March 2017 - As we reported in our previous newsletter, the European Commission (the "Commission") published at the end of 2016 its "Clean Energy For All Europeans" legislative package, referred to in public as the "Winter Package". The Winter Package is considered to be the most significant and extensive legislative proposal relating to the electricity market since the publication of the Third Energy Package.

The acceptance of the Winter Package requires the support of the European Parliament and the majority of the Member States. At the recent meeting of the Transport, Telecommunications and Energy Council (the "Ministers Council"), the ministers of the Member States for the first time discussed the Winter Package in more detail.

The standpoints expressed by the Ministers Council serve as an important guideline as to which proposals of the Winter Package may be supported by the Member States, and which proposals may require further negotiations between the parties involved.

We summarise below the opinions expressed at the Ministers Council.

Generally speaking, the Member States acknowledge the importance of the Winter Package, but they also underlined that the co-legislators need sufficient time to review and discuss it in detail. Some Members States noted that the determination of the energy mix belongs to the competence of the Member States and also drew the attention to the importance of ensuring compliance with the principles of proportionality and subsidiarity.

New electricity market design

  • In principle, the Member States agreed that the emergence of market prices based on the balance of supply and demand is necessary in order to motivate new investments. Nevertheless, some delegates noted that maintaining the right to apply regulated tariffs would be justified in the case of vulnerable customers.
  • Whilst closer regional cooperation was welcomed positively by several ministers, Members States did not support the transfer of national competences to the Regional Operational Centres, as it was suggested by the Commission.
  • According to the ministers, further infrastructural investments are needed in order to achieve the 15% interconnection target rate by 2030.

Energy efficiency

  • The Member States supported the indicative target for energy efficiency of 27%, but only a few of them supported to have a binding energy efficiency target, as was proposed by the Commission.
  • Ministers expressed doubts about the practicability of the 1.5% annual energy savings obligation until 2030 and also raised concerns about financing energy efficiency targets beyond 2020. In this respect the ministers noted that the legislative proposal should acknowledge early energy efficiency efforts.
  • Ministers underlined that the long-term renovation obligation relating to the decarbonisation of buildings would be too burdensome for the Member States, and therefore the related strategy needs to be further elaborated by the Commission.

Renewable energy

  • Whilst the majority of the ministers supported the move towards a market-based approach to support renewable energy production, they also raised concerns about new renewable energy regulations. The concerns of the Member States primarily related to the proposed partial cross-border tenders for supporting renewable energy, which would allow the participation of other Member States' generators at a tender organised by a different Member State. Ministers also had doubts about the proposed set up of an EU fund for renewable energy.
  • Regarding the gradual phasing out of first-generation biofuels from the market, the Ministers noted that the implementation of this process requires a cautious approach and should take into account completed investments in this area and the importance of predictability and investor security.

Energy Union Governance

  • Regarding the new union governance mechanism, which should support the completion of the objectives of the Energy Union and which to this end is intended to coordinate and oversee the actions of the Member States, the ministers noted that it should be harmonised with the other elements of the Winter Package.
  • Regarding Member State action aiming at the completion of the 2030 targets, the ministers highlighted that it is important to provide the Member States with certain discretionary decision-making powers in order to reflect national specifics and changes in technology trends.
  • The ministers also highlighted that the deadlines for the submission of the integrated national energy and climate plans should be reconsidered by the Commission, to allow sufficient time for the Member States for preparations, examinations, analyses and wide-scale consultations.