Part I General questions

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1 Europäische Kommission Rue de la Loi 1049 Brüssel Belgien To be submitted online Kontakt DW Unser Zeichen Ihr Zeichen Datum Mag. Aleandra Herrmann-Weihs 212 Her/Ha 1/ Jänner 2016 Consultation on the Review of Directive 2012/27/EU on Energy Efficiency Register ID Number Dear Madam, Dear Sir, Oesterreichs Energie welcomes the opportunity to comment on the questions listed in the consultation: Consultation on the Review of Directive 2012/27/EU on Energy Efficiency Part I General questions 1. Article 1: Subject matter and scope and Article 3: Energy efficiency target 1.1. What is the key contribution of the EED to the achievement of the 2020 energy efficiency target? sees the EED as the essential piece of legislation for energy efficiency due to its multiple angles including metering & billing provisions, buildings, demand response etc. Every Member State needed to implement the EED into national law, thus was forced to adopt a national energy efficiency act/plan. The setting of national targets helped to gather momentum for national policies to increase energy efficiency. For the power sector however, the main importance of the EED lies in article 7 with its supplier obligation schemes, which has been picked as the main instrument in the directive to achieve the 2020 energy efficiency target. The article is central to the power sector as it places the burden on energy providers and less on other sectors. Due to the relatively recent implementation of the instrument in most member states it is often too early to tell if the choice of burden sharing has been successful in terms of target achievement and cost efficiency Wien Fa Oesterreichs Energie 1/17

2 1.2. How has the EED worked together with the Effort Sharing Decision, other energy efficiency legislation (on buildings, products and transport) and ETS? Could you describe positive synergies or overlaps? is a strong supporter of energy efficiency both on demand and supply side but remains concerned about the policy overlaps created by the three target approach in the 2020 package and potentially the 2030 package. There have been contradictory regulatory signals between the EED, which promotes the use of combined heat and power, and e.g. ETS that does not provide a signal for operation and investment of energy efficient solutions like CHP. Policy overlaps in energy and climate policy have potentially negative impacts on the functioning of the energy markets as well as the ETS. It is therefore essential that these overlaps are recognised and evaluated properly before a decision can be made on how to etend or epand them. Therefore, the goals and instruments selected to achieve our energy and climate goals need careful consideration based on their effect on enabling a market based transition to a lowcarbon economy including the power sector. Referring to the regional differences at the generation structure and the different shares of electricity generation based on renewable energy sources we promote the application of regional differing primary energy factors How has the EED worked together with eisting national legislation? Could you describe any positive synergies or overlaps? The Austrian government brought a new Energy Efficiency Act into force as of This act, in particularly the obligation scheme of this act, was intensely discussed among the stakeholders. The new Energy Efficiency Act recognizes prior voluntary initiatives on the basis of the EED from However, the Act epressly stipulates that specific public subsidies, such as residential building subsidies, are not admitted under the obligation scheme and that therefore there is no overlap between eisting efficiency measures and new efficiency measures under the Energy Efficiency Act. There is no overlap between CO2 emission reduction legislation and the Energy Efficiency Act What are the main lessons learned from the implementation of the EED? As pointed out in question 1.2, a key lesson from the EED implementation has been the impact of overlapping policy tools and their effect on the European market tool to decarbonise, the ETS. It is essential to address this problem in the review of the directive. The Austrian energy saving obligation scheme requires energy utilities to implement and report energy saving measures equal to 0,6% of annual energy sales. The Austrian law focuses too much on end energy savings. Therefore benefits of DHC, local contractor Wien Fa Oesterreichs Energie 2/17

3 solutions or internal supply side efficiency improvements are not recognized in a sufficient way. In future reviews stronger emphasis on primary energy savings are necessary. The lengthy legal process to implement the Austrian energy saving obligation scheme led to legal uncertainty and therefore higher costs than necessary. An important lesson learned from the implementation in Austria is that the obligation scheme causes substantial administrative costs, both for the public and the private sector. A further insight reported from different member states were unrealistic planning for energy audits. This was also the case in Austria. Mandatory audits within a very short timeframe have caused market disturbances on the auditing service market and raised actor's cost and lowered the quality of audits. Finally, it has become apparent that the fleibility element (allowing alternative measures) under article 7 has played a very positive role in allowing member states to identify and tackle national challenges in the efficiency contet Which factors should the Commission have in mind in reviewing the EU energy efficiency target for 2030? The European framework for climate and energy policies has to create ideal conditions to realize energy efficiency measures covering all sectors. Effective incentives are needed, especially for research and development as well as for the cost-efficient implementation of investments in energy efficiency measures What should the role of the EU be in view of achieving the new EU energy efficiency target for 2030? The EU should monitor the process in terms of energy efficiency improvements and give non-binding advice to those countries that are not able to reach the given goals. The European Union should maintain its position as a coordinator and evaluator of the agreed ambitions, through proper echange on best practises, policy tool coordination as well as monitoring and governance. The EU can serve well as a platform where strategic decisions can be made rather than specific technological pathways decided. Leaving the necessary fleibility to member states/regions is therefore important Wien Fa Oesterreichs Energie 3/17

4 1.7. What is the best way of epressing the new EU energy efficiency target for 2030: Epressed as energy intensity Epressed in an absolute amount of final energy savings Epressed in both primary and final energy consumption in 2030 Epressed only in primary energy consumption in 2030 Epressed only in final energy consumption in 2030 Other (please specify) 1.8. For the purposes of the target, should energy consumption be: Epressed as energy, regardless of its source (as now) Epressed as avoided non-renewable energy Epressed as avoided fuel-use (but including biomass) Other (please specify) 2. Article 6: Purchasing by public bodies of energy efficient buildings, goods and services 2.1. In your view, are the eisting EU energy efficiency requirements for public procurement sufficient to achieve the needed impact of energy savings? 2.2. How could public procurement procedures be improved in the future with regard to high energy efficiency performance? 2.3. Do you think that there is sufficient guidance in your country to characterise "energy efficient products, services and buildings"? Yes 2.4. Have you seen information campaigns or other public initiatives in your or in another EU country that eplain public procurement of energy efficient products, services and buildings? 1040 Wien Fa Oesterreichs Energie 4/17

5 3. Article 7: Energy efficiency obligation schemes 3.1. Are you aware of any energy efficiency measures that have been carried out or are planned in your country, by the utilities or third parties in response to an energy efficiency obligation scheme? Yes. Energy efficiency products and services have been part of utility business models for several years. A wide range of measures are carried out under the new obligation scheme In your view, is Article 7 (energy efficiency obligation scheme or alternative measures) an effective instrument to achieve final energy savings? With the possibility for fleibility (Art.7(2)) and alternative measures (Art.7(9)) Article 7 could be considered an effective instrument to achieve final energy savings. However, final energy savings do not necessarily lead to primary energy savings, which is the ultimate objective of the directive. In addition the effectiveness of Article 7 depends on the national implementation. Due to the relatively recent implementation of the instrument in Austria and most other member states it is too early to tell if the choice of tool has been successful in terms of target achievement and cost efficiency. Energy-saving obligation schemes could be more cost-effective if the scope of eligible measures would be epanded. The current approach cannot provide the necessary fleibility to develop integrated solutions building on a synergies e.g. between heat demand reductions and connection to a cleaner heat supply. These synergies are critical to achieve savings in the cheapest way by tapping the potential for saving at the level of energy transformation e.g. use of recoverable heat and CHP. Furthermore schemes to develop energy savings should be tailored to the estimated potential of the different markets. The current target is applied uniformly to all Member States, which does not at all account of the different situations across Europe regarding energy supply and quality of the building stock. The alternative measures are a very important element of the article, as they can fit well with eisting national regulatory frameworks as well as with the differentiated potentials available for energy efficiency. They can provide some fleibility through the use of a mi of policy instruments that will ensure that investments target the cheapest savings Wien Fa Oesterreichs Energie 5/17

6 The measures introduced by Art. 7 (2) are also important, as they provide some fleibility - in particular the possibility to include savings gained at the level of transformation and transport/distribution What are, in your view, the main challenges or barriers to implementing Article 7 effectively and efficiently in your country? Please select up to 5 options from the list. To select or introduce the right set of measures for achieving 1.5% energy savings (annually) Too great fleibility to use wide range of measures: energy efficiency obligation scheme and alternative measures Strong opposition from energy suppliers and distributors to set up an energy efficiency obligation scheme Lack of effective enforcement Lack of sufficient knowledge and skills of involved parties Lack of awareness (by the end-users) of the energy efficiency obligation schemes or alternative measures Developing the calculation methodology in line with the requirements of Anne V Ensuring sound and independent monitoring and verification of energy savings Avoiding double counting High administrative burden Ensuring consistent application of the requirements with other energy efficiency legislation (e.g. building codes) Limited timeframe ( ) that makes it hard to attract investment for long term measures Other (please specify) Delayed implementation of Article 7 can led to increased costs due to legal uncertainty. Developing the calculation methodology is comple and therefore costly and time consuming Do you believe that the current 1.5% level of energy savings per year from final energy sales is adequate? Strongly agree Agree Disagree Strongly disagree No opinion We believe the required yearly energy saving percentage should reflect the needed ambition in order to achieve the 2020 and respective 2030 energy efficiency goal. The rules about calculations and acceptable measures make it hard to reach the target for each year. An 1040 Wien Fa Oesterreichs Energie 6/17

7 European objective should be fleible enough in view of the different situations across Europe Should energy efficiency obligation schemes have specific rules about energy savings amongst vulnerable consumers? We believe that wider social policy is the best way to help consumers tackle the root causes of debt, including energy. While we agree that energy efficiency financing schemes can be a good way to support consumers having trouble paying their energy bills as they do not have the financial resources upfront to make such investments. We are convinced that support granted to people suffering from poverty should come from general incomes of the State, i.e. through general taation to avoid levying energy bills. 4. Articles 9-11: Metering, billing information and cost of access to metering and billing information 4.1. Overall adequacy: Do you think the EED provisions on metering and billing (Articles 9-11) are sufficient to guarantee all consumers easily accessible, sufficiently frequent, detailed and understandable information on their own consumption of energy (electricity, gas, heating, cooling, hot water)? Yes. The provisions set out in article 9-11 are fit to provide relevant information while ensuring that new measures are based on technical feasibility and cost-effectiveness. The possibility to use meters, Heat Cost Allocators or alternative measures provides for a fleible approach to account of the variety of settings at EU level Do you think it appropriate that the requirement to provide individual metering and frequent billing (Articles 9(1), 9(3) and 10(1)) is subject to it being technically feasible and/or cost effective? Yes - Requirements should be conditional on technical feasibility and cost-effectiveness. The focus on measures that are technically feasible and cost effective must remain. For this reason the requirement on cost-effectiveness is absolutely necessary to ensure that only measures that lead to real energy savings will be deployed Should such conditions of being technically feasible and/or cost effective be harmonised across the EU? We are sceptical in this regard. Member states are very diverse in terms of climate, saving potential, differences in eisting building stock (age, technology etc.). Furthermore, practices 1040 Wien Fa Oesterreichs Energie 7/17

8 and stakeholders responsibilities differ widely from country to country. An overview of the situation in the different Member States and an echange of best practises could be useful. Given the different conditions across Member States it is better that these conditions are defined at national/local levels How would these conditions of being technically feasible and/or cost effective affect the potential for energy savings and consumer empowerment? This will result in lower costs for consumers Smart meters: Do you think that A) the EED requirements regarding smart metering systems for electricity and natural gas and consumption feedback and B) the common minimum functionalities, for eample to provide readings directly to the customer or to update readings frequently, recommended by the Commission 1 together provide a sufficient level of harmonisation at EU level? Yes What obstacles have national authorities/actors faced in introducing on a large scale individual meters that accurately reflect the final customer s actual energy consumption? Do you have any good eperiences to share on how to overcome these obstacles? A technology rollout of this magnitude must always be accompanied with timely and proper information campaigns for customers in order to achieve their buy-in. This relates especially to the benefits customers can epect from the new technology. 5. Article 20: Energy efficiency national fund, financing and technical support 5.1. What should be the most appropriate financing mechanisms to significantly increase energy efficiency investments in view of the 2030 target? As shown in EURELCTRIC s policy paper on triggering energy efficiency investments 2 from September 2015, EURELECTRIC sees a number of ways in which the gap in (especially private) energy efficiency investments can be closed. We believe it is critical for the Commission to acknowledge that utilities are central players in unlocking this potential. New 1 C(2012) Wien Fa Oesterreichs Energie 8/17

9 business models have allowed the further development of close customer relations. Power providers are changing their role and are becoming more geared towards becoming suppliers of more than just energy as a commodity, and the related epansion of know-how has brought new technologies into the market. Due to their proimity to customers, utilities can also act as information providers or, through innovative financing models; they can also play a role in the financial eecution of energy efficiency projects Should there be specific provisions aimed at facilitating investment in specific areas of energy efficiency? Yes. The current market is not favourable to investments into energy infrastructure and high efficient CHP. Two factors are playing against new investments: - The recent evolution of oil and gas prices - The wholesale price for electricity, resulting from subsidises for intermittent RES, which do not allow operators of conventional power plants - including high efficient CHP - to recover their operating costs. The promotion of energy efficiency is therefore critical in such a contet. DHC infrastructure is still perceived as a risky investment If yes, specify your answer from the below list: Building renovation Efficient appliances and equipment in households District heating and cooling network development Energy use by industries SMEs Companies City and community infrastructures in relation to transport, waste heat recovery, waste-to-energy Other (please specify) 5.3. Do you agree that one way to increase the impact of energy efficiency investments could be through making the energy performance/savings monitoring mandatory under Article 20 whenever public funds/subsidies are used for EE investments? Such monitoring could be done, for eample, via online platforms, by users in the regular intervals. Strongly agree 1040 Wien Fa Oesterreichs Energie 9/17

10 Agree Disagree Strongly disagree No opinion Many eisting energy efficiency programs focus on the household level, the effect of single measures is generally small, while the transaction cost are high. For this reason it also is not advisable to install monitoring of energy efficiency at the measure level. It would only increase the transaction cost of energy efficiency measures, while a clear goal should be to bring them down. 6. Article 24: Reporting and monitoring and review of implementation 6.1. Do you think that the eisting reporting and monitoring system under the EED is a useful tool to track developments with regard to energy efficiency in Member States? Do you think that the reporting of national indicators (for eample, value added/ energy consumption, disposable income, GDP etc. for year (n-2) 3 under Anne XIV (1)(a)) of the EED should be simplified? 6.3. Do you think additional indicators (in addition to those referred to in Anne XIV (1)(a) (e)) are needed to improve monitoring to assess Member States' progress towards their energy efficiency targets? 3 In the year before last [year X(1) 2], where X is the current year Wien Fa Oesterreichs Energie 10/17

11 Part II Technical questions (on Articles 6 and 7) 7. Article 6: Purchasing by public bodies of energy efficient buildings, goods and services 7.1. Do you believe that measures on public procurement of energy efficient products, services and buildings should become mandatory also for public bodies at regional and local levels? 7.2. In your view, what are the main barriers that preventing the use of energy efficiency requirements in the eisting public procurement procedures (please select from the list and eplain your reply: There is a lack of awareness about the use of energy efficiency requirements in public procurement There is insufficient epertise and/or knowledge on the use of energy efficiency requirements in public procurement Thresholds are too high which is why energy efficiency requirements do not apply to many contracts Incompatibility of energy efficiency requirements with other procurement criteria (sustainable requirements, low price, safety requirements, technical requirements) Higher energy efficiency criteria in public procurements may imply higher prices Lack of clarity of the energy efficiency requirements for public procurement Energy efficiency requirements for public procurement are not very clear and difficult to check 7.3. In your view, should all EU public procurement rules relating to sustainability (including in particular energy efficiency in buildings, the use of renewable energy sources, etc.) be gathered into a single EU guidance framework? 7.4. Do you think that there is sufficient guidance/framework to know what is meant by "energy efficient products, services and buildings"? 7.5. While energy efficient products will be cheaper to operate, their initial cost might be higher and a longer period of time will be needed to "pay back" this higher cost. Is this a problem and if so, how can public authorities overcome it? As eplained in EURELECTRIC s paper on energy efficiency financing, long payback times for efficiency investments do pose a barrier, among other factors. Better access to financing schemes and better use of more innovative financing models as eplained in our answer to question 5.1 can be of great effect in this area Wien Fa Oesterreichs Energie 11/17

12 8. Article 7: Energy efficiency obligation schemes 8.1. Emerging evidence suggests that most of the measures introduced under Article 7 have long lifetimes (20-30 years) and will continue have an impact beyond Do you share this view? Generally, efficiency measures will have lifetimes of around 20 years, but rarely more. This is the epected lifetime of efficient equipment such as heat pumps or high efficiency boilers. House insulation measures will remain effective for longer, while evidence suggests that educational and behavioural measures do not hold up for a very long time What is your view on the potential benefits (listed) of energy efficiency obligation schemes? Strongly agree Agree Disagree Strongly disagree No opinion Lower energy bills for consumers Better awareness of energy efficiency potential by consumers Better relationship between energy suppliers, distributors and customers Lower energy generation (and transmission) costs for the utilities Improved business and administrative environment for up-coming innovative energy services Aggregation of small-scale investments (pooling/bundling) 1040 Wien Fa Oesterreichs Energie 12/17

13 Development of new financing models e.g. energy performance contracting Stimulation of energy efficient renovation of buildings Increased competitiveness in the energy markets Other 8.3. Are you aware of any developments in the energy services markets that have benefited particular actors (e.g. service providers, suppliers, distributors, etc.) in Member States having an obligation to define the obligated parties under the energy efficiency obligation scheme? 8.4. If you think that some requirements of Anne V need more precise guidance please list those requirements and specify briefly what further information you think would be useful. The power sector believes the focus should rather be on simplification. Too detailed and comple guidance has undermined the effectiveness and increased the administrative burden of the policy As you might know, the current framework of Article 7 is set until 2020, linked to the energy efficiency target for 2020, which will epire at the end of In your view, should the Article 7 obligations continue beyond 2020 in view of the new energy efficiency target for 2030? Looking at obligation schemes beyond 2020, some critical issue will have to be addressed. It is too early to provide an answer to this question. In many member states (including Austria) Article 7 has only recently been implemented. Depending on a thorough evaluation of the results at a later stage in all member states it could be decided whether Article 7 should be maintained post Wien Fa Oesterreichs Energie 13/17

14 We share the Commission s views that electricity will play a very important role as a carbonneutral energy carrier in the future due to its unique role for integration of renewables, smart consumer engagement and wider environmental benefits such as air quality improvements. This electrification of transport and the related distributed storage will have a strong impact on how our society will consume electricity and skew normal energy demand profiles. The review must take this into account and weigh the impact of obligation schemes in this regard. If yes, what factors should be considered for the future Article 7 (please select up to 5 options from the list, and eplain your reply if possible): The amount of savings to be achieved should be set at a more ambitious level for post 2020 (eceeding the eisting 1.5%) The energy efficiency obligations scheme should be kept as the only possible instrument to achieve the required savings The possibility to choose between the energy efficiency obligations scheme and/or alternative measures should be retained The possibility to eclude sales in transport from the baseline should be removed The possibility to eclude sales in transport from the baseline should be kept but restricted to the fied amount to ensure the level playing field The eemptions under paragraph 2 applying a lower calculation rate (for the first years), and ecluding sales in ETS industries, as well as allowing savings from measures targeting energy generation and supply should be removed altogether The eemptions under paragraph 2 should be retained but the level and number of eemptions should be reviewed The possibility for 'banking and borrowing' energy savings from different years should be removed (paragraph 7(c)) The possibility for 'banking and borrowing' energy savings should be kept with a possibility to count savings towards the net obligation period (paragraph 7(c)) Other (please specify) 8.6. Do you think that the scope of eligible measures allowed under Article 7 should be clarified? No clarification is required but an epansion of the national fleibility would ensure a cost effective implementation. If yes, please eplain your answer further: The scope of eligible measures should only be end-use energy savings (as it is at the moment) The scope of eligible measures should be epanded Other (Please specify) 1040 Wien Fa Oesterreichs Energie 14/17

15 If the scope should be epanded, please specify which of the following possibilities would be appropriate: Measures to switch fossil fuel heating and cooling fully or partially to renewable energy (e.g. through individual appliances, district heating and cooling, centralised distributed units supplying larger building complees or groups of buildings) Measures to increase efficiency of district network infrastructure and generation, including through thermal storage facilities Measures to make energy generation from small scale generation more efficient, below the ETS threshold Switch to self-consumption, auto-generation and energy positive buildings Participation in demand response, including from providing storage capacities Primary energy savings from the utilisation and recovery of waste heat (e.g. in district networks) Savings from energy management systems Energy savings from better organisation of activities Other 8.7. Would there be benefits in greater harmonisation of some of the requirements of Article 7 to allow more consistent implementation across Member States? Provision of Article 7/Anne V Calculation methods Strongly agree Agree Disagree Strongly disagree No opinion Materiality Additionality Lifetimes Price demand elasticities 4 for taation measures in real terms 4 Price demand elasticity is a measure used in economics to show the responsiveness, or elasticity, of the quantity demanded of a good or service Wien Fa Oesterreichs Energie 15/17

16 Indicative list of eligible energy saving measures Monitoring and verification procedures Reporting Other In the field of energy efficiency fleibility is a key issue. Allowing member states to address their individual challenges is important. Therefore, echanges on best practises are very useful, but forced harmonisation is not advised What role should the EU play in assisting the Member States in the implementation of Article 7? The implementation eperiences from article 7 are very mied due a wide number of reasons. In many cases, it is also too early to tell how successful the article has been implemented. As member states are continue to gather eperiences the role of the EU must be that of a platform on which EU countries can echange and learn from successes and failures, sharing their best practises Please state which best practice eamples could be promoted across the EU and how? There are several ways in which best practise eamples can be shared. Ideas proposed by the power sector include using MS reports as a database, publishing the best ideas and the organisation of workshops in the relevant sectors Wien Fa Oesterreichs Energie 16/17

17 8.10. Would it be appropriate and useful to design a system where some types of energy savings achieved in one Member State would count towards obligations carried out either by governments or by economic operators in another country, just as the option to cooperate on greenhouse gas emissions reductions already eists? As long as there is no comparable energy saving unit that can be traded, member states could only transfer their savings bilaterally. To be able to do so member states would have to agree on methodologies and procedures to determine the savings mutually, which seems unlikely in the near future Would it be appropriate and useful to design a system where energy efficiency obligations would also include elements aiming at gradually increasing the minimum share of renewable energy applicable to energy suppliers and distributors? Generally, there should not be further obligations in terms of RES placed on suppliers and distributors. The EED should retain its primary focus on efficiency while the promotion of RES is done through other instruments e.g. obligations on buildings Could the option of establishing an EU wide 'white certificate' trading scheme be considered for post 2020? Strongly agree Agree Disagree Strongly disagree No opinion This option would require an EU wide harmonisation and regulation in the field of energy efficiency legislation, which would result in high administrative burden. At the same time such a scheme might be very difficult to establish and implement from a political point of view. Thank you for taking our comments into consideration. If you have any further questions, please do not gesitate to contuct us. Yours sincerely, DI Wolfgang Anzengruber President Dr. Barbara Schmidt Secretary General 1040 Wien Fa Oesterreichs Energie 17/17