Highlights Core Theme 1: RES Electricity

CT1 - 2nd Plenary Meeting in Zagreb

Headline 1: The Role of Self-Consumption of Renewable Electricity in Different Market Environments

The first session of Core Theme 1 on RES Electricity looked at the different market environments and experiences of self-consumption practices in the Member States. Through the presentation of several Member States, including Denmark, Germany, Italy and the United Kingdom, benefits and challenges of RES self-consumption were identified. Attendees of the session discussed the different approaches and considered aspects of RES self-consumption in the context of consumer empowerment and political acceptance, which are the main drivers so far for Member States to encourage self-consumption. It was noted that a large number of Member States encourage RES-self-consumption, usually through a partial or complete exemption from grid fees and other charges. These incentives can have a strong distributive effect, especially in market environments that are characterized by comparatively higher fees and charges on electricity. Thus, the attendees concluded that a targeted definition and support of self-consumption is key to reap benefits for the overall electricity system.

Headline 2: Sector Coupling and its Contribution to System Integration of Renewables

The second session focused on the renewable electricity as an option for sector coupling and identified two main objectives: decarbonisation and flexibilisation. The increased usage of renewable electricity contributes to the decarburization of transport as well as the heating and cooling sector. Moreover, sector coupling can flexibilise the electricity system and thereby contribute to system integration of variable renewables. A number of technologies that could facilitate sector coupling are already available or in the process of being developed. However, in most Member States, the current regulatory framework targets each sector independently. This problem was examined in more depth in a simulation game focusing on the implications of regulatory price components on profitability of different sector coupling technologies.
An important lesson learnt from this simulation game was that if fees and charges are higher for electricity than for fossil fuels used in other sectors, which is the case in many Member States, this acts as a significant barrier for sector coupling. Moreover, it was noted that this effect persist even if the costs for sector coupling technologies will decrease in the coming years due to technological development. In addition, other market entry barriers were also discussed, for example the double charging of storage.

Headline 3: Cross-Border Auctions and Regulatory Convergence

At the beginning of the session, a brief presentation about the groundbreaking signing of cooperation agreements on statistical transfers between Luxembourg and Lithuania as well as Luxembourg and Estonia was given. Afterwards, the impact of national regulatory frameworks on the costs of onshore wind deployment was presented on the basis of the preliminary results of a study conducted in the PENTA region. RES deployment costs are not only determined by natural potential (i.e. wind conditions, sun radiation) and market values – regulatory framework conditions, such as rules for grid connection, planning and permitting, taxation and financing costs are also factors to be taken into account. The study aims to quantify the effects of the most important regulatory framework conditions in the PENTA countries on the costs of wind onshore deployment. The preliminary results show that regulatory framework conditions are indeed an important factor and cost effects of such framework conditions differ between Member States. Through the course of the third session, a simulation game also took place, during which participants simulated the mutual effects of cross-border auctions and regulatory frameworks by negotiating for two fictional countries. The simulation game showed that cross-border auctions can lead to a dynamic where Member States adapt their regulatory framework to lower costs, in order to render domestic sites more competitive. Participants concluded that this dynamic should be used as an opportunity for a “race for best practices” in order to foster regulatory convergence; a “race to the bottom” should be avoided.