Global Energy Forum 2019 New Technologies in the Energy Sector

1. Global Energy Forum 2019New Technologies in the Energy Sector Una Shortall, CEER Deputy Secretary General Lima, 22nd October 2019

2. New technology impacting energy sector and associated regulatory changes • Who is the Council of European Energy Regulators (CEER)? • Energy Transition in Europe (targets and legal framework) • Some recent CEER work on technology and digitalisation: • 3D” Strategy (2019 – 2021) • Smart Technology Development Report (2018) • Case studies on technology aspects of the Clean Energy Package (2019) • Paper on Dynamic Regulation that enables Digitalisation in the Consumer Interest (2019)

3. CEER: 39 European energy regulators Members • 28 EU Member States • Iceland • Norway Observers • Albania • Bosnia and Herzegovina • Georgia • Kosovo • Moldova • Montenegro • Republic of North Macedonia • Serbia • Switzerland

4. Energy Transition: Big Picture in Europe New Legislative Framework Clean Energy Package (CEP) 2019 • 8 legal texts (revised) • Electricity Directive (inter alia) on technology issues: encourages smart meter roll-out, dynamic price contracts, provides for energy communities etc. • Adopted 2019 • Implementation phase Targets 2020: 20/20/20 (EE, RES, GHG) 2030: 32.5% Energy Efficiency (EE) 32% RES - 40% GHG 2050 Aim: “carbon neutral”

5. CEER’s “3D” Strategy (2019- 2021) DIGITALISATION (in consumer interest) • Protect & empower consumers • Cost saving opportunities • New business models DECARBONISATION(at least cost) • Promotion of flexibility • Integration of RES fully into the grid and the market • Whole system approach • Market based solutions DYNAMIC REGULATION • European solutions for adaptive regulation in a fast-changing world. • Future proofed regulatory framework that enables the energy transition and digitalisation • Cross-sectoral cooperation Dynamic regulation should serve consumers by creating well-functioning markets that provide undistorted price-signals (thus incorporating digitalisation and decarbonisation)

6. 5 potential technology game changers for energy consumers and the impact on regulation In 2018, CEER adopted a future-looking view of regulation identifying technology that impacts consumers and assessing whether energy regulation needs to adapt. Regulatory Issues 1 Smart home technology & IoT • Smart meters • Dynamic pricing • Data Management • Cybersecurity • Prosumers with rights and also obligations as market players (individual and energy communities, net metering, fair allocation of cost-reflective tariffs) • EV (impact on the system, public v’s private charging, consumer rights & protection may depend on where the driver plugs in). • Removing barriers • Monitoring EV (charging) 4 Electricity self-generation 2 5 Blockchain Electrical energy storage 3 CEER Report on Smart Technology Developments, CEER Position Paper on Renewable Self-Generation

7. Blockchain – an example in energy sector

8. EV Leaders (globally) • Norway: share of new EV sales • California: number of EVs and charging points • China: growing market and highest number of public charging pointsJapan: market from charging technology perspective, and experience with V2Home and V2Grid. Source: IEA

9. EV demand response – V2Grid Business models for V2G are still in at an infancy stage internationally Source: IEA

10. Batteries are becoming a cost-competitive flexibility provider Source: IEA

11. Technology that benefits consumers – CEER Case Studies • Case studies on 3 technology-related aspects of CEP: • On-demand smart meter roll-outs (Ireland, Norway) - show that collective benefits that cannot be achieved with a demand-led roll-out. • Dynamic price contracts (Spain, Sweden, Norway) • Data exchange and interoperability (Austria, Czech Republic, Denmark) CEER Report on Implementing Technology that Benefits Consumers in the Clean Energy Package https://www.ceer.eu/web/portal/1765

12. Smart Meter Roll-Out Case Study: Ireland • Smart meter roll-out 2019-2024 to 2 million customers (96%) • Significant work (and consultation) by CRU (the regulator) to ensure consumers benefit: • Roll-out is on a phased basis, informed by a Cost-Benefit Analysis • Demand-led aspect to Phase 1 • Key functionalities of the meter specified (e.g. collection of half-hourly data, provision of data to 3rd parties upon consumer request) • Cost of meters to be socialised across all electricity customers • All suppliers must offer a standard smart tariff (e.g. day, night and peak) so that customers get familiar with time-of-use offers. These are “non-dynamic”.

13. Dynamic Prices Case Study: Spain • Smart meter roll-out for households (up to 15kW of contracted power) by 2018. • 11 million (42%) of Spanish customers have a default tariff (called PVPC) that is based on dynamic pricing. • The default tariff is applied to consumers with contracted power of below 10kW and who are with a “reference supplier” – this means that they did not choose a free market supply contract. • CNMC (the regulator) sets out the methodology for the margin for reference suppliers. • Suppliers make offers indexed to the spot market. • Reference suppliers must offer a (non-regulated) fixed price for 1 year (but these are amongst the most expensive – only 3,500 customers chose these fixed price option). • Consumers get hourly prices that allows them to adjust their consumption and manage their bills • CNMC estimates that consumers under the PVPC could have saved 31-70 Euro per year had they selected the best offer on the market.

14. CEER Paper on Dynamic Regulation to Enable Digitalisation of the Energy System (Oct 2019) • Explores: • what digitalisation means for consumers • role of the regulator in stimulating change in a positive way for the consumer • Identifies: • risks and challenges in digitalisation • core elements of a sustainable regulatory strategy on digitalisation in the energy sector • priority areas where regulators and DSOs can add most value • Recommends: • actions to unlock the benefits of digitalisation for consumers CEER Conclusions Paper on Dynamic Regulation to Enable Digitalisation of the Energy System https://www.ceer.eu/1740

15. Digitalisation of the energy system drives change and creates value propositions for consumers… Value Propositions Changes to the energy system 1 ConsumerParticipation Efficiency Cost savings • Improved productivity for networks, generation and gas assets Convenience 2 Choice • Smart buildings & heating/cooling • Mobility as a service • New retail pricing and products Changes Demand 3 • Peer-2-peer trading • Flexibility market places • In 2015 New platforms Quality & Security of Supply CEER’s view: Digitalisation is not an objective in itself, but a means to deliver benefits for the energy system and ultimately for energy consumers.

16. CEER’s Digitalisation Pathway

17. 7 Recommendations of CEER Digitalisation Report CEER Conclusions Paper on Dynamic Regulation to Enable Digitalisation of the Energy System 10 Oct 2019 CEER Report on Smart Technology Developments 5 June 2018 CEER Paper on Renewable Self-Consumers and Energy Communities 27 July 2017 CEER Position Paper on Renewable Self-Generation 16 Sept 2016 (Upcoming) European Commission report “Assessment and Roadmap for the digital transformation of the energy sector towards an innovative internal energy market” (expected end of Oct 2019): - 10 digitalisation use cases”, case studies from 9 countries,

18. Thank you for your attention! www.ceer.eu

19. 5 Digitalisation Priority Areas • Ensuring effective price-signals • Promoting DSO use of flexibility • Enabling market-based flexibility • Generating data that is accessible and useful • Fostering innovation CEER Conclusions Paper on Dynamic Regulation to Enable Digitalisation of the Energy System

20. 7 Recommendations of CEER Digitalisation Report • Ensuring data protection • Strengthening cybersecurity • Monitoring market evolution • Designing the right grid service products • Deepening TSO/DSO relationships • Empowering consumers through new products • Regulating intermediaries CEER Conclusions Paper on Dynamic Regulation to Enable Digitalisation of the Energy System https://www.ceer.eu/1740