What does the new Directive on energy efficiency propose?

What does the new Directive on energy efficiency propose?

The objective is to save energy and achieve a goal that is set by the EU, which is to reduce 20% energy consumption by 2020. Viewed in absolute terms (in millions of tons of oil equivalent – Mtoe), we can say that by reducing consumption of 368 Mtoe in 2020 is compared to projected consumption for the same

The objective is to save energy and achieve a goal that is set by the EU, which is to reduce 20% energy consumption by 2020.

Viewed in absolute terms (in millions of tons of oil equivalent – Mtoe), we can say that by reducing consumption of 368 Mtoe in 2020 is compared to projected consumption for the same year that no change was 1842 Mtoe. This objective should be achieved by the EU as a whole. Currently, with all measures taken by EU and national levels the consumption has decreased by 1678 Mtoe, or 9% of savings.

What are the proposed measures?

Legal obligations for the establishment of energy saving measures in all member countries are: energy distributors or companies that sell their electricity on the retail market will be required to save 1.5 % of the total volume of energy sold each year through the implementation of measures to improve energy efficiency such as heating systems, installation of double glazed windows and insulation of roofs among end users of energy.

The public sector will have to lead by example: public bodies will need to encourage the rest of the market to purchase energy efficiency products and services through a set of legal obligations for the purchase of energy efficient buildings, products and services. In addition, public bodies need to gradually reduce their energy consumption in their premises by implementing subsequent year renovation that would include at least 3% of the total area of ​​the building.

The main measure of energy savings for consumers are: easy and free access to real time and historical data on energy consumption through more accurate individual measurements that will empower consumers to better manage energy consumption. Payment will need to be based on actual consumption, according to data collected during the measurements.

Industry: Incentives for small and medium enterprises that intend to conduct energy audits and to spread good practice principles. Large firms will have to make a review of energy consumption in order to identify potentials for reducing energy consumption.

Efficiency in energy production: monitoring the level of efficiency of new capacity for energy production, the establishment of national plans for heating and cooling based on sound planning of infrastructure for efficient heating and cooling, including the recovery of waste heat.

What exactly is planned for public buildings?

From January 1st 2014, 3% of public buildings should be renovated every year with the clear aim of saving energy. Currently, the same level of the buildings are being renewed, but only in half of those cases are energy efficiency improvements applied (1.5% of reconstructed buildings). In practice, this would mean better insulation of the walls, double glazing in kindergartens, schools and municipal buildings, roof repair and replacement of inefficient boilers.

In many cases, cost-optimal reconstruction can lead to a 60% energy savings. Benefits can be estimated at about 6
Mtoe in 2020,
which is equivalent to 17 non-construction of coal powered plants or 9000 wind turbines.

Due to the large share of public buildings (about 12% of buildings of the EU), its restoration could serve as an engine for greater market presence of energy efficiency in other sectors as well as developing the necessary skills and knowledge. Buildings (private and public) still consume about 40% of the total energy consumption.

How to get the government to spend money in times of austerity?

Renovating public buildings will largely pay itself off through savings on the energy bills and will also assist economic recovery by stimulating economic activity and employment.

However, it still remains a need for the investments for the implementation of energy efficiency. For this reason, the proposed Directive includes provisions to strengthen the market for energy services. In these markets, energy services companies (ESCO) will pay for the initial investment and get the money back through savings on energy costs. In addition to energy savings, new business opportunities will be launched and jobs created, for example; construction companies or providers of equipment and services. Energy services market currently stands at around 6 billion Euros, while in the U.S. it is worth 30 billion Euros and it is further developing. The potential of the EU for this type of market is estimated at 25 billion Euros.

What measures are proposed for the energy companies?

Energy companies have significant commercial data on energy consumption of its customers who might turn into a significant participant in the market power, but they have no incentive to move from the impasse. To include these companies, the Commission recommends that all energy distributors or any company that sells energy on the territory of the Member States must commit to saving energy that would be equal to 1.5% of total energy sold in the previous year.

To achieve these savings, the energy companies should cooperate with the end users (ie. owners of houses or apartments, supermarkets, hospitals …) to implement energy savings. Saving will be measured in absolute terms, which means that companies can still increase their sales and production.

Each member country will have to devise its own scheme that would best suit their national circumstances and at the same time keep track of certain common EU requirements (ie. the same levels achieved savings, savings certification …).

If carried out properly and with sufficiently stringent levels of ambition, a decline of 6.4% of total EU energy consumption by 2020 will be achieved (ie. 108-118 Mtoe of primary energy which is equal to the joint consumption Poland and Portugal).

Who will pay for these programs?

Depending on the method of program implementation at the national level, the costs are either equally distributed to all customers or energy service company that conduct a preliminary investment which is then returned through savings on energy bills within a specified period of time. 

What are the advantages for the industry?

The Commission proposes that large companies need to conduct regular independent energy audits. Member States
are also encouraged to develop incentives for companies to introduce energy management as a systematic framework for the rational use of energy.
Sharing best practices and energy efficiency projects aimed at capacity building for energy management are also proposed for small and medium enterprises.

How about the consumers?

Member States shall ensure that end users of electricity, natural gas, heating and cooling and hot water is delivered through district heating systems to ensure set standards that accurately measures and provide insight into the actual energy consumption per household to provide information in real time.

Member States shall ensure the accuracy and frequency of collection, and billing for actual consumption for all sectors covered by the Directive, including energy distributors, distribution system operators and retail energy companies. The deadline for this action is the January 1st 2015. In the long term, the energy companies should introduce smart meters, although in the short term the frequency of collection can be based on existing standards of self-reading by consumers.

Potential savings that could be achieved by the information, due to a more adequate measurement and collection, is estimated at around 80 Mtoe. Already, some pilot projects have shown potential for savings by reducing energy consumption by 15-20% (40% of electricity) where customers can turn off appliances via a website or mobile device.

What is proposed for district heating?

The Directive stipulates that by January 1st 2014, the Member States must establish national plans for heating
and cooling with the aim of developing high efficient cogeneration (CHP) plants and efficient district heating and cooling.

Cogeneration is the simultaneous production of thermal and electrical or mechanical energy. This method can
achieve savings of at least 30% compared to separate production of electricity and heat.
CHP is a mature, proven technology and there is additional economic potential for at least a doubling of CHP capacity by 2020. Despite everything, the share of CHP is not increased and currently stands at 11% in comparison to 2004. This is an increase of 0.5%. To achieve the appropriate economic potential by 2020 (that was 21%) annual growth of at least 6% is required.

Why binding targets? What is the “two steps” approach?

The proposed measures are binding and not binding targets for each Member State: once the Directive enters into force, Member States have an obligation to implement all its provisions. For example, they will not be able to decide whether or not to spend 3% of the goals of reconstruction of public buildings, because if they fail to implement the Directive the Commission can initiate infringement procedures.

In addition, the Commission proposes that Member States themselves inflicted non-binding national targets for energy efficiency and the Commission to propose mandatory national targets only if in 2014 they come to the conclusion that the EU is unlikely to achieve the goal of 20% savings.

(Source: www.croenergo.eu)

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