February 15, 2017

The EU ‘Winter Package’ Aims High

On 30 November 2016 the European Commission put forth proposals for the most wide-reaching reform of energy policy in the European Union in almost 10 years. The so-called, “Winter Package” or the official title, "Clean Energy for all Europeans", is a massive package of legislative proposals, Commission Decisions and official Communications and Reports. 

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Correspondingly large is the ambition of the package, namely to “shape the low-carbon energy transition for the next 10-15 years”. That entails creating a framework to comply with the Paris agreement on CO2, cope with fundamental shifts in energy generation and consumption, set the market framework for the energy retail market and for “putting the consumer at the center of the energy market.”

Content of the EU 'Winter Package':
 legislative proposals (4 Directives and 4 Regulations)
 Commission Decisions
 official Communications and Reports
 accompanying annexes
 impact assessments
 guidelines
Over 1000   pages are the legislative proposals alone


The Commission estimates that the EU will need investments of €75 bn. per annum in energy infrastructure in the period between 2021-2030, 80% of which will be in generation from renewable energy sources and networks and grids.

The legislative proposals in the package:

What’s in there for smart metering?

In one of the accompanying documents the Commission complains of the relatively low penetration of smart electricity meters in the EU. This gives indications of the “ineffectiveness” of the provisions in the 3rd Energy Package and in the Energy Efficiency Directive. Many Member States have made wide use of caveats on technical feasibility and financial reasonableness/proportionality to make broad exceptions to the requirement to roll out smart metering. Therefore, this package proposes that those Member States that have assessed smart metering negatively in their national CBA, shall “ensure that those assessments are revised periodically in response to changes in the underlying assumptions and to technology and market developments.”

Whereas the smart metering provisions were in an annex to the Electricity Directive in the 3rd Energy Package, in these proposals the Commission has put the new requirements in the main body of legislation. Also for the first time, definitions are proposed for smart metering systems and interoperability.

Smart Metering Systems: “an electronic system that can measure energy consumption, providing more information than a conventional meter, and can transmit and receive data for information, monitoring and control purposes, using a form of electronic communication.”

Interoperability: “in the context of smart metering, the ability of two or more energy or communication networks, systems, devices, applications or components to interwork, to exchange and use information in order to perform required functions.”

 
As one of the biggest obstacles to the rollout of smart metering in Europe has been battles over how to divide up the “cost pie”, the European Commission proposes that final customers should contribute to the costs of smart metering in a “transparent and non-discriminatory manner.” Moreover, where smart metering has been assessed negatively in a national CBA, final consumers are still entitled to have a smart meter installed within 3 months of asking for one – although they have to pay for the whole thing themselves.

It seems obvious, and most have already done so, but the Electricity Directive also stipulates that Member States publish minimum functional and technical requirements when rolling out smart meters. These minimum functionalities should correspond to the ones listed in the Commission’s Smart Metering Recommendations from March 2012. Flexibility and Demand Response play a large role in the Commission’s vision of the future energy system, Member States should also “ensure the interoperability of these smart metering systems as well as their connectivity with consumer energy management platforms.”

The package does not only deal with electricity metering. In the revision of the energy efficiency directive, the Commission proposes that individual meters for heating, cooling and domestic hot water should be installed for each unit in multi-apartment and multi-purpose buildings. As of 1 January 2020 newly installed meters and cost-allocators must be remotely readable, and by 1 January 2027 all meters and cost-allocators should be able to be read remotely.

Smart metering data in focus

For the first time, smart metering data is addressed in a legislative proposal. Member States should define which parties (TSOs, DSOs, suppliers, aggregators, ESCOs, etc.) may have access to metering and consumption data (with the consumer’s consent). The proposals make no provision or recommendation for the organization of data management, e.g. whether the DSO collects and distributes the data or whether a “Data-Hub” model is used, but whatever organizational model is used, the provision of the data cannot be discriminatory. Beyond that, “member States shall define a common data format and a transparent procedure for eligible parties to have access to the data, in order to promote competition in the retail market and avoid excessive administrative costs for the eligible parties.” The idea behind this is to describe the standard information requirements and sequence of information so that data is “machine-readable across Europe.”

Steps towards a major change

These descriptions are only a tiny fraction of the changes to the energy supply system that the European Commission is proposing. There are sections on the roles and responsibilities of the network operators as well as setting up a “DSO entity” for all DSOs in Europe that are above the unbundling de minimis clause, which will work out plans for the development of demand response as well as the “digitalization of distribution networks including the deployment of smart grids and intelligent metering systems.”

We are, however, only at the very beginning of the legislative process. Although Energy Union Commissioner Sefcovics said that he would like to see the package adopted by the end of this year, the 3rd Energy Package, which was considerably smaller, took two years to pass the European Parliament and Council. In any case, the new regulations that come out of this package will determine the market framework that Landis+Gyr and our customers will be operating under as of 2020.