Energy Efficiency First in the power sector: incentivising consumers and network companies

Abstract

AbstractEnergy Efficiency First (EE1st) is an important concept that, if implemented, will minimise the cost of the energy transition by exploiting the end-use energy efficiency and demand response potential of end users. The power sector is particularly relevant for the application of the EE1st principle as it needs to be decarbonised early, demand is to grow due to the electrification, and due to the increasing value on demand flexibility to maintain system balance. In this paper we show that consumers need to be considered as multiple resources for the power system and examine key regulatory tools to mobilise consumers to offer their flexibility and DSOs to use this flexibility to reduce the need for network asset investment. The pricing of energy and network is key in delivering demand-side flexibility. At the same time DSOs need to consider them in their network planning by law, and regulators are encouraged to incentivise them to integrate the consumers in network operation innovatively. The European regulation provides an appropriate framework for the implementation of the principle in the power sector. It is now the tasks of national regulators to implement them effectively.