Protecting and empowering consumers is key to the success of the energy transition

By Mechthild Wörsdörfer, Deputy Director General, DG ENER, European Commission, (pictured)
Summer 2023

Mechthild Wörsdörfer, Deputy Director General, DG ENER, European CommissionAs the turbulence caused by the energy crisis now slowly begins to settle, we must draw on the lessons learned during this challenging period and continue to put consumers at the heart of energy policy.

Lessons learned from the crisis
Consumers across Europe have experienced severe pressures during the energy crisis, which was the worst of its kind in a generation. The last Consumer Conditions Scoreboard demonstrates the extent of the strain on consumers, showing that in 2022:

  •  almost half of consumers (48%) were worried about being able to pay their bills
  •  a large majority (71%) took measures to reduce their energy consumption at home
  •  and 37% reported that they have dipped into their savings

Indeed, the pressures of the crisis were felt even more acutely by energy poor and low-income households who spend significantly higher shares of their incomes on energy. For the first time in recent memory, middleincome households in Europe also faced the prospect of not being able to pay their energy bills.

Our response Throughout the energy crisis, our role as EU policy makers has been to protect struggling households, particularly the most vulnerable ones. Already in October 2021, before Russia's full-scale invasion of Ukraine, the European Commission had put in place a toolbox with different measures that Member States could implement to protect consumers from the impact of high energy prices, through direct payments of bills or support measures for energy efficiency renovations, for example.

This toolkit was further expanded following the Russian invasion of Ukraine with the adoption of a series of emergency measures under the REPowerEU plan. On 6 October 2022, the adoption of the Regulation (Joint Declaration on enhanced consumer protection) on an emergency intervention to address high energy prices allowed Member States to implement measures to reduce electricity demand to help lower the electricity costs for consumers and suggested a temporary revenue cap on electricity producers.

We have also engaged with representatives from suppliers, distribution system operators, regulators and consumer organisations, which resulted in the Joint Declaration on enhanced consumer protection, signed in December 2022, to protect consumers during the last winter, including through bill deferrals, payment plans, avoiding disconnection and the provision of clear information to all customers.

Looking ahead – the Revision of the Electricity Market Design
The Commission's recent proposal for the reform of the electricity market design addresses the issue of consumer exposure to price volatility. The main focus of the reform is in three areas:

  •  Improving consumer protection by ensuring the right to access energy through suppliers of last resort and protecting vulnerable customers from disconnection. It also aims to ensure consumers can choose from a variety of offers, including fixed price and fixed term contracts and receive clear information. At the same time, it further empowers consumers by enabling them to have direct access to renewable generation through energy sharing and selfconsumption.
  •  Making energy bills less dependent on short-term market price of electricity while providing stable revenues for investors in renewable and low-carbon energy. It aims to boost the market of power purchase agreements and stabilize curb excessive revenues of energy producers by requiring the use of two-way contracts for difference for new investments in low carbon generation where public funding is needed.
  •  Enabling an accelerated deployment of renewables and the phase out of gas by facilitating further the integration of renewables in the electricity system and improving conditions for the use of flexibility solutions such as demand response, storage and other weather independent renewable and low carbon sources.

The way to 2030 Drawing on the lessons learnt from the crisis, we need to ensure that nobody is left behind. Going forward, national measures need to be well-targeted and must incentivise consumers to save energy, where feasible. Of course, we are not speaking here of the many vulnerable people living in cold homes because they cannot afford heating (situation known as "hidden energy poverty"), but for others where further energy savings are possible. After all, the cheapest energy is the energy we do not use.

In this sense, our objective to become climate neutral by 2050 was translated into concrete targets for 2030 in our Fit for 55 Package, our objective to reduce emissions by 55% before 2030, compared to 1990. Adopted by co-legislators on 10 March 2023, the revision of the Energy Efficiency Directive is set to reduce final energy consumption at EU level by 11.7% by 2030. Importantly, new provisions addressing energy poverty, basic contractual rights and information and awareness raising are set to increase the levels of consumer protection and empowerment across Member States.

As regards building renovation, the proposed Energy Performance of Buildings Directive upgrades the existing regulatory framework. It sets out how Europe can achieve a zero-emission and fully decarbonised building stock by 2050, relying on increased rates of renovation, particularly for worst-performing buildings and modernise the EU's building stock, making it more resilient and accessible.

As a further demonstration of the EU's commitment to deliver on a just and fair transition that is upheld by the benefits of structural measures, co-legislators formally adopted the Social Climate Fund to help tackle energy poverty and improve access to zero- and low-emission mobility and transport in the EU.

Empowering Consumers
Beyond providing protection, our measures must also transform consumers into active energy citizens by empowering them in energy decision-making at household and community level.

During the crisis, many households decided to invest in new technologies. Solar PV installations in 2022 grew by 47% and heat pumps saw a 38% increase relative to 2021. At community level, we saw a rise in interest in energy communities, which empower consumers to access renewables and see the benefit directly in their energy bills.

We have already seen successful examples of such energy communities in action. In Mechelen, Belgium, for example, an energy community was set up to make energy sharing possible between residents of social housing with solar panels on their roofs, and other residents of an apartment building in that district on which solar panels could not be installed for technical reasons.

I would also point to an initiative in Spain whereby electricity produced via solar panels on school roofs was given for free by the local authority to the vulnerable households selected by the municipality's social services to participate in the scheme. There are many more such encouraging examples across the EU. The crisis has shown us that consumers who are adequately protected and empowered to make energy decisions at household and community level, can truly be the protagonists of the energy transition.

The European Commission will continue to prioritise consumer protection and empowerment in our policy making, which will be key in our efforts to promote security, affordability and clean energy in our energy system, and become the world’s first climate neutral continent by 2050.

Learn more and join the discussion at the upcoming European Sustainable Energy Week on 20-22 June. Register now.