On 10 October 2019 the Council of European Energy Regulators (CEER) released its regulatory strategy in relation to digitalization within the energy sector, after conducting a public consultation that concluded in May 2019. Digitalization in the consumer interest forms one of three key strategic policy areas in CEER’s 3D Strategy for 2019-2021 in response to the varying challenges and opportunities which have arisen due to digitalization within the sector. The strategy set out in the paper aims to effectively utilize digitalization in the energy sector, with a focus on benefitting and protecting consumers.
In its paper, the CEER highlights three implications of digitalization which bring value to the energy system. Firstly, the real time collection, processing, analysis and exchange of data increases productivity by allowing, for example, better informed decisions, operating efficiencies and reduced costs. Secondly, the data can lead to new service offerings which impact the way that energy is consumed (such as smart buildings and heating/cooling services, the electrification of transport systems and dynamic energy retail pricing). Moreover, digitalization is necessary for the creation of new platforms and marketplaces, where active prosumers can participate in balancing the supply and demand for electricity. These implications in turn provide value for consumers through increased cost savings, convenience, choice, consumer participation, quality and security of supply.
The basis of this strategy constitutes six principles, which the CEER believes will further its agenda for a sustainable regulatory strategy on digitalization. In light of these principles, the report details five priority areas that will be integrated into the CEER’s work programme during its 3D Strategy and sets objectives on the CEER itself, National Regulatory Authorities (NRAs) and DSOs as follows:
- Ensuring effective price signals – NRAs must now review network tariffs in light of the wide availability of data around tariffs and to also ensure customers receive cost-reflective signals with regards to new technologies that are being used.
- Promoting DSO use of flexibility – NRAs must also review network tariff regulations so as to remove any capex bias that may be present and also to encourage the use of “flexibility services” where it is economic to do so.
- Enabling market-based flexibility – DSOs must facilitate the procurement of flexibility services so that they can be used by consumers.
- Getting and making the data accessible and useful – DSOs are now required to do this so that high quality data can be used as effectively, efficiently and securely as possible by both themselves and market participants.
- Fostering innovation – regulators must now develop sandboxes and other trial methods to foster innovation, and the CEER will also ensure information sharing between EU-funded and national initiatives in this area.
Each of the above listed areas will be reported on in specified CEER reports and are accompanied by a number of recommendations which correspond to on-going tasks that national regulators are carrying out with regards to: data protection; strengthening cybersecurity; monitoring market evolution; designing the right grid service products; deepening TSO/DSO relationships; and empowering consumers through new products and regulating intermediaries.
As a result of the CEER’s priorities and recommendations, we expect to see a renewed push from national regulators, in particular working at both a national and pan-European level to engage in a more streamlined way with energy sector digitalization, along with new products and markets that continue to emerge in this area, in turn, leading to greater consumer confidence and growth.