Energy sharing under the EU’s proposed electricity market design reform is under threat from opposition in the European Parliament, which could allow EU countries to limit it to the neighborhood level only. This cannot be allowed to happen, writes Monique Goins.
Monique Goens is Director General of the European Union consumer organization BEUC.
Consumers have faced unprecedented increases in their bills recently, in the months (and years) since the energy crisis began. To emerge from this crisis, Europe needs to accelerate investments in renewable energy.
But it should also be easier for consumers to access cheap renewable energy sources so they can make long-term savings on their bills. Sharing energy – between friends, neighbors or peers – may be part of the solution.
In response to the energy crisis, the European Commission proposed a series of short- to medium-term reforms to prevent rising fossil fuel prices from hitting households and industry again, including increasing domestic supply of renewable energy sources.
The move to generating more renewable energy is of course a good thing. Wind farms and solar parks are becoming increasingly visible features in landscapes across Europe. Many consumers are also making the switch by installing solar panels on their roofs and are seeing the benefits in terms of lower energy bills.
However, many consumers cannot invest in their own solar panels because they cannot afford the investment, because they live in an apartment building or because they are renters. As a renter, I also faced this difficulty.
To address this obstacle, the Commission’s electricity market design reforms propose enabling consumers who own solar panels to share energy directly. This is a completely new model for consuming renewable electricity collectively and remotely. This comes in addition to energy communities as a new model for consuming renewable energy sources collectively and remotely.
It works by allowing consumers with solar panels to allocate their excess production (for example, during the day when they go to work) to the community, or to neighbors or family members who live elsewhere.
This is a win-win: both for those who produce the electricity – where they can often get better wages than those offered by their energy company – and for those who buy it, for whom it can be cheaper than their current suppliers.
For consumers, this could translate into savings per household of up to €1,100 per year on average on their electricity bill. For consumers (with solar panels at home), it’s also good news.
Sharing unused energy with other consumers for a higher fee than they could get for it on the wholesale market could also help pay back some of their initial investment in solar panels, for example.
Make energy sharing work for everyone
But for energy sharing to work best, it shouldn’t be limited to a few neighbors living on one street. Renewable energy generation can vary across regions, depending on the amount of daylight available for solar energy, for example. That’s why it works best at the state level. The commission’s proposal would allow consumers to do just that.
Research shows that sharing solar, wind, and other renewable energy sources among a broader group of consumers allows electricity grids to better match combined demand and supply. Efficient energy sharing requires a critical mass of people.
But now energy sharing within the reform of electricity market design is under threat from opposition from the European Parliament, which could allow EU countries to limit it to the neighborhood level only.
This cannot be allowed to happen. If energy sharing is limited to a very local level, prices are likely to remain high, preventing the arrival of new market players, such as utility companies or startups that help facilitate sharing.
Policymakers should look to Austria for inspiration. The Alpine country already allows consumers to share renewable electricity across the country. The one-stop center helps consumers create or join new energy sharing schemes.
The costs of using networks are allocated fairly: the greater the distance of sharing excess energy, the higher the cost.
The design of Europe’s electricity market should help consumers access cheap renewable energy and save on their bills. Energy sharing is a way to achieve this. It is not a pipe dream, it already exists and countries like Austria are setting an example of how it works.
This should now be rolled out across the European Union. European lawmakers should revise their ambition accordingly and prevent energy sharing from being reduced to a niche domestic offering. It’s time to think big.
