What is the objective?
The aim is to save energy
and to reach the target the EU has set itself:
By 2020, the EU wants to cut energy consumption
by 20 percent1.
In absolute terms – calculated in million tons
of oil equivalent (Mtoe)– this are 368
2020 compared to projected consumption in that
year of 1842 Mtoe. This needs to be achieved by
the EU as a whole.
At the moment – with all the
measures on EU and national level in place so
far – we would only reach 1678 Mtoe, or 9%
Figure 1: Projection of
primary energy use for the EU by 20202
What are the measures proposed?
Legal obligation to establish energy
saving schemes in
all Member States: energy
distributors or retail energy sales
companies will be obliged to save every year
1,5 % of their energy sales, by
volume, through the implementation of energy
efficiency measures such as improving the
efficiency of the heating system, installing
double glazed windows or insulating roofs,
among final energy customers.
Public sector to
lead by example: public
bodies will push for the market uptake of
energy efficient products and services
through a legal obligation to purchase
energy efficient buildings, products and
services. They will further have to
progressively reduce the energy consumed on
their own premises by carrying out every
year the required renovation works covering
at least 3% of
their total floor area.
Major energy savings for consumers: easy
and free-of-charge access to data on
real-time and historical energy consumption
through more accurate individual metering
will now empower consumers to better manage their energy
consumption. Billing should be based on the
actual consumption well reflecting data from
for SMEs to
undergo energy audits and disseminate best
practices while the large companies will
have to make an audit of their energy
consumption to help them identify the
potential for reduced energy consumption.
Efficiency in energy generation: monitoring
of efficiency levels of new energy
generation capacities, establishment of
national heat and cooling plans as a basis
for a sound planning of efficient heating
and cooling infrastructures, including
recovery of waste heat.
What exactly is planned for public buildings?
From 1 January 2014, 3%
of public buildings should be renovated each
year, with the clear aim to save energy.
Currently, the same percentage is renovated per
year but in only half of the cases energy
efficiency improvements are included (1, 5%
energy related renovation rate). In
practice, this could mean that walls are
insulated, double glazing windows are installed
in kindergardens, schools or townhouses, roofs
are redone and inefficient heating boilers
In many cases a
cost optimal renovation can bring up to 60%
energy savings. The
benefit can be estimated to 6
Mtoe in 2020 would for illustration means that
the construction of 17 coal power units or about
9 000 wind turbines would be avoided.
Due to the important share
of public buildings (about 12% of the EU build
up area), it could serve as a strong driver for
higher market uptake of energy efficiency in
other sectors and development of the skills and
Buildings (private and public) still represent
40 % of the overall final energy consumption.
How can you force government to spend money in
times they have to save money?
The renovation of public
buildings would to a significant
extent pay for itself through
the savings on the energy bills and would also
help the economic recovery by stimulating
business activity and jobs.
However, still there is a
need for upfront investment in the
implementation of energy efficiency improvements.
For this reason, the proposed Directive includesprovisions
to strengthen the energy services markets. In
these markets energy service companies (ESCOs)
would pay for the initial investments and get
their money back from the savings on the energy
addition to energy savings, this will create
business opportunities and new jobs, for example,
for construction companies, equipment providers.
The energy service market currently accounts for
about € 6
billion as compared to€ 30
billion in the USA where
it is more developed). The
EU potential for such market is estimated at € 25
In addition to the private funding, Member
States can also use their allocations under the
European Regional Development Fund (ERDF) to
finance the renovation of public buildings. In
the period 2007 – 2013, 4.4 billion Euro where
available for that purpose.
Which measures are proposed for energy companies?
Energy companies dispose of
important commercial information about the
energy consumption of their clients that could
make them an important actor in the energy
savings market but they do not have stimuli to
do so. To engage these companies, the Commission
proposes that either all
energy distributors or all retail energy sales
companies operating on the Member State's
territory achieve annual energy savings equal to
1.5% of their energy sales volume in the
previous year. In
principle, these are companies delivering gas,
heating oil or electricity.
To achieve these savings the
energy companies concerned would have to work
with the final energy users (e.g. individual
house owners, supermarkets, hospitals) to
implement energy savings. The savings are
counted in absolute terms and thus companies can
still increase their sales.
Each Member State would have
to devise its own scheme that best meets the
national circumstances while following certain
common EU requirements (e.g. same level of
ambition, certification of savings).
In order to allow for
sufficient flexibility, Member Sates have also
the possibility to propose alternative energy
savings mechanisms that lead to the same results
but are not based on obligation on energy
companies. These could, for example, be funding
programmes or voluntary agreements.
If implemented properly and
with a stringent level of ambition, it is
expected that it will reduce the EU's energy
consumption by 6.4%
in 2020 (or 108 to 118 Mtoe primary energy which
is the current consumption of Poland and
Do such energy efficiency schemes already exist?
There are already positive
experiences from the countries that have
introduced similar obligations, e.g. Denmark,
France, Italy, the UK, and the region of
of the positive outcomes Poland has
recently voted for similar scheme and Malta considers
taking up a saving obligation scheme as well.
So far, reductions of 2.3%
to 5.6% of final energy consumption have been
realized by the energy companies concerned (typically
suppliers or distributors) over the duration of
the various schemes. The most advanced scheme
works with an annual reduction of 1.5% as
foreseen in the Directive. Still the level of
ambition is lower than schemes in other
countries like Australia
or USA (Illinois: 2%, Massachusetts: 2.3% per
year additional through 2020, Vermont: averaging
2% additional per year, Iowa: 1.5% per year
additional, Maryland: 1.5% to 1.8% additional
Who will pay for such schemes?
Depending on the way the
schemes are implemented at national level the
costs are either equally
spread to all consumers or energy services
companies are used and the
upfront investments are recuperated from the
savings on the energy bills over certain period
Are you not imposing to companies unnecessary
obligations? Why not being more market liberal?
No. The approach proposed by
the Commission is a market
based approach as Member
States can decide – as
it has happened in Italy, France, the UK and
Flanders – to certify the savings and make them
allows for the implementation of the savings at
least cost and it has proved very efficient in
mobilizing energy savings improvements. However,
an additional flexibility is foreseen by
allowing that the saving target can be met
through other measures such as voluntary
agreements or funding solutions if the Member
States chooses so.
What are the benefits for the industry?
The Commission proposes that
large companies have
to do regular energy
out in an independent manner.
Member States are also encouraged to develop
incentives for companies that introduce an
energy management system as a systematic
framework for the rational use of energy.Exchange
of best practices in
energy efficiency and projects aimed at building
capacity on energy management are also proposed
And for the consumers?
Member States shall ensure
that final customers of electricity, natural
gas, district heating or cooling and
district-supplied domestic hot water are
accurately measure and allow making available
their actual energy consumption and providing
information on actual time of use.
Member States shall ensure
and the frequency of the billing and that the
billing is based on actual consumption,
for all the sectors covered by the Directive,
including energy distributors, distribution
system operators and retail energy sales
companies. This should be done not later than
1 January 2015 for electricity, natural gas; hot
water and centralised heat.
In a longer term, this may require introduction
of intelligent metering although in the shorter
term, frequent billing can be based on self
reading of existing meters by the consumers
The potential savings that
could be reached through improved information
provided through more adequate metering and
billing are estimated at the level of around 80
some pilot projects have shown a potential of
reduction of the energy consumption up to 15-20%
(40% in electricity) when customers are allowed
to turn off appliances by web interface or
Why more obligations regarding 'smart meters' if
they are already required in under the existing
Existing EU legislation on internal market for
electricity and gas already foresees a roll-out
of smart meters (e.g. at least 80% of smart
meters for electricity deployed by 2020, subject
to a positive cost-benefit analysis by Member
States). Individual metering of heat and hot
water consumption as well as frequent individual
billing based on actual consumption of energy
have also already been assumed by the existing
Directive of Energy Services.
But there are shortcomings
in the current display and presently the
developments on individual metering and billing
so far have not been always helping end-users to
For example, new electronic
meters for electricity/gas are often provided
without proper interface (e.g. in-home display
or via some other type of electronic device such
smart phones, tablets, etc). Billing is still
often based just on forecasts and not actual
consumption, billing of heat in multi-apartment
buildings is often just based on flat rate per
m2; billing based on actual consumption in some
countries is sometimes required as often as
annually, which all do not encourage the
consumers to save energy.
The legislative proposal
aims to ensure that certain minimum feedback
from metering is provided free
of charge to individual consumers.
What is proposed for district heating?
The Directive requires that by 1 January 2014,
the Member States have established a national
heating and cooling plan for developing the
potential for the application of high-efficiency
cogeneration (CHP) and efficient district
heating and cooling.
Cogeneration is the simultaneous generation in
one process of thermal energy and electrical or
CHP saves at least 30% of energy compared to
separate electricity and heat production. CHP is
a mature, well-proven technology and there is an
additional economic potential of at least
doubling CHP by 2020. Despite this, CHP share
remained flat. The current share is 11%. Since
2004 there was only 0.5% increase. A 6% per year
growth would be needed to realise the economic
potential by 2020, which is at least 21%.
Why not binding targets? What is the 'two steps
We propose binding measures rather
than binding target for
each and every member state: once the directive
enters into force, Member
States will have the obligation to apply all its
provisions. For instance, they cannot decide
whether or not to implement the 3% renovation
target for public If not, the Commission may
start infringement procedures.
In addition, the Commission proposes that
(1) Member States set
themselves non-binding national
energy efficiency target
(2) the Commission will
propose binding national targets if in 2014 we
come to the conclusion that the EU is not likely
to achieve the 20 percent target
COM(2005) 265 and Council conclusions 2007:
7224/1/07 REV 1
SEC (2011)277 final
Project AlertMe in UK (http://www.alertme.com)