Incentives to improve energy efficiency in EU grids

Published: 25/04/2013

This paper commissioned by the European Copper Institute investigates the energy efficiency aspects in the network design and operation based on the Energy Efficiency Directive (2012/27/EU) and its provisions related to network tariffs and regulation. The analysis on the possible technical efficiency measures to reduce losses (chapter 2), shows that a variety of both equipment replacement and operational improvements can lead to greater efficiency.

The regulatory mechanisms for network tariffs in Germany, UK and Spain have been reviewed in chapter 3 to assess whether they provide an incentive for energy efficiency in the grid. The current design in Germany does not provide such an incentive, although there are signals that it will do so in the near future. In UK and Spain, especially for distribution system operators there are clear financial incentives to reduce distribution losses.

In chapter 4, several policy options for improving technical efficiency in grids were evaluated in the basis of a set of high-level criteria. The analysis concluded that setting financial incentives through the grid tariff regulation appears to be the most effective policy option to achieve efficiency improvements and is supported by the language in the Energy Efficiency Directive. The design and implementation of such a measure in a national approach is very country specific as details of the market and of grid regulations is different in each country.