Implementation of the Energy Efficiency Directive: Opportunities and Challenges

Discussions in Latvia are ongoing regarding the optimum solution to implementing Directive 2012/27/EU of the European Parliament and of the Council of 25 October 2012 on energy efficiency, amending Directives 2009/125/EC and 2010/30/EU and repealing Directives 2004/8/EC and 2006/32/EC (Directive 2012/27/EU). Without a doubt, increased energy efficiency contributes significantly to energy supply security, competitive performance, increased quality of life, reduced energy dependence and greenhouse gas (GHG) emissions. However, Directive 2012/27/EU should be implemented with careful planning, evaluating every aspect of the process.

This study analyses a scenario, where a significant fraction of target energy efficiency is achieved by obliging energy utilities to implement user-end energy efficiency measures. With implementation of this scheme towards energy end-use savings, user payments for energy should be reduced; on the other hand, these measures will require considerable investment. The energy efficiency obligation scheme stipulates that these investments must be paid by energy utilities; however, they will actually be covered by users, because the source of energy utilities’ income is user payments for energy. Thus, expenses on such measures will be included in energy prices and service tariffs.

The authors analyse the ways to achieve a balance between user gains from energy end-use savings and increased energy prices and tariffs as a result of obligations imposed upon energy utilities. Similarly, the suitability of the current regulatory regime for effective implementation of Directive 2012/27/EU is analysed in the energy supply sectors, where supply tariffs are regulated.