The EU Commission’s Catharina Sikow-Magny discusses a decarbonised economy

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Decarbonising Europe’s economy

Director responsible for the Green Transition and Energy System Integration in DG Energy at the European Commission, Catharina Sikow-Magny, says that ambitious targets and agreed pathways are the cornerstones of plans to decarbonise Europe’s economy.

Speaking in the context of the European Climate Law, which made endorsement of climate neutrality of the European Union by 2050 and the European Council’s decision to increase the greenhouse gas reduction target to 55 per cent by 2030 legally binding, SikowMagny assesses good progress across the EU in reaching the collective 20 per cent target by 2020 for renewables.

However, the Director of energy system integration admits that, although onethird of the EU’s electricity is being generated by renewable sources, other sectors including transport and heating and cooling have been slow to decarbonise across the EU.

Acknowledging that this overall assessment correlates with what is happening in Ireland specifically, SikowMagny expresses the Commission’s satisfaction that Ireland has entered into statistical transfers to meet its 2020 target, explaining that such use serves the exact purpose of why the transfers were introduced under the Renewables Directive.

The Director states that despite evident progress, ambitions across the EU must now be increased to meet the new 55 per cent greenhouse gas target reduction by 2030.

“In renewables this means that we need to look to a more ambitious target probably somewhere between 38 to 40 per cent for 2030, according to our assessments, significantly higher than the existing 32 per cent target,” she explains.

Sikow-Magny outlines that for electricity this probably means a target of around 65 per cent of all electricity consumed across the EU coming from renewable sources. To this end, the EU Commission representative welcomes the Irish Government’s aim to position itself as a leader in this area and its 70 per cent renewable electricity target by 2030.

However, Sikow-Magny stresses the importance of a focus across EU member states not solely on the targets but also systems to make renewables work, including storage, flexibility, interconnection, and industrial processes.

“These are important challenges, and we need to ensure that high renewable production will be matched with high reliability and security of supply,” she adds.

Pointing to how the EU Commission is seeking to address these challenges, the Director says that the implementation of the legal acts of the Clean Energy Package, in a timely manner, is critical. Following the transposition deadline of the Electricity Directive at the end of 2020, the Renewables Directive had to be transposed into national law by member states by June 2021.

The Director believes that the Renewables Directive will underpin and bring about a circular economy and biodiversity protections.

Alongside implementation of the Clean Energy Package, the Commission is currently reviewing all legislation across all sectors to see where improvements are needed to reach the 55 per cent target.

“We need to assess the renewables target but we also need to ensure that our renewables target is underpinned by all of the relevant elements from the Energy System Integration Strategy, which outlines how the EU Green Deal can be implemented in the energy sector,” explains Sikow-Magny.

“We have already started some of this latest legislative work. Last December, we proposed a review of the TransEuropean Networks guidelines to ensure it is fit for the future and amongst other things, while keeping a focus on electrification and electricity interconnection, we will start looking at how to bring renewable gases and hydrogen into the system.”

By the end of 2021, the EU Commission plans to propose a package on how to decarbonise gas, how to bring hydrogen to the market and how to diffuse methane emissions from different sectors.

“We have a busy year ahead of us not just in implementation but also preparing new legislation to improve and raise the ambition,” she summarises.

Offshore

Turning to Ireland’s decarbonisation journey, the EU Commission representative highlights interest in the EU strategy on offshore renewable energy published in November 2020. Sikow-Magny outlines that the strategy aims to tap into the huge potential of offshore renewable energy and to enshrine the EU offshore industry as a global powerhouse in offshore technologies.

“Our aim is to remove barriers so that we can reach a goal of in the region of 300GW of offshore wind and 40GW of ocean energy across our sea basins by 2050,” she explains.

“The strategy presents a way to shift our thinking to support the whole value chain in two main areas. Firstly, we need to move from national borders in the sea to look at the best sea basins globally and together. Regional cooperation is key. We must encourage industry to work with us and not in silos.

“Secondly, we need the right electricity grid to bring power onshore efficiently and directly to consumers. The TransEuropean Energy Networks guidelines review proposes ambitions transformations on grid development, including the Celtic Interconnector as one of its flagship projects.

“The ambitious offshore wind target of 5GW that we have seen in the Irish strategy by 2030 is an important contribution to this overall offshore strategy and we are looking forward to continuing the cooperation in this area with Ireland.”

Just transition

Another critical element of decarbonisation success highlighted by Sikow-Magny is the EU Commission’s investment strategy to ensure a just transition.

“European regions differ one from the other in resources and carbon intensity and therefore, an important element of the Green Deal is to ensure that the energy transition also brings social benefits to all of our regions. Transformation of the economy must be fair and ensure that nobody is left behind.

“A just transition will bring more sustainability and more resilient Europe in all dimensions, be they environmental, economic or social. We have noted again with appreciation and interest the design of Ireland’s new RESS scheme with quite innovative solutions to support participation and engagement of local communities. This is, of course, key in any change and investment in infrastructure project.

Concluding, Sikow-Magny says: “2030 is tomorrow. Nine years is an extremely short time in the energy industry, but we believe our ambitious targets are realistic. Over the past decade we have seen the cost of renewable energy decrease dramatically. For wind, costs have fallen in the region of 70 per cent and in solar PV, close to 90 per cent. We expect similar cost reductions in the new areas such as hydrogen, electrolysis, and decarbonising gas through waste.

“All this is possible when we have an ambitious target and when we have an agreed pathway. We can be confident that despite being very ambitious we also have a very realistic plan ahead of us. The key is to work together to make change happen.”

How active consumers can facilitate greater integration of renewables

The traditional flow of energy was unidirectional, from large generators to customers with suppliers acting as intermediaries. This relationship is beginning to be transformed however, as more consumers are installing small-scale generation and consumers are being empowered to become active in the transition to a low-carbon economy, through demand response.

The Clean Energy for all Europeans Package (CEP) is a set of EU Regulations and Directives aimed at setting requirements that will enable the EU to meet its renewable goals and targets set out at the Paris Agreement in 2015. Two of the main documents in this package include the Electricity Directive (EU) 2019/944 (IMED) and the Renewables Directive (EU) 2018/2001 (REDII). A key element of these directives is the inclusion of small-scale market actors in the energy sector, such as individuals and energy communities who will be integral in developing and participating in new energy activities and opportunities, previously only available to large suppliers and network operators. out in Ireland, consumers will have more opportunity to become aware of their energy usage and realise how it affects the wider electricity grid. Their active consumption can lead to an understanding of the source of the energy they use, and the opportunity to use greener and cheaper electricity at different times of day, or in different weather conditions. This understanding can then be translated into action if an individual or a group of individuals forming an energy community want to become more involved in maximising their local area’s decarbonisation efforts.

The CRU is in the process of developing an enabling regulatory framework that will facilitate the participation of active consumers and energy communities in the Irish electricity sector. An active consumer is an individual who generates renewable energy for their own consumption, sells or stores excess generated electricity, participates in energy efficiency schemes, or provides flexibility services to the distribution system operator, provided none of these activities are their primary profession.

An energy community is considered a group of active consumers who voluntarily commit to providing environmental, social, or economic welfare by engaging in renewable energy generation, energy sharing or trading, storage, or supply, provided these activities are not for commercial purposes and do not constitute the primary profession of any of the members of the community.

existing Sustainable Energy Communities (SECs) who actively participate through the Sustainable Energy Authority of Ireland’s SEC Programme. The concepts of energy communities detailed in the directives, however, depict a different model than the existing SECs. Energy communities under the CEP would be encouraged to partake in specific energy activities that would help integrate more renewable energy into Ireland’s energy system.

The activities that active consumers and energy communities may partake in to play their part in the transition towards cleaner energy and higher renewable energy integration include the following:

• Generation: Consumers should be able to produce renewable electricity for self-consumption. For example, this could include installing solar PV panels on rooftops, or installing a small wind turbine that provides energy to community members.

• Supply: Consumers should be able to sell electricity from individually owned or community owned generation assets. Additionally, in selling this electricity, consumers should be renumerated for excess electricity supplied to the grid.

• Storage: Consumers should be able to own an energy storage unit and not be faced with barriers while connecting to the grid.

• Sharing: Members of a community or jointly acting active consumers located in the same apartment building or complex should be able to share self-produced electricity among themselves.

• Trading: Consumers should be able to participate in peer-to-peer trading arrangements.

• Flexibility and demand response:

Consumers should be able to provide services to the distribution system operators to provide flexibility to the grid. This could involve avoiding using large appliances at times of peak demand or turning off appliances when notifications are received that there is congestion on the grid.

Energy communities and active consumers are entitled to engage in these activities on their own, or by using an aggregator, who would be an entity that pools consumer loads and operates in the electricity markets on their behalf. Additionally, energy communities can hire a third-party to install, operate, or maintain their renewable energy project. The use of aggregators and third parties should enable more community participation from non-industry experts that want to play their part in integrating more renewables into the system.

Another key entity in the facilitation of active consumers and energy communities will be the distribution system operator. ESB Networks will have a role to play in facilitating community development and enabling participation in activities such as energy sharing and demand response. It has begun assessing the changes needed to enable these forms of participation, and the CRU will continue to engage with ESB Networks as these concepts develop further.

The CRU has also begun discussions with prospective energy communities to identify regulatory barriers which could cause challenges in the progression of their projects. Two calls for evidence and one consultation have already been published as the CRU started exploring these topics. The papers mainly presented subjects, such as regulatory oversight, at a high-level to highlight the challenges of incorporating new market actors and small-scale individuals and energy communities into the energy sector. More recently, the CRU took a step in a new direction to engage energy communities directly through webinars, where an open format allowed for constructive discussions and the opportunity for the CRU to learn from the most impacted stakeholders; the active consumers themselves.

From these engagements, the CRU has developed a strategy for the development of the enabling regulatory framework which will be progressed in the upcoming years. The framework will take time to develop fully, but once completed, it should be flexible enough to allow participation in all forms of energy activities by active consumers and energy communities. This would then enable a higher integration of renewable energy being used by small scale market actors in ways that were unavailable to these individuals and communities in the past and will empower consumers to play a larger role in the transition towards using cleaner energy.

“The CRU is in the process of developing an enabling regulatory framework that will facilitate the participation of active consumers and energy communities in the Irish electricity sector. An active consumer is an individual who generates renewable energy for their own consumption, sells or stores excess generated electricity, participates in energy efficiency schemes, or provides flexibility services to the distribution system operator.”

T: +353 1 4000 800 E: krichardson@cru.ie W: www.cru.ie