Smart grid and EU policy
Yoram Krozer: CSTM – University Twente and Sustainable Innovations Academy
Content
• Citizens initiatives and smart grid
• Smart grid enterprises and innovations • Taxes and scale in the EU
• Subsidies fossil fuels and renewables • Conclusions
Citizens initiatives and smart grid
• Citizens energy initiatives are popular in studies on the governance of commons,
• Also, enterprises in distributed energy systems (e.g. Navarra, Freiburg).
• Enterprises create smart grid (downscaling of energy system for homes, buildings, districts) • Does EU help these innovators?
Smart grid enterprises
In the EU average 2008 - 2011
number growth a year
All enterprises 23,509,766 0%
ICT 954,807 3%
Energy 85,237 24%
Employees 1,281,465 2%
Per enterprise 16 -18%
• Growth of energy enterprises is spectacular • 2% annual average jobs increase during crisis • Capitalisation for technologies and services
Why innovations?
• The EU energy consumption does not grow • Growing are:
• Renewable energy consumption: 6% annual average • 2% annual average margin growth (Sale – FOB price)
in the electricity business
• Residents pay more electricity despite higher prices
• Innovations:
• Renewable energy supplies (e.g. diversification), • Value adding energy products (e.g. co-generation) • Cost-effective energy management (e.g. ICT)
Taxes and scale in the EU
Per unit €/kWh Aver. Price Max. discount Aver. Tax Max. exemption gas, residential 0.068 -40% 0.016 -28% gas, business 0.063 -44% 0.012 -63% electricity residential 0.209 -29% 0.053 -29% electricity business 0.141 -23% 0.015 -80%
• EU rewards scale by lower tax (up to 80% lower) • Incumbents gain, smart grid enterprises penalised • Exemptions invoke discounts, reinforcing penalties?
EU tax support to vested interests
Annual average in the EU
€ million Sales Tax exemption Percent gas, residential 90,021 19,072 21% gas, business 90,021 37,565 42% electricity residential 142,514 31,632 22% electricity business 318,618 29,335 9%
Total 641,175 117,603 18%
• Tax exemptions ca. 118 bln euro for 641 bln sales • Is it on purpose or unintended? How to abolish?
Subsidies fossil fuels and renewables
Subsidies in € billion (excluding nuclear and international) 2001 (1) 2008 2010
Fossil fuels 23.9 34.9(*) 25.0 Renewable energy 5.3 36.7 36.8 (1) European Environmental Agency
(2) Excluding nuclear energy & international uses (air, ships)
• Subsidies embrace : grants (on-budget), credits, rebate, allowance, infrastructure, etc (off budget). • Fossil fuels get larger financial policy support than
Conclusions
• Citizens energy initiatives revive energy markets • Innovations versus vested interests rent-seeking • EU tax and subsidies policies cause economic
deficit, social losses and environmental damage • Cut exemptions and subsidies but how to do it? • Empowering: making regional energy portfolio’s • Opportunities in smart grid: renewable energy,
