Energy efficiency in utilities

Aims

The overall aim of the REEP policy dialogue is to support legislators and investors eliminate market barriers to energy efficiency and accelerate the take-up of energy services.

Scope

Energy tariff reform and engaging energy supply utilities in the delivery of energy efficiency options is critical to achieve energy efficiency goals in the Western Balkans. The need to reform and phase-out the existing system of price regulation for the eligible consumers in the Western Balkans was underlined both by the Energy Community Secretariat in its Implementation Reports and the European Commission in its 2011 Report on the Energy Community Treaty. At its meeting of 5 October 2011, the Permanent High Level Group “reiterated its concern about persisting barriers to the establishment of open national and regional markets, including excessive price regulation.”

Encouraging energy supply utilities to deliver energy efficiency options to their clients is an important part of the Energy Efficiency Directive (2012/27/EU). In particular, under Article 7 (Energy efficiency obligation schemes), the key provisions include:

  • The setting of a cumulative end-use energy savings target by the end of 2020 at least equivalent to an annual saving of 1.5% (for the 2014-2020 period) of the annual energy sales to end-users over the 2010-212 period;
  • The need to designate the parties that will have the energy efficiency obligation and the end-use sectors that are eligible or targeted under the obligation; and
  • A requirement to establish a measurement, control and verification system to ensure the targets are met by eligible energy saving measures and to certify the achievement of the energy savings.

There is a strong case for supporting utility energy efficiency obligations under REEP. Utilities in the Western Balkan region currently play a very limited role in implementing energy efficiency policies and programmes. However, utilities can represent an important energy efficiency implementing organisation and may have some distinct advantages in this regard. These include the following:

  • Existing relationship with end-users and access to valuable market data, including how much energy is sold to whom and when, and therefore energy saving measures can be strategically targeted;
  • Access to capital and other resources and competences, including human resources, an extensive service and delivery network, and marketing and engineering expertise; and
  • Obligations to ensure supply adequacy and therefore a need to plan for and accommodate energy and peak demand growth.

The utility-related REEP policy dialogue component aims to assist selected countries to reform their energy tariffs and develop a subset of the secondary legislation, regulations and guidelines necessary for the transposition of Article 7 of the Energy Efficiency Directives.