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Fingrid Current 5 April 2017

Presentation recordings are published at: www.fingrid.fi/en/news/events

2 #EnergyUnion

CLEAN ENERGY FOR ALL

EUROPEANS

Anna COLUCCIHead of Unit – Retails markets; coal & oilEuropean Commission – DG ENERGY

CLEAN ENERGY FOR ALL EUROPEANS

3 #EnergyUnion

Unique opportunity to modernise our economy and to

WHY DO WE NEED THIS PACKAGE?THE ENERGY SYSTEM OF TOMORROW WILL LOOK DIFFERENTLY

203050% of electricity to come from renewables

2050Electricity completely carbon free

Thanks to the EU - ambitious energy and climate commitments

With leadership comes responsibility

create the growth and jobs we needboost competitiveness

CLEAN ENERGY FOR ALL EUROPEANS

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WHAT ARE OUR GOALS?

CREATING JOBS & GROWTH, BRINGING DOWN GREENHOUSE GAS EMISSIONS, SECURING ENERGY SUPPLY

Demonstrating global leadership

in renewables

Delivering a fair deal for consumers

Putting energy efficiency first

CLEAN ENERGY FOR ALL EUROPEANS

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New Electricity Market Design(including Risk Preparedness)

HOW DO WE GET THERE?

THE RIGHT REGULATORY FRAMEWORK FOR POST – 2020

Energy Union Governance

" In essence the new package is about tapping our green growth potential across the board"Commissioner Miguel Arias Cañete (2016)

Energy

CLEAN ENERGY FOR ALL EUROPEANS

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A FAIR DEAL FOR CONSUMERS

NEW MARKET DESIGN

• Access to fit-for-purpose smart meters

• Certified price comparison tool

• Clearer energy bills

• Entitle individuals and communities to generate electricity and to consume, store or sell it back to the market

• Easier switching conditions

• Reward demand-response

• Monitoring of energy poverty (governance)

• Information on alternatives to disconnection

• Sound data management

BETTER INFORMED EMPOWERED PROTECTED

CLEAN ENERGY FOR ALL EUROPEANS

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Better informed consumers - Entitlement to a smart meter with common functionalities

Current situation and problem• While smart meters are key for enabling

consumer participation in the retail energy market they are currently only widely available in 3 Member States

Proposal

• Electricity consumers are entitled to request a smart meter (Art 21)

• Smart meters have to meet common minimum functional requirements (Art19, 20)

Planned roll-out of smart meters by 2020Existing access to smart meters

CLEAN ENERGY FOR ALL EUROPEANS

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Better informed consumers - Price Comparison Tools and Billing Information

Current situation and problem

• Although comparison tools make engaging in the market quicker, easier and more beneficial, consumers lack trust in them.

Proposal

• EU electricity consumers have free-of-charge access to at least one certified energy comparison tool that meets minimum quality standards.

Current situation and problem

• Consumers report difficulties in understanding their bills, and bills are not effective in providing basic information that could facilitate effective consumer choice.

Proposal

• Suppliers will have to prominently display basic information on every bill, and report energy costs, network charges and taxes/levies in the same way for clarity.

PRICE COMPARISON TOOLS BILLING INFORMATION

CLEAN ENERGY FOR ALL EUROPEANS

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Empowered consumers - unlocking demand side response and active consumers potential

There is a lot of untapped potential• Only 21 GW activated today, more than 50 GW can be activated by 2030

• 5.6 bn. euro/annum benefit (¾ on the generation side and ¼ in reduced network investments

Price based (Implicit DR): consumers are exposed to electricity price variations and actively adjust their demand. Challenges:

• Full roll out of smart meters only planned in 17 MS

• Enabling technologies not yet widely accessible

• Real time price signals are not passed onto consumers

Incentive based (Explicit DR): consumers are directly paid for adjustments in their consumption

Challenges:• Service providers (aggregators)

are effectively banned in some MS;

• Many markets remain effectively closed to DR.

CLEAN ENERGY FOR ALL EUROPEANS

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Empowered consumers - unlocking demand side response and active consumers potential

Enable price based demand response

• Accelerated smart meter deployment

• Entitlement to a dynamic electricity price contract

Enable incentive based demand response

• Remove market barriers for aggregators

• Introduce additional rules for flexible markets (electricity regulation)

Enabling tools for active consumers and energy communities

• Entitlement to all consumers to generate, self-consume, store or sell self-generated electricity while ensuring non-discriminatory network tariffs

CLEAN ENERGY FOR ALL EUROPEANS

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Empowered consumers – Switching fees

Current situation and problem

• ~20% of consumers currently face a €5 to €90 fee for switching

• Existing provisions: Annex I of 2009/72/EC → legal uncertainty

Proposal

• Switching related charges prohibited.

• MS may choose to allow early termination fees on fixed term contracts, but these must be limited in size and contracts containing them must provide consumers with tangible advantages in return.

Real-life examples- €27.90 'service fee'- €27.16 'start up' fee- €27.59 'admin. cost' on first bill- €70 security deposit - €25 yearly charge for new contracts- €20.54 unexplained charge on first bill

Other examples- 'activation fee'- fee for contracts of less than one year

CLEAN ENERGY FOR ALL EUROPEANS

Proposal: All consumer prices shall be freely set by the suppliers after the entry into force of the Directive, butTransition period for vulnerable and energy poor consumers

• A sufficient timeframe (5 years after entry into force) to allow a smooth transition from regulated prices to an adequate protection

Permanent exception in case of extreme urgency• Price regulation for vulnerable household• Subject to scrutiny by the Commission

Key market reform – Phase out of regulated prices

Current situation and problem

• 17 Member States still have some kind of price regulation

• Non regulated MS perform better in terms of number of suppliers, market share of new suppliers, switching rates, consumer satisfaction

CLEAN ENERGY FOR ALL EUROPEANS

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Protected consumers – Energy Poverty

SHARE OF HOUSEHOLD INCOME SPENT ON DOMESTIC ENERGY

Proposal: • Member States to define criteria

for the purpose of measuring energy poverty, monitor energy poverty and report to the Commission every 2 years.

• Energy Poverty Observatory to support Member States

• Customers in arrears to be given adequate information on alternatives to disconnection.

Current situation and problem• Growing levels of energy poverty

EU wide

• Lack of clarity of the term energy poverty and lack of reliable data to assess the scope of the problem

Energy Efficiency measures required

to target energy poor households under

Energy Efficiency and Energy

Performance of Buildings Directives

CLEAN ENERGY FOR ALL EUROPEANS

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Protected consumers – Sound data management and level playing field for access to data

Current situation and problem

• Smart metering systems, in 19 Member States more granular consumption data and new services

• Existing provisions in Electricity Directive not fit for new developments

Proposal

• Define responsibilities for parties involved in data handling

• Set principles for granting access to consumer data, with the explicit consent of the consumer, including non-discrimination, transparency and easy access.

Smart meters generate roughly 3000 times as

much information as the analogue meters

CLEAN ENERGY FOR ALL EUROPEANS

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Distribution Networks

Problem • Current framework at EU or national level does not allow DSOs to be flexible

and cope with variable RES and new loads and does not focus on specific tasks of the energy transition.

• In most cases DSO remuneration favours network expansion solutions• Diversity of distribution tariffs create different market conditions for distributed

resources across EU

Proposal Enabling framework for DSOs to procure and use flexibility

DSO tasks in storage, EVs infrastructure and data management

Cooperation between DSOs and TSOs alongside a EU DSO entity

EU-wide principles for distribution network tariffs

DSOs to prepare multiannual development plans

CLEAN ENERGY FOR ALL EUROPEANS

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Improving the institutional framework – EU DSO entity

Current situation and problem

• Distribution networks are gaining importance; however, DSOs are not formally represented in the EU institutional framework

• Cooperation of DSOs and TSOs on a voluntary basis; however, a closer cooperation also in the context of network codes is required

Proposal

• Adapt the institutional framework to the new realities, including the establishment of a EU DSO entity

• EU DSO entity to work in specific areas and cooperate with ENTSO-E