EU energy policy in transition
While the headlines focus on Brexit and the uncertainty brought about by the refugee crisis, the European Union's civil service machinery is continuing to work towards a more efficient single market and better regulation than before. At the same time, regulation also has an increasingly profound impact on the business operations of Finnish companies. Far-reaching changes are expected especially in the energy sector, now that Brussels is creating the framework for the EU's energy policy for the period after 2020. The changes will be significant from the perspective of both electricity producers and consumers.
The Commission has recently published the so-called 'internal energy market'. The winter package, which includes a number of legislative proposals, impact assessments and reports. The EU is now under enormous pressure. On the one hand, the regulatory framework should be reformed to enable the continuous functioning of the electricity market in a situation where the share of renewable energy sources in the energy mix is growing exponentially. On the other hand, it should also be possible to remedy the current unsustainable market situation, in which the majority of investments are based on state aid due to a weak price signal and where the competitiveness of conventional energy sources is threatened.
Energy security and security issues and, in particular, the EU's dependence on Russian gas create politically sensitive aspects to renewable energy regulation. A good example of this is the Commission's attempt to monitor energy agreements between EU Member States and third countries. Some Member States were sharply at odds when the Commission proposed at the beginning of 2016 that international energy agreements should be revised before they were signed. In the end, however, an agreement was reached which, at least according to official statements, was acceptable to all parties, with the possible exception of Russia, whose attempt to rush its foot into the closing door of the EU's energy policy may have been the main reason for the Commission's proposal.
Improving the position of consumers is a key objective of energy policy reforms. In an ideal situation, the renewed electricity market model would create stronger incentives for consumers to utilise solar power and electricity storage technologies, for example, and thus participate in improving the functioning of the market through demand response. From the consumer's point of view, the end result would be a lower electricity bill and a better position in the market in all respects.
It is hardly possible to achieve the European Commission's objectives without Member States, organisations, businesses and consumers pulling together. However, finding common ground is difficult, and competition is fierce, especially between forms of electricity production. There is a risk that decision-makers and stakeholders representing different viewpoints will water down each other's efforts to take energy policy in a better direction. It would therefore be desirable to make the best possible use of all means of communication in the process, in order to achieve the best possible result. As always, the key to success in the cacophony of conflicting messages is timely and well-targeted advocacy work.
Anssi Klemetti
Manager, Brussels Office