We are well into the year to wish you a happy new year but nonetheless, we hope that 2021 will eventually lead us back to the quality of life, safety and health that we all cherish. We wanted to wait a bit to issue our first newsletter of 2021 so that we could update you on a good number of CEER activities and publications that have already taken place, as well as ones coming up in the near future. This issue also lets you know about CEER’s recent joining of the EU’s EU4Energy programme as one of three implementing partners for Phase II of the project.
17 Feb 2021, 10:00-12:30 CET: CEER Webinar Series on Data Accessibility: #2 System Data This webinar is part of the CEER webinar series on data accessibility and will focus on system data. The first webinar of the series took place on 10 February which focused on consumer and market data. Click here to register and access the agenda.
30 March 2021, 13:00-15:30 CET: CEER Annual Conference 2021 – Dynamic Regulation in Practice: The energy sector during the pandemic and Energy Transition The CEER 2021 Annual Conference represents one of our flagship events of the year. This year is the last year of our 3D Strategy, therefore the overall focus of the event is on the last “D” Dynamic Regulation. The dynamic regulation naturally ties in the two sessions. Session one will develop around the topic of the pandemic's effects on the energy sector. Session two will show another aspect of dynamic regulation, demonstrating how NRAs adapt and evolve with regard to regulatory frameworks that fit the energy sector transition.
CEER is currently reviewing its communications strategy and we want to hear your feedback! This very short and non-technical survey (it will take you 5 minutes to respond) will help us to identify potential gaps and areas for improvement. We thank you for taking the time to give us your input. The survey will be opened from 15 February until 17 March 2021. Please find the questionnaire here.
Before going ahead with new publications for this year, CEER thought it apropos in January to take a look back a 2020’s publications in a single document that brings together main positions and points made in 2020’s CEER publication. This document, “What Regulators Stood For in 2020!”, also summarises some high-level points that we have here for you:
• Let’s ASPIRE! The renewed and expanded 2030 Vision for Energy Consumers calls on governments, industry, regulators, consumer bodies and authorities to deliver Affordability, Simplicity, Protection, Inclusiveness, Reliability and Empowerment (ASPIRE)
• for all consumers, as we build and implement together a sustainable economy that provides climate neutrality.
• CEER’s Roadmap and Handbook for achieving well-functioning retail markets by 2025 provide NRAs with a toolkit to monitor and analyse the performance of their markets. It is important to promote a discussion with national policy makers and consumer protection authorities about the goals of well-functioning energy retail markets.
• Information provision is not enough. Beyond the availability of the information itself, consumers need to be made aware of, and learn how to, process new information, what the information tells them and how they can use the information to their advantage.
• At no time is the crucial role of the energy sector more important than during a global health crisis. National regulators oversaw the quick activation of normal emergency planning to guarantee the energy supply of priority installations. Extraordinary measures
• were also put in place to make it safe for people to stay home during the COVID-19 pandemic to avoid energy supply disconnections.
• Need for protecting critical network environments NOW, so that we do not wait for Cybersecurity Network Codes to be firmly defined and published.
• Improving the sustainability criteria for PCIs, in particular for gas projects; sustainability as a criterion for CEF grants for works.
• Evolving EU and national laws and regulations in order to create appropriate pathways to Whole System Approach, whilst keeping to a minimum any potential negative impacts.
• NRAs will through incentives ensure that TSOs/DSOs limit or reduce the volume of power losses and the cost of energy necessary to cover them.
• CEER provided relevant information on aspects of renewables
• development across Europe to support strategic decisions with background information on e.g. unsupported RES and tendering procedures.
• Favoured innovation from a regulatory perspective are developments that increase grid efficiency and benefits for consumers at the same (or at even lower) cost. This innovation is mostly promoted indirectly via the general regulatory framework and/or via specific features regarding incentives for network performance.
• NRAs might shift the responsibility for Δ in-out forecast and procurement to the TSO or the DSO and socialise related costs among (final) customers through a tariff component.
• CEER calls for a standard methodology for measuring and report
• the methane emissions and outlines various existing mechanisms to incentivise network operators to reduce methane emissions in their network.
• Consideration should be given to the absence of formal harmonised definitions of innovation in gas transmission as this represents a major problem for the regulatory framework.
Of course, at the start of the year, CEER always publishes its annual work programme, and this year is no different. CEER’s 2021 Work Programme comprises 27 public work items that consists of four activities (such as webinars, workshops or conferences) and 21 written deliverables (reports), with one item having both a written deliverable and activities.
Other recent publications include:
Other recent publications include:
• Three European Green Deal White Papers (two of which, ACER-CEER) related to the European Green Deal and sector integration. See more in the Feature section below.
• Three CEER responses to European Commission public consultations: the CEER response to the European Commission’s public consultation on the priority list for the establishment of gas network codes and guidelines (29 January); the CEER response to the European Commission’s public consultation on the EU energy efficiency directive (EED) (9 February); and the CEER response to the European Commission's public consultation on the EU renewable energy rules – review (12 February).
CEER has held two webinars so far in 2021.
As mentioned above, CEER’s Distributions Systems Working Group has organised a webinar series on data accessibility.
The first webinar in the series, on market and consumer data, was held on Wednesday, 10 February and attracted over 190 attendees. It was opened by Jiří Pilař from DG Connect addressing the European initiatives of the European Strategy for Data, Data Spaces and the Data Governance Act. Afterwards, CEER representatives in the Commission’s Smart Grids Task Forces EG1 and EG3, Christelle Heng and Louise van Rensburg respectively, explained the group’s task and roles. ACER Board of Regulators Chair, Clara Poletti, addressed the regulator’s view on the topic, to protect and empower the consumer while also having non-discrimination and no barriers for suppliers and new actors.
The academic perspective on data accessibility of market and consumer data was provided by Valerie Reif from the Florence School of Regulation, Helena Gerard from VITO and Silvia Vitiello from the Commission’s Joint Research Centre. The webinar’s last session was a panel discussion moderated by Judith Ward from Sustainability First. The discussion focussed on three themes: society/‘common-good’ benefits, consent to access and customer trust. The panellists included Agustín Reyna from BEUC (European Consumer Organisation), Constantina Filiou from DG Energy, and Eleonora Bettenzoli from Italian regulator ARERA who was also the webinar coordinator.
The presentations and the recording of the webinar can be found here.
On Thursday, 11 February, CEER hosted the Verbund H2Future regulatory workshop to discuss the “Green Hydrogen for Industry”, co-moderated by Markus Krug, CEER Regulatory Gas Strategy Work Stream Co-Chair.
The workshop tackled the topic of electrolysers in balancing markets, the certification of green gases, and the repurposing of gas grids beyond on-site hydrogen production. Under the last topic, ACER speakers gave a presentation on the “ACER-CEER Regulatory White Paper on When and How to regulate hydrogen networks?” published on 9 February (in the Feature section below). The webinar attracted more than 130 participants.
The slide pack and the recording of the workshop can be found here.
CEER, in cooperation with ACER, has started a series of European Green Deal White Papers (some joint ACER-CEER, others CEER-only). The aim is to deepen understanding on the regulatory aspects of Green Deal issues and to assist the European Commission in assessing various options as part of the preparations for legislation on hydrogen and energy system integration.
So far, three white papers of the series have been published (all found here): on 9 February, the ACER-CEER paper “When and How to Regulate Hydrogen Networks”; on 11 February, the ACER-CEER paper “Regulatory Treatment of Power-to-Gas”; and on 15 February the CEER-only paper “Long-Term Storage”.
While each White Paper stands alone, and has a summary section of main points/recommendations for readers, it is important to note that the papers are inter-related and together bring out some important points related to sector integration and the future use of hydrogen. The papers relate in one way or another to the Commission Communication on Powering a Climate-Neutral Economy: An EU Strategy for Energy System Integration (COM/2020/299 final) and the Commission Communication on a Hydrogen Strategy for a Climate-Neutral Europe (COM/2020/301 final), which are part of the European Green Deal initiative, as hydrogen and system integration are to play a role in achieving a decarbonised future.
Network regulation is an essential function of energy regulators, provided that those networks display characteristics of natural monopolies and hence, the model of promoting free-market competition is not appropriate. Natural gas networks that are natural monopolies existed long before current regulatory arrangements, but as the hydrogen strategy’s roadmap indicates, a gradual scaling up of production and demand for hydrogen is expected in the coming decades. Hence, regulators must prepare to optimally regulate new or repurposed infrastructure as well as intensification of use of current infrastructure. Clarity on future rules avoids sunk investments and costs for ex-post interventions. Hence, regulators look to clarify regulatory principles from the outset, apply a gradual approach in line with market/infrastructure development and periodic market monitoring. The benefits of repurposing gas assets for hydrogen transport must be properly valued, and where assets are existing at the same time, cost-reflectivity applied to avoid cross-subsidisation.
Proper regulation of hydrogen networks must be done within a coherent approach across sectors for the purpose of infrastructure planning, whilst keeping in mind energy system integration. Hence, simply applying typical gas market regulation with slight tweaks may not be sufficient because of differences in the sectors and the need for system integration. Case in point of such system integration are power-to-gas (P2G) facilities. Such facilities take electric power and, via electrolysers, hydrogen or synthetic methane. In the context of moving toward greater system integration (and decarbonisation), core regulatory principles remain, one of which is that regulators do not take decisions on the best technology but rather eliminate barriers and set out regulatory conditions to allow the best/most cost-effective solutions to be developed.
So, investment in and management of P2G facilities should be market-based and open to competition (a ‘level playing field’) so that the market chooses optimal solutions, and monopoly system operators should, as a rule, be precluded from investing/managing such facilities. So that the market arrives at the right solutions here, network tariffs will need to be cost-reflective and applied in a technologically neutral way, and distortive taxes and levies avoided. More fundamentally, definitions in legislation with respect to networks should be revisited to take into account the increasing integration of the electricity and gas sectors. P2G installations are not necessarily storage facilities and those that are connected to the network to both electricity and gas networks should be distinguished from those only connected to electricity networks for, say, industrial purposes. It is the former set-up that is relevant for system integration as envisioned in aforementioned Commission strategy, particularly when the gases produced are environmentally sustainable (e.g. hydrogen produced entirely from renewables-sourced electricity) and this is why CEER believes that it is also important that traceability of renewable energy is ensured throughout the integrated energy system.
As mentioned, it is for the market to decide about the use of P2G technology versus/complementary with other ways to achieve decarbonisation. The economic viability of P2G, particularly, when and in which use cases it becomes competitive is still to be determined. Relating this back to CO2-free hydrogen, the increasing prices for CO2 certificates combined with continuously falling prices renewably-sourced electric power and lower CAPEX cost for electrolysers may allow P2G facilities to become economically viable. A knock-on effect is that increased demand for CO2-free hydrogen can level electricity demand patterns and reduce curtailment of renewable-power facilities, such as solar (PV) and wind.
Another potential use of P2G is for long-term energy storage, which is the final topic of this feature on the three white papers. For such seasonal storage, the electricity price needs to be lower than the natural gas price during the summertime when excess (PV) energy would need to be converted to and stored in form of gas. as long as natural gas power plants represent a big share of the generation assets in Europe and do often set the marginal price, the average electricity price will very likely remain higher than the natural gas price. A reduction in natural gas consumption in the path to a carbon-neutral society also most likely will lower the gas price and thus impair the economic viability of P2G as a crucial activity in long-term electricity storage process. However, if guarantees of origin are used, economic viability could potentially be enhanced, as their use would allow the physical sharing of gas storage facilities and reduce initial infrastructure investment costs.
More generally, the increasing share of variable renewable energy sourced (VRES) power will, due to their seasonal generation pattern, increase the need for solutions that provide seasonal adequacy and help to guarantee security of supply throughout the whole year. As mentioned in the preceding paragraph, leveraging synergies between the gas and electricity sectors has some potential to aid in this, particularly in a scenario where fossil fuel power plants will diminish in output. It is important to recall that long-term storage is only one approach to maintaining seasonal adequacy, and it is not clear whether long-term storing of renewable energy is the most economical solution for seasonal adequacy. Regardless, as thermal production is phased out, CEER’s analysis finds that up to 2040, there is not expected to be additional demand long-term energy storage on an averaged European scale. Although pumped hydropower is limited, gas storage capacity exceeds the potential electricity storage demand. Continuing development of interconnectors is important for short-term flexibility, but does not affect long-term storage needs. In the case of reaching 100% renewable electricity by 2040, even then long-term storage needs are estimated at less than 3% of total energy demand, with a higher ratio of wind power to solar PV able to drive down that percentage further.
Returning to the principle of a level playing field, regulations should establish one between long-term storage and other seasonal adequacy approaches (i.e. excess generation assets, flexibility and storage). More broadly, given the increasing importance of hydrogen and P2G, storage and sector coupling technologies should be integrated in a more detailed way in planning models (e.g. integrated electricity and gas market and network model, Ten-Year Network Development Model).
CEER participation in EU4ENERGY Phase II
The EU4Energy Initiative brings together EU support in the energy area for the Eastern Partnership. The Eastern Partnership (EaP) is a joint initiative of the EU, its Member States and Armenia, Azerbaijan, Belarus, Georgia, the Republic of Moldova and Ukraine. EU4Energy is directed towards improving energy supply and security, as well as promoting rational consumption of energy and utilisation of renewables (https://www.euneighbours.eu/en/east/stay-informed/projects/eu4energy-programme).
CEER, together with Energy Community Secretariat and International Energy Agency, was selected in December 2020 to be an implementing authority of EU4ENERGY Phase II aimed at fostering the clean energy transition and decarbonisation in the six countries mentioned above. The EU4ENERGY Phase II was launched in January 2021 after the completion of EU4ENERGY Phase I (2016-2020) and will run for four consecutive years.
The aim of the components implemented by CEER is to strengthen capacities of the Armenian, Azerbaijani and Belarusian energy regulatory authorities through identifying priorities and providing assistance on the topics via knowledge transfer and experience sharing. The proposed priorities will be incorporated in Annual Action Plans for cooperation in the field of energy.
Furthermore, the project will promote regional cooperation among all six Eastern Partnership countries and raise visibility and the presence of the European Union in the Eastern Neighbourhood.
The CEER project office will be located in Tbilisi (Georgia) in the building of CEER Observer regulatory authority GNERC and will coordinate the implementation of the project together with the CEER headquarters in Brussels. The Project Manager is Ms Eszter Süle, formerly of CEER Member E-Control.
For more information, please visit: https://www.ceer.eu/eu4energy