Summer Energy Package: EDSO welcomes consumer empowerment, cost-reflective network tariffs and flexibility incentives in smart grid environment

July 16 2015, Brussels – European Distribution System Operators for Smart Grids (EDSO) welcomes the balanced consideration of the consumer, security of supply and sustainability objectives in the European Commission’s “Summer Package”: important steps towards implementing a resilient Energy Union for Europe’s energy consumers.

While recognising the challenging task still ahead, the European Commission’s Communication on a new energy market design provides a good basis on which to elaborate the conditions needed to deliver affordable and reliable energy for all. The Package recognises the need to adapt to new realities by making the most of flexible demand and generation as well as smart technologies in a way that “empowers citizens to take ownership of the energy transition”. Smart grids and the ability of distribution system operators (DSOs) to optimally manage flexible networks, where 95% of renewable energy sources (RES) are connected, are fundamental for the realisation of the EU’s vision.

“The Package represents strong efforts towards designing a new market where price incentives simultaneously reward the active participation of consumers, encourage sustainability through energy efficiency and the uptake of RES and self-consumption, send the right signals to investors, all while very importantly ensuring that grid operators are able to cost-efficiently guarantee a stable supply” said Ana Aguado, EDSO Secretary General.

EDSO commends the recognition that distribution network costs are driven by peak capacity, meaning they do not, by definition, decrease in a high self-consumption scenario, and by no means if self-generated electricity is fed back into the network. As long as prosumers are still connected, the grid remains on standby for their use and must be equipped to deal with any eventuality. Capacity based network tariff structures consequently act as a form of necessary insurance but can also, under the right framework, be used to incentivise cost-reducing and grid-optimised flexibility from demand and generation alike. While supportive of self-production and consumption, EDSO nonetheless stresses the need to ensure fair and cost-reflective tariff structures.

The reconsideration of DSO roles and their ability to be active system managers and neutral market facilitators, particularly with respect to data handling, is welcomed. Likewise is the recognition that better cooperation between DSOs and transmission system operators (TSOs) is paramount. EDSO highlights the good work already undertaken in the informal DSO-TSO Platform launched this year. The acknowledgement of the important contribution that research, development and demonstration (RD&D) will make to the new market design is also well received. Further supporting the line of the European Commission, one-size-fits-all prescriptions at EU level may not always be possible. EDSO believes the development of high-level guiding principles for member states and national regulatory authorities will help to more efficiently reach the Energy Union objectives.