This new tool aims to bring visibility on smart energy solutions in the energy system and help identify and overcome the hurdles that are still hindering developments in Europe.
Tariffs, taxes and other levies are key components in the energy policy discussion. After all, they represent a significant share of total energy costs for households – often more than half of their energy bill.
Unfortunately, the current tariff and tax design has been defined in a different age to the one we need in 2020 and beyond. The world is moving towards flexibility and the engagement of decentralized energy users for the integration of variable energy resources.
Current network tariffs, however, often send mixed signals to market participants, not always reflecting the needs of today’s energy system. Beyond this, taxes are typically rigid – blunting relevant price signals from the market or the network.
DecarbEurope partner smartEn – the association of market players driving digital and decentralised energy solutions – has shed light on the situation of network tariffs and taxes in European countries today. To do this, they interviewed 17 Regulators, 17 Transmission System Operators (TSOs), 25 Distribution System Operators (DSOs) and more than 20 business associations, suppliers, service providers and public institutions.
Putting all this valuable input together has enabled them to create the smartEn Map of Network Tariffs and Taxes. It provides a comprehensive summary of central factors that enable or discourage the optimal use of decentralized energy resources and demand-side flexibility.
As Klaus-Dieter Borchardt, Deputy Director-General, DG Energie, European Commission, writes in the foreword: “Against this background, providing an overview over national taxes and tariff structures is of particular importance to all market participants, but also to policymakers looking to improve their national regulatory framework. I strongly welcome the publication of the smartEn Map on Network Tariffs and Taxes which will certainly provide an important contribution to this discussion. The report will be an important basis for analysing and improving tariff frameworks over the coming years.”
What’s in the Network Tariffs and Taxes Map?
The report describes how network tariffs and taxes are influencing the development of smart and flexible solutions and how they could be improved. It looks into the transmission and distribution tariffs, and how they affect different customers, from households to industry. It also explores the development of smart meter infrastructure, and looks into the different contract options for customers and the prices for electricity.
Sufficient network tariff design data was gathered from each of the 16 countries selected to enable a high-level comparison. A quick overview of some of these differences makes interesting reading.
- Estonia is described as having one of the most developed smart metering infrastructures in the EU. This is accompanied by a low electricity price and a healthy offer of different contract options for consumers, including dynamic price contracts.
- Finland already has a near-100% coverage of smart metering which has provided hourly pricing schemes offers for Finnish customers.
- Norway is described as one of the countries displaying the most innovative change in tariff design over the past years.
- At the other end of the scale, in Germany, consumers pay the highest price for electricity in the EU, with the largest part of it being fixed taxes and charges that blunt possible market and network price signals.
The map is available free of charge to download from the smartEn website.