European Commission’s power play means easier funding for energy efficiency

Shining ambition: European Commission plots sweeping change to Europe's energy market.
Shining ambition: European Commission plots sweeping change to Europe’s energy market.

The European Commission has unveiled hugely ambitious plans to create sweeping changes across the European energy market, launching its Energy Union manifesto with integration, interconnection and energy efficiency at its heart.

The Commission is to pay special attention to increasing the energy efficiency of buildings and transport and help companies unlock financing to get projects over the line.

The Commission has long talked of Energy Union, but today formalised those plans, which, if implemented, could radically alter the structure of the energy market.

The package includes:

  • new legislation to redesign and overhaul the electricity market
  • ensuring more transparency in gas contracts
  • substantially developing regional cooperation as an important step towards an integrated market, with a stronger regulated framework
  • new legislation to ensure the supply for electricity and gas
  • increased EU funding for energy efficiency or a new renewables energy package
  • focusing European research and innovation energy strategy
  • reporting annually on the ‘State of the Energy Union’

Many of the elements could take years, if not decades to implement, given disparate national policies and priorities.

At a regional level, plans to redesign the wholesale and retail markets, overhaul integration and interconnection, create smart ‘super grids’, make gas supply more transparent and impose a pan-European regulator over national energy markets are hugely ambitious, even individually.

However, the policy elements around energy efficiency should be less difficult to deliver.

According to the Commission, it is “necessary to fundamentally rethink energy efficiency and treat it as an energy source in its own right, representing the value of energy saved. As part of the market design review, the Commission will ensure that energy efficiency and demand side response can compete on equal terms with generation capacity… The Commission will, therefore, encourage Member States to give energy efficiency primary consideration in their policies.”

The Commission has also promised to make access to energy efficiency financing easier to companies and organisations in order to overcome one of the single biggest hurdles in delivering energy savings.

The Commission will develop a ‘Smart Financing for Smart Buildings’ initiative, facilitating access to existing financial instruments, and will outline a strategy to facilitate investment in heating and cooling.

The framework strategy document states:

“Actions by Member States, particularly at the local and regional levels, are needed to exploit the energy efficiency potential of buildings.

“Attracting investments at the scale needed remains a challenge, especially at the local level, mainly due to lack of awareness and expertise in small-scale financing. The Commission will support ways to simplify access to existing financing and offer ‘off-the-shelf’ financing templates for financial instruments to the European Structural and Investment Funds managing authorities and interested stakeholders, promote new financing schemes based on risk and revenue sharing, develop new financing techniques and support in terms of technical assistance.

“Financial support needs to be combined with technical support to help aggregate small-scale projects into larger programmes which can drive down transaction costs and attract the private sector at scale.”

The Commission also said it will review the Energy Efficiency and Energy Performance of Buildings Directives in a bid to create a framework that is fit for purpose in delivering energy efficiency in buildings.

The document also states that the Commission will draw up a district heating strategy, in a bid to unlock “huge efficiency gains”, and has indicated it sees energy from waste as a priority.

A digested breakdown of the Union plan is available here.

The full 21 page document, setting out proposals and timetables, is available here.

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