Spring Seminar FUNSEAM The Clean Energy Package and the Role of Renewables Sofia Pinto Barbosa Unit Renewable Energy and CCS Policy, DG ENERGY European Commission Madrid, March 23rd. 2017 FUNSEAM AND EDP RENOVÁVEIS

1. CLEAN ENERGY FOR ALL EUROPEANS
Spring Seminar
The Clean Energy Package and the
Role of Renewables
Sofia Pinto Barbosa
Unit Renewable Energy and CCS Policy, DG ENERGY
European Commission
Madrid, March 23rd. 2017

2. CLEAN ENERGY FOR ALL EUROPEANS
The Clean Energy Package
and the Role of Renewables
Madrid, 23rd March 2017
Sofia Pinto Barbosa
European Commission – DG ENERGY
Unit C1 – Renewables

3. CLEAN ENERGY FOR ALL EUROPEANS
1. Clean Energy for All Europeans
1. Revised Renewables Directive for the
Period after 2020
3
AGENDA

4. CLEAN ENERGY FOR ALL EUROPEANS
GOALS OF THE CLEAN ENERGY FOR ALL EUROPEANS PACKAGE
LEADING THE ENERGY TRANSITION - CREATING VALUE FOR CITIZENS AND BUSINESS
Demonstrating
global leadership
in renewables
Delivering a
fair deal for
consumers
Putting energy
efficiency first

5. CLEAN ENERGY FOR ALL EUROPEANS
New Electricity
Market Design
(including Risk
Preparedness)
HOW DO WE GET THERE ?
THE RIGHT REGULATORY FRAMEWORK FOR POST – 2020
Energy Union
Governance
" In essence the new package is about tapping our green growth potential across the board"
Commissioner Miguel Arias Cañete (2016)
Energy
5

6. CLEAN ENERGY FOR ALL EUROPEANS
HOW DO WE GET THERE?
THE RIGHT ENABLING ENVIRONMENT FOR POST – 2020
Setting the right
incentives for
investment in the
energy transition
and maximising the use
of public funds
Delivering on social
concerns and job
training to ensure a
socially fair energy
transition
Driving
digitalization
forward to enable
new energy
technologies
Delivering on key
energy
infrastructure
projects
Accelerating research
and innovation to
support leadership in
advanced RES
Ensuring regional
cooperation: Making
the energy transition a
multi-level
government and
stakeholder project
External dimension:
Fostering security of
supply and promoting
clean energy measures
abroad
6

7. CLEAN ENERGY FOR ALL EUROPEANS
The package
presents a dual
opportunity to
speed up
decarbonisation
and to speed up
growth and job
creation.
WHAT CAN WE EXPECT IN TERMS OF RESULTS?
Economic growth*:
• 1% increase in GDP
• 190bn EUR into the economy
• 900,000 new jobs
*Upper end of estimates
2016 2030
Investment:
• extra 177bn EUR euros per year
of investment from 2021 to meet
2030 climate & energy targets
• Crucial role for EFSI
Decarbonisation:
• Carbon intensity of the economy
57% lower in 2030 than in 2015
• 72% share of non-fossil fuels in
electricity generation in 2030
7

8. CLEAN ENERGY FOR ALL EUROPEANS
HOW DOES IT LOOK LIKE?

9. CLEAN ENERGY FOR ALL EUROPEANS
THE REVISED RES DIRECTIVE POST-2020 - CONTEXT
More than 1 million people work in the renewable energy
sector, with potentially 3 million more jobs by 2020
With an estimated renewable energy share of 17% of gross final energy
consumption in 2015 the EU is on track to meet the 2020 target
Reduced dependence on fossil fuels and energy imports: cut fossil fuels
use by the equivalent of Poland's entire annual energy consumption
Renewables are becoming affordable: 80% decrease of PV panel prices in 5
years, offshore wind already met targets for 2020
European leadership: in 2016 173 countries have renewable energy
targets

10. CLEAN ENERGY FOR ALL EUROPEANS
PROGRESS TOWARDS NATIONAL RES TARGETS

11. CLEAN ENERGY FOR ALL EUROPEANS
Investment
certainty
Cost-effective
deployment
Collective
target
achievement
Strengthening
bioenergy
sustainability
Promoting
innovation in
transport
Tapping
heating and
cooling
potential
Contributing to the EU
political priority of
becoming world
number 1 in
renewables
&
Achieving the
at least 27 %
EU-level binding
renewables target
cost-effectively
THE REVISED RES DIRECTIVE POST-2020 – KEY OBJECTIVES

12. CLEAN ENERGY FOR ALL EUROPEANS
Various measures can ensure a more
even and more cost-effective
deployment of RES across the EU
e.g. Financial instruments tackling cost of
capital, no retroactive changes, open up
support schemes…
A MORE EVEN DEPLOYMENT ACROSS MEMBER STATES IS CRUCIAL
Investments are increasingly
concentrated in a few Member
States with low cost of capital and
policy frameworks perceived as more
stable
UK and Germany alone represented
over 2/3 of all investments over
2013-2015
Baseline EUCO27
RES share in 2030 27% 27%
Assumptions National support;
diverging cost of
capital
EU-wide
support; same
cost of capital
RES investments
required (2021-2030)
€ 404 bn € 240 bn
Share of top 3 MS in
total investments
67% 47%

13. CLEAN ENERGY FOR ALL EUROPEANS
ENSURING A HOLISTIC APPROACH ACROSS THE PACKAGE
RED II
Electricity Reg.
• Balancing responsibility (art 4)
• Balancing market rules (art 5)
• DA and ID market rules (art 6-7)
• Priority dispatch (art 11)
• Priority access / curtailment (art 12)
• Network planning (art 12)
• T&D network tariffs (art 16)
• ENTSO-E tasks (art 25)
• Network codes on curtailment + grid tariffs (incl.
connection charges) + ancillary services (art 55)
Electricity Dir.
• Entitlement to a dynamic price contract (art 11)
• Aggregators (art 13, art 17)
• Active / self-consumers' rights (art 15)
• Local energy communities' rights (art 16)
• Smart metering (art 19-21)
• Ancillary services by DSOs (art 31) and TSOs (art 40)
• Integration of electro-mobility in networks (art 33)
• Gos mandatory for RES-e disclosure (Annex II)
EPBD
• Definition of technical building systems (art 2)
• Long term renovation strategies (art 2)
• Smart finance for smart buildings (art 2)
• Charging points / pre-cabling requirements (art 8)
• Calculation of EPBD (Annex 1.2)
Governance Reg.
• Integrated national energy and climate plans (art 3, art 13)
• Integrated national energy and climate reports (art 15, art 18)
• Assessment of progress (art 25)
• Response to insufficient ambition and progress (art 27)
• Commission recommendations (art 28)
• Template for national plans (Annex I)
• MS reporting obligations for RES (Annex VII)
EED
• Energy savings obligation (art 7)
• Metering obligations for H&C (art 9a)
• Billing and consumption information (art 10,
Annex VII)
• Update of the PEF (Annex IV)
• Common method for calculating energy
savings (Annex V)

14. CLEAN ENERGY FOR ALL EUROPEANS
14
DELIVERING A SET OF WELL-BALANCED MEASURES ACROSS SECTORS
Reaching
>27% RES
in 2030

15. CLEAN ENERGY FOR ALL EUROPEANS
15
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
2005 2015 2020 2030 2050
Other electricity
RES-E
RES-E: Where are we and where do we need to go?
RES-E share of total electricity
66%
49%
36%
28%
15%
247
142
103
79
42
Ktoe
Ref16 Euco30 Euco30
+13pp
+39 Mtoe
+17pp
+105 Mtoe
79
1/3 1/2 2/31/4

16. CLEAN ENERGY FOR ALL EUROPEANS
16
PROMOTING A STABLE FRAMEWORK FOR RENEWABLE ELECTRICITY
STATE AID RULES
1. Guidelines
2. Case by case notifications to and
assessment by DG COMP
Support to be
market-
responsive
and cost
effective
Visibility for
investors (3-
year cycle)
Gradual and
partial
opening to
cross-border
participation
Stability of
financial
support (no
retroactive
changes)
Support schemes
One-stop
shops
Time limits
Simple
notification for
small-scale
Simple
notification for
repowering
Administrative barriers
Article 4 Art 15(3)
Article 5 Article 6
Article 16 Art 16, 17
Article 17 Article 16

17. CLEAN ENERGY FOR ALL EUROPEANS
17
Unlocking the Potential of Consumer Engagement
Consumer
Mobilise
private
capital
Increase
local
acceptance
Inform
consumer
choices
Drives 50%
of rooftop
PV
Good sites
are getting
scarcer
Ready to
pay a
premium for
RES?

18. CLEAN ENERGY FOR ALL EUROPEANS
18
EMPOWERING CITIZENS AND COMMUNITIES
Renewable self-consumers to be allowed to generate, store, sell and consume
their own electricity (linked to art. 15 Electricity Directive)
Renewable self-consumers in multifamily houses to be allowed to generate,
store, sell and consume their electricity jointly
No disproportionate procedures and charges that are not reflective
Specific provisions for energy communities (linked to art. 15 Electricity Directive)
Improved Guarantees of Origin for better consumer information (art. 19)

19. CLEAN ENERGY FOR ALL EUROPEANS
RES-H&C – What Is At Stake?
Why act at EU-level ?
• ≈ 50% energy consumption
• 18% RES today => 27% in 2030
• 68% of the EU's gas imports
• Risk of missing target if no action
Primary energy demand for heating and cooling in the EU
Essential yet
fragmented sector

20. CLEAN ENERGY FOR ALL EUROPEANS
ADDRESSING THE UNTAPPED POTENTIAL OF HEATING & COOLING
Article 23
• MS "shall endeavour to increase"
the share of RES-HC by 1pp/year
• Flexibility on the measures
• Flexibility on implementing entities
• Possible combination with EED Art 7
Article 24
• Consumers' information on DHC
energy performance and RES share
• Consumers can disconnect, if they
can achieve a higher performance,
or switch within the DHC system to
RES/waste heat suppliers
• Opens DHC for RES/waste energy
suppliers
Article 2 (definitions)
introduction of ambient heat and
waste heat
Article 15 (reg. and codes)
• Reinforcement of RES-HC in
planning & building
• Minimum levels of RES in
buildings + link with EPBD
• Easier technical requirements
Article 26 to 28
bioenergy sustainabitility criteria
Article 20 (grid operation)
DHC deployment, RES integration
New Articles Revisions

21. CLEAN ENERGY FOR ALL EUROPEANS
21
23%
56%
15%
0%
5%
1%
Gasoline
Diesel
Kerosene
Gas
Biofuel
Electricity
• 32% of final energy
consumption
• Relies on oil for 94% of
its energy needs.
• Increasing share of total
GHG emissions (23% in
2014)
• GHG emissions remain
higher than in 1990.
Source: Primes, 2015 shares in transport energy
consumption
RES in Transport – Key Figures

22. CLEAN ENERGY FOR ALL EUROPEANS
22
PROMOTING INNOVATION IN TRANSPORT

23. CLEAN ENERGY FOR ALL EUROPEANS
BIOENERGY – THE ISSUES
Focus on solid biomass/biogas for heat
and power – major role for the EU
climate & energy objectives.
Clear benefits in terms of energy
security, growth and jobs, technology
innovation, and climate action.
Emerging risks :
 Climate performance of forest biomass
depending on future trends on forest
management practices
 Environmental impacts (e.g.
biodiversity, soil and air quality)
 Potential competition for biomass
resources and biomass availability
 Fragmentation of the internal market
resulting from diverging national
sustainability schemes

24. CLEAN ENERGY FOR ALL EUROPEANS
24
agriculture biomass – kept/streamlined existing sustainability criteria
(e.g. no-go areas) (full harmonization)
biofuels/bioliquid - GHG savings increased to 70% for new installations
heat and electricity from biomass (20 MWfuel) and biogas (0.5 MWel) -
new GHG saving requirement: 80% for new plants in 2021 (85% in 2026)
Sustainability
criteria
forest biomass – new risk-based criteria on biodiversity and carbon
management (minimum requirement, Member States can go beyond)
End-use
performancecriteria
Cogeneration requirement for all new bioelectricity plants (20 MWfuel),
3-year transition period + exceptions for security of supply.
EU BIOENERGY SUSTAINABILITY FRAMEWORK
GHGefficiencyagriforest
• Sustainability criteria for same feedstock independent of final use
• End use performance criteria for biofuels, biomass and biogas

25. CLEAN ENERGY FOR ALL EUROPEANS
HOW TO MAKE IT HAPPEN: ACHIEVING AT LEAST 27 % RES EU-WIDE
2030202320212019
Governance
(reporting & monitoring)
Sector specific measures
(transport, H&C, support schemes, self-consumers…)
Flexible Gap filler
If gap, MS decide on measures incl.
voluntary contribution to financing platform
Enabling framework incl. enhanced use of funds
Planning, reporting and monitoring
2020 targets as the baseline
Governance
RED II

26. CLEAN ENERGY FOR ALL EUROPEANS
26 #EnergyUnion

27. CLEAN ENERGY FOR ALL EUROPEANS
Back up Slides

28. CLEAN ENERGY FOR ALL EUROPEANS
• Renewables (2/3)
• Recast of the Electricity Regulation

29. CLEAN ENERGY FOR ALL EUROPEANS
29
Solution: merit order dispatch, unless…
Administrative effort Demonstration project Grandfathering
Problem: increasing share of PD, no room for market, loss of
flexibility incentives
Priority Dispatch current law:
PD for all RES, CHP, some indigenous ressources, no
definition
Priority dispatch

30. CLEAN ENERGY FOR ALL EUROPEANS
30
Solution: clear curtailment rules
Voluntary & Market-
based where possible
Clear curtailment
order
Clear compensation
Reporting &
Planning,
Countermeasures
Problem: balancing economic efficiency, secure system
operation, and achieving decarbonisation objectives; legal
certainty
Priority access current law:
PA for all RES & CHP, no definition
Priority access / curtailment

31. CLEAN ENERGY FOR ALL EUROPEANS
31
Market-based where possible
• Voluntary offers for being curtailed come first
• Market-based compensation
• But not always possible/sufficient
Clear curtailment order
• When non-market based
• First conventional, then CHP, then RES, then self-consumption (no export to the
grid)
• Deviation if disproportionate costs or security issues
Compensation
• At least 90 % of lost net revenues (including subsidies) or additional costs,
whatever higher
Reporting & planning & countermeasures
• Yearly report by TSO on RES & CHP curtailment & redispatch
• Obligation to aim for minimum curtailment & redispatch
• Right to integrate 5 % curtailment in network planning where more efficient
Priority access / curtailment

32. CLEAN ENERGY FOR ALL EUROPEANS
32
Solution: BR for all with possible national exemptions
Administrative effort
Demonstration
project
Grandfathering
Problem: balancing responsibilty is fundamental for flexibility
(e.g. aggregation), stable network & liquid short-term
markets
Balancing responsibility
No principle in 3rd package. EEAG requires "standard
balancing responsibility" with exceptions
Balancing responsibility

33. CLEAN ENERGY FOR ALL EUROPEANS
33
What does that mean for investors?
• Full protection of legitimate expectations / grandfathering
• Priority dispatch has little impact on solar and wind running hours
due to their position in the merit order (but can have impact on
high marginal cost RES)
• Curtailment rules provide clarity and legal certainty, strongly
protecting RES and CHP
• Balancing responsibility provides incentives for aggregation and
liquid short-term markets
• Stronger intraday & day-ahead markets help renewables to hedge
• RES can capture higher prices when the system is tight, can
participate in system services and will be curtailed as a last resort
• Level playing field and strict rules on capacity mechanisms reduce
risk for new distortions in favour of conventional generation
Impact for investors

34. CLEAN ENERGY FOR ALL EUROPEANS
• Renewables (3/3)
• Governance Regulation

35. CLEAN ENERGY FOR ALL EUROPEANS
FOR ACHIEVEMENT OF ENERGY UNION OBJECTIVES AND 2030 TARGETS
Draft National Plans
(and their updates)
Implementation
of National Plans
(Progress Reports)
Final National Plans
(and their updates)
Recommendations
(2018 and 2023)
MS
COM
Recommendations
(2021-2030)
Union measures
(2019 and 2024)
Union measures
(2021-2030)
National measures
for RES (2024)
Closing "Delivery gap"Closing "Ambition gap"
Achieving the at least 27% target