Energy Cities welcomes the Commission’s initiative to launch a public consultation process on a new energy market design, notably as it aims at establishing a market that can fully integrate the increasing share of local renewable energy. A new market design that puts local renewable energy at its core will reduce costs, guarantee security of supply and foster innovation, sustainability and economic growth.
In our view, the new energy market design should level the playing field for all energy producers on the market, from private companies over municipalities and communities to prosumers. Especially local authorities and their citizens, who are the backbone of the energy transition, should be able to become energy producers on an equal footing with all other players on the market.
However, local authorities still face important barriers when aiming to integrate in the energy market as energy producers and suppliers.
Grid connection costs are unequally shared between local renewable energy producers and grid operators. This significantly increases grid connection costs for local renewable energy producers. These costs are also high, because local renewable energy producers do not have the option to locate their locally bound project to the most suitable point where the grid is not constrained. In other cases, the assigned connection points for local renewable energy projects is very far from the installation, which also makes the grid connection more costly. In order to address this barrier, the grid connection costs should be equally shared between local renewable energy producers and grid operators. Moreover, local renewable energy producers should be enabled to pay a lower share of these costs, the further away the assigned grid connection point is from their installation.
Another important barrier for local authorities engaged in renewable energy production and distribution concerns their constrained access to complete energy data.
Currently, local authorities have to acquire energy data from many different providers, which amounts to a complex, time-consuming and ineffective process. Furthermore, the energy data is often incomplete, which creates a vital obstacle for local authorities as they need precise energy data in order to plan for their energy supply until 2030. To address this barrier, the role of DSOs should be enhanced in the new energy market design. DSOs should act as neutral market facilitators and be in charge of aggregating the energy data and providing all players on the market with the data, including municipalities. This would largely facilitate the local energy transition. By making DSOs a one-stop shop for aggregating and distributing energy data as neutral market facilitators, municipalities would have easier and faster access to energy data and therefore would be able to plan their energy supply more effectively for the long term.
The new energy market design should serve as an opportunity for the Commission and Member States to eliminate these barriers, so that local authorities can fully compete on a flexible and integrated energy market and fulfill their role as the main driver of the energy transition.
See this and other position papers here.
Grid picture: mycteria/shutterstock.com
Solar panels: Elena Elisseeva/shutterstock.com