Covenant of Mayors
  Covenant Newsletter September 2015  
New deal for consumers: How can cities help their citizens become “active energy players”?
Interview with Jan Panek, European Commission's DG Energy.

The European Commission unveiled on 15 July its proposal to create a “new deal” for European consumers, as part of a summer package of key legislation. Based on a three-pillar strategy, the document places special emphasis on consumer empowerment, data protection, and smart homes and networks. It begins by restating the principles of the energy union, which, beyond the protection of vulnerable consumers, calls for citizens to “take ownership of the energy transition” and “participate actively in the market”. Considering local authorities are the closest government level to citizens, and in view of their ambitious commitments to the Covenant of Mayors, they seem ideally placed to deliver such political agenda.

Indeed, the European Commission paper makes direct reference to the Covenant of Mayors, citing the movement as evidence that “local authorities are willing to play their part in the new energy system supporting innovative local energy”. To find out more about how the Commission envisions the role of cities in the new retail energy markets, the Covenant of Mayors Office puts a few questions to Jan Panek, Head the Unit for Retail Energy Markets at DG Energy.


  • How can Covenant cities help consumers play their full role in the internal market, e.g. through self-generation?

Covenant signatories make in their Sustainable Energy Action Plans (SEAPs) important and formal commitments to changing the ways they manage energy procurement and consumption in their cities. SEAPs often include initiatives aimed not only at better energy management by public authorities and local administrations, but also by local citizens. For many signatories, better energy management is not only about energy efficiency but also local power generation. This concerns not only municipalities with their own local energy companies (such as Stadtwerke). Many cities own housing facilities, where they can demonstrate and promote energy self-generation best practices to consumers. Cities are thus well placed to help and guide consumers towards installing onsite renewable generation facilities.

Furthermore, cities can act as partners of regional and national authorities to make the voice of consumers heard e.g. in setting up the regulatory framework. The summer package includes in this regard a Commission Staff Working Document on good practices in designing national schemes for self-generation of renewable energy. Moreover, cities often own and sometimes even operate local electricity distribution grids. By installing innovative technologies and investing in smart grid solutions in local distribution networks, they can enable citizens to become not only producers (at least for part) of their own energy, but also open new opportunities for consumer engagement in demand response, or simply to become better informed and energy-conscious in their consumption habits and related decisions.

  • How will cooperatives play their part in the “new deal for energy consumers” and how can Covenant signatory cities support them in this process?

Cooperatives can play an important role for consumers who want to take action but do not feel comfortable, confident or interested in acting alone. By becoming members of an energy cooperative, consumers can overcome such inhibitions and become members of a local community taking energy-related actions. There are different types of energy cooperatives. Some operate their own generation assets (such as wind or solar parks) and thus produce and market their own energy. Others can act as aggregators or intermediaries, ensuring optimal operation and management of their members’ generation installations (such as roof-top PVs on houses). Yet others can act as financial actors, pooling their members’ resources and investing them in larger-scale generation or helping to fund low-carbon renovation/construction works in public facilities. In all cases they have important advantages not only for their members but also for local energy systems. They contribute to decarbonising electricity generation, they involve citizens who can more easily understand the energy market and play a role in it and help the energy transition. They can also potentially reduce energy bills or bring revenues to the shareholders. They can therefore support a municipality’s plans to reduce GHG emissions in a way that is cost-effective and also draws wider groups of citizens into energy-related action.

  • How can the European Commission support cities in participating in the retail market as active players?

The Commission is keen to work with cities to help consumers become full players in the market through information, awareness-raising, as well as support to concrete engagement projects and initiatives. The Commission offers support on different fronts, depending on the type of project and investment the municipality intends to implement. For example, the Horizon 2020 Energy Work Programme foresees for the period 2014-2015 approximately EUR 200 million for co-funding Smart Cities and Communities Lighthouse Projects. This funding helps cities to increase their district energy efficiency and foster the use of local renewables. Altogether the budget for all non-nuclear energy research activities is close to EUR 6 billion for the period 2014-2020.

Within the European Structural Investment Funds (ESIF), 5% of the European Regional Development Fund is ring-fenced for integrated strategies for urban development. Further EUR 17 billion are earmarked for energy efficiency in buildings. In addition, the EUR 265 million European Energy Efficiency Fund also provides tailor-made debt and equity instruments to local, regional and (if justified) national public authorities or public or private entities acting on their behalf. Last but not least, over EUR 1.6 billion in investments have already been mobilized thanks to technical assistance under ELENA. This European Facility supports regional or local authorities in accelerating their investment programmes in the fields of energy efficiency and renewable energy sources.

These funds are quite substantial and they are meant to enable concrete integrated and replicable solutions. Beyond mere funding they support bottom-up initiatives from cities and encourage them to network and share knowledge to achieve their commitment under the Covenant of Mayors. More generally, they help their citizens play a much bigger role in the energy market. Content and governance are equally important.

  • Talking about governance, the strategy mentions a role for the Covenant of Mayors in the “effective governance of the energy union”. Could you please elaborate on this?

As shown above, cities represent a pivotal link for translating EU-wide objectives into locally implementable and meaningful actions. Initiatives inspired by the Covenant and undertaken by individual cities contribute to all the Energy Union objectives: security of supply, sustainability, and competitiveness/affordability. Cities and local communities are the best governance level to engage with citizens – their public authorities are ideally placed for raising citizens’ awareness of the challenges, opportunities and trade-offs of the energy transition. At the same time, they are often most effective in demonstrating which energy measures make most sense under particular local conditions, and which energy initiatives really make a difference to citizens’ daily lives. Therefore, Member States’ involvement in the Energy Union’s governance process will benefit from involving local and regional authorities.

    >> Covenant Monthly Newsletter September 2015 <<
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  The sole responsibility for the content of this newsletter lies with the Covenant of Mayors Office. It does not necessary reflect the opinion of the European Union. The European Commission is not responsible for any use that may be made of the information contained therein. The Covenant of Mayors was set up with financial support of the European Commission and consists of five associations of European local authorities: Energy Cities, Climate Alliance, Eurocities, CEMR, Fedarene, and ICLEI Europe.

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