public sector as a whole. The annual 3% buildings renovation obligation is being extended to all levels of public administration.

Energy Performance Contracts will be prioritised in the implementation of energy efficiency projects in the public sector, whenever possible. Public bodies will continue to consider energy efficiency requirements when making decisions regarding the purchase of products, buildings and services.

Businesses operating in the EU will be able to benefit from assessments of their energy use practices, with energy management systems becoming a default requirement for large energy consumers exceeding 85TJ of annual energy consumption and will be subject to mandatory audits in the event of non-compliance.

Enterprises with an energy consumption above 10 TJ will have to perform an energy audit and prepare an action plan for the different recommendations.

Data

The agreement also introduces a reporting scheme of energy performance in large data centres, promoting transparency and optimisation of energy efficiency potential.

Given the importance of digitalisation and data centres, the directive introduces an obligation for the monitoring of the energy performance of data centres.

An EU-level database will collect and publish data, which is relevant for the energy performance and water footprint of data centres with significant energy consumption.

Heating, workforce and financing

The new legislation promotes local heating and cooling plans in larger municipalities.

Based on the revised definition of efficient district heating and cooling included in the legislation, minimum requirements will be gradually tightened in the coming years towards achieving a fully decarbonised district heating and cooling supply by 2050.

EU countries will also need to ensure that certification and qualification opportunities are available for energy efficiency-related professions.

The agreement supports energy efficiency financing provisions to facilitate investments, including from the private sector, which has a key role to play given the limited public resources available for the clean energy transition.

EU countries are tasked with promoting innovative financing schemes and green lending products, ensuring wider access through transparent investment. Enhanced reporting on energy efficiency investments will improve accountability and transparency.

The Council’s endorsement follows the one given by the European Parliament earlier this month and marks the final step in the legislative process that started in July 2021 as part of the ‘Fit for 55’ package.

As part of the Clean Energy for all Europeans package, the Energy Efficiency Directive underwent significant amendments in 2018, introducing updated energy efficiency targets of at least 32.5% by 2030, based on 2007 projections. Additionally, an extended energy savings obligation was implemented, specifying annual energy savings targets for EU countries during the 2021-2030 period.

The Commission’s proposal for a second revision (a recast) of the Energy Efficiency Directive was put on the table in July 2021 as part of the Fit for 55 package. This proposal included an energy efficiency target of 9% compared to the 2020 reference scenario, asserting the important role to be played by energy efficiency in Europe’s efforts to reduce net greenhouse gas emissions.

Among the consumer-related amendments proposed with the current price volatility in mind, consumers should have the right to fixed price contracts and dynamic price contracts, as well as more key information on the options they sign up to and a banning of suppliers from being able to unilaterally change the terms of a contract.

It also was advocated that EU countries should prohibit suppliers from cutting the electricity supply of vulnerable customers, including during disputes between suppliers and customers, and prevent them from requiring these customers to use prepayment systems.

The Committee also backed wider use of ‘Contracts for Difference’ (CfDs) to encourage energy investments and suggested leaving the door open for equivalent support schemes after approval by the Commission.

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The importance of power purchase agreements (PPAs) was also highlighted in providing consumers with stable prices and renewable energy providers with reliable revenues.

The European Commission is tasked with setting up a marketplace for PPAs by the end of 2024.

Commenting on these outcomes, rapporteur Spanish MEP Nicolás González Casares said that with the agreement, “the parliament is putting citizens at the centre of the design of the electricity market, promoting the right to share energy, reducing price spikes and promoting affordable prices for citizens and companies”.

“We turned CfDs into the reference system for encouraging the electricity sector to transition towards a renewable-based zero emission system. A system that will improve make companies more competitive through clean electricity at competitive and stable prices.”

System flexibility

The other key focus of the Committee was system flexibility, with it advocating in favour of ‘non-fossil flexibility’ and flexibility on the demand side, for instance via the use of home battery systems to help balance the grid and to empower consumers to adapt their consumption to prices and needs.

These provisions have been welcomed by the European Association for Storage of Energy (EASE), which said in a statement they would give investors confidence in energy storage technologies to provide the flexibility needed to integrate further renewable energy.

Member states would now have the powers to set up non-fossil flexibility support schemes, which provide energy storage a solid business case.

Additionally, EU countries must now assess the flexibility needed in the electricity system to deploy further sources of renewable energy in line 2030 climate goals, and set a national objective for energy storage.

The Commission is expected to introduce a strategy for energy storage from 2025, to ensure a harmonised approach across the EU.

The reform package will now go to the Commission and Council.

Also on the radar is capital commitments for a Danish renewables fund held by Copenhagen Infrastructure Partners, which they claim place it on track to being the biggest of its kind globally, as well as the EIB’s raised support package to REPowerEU of up to €45 billion.

Enel sells part of Australian operations

Italian green energy major Enel, acting through its fully-owned subsidiary Enel Green Power (EGP), has signed an agreement with Japan-based INPEX Corporation, for the sale of 50% of the Group’s activities in Australia, namely Enel Green Power Australia and Enel Green Power Australia Trust.

The sale of the two entities, which are currently wholly owned by EGP, went for approximately €400 million ($449 million) enterprise value, €140 million ($157.2 million) of which is in debt.

Upon closing, EGP and INPEX are expected to jointly control EGPA, overseeing the company’s renewable generation portfolio and continuing to develop its project pipeline of wind, solar, storage and hybrid projects.

The overall transaction is expected to generate a positive impact of €87 million ($97.7 million) on the 2023 Group’s ordinary and reported EBITDA.

Moreover, the deal is expected to generate a positive effect on the Group’s consolidated net debt of approximately €145 million ($162.8 million).

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The sale marks the latest from the Enel Group to consolidate its debt: October 2022 saw the Group divest 50% stake in US-based Gridspertise and launch a set of sustainability-linked bonds worth €4.1 billion ($4 billion); March this year saw them sell all equity stakes in its Romanian operations to Greece’s Public Power Corporation.

EGPA operates 3 plants totalling 310MW of installed gross capacity powered by solar as well as one 76MW wind project under construction and one 93MW solar project in execution.

EGPA is also developing a significant portfolio of wind, solar, storage and hybrid projects across Australia.

The sale marks a continued entry into the renewables scene for Inpex, a Tokyo headquartered oil and gas giant – the largest exploration and production company in Japan –  that has recently announced clean hydrogen and ammonia projects, which they claim as a first for Japan.

€5.6 billion for Copenhagen Infrastructure’s fifth fund

Copenhagen Infrastructure Partners (CIP) has reached first close on its fifth flagship fund – Copenhagen Infrastructure V (CI V) – at €5.6 billion ($6.3 billion) in capital commitments received.

According to the Danish CIP, which specialises in renewable infrastructure investments  – the commitment place CI V on path to reach its target of €12 billion ($13.4 billion), becoming what the company claims the “world’s largest dedicated greenfield renewable energy fund” they state in a press release.

A large group of institutional investors across continental Europe, the Nordics, the UK, North America and the Asia-Pacific region participated in the first close of CI V.

The investment strategy, states CIP, is a continuation of CIP’s predecessor flagship funds CI I, CI II, CI III, and CI IV, applying a repeated approach where projects are entered early and de-risked and optimised prior to the start of construction to capture an attractive greenfield premium.

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The fund will focus on greenfield investments – a form of foreign direct investment where a parent company starts a new venture in a foreign country by constructing new operations from the ground up.

CPI’s fund will focus on such investments specifically within large-scale renewable energy infrastructure.

According to CIP, the fund has a global reach and intends to diversify investments across technologies such as offshore & onshore wind, energy storage and solar in low-risk OECD countries in North America, Western Europe and Asia Pacific.

At this first close, the Fund has ownership of more than 40 renewable energy infrastructure projects with a total potential commitment of approximately €20 billion ($22.4 billion), corresponding to more than 150% of the target fund size.

#ICYMI: EIB boosts REPowerEU support package to €45 billion

The EIB’s Board of Directors has decided to raise the additional funds earmarked for projects aligned with REPowerEU – a plan designed to end Europe’s dependence on fossil-fuel imports – from the initial €30 billion ($33.5 billion) package announced in October 2022 to €45 billion ($50.2 billion).

The decision was made at the EIB Group’s July meeting in Luxembourg.

The new funding marks a fresh record for the Group, expanding its support to the build-up of manufacturing capacity for strategic net-zero technologies and products.

Projects eligible for financing include renewables, energy storage, grids and energy efficiency, as well as electric vehicle charging infrastructure – Read more.

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Smart Energy International

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The EIB’s Board of Directors decided to raise the additional funds earmarked for projects aligned with REPowerEU – a plan designed to end Europe’s dependence on fossil-fuel imports – from the initial €30 billion ($33.5 billion) package announced in October 2022 to €45 billion ($50.2 billion). The decision was made at the EIB Group’s July meeting in Luxembourg.

The new funding marks a fresh record for the Group, expanding its support to the build-up of manufacturing capacity for strategic net-zero technologies and products.

Projects eligible for financing include renewables, energy storage, grids and energy efficiency, as well electric vehicle charging infrastructure.

In practice, the EIB will support manufacturing in solar and thermal photovoltaics, onshore and offshore wind turbines, battery storage, heat pumps, electrolysers and fuel cells, grid technologies, sustainable biogas and carbon capture and storage.

All projects must comply with the Bank’s environmental, social, climate and procurement standards.

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The additional funding will be deployed by 2027 and is expected to mobilise in total more than €150 billion ($167.3 billion) in investment.

Also eligible are investments related to the extraction, processing and recycling of related critical raw materials.

Also aligning with the Green Deal Industrial Plan, the EIB has stated it will support the re-skilling and upskilling cost of the EU’s workforce and work closely with education systems and institutions, including in vocational education and training, to ensure that they have the proper means to deliver the required set of skills for the net-zero transition.

The EIB’s Board of Directors also approved €10 billion ($11.2 billion) in new lending for projects.

The approvals include new wind and solar generation in Spain and Austria, grid upgrades in Italy, and an electric vehicle battery cell manufacturing Gigafactory in France.

“We are deploying the full range of our available financial firepower to support Europe’s industrial competitiveness, manufacturing and the rollout of critical technologies that will lead us to a swift and just transition to net zero,” said EIB president Werner Hoyer. “The people of our Union can always count on the unwavering support of their Bank.”

90% of the additional lending foreseen under the EIB’s REPowerEU+ package will be provided by the EIB; the remaining 10% via the EIF (European Investment Fund), subject to EIF Board approval.

Outside the EU, the Board also approved financing for a new electricity interconnector between Ecuador and Peru and streamlined financing for small-scale clean energy and green transition projects across Africa.

The law will set energy-saving targets in both primary and final energy consumption in the EU.

With the directive, member states will have to collectively ensure a reduction in energy consumption of at least 11.7% at EU level by 2030 (compared to the projections of the 2020 Reference Scenario).

A monitoring and enforcement mechanism will accompany this objective to make sure member states deliver on their national contributions to this binding EU target.

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By 2030, member states need to save on average 1.5% per year. The annual energy savings will begin with 1.3% in the period until the end of 2025 and will progressively reach 1.9% in the last period up to the end of 2030.

The saving targets should be met through local, regional and national measures, in different sectors – such as public administration, buildings, businesses and data centres.

Member of the EU parliament insisted that the scheme should in particular cover the public sector, which will have to reduce its final energy consumption by 1.9% each year.

Member states will also need to ensure that at least 3% of public buildings are renovated each year into nearly-zero energy buildings or zero-emission buildings. The directive also establishes new requirements for efficient district heating systems.

Member of Parliament Niels Fuglsang, who negotiated the Directive as rapporteur, said: “The energy crisis is not over. There is no guarantee that the next winters will be as mild as the last one. In the next seven years, we have to deliver the needed structural changes.

“I am very happy that we succeeded in pushing member states towards far more ambitious energy efficiency targets. This is crucial so that we no longer depend on Russian energy in the future and can meet our climate targets. Today’s vote is a great victory; it is not only good for our climate, but bad for Putin.”

Parliament adopted the legislation by 471 votes to 147 with 17 abstentions. It will now also have to be endorsed by the Council of Ministers before it can enter into force.

On 14 July 2021, the European Commission adopted the ‘Fit for 55’ package, adapting existing climate and energy legislation to meet the new EU objective of a minimum 55% reduction in greenhouse gas (GHG) emissions by 2030

The package included the recast of the existing Energy Efficiency Directive, aligning its provisions with the new 55% GHG target.

According to the report, published by the European Heat Pump Association (EHPA), European heat pumps sales grew by +38.9% in 2022. With 3 million units sold across Europe, the Association states this is a new sales record.

France, which yet again saw strong heat pump growth last year, was found by the report to be leading the way in terms of avoided greenhouse gas emissions through heat pumps, at over 16Mt. It is followed some way behind by Germany and Italy at over 5Mt avoided each.

Still not on track

Although the figures are promising, more is yet needed, states the Association.

In a press release announcing the report, they stated:

“If things were to stay this way, the buildings sector would be off track to decarbonise heating and cooling by 2050, as the EU climate law requires. This is because the playing field is still tipped massively in favour of fossil fuels, in terms of subsidies and taxation.

“However, the issue is very likely to be addressed soon by the European Commission in their upcoming EU Heat Pumps Action Plan, which should help make the situation fairer for clean solutions.”

Jozefien Vanbecelaere, head of EU affairs at EHPA, added that “heat pumps have a leading role to play to reach net zero emissions, but to bring them centre stage governments must give clear policy signals. They can do this by addressing distorted pricing which favours gas over electricity and supporting the EU Commission’s proposed phase out of standalone fossil fuel boilers.”

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European heat pumps figures

With approximately 120 million residential buildings in Europe, the report finds the heat pump market share in the building stock at over 16%.

According to the report, all heat pump markets across Europe experienced substantial growth. Specifically:

• The strongest relative gains were achieved in Belgium (+118.0%), Poland (+112.0%) and the Czech Republic (+105.9%).

• 87% of the European market volume was sold in only ten countries. The five biggest European heat pumps markets in 2022 were France (621,776 units sold; +15.8% growth vs. 2022), Italy (513,535; +35.2%), Germany (275,697; +59.0%), Sweden (215,373; +61.3%), and Poland (207,992; +112.0%).

• The biggest absolute gains were achieved in Italy (133,564), Poland (109,890), Germany (102,310), France (84,665), Sweden (81,875) and Finland (66,984).

• The Nordic countries show the biggest market penetration for heat pumps in the building stock and also experience significant shares of the technology in the renovation sector.

• Sweden, Norway, Denmark and Finland grew by 40,092 units, although figures for the Swedish market in the report do not include the growth in air-air heat pumps.

• While Finland’s market is maturing, it revealed a significant growth perspective for Europe. If all countries had the same market penetration as Finland, they state, the annual sales number of heat pumps in Europe would be more than seven times bigger than today’s, resulting in 15 million units sold per year and – if maintained until 2030 – reaching a stock of 106 million units in that year.

• In aggregated terms, 19.79 million heat pump units were installed since 1996. This amounts to an installed thermal capacity of 173.6GW.

• All installed heat pumps produce 325TWh of useful energy, 205.2TWh of which being renewable. Their use saved 262.6TWh of final and 117.6TWh of primary energy.

For policymakers, states the report, the findings mark a good forecast, as it reveals significant untapped potential to reduce Europe’s energy demand for heating, cooling and hot water production.

However, they add that achieving it by 2030 would require an annual 21% growth rate and a tremendous effort with regards to framework conditions, efficiency requirements for buildings, upskilling of installers and planner/architect qualifications as well as the development of flanking measures.

Over in the UK

Responding to the release of the EHPA’s report was The Heat Pump Association, which are members of the EHPA, who commented on the report and its signals for the market in the UK.

Stated the Association: “The European Heat Pump Association’s latest market report showcases the positive impact heat pumps are having across Europe to mitigate emissions and grow European economies. We welcome these figures and believe the UK can afford to be equally ambitious provided the Government takes swift and decisive action to support the market.”

According to the Association, the UK is showing significant progress in its heat pump rollout, with the first half of 2023 projecting a sales growth of 10%.

However, they add that the country is still falling behind, “with one of the lowest heat pump penetration rates across Europe despite high forecasted growth.”

The Association related this back to the correlation between decreasing ratio of gas to electricity prices and increased heat pump sales; “it is concerning that the UK has one of the highest ratios of electricity to gas prices out of 27 countries analysed in the report.”

Charlotte Lee, chief executive of the Heat Pump Association, also commented: ” We believe the UK Government’s projected deployment target of 600,000 heat pumps installations per year by 2028 remains achievable provided it moves swiftly and decisively to introduce the Future Homes Standard, provide early clarity of a date for the full phase out of 100% fossil fuel boilers, and takes steps to reduce the price of electricity.”

According to the World Green Building Council, buildings are responsible for 39% of global energy-related carbon emissions; 28% from operational emissions from energy needed to heat, cool and power them.

By enabling a shift away from heating and cooling powered by fossil fuels, stated the Commission in a press release announcing the consultation, heat pumps are central to the clean-energy transition and to achieving carbon neutrality in the building sector.

Input from the consultation will feed into the Commission’s work on an action plan on heat pumps intended for publication in the fourth quarter of this year.

The consultation has been launched in all official EU languages and will run for 12 weeks until 30 August 2023.

The consultation focuses on four main areas, which are central to the expansion of the sector:

1. A partnership between the Commission, EU countries and the sector itself
2. Communication with all interest groups and a skills partnership for rolling out heat pumps
3. Legislation, notably eco-design and energy labelling
4. Accessible financing

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A synopsis report of the contributions to this consultation and a summary of the results of all consultations will be published together with the Communication itself.

The REPowerEU plan calls for prioritising investments in renewables and energy efficiency to reduce fossil-fuel imports and for doubling the current roll-out rates of heat pumps in buildings. It also calls for a faster roll-out of large heat pumps for district heating and cooling networks.

The European Commission report on the competitiveness of clean energy technologies indicates that the roll-out of all types of heat pumps needs to accelerate further: from heat pumps for single-family houses, large multi-apartment buildings, tertiary buildings and heat networks, to high-temperature heat pumps for industrial applications.

The Green Deal Industrial Plan further points to heat pumps as one of the key technologies needed to meet EU climate-neutrality goals in the Net-Zero Industry Act to underpin industrial manufacturing.

The new rules, one of the deliverables of the action plan on the digitalisation of energy, set out a reference model for EU countries defining interoperability requirements for access to and exchange of smart metering data by consumers and energy market participants.

Under these new rules, consumers should be able to get easy access to their metering data and also give permission for data on their energy consumption or generation to be used by third parties in ways which benefit them.

As such the aim is to provide consumer protections while at the same time empowering them to be active participants in the energy transition.

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For businesses and system operators, the rules, and others that follow, should facilitate their operation on the internal market and the easy, safe and secure flow of data to those that need it.

In turn, this should help operators to improve existing processes and incentivise the development and delivery of new energy services, such as energy sharing and demand response.

Rules on data access

The EC reports the new rules as the first of a number of such regulations that will be put in place in the next two years in order to facilitate the interoperability of energy consumer data.

Their implementation follows what is described as an intensive development phase and consultation process with the relevant stakeholders to ensure the new rules cover all the necessary issues and are workable in practice.

Among the participants in the process were network operators, which also will be key to the implementation of the rules.

Commenting, Paul de Wit, Regulatory Advisor at Alliander and Chair of the DSO Entity Expert Group on Data, said harmonising the access to metering and consumption data is key to enabling massive consumer participation in the energy market.

“Therefore, DSO Entity, which represents over 900 DSOs that directly connect more than 250 million consumers, will contribute to accelerating the European energy transition by assisting the European Commission to guide member states implementing the new rules.”

Common reference model

The common reference model is composed of a set of reference procedures for access to data and of the required information exchanges between the roles acted by market players.

Its focus is on the business, function and information layers of interoperability, with the other two layers – communication and component – able to be determined at a national level in accordance with local specificities and practices.

The reference model describes the workflows that are required for specific services and processes based on a minimum set of requirements to ensure that a given procedure can run correctly, while allowing for national customisation.

It is composed of a ‘role model’ with a set of roles/responsibilities and their interactions; an ‘information model’ that contains information objects, their attributes, and the relationships between these objects; and a ‘process model’ detailing the procedural steps.

The model also is technology-neutral and not directly tied to any specific implementation details.

The EC is planning a series of workshops, along with representatives from the DSO Entity and ENTSO-E, to introduce the new regulations to national authorities and system operators.

The regulations also require the setting up of a common repository of national practices on how the reference model is being implemented in EU member states for public access and sharing at the EU level as a measure of transparency as well as lowering the barriers of access for new market participants.

Established after the conclusion of the G7 Summit in Japan, the collaboration aims to strengthen bilateral cooperation on climate change, clean energy and the energy transition.

The partnership was launched in Seoul, South Korea, during the EU-Korea Summit by Commission president, Ursula von der Leyen, and Korean president, Yoon Suk Yeol.

Both parties reaffirm with this partnership their commitment to keep global temperature rise below 1.5°C and reach climate neutrality by 2050 at the latest. Additionally, both sides reiterated their commitment to their respective 2030 targets for greenhouse gas emission reductions.

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Specifically, the partnership will focus on the following areas:

• Supporting a clean and fair energy transition by intensifying cooperation on renewable energies, energy efficiency, renewable and low-carbon hydrogen, batteries and green mobility, Carbon Capture, Utilisation and Storage (CCUS) and a just transition away from unabated coal-fired power generation;
• Working with third countries to facilitate their green transition, notably in the area of climate change mitigation, adaptation and resilience, the clean and fair energy transition and circular economy;
• Strengthening efforts on combatting climate change, including cooperation on climate adaptation, carbon pricing, methane emissions and climate finance;
• Joining forces in other areas such as business cooperation, sustainable finance, research & innovation, sustainable food systems, sustainability and resilience of our supply chains as well as employment and the social dimension of the green transition;
• Increasing cooperation on environmental issues, including but not limited to biodiversity loss, forest degradation and deforestation, circular economy and the full life cycle of plastics, as well as the implementation of the Kunming-Montreal Global Biodiversity Framework.

International cooperation amid turbulent waters

Alongside the partnership, the two have also agreed to promote international climate action and have stated a commitment to cooperate to support developing countries and emerging economies with the implementation of their climate and environmental policies.

The partnership was announced a day after the Group of Seven (G7) Summit, whereby G7 leaders acknowledged the importance of new incentives, industrial policies and public as well as private investments.

According to a Washington-issued release, “leaders committed to work together to ensure regulations and investments will make clean energy technologies more affordable for all nations and help drive a global, just energy transition for workers and communities that will leave no one behind.”

During the announcement of the partnership, on the back of the Summit, Von der Leyen commented on the significance of the partnership, which will strengthen EU-South Korean ties as Russia continues its offensive against Ukraine.

“It is wonderful to experience this true friendship. It is heart-warming and I think our people need it in these troubled times in the changing world… We defend together for as long as it takes, Ukraine’s attempt to secure the UN Charter and their fight for the respect for international law as we stand by your side in these difficult times under constant threat on the peninsula.”

According to Reuters reportage, results from the G7 Summit were a tightening of sanctions against Russia and a discussed need to reduce reliance on trade with China.

Green Partnerships are set up as bilateral frameworks to enhance dialogue and cooperation with key EU partners. According to the European Commission, they are comprehensive forms of bilateral engagement established under the European Green Deal.

The first Green Partnership was established with Morocco ahead of COP 27 in October 2022.

Said Von der Leyen: “The EU and the Republic of Korea share the ambition of a climate-neutral future. The launch of our Green Partnership will help us towards that goal. We will now work on the convergence in key areas and deepen cooperation on strategic, clean energy projects. Because it is good for our supply chains, good for our competitiveness and good for the planet.”

The guidance, which is based on assessment of the content requirements mandated by the EU Battery Regulation, covers no less than 90 data attributes that have been identified in the project for a battery passport.

These, developed with input from the broader battery community, in turn are grouped into seven ‘content clusters’ in line with the regulation.

Sophie Herrmann, Partner at system change company Systemiq GmbH and Programme Director of the Battery Pass Consortium, explains that the content guidance is intended as an asset for all participants of the digital passport ecosystem, from battery value chain actors to standard development organisations and other consortia and projects.

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“Digital battery passports can contribute to lowering the impacts of battery manufacturing such as greenhouse gas emissions, increase resource efficiency along the entire value chain, and better assure the upholding of human rights standards. They are a critical aspect of ensuring resilient supplies of critical raw materials for Europe’s mobility transition.”

Battery Pass

The Battery Pass is an initiative co-funded by Germany’s Federal Ministry for Economic Affairs and Climate Action (BMWK) with the aim to advance the implementation of the EU battery passport mandated by the Battery Regulation.

The three-year project, which launched in April 2022, is being undertaken by an 11-member consortium from industry, science, technology and auto manufacturing, with the objective of developing and demonstrating a battery passport.

In terms of the EU Battery Regulation, which is expected to enter into force in Q3 of 2023, the adoption of a battery passport for batteries for electric vehicles, light transport and industrial applications >2kWh would occur in February 2027.

Battery passport content guidance

The content clusters set out by the Battery Pass consortium are:

1. General battery and manufacturing information – of interest for end-users as well as authorities in the context of tracing back liability and verifying compliance and can be largely based on standardised reporting such as unique identifiers or manufacturing codes.
2. Compliance, labelling and certifications (included under 5 below).
3. Battery carbon footprint – a key policy measure to enable decarbonisation in the value chain through transparency with the recommendation following the Global Battery Alliance’s GHG Rulebook to calculate ‘cradle to grave’ carbon footprints using company-specific data.
4. Supply chain due diligence – helps to address social and environmental issues in complex supply chains and the due diligence report the only mandatory battery passport data point but further voluntary additions recommended.
5. Battery materials and composition – key for logistics, dismantling and recycling companies as well as consumers, including information on battery chemistry and critical raw materials and on hazardous substances and their potential impact.
6. Circularity and resource efficiency – to enable secure and sustainable access to critical battery raw materials, including removal and disassembly of batteries, recycling of materials and end-user waste management.
7. Performance and durability – facilitates a comparison of batteries at purchase and the determination of the value for a second life and amounts to almost half of the data attributes but detailed descriptions in the Regulation are falling short.

Technical standards

This content guidance marks the completion of the first major phase of work for the project but the consortium has indicated it intends to continue to work on updates based on regulatory processes and new insights that emerge.

The consortium also intends to provide recommendations to the European Commission and to explore opportunities to become involved in secondary regulation.

The next major deliverable is a set of technical standards, followed by the demonstrator in virtual form by the end of Q1 2024 and the final version by the end of Q3 of 2024.

The battery passport is set to be the first digital product passport implemented in the EU.

Further product categories are planned to follow, including textiles, construction, consumer electronics, plastics, chemicals and the automotive sector.

The proposed reforms make Contracts-for-Difference the new norm for supporting renewables investments. It actively supports the growth of power purchase agreements and allows investors to sell their electricity via PPAs or directly on the electricity market.

These reforms, which are part of the Green Deal Industrial Plan, come in response to the Russian invasion of Ukraine, as well as increased competition from the US, both of which have highlighted the need for a more adaptable and competitive electricity market.

While the consensus seems to be positive that these reforms are a step in the right direction, it seems the reforms are more targeted and toned down than initially expected.

Concerns have also been expressed that the reforms are incomplete and will need further tweaking in the future.

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Politico reports Georg Zachmann, senior fellow at European think tank Bruegel as stating: “Last year, politicians essentially wanted to take over electricity market designs and thought they knew what outcomes they wanted — they wanted to repair the market with a hammer.

“At the same time, the pressure in European energy markets has somewhat relaxed and the result is we have a much more targeted reform.”

Zachmann suggests political discussions which will follow could become long-winded and complex and recommends greater coordination on both the supply and demand side and consistent messaging on how old and new market mechanisms should work together.

ENTSO-E, the European Network of Transmission System Operators for Electricity, supports the objectives of the proposals to optimise the current electricity market design but has expressed concerns in a statement.

ENTSO-E considers that some key elements are currently missing from the proposals. In particular, “a need to improve investment signals for adequacy in order to secure the availability of reliable and affordable electricity when needed”.

The organisation also has some concerns about the impact of specific provisions that were included without a proper impact assessment.

According to its statement, this could have a “detrimental effect on the functioning of the market (e.g. including in legislation detailed provisions on intraday gate closure time, compensation mechanisms for offshore renewables using congestion income, mandatory development of Regional Virtual Hubs for forward markets).

“These topics could be considered in a possible future more comprehensive market reform, if the net benefits of these measures can be proven by a thorough impact assessment.”

WindEurope chief executive Giles Dickson suggests that the problem of Europe’s electricity market these last two years has not been the market design.

“It’s been high gas prices, made worse by the war. The market design has been extremely efficient in matching supply and demand – and has given consumers years of affordable electricity prices.

It’s good the Commission proposal builds on the strengths of the existing market design. What’s needed is an evolution not radical changes.”

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Daniel Fraile, chief policy officer of Hydrogen Europe said in a statement: “The possibility to combine both contract-for-difference and power purchase agreements will be hugely beneficial for renewable hydrogen producers who depend on these PPAs to prove the renewable character of their hydrogen.

“The proposed obligation for Members States to regularly assess their flexibility needs is also much welcome because it will highlight the need to deploy long-term storage solutions where hydrogen is poised to play a fundamental role,” he added.

Ignacio Galán, Iberdrola’s executive chairman, said the proposed reforms “recognise that increasing electrification through investments in renewables, networks and storage is the only way to achieve energy security in Europe”.

“Offering customers stability through long-term clean energy contracts has been core to our strategy for years, so we welcome measures that seek to strengthen these aspects based on market mechanisms.

“The Commission has acted swiftly to respond to the crisis and keep the Single Market and the Green Deal goals on track. Members states and the European Parliament now need to be unified and move with the same speed to ensure a clean and secure energy future for the continent becomes a reality.”

The proposed reform will now have to be discussed and agreed upon by the European Parliament and the Council before entering into force.

The Commission’s suggested reforms for Europe’s electricity design underline the fundamental role of flexibility that storage can provide to the electricity system.

In the document, the Commission recommends ten points for EU countries to consider when designing network charges and tariff schemes and facilitating permit granting.

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According to their recommendations, Member States should:

1. Account for the double role (generator-consumer) of storage when defining regulatory framework and procedures, in particular when implementing the Union legislation concerning the electricity market, in order to remove existing barriers. This includes preventing double taxation and facilitating permit-granting procedures.
2. Identify the flexibility needs of their energy systems in the short, medium and long term, and in their updates of the national energy and climate plans strengthen the policies and measures that aim to promote demand response, flexibility and storage deployment, both utility-scale and behind-the-meter.
3. Ensure that energy system operators further assess the flexibility needs of their energy systems when planning transmission and distribution networks, including the potential of energy storage (short- and long-duration) and whether energy storage can be a more cost effective alternative to grid investments. They should also consider the full potential of flexibility sources, in particular storage, when assessing their connection capacity (e.g. considering flexible connection contracts) and operating the system.
4. Identify potential financing gaps for short-, medium- and long-term energy storage, including behind-the-meter (thermal and using electricity) and other flexibility instruments, and if a need for additional flexible resources to achieve security of supply and environmental objectives is identified, consider the potential need for financing instruments that provide visibility and predictability of revenues.
5. Explore whether energy storage services – in particular the use of flexibility in distribution networks and the provision of non-frequency ancillary services – are sufficiently remunerated and whether operators can add up the remuneration of several services.
6. Consider competitive bidding processes if necessary to reach a sufficient level of deployment of flexibility sources to achieve security of supply.
7. Identify any specific actions, regulatory and non-regulatory, to remove barriers to the deployment of demand response and behind-the-meter storage, e.g. linked to the uptake of electrification of end use sectors based on renewable energy sources, the deployment of individual or collective self-consumption and to bidirectional charging through the use of electric vehicle batteries.
8. Accelerate deployment of storage facilities and other flexibility tools in islands, remote areas and the EU’s outermost regions areas with insufficient grid capacity and unstable or long-distance connections to the main grid, for example through support schemes for low carbon flexible resources, including storage, and revise the network connection criteria to promote hybrid energy projects (i.e. renewable generation and storage).
9. Publish detailed data on network congestion, renewable energy curtailment, market prices, renewable energy and GHG emission content in real time, as well as installed energy storage facilities, to facilitate investment decisions on new storage facilities.
10. Support research and innovation in the technology, in particular long-term energy storage and storage solutions coupling electricity with other energy carriers, and to optimise existing solutions (e.g. efficiency, capacity, duration, minimal climate and environmental footprint). Consideration should be given to de-risking instruments, such as technology accelerator programmes and dedicated support schemes that guide innovative energy storage technologies through to the commercialisation stage.

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EASE calls for energy storage integration in market reformations

The recommendations from the Commission coincided with their proposal for electricity market design reformation, a reformation that will form part of the Green Deal Industrial Plan. Key within the proposals was also the theme of flexibility, to which storage technologies can be leveraged.

In a press release response to the proposed market reformations, EASE – the European Association for Storage of Energy – called the upcoming revisions “an opportunity for the European Union to accelerate the transition to a sustainable and affordable energy system by boosting investment where it is most needed to achieve the Union’s Fit-for-55 and REPowerEU objectives.

“Energy storage must be deployed at a high speed and a large scale (2030 demand estimated at 200GW i.e. twice the current capacity) to offer cost-efficient solutions to increase the penetration of renewables in the system, contain electricity prices, and substitute fossil-based flexible generation while maintaining the security of supply.”

EASE’s response saw them join Cleantech for Europe, Climate Strategy, Future Cleantech Architects, 1.5° Ventures and InnoEnergy in urging co-legislators to use the potential of storage by introducing ambitious provisions.

Their recommendations to do so are twofold:

1. Strengthen the energy storage business case

According to EASE, the revised electricity market design must provide an appealing business case for projects to attract the necessary investment.

New market products, in particular for peak shaving, curtailment prevention and congestion management, will be needed to secure predictable revenue streams for storage, both utility-scale and behind-the-meter.

A lower carbon cap needs to be mandated in the capacity market and participation of carbon-neutral facilities should be favoured.

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Support schemes need to be tailored to storage when market failures occur i.e. when the storage capacity deployed is not enough to ensure the flexibility needed in the system.

Storage needs to be a prime participant in the Power Purchase Agreement (PPA) market – a key focus area of the EU’s proposal – with a focus on 24/7 clean energy PPAs.

2. Further market visibility for projects should be provided with the following measures:

Energy storage targets need to be mandated at the Member State level, reflected in the 2030 NECPs (National Energy and Climate Plans), addressing flexibility needs from seconds to seasons.

Set the necessary conditions for a strong storage market. This includes signals for flexibility, harmonised capacity mechanisms and support schemes for storage facilities, as well as swift implementation of the new framework – all of which will play a key role in helping the European Union offer consumers a secure, sustainable, and affordable electricity supply.

The agreement establishes an EU energy efficiency target of 11.7% for 2030 – up from the 9% of the Commission’s original ‘Fit for 55′ proposal.

The annual energy savings obligation nearly doubles, with EU countries required to achieve new savings each year of 1.49% of final energy consumption on average from 2024 to 2030, up from the current level of 0.8%.

The requirement is to reach 1.9% by the end of 2030.

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A statement from the Commission reads that for the first time, the energy efficiency first principle is given legal strength with a clear requirement for EU countries to take energy efficiency into consideration in policy, planning and major investment decisions in the energy sector and beyond.

The revised rules give a greater responsibility to the public sector to increase energy efficiency, with public bodies needing to systematically take into account energy efficiency requirements in their public procurement of products, services, buildings and works.

A new annual energy consumption reduction target of 1.9% is introduced for the public sector, while EU countries’ obligation to renovate each year at least 3% of the total floor area of buildings owned by the public administration now also covers the regional and local levels.

The revised directive also requires companies to become more energy efficient, with energy management systems to become a default obligation for large energy consumers that exceed 85TJ of annual energy consumption.

Otherwise, companies with consumption exceeding 10TJ will be subject to an energy audit.

A reporting scheme for the energy performance of large data centres is also introduced.

Heating and cooling and finance

Under the new rules, EU countries will have to promote local heating and cooling plans in large municipalities having populations above 45,000. Also, with the revised definition of efficient district heating and cooling, minimum requirements will be gradually changed to ensure a fully decarbonised district heating and cooling supply by 2050.

Support to new high efficiency cogeneration units using natural gas and connected to district heating in efficient district heating and cooling systems will only be possible until 2030, whereas any other fossil fuel use will be banned for new heat generation capacities in such systems.

The deal also further strengthens provisions on energy efficiency financing to facilitate the mobilisation of investments. EU countries will be required to promote innovative financing schemes and green lending products for energy efficiency by ensuring their wide and non-discriminatory offer by financial institutions. Countries also will have to report on the volume of energy efficiency investments.

Finally, the agreement includes the first EU definition of energy poverty and countries will have to implement energy efficiency improvement measures as a priority among people affected by energy poverty, vulnerable customers, low income households, and where applicable, people living in social housing.

Among these is the creation of one-stop-shops for technical and financial assistance and out-of-court mechanisms for the settlement of disputes.

With the agreement reached, it must now be formally adopted by the European Parliament and Council and then published to enter into force.

This meeting between the powerhouse leaders saw a joint commitment towards diversifying critical mineral supply chains and enabling EU-extracted resources for Electric Vehicles (EVs) to count toward Inflation Reduction Act (IRA) EV tax credits.

According to a joint EU-US press release, the two will cooperate on “diversifying critical mineral and battery supply chains, recognising the substantial opportunities on both sides of the Atlantic to build out these supply chains in a strong, secure and resilient manner.

“To that end, we intend to immediately begin negotiations on a targeted critical minerals agreement for the purpose of enabling relevant critical minerals extracted or processed in the European Union to count toward requirements for clean vehicles in the Section 30D clean vehicle tax credit of the Inflation Reduction Act.”

This is hoped to reduce strategic dependence on such supply chains and generate more public and private investment in clean energy technologies.

Critical mineral supply chains have been proving a core area of concern for the clean energy transition; earlier this year in January, the International Energy Agency identified diversification of supply chains as crucial within a clean energy-based economy.

Competitive regulation

The meeting also brought about the Clean Energy Incentives Dialogue, a dual coordination of clean energy industrial bases to strengthen future investments.

At the heart of the Dialogue is investment into clean energy technologies, especially EVs and clean hydrogen, which has become an area of regulatory competition between the EU, the US and China.

Biden’s IRA announced last year became a regulatory game changer for the country’s energy transition, placing the US high on the list as an investment landscape.

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China, on the other hand, invested $546 billion in 2022 across solar and wind energy, EVs and batteries, surpassing both the US and the EU.

The EU’s response was the recently announced Green Deal Industrial Plan, which the Commission hopes will enable it to regain a competitive edge against both.

The joint Dialogue therefore aims to ensure that clean energy investments from the EU and US do not clash.

In the release, they state that the Dialogue aims to “coordinate our respective incentive programmes so that they are mutually reinforcing.

“Both sides will take steps to avoid any disruptions in transatlantic trade and investment flows that could arise from their respective incentives. We are working against zero-sum competition so that our incentives maximise clean energy deployment and jobs – and do not lead to windfalls for private interests.”

The Clean Energy Incentives Dialogue will form part of the EU-US Trade and Technology Council, where it will also facilitate information-sharing on non-market policies and practices of third parties—such as those employed by the People’s Republic of China (PRC).  

The goal is to achieve a zero target by 2050, thereby aligning the production and consumption with the region’s net zero goal.

The measure, among 55 pages of amendments to initial proposals, forms part of the revision of the Commission’s directive and regulation on F-gases.

Other objectives of the revision include enhancing implementation and enforcement on issues such as illegal trade and the training needs on F-gas alternatives and improving monitoring and reporting as well as making textual improvements.

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Fluorinated gases include hydrofluorocarbons as the most important component, perfluorocarbons, sulphur hexafluoride and nitrogen trifluoride and are greenhouse gases with high global warming potential.

Of these, sulphur hexafluoride (SF₆) is of most interest to the energy industry with its widespread use in switchgear, while other uses for F-gases have included refrigerators, air conditioning, heat pumps, fire protection and foams and aerosols.

Overall, the F-gases are estimated to account for about 2.5% of the EU’s greenhouse gas emissions and thus their elimination, while a small component is nevertheless a necessary one.

As the members of the Switching Gears for Net Zero Alliance – six leading global power equipment manufacturers – put it, “Our choice is clear: we want to switch gears for net zero, for zero F-gases in switchgear”.

Measures on SF₆

SF₆ has been in the sights of the EU with its 2014 prohibition for most applications, except for the power sector due to the lack of alternatives at the time.

The new measures on SF6 confirm the existing prohibitions on specific uses but complement them with additional restrictions on their use in all new switchgear in power distribution, either as replacements or additions.

These are:
● MV switchgear for primary and secondary distribution ≤24kV – from 1 January 2026
● MV switchgear for primary and secondary distribution from >24kV to ≤52kV – 1 January 2028
● HV switchgear from >52kV to ≤145kV and ≤50kA short circuit current – 1 January 2028
● HV switchgear >145kV and >50kA short circuit current – 1 January 2031.

Switchgears already installed in the grid as of these dates do not require to be replaced.

With SF6 free alternatives already available on the market, and with the long lifetime of switchgear in the grid, network operators have the opportunity to get ahead of the restrictions, while also contributing to the reduction of their own carbon footprint.

Among these, solutions with fluoronitrile mixtures, while having lower global warming potential than SF6, nevertheless involve the use of environmentally harmful F-gases and are not encouraged.

Mark Kuschel, Head of International Standardisation Grid Technologies at Siemens Energy, says the vote to ban climate-damaging F-gases in switchgear is an important milestone in the decarbonisation of power transmission.

“It ensures that in the future climate-damaging gases will be replaced by climate-friendly alternatives in power transmission – the right technologies and know-how for this are already available today.”

Heat pumps

The other main topic of interest for the power sector is heat pumps, with their use being promoted due to their lower emissions compared to conventional natural gas boilers. The concern is that the HFC phase-down does not endanger the REPowerEU heat pump deployment targets as the industry adapts to alternatives.

HFC prohibitions start to take effect from 1 January 2026, one year later than initially proposed. After that the Commission will undertake assessments annually on the impact of the phase-down, with a view to allowing a limited amount of additional quotas for HFCs in heat pumps until 2029.

The REPowerEU target is the rollout of 10 million heat pumps by 2027 and a doubling of the rate of their deployment by 2030.

The next step for the proposals is their adoption during the 29-30 March 2023 plenary sitting and then serving as the negotiating position with EU governments on the final shape of the legislation.

Today, the Commission presented the Green Deal Industrial Plan to enhance the competitiveness of Europe’s net-zero industry and support the transition to climate neutrality.

The Plan aims to provide a more supportive environment for the scaling up of the EU’s manufacturing capacity for net-zero technologies and products required to meet Europe’s ambitious climate targets.

The Plan is based on four pillars: a predictable and simplified regulatory environment, speeding up access to finance, enhancing skills and open trade for resilient supply chains.

Staying competitive

The plan is the EU’s response to global legislative developments within the clean energy industry.

In announcing the plan, Ursula von der Leyen, president of the European Commission, said: “We see that major economies – rightfully so – are stepping up their investment in the net zero industry…”

Von der Leyen cited Japan’s green transformation plans, India’s production-linked incentive scheme – “a massive investment for pv and…batteries”, as well as the Inflation Reduction Act in the US and investments across the UK, Canada and other countries.

However, stated von der Leyen, while the plan comes as a European competitive response, she emphasized during a media briefing the importance of all plans that aim to advance a net zero future: “Let me be very clear: We welcome this.

“This is good news. We have long argued that the fight against climate change is a [necessity]…We are competitive, we need competition [and] what we are looking at is that we have a level playing field in global competition…”

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Regulation

The first pillar of the plan is about a simpler regulatory framework.

The Commission will propose a Net-Zero Industry Act to identify goals for industrial capacity and provide a regulatory framework suited for its quick deployment.

This is hoped to ensure simplified and fast-track permitting, promoting European strategic projects and developing standards to support the scale-up of technologies across the Single Market.

The framework will be complemented by the Critical Raw Materials Act, to ensure sufficient access to those materials, like rare earths that are vital for manufacturing key technologies, and the reform of the electricity market design, to make consumers benefit from the lower costs of renewables.

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Funding

The second pillar of the plan will speed up investment and financing for clean tech production in Europe.

Under competition policy, the Commission aims to guarantee a level playing field within the Single Market while making it easier for Member States to grant necessary aid to fast-track the green transition.

Stated von der Leyen: “We should refrain from thinking in stove pipes that member countries are islands. They are not.

To speed up and simplify aid granting, the Commission will consult Member States on an amended Temporary State aid Crisis and Transition Framework and it will revise the General Block Exemption Regulation in light of the Green Deal, increasing notification thresholds for support for green investments.

This aims to streamline and simplify the approval of Important Projects of Common European Interest (IPCEI)-related projects.

The Commission will also facilitate the use of existing EU funds for financing clean tech innovation, manufacturing and deployment.

The Commission is exploring avenues to achieve greater common financing at EU level to support investments in manufacturing of net-zero technologies, based on an ongoing investment needs assessment.

The Commission will work with Member States in the short term, with a focus on REPowerEU, InvestEU and the Innovation Fund, on a bridging solution to provide fast and targeted support.

Skills shortage

As between 35% and 40% of all jobs could be affected by the green transition, developing net-zero minded skills will be a priority for the European Year of Skills, and the third pillar of the plan will focus on this.

To develop these skills, the Commission will propose to establish Net-Zero Industry Academies to roll out up-skilling and re-skilling programmes in strategic industries.

It will also consider how to combine a ‘skills-first’ approach, recognising actual skills, with existing approaches based on qualifications, and facilitate access of third country nationals to EU labour markets in priority sectors, as well as promote measures to foster and align public and private funding for skills development.

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Supply and trade

The fourth pillar looks at global cooperation and making trade work for the green transition under the principles of fair competition and open trade, building on engagements with EU partners and the work of the World Trade Organization.

To that end, the Commission will continue to develop the EU’s network of Free Trade Agreements and other forms of cooperation with partners to support the green transition.

The Commission will also protect the Single Market from unfair trade in the clean tech sector and will use its instruments to ensure that foreign subsidies do not distort competition in the Single Market, also in the clean-tech sector.

The European Green Deal Industrial Plan was announced by President von der Leyen in her speech at the World Economic Forum in Davos in January 2023.

Said von der Leyen: “We have a once in a generation opportunity to show the way with speed, ambition and a sense of purpose to secure the EU’s industrial lead in the fast-growing net-zero technology sector.

“Europe is determined to lead the clean tech revolution. For our companies and people, it means turning skills into quality jobs and innovation into mass production, thanks to a simpler and faster framework. Better access to finance will allow our key clean tech industries to scale up quickly.”

In a declaration of intent the two industry organisations have committed to the joint development of the digital twin as part of the ongoing digitalisation of the energy sector.

The proposal for a digital twin of Europe’s electricity grid was one of those in the European Commission’s action plan for digitalising the energy sector, which was released in October 2022.

The digital twin will be a sophisticated virtual model of the European electricity grid. Its aim is to support the development of innovative solutions and coordination of investment to enhance the efficiency and smartness of the grid.

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The focus is on five areas: observability and controllability; efficient infrastructure and network planning; operations and simulations for a more resilient grid; active system management and forecasting to support flexibility and demand response; and data exchange between TSOs and DSOs.

Hervé Laffaye, President of the ENTSO-E Assembly, commented that ENTSO-E and the DSO Entity are already collaborating in various areas to ensure a common approach for the European electricity grids.

“[The declaration] marks the path to a new activity to the common working endeavour of which we are very proud.”

Vincenzo Ranieri, President of the EU DSO Entity, added that the two organisations will closely cooperate to provide further guidance to grid operators to optimise their investments into smartening the network.

“This will optimise the way grid operators manage their network, unleashing resiliency and flexibility potentials. In that way, the European power system can effectively evolve as an enhanced open grid which will empower consumers to take an active part in the energy transition.”

Digital twin task force

To kickstart the digital twin development a common task force will be established to work out an implementation plan and identify joint actions and deliverables.

The action plan envisaged that the digital twin would not be created in one go but would be a continuous investment and innovation effort for years to come, which also would ensure synergies with upcoming initiatives on virtual worlds such as the metaverse.

In parallel, the development of the digital twin is expected to be supported through the definition by the regional and national regulatory authorities of a set of common smart grid indicators to enable them to monitor and guide investments to smarten the electricity grid.

The EC’s digitalisation action plan estimates that around €170 billion (US$180 billion) investments in digitalisation will be needed out of a total of around €400 billion in the distribution grid – and a total of €584 billion in the electricity grid as a whole – in the period 2020 to 2030 to achieve the ‘Fit for 55’ and REPowerEU plan targets.

The eight projects, from the EU’s latest 2021 list of ‘Projects of Common Interest’, are expected to support both the European Green Deal and the more recent REPowerEU initiatives.

GreenSwitch, one of five smart grid projects included in the PCI list, is a cross-border project between Austria, Croatia and Slovenia.

The investment support of €73.1 million ($77 million) is intended to upgrade the electricity grids to allow for the integration of an increasing number of new distributed energy resources, including renewable energy production, heat pumps and electric vehicles, to optimise grid operation via digitalisation and to make full use of complementarities in terms of seasonal loads between the three countries.

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The largest share of the funding, €307.6 million ($325 million), is intended for the construction of the first transmission interconnection between Italy and Tunisia.

The new link, an undersea high voltage electricity cable named the ELMED interconnector, is planned to increase the security and the sustainability of electricity supply in Europe and to allow for better renewable energy integration and the replacement of gas-fired thermal generation.

Another project identified for funding is the Hydroelectric Power Station Silvermines in Ireland, which will receive €4.3 million ($4.5 million) for studies to set up a hydroelectric pumped storage system at a historic mining site.

The goal is to help reduce price volatility, contribute to market stabilisation and increase the flexibility resource of the island’s electricity system.

Two further projects will also receive support to help reduce the dependence on Russian gas supply. One is the underground gas storage facility in Bilciurești in Romania, which is set to receive €38 million for expansion works.

The other is the liquefied natural gas (LNG) terminal in Gdansk in Poland, with an allocation of €19.6 million ($21 million). The project is also anticipated to contribute to increasing the availability of LNG for Poland and the wider region.

Three projects concerning carbon capture and storage also are set for funding.

The Antwerp@C CO2 Export Hub will receive €144.6 million ($153 million) to develop the necessary infrastructure in the port of Antwerp to enable industrial users in the area to transport, liquefy and export their emitted CO2 to permanent storage sites.

The Ghent Carbon Hub, also in Belgium, will be awarded €9.6 million for studies aiming for the development of a CO2 liquefaction terminal in Ghent as well as pipelines connecting it to industrial emitters in the region.

The D’Artagnan Dunkirk CO2 Hub in France will receive €5.2 million for infrastructure studies in the Dunkirk harbour to collect CO2 from various emitters and to liquefy it before its export to permanent storage sites.

In the latest progress report on the competitiveness of clean energy technologies in the region, the Commission states that R&I investment is steadily growing and that at the global level, the EU remains a leader in ‘green’ inventions and high-value patents with applications in the fields of climate and environment (23%), energy (22%) and transport (28%).

However, there needs to be continuing efforts to reduce the dependency on, and effectively diversify, the sourcing of raw materials, with their surging prices severely affecting the competitiveness of clean energy technologies.

The EU also needs to deepen international cooperation and to overcome the shortage of skilled labour in various clean energy technology segments, while also ensuring a gender-balanced and equal environment.

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The proposal to make 2023 the European Year of Skills is expected to represent a step towards the increase of skilled workers.

Specific clean energy technologies

On specific clean energy technologies, the report finds that the EU’s wind sector remains a world leader in R&I and high value patents in 2022 and maintains a positive trade balance. Competition remains fierce, however, and the wind industry will need to overcome the current unfavourable context also due to the increasing global demand for rare earth materials and supply chain disruptions.

The EU has also confirmed its position in 2022 as one of the largest markets for PV as well as a strong innovator, especially in emerging PV technologies. From the value chain perspective, the EU is still lagging behind Asia, with a strong dependence on several crucial components.

On the other hand, there are challenges to overcome with several technologies. For example, the heat pumps sector will have to accelerate its already fast-growing deployment and ensure systems affordability and suppliers will have to ramp up production in order to maintain their market share by comparison with third countries.

With regards to battery production, the EU is on track to almost achieving self-sufficiency by 2030, but a lack of domestically sourced raw materials and advanced materials production capacity continue to pose challenges. Further attention is needed to increase recycling capacity and establish technological capability in cheaper storage/longer-term storage.

On hydrogen production through electrolysis, the EU benefits from its strong comprehensive approach to pull demand and supply. Surges in electricity prices and reliance on critical raw materials are some of the main challenges.

The EU also reports being the clear market leader in operational commercial plants of renewable fuels and high-value innovations. Although with limited installed and planned production for 2030, renewable fuels can contribute to all Fit for 55 emission saving targets, if certain technical and economic risks are addressed.

Innovation

Innovation in the EU’s digital energy infrastructure will be key to ensuring that the electricity grid is fit for the future energy system, the report states. Demand for home energy management systems and smart EV charging is taking off and expected to grow and the rollout of an intelligent metering system is progressing, albeit at a slower pace than envisaged.

In conclusion, the report, which was released as part of the latest state of the Energy Union update, notes that overall, despite the promising positive trends observed in the EU innovation ecosystem, further efforts are needed to address structural barriers and societal challenges holding back the local climate-tech start-ups and scale-ups more than in other major economies.

“To exploit its potential to become a global leader in the climate-tech and deep-tech domains, the EU needs to leverage its diverse talents, intellectual assets and industrial capabilities, and to get private investors to participate more actively in the funding of climate-tech and deep-climate-tech start-ups.”

Supported by the European Investment Bank (EIB), the Solas Sustainable Energy Fund ICAV (SSEF) delivers a financing solution for energy service companies (ESCOs) across the EU.

The fund aims to support energy-saving business models focusing on the renovation of existing infrastructure, particularly buildings, by using established and reliable energy efficient technologies such as rooftop solar photovoltaic panels, LED lighting, heat pumps, combined heat and power units and building fabric.

The fund finances projects in both the public and private sectors, including smaller projects within the Small and Medium-sized Enterprise (SME) sector, where companies often find it more difficult to secure finance.

By end of 2022, SSEF expects to have signed financing agreements worth €50 million ($51.9 million) to support energy efficiency projects across the EU.

Pipeline projects will deliver estimated energy savings of 150GWh per year and will reduce greenhouse gas emissions by around 42,000 tonnes CO2e per year.

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The fund has recently deployed financing to the following energy service companies:

• An Ireland-based energy service company, supporting a portfolio of LED lighting retrofit projects with an integrated financing solution, allowing their SME and corporate customers to pay a fixed monthly payment for the provision of Lighting-As-A-Service (LaaS). These retrofits significantly reduce energy costs, reduce CO2 emissions and improve lighting quality for customers.
• A German energy service company, supporting a range of energy efficient renovations, including combined heat and power and LED lighting for a European industrial client. These improvements have led to reductions of approximately 3,270 tonnes CO2e per year, helping the industrial client to achieve their goal of becoming carbon neutral by 2050.

Further deployments are planned for the end of 2022, and throughout 2023.

SSEF’s cornerstone investors are institutions from both the public and private sectors, including the EIB, Ireland Strategic Investment Fund (ISIF), and MEAG, the asset manager of the Munich Re Group. The EIB committed a €30 million ($31.1 million) investment at the launch of the fund, backed by the European Fund for Strategic Investments (EFSI), the main pillar of the Investment Plan for Europe.

The fund is also supported by the Private Finance for Energy Efficiency (PF4EE) initiative, a financial instrument funded through the EU LIFE Programme and set up by the EIB and the European Commission.

PF4EE facilitates investment into energy efficiency technology in buildings and, in particular, enables the provision of long-term debt financing for SMEs and public bodies.

European Commissioner for Energy Kadri Simson said: “Investing in energy efficiency is always a good idea, but it makes even more sense when energy prices are high. Initiatives like the Solas Sustainable Energy Fund help to make sure that we have the necessary funding for these investments.

“The more efficient we become, the more we can reduce energy consumption and energy bills, decrease our greenhouse gas emissions and phase out our dependence on Russian fossil fuels.”

Digitalisation, one of the four ‘D’s of the energy transition, is as the ‘enabler’ central to its realisation, cutting across businesses, consumers and technologies alike.

The EC’s action plan, more than a year in making, has six key goals, namely:
• Promote connectivity, interoperability and seamless exchange of energy data;
• Boost and coordinate investments in the smart electricity grid;
• Provide better services based on digital innovations to engage consumers;
• Enhance cyber security of the energy system;
• Ensure that the growing energy needs of the ICT sector align with the Green Deal;
• Design effective governance and continuous support for research and innovation.

The aim is to make our energy system more efficient and ready for increasing share of renewable energy sources,” commented Commissioner for Energy, Kadri Simson.

“For this, we need more innovative digital solutions and a grid that is much smarter and more interactive than it is today. [The] Action Plan will help unlock the potential of digitalising the energy sector and the important energy savings that this can provide, benefitting all consumers.”

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Sharing data

To coordinate data exchanges, a common European energy data space is planned, which will need to start its deployment no later than 2024 with governance in the form of a coordinated European framework for sharing and using the data.

To support this activity, the Smart Grid Task Force will be formally re-established and renamed the Smart Energy Expert Group, which in turn will set up a ‘Data for Energy’ working group no later than March 2023.

Responsibilities of this D4E group, which will be comprised of EU-wide public and private representation, will include developing a portfolio of high level use cases for data exchanges in energy, including flexibility services for the energy markets and grids, smart and bi-directional charging of electric vehicles and smart buildings.

With smart metering a ‘building block’ for data, member states are called upon to speed up their rollouts towards full deployment. Where a previous cost-benefit analysis concluded against the rollout of smart meters, these should be revisited and re-run in the light of the Green Deal and REPowerEU.

Other initiatives include acts on interoperability requirements and a code of conduct for smart appliances to boost participation in demand response schemes.

Promoting investments

The EC estimates an investment of €584 billion in the electricity grid is required between 2020 to 2030, of which around €400 billion is in the distribution grid, including €170 billion in digitalisation.

The key activity to support this investment is the creation by EU TSOs and DSOs of a digital twin of the European electricity grid, which should be set in motion with the signing of a declaration of intent between ENTSO-E and the EU DSO Entity.

Its creation, a long term activity, will require coordinated investments in five areas, viz observability and controllability, efficient infrastructure and network planning, operations and simulations for a more resilient grid, active system management and forecasting to support flexibility and demand response and data exchange between TSOs and DSOs.

Other requirements for investments include a regulatory framework that is fit for purpose in place by 2023.

Benefits for consumers

The EC states consumers as front and centre in its efforts to digitalise the energy system.

Key proposals are a legal framework that empowers and protects consumers, with a fitness check of EU consumer law on digital fairness currently under way, and the creation of digital tools that reflect demographic change, for example the increasing numbers of older consumers who may need to be specifically supported in the digital transition.

Energy communities and local energy initiatives are another approach for engaging consumers and the Commission intends to shortlist and produce guidance on energy sharing and peer-to-peer exchange and to develop an experimentation platform to test and simulate energy communities in combination with activities such as blockchain-based energy trading.

Workforce skills also are addressed with the establishment by the end of 2023 of a large-scale partnership on the digitalisation of the energy value chain as part of the EU’s Pact for Skills.

Follow the latest news from the EU Commission on Enlit World’s EU Project Zone

Cybersecurity

The EC intends alongside ongoing activities to strengthen the cybersecurity of the energy system, to prioritise the identification of specific ICT services, systems or products that might be subjected to coordinated risk assessments, in particular in the renewable energy and grid supply chain, including offshore wind.

In parallel, there will be proposals for an act in the form of the network code for cybersecurity aspects of cross-border electricity flows and another on the cybersecurity of gas and hydrogen networks.

The Commission also is proposing a Council recommendation to improve the resilience of critical infrastructures in energy and other priority sectors against possible physical, cyber or hybrid attacks, while a legislative proposal has been adopted for harmonised cybersecurity rules for the placing on the market of products with digital elements.

ICT sector energy consumption

With the energy consumption of the ICT sector on the rise with for example the growth of data centres and crypto mining activities, ensuring that these needs are met in synergy with the climate neutrality objective is an essential part of the transition, the EC states.

Specific actions include an energy labelling scheme for computers and by 2025 a code of conduct for the sustainability of telecommunications networks and an environmental labelling scheme for data centres.

The EC also intends to promote the reuse of waste heat from data centres to heat homes and businesses, including funding research and innovation into systems for waste heat storage during the summer season for reuse during the winter.

Alongside this the Commission intends to develop an energy efficiency label for blockchains and by 2025 to report on the environmental and climate impact of new technologies in the crypto-asset market, including an assessment of policy options to mitigate adverse impacts.

In the meantime, member states are urged to implement targeted measures to lower the electricity consumption of crypto asset miners.

EU-wide coordination

With its aim to deliver on the EU’s digital and green policy objectives, the EC proposes to prioritise support for the twin transition synergies through the main frameworks for member state planning, closer cooperation at EU level between public authorities and between energy and digital stakeholders and closer cooperation at international level with like-minded countries and international organisations.

In this connection, the Smart Energy Expert Group will play a central role, including setting up a high level dialogue with national representatives.

The Commission also calls on member states to increase their research support for the piloting of digital technologies in the energy sector and proposes a flagship initiative to be included in the Horizon Europe programme.

In conclusion, the Commission states that there is no transition towards clean energy without a plan for digital.

“Therefore, the Commission invites the European Parliament and the Council to endorse this action plan and contribute to its swift implementation.”

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The plan is intended to set a new paradigm in how energy is produced and consumed and how the energy infrastructure is utilised, according to Paula Pinho, Director for Just Transition, Consumers, Energy Efficiency and Innovation in the European Commission’s DG Energy.

Speaking in a keynote session at the European Sustainable Energy Week, Pinho said that it is about ensuring that all the players in the system, from generators to consumers, have the tools to monitor and manage their production and consumption and optimise the efficiencies in the infrastructure.

And for this, “data is the currency of digitalisation, with data access and data exchange.”

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While aspects of a draft plan have been leaked by Reuters among others and repeated by other media outlets, the facts are in the final plan (which will be presented here when it becomes available).

The plan is focused on five key areas – a data exchange framework, investment promotion and consumer empowerment as opportunities on the one side and cybersecurity and data protection and the carbon footprint of ICT solutions as challenges on the other.

“The question is what we do with the data and first it is about having access and making best use of it and so data exchange is a prerequisite,” said Pinho.

Pearse O’Donohue, Director for Future Networks at DG Connect, speaking in the keynote session, said that underpinning the acceleration of the digital transformation is proper cooperation and coordination between the various stakeholders – the member states, energy providers, industry, consumer groups and energy communities.

“We need to break down the silos so that at every level we are working together on this twin [digital and green] transition.”

O’Donohue said the Commission plans to work with industry to develop the tools and methodologies to assess the climate change impact of enabling digital solutions.

“There’s a lot of work remaining to be done,” he concluded, referring to the “concrete steps” that will be proposed in the energy digitalisation plan.

Among these are the emergence of the new digitalisation hubs and the development of a common energy data space.

“Digital must play its part but also meet its responsibilities.”

The aid measure has been approved in favour of energy storage operator IE-Energy to partially finance the battery installations. Taking the form of a direct grant, the measure will cover approximately 30% of capital expenditures.

The measure will contribute to the modernisation of Croatia’s energy network, increase the country’s and the EU’s energy security and accelerate the decarbonisation of the Croatian energy sector.

Although no details have been released on specifics for the storage projects, it is believed that independent TSO HOPS (Hrvatski operator prijenosnog sustava) will be utilising the grid balancing services to coordinate grid management in the country.

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According to the European Commission, TSOs use grid-scale batteries to maintain a continuous balance between electricity supply from power stations and demand from consumers, and to electricity when needed.

The Commission assessed the measure under Article 107(3)(c) of the Treaty on the Functioning of the European Union, and in particular its Guidelines on State aid for climate, environmental protection and energy.

The Commission has also concluded that the aid is necessary to address an existing market failure, as there is a lack of incentives to provide balancing services to TSOs through grid-scale energy storage facilities.

The emergency intervention announced as part of the State of the Union 2022 comprises three primary measures, a reduction in electricity consumption and a pair of what are effectively ‘windfall taxes’ via a revenue cap for low cost power generators and a ‘solidarity contribution’ from the fossil fuel companies.

Demand reduction is envisaged as achieving an overall calming effect on the market. The Commission proposes an obligation for member states of at least 5% reduction in electricity demand during peak hours – estimated to reduce gas use for power by 4% – along with a targeted reduction in overall demand by at least 10% until the end of March 2023.

Countries would be free to choose the measures to achieve this demand reduction, but in particular they should consider measures such as auctions or tender schemes for demand side response or electricity not consumed.

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Tapping company revenues

The revenue cap for ‘inframarginal’ electricity production is proposed to tap the “excess revenues” these producers are making as the high gas prices have driven up the wholesale electricity price while their generation costs have remained low. A temporary cap is proposed of €180/MWh of electricity produced from nuclear, lignite and renewable sources, among others, with any revenue above this level collected by the member state governments and redirected to energy consumers.

The level of this cap is described as minimising the impact that expensive price-setting marginal sources like coal or gas currently have on the final price of electricity while still ensuring a reasonable return on investment for the technologies covered and is calibrated significantly above the average market price expectations of market participants for peak hours before the Russia-Ukraine conflict.

The Commission estimates this proposal could generate up to of €117 billion annually.

Suggested examples of the use of these revenues include compensation for reducing consumption, direct transfer, compensation to suppliers that deliver electricity below cost and promoting investment into renewables and energy efficiency.

The solidarity contribution is aimed similarly to tap into the profits of the oil, gas, coal and refinery companies due to the market disruptions with estimated revenue generation of around €25 billion.

The contribution would be collected by member states on “excess profits”, defined as above a 20% increase on the average profits over the last three years.

Example uses of such funds suggested include financial support for end users, in particular for vulnerable households, hard hit companies and energy intensive industrial users, the financing of cross-border projects in line with REPowerEU objectives or other common financing to foster the green transition.

Regulated energy price changes

In addition to these measures, a further proposed intervention is an expansion of the Energy Prices Toolbox to allow below cost regulated electricity prices for the first time and to expand regulated prices to also cover small and medium-sized enterprises.

“These unprecedented measures are a necessary response to the energy supply shortages and high energy prices affecting Europe,” commented Executive Vice-President Frans Timmermans.

“Above all, however, this crisis underlines that the era of cheap fossil fuels is over and that we need to accelerate the switch towards homegrown, renewable energy.”

The proposed measures are now subject to a vote in the Council, with a majority vote for approval, but the Commission has indicated that member states have already expressed their intention to swiftly work on them.

The electricity emergency tool should apply no later than 1 December 2022 and until 31 March 2023, with a review by 28 February 2023.

The solidarity contributions of the fossil sector will be applied for one year after entering into force, with a review by mid-October 2023.

They decided that we should snug together as a union and invite England to the party too because what is happening with the energy prices is unprecedented and we need to react fast and decisively. Right? Well, wrong. At least in part.

The 1973 oil crisis

So, dust your school history books and check out the 1973 oil crisis. It bears similarities with what we are experiencing right now and it happened less than 50 years ago.

During the 1973 Yom Kippur war – also known as the Ramadan war or the fourth Arab-Israeli war – the Arab nations of the Organization of the Petroleum Exporting Countries (OPEC) enforced an oil embargo on the US, Japan and Western European countries.

Over the next six months after the embargo, the prices quadrupled and remained high until the end of it in March 1974 (with the Arab-Israeli peace agreement).

The embargo ramifications are still felt today, some would say. That, as a sneak peek of what can happen with the current crisis and president Putin’s decision to halt gas flows to Europe.

Now, back to the history “reading”. Why did the Arab nations proceed with the embargo? Because the US and (some) allies decided to support Israel with funds and weapons. Are bells ringing so far?

If not, then please check out president Nixon’s speech on energy dependence from 1973 and then compare it to those of contemporary EU leaders. The bells will go wild. Shockingly, we have not learnt our lesson.

And I don’t refer to supporting countries that have been attacked. My comment focuses on the lessons learnt, or obviously not, regarding energy dependence during the last 50 years.

The energy-focused EU Council meeting

There are, however, also differences between then and now. One of which is the very existence of the European Union. And although there is no homophony among the EU nations, there is discussion and compromise for the greater good.

And that translates to the agreement between EU nations to reduce imports and reliance on Russian gas and oil that was made earlier this year. Also, to joint gas purchasing capabilities and sufficient energy storage for the coming winter.

In addition, last week’s EU Council invited the Commission by mid September to:

• provide mandatory targets to reduce electricity usage during peak times (main price driver)
• cap revenues of oil and gas companies (about time)
• cap Russian gas prices (and the crowds go wild)
• help utilities survive (the near bankruptcy of Wien Energie and the Austrian government’s rescue plan is an example)
• cap revenues of companies providing RES-based energy (solar, wind, nuclear, etc. it’s only fair you guys).

It seems like the Commission will have its hands full for the coming few days. I for one can’t wait to visit the European Sustainable Energy Week (EUSEW – taking place from 26 to 30 September 2022) summit to hear more about REpowerEU and other proposals. What about you?

Cheers,

Areti Ntaradimou

Editor, Smart Energy International

Follow me on LinkedIn

The new standards to cover passenger and light commercial vehicles propose emission reduction targets of 55% for passenger cars and 50% for vans for 2030 and 100% for 2035.

In other words, by 2035 all new passenger vehicles and vans in Europe would be required to be zero emission, i.e. electric or hydrogen powered.

The vote was achieved with 339 in favour to 249 against and 24 abstentions and now requires the position to be negotiated with member states to enable its likely entry into law.

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“An ambitious revision of CO2 standards is a crucial part of reaching our climate targets,” commented rapporteur Jan Huitema from the Netherlands.

“With these standards, we are creating clarity for the car industry and can stimulate innovation and investments for car manufacturers.”

In addition, purchasing and driving zero-emission cars would become cheaper for consumers, he promised.

The target was argued as crucial to reaching climate neutrality by 2050.

Other measures agreed as part of the package include the removal of the incentive mechanism for zero and low emission vehicles as no longer serving its original purpose and a gradual reduction in the cap for eco-innovation from the existing 7g CO2/km limit until 2024 to 5g from 2025, 4g from 2027 and 2g until the end of 2034.

The European Commission also is required to report by the end of 2023 on the need for targeted funding to ensure a just transition in the automotive sector and on a common methodology for assessing the full life cycle of CO2 emissions of cars and vans in the market, while from 2025 and annually thereafter reports are required on the progress towards zero-emission road mobility.

The EU is not alone in proposing aggressive zero emission vehicle targets. The British government has set an even more aggressive 2030 target date for the phase out of petrol and diesel cars and vans and 2040 for all heavy goods vehicles.

The challenge now is that the infrastructure is in place to enable the operation of the zero emission vehicles.

In the same meeting, the EU parliament also approved a increase of 2% to 57% from 55% in the 2030 greenhouse gas emissions reductions with improvement in natural carbon sinks in the land use and forestry sectors.

According to the EU Commission’s website, ‘The questionnaire seeks to collect views from citizens; business communities and industry, including energy and ICT companies; Member States and public authorities; local, economic and social partners, including non-governmental organisations; consumer’s organisations; academia and research institutes; as well as other digital and energy stakeholders’.

With everybody’s attention focused on the Green Deal, the role that digitalisation can play in reaching the European Union’s goal of becoming climate-neutral by 2050 can get overlooked sometimes. Although it is of the outmost importance.

First of all, as we all know, digitalisation includes a lot of topics. From Artificial Intelligence (AI) and Virtual Reality (VR) to the Internet of Things (IoT) and smart metering, to name but only a few. These technologies are fundamental in improving the efficiency and flexibility of the energy system, as well as in managing a more and more complex grid. From infrastructure and maintenance to transmission and distribution. Again, to name only but a few applications.

And in order to function well, if at all, this complex mechanism needs data. It actually ‘feeds’ on data. Data-driven innovation is a key element to achieving the goals that the Green Deal has set for all Europeans. Data sharing is essential, therefore, but it also has to happen within a safe and secure environment.

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As Spidey said back in 1962, ‘with great power there must also come great responsibility’. Hence the need for a cyber-secure digitalisation of the energy system. This is why the European Commission is working together with various stakeholders to ensure high standards of cybersecurity for the European electricity grid.

Last but not least, when it comes to points, Digitalisation may be a much-needed tool to use in the fight against climate change, but it does have an impact on it itself. And that aspect, should not be overlooked.

According to a recent report from the International Energy Agency (IEA), data centres account for about 1% of the global energy demand. And if you think that this is a small number, let me tell you that for 2020, that was equivalent to 200-250 terawatt-hours. And the same report estimates that this number is going to continue growing in 2022.

This Digitalisation for Energy action plan that will be published in a few months aims to figure out what can be done to address the above mentioned challenges, both from a legislative and non-legislative point of view. And moreover, it aims to clarify if the challenges should be addressed at an EU level or at a national/local level.

The feedback that the Commission is asking for is therefore quite important. I could actually almost compare it to voting. So, when I saw that the public consultation received a total of 55 valid feedback instances, I admit I was a bit shocked.

Do you think we can do better than that? I personally think we should.

Cheers,
Areti Ntaradimou
Editor, Smart Energy International

Follow me on LinkedIn