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CT1 - 5th Plenary Meeting in Copenhagen

|   CT 1

Highlights Core Theme 1: RES Electricity

Headline 1: Update and Q&A on New Provisions related to RES Electricity

On the 18th of December 2018, the Council, the European Parliament and the Commission reached an agreement on the revised Electricity Market Regulation and Directive. The Electricity Regulation will be directly applied in the Member States as of 1 January 2020, whereas the Electricity Directive will have to be implemented until the end of 2020. Both legal acts contain provisions with high relevance for RES electricity, in particular on priority dispatch, curtailment of RES electricity in case of redispatch, balancing responsibility, rules on energy communities and active customers.

During the 1st CT1 session, experts were provided with the opportunity for a first exchange on the interpretation and implementation of those new and modified provisions of the Electricity Market Regulation and Directive with regard to RES electricity, both among themselves and with Commission representatives. At the end of the session, participants came to the conclusion that the Electricity Regulation sets out a more harmonized EU legal framework on balancing responsibility, priority dispatch and curtailment of RES than the current Renewable Energy Directive. However, Member States still retain a certain degree of flexibility, for example with regard to different options for implementation or the use of derogations. With regard to the Electricity Directive, participants concluded that there is considerable overlap between the Electricity Directive and the RED II in areas related to active customers, energy sharing and renewable energy communities. Overall, participants concluded that an integrated approach is needed for the implementation of the Electricity Regulation, the Electricity Directive and the RED II with regard to RES electricity; and that closer exchange between Member States, as well as between Member States and the European Commission, is important to support such implementation.

Headline 2: Priority for Renewables in the Electricity Market

Article 16 of the current Renewable Energy Directive 2009/28/EC lays down the principle of priority dispatch for RES electricity. These rules have been considerably revised and have now been moved from the Renewable Energy Directive to the revised Electricity Market Regulation. Member States will have to adapt their current rules until 1 January 2020, the date on which the Electricity Market Regulation will become directly applicable.

The second CT1 session focused on exchanging information and highlighting best practices on priority dispatch and curtailment of RES in case of redispatch, as well as identifying challenges ahead for the implementation of the new rules in the revised Electricity Market Regulation. Two Member State presentations highlighted different experiences with priority dispatch and curtailment of RES in case of redispatch both under a central dispatch model and under a self-dispatch model. In smaller break-out groups, participants discussed changes in the national frameworks due to new rules on priority dispatch, thresholds for priority dispatch and incentives to voluntarily give up priority dispatch. Participants concluded that there is currently a divergent implementation of the concept of priority dispatch in the Member States. Consequently, some Member States might have to reduce the scope of priority dispatch and others might have to extend it. Moreover, participants concluded that the threshold of 400 kW was relatively high for Member States that have already achieved market integration of such RES plants, so that it could be advisable for such Member States to apply for a derogation.

Headline 3: The New Union Renewable Energy Financing Mechanism

The recast of the Renewable Energy Directive that entered into force on the 24th of December 2018 includes an EU-binding target for the share of energy from renewable sources in the European Union's gross final consumption of energy in 2030 of at least 32%. According to Article 3, the Commission shall support the high ambition of Member States through an enabling framework comprising the enhanced use of Union funds, in particular financial instruments, inter alia to reduce the cost of capital for RES projects and enhance regional cooperation between Member States.

The RED enabling framework is supported by an additional Union renewable energy financing mechanism established in Article 33 of the new Governance Regulation that also entered into force on the 24th of December 2018. The Commission shall establish the financing mechanism by January 2021 in order to serve two purposes: (1) to cover a gap to the Union RES trajectory to 2030 by tendering support for new RES projects in the Union, and (2) to contribute to the RED II enabling framework irrespectively of a gap by providing support in the form of low-interest loans, grants, or a mix of both.

A research project on behalf of the Commission was presented, which aims at outlining the general structure of the financing mechanism, developing principles for the allocation of costs and benefits, creating a robust framework for the design of support and designing a draft roadmap for practical implementation. After this input, participants discussed factors for increasing the attractiveness of the renewable energy financing mechanism and the relative importance of the gap-filling and enabling function. Participants concluded that in order to make the mechanism attractive, it is important to tailor it to the preferences of host and contributing Member States. Moreover, a balance is needed between the interests of host and contributing Member States, e.g. with regard to grid integration costs. Both the enabling and gap-filling functions of the mechanism were deemed to be important, and the open issue of sufficient funding of the enabling framework was highlighted in this regard.