EN EN

EUROPEAN
COMMISSION
Brussels, 6.11.2013
SWD(2013) 445 final

COMMISSION STAFF WORKING DOCUMENT
Guidance note on Directive 2012/27/EU on energy efficiency, amending Directives
2009/125/EC and 2010/30/EC, and repealing Directives 2004/8/EC and 2006/32/EC

Article 5: Exemplary role of public bodies' buildings



Accompanying the document
COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN
PARLIAMENT AND THE COUNCIL
Implementing the Energy Efficiency Directive – Commission Guidance

{COM(2013) 762 final}
{SWD(2013) 446 final}
{SWD(2013) 447 final}
{SWD(2013) 448 final}
{SWD(2013) 449 final}
{SWD(2013) 450 final}
{SWD(2013) 451 final}

 
 

TABLE OF CONTENTS
A.  Introduction ................................................................................................................................. 2
B.  Scope of the obligation ............................................................................................................... 2
C.  Establishing the basis for calculating the target (inventory or alternative) ................................ 3
D.  Exemplifications of options for fulfilling the 3% renovation rate target .................................... 6
 
 

ARTICLE 5: EXEMPLARY ROLE OF PUBLIC BODIES' BUILDINGS
A. INTRODUCTION
 
1. Article 5 of Directive 2012/27/EU of 25 October 2012 on energy efficiency
1
('the EED' or
'the Directive') requires Member States to ensure that, as from 1 J anuary 2014, 3% of the total
floor area of central government-owned and –occupied heated or cooled buildings is
renovated each year to meet the minimum energy performance requirements that each
Member State has set in application of Article 4 of the Energy Performance of Buildings
Directive (2010/31/EU, also the 'EPBD')
2
. The implementation of Article 5 of the EED
therefore builds on the correct transposition of the EPBD. In addition to this main obligation
set out in paragraphs 1-5, it foresees an "alternative approach" (paragraph 6).

This note aims to provide guidance to Member States on how to apply Article 5 of the EED.
The note states the views of the Commission services, does not alter the legal effects of the
Directive and is without prejudice to the binding interpretation of Article5 as provided by the
Court of J ustice.
B. SCOPE OF THE OBLIGATION
 
2. Article 2(9) of the EED defines 'Central government' as 'all administrative departments whose
competence extends over the whole territory of a Member State'. In putting this definition into
practice, Member States can draw on:

 Annex IV of the Public Procurement Directive (2004/18/EC
3
), which includes a list of
central government bodies in all Member States;

 The data on public accounts which Eurostat collects on the basis of Council Regulation
479/2009/EC on the application of the Protocol on the excessive deficit procedure
annexed to the Treaty establishing the European Community
4
.

The Guidance to Council Regulation 479/2009/EC, ESA95
5
(European system of national and
regional accounts), defines central government in point S.1311 as: '[…] All administrative
departments of the State and other central agencies whose competence extends normally over
the whole economic territory, except for the administration of social security funds. Included
in sub-sector S.1311 are those non-profit institutions which are controlled and mainly
                                                           
1
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, .OJ
L 315, 14.11.2012, p. 1
2
Directive 2010/31/EU of the European Parliament and of the Council of 19 May 2010 on the energy
performance of
buildings (recast), OJ L 153, 18.6.2010, p.13
3
OJ L 134, 30.4.2004, p. 114–240
4
OJ L 145,10.6.2009,.p.1
5
http://circa.europa.eu/irc/dsis/nfaccount/info/data/esa95/en/een00081.htm.
 
 

financed by central government and whose competence extends over the whole economic
territory'..

This definition differs from that used in the EED in that the latter does not refer explicitly to
'central agencies' and does not exclude 'administrative departments for the administration of
social security funds'. Member States could therefore, in principle, use the lists of central
government bodies specified for the purposes of Council Regulation 479/2009/EC as a
possible reference for establishing which institutions fall within the scope of Article 5 of the
EED, while taking into account the differences mentioned above

3. As indicated, the Commission guidance on Council Regulation 479/2009/EC clarifies that for
the purposes of that Regulation 'central government' consists of those non-profit institutions
which are controlled and mainly financed by central government and whose competence
extends over the whole economic territory. Thus central government is not limited to
ministries but includes the entities which are directly dependent on them in terms of authority
(i.e. are not fully autonomous) and financing. Council Regulation 479/2009/EC and the
accompanying guidance provide possible criteria for Member States to establish the scope of
'central government' within the context of the EED – but are in no way binding as the EED
does not include references to Council Regulation 479/2009 nor to Annex IV of the Public
Procurement Directive in the context of defining ‘central government’.
 
4. When establishing the scope of the obligation under Article 5 of the EED, Member States
should take into account Recital 17 of the EED which provides that '[…] The obligation to
renovate floor area of central government buildings should apply to the administrative
departments whose competence extends over the whole territory of a Member State. When in
a given Member State and for a given competence no such relevant administrative department
exists that covers the whole territory, the obligation should apply to those administrative
departments whose competences cover collectively the whole territory'. This recital takes into
account the federal structure of some Member States and is relevant for those Member States
where for certain competences (such as health or education) there are no central/national
government authorities which would exert control or would be the main provider of financing.
C. ESTABLISHING THE BASIS FOR CALCULATING THE TARGET (INVENTORY OR
ALTERNATIVE)
 
5. Member States have a choice of two methods to meet the obligations of Article 5. The main
obligation is laid down in Article 5(1) and the 'alternative' approach/obligation in Article 5(6).
The fulfilment of either obligation is expected to lead to an equivalent targeted improvement
in the energy performance of buildings, the chosen approach will mainly determine only the
manner in which this target is reached.

6. Under the main obligation ('default' approach) the energy performance and surface
6
of all
buildings to which Article 5 applies will need to be specified in a publicly available inventory
                                                           
6
This discussion document uses the word 'surface' as the equivalent of 'total useful floor area'. The actual
definition of surface for the purposes of this Article must be formulated such that it ensures consistency with
energy performance certificates in use in the Member State/Region concerned.
 
 

as set out in Article 5(5), excluding however buildings exempted on the basis of Article 5(2).
This task will be facilitated by the fact that Member States are already required, under Article
12 of the EPBD, to issue energy performance certificates for buildings occupied by a public
authority and frequently visited by the public. This requirement under the EBPD applies as of
9 J anuary 2013 to buildings with a total useful floor area above 500 m2, and as of 9 J uly 2015
above 250 m
2
. In line with Article 11 of the EPBD, these energy performance certificates
must include:
 
 The energy performance of a building and reference values such as minimum energy
performance requirements in order to make it possible for owners or tenants of the
building or building unit to compare and assess its energy performance;
 Recommendations for the cost-optimal or cost-effective improvement of the energy
performance of a building or building unit.
 
7. The energy performance certificates will therefore allow Member States to establish which
buildings do not meet minimum energy performance requirements and what measures need to
be undertaken to bring the buildings up to the required efficiency.
 
8. Two provisions of the Directive allow for flexibility when applying the main obligation (the
'default' approach):
 Article 5(3) allows a Member State that has renovated more than 3% of the total floor
area of central government buildings in a given year to count the excess in any of the
three previous or following years;
 Article 5(4) allows a Member State to count towards the annual renovation rate of
central government buildings:
o New buildings occupied and owned as replacement for specific central
government buildings demolished in any of the two previous years; or
o Buildings that have been sold, demolished or taken out of use in any of the two
previous years due to more intensive use of other buildings.
 
9. Under the 'alternative' approach/obligation set out in Article 5(6) the energy saving target can
be calculated on the basis of appropriate standard values for the energy consumption –
expressed in kWh or other energy units – of identified reference central government buildings
before and after renovation and according to estimates of the surface of the central
government stock. The energy savings achieved under the alternative approach are
cumulative, meaning that Member States are required to achieve the sum of annual savings
over the whole period between 2014 and 2020. Furthermore, in line with Article 5(6), all the
savings have to be achieved within central government buildings.
 
10. The main principle laid down by the Directive is that the amount of energy savings obtained
under the ‘alternative’ approach must be equivalent to the energy savings obtained through
the 3% renovation rate (‘default’ approach). The Directive allows the level of energy savings
that the ‘default’ approach would generate to be estimated on the basis of standard values.
Although establishing an inventory of buildings owned and occupied by central governments
is not mandatory under the alternative approach, it should be noted that the best way of
ensuring equivalence is to use the inventory referred to in Article 5(5) as the basis for
calculating the 'alternative' target (i.e. expressed in terms of energy saved, and not in terms of
renovated surface), as this will provide greater accuracy than establishing the target on the
basis of estimates. This being the case, Member States may wish to establish and use the
 
 

inventory, irrespective of whether they choose to reach the target using the 'alternative' or
'default' approach.

11. If Member States instead choose to use standard values for the calculation of the 'alternative'
energy saving target' as foreseen in Article 5(6) second subparagraph they may use the
elements provided by the EPBD and the associated "cost-optimal" methodology
7
, namely:
 Types of reference buildings;
 Reference values for energy consumption of each type of reference building before
renovation;
 Reference values for cost-optimal energy consumption of each type of reference
building with the defined energy efficiency measures applied.
 
12. The 'defined energy efficiency measures' under the cost-optimal methodology will include
only those that address the building envelope, building elements and technical systems.
Therefore, savings resulting from behavioural changes would need to be measured/estimated
using other reliable methods, such as surveyed savings or metered savings.
 
13. The alternative approach allows the combining of different ways of reducing energy
consumption in central government buildings (behavioural changes, 'deep' renovations,
'shallow' renovations, etc.).
 
14. The EED foresees that Member States can use certain flexibility mechanisms provided in
Articles 5(3) and 5(4) for the purposes of the renovation rate target ('default' approach). .
Article 5(6) provides that, under the ‘alternative’ approach, Member States will have to
achieve by 2020 an amount of savings that is at least equivalent to that achieved by fulfilling
the 3% renovation rate under Article 5(1). That means that as under Article 5(3) – it will be
possible to count in the target for a given year the excess of savings achieved in previous or
following years. Similarly, since the target under the alternative approach will be established
in energy terms, the flexibilities provided for under Article 5(4) (replacing inefficient
buildings with efficient ones and relocating staff to a smaller space) will lead to decreased
energy consumption and thus will de facto also be available in this case.
 
15. Member States opting for the ‘alternative’ approach will have to notify to the Commission, by
31 December 2013, the alternative measures that they plan to adopt, showing how they would
achieve an equivalent improvement in the energy performance of the buildings within the
central government estate. In terms of notification methods, Member States should notify
their legal provisions transposing the Directive into national law using the 'NIF' database. To
ensure an efficient transfer of information the use of the 'NIF' database for the other
notifications required under the Directive, such as under Article 5(6) is to be encouraged.
                                                           
7
Commission Delegated Regulation (EU) No 244/2012 of 16 J anuary 2012 supplementing directive
2010/31/EU by establishing a comparative methodology framework for calculating cost-optimal levels of
minimum energy performance requirements for buildings and building elements, OJ L 81, 21.03.2012, p. 18
 
 

 
D. EXEMPLIFICATIONS OF OPTIONS FOR FULFILLING THE 3% RENOVATION RATE
TARGET
 
16. The examples below aim to illustrate in a practical way how the 3% renovation rate can be
established and achieved under the 'default' and 'alternative' approaches set out in Article 5 of
the EED. The symbols and figures included there are purely illustrative.

17. Example 1. Default approach with the different flexibility mechanisms applied

18. Calculation of the target

Building Surface
(in m
2
)
Rating Buildings below
minimum for new
built/major
renovation
(assumed to be B)
Total
surface of
buildings
below
minimum
1 2000 B
2 10000 C v 10000
3 7200 D v 7200
4 600 B
5 30000 E v 30000
6 3000 A
7 300 E v 300
8
8
600 E v
Total:
47500

In this example the target for one given year will be: 3% * 47500 =1425 m
2
.

19. In line with Article 5(1), fifth subparagraph, Member States have to prioritise the renovation
of buildings with the poorest energy performance, where cost-effective and technically
                                                           
8
In this example it is assumed that building 8 was sold in the two previous years by the central government
authorities,
hence its surface does not count in the 'denominator' (total surface of buildings owned and occupied by central
government on 1 J anuary not meeting minimum EPBD requirements).
 
 

feasible. Cost-effectiveness should in principle be ensured by the fact that the targeted level of
energy performance can be based on the cost-optimal methodology under the EPBD.

20. Under the scenario in Example 1, this means that buildings 5 and 7 need to be prioritised.
However, at the same time, Article 5(4) allows Member States to count towards the annual
renovation rate new buildings occupied and owned as replacements for specific central
government buildings demolished in any of the two previous years or buildings that have been
sold, demolished or taken out of use in any of the two previous years due to more intensive
use of other buildings. Assuming that building 4 was built as replacement for a specific
central government building demolished in the previous two years, its surface can be counted
towards the target. Assuming that building 8 was sold in the two previous years and its staff
were relocated to buildings 1 to 7, its surface can also be counted in the target. Counting these
two buildings will imply that the remaining target for that year is 225 m
2
(1425 – (600 +
600)).

21. The two following options for meeting the target therefore arise:

Option 1: Renovate building 7. The annual target will be met.

Option 2: Renovate building 5. Given its surface, it will be possible to count savings resulting
from this renovation in this year and the three following years.

22. Example 2. Alternative obligation/approach: calculation of the energy saving target
using estimates and standard values and options for meeting it

23. Calculation of the target

a. Types of
reference
public
buildings

b.Energy
consumption
(kWh/m
2
)
c. Cost-optimal
energy
consumption
with the
defined energy
efficiency
measures
applied
(kWh/m
2
)
d. Total
estimated
surface for
given category
of buildings
expressed in
1000 m
2

Total energy
saving (GWh)
Calculation:
(b-c)*d/1000
Offices 360 250 500000 55000
Educational
buildings &
hospitals
200 150 200000 10000
Residential 150 100 500000 25000
Other 100 70 300000 9000
'denominator' under alternative approach 99000

 
 

Result: In this example, the annual target will therefore be: 3% * 99000 GWh =2970 GWh
(the estimated amount of energy that would be saved if 3% of central govenrement buildings
were renovated to meet cost-optimal energy consumption levels).

24. As indicated in section 3 of this paper, Member States may also find it convenient use the
inventory to establish the alternative target. In that case, a similar formula as in the table
above would apply:


where:

'b' is the energy consumption of each building not meeting EPBD requirements;
'c' is the minimum consumption required under EPBD;
'd' is the surface of each building not meeting EPBD requirements.

25. Sub-option one under alternative approach: reaching the target by reaping full cost-
effective saving potential on the basis of deep renovations

a. Types of
reference
public
buildings

b.Energy
consumption
(kWh/m
2
)
c. Energy
consumption
after reaping
the full cost-
effective saving
potential
(kWh/m
2
)
d. Renovated
surface (1000
m
2
)
Total energy
saved (GWh)
Calculation:
(b-c)*d/1000
Offices 360 20 5000 1700
Educational
buildings &
hospitals
170 20 1000 150
Sport facilities 150 20 5000 650
Other 100 20 5800 470
Target 2970

Result: the annual target was achieved by renovating about 1% of the floor area (column 'd' in
the first table in Example 2 divided by column 'd' in second table in Example 2) to nearly
zero-energy consumption level (in this case assumed to be 20 kWh/m
2
).
 
 

 

26. Sub-option two under alternative approach: reaching the target on the basis of
behavioural changes

a. Types of
reference
public
buildings

b.Energy
consumption
(kWh/m
2
)
c. Energy
consumption
after the
introduction of
behavioural
changes
(kWh/m
2
)
d. Surface of
buildings where
behavioural
changes need to
be introduced
(1000 m
2
)
Total energy
saved (GWh)
Calculation:
(b-c)*d/1000
Offices 360 324 47222 1700
Educational
buildings &
hospitals
170 153 8823 150
Sport facilities 150 135 43000 650
Other 100 90 47000 470
Target 2970

Result: assuming that behavioural changes on average lead to a 10% reduction of energy
consumption, they would have to be introduced in about 10% of the buildings owned and
occupied by central government (column 'd' in the first table in Example 2 divided by column
'd' in third table in Example 2).
The above examples of meeting the target under the ‘alternative’ approach are not exhaustive,
as it is possible to meet the obligation through any combination of renovations with different
levels of inenstity, behavioural changes or building management that have an impact on the
energy consumption and lead to equivalent savings as would be achieved by renovating 3% of
relevant buildings to minimum energy performance requirements set in application of the
EPBD.

EN EN


EUROPEAN
COMMISSION
Brussels, 6.11.2013
SWD(2013) 446 final

COMMISSION STAFF WORKING DOCUMENT
Guidance note on Directive 2012/27/EU on energy efficiency, amending Directives
2009/125/EC and 2010/30/EC, and repealing Directives 2004/8/EC and 2006/32/EC

Article 6: Purchasing by public bodies

Accompanying the document
COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN
PARLIAMENT AND THE COUNCIL

Implementing the Energy Efficiency Directive – Commission Guidance

{COM(2013) 762 final}
{SWD(2013) 445 final}
{SWD(2013) 447 final}
{SWD(2013) 448 final}
{SWD(2013) 449 final}
{SWD(2013) 450 final}
{SWD(2013) 451 final}

 
2
 
TABLE OF CONTENTS
A. Introduction ......................................................................................................................... 3
B. Legal and policy context ..................................................................................................... 3
C. Scope of the obligation ....................................................................................................... 5
C1. Central government ..................................................................................................... 5
C2. Procurement items covered ......................................................................................... 6
C3. Thresholds ................................................................................................................... 9
D. The Procurement Process .................................................................................................. 10
D1. The conditionalities ................................................................................................... 10
D2. Conclusion ................................................................................................................. 12
 
3
 
ARTICLE 6: PURCHASING BY PUBLIC BODIES
A. INTRODUCTION

1. Article 6 of Directive 2012/27/EU of 25 October 2012 on energy efficiency
1
(the Energy
Efficiency Directive – hereafter also 'the EED' or 'the Directive') requires Member States to
ensure that central governments purchase only products, services and buildings with high
energy-efficiency performance. The Directive indicates what these items are and what level of
performance they must meet by referring to criteria established under a number of EU
legislative measures such as the Energy Labelling Directive 2010/30/EU
2
and the Energy
Performance of Buildings Directive (2010/31/EU) (hereafter 'the EPBD')
3
. This obligation is
subject to a number of conditions listed in Article 6(1) and applies only to contracts with a
value equal to, or greater than, the thresholds laid down in Article 7 of the Public Procurement
Directive (2004/18/EC, hereafter also 'the PPD')
4
.

Article 6 also includes specific provisions on contracts of the armed forces; assistance to
regional and local administrative levels; promoting energy performance contracting; and
purchasing product packages. The aim of this paper is to assist Member States in the
implementation of Article 6 by discussing the following issues:

 the relationship between Article 6 and the Public Procurement Directive and its
comparison with other EU legislation in the field of energy efficiency procurement;
 the scope of Article 6 in terms of obligated parties, procurement items and contracts to
which it applies;

 the inclusion of the provisions of Article 6 in the procurement process.

This note aims to provide guidance to Member States on how to apply Article 6 of the EED.
The note states the views of the Commission services, does not alter the legal effects of the
Directive and is without prejudice to the binding interpretation of Article 6 as provided by the
Court of J ustice.
B. LEGAL AND POLICY CONTEXT

2. The general rules applicable to procurement in sectors other than defence, water, energy,
transport and post are set out in the Public Procurement Directive.
                                                           
1
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, OJ L
315/1 of 14 November 2012.
2
Directive 2010/30/EU of the European Parliament and of the Council of 19 May 2010 on the indication by
labelling and standard product information of the consumption of energy and other resources by energy-related
products, OJ L 153, 18.6.2010, p. 1
3
Directive 2010/31/EU of the European Parliament and of the Council of 19 May 2010 on the energy
performance of buildings (recast), OJ L 153, 18.6.2010, p. 13
4
OJ L 134, 30.4.2004, p. 114–240
 
4
 

3. The Public Procurement Directive sets the framework for how procurement should be
undertaken with the aim of ensuring principles such as fair competition and getting best value
for taxpayers’ money. It leaves to specific legislation, such as the EED, any definition of what
has to be purchased. The rules included in such specific legislation need, however, to be in
line with the rules of the general procurement framework.

4. In the case of the EED the principles of 'acting fairly' and 'getting value for money' are
ensured by the fact that the minimum requirements the procured items must meet are openly-
available/non-proprietary and common and they aim at minimising the life-cycle cost of these
items. This is discussed in greater detail in section D of this paper.

5. The body of mandatory EU rules in the field of energy-efficiency procurement is well
established. Energy efficiency is factored into the procurement process in different ways:

 Under the Clean Vehicles Directive (2009/33/EC)
5
the contracting parties have to take
into account the operational lifetime cost of purchased vehicles in a number of ways,
including energy consumption and carbon emissions. This has to be done either by
setting appropriate technical specifications, or by including these aspects in the award
criteria. If the impacts are monetized for inclusion in the purchasing process Member
States have to use a defined methodology and standard data as defined in the
Directive. In order to assist procurers, the Clean Vehicle Portal
6
provides a tool to
calculate the life-time operational cost.

 The Energy Services Directive (2006/32/EC)
7
requires the public sector to apply – as
some of several options – the use of energy performance contracting or the purchasing
of energy-efficient products, buildings and vehicles based on minimized life-cycle cost
analysis. It is left to Member States to define what efficiency levels and methodologies
are applied. This Directive was repealed by the entry into force of the EED on 4
December 2012.

 The Energy Labelling Directive (2010/30/EU)
8
requires contracting authorities to
endeavour to procure only products belonging to the highest efficiency class, where
such products are covered by delegated acts under this Directive. This provision will
be repealed by the EED on 5 J une 2014.

 The Energy Star Regulation (106/2008/EC)
9
applies the same approach as Article 6 of
the EED, namely that central governments must specify energy-efficiency
                                                           
5
Directive 2009/33/EC of the European Parliament and of the Council of 23 April 2009 on the promotion of
clean and energy-efficient road transport vehicles, OJ L 120, 15.5.2009, p. 5–12
6
http://www.cleanvehicle.eu/
7
Directive 2006/32/EC of the European Parliament and of the Council of 5 April 2006 on energy end-use
efficiency and energy services and repealing Council Directive 93/76/EEC, OJ L 114, 27.4.2006, p. 64–85
8
Directive 2010/30/EU of the European Parliament and of the Council of 19 May 2010 on the indication by
labelling and standard product information of the consumption of energy and other resources by energy-related
products, OJ L 153, 18.6.2010, p. 1
9
Regulation (EC) No 106/2008 of the European Parliament and of the Council of 15 J anuary 2008 on a
Community energy-efficiency labelling programme for office equipment (recast version), OJ L 39, 13.2.2008,
p. 1–7
 
5
 
requirements for public supply contracts of office equipment that are not less efficient
than those set out under the Energy Star Programme.

Article 6 of the EED, therefore, does not introduce a new approach to EU rules on energy-
efficiency procurement, but merely extends the scope of the obligation to additional items.
C. SCOPE OF THE OBLIGATION

C1. Central government

6. In line with the definition provided by Article 2(9) of the EED, 'central government' means
'all administrative departments whose competence extends over the whole territory of a
Member State'.

7. In putting this definition into practice Member States can draw on;

•Annex IV of the Public Procurement Directive (2004/18/EC), which includes a list of
central government bodies in all Member States;

• The data on public accounts which Eurostat collects on the basis of Council
Regulation 479/2009/EC on the application of the Protocol on the excessive deficit
procedure annexed to the Treaty establishing the European Community
10
.

The Guidance to Council Regulation 479/2009/EC, ESA95
11
(European system of national
and regional accounts), defines central government in point S.1311 as: '[…] All administrative
departments of the State and other central agencies whose competence extends normally over
the whole economic territory, except for the administration of social security funds. Included
in sub-sector S.1311 are those non-profit institutions which are controlled and mainly
financed by central government and whose competence extends over the whole economic
territory'.

8. This definition differs from that used in the EED in that the latter does not refer explicitly to
'central agencies' and does not exclude 'administrative departments for the administration of
social security funds'. Member States could therefore, in principle, use the lists of central
government bodies specified for the purposes of Council Regulation 479/2009/EC12 as a
possible reference for establishing which institutions fall under the scope of Article 6 of the
EED, while taking into account the differences mentioned above.

9. The Commission guidance on Council Regulation 479/2009/EC clarifies that central
government is those non-profit institutions which are controlled and mainly financed by
central government and whose competence extends over the whole economic territory. Thus
central government is not limited to ministries, but includes the entities which are directly
dependent on them in terms of authority (i.e. are not fully autonomous) and financing.
Council Regulation 479/2009/EC and the accompanying guidance provide possible criteria
                                                           
10
OJ L 145,10.6.2009,.p.1
11
http://circa.europa.eu/irc/dsis/nfaccount/info/data/esa95/en/een00081.htm.
12
http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ :L:2009:145:0001:0009:en:PDF.
 
6
 
for Member States to establish the scope of central government within the context of the EED,
but are in no way binding as the EED does not include references to that Regulation nor to
Annex IV of the Public Procurement Directive in the context of defining ‘central
government’.

10. When establishing the scope of the obligation, Member States should take into account
Recital 17 of the EED which provides that '[…] The obligation to renovate floor area of
central government buildings should apply to the administrative departments whose
competence extends over the whole territory of a Member State. When in a given Member
State and for a given competence no such relevant administrative department exists that
covers the whole territory, the obligation should apply to those administrative departments
whose competences cover collectively the whole territory'. This recital takes into account the
federal structure of some Member States and is relevant to those Member States where for
certain competences (such as health or education) there are no central/national government
authorities which would exert control or would be the main provider of financing.

C2. Procurement items covered

11. The procurement items covered by laws listed in Annex III of the EED are set out below. The
list, with the exception of tyres and buildings, is not fixed and exhaustive as implementing
measures covering additional items will be proposed in the future.

Energy labelling implementing regulations under Directive 2010/30/EU

12. Implementing measures of the Energy Labelling Directive are delegated acts within the
meaning of Article 290 TFEU and are adopted by the Commission if the European Parliament
and the Council do not raise objections.

13. In the case of the products mentioned below, Member States will have to purchase only those
products that belong to the highest energy efficiency class possible in the light of the need to
ensure sufficient competition:

 Household dishwashers (Regulation1059/2010/EU); 
 Household refrigerating appliances (Regulation 1060/2010/EU); 
 Household washing machines (Regulation 1061/2010/EU); 
 Televisions (Regulation 1062/2010/EU); 
 Air conditioners (Regulation 626/2011/EU);
 Household tumble driers (Regulation 392/2012/EU);
 Electrical lamps and luminaires (Regulation 874/2012/EU).

14. In line with Article 6(4) of the EED, when purchasing a product package covered as a whole
by a delegated act adopted under Directive 2010/30/ EU, Member States will be allowed to
require that the aggregate energy efficiency takes priority over the energy efficiency of
individual products within that package, by purchasing the product package that belongs to
the highest energy efficiency class.

15. Currently there are no labelling rules for product packages. Energy labelling implementing
measures for product packages are expected in the near future for heaters and lighting
systems. As an hypothetical example, procurers purchasing a lighting system package
 
7
 
including lamps, controls, ballasts and luminaires might be able to request that the lamps need
to have only a category 'B', provided that the whole package reaches the highest category (A+
and above).

Ecodesign implementing measures under Directive 2009/125/EC

16. Implementing measures under the Ecodesign Directive
13
are currently dealt with under the
'Comitology' procedure and are adopted by the Commission after a vote of a regulatory
committee composed of Member State representatives and further to the scrutiny of the
European Parliament and the Council.

17. For products covered by an Ecodesign implementing measure central governments may only
purchase products that comply with energy efficiency benchmarks specified in that
implementing measure. This requirement is applicable only to products that are not covered
by implementing measures of the Energy Labelling Directive. In addition this requirement is
applicable only to Ecodesign implementing regulations adopted after the entry into force of
the EED. Thus far this list includes Commission Regulation (EU) No 1194/2012 setting
ecodesign requirements for directional lamps, for light emitting diode lamps and related
equipment and Commission Regulation (EU) No 617/2013 –setting ecodesign requirements
for computers and computer servers.

Energy Star

18. Energy Star specifications are included in Annex C of the EU-US Energy Star Agreement14.
It should be noted that, since Energy Star is a voluntary label, the EED does not require that
the procured office equipment be Energy Star-labelled, but merely that it is not less efficient
than the levels indicated under the relevant Energy Star specifications. New product
specifications are to be added in the course of 2013.

19. The adoption of Ecodesign implementing measures for products that fall under the
Energy Star Agreement is planned for 2013. The question then arises as to which of the two
rules should be used by Member States as the basis for public procurement. Since the EED
does not address it specifically, this issue will need to be tackled in product-specific
Ecodesign implementing measures or through a horizontal Ecodesign implementing measure r
addressing this specific issue.

Tyres

20. Central governments will only be able to purchase tyres that achieve the highest fuel energy
efficiency class, as defined by Regulation 1222/2009/EC
15
on the labelling of tyres with
respect to fuel efficiency and other essential parameters. Annex III of the EED indicates that
this requirement should not prevent public bodies from purchasing tyres with the highest wet
                                                           
13
Directive 2009/125/EC of the European Parliament and of the Council of 21 October 2009 establishing a
framework for the setting of ecodesign requirements for energy-related products (recast), OJ L 285,
31.10.2009, p. 10
14
Agreement between the Government of the United States of America and the European Union on the
coordination of energy-efficiency labelling programmes for office equipment, OJ L 63/7 of 6.3.2013.
15
Regulation (EC) No 1222/2009 of the European Parliament and of the Council of 25 November 2009 on the
labelling of tyres with respect to fuel efficiency and other essential parameters , OJ L 342, 22.12.2009, p. 46–
58
 
8
 
grip class or external rolling noise class where justified by safety or public health reasons.
Article 6 of the EED does not apply to tyre types excluded from the scope of Regulation
1222/2009/EC by virtue of Article 2 of that Regulation (e.g. re-treaded tyres).

Services

21. Given that the EED does not define ‘Service contracts’, the relevant definitions of the PPD
should be used as a reference point. ‘Public service contracts’ are defined in Article 1(2)(d) of
the PPD and listed in Annex II of that Directive. This is necessary in order to differentiate
‘public service contracts’ from ‘public works contracts’, which are not included in the scope
of Article 6 of the EED.

22. Central governments will have to require in their tenders for service contracts that service
providers only use products that comply with the requirements referred to in points (a) to (d)
of Annex III of the EED, when providing the services in question. This requirement will apply
only to new products purchased by service providers partially or wholly for the purpose of
providing the service in question. As an example, a procurement entity purchasing IT services
will not have to request that the service providers upgrade all of their equipment to Energy
Star levels, but only that the new equipment they will purchase for the purposes of the service
in question meets those levels.

23. The contract documents (such as contract notices, contract documents or additional
documents) need to specify how bidders are to provide evidence of meeting this requirement.
They will need to take account of the fact that this will work differently under different
contracting routes – for instance, whilst it may be possible to identify purchases made
specifically for the provision of a particular defined service, it may be more difficult initially
to do so for outcome-based specifications, especially those that are established by negotiation.
In the latter case, a possible option could be a binding statement of intent at an early stage
from bidders, followed by the expected greater detail as part of any final bid. The contract
documents would need to specify the means by which this obligation will be verified. These
means will need to be proportionate to the nature of the service in question. The evidence
requested from contractors could include samples, descriptions and photographs of the
products purchased for the service in question or certificates drawn up by official quality
control institutes or agencies of recognised competence attesting the conformity of products
purchased and used by the service provider.

Buildings

24. In purchasing or making new rental agreements for buildings, central governments will in
general have to choose only buildings which comply with the minimum efficiency
requirements that the Member State in question has set under the EPBD.

25. Article 6 and Annex III of the EED indicate that the purchased or rented buildings have to
meet the minimum energy performance requirements set under with Article 4 of the EPBD.
This EPBD provision requires Member States to set inter alia minimum requirements for
buildings and building elements.

26. Where a Member State has chosen to transpose the EPBD by applying minimum requirements
only to the elements of the renovated building as permitted under Article 7 of the EPBD, it
 
9
 
will need to be verified whether the whole building meets the minimum requirements. Annex
III of the EED indicates that compliance with Article 6 and Annex III (f) of the EED should
be verified by means of the energy performance certificates referred to in Article 11 of the
EPBD. This provides that the energy performance certificates should include the energy
performance of a building and reference values such as minimum energy performance
requirements in order to be able to compare and assess the energy performance. Therefore,
irrespective of how Articles 4 and 7 of the EPBD have been transposed, energy performance
certificates that comply with the requirements of Article 11 of the EPBD ought to provide
Member States with the means of meeting the requirements of Article 6 and Annex III (f) of
the EED.

27. There is no contradiction between minimum efficiency requirements applied to building
elements under Article 7 of the EPBD and the establishment of the energy performance of the
building as a whole. Article 4 of the EPBD requires Member States to set minimum energy
performance requirements for buildings or building units as well as for building elements.
Article 7 of the EPBD indicates that Member States should take the necessary measures to
ensure that, when buildings undergo major renovation, the energy performance of the building
or the renovated part thereof is upgraded in order to meet minimum energy performance
requirements set in accordance with Article 4 in so far as this is technically, functionally and
economically feasible. It specifies that those requirements should be applied to the renovated
building or building unit as a whole and, additionally or alternatively, those requirements may
be applied to the renovated building elements.

28. Annex III point (f) of the EED lists certain exemptions. One is when central governments
purchase or rent a building in order to undertake deep renovation or demolition. Although
'deep renovations' are not defined in the Directive, Recital 16 refers to them as renovations
'which lead to a refurbishment that reduces both the delivered and the final energy
consumption of a building by a significant percentage compared with the pre-renovation
levels leading to a very high energy performance'. This implies that such renovations must at
least to go beyond the minimum efficiency requirements set under the EPBD.

C3. Thresholds

29. The obligations laid down in Article 6 of the EED are applicable to contracts above the
thresholds listed in Article 7 of the Public Procurement Directive. The thresholds now in force
were established by Regulation 1251/2011/EU
16
. For all supplies contracts contracted by
central government not operating in the field of defence and for all contracts and design
contests concerning services listed in Annex II, part A of the PPD the threshold is 130 000
euros. For all contracts concerning services listed in Annex II B of the PPD the threshold is
200 000 euros. Services are covered by Annex III of the EED, and in that context, the relevant
categories in Annex II, part A of the PPD include, among other, maintenance and repair
services, computer and related services, building-cleaning services and property management
services.

                                                           
16
Commission Regulation (EU) No 1251/2011 of 30 November 2011 amending Directives 2004/17/EC,
2004/18/EC and 2009/81/EC of the European Parliament and of the Council in respect of their application
thresholds for the procedures for the awards of contract, OJ L 319, 2.12.2011, p.
43–44
 
10
 
30. Since the purchasing of existing buildings is not covered by the PPD, no contract thresholds
apply in this case. Central government bodies can only purchase, or make new rental
agreements for buildings that comply at least with the minimum efficiency requirements
referred to in Article 4(1) of the EPBD, irrespective of the value of the building purchased or
of the rental contract.
D. THE PROCUREMENT PROCESS

31. The principle of Article 6 of the EED is simple – when central governments purchase
products, buildings and services, they must ensure high energy efficiency and they must
comply with the standards listed in Annex III. These are mandatory minimum requirements
and, in line with Article 1(2) of the EED, Member States can go further as long as this is
compatible with EU law and more stringent national measures are notified to the
Commission. Therefore, in the procurement process, these requirements should in principle be
part of technical specifications or any other document defining the subject matter of the
contract.

32. The obligations imposed under Article 6 of the EED are to a certain extent conditional. They
must be consistent with cost-effectiveness, economical feasibility, wider sustainability,
technical suitability and sufficient competition. These terms aim to anchor the specific
legislation in the core principles of the PPD, namely 'getting value for money' and ensuring
fair competition. Therefore, as long as the 'conditionalities' are met, Member States must
purchase the most energy efficient products, services and buildings available. In order to
determine whether the conditionalites are met, Member States should establish a transparent
and evidence-based methodology, rather than deciding on a case-by-case basis, so as to ensure
that the principles of 'acting fairly' and 'getting value for money' laid out on the general
procurement legislation are respected. .In general these five 'conditionalities' are factored into
the legal acts listed in Annex III of the EED. There could be however cases where purchasing
products/services/buildings as specified in Annex III will not satisfy all of the
‘conditionalities’. The sections below provide guidance in which instances this may be the
case and how it could be verified.

D1. The conditionalities
 
Cost-effectiveness and economical feasibility

33. In the context of energy efficiency, cost-effectiveness in principle means cost-effectiveness
over the life-cycle of the product, service or building in question, and relates the costs of a
measure to the impact that has been achieved in terms of energy efficiency (i.e. Euro purchase
cost per amount of energy saved) and performance of the product/service/building.. Cost-
effectiveness in the context of public procurement can, however, also be understood in a
wider way so as to include considerations which are not linked with direct benefits to the
procuring entity, e.g. societal costs associated with greenhouse gas emissions or air pollutants.
An example of the consideration of such societal costs is the EPBD, which allows Member
States to use the macroeconomic approach when setting the cost optimal level of energy
efficiency of buildings and includes the cost of CO
2
emissions in calculations. Another
example is the Clean Vehicles Directive, where external costs related to CO
2
, NOx, non-
 
11
 
methane hydrocarbons and particulate matter are considered in calculating the life-cycle cost
of vehicles purchased by public authorities.

34. Economical feasibility relates to the upfront price and the running costs of the
product/service/building and the ability of the procurement entity to bear this cost. As energy
efficiency measures always lead to a decrease of running costs as regards energy cost, in this
context the principle of economical feasibility relates only to the ability of the procurement
entity to bear the upfront price and other running cost like maintenance or spare parts.. It
needs to be underlined that Article 6 and the EED more broadly aim at minimising the life-
cycle cost irrespective of the upfront price.

35. Life-cycle cost-effectiveness underpins the items listed in Annex III of the EED, be it
minimum requirements under the EPBD or Energy Star specifications for office equipment.
Under the EPBD, minimum requirements for buildings have to be set with a view to
achieving cost-optimal levels, whereas minimising life-cycle cost compared to market average
is one of the criteria for setting Energy Star specifications.

36. However there could be a situation where it is not cost-effective or economically feasible to
buy the most energy-efficient product, for example in relation to benchmarks for certain
products under the Ecodesign Directive and the highest efficiency classes for certain products
under the Energy Labelling Directive. Ecodesign benchmarks aim to identify best-performing
products on the market, and the Energy Labelling Directive allows for the setting of empty
top energy classes corresponding to not-yet available or not sufficiently available technology.
This may limit the number of products available on the market which can meet the top
requirements, until new more efficient models appear corresponding to this top tier. In these
two cases manufacturers may charge premiums which exceed the savings resulting from
lower operational cost or make the purchase of the product economically not feasible.

37. In the context of Article 6 of the EED, cost-effectiveness does not mean the cheapest product
on the market from a life-cycle cost standpoint. For example, in the case of products the least-
life cycle cost level corresponds to minimum requirements set under the Ecodesign Directive.
In this case purchasing a product with a least life-cycle cost would mean purchasing the least
efficient product on the market. Central governments have an obligation to ‘pull’ the market
through procurement towards greater efficiency even if this does not result in purchasing the
products with the least life-cycle cost. This leading role is emphasised by Recital 15 of the
EED.

38. However if public procurers discover that the life-cycle cost of all products belonging to an
efficiency category required to be purchased under Article 6 of the EED is significantly
higher than the life-cycle cost of less efficient products, they should have the possibility to
purchase these less efficient products, provided this is done on the basis of a structured (i.e.
not ad hoc), evidence-based and transparent approach.

Wider sustainability

39. Wider sustainability is not contradictory with greater energy-efficiency. On the contrary, in
most cases there are synergies between the two elements. In addition in the case of items
covered by Annex III of the EED, energy consumption in the use phase usually has the
greatest environmental impacts.
 
12
 

40. In those rare instances where there is a conflict between greater energy efficiency and reduced
environmental impact, public procurers will need to weigh those impacts on the basis of a
transparent and evidence-based approach in order to be able to purchase
products/buildings/services which are less efficient than those whose efficiency corresponds
to the levels indicated in Annex III of the EED. This would have to be established on the basis
of appropriate data and tools such as Ecoindicators
17
. It is, however, difficult to put on the
same scale energy, materials, air emissions and other environmental impacts. One possible
option is to normalise by dividing each impact category by the whole amount of this category
(e.g. air emissions) in a given year in the EU or the individual Member State, and then
compare in which environmental category the impact of the product is greater. Such
assessments are imperfect but they can help identify those cases where higher energy
efficiency could lead to an overall negative environmental impact.

41. In those cases where it is found on the basis of well-established tools and data that the global
environmental impact of all products belonging to an energy efficiency category required to
be purchased under Article 6 of the EED is significantly worse than the global environmental
impact of less energy efficient products, public procurers should have the possibility to
purchase these less energy efficient products.

Sufficient competition

42. Under the EED an issue could arise where for a given product there is a limited offer on the
market. This may again apply in particular to benchmarks under the Ecodesign Directive and
top energy classes under the Energy Labelling Directive. Available databases such as 'Top ten'
(www.topten.eu) can assist procurers in estimating the number of products on offer for a
given category. It should be noted however that in the ‘Concordia Bus Finland’ case (C-
513/99) the European Court of J ustice found that '[...] the fact that one of the criteria adopted
by the contracting authority to identify the economically most advantageous tender could be
satisfied only by a small number of undertakings, one of which was an undertaking belonging
to the contracting authority, is not in itself such as to constitute a breach of the principle of
equal treatment' (paragraph 85).

D2. Conclusion

43. In an instance where a procuring entity would have reasonable doubts that the most efficient
products/services/buildings available on the market and meeting the criteria listed in Annex
III of the EED do not meet one or more of the conditionalities included in Article 6, the
obligation to purchase those items does not apply. The entity will have to demonstrate in a
transparent and evidence based way that the conditionality is not met. The manner in which
this has to be shown should be set out in the national legislation transposing Article 6 of the
EED, or in other publicly available official documentation.
 
                                                           
17
ILCD handbook. Analysis of existing Environmental Impact Assessment methodologies for use in Life Cycle
Assessment'; J RC-IES, 2010.

EN EN


EUROPEAN
COMMISSION
Brussels, 6.11.2013
SWD(2013) 451 final

COMMISSION STAFF WORKING DOCUMENT
Guidance note on Directive 2012/27/EU on energy efficiency, amending Directives
2009/125/EC and 2010/30/EC, and repealing Directives 2004/8/EC and 2006/32/EC

Article 7: Energy efficiency obligation schemes


Accompanying the document
COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN
PARLIAMENT AND THE COUNCIL


Implementing the Energy Efficiency Directive – Commission Guidance

{COM(2013) 762 final}
{SWD(2013) 445 final}
{SWD(2013) 446 final}
{SWD(2013) 447 final}
{SWD(2013) 448 final}
{SWD(2013) 449 final}
{SWD(2013) 450 final}

 

TABLE OF CONTENTS

A.  INTRODUCTION ................................................................................................................................ 2 
B.  HOW TO CALCULATE THE REQUIRED AMOUNT OF ENERGY SAVINGS? ............................................ 2 
C.  WHAT POLICY INSTRUMENTS AND WHAT CRITERIA? ...................................................................... 9 
D.  WHICH SECTORS AND INDIVIDUAL ACTIONS ARE TO BE TARGETED ............................................. 14 
E.  HOW TO CALCULATE THE ENERGY SAVINGS FROM EACH INDIVIDUAL ACTION? .......................... 18 
F.  WHAT MEASUREMENT, CONTROL, QUALITY, MONITORING AND VERIFICATION REQUIREMENTS? 21 
G.  WHAT REPORTING REQUIREMENTS? .............................................................................................. 22 
H.  LIST OF STUDIES AND PAPERS ........................................................................................................ 24 
 
 

ARTICLE 7: ENERGY EFFICIENCY OBLIGATION SCHEMES
A. INTRODUCTION

1. Article 7 of the Energy Efficiency Directive
1
(hereafter 'the EED' or 'the Directive') can be
implemented by having in place or establishing one or a combination of the following policy
measures: (i) energy efficiency obligation schemes or (ii) alternative policy measures.

In doing so, certain steps need to be followed by each Member State:

1. Establish the total quantity of energy savings that has to be achieved and its spread over
the obligation period (see Section B);
2. Decide whether to use energy efficiency obligation schemes or alternative policy
measures, or both, and, while designing the schemes or measures, ensure that certain
criteria are met (see Section C);
3. Establish which sectors and individual actions are to be targeted so that the required
amount of energy savings is achieved (see Section D);Establish how energy savings from
individual actions are to be calculated (see section E);
4. Ensure control, verification, monitoring and transparency of the scheme or alternative
policy measures (see Section F); and
5. Report and publish the results (see Section G).

2. There are differences in some of these steps depending on the policy measure(s) to be used.
These differences, when applicable, are indicated in the text.

3. The document also includes a list of various reports and studies in Section H, which could
support the setting of national policy measures. This list is indicative, of guiding nature and
non-exhaustive.

4. This note aims to provide guidance to Member States on how to apply Article 7 of the EED.
The note states the views of the Commission, does not alter the legal effects of the Directive
and is without prejudice to the binding interpretation of Article 7 as provided by the Court of
Justice.
B. HOW TO CALCULATE THE REQUIRED AMOUNT OF ENERGY SAVINGS?

5. The quantity of energy savings that is to be achieved over the seven-year obligation period (1
January 2014 to 31 December 2020) is calculated in the same way regardless of the methods
that will be used to achieve it. To this end, the following questions are relevant:

1. Which datasets are to be used in the calculation?
2. How is the overall amount of energy savings to be achieved over the seven-year
obligation period to be calculated?
                                                           
1
 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, OJ L
315, 14.11.2012, p. 1. 
 

3. How do the energy savings required have to be spread over the seven-year obligation
period?
4. Which options from Article 7, paragraph 2, can be used and to what extent?

B1. Which datasets are to be used in the calculation? 

6. Article 7, paragraph 1 states:

'Each Member State shall set up an energy efficiency obligation scheme. That
scheme shall ensure that energy distributors and/or retail energy sales companies
that are designated as obligated parties under paragraph 4 operating in each
Member State's territory achieve a cumulative end-use energy savings target by 31
December 2020, without prejudice to paragraph 2.

That target shall be at least equivalent to achieving new savings each year from 1
January 2014 to 31 December 2020 of 1,5 % of the annual energy sales to final
customers of all energy distributors or all retail energy sales companies by volume,
averaged over the most recent three-year period prior to 1 January 2013. The sales
of energy, by volume, used in transport may be partially or fully excluded from this
calculation…'.

7. It follows that to calculate the overall amount of savings required, the average of the annual
energy sales, by volume, to final customers of all energy distributors or all retail energy sales
companies for the three years before 1 January 2013, i.e. for 2010, 2011 and 2012 needs first
to be calculated. Energy sales for the transport sector can be partially or fully excluded from
this calculation. To establish the statistical datasets to be used, the following definitions in
Article 2 should be considered:

'(20) ‘energy distributor’ means a natural or legal person, including a distribution system
operator, responsible for transporting energy with a view to its delivery to final
customers or to distribution stations that sell energy to final customers;

(21) ‘distribution system operator’ means ‘distribution system operator’ as defined in
Directive 2009/72/EC and Directive 2009/73/EC respectively;

(22) ‘retail energy sales company’ means a natural or legal person who sells energy to
final customers;

(23) ‘final customer’ means a natural or legal person who purchases energy for own end
use;'.

Thus the Directive prescribes that all final energy (with the possible exception of energy used
in the transport sector) that is sold to a natural or legal person is included in the calculations.
By contrast, energy volumes transformed on site and used for own-use, and those that are
used for the production of other energy forms for non-energy use, are excluded. The
definitions include both grid-bound and off-grid energy (e.g. heating oil, biomass for heating).
For grid-bound electricity the text does not make a distinction between electricity passed
thought the low-, medium- or high- voltage network. All these are to be included as far as
there is a purchase. These data are collected by Eurostat according to Regulation (EC) No
1099/2008.
 


8. In terms of statistical datasets to be used in the calculation of the required amount of savings,
the Commission services consider that the Eurostat categories "Final energy consumption"
(Code B_101700) and possibly partially or fully excluding "Final energy consumption –
transport" (Code B_101900) contain the elements that are required in Article 7, paragraph 1
(see the box below). Using Eurostat categories would mean that any possible double counting
is avoided.

Relevant Eurostat definitions

Final energy consumption (Code B_101700) covers energy supplied to the final consumer's
door for all energy uses. It is the sum of final energy consumption – industry (Code
B_101800), final energy consumption - transport (Code B_101900) and final energy
consumption - household, commerce etc. (Code B_102000).

Final energy consumption – industry (Code B_101800) covers the consumption in all
industrial sectors with the exception of the "Energy sector" (see Code B_101300). The fuel
quantities transformed in the electrical power stations of industrial auto-producers and the
quantities of coke transformed into blast-furnace gas are not entered under overall industrial
consumption but under transformation input, (see Codes B_101022, Input to auto-producers
thermal power stations and Code B_101006, Input to blast-furnace plants).

Final energy consumption – transport (Code B_101900) covers the consumption in all types
of transportation, i.e., rail, road, air transport and inland navigation.

Final energy consumption – households, commerce, etc. (Code  B_102000) covers quantities
consumed by private households (Code B_102010), services (Code B_102035),
agriculture/forestry (Code B_102030), fishing (Code B_102040) and non-specified (Code
B_102040).

In addition, for information final non-energy consumption (Code B_101600) covers the use of
energy products for non-energy purposes. It is the sum of final non-energy consumption in the
chemical industry (Code B_101601) and in non-chemical industries (Code B_101602).


9. In this way, for instance, the following categories are automatically excluded from the
calculation:
 
 Final non-energy consumption (Code B_101600); 
 Input to auto-producers thermal power stations (Code B_101022); 
 Input to blast-furnace plants (Code B_101006); 
 Electricity used for purposes of balancing of energy system that has not occurred at final
energy user level. 

10. The use of electricity for electric cars and energy generated by households for their own use
can be excluded from this calculation. However, Member States would need to develop a
methodology and justify this in the notification to the Commission (as described in Annex V,
part 4, point (c)).

 

11. Other national data sources can also be used, including data from energy providers, as far as
these contain the same elements and lead to similar quantities. The use of alternative
statistical sources and any difference of the resulting quantities needs to be explained and
justified in the notification to the Commission (as described in Annex V, part 4, point (c)).

12. If the data for 2012 are not available when the Member States must notify the Commission
on Article 7 is to be submitted (i.e. end 2013), expert estimations can be used and justified in
the notification to the Commission (as described in Annex V, part 4, point (c)). However, if at
the time when the official data are available there are significant discrepancies between the
estimated and real numbers, then the amount of savings required would need to be readjusted
to the real recorded numbers.

B2. How to calculate the overall amount of energy savings to be achieved over the
seven-year obligation period

13. The next step is to multiply by 1.5% the average figure established for 2010, 2011 and 2012
so as to calculate the 'new' yearly amount to be saved. In addition, under the concept of
lifetimes in Annex V, part 2, point (e), each individual energy-saving action is considered to
deliver savings not only in the year of implementation, but in also in future years up to 2020.
For this reason, the required amount of savings has to be 'cumulated' year-on-year (if not, one
year's actions could be considered enough to fulfil the entire requirement). The overall
amount to be reached over the whole period is therefore a sum of the following cumulative
percentages: 2014 – 1.5%; 2015 – 3%; 2016 – 4.5%; 2017 – 6%; 2018 – 7.5%; 2019 – 9%;
2020 – 10.5%.

14. For example, a Member State could have an energy use of 102 million tons of oil equivalent
(Mtoe) in 2010, 98 Mtoe in 2011 and 100 Mtoe in 2012 – giving an average of 100 Mtoe for
the three years before 1 January 2013.

The total amount of savings required in this Member State in relation to 2014 through the
implementation of Article 7 would therefore be (100 x 1.5% x 1 year) = 1.5 Mtoe. The total
amount required in relation to 2015 would be (100 x 1.5% x 2 years) = a cumulative 3 Mtoe.
Similar calculations can be performed for each of the subsequent years, up to 2020 in relation
to which the total amount required would be (100 x 1.5% x 7 years) = 10.5 Mtoe. This implies
that the total amount of energy savings required over the whole seven-year period would be
42.0 Mtoe, i.e.:

Year Energy savings [Mtoe] Total
2014 1.5 1.5
2015 1.5 1.5 3.0
2016 1.5 1.5 1.5 4.5
2017 1.5 1.5 1.5 1.5 6.0
2018 1.5 1.5 1.5 1.5 1.5 7.5
2019 1.5 1.5 1.5 1.5 1.5 1.5 9.0
2020 1.5 1.5 1.5 1.5 1.5 1.5 1.5 10.5
Total 42.0 Mtoe
 
 

B3. How to spread the energy savings required over the seven-year obligation period

15. If energy efficiency obligation schemes are used, there is no obligation to report how the
effort is spread over the obligation period, as the last sentence of Article 7, paragraph 1, states
only that:

'Member States shall decide how the calculated quantity of new savings referred to in
the second subparagraph is to be phased over the period'.

However, Member States should establish how the savings are to be phased over the period.
For example, one Member State might choose a linear increase of the savings over time;
another might decide to start later but to require higher savings towards the middle/end of the
period.

16. If alternative policy measures (under Article 7(9)) and/or national energy efficiency fund
(under Article 20(6)) are used, at least two intermediate periods need to be introduced, as
required in Article 7(10) (a):

'Without prejudice to paragraph 11, the criteria for the policy measures taken
pursuant to the second subparagraph of paragraph 9 and Article 20(6) shall be as
follows:

(a) the policy measures provide for at least two intermediate periods by 31
December 2020 and lead to the achievement of the level of ambition set out in
paragraph 1;'

The length of these periods and savings to be achieved are to be reported as required in Annex
V, part 4, points (c) and (d):

'4. Notification of methodology

Member States shall by 5 December 2013 notify the Commission of their proposed
detailed methodology for operation of the energy efficiency obligation schemes and
for the purposes of Article 7(9) and Article 20(6). Except in the case of taxes, such
notification shall include details of: …..

(c) the level of the energy saving target or expected savings to be achieved over
the whole and intermediate periods'.

There are no requirements for how long these intermediate periods should be and what levels
of savings must be achieved.

B4. What possibilities from Article 7, paragraph 2 can be used and to what extent

17. Article 7, paragraphs 2 and 3, states that:

'2. Subject to paragraph 3, each Member State may:

 

(a) carry out the calculation required by the second subparagraph of paragraph 1
using values of 1 % in 2014 and 2015; 1,25 % in 2016 and 2017; and 1,5 % in
2018, 2019 and 2020;

(b) exclude from the calculation all or part of the sales, by volume, of energy used
in industrial activities listed in Annex I to Directive 2003/87/EC;

(c) allow energy savings achieved in the energy transformation, distribution and
transmission sectors, including efficient district heating and cooling
infrastructure, as a result of the implementation of the requirements set out in
Article 14(4), Article 14(5)(b) and Article 15(1) to (6) and (9) to be counted
towards the amount of energy savings required under paragraph 1; and

(d) count energy savings resulting from individual actions newly implemented
since 31 December 2008 that continue to have an impact in 2020 and that can
be measured and verified, towards the amount of energy savings referred to in
paragraph 1.

3. The application of paragraph 2 shall not lead to a reduction of more than 25 % of
the amount of energy savings referred to in paragraph 1. Member States making use
of paragraph 2 shall notify that fact to the Commission by 5 June 2014, including the
elements listed under paragraph 2 to be applied and a calculation showing their
impact on the amount of energy savings referred to in paragraph 1'.

It follows that there are certain possibilities that allow for certain national circumstances to be
taken into account and can lead to a lower amount of end-use energy savings required to be
achieved over the seven-year period.

18. The following four possibilities are included in the text:

a. Calculation based on a lower annual saving rate;
b. Full or partial ETS industry exclusion;
c. Counting certain energy savings from energy transformation and transmission sectors;
and/or
d. Early actions after end-2008 that still deliver savings in 2020.

Possibilities (a) and (b) are related to the overall amount of energy savings to be achieved –
see the examples below.

The latter two possibilities – (c) and (d) – are related to the question of which energy savings
can be counted towards the achievement of the required amount of energy savings.

As examples:
 If a Member State used only the possibility provided in Article 7( 2) (a), of carrying out
the calculation with lower rates (1.0% for 2014 and 2015, 1.25% for 2016 and 2017, and
1.5% for 2018, 2019 and 2020), then the overall amount of savings to be reached over the
period is the sum of the following cumulative percentages: for 2014 – 1.0%, 2015 – 2.0%,
2016 – 3.25%, 2017 – 4.5%, 2018 – 6.0%, 2019 – 7.5%, 2020 – 9.0%. Continuing with
the example used in section B2 above, the amount of savings required over the seven-year
period would be 33.25 Mtoe (and not 42.0 Mtoe).
 


 If a Member State used only the possibility provided in Article 7(2)(b), and fully or
partially exclude EU Emissions Trading Scheme (ETS) industry from the calculation
under Article 7(1), then the Member State would need to establish what volumes of
delivered or retailed energy are used for these industrial activities. This calculation takes
as its starting point the energy that is used for the activities listed under Annex I of the
ETS Directive
2
and that is accounted for under the Eurostat definition of final energy
consumption (Code B_101700). From this amount must be deducted the energy used for
the three 'energy activities' that are listed in Annex I of the ETS Directive: combustion
installations with a rated thermal input exceeding 20 MW (except hazardous or municipal
waste installations); mineral oil refineries; and coke ovens and the energy used in
aviation
3
. Next, the Member State will need to exclude this calculated amount of final
energy partially or fully from the calculation, ensuring that the result after the deduction is
no lower than 75% of what would have it been as calculated under section B2 (i.e., in the
example given there, the reduction could not be of more than 10.5 Mtoe and the required
amount of savings must be no less than 31.5 Mtoe).

 If a Member State used only the possibility provided in Article 7(2)(c), and count certain
energy savings from energy transformation and transmission sectors towards the required
amount of savings to be reached over the period, then this amount must not be more than
25% - thus, in the example in section B2, not more than 10.5 Mtoe (the individual actions
allowed under point (c) are analysed in section D2 below).

 If a Member State used only the possibility provided in Article 7(2)(d), and counted 'early
action' towards the required amount of savings to be reached over the period, then it could
count savings from individual actions carried out after the end of 2008 that still continue
to deliver energy savings in 2020. This amount must not be more than 25% thus, in the
example in section B2, not more than 10.5 Mtoe.

19. There is no limitation on Member States' choice or combination of these four possibilities
except that, according to Article 7(3), all the selected possibilities taken together must amount
to no more than 25% of the savings required under Article 7(1).

For example, a Member State might reduce the required amount of savings to be achieved by
5.25 Mtoe because of partial exclusion of ETS industries and require savings of 36.75 Mtoe
over the period. It might at the same time decide to count up to 5.25 Mtoe savings from
individual actions after the end of 2008 that still continue to deliver energy savings in 2020.
                                                           
2
 Directive 2003/87/EC of the European Parliament and of the Council of 13 October 2003 establishing a scheme
for greenhouse gas emission allowance trading within the Community as amended by Directive 2009/29/EC of
the European Parliament and of the Council of 23 April 2009 and amending Council Directive 96/61/EC, OJ L
275, 25.10.2003, p. 32.
3
 Alternatively to establish the quantities of energy use in the non-ETS industries, the reported final energy use
figure for the corresponding industrial sector could be multiplied by ETS / non-ETS ratio of greenhouse gas
emissions as reported in the greenhouse gas inventories. 
 

 
C. WHAT POLICY INSTRUMENTS AND WHAT CRITERIA?

20. The following questions need to be considered when establishing which policy measures are
to be used to comply with the requirements of Article 7:

1. What policy measures or combinations are to be applied?
2. What criteria should be fulfilled in the design of the policy measures?
3. Is double counting of energy savings allowed for the purposes of Article 7?

C1. What policy measures or combinations are to be applied?

21. Article 7 sets out that the required amount of energy savings is achieved through national
energy efficiency obligation schemes or other "policy measures". These policy measures need
to be designed to achieve 'end-use energy savings' which are 'among final customers' (as set
out in Article 7(1) and (9); and are defined as 'a regulatory, financial, fiscal, voluntary or
information provision instrument formally established and implemented in a Member State to
create a supportive framework, requirement or incentive for market actors to provide and
purchase energy services and to undertake other energy efficiency improvement measures'
(Article 2,(18)).

This wording excludes policy measures that are primarily intended to support policy
objectives other than energy efficiency or energy services as well as policies that trigger end-
use savings that are not achieved among final consumers.

Examples of such policy measures would be construction of new roads to ease traffic
congestion, various energy grid networks charges, or feed-in tariffs.

22. As regards the choice of policy measures, the Directive speaks of energy efficiency obligation
schemes (described in Article 7(1) to (8)) or 'other' policy measures (described in Article 7(9)
to (11) and Article 20(6)).

Article 7(9) first and second paragraphs state that any combinations of policy measures are
possible provided 'equivalence' is maintained.


23. The energy efficiency obligation schemes, are mandatory schemes, established by a Member
State, that place an obligation on energy providers to achieve savings amongst final
consumers. Requirements relevant to the establishment and operation of obligation schemes
are found in Article 2, definitions 14, 18 to 22, and 24; Article 7(1), (4) to 8; and Annex V,
parts 1, 2 and 4. Relevant provisions are also found in Article 18 (3). The energy providers
subject to obligations under these schemes are 'obligated parties' and are to be designated by
each Member State, on the basis of objective and non-discriminatory criteria, amongst the
energy distributors and/or retail energy sales companies operating on its territory (Article
7(4). Transport fuel distributors or transport fuel retailers operating on a Member State's
territory may also be included, irrespective of whether the energy used in the transport sector
is included in the calculation in Article 7(1) and irrespective of whether individual actions in
the transport sector are allowed to be counted within the schemes.
 
10 

As explained in section B3, Member States must establish how the calculated amount of
energy savings is to be phased over the obligation period.

To allow obligated parties flexibility in how they reach the required savings, Member States
may permit them to obtain energy savings from energy service providers or third parties,
provided there is in place a process of approving these savings (Article 7, (7)(b)).

Energy efficiency obligation schemes can also be used to promote social aims, such as
tackling energy poverty (Article 7(7) (a)).

Member States may allow, following Article 20(6), parties obligated under an energy
efficiency obligation scheme to fulfil their obligations by contributing to the Energy
Efficiency National Fund. The contributed amount should be equal to the investments which
obligated parties would otherwise have to make to achieve the amount of savings they would
be required to achieve.

24. The 'other' or 'alternative' policy measures could take different forms. The following
possibilities are mentioned in Article 7(9) and in Article 20(6) (the list is not exhaustive):

 Energy or CO
2
taxes
These are taxes established by a Member State that have the effect of reducing end-use
energy consumption. Requirements relevant to this measure are found in Article 2 (17),
(18) and (19), Article 7(9) to( 11) and Annex V, parts 3 and 4. The party under these
schemes is an 'implementing public authority', which 'is a body governed by public law
which is responsible for the carrying out or monitoring of energy or carbon taxation,
financial schemes and instruments, fiscal incentives, standards and norms, energy
labelling schemes, training or education'

 Financing schemes and instruments, and fiscal incentives
These are policy measures established by a Member State that lead through a monetary
and fiscal incentive to the application of energy-efficient technology or techniques and
have the effect of reducing end-use energy consumption. Requirements relevant to their
establishment and implementation are found in Article 2(15),(17) and (19), Article 7(9) to
(11) and Annex V, parts 1, 2 and 4. The monitoring of this policy measure must be carried
out by an 'implementing public authority' or 'entrusted party'. An 'entrusted party' is a
legal entity with delegated power from a government or other public body to develop,
manage or operate a financing scheme on behalf of the government or other public body.
In case of the financing schemes or instruments the funding ought to come either only
from public sources (European or national) or from a combination of both public
(European or national) and private (e.g. banks, investment funds, pension funds) sources
explicitly targeting the realisation of individual actions that lead to end-use energy
savings
4
.

 Energy Efficiency National Fund
                                                           
4
In terms of European funding, it is to be noted that Member States shall devote at least 20% of the European
Regional Development Fund allocation for 2014-2020 in more developed regions, 15% in transition regions and
10 to 12% in less developed regions, to renewable energy and energy efficiency.
 
11 
This can be any fund established by a Member State with the purpose of supporting
national energy efficiency initiatives. Requirements relevant to the establishment and
operation of these funds are found in Article 2 (15),(17) and (19), Article 7(9) to (11),
Article 20(6) and Annex V, parts 1, 2 and 4. The monitoring of this policy measure must
be carried out by an 'implementing public authority' or 'entrusted party'. To count for the
purposes of Article 7, the funding ought to come either only from public sources
(European or national) or from a combination of both public (European or national) and
private (e.g. banks, investment funds, pension funds, obligated parties) sources explicitly
targeting the realisation of individual actions that lead to end-use energy savings
5
.

 Regulations and voluntary agreements
These are policy measures established by a Member State that lead to the application of
energy-efficient technology or techniques and have the effect of reducing end-use energy
consumption. These could be legally binding measures that impose specific energy
efficiency technologies or techniques or voluntary agreements where actors - industry or
local authorities - commit to certain actions. Requirements relevant to the establishment
and operation of these policy measures are found in Article 2(16) and (18) to (19), Article
7(9) to (11) and Annex V, parts 1, 2 and 4. Those participating in these policy instruments
are called 'participating parties' and include 'enterprises or public bodies that have
committed themselves to reaching certain objectives under a voluntary agreement, or are
covered by a national regulatory policy instrument'.

 Standards and norms
These are policy measures (such as building codes, minimum performance requirements
for processes) established by a Member State that aim to improve the energy efficiency of,
for example, products, services, buildings and vehicles. Standards and norms that are
'mandatory and applicable in Member States under Union law' do not count; this is
explained further in points 34 and 36 below. Requirements relevant to this measure are
found in Article 2(17), (18) and (19), Article 7(9) to (11) and Annex V, parts 1, 2 and 4.
The parties under these schemes are 'implementing public authority'.

 Energy labelling schemes
These are labelling schemes established by a Member State, with the exception of those
that are mandatory and applicable in that Member States under Union law (e.g. savings
coming from the pure introduction of an Energy Label as required under Energy Labelling
Directive
6
cannot be counted
7
). Requirements relevant to their establishment and
implementation are found in Article 2(17),(18) and (19), Article 7(9) to (11) and Annex V,
parts 1, 2 and 4. It should be noted that careful consideration of the impact of such labels
is required so as to establish the link between the label and the individual actions
attributable to it.
                                                           
5
 Ibid 4. 
6
Directive 2010/30/EU of the European Parliament and of the Council of 19 May 2010 on the indication by
labelling and standard product information of the consumption of energy and other resources by energy-related
products, OJ L 153, 18.6.2010, p. 1. 
7
  Energy labelling of products based on the Energy Labelling Directive can be used as an element of the other
alternative policy measures (e.g. financing or fiscal incentives, energy efficiency obligations, voluntary
agreements). The impact of these alternative policy measures is to be counted following the requirements of
Article 7 and Annex V.  
 
12 

 Training and education, including energy advisory programmes
These are policy measures established by a Member State that lead to the application of
energy-efficient technology or techniques and have the effect of reducing end-use energy
consumption through, for example, training programmes for energy auditors, education
programmes for energy managers or energy advisory programmes for households.
Requirements regarding their establishment and implementation are found in Article 2,
(17), (18) and (19), Article 7(9) to (11) and Annex V, parts 1, 2 and 4. The monitoring of
this policy measure must be carried out by an 'implementing public authority'. It should be
noted that careful consideration of the impact of such measures is required so to establish
the link between the training or education activity and the individual actions attributable to
it.

 Other alternative policy measures
The list provided in Article 7(9) is not exhaustive and other policy measures may be
applied. However, following the requirements of the third sentence of the last
subparagraph of paragraph 9, Member States must explain in their notification to the
Commission how an equivalent level of savings, monitoring and verification is achieved.

25. To reduce the administrative burden and provide for a comprehensive policy framework a
Member State may group all individual policy measures to implement Article 7 into a
comprehensive national energy efficiency programme (Article 7(9) and recital 23).

26. Any combination of the policy instruments mentioned above may be used. Because of the
diverse nature of the challenges for the different end-use sectors, there could be different
policy instruments that target each of these sectors. For example, a Member State could
achieve part of the required savings through a new or existing energy efficiency obligation
scheme; part through new or existing financial policy instruments for the residential sector;
part through agreements with industrial sectors; part through fiscal policies (such as CO
2

taxes); and part through the implementation of the energy audit provisions in Article 8; and
part through local programmes for the promotion of more efficient urban transport. The
impact of all these measures would need to be quantified as described in the various sections
of this note.

 
13 

C2. What criteria should be fulfilled in the design of the policy measures?

27. The concrete design of the policy measures to comply with Article 7 is to be established by
Member States in compliance with the basic requirements and criteria set out in Article 7 and
Annex V. These are summarised in the table below.

Policy measure


Criteria to be met
by the policy measure

Relevant
articles
EE
obligation
schemes
Energy
and CO
2

taxes
Regulations or
voluntary
agreements
Financing schemes & fiscal
instruments, standards and
norms, energy label., training
and education
Relevant articles A7 (1) A7 (9) (a) A7 (9) (c)
A7 (9) (b), (d), (e), (f) and
A20(6)
Lead to the achievement
of the level of ambition
set out in A7 (1)
A7 (1) and
(10) (a)
√ √ √ √
Provide for at least 2
intermediate periods
A7 (10) (a) X √ √ √
Clearly defined
responsibility of:
Obligated party (OP),
Entrusted Party (EP),
Participating party (PP),
Implementing Public
Authority (IPA)
A7 (4),
(10) (b)
√ OP √ IPA √ PP √ IPA or EP
Savings determined in a
transparent manner
A7 (4),
(10) (c)
√ √ √ √
Savings expressed in
final or primary energy
using Annex IV
conversion factors
A7 (10) (d) √ √ √ √
Savings calculated based
on Annex V points (1)
and (2)
A7 (10) (e) √ X √ √
Savings calculated based
on Annex V point (3)
A7 (10) (f) X √ X X
Annual report by PP,
unless not feasible
A7 (10) (g) X X √ X
Data to be provided by
OP, if required
A7 (8) √ X X X
Monitoring of the results A7 (6),
(10) (h)
√ √ √ √
Control system A7 (6),
(10) (i)
√ √ √ √
Data on annual trends
published annually
A7 (8),
(10) (j)
√ √ √ √
Note: √ - indicates that the criterion is required for the particular policy measure, X – indicates that the criterion
is not required for the particular policy measure. ''A'' means Article.

 
 
14 

C3. Is double counting of energy savings allowed for the purposes of Article 7?

28. The combination of several policy measures may result in the realisation of a single individual
action. Article 7(12) is explicit that, in this case, no double counting of energy savings coming
from this individual action is to be made.:

'12. Member States shall ensure that when the impact of policy measures or individual
actions overlaps, no double counting of energy savings is made'.

The method to ensure this is to be decided at national level and must be reported in
accordance with Annex V, part 4, point (f) on calculation methodology.


D. WHICH SECTORS AND INDIVIDUAL ACTIONS ARE TO BE TARGETED

29. In establishing from which sectors and from which individual actions carried out as a result of
policy measures energy savings can be counted, the following questions may arise:

1. Are there limitations as regards the choice of sectors?
2. From which individual actions can savings be counted?
3. When should the individual actions take place?

D1. Are there limitations as regards the choice of sectors?

30. Article 7 aims to trigger energy savings at energy 'end-use' (paragraph 1, second sentence)
and there are no limitations as to which final energy use sectors can be targeted with the
national policy measures put in place to implement this Article. Savings from policy measures
in the transport sector and ETS industries may be counted, even if these sectors' energy use
has been excluded from the calculation of the overall amount of energy savings as described
in section B1 of this note.

31. In addition to end-use energy savings, some Member States may, as described in section B4
above, decide to target - within the 25% limit set out in Article 7(2) and (3) - certain 'supply
side' savings from the energy transformation, distribution and transmission sectors, including
efficient district heating and cooling infrastructure (for details see point 38 below).

D2. From which individual actions can savings be counted?

32. To quantify the impact of policy measures, only energy savings that are a result of real
'individual actions' that result from the implementation of these policy measures are to be
taken into account. Savings can be counted from any individual actions that (i) save energy
and (ii) are undertaken as a result of a policy measure of a Member State. This follows from
the following definitions in Article 2:

'(18) 'policy measure' means a regulatory, financial, fiscal, voluntary or information
provision instrument formally established and implemented in a Member State to
create a supportive framework, requirement or incentive for market actors to provide
and purchase energy services and to undertake other energy efficiency improvement
measures;
 
15 

(19) 'individual action' means an action that leads to verifiable, and measurable or
estimable, energy efficiency improvements and is undertaken as a result of a policy
measure;'

33. Annex V, part 2, point (c) states that in order to be taken into account,

''(c) the activities of the obligated, participating or entrusted party must be demonstrably
material to the achievement of the claimed savings;''.

It follows from this 'materiality test' that the automatic rolling out of EU legislation, or
autonomous improvements because of, for example, market forces or technological
developments, cannot be taken into account. Member States may not count actions that would
have happened anyway. The activities of the national public sector parties that are
implementing the policy measure must be 'material' to the carrying out of the action. The
term 'material' means that the party in question must have contributed to the realisation of the
specific individual action in question, and that the subsidy or involvement of the obligated,
participating or entrusted party must not have had what is clearly only a minimal effect in the
end user’s decision to undertake the energy efficiency investment. The term 'demonstrably'
means that the Member State must be able to show that this is so.

34. In addition to this materiality test, Annex V, part 2, point (a) and part 3, point (a) set out that
in some cases, only savings that go beyond the minimum requirements originating from EU
legislation can count. This is relevant for individual actions that are a result of energy
efficiency obligation schemes, alternative policy measures and a national energy efficiency
fund, are related to, for example, the following EU laws :

 For products – the requirements established by implementing measures under the
Ecodesign Directive
8
;
 For new passenger cars and light commercial vehicles – the emission performance
standards established by Regulations 443/2009
9
and 510/2011
10
;
 For taxes – the minimum levels of taxation applicable to fuels as required in Council
Directive 2003/96/EC on restructuring the Community framework for the taxation of
energy products and electricity
11
or in Council Directive 2006/112/EC on the common
system of value added tax
12
.

When these legal texts are modified or new implementing measures are adopted the new
levels will apply.
                                                           
8
Directive 2009/125/EC of the European Parliament and of the Council of 21 October 2009 establishing a
framework for the setting of ecodesign requirements for energy-related products (recast), OJ L 285, 31.10.2009,
p. 10.
9
Regulation (EC) No 443/2009 of the European Parliament and of the Council of 23 April 2009 setting emission
performance standards for new passenger cars as part of the Community’s integrated approach to reduce CO2
emissions from light-duty vehicles, OJ L 140, 5.6.2009, p. 1.
10
Regulation (EU) No 510/2011 of the European Parliament and of the Council of 11 May 2011 setting emission
performance standards for new light commercial vehicles as part of the Union's integrated approach to reduce
CO
2
emissions from light-duty vehicles, OJ L 145, 31.5.2011, p. 1.
11
Council Directive 2003/96/EC of 27 October 2003 restructuring the Community framework for the taxation of
energy products and electricity, OJ L 283, 31.10.2003, p. 51.
12
Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax, OJ L347,
11.12.2006, p. 1.
 
16 

35. By contrast, where the required energy performance is determined by national policy choices
which are not a result of mandatory and applicable EU requirements, then for the individual
actions that are a result of these policy measures all of the resulting energy savings can be
attributed to these individual actions.

36. In addition to the limitations referred to in point 34, the Directive imposes additional
limitations as regards the possibility to count savings from certain alternative policy measures.
For alternative policy measures (other than taxation), these – as set out in Article 7(9)(d) and
(e) – are:

'(d) standards and norms that aim at improving the energy efficiency of products and
services, including buildings and vehicles, except where these are mandatory and
applicable in Member States under Union law;

(e) energy labelling schemes, with the exception of those that are mandatory and
applicable in the Member States under Union law;'

The qualification related to 'mandatory and applicable in Member States under Union law'
means that, when concrete energy performance levels or labelling schemes are laid down in
EU legislation, then the energy savings stemming from individual actions that result from
automatic transposition of these levels cannot be counted as an alternative policy measure. It
is only if the nationally established levels are more ambitious than those required at EU level
– as far as this is legally possible – that the difference between the mandatory EU levels and
the concretely established levels can be counted.

When there are other alternative policies (such as financing, fiscal, voluntary agreements) that
accelerate the uptake of, for example, more efficient products, buildings, vehicles, or services,
then the full credit of the savings coming from the individual action can be counted for all but
for those listed in Annex V, part 2, point (a), and part 3, point (a). For them the levels set out
as a result of the implementation of the EU legislation listed in Annex V, part 2, point (a), and
part 3, point (a), apply as minimum starting points for calculation of the energy savings from
all individual actions.

37. There are no limitations on the type of end-use energy saving measures that can be counted.

38. By contrast, only limited savings from individual actions that save energy in energy
generation, transformation and transmission can be counted. First, the amount of energy
savings coming from such measures is limited by Article 7 (3) (as explained in section B4).
Second, these individual actions must result from the implementation of the requirements in
Article 14(4), Article 14(5)(b) and Article 15(1) to (6) and (9) of the Directive. In summary,
supply-side energy savings can be counted within the '25% bundle', if they come from
individual actions realised as a result of:

 Policy measures by Member States to develop efficient district heating and cooling
infrastructure and/or to accommodate the development of high-efficiency cogeneration
and the use of heating and cooling from waste heat and renewable energy sources;
 The energy savings achieved when following a cost-benefit analysis a conversion is
carried out, during a substantial refurbishment, to high-efficiency cogeneration of an
 
17 
existing thermal electricity generation installation with a total thermal input exceeding 20
MW;
 Policy measures by Member States to increase the efficiency of transmission and
distribution; or
 Policy measures by Member States that encourage operators of installations
undertaking the combustion of fuels with total rated thermal input of 50 MW or more to
improve their annual average net operational rates.

D3. When should the individual actions take place?

39. As "new" savings are required, not everything that Member States have done at any time in
the field of end-use energy efficiency can count for the purposes of Article 7. The Article
contains rules to define when actions need to take place in order to be counted towards the
energy savings required.

40. Two broad approaches could have been taken:

(a) The requirements of the Article could have had to be fulfilled by new policy measures.
Savings from policy measures that existed before a given cut-off date could have been
excluded; or

(b) The requirements of the Article could have had to be fulfilled by new individual
actions. Savings from individual actions undertaken after the cut-off date could have
been counted, even if the policy measure that had given rise to the actions – for
example, a funding scheme – had been introduced before that date.

The text takes the second approach, i.e. savings from individual actions carried out within the
obligation period (after 1 January 2014 and until 31 December 2020) can be counted, even if
the policy measure that gave rise to the actions was introduced before that date.

For example, if a Member State established a funding scheme for window replacements in
2005, which continues to be in place in 2014, financing 100 000 window replacements per
year, the savings from individual actions – windows replaced – in 2014 and onwards can be
counted. If this Member States has decided to use the possibilities of Article 7(2)(d) (see
section B4 above), savings from windows replaced from end-2008 until end-2013 can also be
counted.

41. Article 7, paragraph 7, point (c) states that:

'7. 'Within the energy efficiency obligation scheme, Member States may:

[….]

(c) allow obligated parties to count savings obtained in a given year as if they had
instead been obtained in any of the four previous or three following years'.

This provision, in the case of energy efficiency obligation schemes, stipulates that Member
States may give additional flexibility to obligated parties to count, towards the required
amount of energy savings they have to achieve, energy savings from individual actions
obtained four years before or three years after the year in which they are actually realised.
 
18 

In considering this provision, Member States should bear in mind that the temporal scope for
this Article is established in its first paragraph, under which obligated parties must achieve an
energy efficiency target equivalent to new savings of 1.5% each year from January 2014 to 31
December 2020. A limited derogation to this temporal scope is provided in Article 7(2) and
(3), and the legislator has made this subject to specific conditions being satisfied such as a cap
of 25% and prior notification to the Commission.
E. HOW TO CALCULATE THE ENERGY SAVINGS FROM EACH INDIVIDUAL ACTION?
 
42. The methodology for Article 7 has to answer the following questions:

1. What quantity of energy saving can be attributed to each action?
2. How should the "lifetime" of energy efficiency improvements be accounted for?

E1. What quantity of energy savings can be attributed to each action?

43. The rules on what quantity of energy savings can be attributed to each individual action are to
be established by Member States in accordance with the framework set in Article 7 and
Annex V.

44. For all policy measures (including those stemming from energy efficiency obligation schemes
and all alternative policy measures except taxation) the principles in Annex V, parts 1 and 2,
must be followed. In part 1, four methods for calculating the savings for different types of
action are mentioned: 'deemed savings' (standard values for each measure), 'metered savings'
(before-and-after measurement), 'scaled savings' (based on engineering estimates) and
'surveyed savings' (based on consumer response). When applying these four methods the
levels that are set out in Annex V, part 2, points (b) and (c) need to be respected.

For energy efficiency obligations, deemed and scaled savings have to date been the most
commonly used methodologies.

Member States will need to determine the eligible energy efficiency measures for which there
are independently proven or well established energy saving norms. For these measures,
deemed or engineering savings can be used. It is recommended that Member States publish
information on how the deemed or scaled savings are determined and what quantity of
savings is attributed to different individual measures and to ensure that this information is
openly accessible. In particular the scaled savings ought to be defined on the 'basis of
nationally established methodologies and benchmarks by qualified or accredited experts that
are independent of the obligated, participating or entrusted parties involved'. Other measures
will have to have their energy savings metered or surveyed to determine their values.

45. For policy measures that are taxes, the principles in Annex V, part 3, point (a) need to be
followed. To calculate energy savings from taxes, elasticities of demand with respect to price
are to be used to estimate how the price increases caused by the tax only (i.e. not from
inflation or other policies) would lead to changes in consumers' behaviour.

 
19 
For fiscal incentives which, for example, provide tax reduction to consumers if they apply
certain energy savings measure or are part of a voluntary agreement, the rules set out in
Annex V, parts 1 and 2 apply.

46. If several types of policy measures are used in combination, e.g. an energy efficiency
obligation scheme and fiscal incentives or fiscal incentives, training and education and
labelling, double counting must be avoided and it must be clear which of the achieved savings
are to be attributed to each of these measures, as stated in Article 7(12).

E2. How should the "lifetime" of energy efficiency improvements be accounted for?

47. Having decided what amount of energy savings is to be attributed to each individual action,
the next step is to establish over what period this action will continue to deliver energy
savings. Article 7 focuses on the quantity of savings that must be achieved by 2020 and the
text of Annex V, part 2, point (e) states that:

'(e) calculation of energy savings shall take into account the lifetime of savings. This may
be done by counting the savings each individual action will achieve between its
implementation date and 31 December 2020. Alternatively, Member States may
adopt another method that is estimated to achieve at least the same total quantity of
savings. When using other methods, Member States shall ensure that the total
amount of energy savings calculated with these other methods does not exceed the
amount of energy savings that would have been the result of their calculation when
counting the savings each individual action will achieve between its implementation
date and 31 December 2020. Member States shall describe in detail in their first
National Energy Efficiency Action Plan according to Annex XIV to this Directive,
which other methods they have used and which provisions have been made to ensure
this binding calculation requirement;'

Therefore, a Member State may choose to attribute to each individual action the 'real' savings
that this action will achieve between the year of its implementation and 2020. This method is
called hereafter the "straightforward" method.

48. Alternatively, and in particular to promote long-term energy efficiency improvements,
Member States may deviate from this method - provided that their choice still leads to the
required quantity of energy savings, calculated as described in points 52 to 55 below, actually
being achieved by 2020.

49. To illustrate the 'straightforward' method, an individual action – say a window replacement –
could be envisaged that saves 1 tonne of oil equivalent (toe) of energy consumption per year,
and that goes on delivering this saving year after year. Under the straightforward method, if
the action is carried out in 2014, it will save 1 toe in 2014 and 1 toe in each subsequent year
up to 2020, for a total of 7 toe. If the action is carried out in 2015, it will save 1 toe each year
from 2015 to 2020, for a total of 6 toe. If it is carried out in 2020, it will contribute to the
requirement only during that single year, for a total of 1 toe.

50. By contrast, a shorter-lived action – e.g. an information campaign – may save 1 toe in the year
of implementation and nothing thereafter. Again, under the 'straightforward' method whatever
the year of implementation between 2014 and 2020, its contribution will be 1 toe. It should be
noted that Member States need to ensure that the overall amount of energy savings as
 
20 
explained in Section B2 is reached. For example, if a Member State introduces predominantly
individual actions with short-term lifetimes at the beginning of the seven-year obligation
period, then it would need to do additional measures so to reach the required savings.

51. The 'straightforward' method clearly fulfils the condition that the calculation method must
lead to the required quantity of savings actually being achieved by 2020. But it has two
disadvantages. First, as shown in point 49, this method can give different values to the same
action, depending on the year it is implemented. Second, because it aims to calculate savings
up to 2020, it allows a maximum of 7 years' worth of savings to be taken into account – yet
some actions deliver savings over a much longer period (new windows, for example, can last
25 years). The straightforward method may not give enough incentive for these long-lived
actions.

52. Member States that have savings schemes in place have addressed this problem in different
ways – all more complicated than the 'straightforward' approach.

53. One alternative to the 'straightforward method' is to give each action an 'index value' that
reflects its expected lifetime. Under this method, an information campaign could be given an
'index value' of 0.25, while a window replacement could be given an 'index value' of 6. If each
of these actions saves 1 toe per year, then the saving attributed to an information campaign
would be (1 x 0.25) = 0.25 toe. The saving attributed to a window replacement, whatever the
year of implementation, would be (1 x 6) = 6 toe. A Member State using this method must
ensure that the result is not higher than the one given by the 'straightforward' approach
13
.

54. A second alternative is to 'cap' the lifetimes attributed to individual actions. For example, a
'cap' of 5 years could be chosen. Under this method, the saving attributed to an information
campaign would be 1 toe. The saving attributed to a window replacement, whatever the year
of implementation, would be (1 x 5) = 5 toe. Again, a Member State using this method must
ensure that the result is not higher that one given by the "straightforward" approach.

55. A third alternative is to use full lifetimes, but to 'discount' future-year savings. For example, a
discount rate of 10% per year could be chosen. Under this method, the saving attributed to an
information campaign would be 1 toe. The saving attributed to an individual action with a
lifetime of 4 years, saving 1 toe each year, would be:

                                                           
13
  Imagine a Member State has to save 35 Mtoe over the period and expects to achieve this by 1 information
campaign per year delivering, e.g. 1 million actions (the effectiveness of each action is 1 toe as demonstrated by
a survey), and 1 million windows replacements per year (the deemed value of each is estimated to be 1 toe).
Under the 'straightforward method', each of the information campaigns would deliver 1 Mtoe in the year in
which it is conducted or 7 Mtoe in total for the seven campaigns over the 7 years by 2020. The 1 million window
replacements will deliver savings equal to 7 Mtoe for the 1 million windows replaced the first year, 6 Mtoe for
the 1 million windows replaced the second year, 5 Mtoe for the third, 4 Mtoe for the fourth, 3 Mtoe for the fifth,
2 Mtoe for the sixth, 1 Mtoe for the seventh, or in total 28 Mtoe by 2020. The savings from information
campaigns and windows replacements thus give 7 Mtoe plus 28 Mtoe or in total 35 Mtoe.

Under the 'index value' method, a Member State might choose to apply an index value of 0.25 for information
campaigns and 4.75 for window replacements. The information campaigns would then count as delivering 0.25
Mtoe in the year in which they are conducted, or 1.75 Mtoe in total for the seven campaigns over the 7 years by
2020. The 7 million window replacements done over the period will deliver savings of 7 Mtoe multiplied by the
factor of 4.75, giving 33.25 Mtoe. The savings from information campaigns and window replacements would
then be counted as 1.75 Mtoe plus 33.25 Mtoe or in total 35 Mtoe.
 
21 
Year 1 1.0 toe
Year 2 (1.0 x 0.9) = 0.9
Year 3 (0.9x0.9) = 0.81
Year 4 (0.81x0.9) = 0.73
Total 3.44 toe

The saving attributed to a window replacement with a lifetime of 25 years, whatever the year
of implementation, would be 9.28 toe. Again, a Member State using this method must ensure
that the result is not higher than the one given by the 'straightforward' approach.
F. WHAT MEASUREMENT, CONTROL, QUALITY, MONITORING AND VERIFICATION
REQUIREMENTS?

56. Proper measurement, control, quality, monitoring and verification of savings is to be ensured
following the provisions of Article 7, paragraphs 6 and 10:

'6. Member States shall ensure that the savings stemming from paragraphs 1, 2 and 9 of
this Article and Article 20(6) are calculated in accordance with points (1) and (2) of
Annex V. They shall put in place measurement, control and verification systems
under which at least a statistically significant proportion and representative sample
of the energy efficiency improvement measures put in place by the obligated parties
is verified. That measurement, control and verification shall be conducted
independently of the obligated parties.

[…]

10. Without prejudice to paragraph 11, the criteria for the policy measures taken
pursuant to the second subparagraph of paragraph 9 and Article 20(6) shall be as
follows:

[…]

(h) monitoring of the results is ensured and appropriate measures are envisaged if
the progress is not satisfactory;

(i) a control system is put in place that also includes independent verification of a
statistically significant proportion of the energy efficiency improvement
measures;'

and of Annex V, part 2:

'2. In determining the energy saving for an energy efficiency measure for the purposes
of Article 7(1) and (2), and points (b), (c), (d), (e) and (f) of Article 7(9), and Article
20(6) the following principles shall apply:

[…]

(g) in promoting the uptake of energy efficiency measures, Member States shall
ensure that quality standards for products, services and installation of measures are
 
22 
maintained. Where such standards do not exist, Member States shall work with
obligated, participating or entrusted parties to introduce them.''

57. The following relevant elements are required to be reported in accordance with Annex V, part
4,

' (i) quality standards;

(j) monitoring and verification protocols and how the independence of these from
the obligated, participating or entrusted parties is ensured;

(k) audit protocols'.

58. Member States have to lay down rules on effective, proportionate and dissuasive penalties
applicable in case of non-compliance with the national provisions adopted pursuant to
Articles 7 and 18(3) and must take the necessary measures to ensure that they are
implemented.
G. WHAT REPORTING REQUIREMENTS?

59. Article 7 and Annex V require that:

 By 5 December 2013, each Member State has to report:

1. The amount of energy savings to be achieved over the obligation period and how this
is to be calculated. This may include an explanation of whether the possibilities in
Article 7(2) are to be used.

2. Their proposed detailed methodology for the operation of energy efficiency obligation
schemes and, for the purposes of Article 7(9) and Article 20(6). This report has to be
based on the details provided in Annex V, part 4.

3. The policy measures that Member States plan to adopt for the purposes of Article 7(9)
last subparagraph, and Article 20(6), following the framework provided in Annex V,
point 4, and showing how they would achieve the required amount of savings. In the
case of the policy measures referred to in the second subparagraph of paragraph 9 and
in Article 20(6) this notification must demonstrate how the criteria in Article 7(10)
are met. In the case of policy measures other than those referred to in the second
subparagraph or in Article 20(6) the Member State must explain how an equivalent
level of savings, monitoring and verification is achieved.

The Commission may make suggestions for modifications in the three months following
notification.

In both cases the Member State can send planned or proposed policy measures and
methodology, or 'finalised' versions.

 By 30 April 2014 and every three years thereafter as part of its National Energy
Efficiency Action Plans, each Member State has to report:
 
23 

A number of issues as provided in the Commission implementing decision of 22 May
2013 (2013/242/EU) establishing a template for National Energy Efficiency Action Plans
and the related guidance document (SWD(2013) 180).

 By 5 June 2014, each Member State has to report:

Article 28 of the EED sets out the general transposition deadline of 5 June 2014, by when
Member States must formally notify the legislation by which they transpose the Directive
into national law. Therefore, each Member State needs to send all finalised measures for
the transposition of Article 7 and Article 20(6) by that date.

In addition, if a Member State makes use of the exceptions under Article 7(2), it must
notify that fact to the Commission by 5 June 2014 and how this is taken into account in
the notified legislative framework. This should include which of the possibilities listed
under Article 7(2) are to be applied and how the requirements of Annex V on the
calculation of energy savings and of Article 7(3) on maximum reduction possible are met.
A calculation showing their impact on the amount of energy savings referred to in Article
7(1) should also be included.

If a Member State decides to modify the policy framework implementing Article 7 after
its June 2014 notification, it should ensure that a coherent policy framework, which
safeguards meeting the overall target of Article 7, is retained and safeguarded and that all
related changes are notified to the Commission.

 Notification methods:

Member States should notify their legal provisions transposing the Directive into national
law using the 'NIF' database. To ensure an efficient transfer of information the use of the
'NIF' database for the other notifications required under the Directive, such as Article 7(3)
and (9) and Annex V (4) is to be encouraged.

60. Each Member State must also:

 For energy efficiency obligation schemes – publish, once a year starting from 2014
where data are available, the energy savings achieved by each obligated party, or each
sub-category of obligated party, and in total under the scheme, as required under Article
7(6); and

 For alternative policies – publish annually starting from 2014 where data are
available, data on the annual trend of energy savings, as required under Article 7(10)(f).

61. For participating and obligated parties the following requirements are set out:

 Participating parties – they must provide on an annual basis a report of the energy
savings achieved, unless not feasible and made publicly available, as required under
Article 7(10)(g);

 
24 
 Obligated parties – they must provide, at a Member State's request which may not be
more than once per year, specific (aggregate) information on their final consumers, as
required under Article 7(8).
H. LIST OF STUDIES AND PAPERS

62. The following studies provide additional non-mandatory guidance on energy efficiency
obligation schemes and alternative policies:

Eoin Lees. 2012. Energy efficiency obligations - the EU experience. Cited at:
http://www.eceee.org/press/2012/energy-efficiency-obligations-the-EU-
experience/resolveuid/bf45556b241774005c8e990bb7ce36ca
Joint European Commission and eceee seminar on Energy Efficiency Obligations. 2011.
Seminar materials available at: http://www.eceee.org/eceee_events/energy-efficiency-
obligations
Joint Research Centre (JRC). 2010. Voluntary agreements in the fields of Energy Efficiency
and emission reduction: review and analysis of the experience in member states of the
European Union. Cited at:
http://ec.europa.eu/energy/efficiency/studies/doc/2010_05_jrc_va_study.pdf
JRC. 2010. Financing Energy Efficiency: Forging the Link between Financing and Project
Implementation. Cited at:
http://ec.europa.eu/energy/efficiency/doc/financing_energy_efficiency.pdf
JRC. 2009. Energy Saving obligations and tradable white certificates. Cited at:
http://ec.europa.eu/energy/efficiency/studies/doc/2009_12_jrc_white_certificates.pdf

63. On monitoring and verification of energy savings the following reports may be useful:

eceee and RAP. 2012. Determining Energy Savings for Energy Efficiency Obligation
Schemes. Cited at: http://www.eceee.org/EED/Rap-ESO-report
Energy Efficiency Programs,” Proceedings of the 2010 International Energy Program
Evaluation Conference, Paris, France: IEPEC. Cited at:
http://www.iepec.org/2010PapersTOC/2010TOC.htm
Energy Efficiency Services Club (ClubS2E). Energy Efficiency Services Measurement and
Verification Guide 2009 (in French). Cited at:
http://www.clubs2e.org/Content/Default.asp?PageiD=285
International Performance Measurement and Verification Protocol (IPMVP). 2012. Cited at:
http://www.evo-world.org/index.php
Vine, E., N. Hall, K. Keating. M. Kushler and R. Prahl. 2010. “Emerging Issues in the
Evaluation of Energy Efficiency Programmes
 

EN EN


EUROPEAN
COMMISSION
Brussels, 6.11.2013
SWD(2013) 447 final

COMMISSION STAFF WORKING DOCUMENT
Guidance note on Directive 2012/27/EU on energy efficiency, amending Directives
2009/125/EC and 2010/30/EC, and repealing Directives 2004/8/EC and 2006/32/EC

Article 8: Energy audits and energy management systems



Accompanying the document
COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN
PARLIAMENT AND THE COUNCIL



Implementing the Energy Efficiency Directive – Commission Guidance
{COM(2013) 762 final}
{SWD(2013) 445 final}
{SWD(2013) 446 final}
{SWD(2013) 448 final}
{SWD(2013) 449 final}
{SWD(2013) 450 final}
{SWD(2013) 451 final}


1
Table of contents
A. INTRODUCTION ................................................................................................................................ 2
B. LEGAL AND POLICY CONTEXT ......................................................................................................... 3
C. OBLIGATION TO PROMOTE THE GENERAL AVAILABILITY OF ENERGY AUDITS ................................ 5
D. SPECIFIC OBLIGATION FOR LARGE ENTERPRISES TO CARRY OUT REGULAR ENERGY AUDITS ......... 6
E. ENSURING HIGH-QUALITY AUDITS .................................................................................................. 9
F. TRAINING PROGRAMMES FOR THE QUALIFICATION OF ENERGY AUDITORS AND AVAILABILITY OF
QUALIFICATION, ACCREDITATION AND CERTIFICATION SCHEMES ........................................................ 13
G. OBLIGATIONS TO DEVELOP PROGRAMMES TO ENCOURAGE SMES TO UNDERGO ENERGY AUDITS
AND TO RAISE AWARENESS AMONG HOUSEHOLDS ................................................................................ 14
H. NATIONAL SUPPORT SCHEMES....................................................................................................... 14
 

2
ARTICLE 8: ENERGY AUDITS AND ENERGY MANAGEMENT SYSTEMS
A. INTRODUCTION

1. An 'energy audit' means a systematic procedure with the purpose of obtaining adequate
knowledge of the energy consumption profile of a building or group of buildings, an industrial
or commercial operation or installation or a private or public service, identifying and
quantifying cost-effective energy saving opportunities, and reporting the findings; (see
corresponding definition in Article 2(25)).

2. Energy audits are an essential tool to achieve energy savings. They are necessary to assess the
existing energy consumption and identify the whole range of opportunities to save energy.
This should then result in proposals of concrete saving measures for the management, public
authorities or home owners. Furthermore, energy audits allow the identification and
prioritization or ranking of opportunities for improvement. In this way, energy audits tackle
the information gap that is one of the main barriers to energy efficiency.

3. Through the identification of energy saving possibilities and proposed recommendations for
follow-up, audits are also the basis for the development of a market for energy services. The
result of an energy audit may be, for example, a recommendation for window replacement in
a household, for insulation of piping in a factory or for setting up a comprehensive energy
management system in commercial buildings, among other recommendations. Furthermore,
energy audits are not only centred on technical solutions such as replacements or retrofits, as
significant opportunities for improvement may also exist in connection to the operation, both
industrial and commercial, for example the more efficient operation and continual
optimization of operating procedures, control parameters, logistic and layout optimization and
maintenance planning. Energy audits may also be part of a broader environmental audit that
considers storage possibilities, connection to district heating and cooling networks or potential
for demand response in industries and commercial buildings. A private or public service, e.g.
city public transport system, may also be subject to an energy audit that results in the
identification of cost-effective energy saving opportunities.

4. Having an energy management system in place requires enterprises to carry out detailed
energy review processes, which also result in the systematic identification and reporting of
energy saving opportunities. This may also be the case for enterprises implementing
environmental management systems.

5. Article 8 of Directive 2012/27/EU of 25 October 2012 on energy efficiency
1
(the Energy
Efficiency Directive – hereafter also 'the EED' or 'the Directive') requires Member States to
comply with the following main obligations:

                                                           
1
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 2012/30/EU and repealing Directives 2004/8/EC and 2006/32/EC, OJ L
315, 14.11.2012, p.1.

3
a) Promote the availability of high quality and cost-effective energy audits to all final
customers, fulfilling minimum criteria based on Annex VI and carried out by qualified
and/or accredited experts or supervised by independent authorities ;
b) Ensure mandatory and regular audits for large enterprises fulfilling minimum criteria
based on Annex VI and carried out by qualified and/or accredited experts or
supervised by independent authorities;
c) Establish transparent and non-discriminatory minimum criteria for energy audits,
based on Annex VI of the Directive;
d) Establish in national legislation requirements for energy auditors, and for supervision
by national authorities,
e) Ensure the development of programmes to encourage small and medium enterprises
(SMEs) to undergo energy audits and to implement the recommendations from these
audits; and
f) Ensure the development of programmes to raise awareness among households about
the benefits of energy audits.

The Article gives scope for the provision of incentives for the implementation of
recommended measures.
B. LEGAL AND POLICY CONTEXT

6. Obligations for Member States in relation to energy audits already existed in the Energy
Services Directive ('the ESD')
2
but under the EED their obligatory nature is stronger, and
audits are made compulsory for large enterprises. Provisions on qualification of experts,
independent control systems and quality assurance and energy performance certificates also
exist in Directive 2010/31/EU on the energy performance of buildings (recast of the earlier
Directive 2002/91/EC, hereinafter ‘the EPBD’)
3
. The relationship between these is explained
below.

7. Article 8(1) and Article 8(4) of the Directive establish the two main obligations for Member
States to promote the availability of energy audits and to ensure that large enterprises carry
out regular energy audits. Whilst the obligation for large enterprises to carry out regular
energy audits is new, an obligation for Member States to ensure the availability of efficient
high-quality energy audit schemes, which are carried out in an independent manner, to all
final consumers, including smaller domestic, commercial and small and medium-sized
industrial customers was already established in similar terms in Article 12 of the ESD. In
cases where energy audits were not commercially available for certain market segments, such
as households, Member States had the obligation to ensure the availability of such audits. The
EED also introduces additional expertise and supervision requirements for energy audits and
an obligation for Member States to ensure the development of programmes to encourage
SMEs to undergo energy audits and to raise awareness among households. Article 12(3) of the
ESD specified that audits resulting from schemes based on voluntary agreements between
organisations of stakeholders and an appointed body, by the Member States concerned in
accordance with Article 6(2)(b) of the ESD, were to be considered as having fulfilled the
                                                           
2
Directive 2006/32/EC of the European Parliament and of the Council of 5 April 2006 on energy end-use
efficiency and energy services, OJ L 114, 27.4.2006, p.64.
3
Directive 2010/31/EU of the European Parliament and of the Council of 19 May 2010 on the energy
performance of buildings (recast), OJ L 153, 18.6.2010, p.13.

4
requirements for Member States to ensure the availability of energy audits. Article 8(2) and
8(5) of the EED maintain the possibility for Member States to conclude voluntary agreements
for the implementation of energy audits, both in SMEs and in large enterprises.

8. Article 11 of the EPBD imposes the obligation on Member States to establish a system of
certification of the energy performance of buildings. This makes it possible for owners or
tenants of a building to assess its energy performance and compare it with others. According
to Article 12 of the ESD, certification in accordance with Article 7 of Directive 2002/91/EC
on the energy performance of buildings
4
must be regarded as equivalent to an energy audit
meeting the requirements set out in Article 12(1) and (2) of the ESD. However, in recognition
of the wider scope of energy audits under Article 8 of the EED, the EED no longer keeps this
equivalence.

9. Therefore, energy performance certification in accordance with Article 11 of the EPBD, and
inspections in accordance with its Articles 14 and/or 15, cannot automatically be regarded as
equivalent to energy audits under Article 8 of the EED (which are e.g. based on measured
data on energy consumption and load profiles for electricity, examine - where applicable -
industrial operations or installations, including transportation, and allow detailed and
validated calculations to provide information on potential savings). However, it is possible
that in specific cases (for instance when auditing office buildings of a large enterprise)
certification and/or inspections under the EPBD in a given Member State may fulfil the
requirements of Article 8 and Annex VI of the EED.

10. Article 8 of the ESD establishes that Member States must ensure, where they deem it
necessary, the availability of appropriate qualification, accreditation and/or certification
schemes for the providers of energy audits. Complementing the provisions of Article 8,
Article 16 of the EED on the availability of qualification, accreditation and certification
schemes establishes that where a Member State considers that the national level of technical
competence, objectivity and reliability is insufficient, the Member State must ensure that, by
31 December 2014, certification and/or accreditation schemes and/or equivalent qualification
schemes, including, where necessary, suitable training programmes, are available for the
providers of energy audits.

11. Certification aspects are also part of the EPBD. Its Article 17 establishes that Member States
must ensure that the energy performance certification of buildings and the inspection of
heating systems and air-conditioning systems are carried out in an independent manner by
qualified and/or accredited experts, whether operating in a self-employed capacity or
employed by public bodies or private enterprises. Experts must be accredited taking into
account their competence. This Article requires that Member States must make available to
the public information on training and accreditation. Member States must ensure that
regularly updated lists of accredited companies which offer the services of such experts are
made available to the public. Similarly, under Article 17(1) of the EED on information and
training, Member States must ensure that information on available energy efficiency
mechanisms and financial and legal frameworks is widely disseminated to all relevant market
actors such as consumers or environmental and energy auditors.

                                                           
4
Directive 2002/91/EC of the European Parliament and of the Council of 16 December 2002on the energy
performance of buildings, OJ L1, 4.1.2003, p.65.

5
12. Where it is relevant, the Commission services encourage Member States to explore synergies
between the transposition and implementation of Article 8 of the Energy Efficiency Directive
and of the implementation of the EPBD (in particular Articles 17 and 18
5
), especially as
regards the national supervisory authorities set up under national legislation to make sure that
energy audits are cost effective and carried out in an independent and cost-effective manner
by qualified and/or accredited experts according to certain qualification criteria or
implemented and supervised by independent authorities under national legislation. These
qualification criteria may nevertheless differ substantially given that the scope of energy
audits under the EED is wider than the certification of buildings under the EPBD. In
particular, the focus of energy audits under the EED – even for buildings and households –
goes beyond the technical characteristics of the buildings and includes e.g. all electricity uses
and behavioural changes such as impact of occupant activity on energy consumption.

13. The Commission services equally encourage Member States to explore synergies and ensure
consistency between the qualification/certification criteria and schemes of the EED and the
EPBD when transposing and implementing their legal provisions. Accordingly, qualified
energy auditors in the framework of the EED could be recognised as qualified experts to
deliver EPCs in buildings. Furthermore, qualified experts to deliver EPCs in buildings could
be targeted for training to become qualified energy auditors.

14. This note aims to provide guidance to Member States on how to apply Article 8 of the EED. It
states the views of the Commission, does not alter the legal effects of the Directive and is
without prejudice to the binding interpretation of Article 8 as provided by the Court of J ustice.
C. OBLIGATION TO PROMOTE THE GENERAL AVAILABILITY OF ENERGY AUDITS

15. Under Article 8(1) of the EED, Member States must promote the availability to all final
customers of high quality energy audits which are cost effective and (a) carried out in an
independent manner by qualified and/or accredited experts according to qualification criteria;
or (b) implemented and supervised by independent authorities under national legislation.
These criteria (cost-effective, undertaken by qualified/accredited experts and supervised by
independent authorities) have to be applied to energy audits promoted by Member States'
programmes - e.g. information campaigns or other support actions - and to those referred to
under Article 8(4) (see section D1). As a consequence, Member States have to ensure that
energy audits become available to all final customers and check that they fulfil the above-
mentioned criteria. Article 8(1) does not impose a specific obligation to carry out energy
audits.

16. Energy audits must be carried out by either "qualified" or "accredited" experts. Accreditation
is a public authority activity that ensures the continuous control of the technical competence
of conformity assessment bodies. It ensures that audits carried out by experts meet the
requirements of Annex VI of the EED. While there is a possibility to have qualified experts, it
may be more difficult to demonstrate their competence through qualification schemes rather
than accreditation. Regulation 765/2008
6
provides the EU definition of “accreditation”. It
                                                           
5
These articles include provisions on independent experts and independent control system, respectively.
6
Regulation (EC) No. 765/2008 defines 'accreditation' as 'an attestation by a national accreditation body that a
conformity assessment body meets the requirements set by harmonised standards and, where applicable, any

6
should be noted, however, that accreditation according to Regulation 765/2008 is normally
provided to legal rather than natural persons. Qualification should therefore rather apply to
those cases where an individual aims to become active as an expert.
7


17. Article 8(1) refers to promoting the availability to 'all final customers' of high quality energy
audits. 'Final customer' is defined in Article 2(23), and means a natural or legal person who
purchases energy for own end use.

18. Energy audits must not include clauses preventing the findings of the audit from being
transferred (on condition that the customer does not object) to any qualified/accredited energy
service provider. Energy audits referred to under Article 8(1) of the EED must be compliant
with relevant data protection legislation, and in particular with Directive 95/46/EC
8
.
D. SPECIFIC OBLIGATION FOR LARGE ENTERPRISES TO CARRY OUT REGULAR ENERGY
AUDITS

D1. Scope of the obligation
19. Under Article 8(4), Member States must ensure that large enterprises ('that are not SMEs')
carry out regular energy audits. Article 8(4) does not exclude any sector (for example
Emissions Trading Systems – ETS – sectors or Integrated Pollution Prevention and Control –
IPPC – licence holders). To be able to ensure that large enterprises fulfil the obligations
established in Article 8(4), Member States have to identify the enterprises that fall under this
obligation.

20. When establishing the scope of this obligation, Member States must follow the definition of
the category of 'small and medium-sized enterprises' or 'SMEs' in Article 2(26) of the
Directive. According to this definition, SMEs are 'enterprises as defined in Title I of the
Annex to Commission Recommendation 2003/361/EC of 6 May 2003; the category of micro,
small and medium-sized enterprises is made up of enterprises which employ fewer than 250
persons and which have an annual turnover not exceeding EUR 50 million, and/or an annual
balance sheet total not exceeding EUR 43 million'
9
. This harmonised definition allows
consistent requirements for companies operating in different EU Member States.

21. In order to be an SME an undertaking must first fall within the definition of 'enterprise', which
is 'any entity engaged in an economic activity, irrespective of its legal form'. Any activity
whereby goods and services are offered on a given market is an economic activity
10
. It is
important to underline that the definition of SMEs in Article 2(26) does not refer to energy
                                                                                                                                                                                         
additional requirements including those set out in relevant sectoral schemes, to carry out a specific conformity
assessment activity'.
7
EMAS (Community eco-management and audit scheme) is an exception to this case and allows for the
accreditation of natural persons.
8
Directive 95/46 of the European Parliament and of the Council of 24 October 1995 on the protection of
individuals with regard to the processing of personal data and on the free movement of such data, OJ L281,
23/11/1995, p. 31.
9
See Commission Recommendation 2003/361/EC of 6 May 2003, OJ L 124, 20.5.2003, p.36.
10
Case 118/85 Commission v Italy [1987] ECR 2599, paragraph 7; Case C-35/96 Commission v Italy [1998]
ECR I-3851, CNSD, paragraph 36), C-309/99 Wouters [2002] ECR I-1577, paragraph 46.

7
intensity or to energy consumption and that the definition, as a provision of a Directive, is
fully legally binding.
11


22. It follows from the definition that the number of employees is the main criterion for
determining whether an enterprise is an SME. The headcount is accompanied by a financial
criterion, either turnover or balance sheet total. A SME does not need to satisfy both financial
criteria.

23. In line with Commission Recommendation 2003/361/EC concerning the definition of micro,
small and medium-sized enterprises, national labour rules apply as regards the definition of
'employees'. Apprentices and students with vocational training contracts should not be
counted, nor should employees away on maternity or parental leave.

24. According to this Recommendation, enterprises can use the data contained in their last
approved annual accounts to make the staff and financial calculations. To calculate their data,
enterprises registered in a given country have to establish whether they are autonomous,
partner or linked enterprises
12
. Enterprises need to include the data of other related enterprises
in other countries (including outside the EU) to assess whether they can be considered to be
an SME or not. An enterprise that holds over 25% of capital or voting rights in another
enterprise, or vice versa 25% of its capital or voting rights are held by a different enterprise, is
a partner or linked enterprise. That means that the number of staff, turnover and/or balance
sheet of the enterprises must be added together to see if they are below the SME threshold. It
is still possible for two small linked enterprises to be SMEs. In general, most SMEs are
autonomous since they are either completely independent or have one or more minority
partnerships (each less than 25% with other enterprises). If an enterprise is autonomous, it
needs to use only the number of employees and the financial data contained in its annual
accounts to check if it respects the thresholds mentioned in point 20 above.

25. As a result, small branches in one Member State may need to carry out an energy audit every
four years because they do not fall within the definition of SME and therefore come within
the category of large enterprises. This should not be considered as an extra burden or
disproportionate
13
because on the one hand such enterprises may well be implementing
energy management systems (see section D2) or may have arrangements whereby the branch
could be helped with the audit, for example by in house experts from the parent company; and
on the other hand, because the energy audit in question is likely to have a more limited scope
and cost.

26. The existence of a list of large enterprises may serve several purposes and help make such
companies aware of their obligations under the EED. In some Member States, a register of
                                                           
11
Note that Commission Recommendation 2003/361/EC of May 2003 forms part of the legal ‘acquis’ in other
areas of EU law, for instance the definition of SME contained in this Recommendation is included in the Annex
to the General Block Exemption Regulation, Commission Regulation 800/2008.
12
In general, most SMEs are autonomous since they are either completely independent or have one or more
minority partnerships (each less than 25%) with other enterprises. If that holding rises to no more than 50%, the
relationship is deemed to be between partner enterprises. Above that ceiling the enterprises are linked.
13
Annex VI(d) requires energy audits to be '‘proportionate'‘. The principle of proportionality implies testing that
a legislative or administrative measure or means is appropriate and necessary in order to reach or achieve a given
goal or objective. The Court of J ustice of the European Union applies the proportionality principle when it
balances legislative measures against private interests, individual rights and fundamental freedoms.

8
enterprises that are not SMEs already exists. There are several other tools that Member States
could consider using to know how many and which enterprises fall under the scope of the
audit obligation on large enterprises. Both Eurostat and often national statistic offices have
some analysis (at least total numbers) by enterprise size class, differentiating between large
and SMEs in line with the EU harmonised definition of SME. Member States could consider
using national obligations that enterprises submit consolidated accounts in line with the
financial reporting legislation in the EU established in the 1970s and 1980s14 as an indication
of an enterprise's status (as a large enterprise). This legislation has been amended in line with
the harmonised EU definition of SME of 2006. In addition, stock exchange offices usually
operate public registries of companies by sector and by size. Member States may also
consider establishing other reporting mechanisms for large enterprises to report on
compliance.

27. It follows from Article 8(4) that enterprises other than SMEs must carry out a first energy
audit, in a form that fulfils the requirements of Article 8(4), between the date of entry into
force (4 December 2012) and, at the latest, 5 December 2015. Then, according to the
maximum four-year interval, if the first energy audit took place, for example, on 15 J anuary
2013, the next one must happen at the latest four years later (before 15 J anuary 2017 in this
example).

28. Large enterprises that have carried out more than one energy audit before 5 December 2015
have flexibility to assess which audit is to be counted as the first one for the purposes of the
Directive, provided that the energy audit in question fulfils the national minimum criteria for
energy audits based on Annex VI.

D2. Exemptions
29. Article 8(6) provides exemptions to the obligation for large enterprises to carry out regular
energy audits, when those enterprises are implementing an energy or environmental
management system ‘certified by an independent body according to the relevant European or
International Standards’. The definition of ‘energy management system’ is provided in
Article 2(11) whereby it ‘means a set of interrelated or interacting elements of a plan which
sets an energy efficiency objective and a strategy to achieve that objective'. In the context of
Article 8(6), the exemption from the audit obligation for large enterprises refers specifically to
formalised energy management systems complying with relevant European and International
Standards. This does not preclude that this independent body may be accredited by a national
accreditation body according to Regulation 765/2008 which attests its technical competence
to carry out its tasks.

30. Typically, when a large company has in place an energy management system, a continuous
energy review process is carried out to control and reduce energy use. The result of this
process of detailed review of the energy consumption profile and identification of
opportunities for energy saving is equivalent to that of discrete, regular energy audits. In
addition, separate energy audits (with the same scope as the energy management system or
with a narrower scope e.g. covering individual sites, buildings or processes) may also be
carried out to support the implementation of the energy management system. For these
                                                           
14
See in particular the so-called 4
th
Company Law Directive on annual accounts (Directive 78/660/EEC) and the
7
th
Company Law Directive on consolidated accounts (Directive 83/349/EEC).

9
reasons, enterprises that are implementing an energy or environmental management system –
certified by an independent body according to the relevant European and International
Standards – are considered to satisfy the energy audit requirement of Article 8(4) in terms of
results and are therefore exempted from this obligation.

31. In order for this exemption to apply the Member States must ensure that the management
system concerned includes an energy audit on the basis of minimum criteria set out in Annex
VI. In practice, this requires in the first place identifying the management system in question
and the standard that it follows. Subsequently, the certification status of the management
system and of the certification body (or for self-certification where applicable) needs to be
checked to make sure that the implementation of the management system fulfils the
requirements described in the following section (E2).

32. Experience so far has shown that in many Member States energy audits and energy
management systems are promoted through voluntary agreement programmes (sometimes
referred to as branch contracts, programmes or sector plans). The most widespread are
voluntary agreements in the industrial sector. In fact, for some of these programmes,
implementing an energy management system is a prerequisite for participation in a voluntary
agreement scheme. This is recognised in Article 8(5) of the Directive, which states that large
enterprises implementing energy audits under voluntary agreements concluded between
organisations of stakeholders and an appointed body and supervised by the Member State
concerned, or other bodies to which the competent authorities have delegated the
responsibility concerned, or by the Commission, are considered as fulfilling the requirements
of Article 8(4).


D3. Penalties
33. Because the transposition of Article 8 requires Member States to impose obligations on third
parties, Member States are required to lay down rules on penalties applicable in case of non-
compliance with the national provisions adopted pursuant to this Article (see Article 13).
These penalties must be ‘effective, proportionate and dissuasive’ and must be notified to the
Commission within 18 months of the coming into force of the Directive.
E. ENSURING HIGH-QUALITY AUDITS

E1. Expertise, including the use of in-house experts or energy auditors, and national
supervision
34. The criteria of expertise and national supervision for the energy audits under Article 8(4) are
identical to those of Article 8(1) described in point 15 above. In other words the same criteria
apply when large enterprises fulfil their energy audit obligations and when Member States
promote the use of energy audits. Accordingly, Article 8(4) requires Member States to ensure
that enterprises that are not SMEs are 'subject to an energy audit carried out in an
independent and cost-effective manner by qualified and/or accredited experts or implemented
and supervised by independent authorities under national legislation by 5 December 2015
and at least every four years from the date of the previous energy audit'.

10

35. The possibility for in-house experts or energy auditors to carry out energy audits only applies
for those subject to the strict criteria named in 8(1) and 8(4), i.e. carried out in an independent
and cost-effective manner by qualified and/or accredited experts or implemented or
supervised by independent authorities under national legislation. The condition for in-house
experts or energy auditors to carry out energy audits is that the Member State concerned has
put in place a scheme to assure and check their quality, including, if appropriate, an annual
random selection of at least a statistically significant percentage of all the energy audits they
carry out (Article 8(1)). The national scheme for checking the quality of in-house experts or
energy auditors can be the same as for external ones. Where energy audits are carried out by
in-house experts, the necessary independence would require these experts not to be directly
engaged in the activity audited (recital 25).

E2. Minimum criteria to be fulfilled
36. For the purpose of guaranteeing the high quality of the energy audit and energy management
systems, Member States must establish transparent and non-discriminatory minimum criteria
for energy audits based on Annex VI on 'Minimum criteria for energy audits including those
carried out as part of energy management systems'.

37. The national minimum criteria to be established on the basis of Annex VI apply to energy
audits promoted by the Member States under Article 8(1) and mandatory audits by large
enterprises under Article 8(4). As mentioned before, these audits also need to satisfy the strict
criteria for expertise and national supervision (see previous section). The respect of national
minimum criteria on the basis of Annex VI and of strict criteria for expertise and national
supervision apply equally to Articles 8(5) and 8(6) as they provide for exemptions and for
equivalent requirements to those established in Article 8(4), i.e. regular energy audits for large
enterprises. Other energy audits that may be implemented in the Member States and that are
not promoted by Member States and not implemented by large enterprises to fulfil the
mandatory requirement are not subject to these strict requirements.

38. In line with recital 24, the minimum criteria in Annex VI are not more far reaching than the
requirements of the relevant European or International Standards. It follows from the wording
of this recital that energy audits should take into account relevant European or International
Standards, such as, for example, EN ISO 50001 (Energy Management Systems), or EN
16247-1 (Energy Audits)
15
, or, if including an energy audit, EN ISO 14001 (Environmental
Management Systems).

39. These standards can provide useful guidance in developing national minimum criteria on the
basis of Annex VI. Furthermore, EN 16247-1 was developed specifically in the context of the
former Energy Services Directive and could be applied as a consistent tool as part of a wider
management system (e.g. EN ISO 50001 or EN ISO 14000). There is a new ISO International
Standard 50002 under development setting standards for conducting an energy audit. It should
be noted that although reference is made to both ISO 50001 and ISO 14000, ISO 50001
                                                           
15
As part of the standardisation work on energy audits in the framework of the mandate M/479 from the
European Commission to CEN and CENELEC, this first standard on general requirements for energy audits has
been published. Specific standards on energy audits in buildings, processes and transport are being finalised. In
addition, a specific additional standard for the qualification of energy auditors is under preparation.

11
targets specifically energy consumption, whilst ISO 14000 focuses more generally on
environmental improvements. The consideration of European or International Standards is
useful towards creating a level playing field for enterprises with activities in several Member
States.

40. Annex VI establishes the guidelines on which the energy audits referred to in Article 8 must
be based, in practice giving requirements for the thoroughness and content of the energy audit
reports. The minimum criteria in Annex VI include guidelines on the data to be used, the
depth and scope of the audit, the recommended cost analysis and the quality requirements in
terms of representativeness of the energy audits referred to in Article 8.

41. These guidelines consist of six elements or criteria which should be examined in each case
and which should each be incorporated in some way in the minimum criteria to be established
at national level. On the basis of Annex VI, national minimum criteria need to make clear that
energy audits must be based on up-to-date data on energy consumption and comprise a
detailed review of the energy consumption profile, building whenever possible on life-cycle
cost analysis. Energy audits must allow the reliable identification of the most significant
opportunities for improvement in energy efficiency, permitting detailed calculations for the
proposed measures. The data used in energy audits must allow performance to be tracked. The
resulting national minimum criteria should therefore lead to quite comprehensive and
thorough energy audits.

42. Member States may add additional elements when developing criteria based on Annex VI.
They may also indicate in which circumstances a particular part of the six elements or criteria
would be most relevant (e.g. life-cycle cost analysis). Member States through their national
minimum criteria may tailor the needs for different segments where they promote energy
audits, for instance to SMEs (for whom a detailed audit may not be cost-effective), a public
service (e.g. a city public transport service) or households.

43. The first guideline in Annex VI (a) is that energy audits must be based on up-to date,
measured, traceable operational data on energy consumption and, in the case of electricity,
load profiles. These data are needed to analyse energy performance of the audited object.

44. Annex VI (b) states that energy audits must comprise a detailed review of the energy
consumption profile of buildings or groups of buildings, industrial operations or installations,
including transportation. Such detailed review allows building the data needed to identify
energy performance improvements opportunities.

45. The guideline for energy audits in Annex VI(c) is to build, whenever possible, on life-cycle
cost analysis (LCCA
16
) instead of Simple Payback Periods (SPP)17 in order to take account
                                                           
16
As possible guidance specifically in the buildings context, the LCCA concept has been used in the Delegated
Regulation 244/2012 on methodology framework for calculating cost-optimal levels of minimum energy
performance requirements for buildings and building elements. The accompanying guidelines on LCCA
(http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ :C:2012:115:0001:0028:EN:PDF) on page 21
provide some more detailed explanations. This is largely based on EN 15459 Economic evaluation procedure for
energy systems in buildings.

12
of long-term savings, residual values of long-term investments and discount rates. This is
particularly relevant in cases where audits need to be of such quality that investment decisions
can be based on them. For example in the residential sector, it is increasingly common to link
support under financial instruments to carrying out an energy audit as a starting point for
energy efficiency projects. The inclusion of additional financial indicators such as Discounted
Payback, Internal Rate of Return or Return on Investment is helps building confidence of
investors and getting access to funding
18
.

46. Annex VI(d) states that energy audits must be sufficiently representative to permit the
drawing of a reliable picture of overall energy performance and the reliable identification of
the most significant opportunities of improvement. Therefore, national minimum criteria
based on Annex VI must make clear that all energy related aspects listed in point (b)
(buildings or groups of buildings, industrial operations or installations, including
transportation) must be systematically screened. According to this screening, the scope and
boundaries (i.e. physical or site limits, extent of activities or facilities addressed) of each
energy audit and the degree of thoroughness needed for drawing up the required reliable
assessment are to be defined on a case by case basis.

47. Examples of possible scopes are the whole site of an enterprise and all energy using systems
or the boiler plant, one or more production lines or the offices, the vehicle fleet or the on-site
transportation. Different levels of detail are also possible, depending for instance on whether
accuracy sufficient for investment decisions is needed, or whether it is necessary to visit a
proportion of similar sites of the same company. The obligation for large enterprises to carry
out an energy audit at least every four years is not in contradiction with carrying out audits
with narrower scopes over a period of time and within the four year periodicity of the audit
requirement. Consideration could be given for example to planning energy audits for different
sites or focusing first on processes and later on office buildings, with different timeframes
within the four-year cycle.

48. The flexibility to adjust both the scope and boundaries and the level of detail must not
contradict the requirement to make a representative assessment of the overall energy
performance and to identify and prioritise energy saving opportunities. For instance, it would
not be justifiable for an enterprise for which the transportation aspects of its operations are the
main user of energy not to include this in the scope of the energy audit. On the other hand,
the energy audit of a given enterprise is not expected to assess the energy use of its transport
service providers (if these come from a different enterprise). The specific European Standard
dealing with the transport aspects of energy audits may provide useful guidance in this regard.
This Standard applies both to operators exclusively dedicated to transport and to public or
private companies with some transport operations.

                                                                                                                                                                                         
17
An energy investment’s Simple Payback Period is the amount of time it will take to recover the initial
investment in energy savings, dividing initial installed cost by the annual energy cost savings. While Simple
Payback is easy to compute, its weakness is that it fails to factor in the time value of money, inflation, project
lifetime or operation and maintenance costs.
18
Discounted Payback is period is a variation of payback period which accounts for time value of money by
discounting the cash inflows from a project. Internal Rate of Return is the rate that makes the present value of all
cash flows from a particular investment equal to zero. Return on Investment is the ration of money gained or lost
on an investment relative to the amount of money invested.

13
49. Annex VI also indicates that the energy audits referred to in Article 8 must allow detailed and
validated calculations to provide clear information on potential savings. The data used in
energy audits must be storable for historical analysis. This means that relevant data, used or
produced during the audit work, must be presented in the energy audit reports in a form that
can be used for e.g. programme level monitoring purposes.

50. When developing national minimum criteria for energy audits, European or international
standards may in particular provide useful guidance for the definition of the scope and level of
detail of an energy audit. For example standards can provide guidance for the assessment of
levels of detail that an energy audit may require, tailored to the subject of the audit (i.e.
building or group of buildings, an industrial or commercial operation or installation or a
private or public service) and with sufficient flexibility to adapt to particular circumstances.
Furthermore, standards may provide useful guidance for the planning of the audit, data
collection, specific checklists to evaluate actual energy performance (e.g. in industrial
processes, in buildings), typical energy and financial saving opportunities or the content of the
audit report. European or international standards also provide examples of how to strike the
right balance between the scope and thoroughness of an energy audit.

51. Energy audits may stand alone or be part of a broader environmental audit. Member States
may require that an assessment of the technical and economic feasibility of connection to an
existing or planned district heating or cooling network must be part of the energy audit. To
identify the full scope of energy saving options, energy audits may also consider storage
possibilities or potential for demand response in industries and commercial buildings.
F. TRAINING PROGRAMMES FOR THE QUALIFICATION OF ENERGY AUDITORS AND
AVAILABILITY OF QUALIFICATION, ACCREDITATION AND CERTIFICATION SCHEMES

52. A sufficient number of reliable professionals competent in the field of energy efficiency
should be available to ensure the effective and timely implementation of and compliance with
the requirements of the Directive on energy audits. For this purpose, Member States are
required to encourage training programmes for the qualification of energy auditors (Article
8(3)).

53. Member States should put in place certification schemes for the providers of energy audits to
make sure that a sufficient number of reliable professionals be available (see recital 46).

54. To further reinforce the availability of qualified experts, in accordance with Article 16 on
availability of qualification, accreditation and certification schemes, where a Member State
considers that the national level of technical competence, objectivity and reliability is
insufficient, the Member State must ensure that, by 31 December 2014, certification and/or
accreditation schemes and/or equivalent qualification schemes, including, where necessary,
suitable training programmes, become available for the providers of energy audits. Member
States have discretion as to how to assess the national level of technical competence,
objectivity and reliability, but if this is considered to be insufficient the previously mentioned
actions must be taken before 31 December 2014.


14
Member States must ensure that qualification, accreditation and certification schemes provide
transparency to consumers, are reliable and contribute to national energy efficiency
objectives. Member States must take appropriate measures to make consumers aware of the
availability of qualification and/or certification schemes. They must make publicly available
the certification and/or accreditation schemes or equivalent qualification schemes and must
cooperate among themselves and with the Commission on comparisons between, and
recognition of, the schemes. The latter is important to address the sometimes diverse
qualification criteria and respective quality control schemes across Member States. Moving in
the direction of mutual recognition of schemes would open the European market for energy
auditors. In this respect, a European-wide accreditation scheme that ensures the quality of
audits may eventually be envisaged.
55. Under Article 17(1) on information and training, Member States must ensure that information
on available energy efficiency mechanisms and financial and legal frameworks is widely
disseminated to all relevant market actors such as consumers or environmental and energy
auditors.
G. OBLIGATIONS TO DEVELOP PROGRAMMES TO ENCOURAGE SMES TO UNDERGO ENERGY
AUDITS AND TO RAISE AWARENESS AMONG HOUSEHOLDS

56. Article 8(2) of the Directive establishes that Member States must develop programmes to
encourage SMEs to undergo energy audits and the subsequent implementation of the
recommendations from these audits.

57. SMEs represent enormous energy saving potential for the Union. To encourage them to adopt
energy efficiency measures, Member States should establish a favourable framework aimed at
providing SMEs with technical assistance and targeted information (see recital 41).

58. Member States must bring to the attention of SMEs, including through their respective
representative organisations, concrete examples of how energy management systems could
help their businesses. The Commission must assist Member States by supporting the
exchange of best practices in this domain.

59. Member States must also (Article 8(3)) develop programmes to raise awareness among
households of the benefits of energy audits through appropriate counselling or advice
services. Articles 8(2) and 8(3) do not impose a specific obligation to carry out energy audits.
H. NATIONAL SUPPORT SCHEMES

60. Article 8 requires Member States to actively promote the availability and the use of energy
audits and the implementation of their recommendations. The scope of national promotion
activities covers a wide range of areas. Compulsory measures that Member States must take
include encouraging training programmes for auditors (Article 8(3)); programmes
encouraging SMEs to undergo energy audits and the subsequent implementation of the

15
recommendations from these audits (Article 8(2)); programmes to raise awareness among
SME (Article 8(2)) and households (Article 8(3)). The national promotion programmes may
be or may encompass support schemes, including State aid. The Article explicitly allows the
setting up of support schemes for SMEs to carry out and implement energy audits. Article
8(2) reads: '[…] On the basis of transparent and non-discriminatory criteria and without
prejudice to Union State aid law, Member States may set up support schemes for SMEs,
including if they have concluded voluntary agreements, to cover costs of an energy audit and
of the implementation of highly cost-effective recommendations from the energy audits, if the
proposed measures are implemented […]'.

61. Likewise, Member States are explicitly allowed to set up incentives and support schemes for
enterprises, including non-SME enterprises, to implement the recommendations of energy
audits and similar measures. Similar measures are energy or environmental management
systems implemented either stand alone or under a Voluntary Agreement, and having
equivalence with energy audits. Article 8(7) reads: '[…] Without prejudice to Union State aid
law, Member States may implement incentive and support schemes for the implementation of
recommendations from energy audits and similar measures'. Support schemes, when they
contain State aid elements, should be without prejudice to the Union State aid law. This
includes the Community Guidelines on State Aid for Environmental Protection
19
and the
Block Exemption Regulations
20
.

62. Article 8 makes the promotion of audits an important objective and creates a framework to
overcome the market barriers and failures21 that impede the implementation of energy audits
or equivalent energy management systems and the implementation their results. It specifically
allows support measures to overcome barriers such as lack of awareness and expertise among
households and SMEs, the low number of trained professionals and high initials costs of
implementation without which audits would not be carried out and implemented on the scale
required.
                                                           
19
OJ C 82, 1.4.2008. The Guidelines are under revision to take into account new developments, including the
EED.
20
Commission Regulation 800/2008, OJ L 214, 9.8.2008. The Regulation is under revision to take into account
new developments, including the EED.
21
The Article replaces Article 12 of the ESD.

EN EN


EUROPEAN
COMMISSION
Brussels, 6.11.2013
SWD(2013) 448 final

COMMISSION STAFF WORKING DOCUMENT
Guidance note on Directive 2012/27/EU on energy efficiency, amending Directives
2009/125/EC and 2010/30/EC, and repealing Directives 2004/8/EC and 2006/32/EC

Articles 9 - 11: Metering; billing information; cost of access to metering and billing
information




Accompanying the document
COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN
PARLIAMENT AND THE COUNCIL


Implementing the Energy Efficiency Directive – Commission Guidance

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{SWD(2013) 446 final}
{SWD(2013) 447 final}
{SWD(2013) 449 final}
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TABLE OF CONTENTS
A. INTRODUCTION .................................................................................................................... 3
B. LEGAL AND POLICY CONTEXT .............................................................................................. 6
C. SCOPE OF THE OBLIGATION .................................................................................................. 6
D. OBLIGATION TO PROVIDE METERS AND METERING DATA ..................................................... 7
E. OBLIGATIONS TO ENSURE THE PROVISION OF BILLING INFORMATION ................................. 12
F. OBLIGATIONS TO ENSURE FREE OF CHARGE PROVISION OF METERING AND BILLING
INFORMATION ............................................................................................................................ 16
G. OBLIGATIONS TO ENFORCE IMPLEMENTATION OF ARTICLES 9, 10 AND 11 ......................... 17


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ARTICLES 9-11: METERING; BILLING INFORMATION; COST OF ACCESS TO METERING AND
BILLING INFORMATION
A. INTRODUCTION

1. Articles 9, 10 and 11 and Annex VII of Directive 2012/27/EU on energy efficiency
1

(hereafter also 'the EED' or 'the Directive') cover metering and billing of individual
consumption of energy. .

2. In relation to metering of energy consumption, Article 9 requires Member States to
comply with the following main obligations:

 Ensure that, with exceptions on technical or financial grounds, final customers for
electricity, natural gas, district heating, district cooling and domestic hot water are
provided with competitively priced meters that accurately reflect their actual energy
consumption and that provide information on actual time of use. Member States must
ensure that such meters are always provided when:

- A new connection is made in a new building; or
- A building undergoes major renovations, as set out in Directive 2010/31/EU
2

(hereafter also 'the EPBD').

 Where Member States implement intelligent metering systems and roll out smart
meters for natural gas and/or electricity in accordance with Directives 2009/72/EC
3

and 2009/73/EC
4
:

- The metering systems must provide final customers with information on actual
time of use;
- Objectives of energy efficiency and benefits for final customers must be fully
taken into account when establishing the minimum functionalities of the
meters and the obligations imposed on market participants;
- The smart meters and data communication must be secure and the privacy of
final customers must be in compliance with relevant Union data protection and
privacy legislation;
                                                           
1
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, OJ L
315, 14.11.2012, p. 1
2
Directive 2010/31/EU of the European Parliament and of the Council of 19 May 2010 on the energy
performance of buildings (recast), OJ L 153, 18.6.2010, p.13.
3
Directive 2009/72/EC of the European Parliament and of the Council of 13 J uly 2009 concerning common
rules for the internal market in electricity and repealing Directive 2003/54/EC, OJ L 211, 14.8.2009, p. 55–93
4
Directive 2009/73/EC of the European Parliament and of the Council of 13 J uly 2009 concerning common
rules for the internal market in natural gas and repealing Directive 2003/55/EC, OJ L 211, 14.8.2009, p. 94–136

4

- In the case of electricity and at the request of the final customer, meter
operators must be required to ensure that the meter can account for electricity
put into the grid from the final customer's premises;
- If final customers request it, metering data on their electricity input and off-
take must be made available to them or to a third party acting on behalf of the
final customer (e.g. an energy services company (ESCO) or energy aggregator)
in an easily understandable format that they can use to compare deals on a like-
for-like basis;
- At the time of installation of smart meters, appropriate advice and information
must be given to final customers in particular about the meters' full potential
with regard to the monitoring of energy consumption.

 As regards metering of the use of heating, cooling and domestic hot water:

- Buildings supplied from a district heating/cooling network or a central source
servicing multiple buildings must be equipped with a central heat or hot water
meter installed at the heating exchanger or point of delivery;
- As regards final customers residing in multi-apartment or multi-purpose
buildings, whether such buildings are supplied from an external source or a
common source within such buildings, individual heat or hot water meters for
each apartment or unit in such buildings must be provided by 31 December
2016. However, in buildings where the use of heat meters is not technically
feasible or cost-efficient, individual heat cost allocators must instead be
installed on each radiator in the individual apartments/units of those buildings.
Finally, where this solution is not cost-effective, alternative methods of heat
consumption measurement may be considered.

3. Article 10 in relation to billing and billing information requires Member State to comply
with the following main obligations:

 Where final customers have individual meters, which are not smart further to
Directives 2009/72/EC and 2009/73/EC (electricity, natural gas, heating, cooling,
domestic hot water), where technically possible and economically justified, they must
be provided with billing information as from 31 December 2014 that is accurate and
based on actual consumption. Such billing information must be provided at a
minimum frequency specified in point 1.1 of Annex VII (stating that final customers
should normally be told at least every 6 months or every 3 months if they ask for it or
are billed electronically how much they will be billed for the energy they used in the
last period).
o Member States may fulfil this obligation by ensuring all such final customers
are provided with an opportunity for regular self-reading whereby they
communicate the readings from their meter to the energy supplier. In such
cases, Member States must ensure that billing based on estimated consumption
or a flat rate in cases when the final customer has not provided a meter reading
for a given billing interval.
 Member States may exempt the consumption of natural gas when it is used for
cooking purposes only.

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 Where there are smart meters, these must enable accurate billing based on actual
consumption (Article 10(2)), and Member States are obliged to ensure that final
customers have the possibility of easy access to complementary information on
their own historical consumption. This must include at least the following
information:
o Cumulative consumption data corresponding to the intervals for which
frequent billing information based on actual consumption has been produced.
Such data should be made available for at least the three previous years or the
period since the start of the supply contract, if this is shorter.
o Detailed consumption data according to the time of use for any day, week,
month and year. Such data should be made available to the final customer for
the period of at least 24 months or the period since the start of the supply
contract if this is shorter.
 Regardless of whether smart meters are available or not, Member States must
ensure that:
o Upon request of the final customer, metering data including complementary
information on historical consumption is made available to an energy service
provider designated by the final customer (e.g. an ESCO or an energy
aggregator);
o All final customers are offered the option of electronic billing information and
electronic bills;
o In or with the bills/billing information for energy consumption the minimum
information specified in the Annex VII (part 1.2) is provided in clear and
understandable terms. This minimum information must include:
i. Current actual prices and actual consumption of energy;
ii. Comparisons of final customers' current consumption with consumption
in the previous billing intervals (at least the same period in the previous
year), preferably in a graphic form;
iii. Contact information for organisations where final customers can find
more information (e.g. on techniques/technologies to save energy,
comparative end-users profiles, etc.);
iv. Where possible and useful, comparisons with an average normalised or
benchmarked final customer in the same user category;
o When the final customers request them, information and estimates on energy
costs must be provided to them in a timely manner and a format enabling
comparison on a like-for-like basis.

4. Article 11 clarifies that Member States must ensure that final customers receive their
energy bills and billing information free of charge and that they can access their
consumption data free of charge and in an appropriate way.

An exception is provided in the context of heating and cooling in multi-apartment
buildings supplied from a district heating or another common heating/cooling source, for
cases where the task of measuring, allocation and accounting for actual individual
consumption is assigned to a third party such as a service provider or local energy
supplier. In that case costs may be passed onto the final customers to the extent that such
costs are reasonable.


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5. This note aims to provide guidance to Member States on how to apply Articles 9-11 of the
EED. The note states the views of the Commission services, does not alter the legal effects
of the Directive and is without prejudice to the binding interpretation of Articles 9-11 as
provided by the Court of J ustice.
B. LEGAL AND POLICY CONTEXT

6. The provisions of the EED on metering and billing information take over some of the
provisions of earlier Directives. Directive 2006/32/EC on energy end-use efficiency and
energy services
5
(which is repealed by the EED) required Member States to ensure that
final customers are provided with competitively priced individual meters that accurately
reflect their actual energy consumption and provide information on actual time of use. In
most cases, this requirement was subject to the conditions that it should be technically
possible, financially reasonable, and proportionate in relation to the potential energy
savings. When a connection is made in a new building or a building undergoes major
renovations, as defined in Directive 2002/91/EC
6
, such individual meters had however to
be always provided. Directive 2006/32 also required that clear billing based on actual
consumption should be provided frequently enough to enable consumers to regulate their
own energy use. In general, these provisions have been taken over in the EED and
additional clarification has been provided.

7. The Directives on the Internal Market for Electricity and Gas (Directives 2009/72/EC and
2009/73/EC) require Member States to ensure the implementation of intelligent metering
systems to assist the active participation of consumers in the electricity and gas supply
markets. As regards electricity, where an economic assessment of the long-term costs and
benefits has been made, at least 80% of those consumers who have been assessed
positively have to be equipped with intelligent metering systems for electricity by 2020.
Where no economic assessment of the long-term costs and benefits is made, at least 80 %
of all consumers have to be equipped with intelligent metering systems by 2020 (Annex
I(2) of the Electricity Directive). As regards natural gas, no deadline is given but the
preparation of a timetable is required, subject to an assessment of long-term costs and
benefit (Annex I(2) of the Gas Directive) . These Directives also state that final customers
must be properly informed of actual electricity/gas consumption and costs frequently
enough to enable them to regulate their own consumption. The EED does not require the
roll-out of smart meters as such as this is already covered by Directives 2009/72/EC and
2009/73/EC. However, in the view of the on-going or planned roll-out of smart meters in
many Member States, the EED brings clarification as regards ensuring that relevant
information from metering and billing will be provided to final customers using smart
metering.
C. SCOPE OF THE OBLIGATION

                                                           
5
Directive 2006/32/EC of the European Parliament and of the Council of 5 April 2006 on energy end-use
efficiency and energy services and repealing Council Directive 93/76/EEC, OJ L114, 24.4.2006, p.64.
6
Directive 2002/91/EC of the European Parliament and of the Council of 16 December 2002 on the energy
performance of buildings, OJ L 1, 4.1.2003, p. 65.

7

8. Articles 9, 10 and 11 of the EED extend the scope and clarify the substantive provisions of
Directive 2006/32/EC on energy end-use efficiency and energy services. The EED
provisions that are identical to those in Article 13 of Directive 2006/32/EC will be
addressed in this note only when they interact with the implementation of the new
provisions.

9. Article 2(23) provides a definition of 'final customers' as 'a natural or legal person who
purchases energy for own end use'. In the context of obligations established in Article 9(1)
and (3) and Article 11(2) in relation to provisions on metering and billing of individual
consumption of heating/cooling and domestic hot water, in cases where heating and
cooling or hot water is purchased collectively by or on behalf of an association of end-
users (for example a group of households responsible for energy consumption in each of
the individual apartments in a multi-apartment building), although it is often a housing
cooperative who purchases the energy, it is the individual households who are the end-
user. Therefore, the definition of final customer should be understood as also covering
those end-users as well as the entity purchasing heating/cooling/hot water on behalf of the
end-users (e.g. a housing cooperative).
D. OBLIGATION TO PROVIDE METERS AND METERING DATA

10. The provisions of Article 9(1), obliging Member States to ensure – subject to technical
feasibility and cost-effectiveness - that final customers are provided with competitively
priced individual meters that accurately reflect the final customer’s actual energy
consumption and that provide information on actual time of use, were introduced by
Article 13 of Directive 2006/32/EC. In the EED, this right continues to apply, but is now
also extended to final customers residing in multi-apartment and multi-purpose buildings
with a common central heating/cooling/hot water system for such a building, which
should be provided with such meters by 31 December 2016 (Article 9(3)).

11. It should be noted that Article 9 does not require the introduction of smart metering
systems as referred to in Directives 2009/72/EC and 2009/73/EC. However, it clarifies
some issues, namely that if Member States introduce smart metering, various obligations
then apply under Article 9(2) in particular.

12. In Article 9(1) and Article 10(3), in respect of multi-apartment or multi-purpose buildings,
the requirement to provide individual hot water meters refers to situations where the final
customer is purchasing domestic hot water provided either from a common boiler or from
outside the building (e.g. district heating). For example, if in a multi-apartment building
the domestic hot water is produced in a common gas boiler, there should be a common gas
meter for that boiler but the individual users of domestic hot water must in addition be
provided with a competitively priced hot water meters for each apartment, where
technically possible and cost-efficient.

13. According to Article 9(2)(a), smart metering systems for electricity or natural gas must
provide final customers with information on actual time of use. However, under Article

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9(1), subject to technical feasibility and cost-effectiveness, it should be understood that
that all individual meters whether smart or not must have this basic function. The use of
the term 'smart metering systems' and not just 'smart meters' in Article 9(2)(a) implies that
Member States have a choice as regards the means
7
through which such metering
information is provided to final customers. For example, Member States may require that
such metering information is provided via an in-home display collecting data from the
smart meter.

14. Article 9(2)(a) does not supersede the requirements of the Measuring Instruments
Directive (2004/22/EC)
8
, which requires that an in-built basic display of the meter is
available in any case
9
. This is important because such displays would serve as a basis for
the calculation of the payment to be made by the final customer, e.g. if the remote reading
function of the smart meter failed.

15. As regards the obligation established in Article 9(2)(a) requiring Member States to ensure
that the 'objectives of energy efficiency and benefits for final customers are be fully taken
into account when establishing the minimum functionalities of the meters and the
obligations imposed on market participants', Member States may consider the
Commission Recommendation on the preparations for the roll-out of smart metering
systems
10
. In any case, it is for Member States to decide which energy efficiency
objectives and which benefits to the final customers are taken into account when obliging
market participants and setting minimum functionalities for smart meters.

16. As regards the requirement for Member States to ensure the security of smart meters and
related data communication and the privacy of final customers in compliance with
relevant Union data protection and privacy legislation, detailed advice has already been
provided in the Commission Recommendation 2012/148/EU of 9 March 2012. In general,
as required by the Data Protection Directive (95/46/EC)
11
, Member States are responsible
for ensuring the privacy of real-time as well as historical information when collecting,
storing, processing and communicating the data from the metering of individual energy
consumption by final customers.

                                                           
7
Article 42 of Commission Recommendation of 9 March 2012 on preparations for the roll-out of smart metering
systems (2012/148/EU) encourages Member States to ensure that final customers using smart metering systems
are equipped with a standardised interface which provides visualised individual consumption data to the
consumer.
8
Directive 2004/22/EC of the European Parliament and of the Council of 31 March 2004 on measuring
instruments, OJ L 135, 30.4.2004, p. 1–80
9
According to Article 10.5 of Annex I to the Directive 2004/22/EC of the European Parliament and of the
Council on measuring instruments (OJ L135, 30.4.2004, p. 1): 'Whether or not a measuring instrument intended
for utility measurement purposes can be remotely read it shall in any case be fitted with a metrologically
controlled display accessible without tools to the consumer. The reading of this display is the measurement
result that serves as the basis for the price to pay'.
10
Commission Recommendation 2012/148/EU of 9 March 2012 on preparations for the roll-out of smart
metering systems.
11
Directive 95/46/EC of the European Parliament and of the Council of 24 October 1995 on the protection of
individuals with regard to the processing of personal data and on the free movement of such data, OJ L 281 ,
23/11/1995, p. 31.


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Article 9(2)(c) requires Member States to ensure that where smart electricity meters are in
operation, at the request of the final customer, meter operators provide a meter that can
account for electricity put into the grid from the final customer's premises. In relation to
Article 9(1) Member States must ensure that such meter(s) are competitively priced, as
otherwise this could create a barrier for the development of distributed generation.

17. According to Article 9(2)(d), if final customers request it, metering data on their
electricity input and off-take must be made available to them or to a third party acting on
their behalf (e.g. an ESCO or an energy aggregator) in an easily understandable format
that they can use to compare deals on a like-for-like basis. This requirement applies only
to situations where, and to the extent that, Member States implement smart metering
systems for electricity. Member States will need to legally establish or otherwise ensure
the right for the final customer to decide whether and to whom the metering data on
his/her individual consumption can be made available.

Secondly, this provision requires that the Member States ensure that the same metering
data that is available to the final customer must be made available to third parties, subject
to the request of the final customer. This information would allow an energy service
provider (eg energy aggregators or ESCOs) to give a more accurate service to the final
customer

18. Article 9(2)(e) requires Member States to ensure that, during installation of smart
electricity or gas meters, final customers must be given appropriate advice and
information in particular about the full potential related to the meter reading management
and the monitoring of own energy consumption. Transposition of Article 9(2)(e) may be
done for example through: (1) establishing the country-wide minimum level/scope of
information that should be provided to final customers e.g. by the installers visiting final
customers to install smart meters, and/or (2) ensuring relevant training programmes for
installers.

This requirement is additional to the requirements of Article 12, under which Member
States should take one or more measures to promote energy efficiency among small final
customers, which may include broader campaigns accompanying the roll-out of smart
meters.

19. Article 9(3) provides clarification concerning the metering of the consumption of heating,
cooling and domestic hot water in multi-apartment and multi-purpose buildings which are
supplied with heating/cooling or hot water from:

- district heating/cooling;
- a central source servicing multiple buildings; or
- a common central heating/cooling source for a single building.

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20. In the case of multi-apartment or multi-purpose buildings supplied with heating or cooling
or hot water from external sources, Member States must ensure that a meter is installed at
the heat exchanger or the point of delivery to the building. Such meters must be installed
by 5 J une 2014. No exceptions are foreseen.

21. The EED does not provide a definition of a multi-apartment or multi-purpose building. A
multi-apartment building could be understood as a building with at least two apartments.
A multi-purpose building could be understood as a building occupied by at least two
entities that need to share between themselves the bill for the energy purchased.

22. As regards individual heat metering in multi-apartment and multi-purpose buildings with
in the scope of Article 9(3), Member States must ensure that individual meters for each
apartment or unit in such building are installed by 31 December 2016 where technically
feasible and cost-efficient.

If the installation of individual heat meters is not technically feasible or not cost-efficient,
accurate heat cost allocators must be installed for each radiator, unless it is shown by the
Member State that this would not be cost-efficient.

23. In interpreting the concept of 'technical feasibility', Member States should bear in mind
the explanation of the equivalent concept of 'technical possibility' given in Recital 29. In
accordance with this explanation, it can be assumed that individual metering of heat
consumption in multi-apartment buildings is technically possible when the installation of
individual meters would not require changing the existing in-house piping for hot water
heating in the building. By contrast, where the hot water used for heating enters and leaves
individual apartments at several points, the use of individual heat meters is less likely to
be technical feasible or cost-efficient. In such buildings, measurements of individual heat
consumption can be carried out by means of individual heat cost allocators.

24. In interpreting the concept of 'cost-efficiency', Member States can compare the costs of
the installation and maintenance of the meters/heat cost allocators with the benefits for
end consumer and other parties (owner/user of the building and individual apartments,
energy supplier, etc.). This calculation can for example be based on the methodology
provided in the European standard EN 15459 ('Energy performance of buildings -
economic evaluation - procedure for energy systems in buildings').

In assessing the benefits of installing individual heat meters/heat cost allocators Member
States should take into account different benefits including energy savings among final
customers that could be achieved through behavioural changes triggered by the metering
data and the billing information based on the measured heat consumption. Various studies
indicate that the range of savings due to behavioural change after the introduction of
individual metering and billing based on actual consumption of heat often reach 30% in

11

comparison to systems without individual metering and with billing based on flat rates
(e.g. per m
2
)
12,13
.

25. As 'technical feasibility' and ''cost-efficiency' allow the Member States exceptions to the
obligations contained in Article 9, it is for the Member States, bearing in mind the above
two paragraphs, to inform the Commission of the technical conditions and economic
thresholds or other criteria under which they justify that it would not be technically
feasible or cost-effective to comply with their obligations.

In the case of multi-apartment and multi-purpose buildings addressed in Article 9(3),
where it is found technically feasible and cost-effective to install individual heat meters
but the final customers already have heat cost allocators, then by 31 December 2016
Member States must ensure that individual heat meters are installed. However, it can be
assumed that the existence of heat cost allocators is a factor that would normally affect the
cost-benefit calculation for the use of individual heat meters.

26. In situations where individual heat cost allocators must be installed for each radiator, in
line with the objective of Article 9(3) this obligation would only refer to radiators inside
apartments or units in multi-apartment or multi-purpose buildings, not those in common
areas of the building.

In accordance with Article 9(1)(b), individual meters for measuring heating or cooling or
domestic hot water consumption must always be installed in new multi-apartment or
multi-purpose buildings supplied from district heating/cooling, or in those undergoing
major renovations as defined in Directive 2010/31/EU. Installation of heat cost allocators
or alternative measurement methods are not an option in these cases.

27. Article 9(1)(b) imposes an unconditional requirement to provide individual meters (not
heat cost allocators) in cases where a new connection is made in a new building or where
a building undergoes a major renovation as defined in Directive 2010/31/EU. If the above
scenario arises in relation to heat consumption or cooling, the obligation is limited to cases
where the final customers are supplied/plan to be supplied from district heating or cooling.
As such, it should be considered an exception to the general framework for the obligation
to provide individual heat meters in multi-apartment buildings as referred to in Article
9(3) second paragraph. This means that the provisions of Article 9(3) on what is
'technically possible' and 'cost-effective' will not apply to multi-apartment buildings
                                                           
12
Gullev, L. & Poulsen, M., “The installation of meters leads to permanent changes in consumer behaviour”.
News from DBDH. Journal 3/2006 pp. 20-24.
13
Clemens Felsmann, J uliane Schmidt, Technische Universitat Dresden, J anuary 2013, Auswirkungen der
verbrauchsabhängigen Abrechnung in Abhängigkeit von der energetischen Gebäudequalität.

12

supplied from district heating where these are new buildings or when these buildings
undergo major renovation.
E. OBLIGATIONS TO ENSURE THE PROVISION OF BILLING INFORMATION

The distinction between bills and billing information
28. Article 10(3)(d) introduces a distinction between bills (which carry the obligation to settle
the due amount) and billing information (which do not, but will normally otherwise
contain the same information).

Specific rules for billing information
29. Article 10(1) requires Member States to ensure, by 31 December 2014, that billing
information is accurate and based on actual consumption, in accordance with point 1.1 of
Annex VII. This provides that billing information should be made available at least
quarterly upon request or where customers have chosen electronic billing, otherwise twice
a year. Under Article 10(1), these minimum requirements do not need to be followed if it
is not 'technically possible and economically justified'.

30. Therefore the minimum frequencies set out in point 1.1 of Annex VII must always be
respected unless not technically feasible or economically justified – which the Member
States would have to explain when they notify their transposition of Article 10 to the
Commission.

31. In accordance with Article 10(1), where smart meters are not available, the final sentence
of point 1.1 of Annex VII states that gas used only for cooking may be exempted from the
requirements on frequent billing information to final customers. If a Member State decides
to apply this clause, it must explain to final customer the extent they apply the exemption
and what rights in relation to frequent billing information on the consumption of gas used
for cooking the final customer has. An example could be setting an annual maximum
consumption limit for gas used for cooking, under which frequent billing information
based on actual consumption would not be required.

32. Article 10(1) requires that billing information is provided at the frequency specified in
Annex VII, point 1.1 of the EED regardless of the type of the non-smart meter and the
billing regime. This means that billing information based on actual consumption must also
be provided (where this is technically possible and economically justified) in accordance
with Article 10(1) first and second paragraph, in cases where the final customers are using
non-smart pre-payment meters,

33. Where technically possible and cost-effective, in multi-apartment and multi-purpose
buildings, billing information on individual consumption of heating and hot water must be
supplied at least twice a year or quarterly when requested by the final customers. The

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EED does not lay down any special rules for taking a collective decision e.g. to sign up for
electronic billing. Normally, national procedures for decision-making in such buildings
will apply.

34. Where meters with remote-reading function are not available, the obligation to provide
frequent billing information can still be implemented in a number of ways including
requiring that energy providers offer systems of meter self-reading to the final customers
or on the basis of data collection by manual meter readers if this is cost-efficient.

35. The critical pre-assumption for the obligation for the provision of accurate billing
information based on actual consumption established in Article 10(1) is the availability of
individual metering equipment (meters or heat cost allocators). However, Article 9(3)
requires that individual consumption meters/heat cost allocators for measuring individual
consumption of heating or cooling or domestic hot water must be installed in multi-
apartment buildings by 31 December 2016.

As regards the provision of heating/cooling and domestic hot water in multi-apartment or
multi-purpose buildings supplied from a common source (other than district
heating/cooling), Article 9(3) provides for more precise conditions than the first paragraph
of Article 9(1) (lex specialis derogat legi generali). It follows that, in such buildings, the
fulfilment of the obligation to provide accurate billing information based on actual
consumption in line with Article 10(1) does not have to take place before Article 9(3) is
implemented, i.e. by 31 December 2016 at the latest.

However, the deadline of 31 December 2016 does not apply to the obligation to provide
individual meters in multi-apartment buildings supplied from district heating/cooling
under conditions specified in Article 13(1) of Directive 2006/32/EC. The deadline for
transposition of this provision was and remains 17 May 2008.

36. The provisions of Article 10(1) refer specifically to the situation in which final customers
do not have smart electricity or gas meters. As such, the minimum frequency for accurate
binding information based on actual consumption specified in point 1.1 of Annex VII of
the EED does not apply to situations where final customers do have such smart electricity
or gas meters.

37. Where a smart metering system is available to final customers, the provisions of the 3
rd

Internal Market Package for electricity and gas
14
continue to apply. According to an
interpretative note published by the Commission on 22 J anuary 2010, where smart
                                                           
14
Directive 2009/72/EC and Directive 2009/73/EC.

14

metering is available to final customers, billing information based on actual consumption
should be provided on a monthly basis
15
.

38. In the context of Article 10(1), the criterion of cost-efficiency for the provision of accurate
billing information based on actual consumption, in accordance with the minimum
frequency specified in point 1.1 of Annex VII of the EED, may be relevant mainly for
establishing whether the cost of sending manual meter readers is economically justified. If
Member States do establish in specific cases that the provision of frequent billing
information based on actual consumption is not cost-efficient this should be explained and
communicated to final customers and those responsible for individual billing by 31
December 2014.

39. According to Article 10(2), where smart electricity or gas metering is in operation,
Member States must ensure that final customers are provided with complementary
information on their own consumption. The obligation must be fulfilled by 5 J une 2014
and from that moment would apply to any smart meters that have been installed before
that date and are still in operation.

40. Complementary information on cumulative data corresponding to intervals for which
frequent billing information has been produced is meant to cover information about
consumption (e.g. for a given month, if billing information is provided monthly) and the
related costs incurred by the final customer. Member States may require that such
information is provided to final customers via paper/electronic billing or any other means
(e.g. separate monthly reports sent to final customers by mail or electronically by the
energy supplier or an energy service company acting on behalf of the energy supplier or
via a secure website).

41. According to Article 10(2)(b), where smart electricity/gas meters have been installed,
Member States must ensure that detailed complementary information according to the
time of use for any day, week, month and year is provided to final customers via internet
or the meter interface. The provision does not provide for other ways to provide such
information.

42. Independently of whether smart meters have been installed or not, in relation to the use of
electricity, natural gas, heating, cooling and domestic hot water, Member States must
require that from 5 J une 2014, information on historical consumption (as referred to in
Article 10(2)) is provided to the final customers or an energy service provider designated
by the final customer, to the extent such information is available. The obligation would
normally be passed on to the energy suppliers and any other organisation collecting and
storing data on individual consumption of final customers.

                                                           
15
http://ec.europa.eu/energy/gas_electricity/interpretative_notes/doc/implementation_notes/2010_01_21_retail_
markets.pdf

15

43. Under Article 10(3)(e) Member States must establish a requirement for information on
energy costs and estimates of energy costs to be provided on demand to enable consumers
to compare deals on a like-for-like-basis, In doing so, Member States have to determine
the meaning of 'timely manner' and 'easily understandable format'.

Common rules for billing information and the actual bills
44. According to Article 10(1) second paragraph, for final customers with non-smart meters,
where frequent 'billing' and 'billing information' based on actual consumption is enabled
by a system of regular self-reading by the final customer, billing information based on
estimated consumption or flat rates must be provided only in situations where, for a given
interval for billing information, the final customer for whatever reason has not provided a
meter reading.

45. The condition of technical feasibility for the provision of accurate bills and billing
information based on actual consumption is strictly linked to the availability of accurate
meters complying with Directive 2004/22/EC of the European Parliament and of the
Council on measuring instruments, or accurate heat allocators complying with relevant
European standards
16
.

46. According to Article 10(3)(b) Member States must ensure that by 5 J une 2014 all final
customers are offered the option of electronic bills and billing information for all types of
consumption covered by Articles 9, 10 and 11, whether with or without smart meters.

Specific rules for the bills themselves
47. According to point 1.1 of Annex VII of the EED, Member States are required to ensure
that, where individual meters are available, individual bills based on actual consumption
are provided at least annually. The general deadline for transposition applies (5 J une
2014).

If the system of self-reading described in Article 10(1) second subparagraph is in use, bills
based on estimated consumption can be issued only if the final customer has not provided
the meter reading.

48. Article 10(3)(d) permits Member States to provide that, at the request of the final
customer, information in bills does not constitute a request for payment. In such cases,
                                                           
16
EN 834 Standard on heat cost allocators for the determination of the consumption of room heating radiators -
appliances with electrical energy supply.
EN 835 Standard on heat cost allocators for the determination of the consumption of room heating radiators -
appliances without electrical energy supply based on the evaporation principle.

16

Member States must ensure that suppliers of energy offer flexible arrangements for actual
payments
17
.

49. Although not referred to in the EED directly, it is recommended that Member States
ensure that, in case of actual bills, information about the request for payment and
information on possible flexible arrangements for payment is included in or provided with
the actual bill (Article 10(3)(d)). This will help final customers more easily distinguish
between the bill and the billing information.
F. OBLIGATIONS TO ENSURE FREE OF CHARGE PROVISION OF METERING AND BILLING
INFORMATION

50. Article 11(1) requires Member States to ensure that final customers receive all their
consumption data as well as bills and billing information free of charge.

51. It follows that energy suppliers or other organisations must themselves bear the costs of
producing and delivering bills and billing information to the final customers.

52. This does not rule out energy companies giving final customers a discount or bonus for
opting for electronic bills and billing information.

53. Under Article 11(2) Member States must ensure that the distribution of costs of billing
information for individual consumption of cooling and heating in multi-apartment and
multi-purpose buildings, must be carried out on a non-profit basis. In that case, costs
incurred by assigning this task to a third party can be passed onto the final customers
occupying such buildings to the extent that such costs are reasonable. In such situations,
billing information issued for example by a district heating company to an owner of a
multi-apartment building would need to be provided free of charge. However, for billing
and billing information, the costs related to contracting a service related to accurate
measuring, allocating and accounting for individual consumption for different apartments
or units in such buildings (sub-billing), may be passed on to the end-users occupying these
apartments/units.

54. The task to define the conditions under which the costs referred to in Article 11(2) are
'reasonable' lies with the Member States.

55. In Article 11(2), the term 'heating and cooling', especially in case of buildings with an
own common heating and hot water source, comprises also domestic hot water where
heating is a prerequisite for warm water preparation.
                                                           
17
As regards electricity and natural gas, the obligation to ensure that final customers are offered a wide range of
payment methods was already introduced in Annex 1(1d) to Directive 2009/72/EC and Annex 1(1d) to Directive
2009/73/EC. The, Energy Efficiency Directive extends this rule to heating/cooling and domestic hot water
supplied from district heating/cooling.

17

G. OBLIGATIONS TO ENFORCE IMPLEMENTATION OF ARTICLES 9, 10 AND 11

56. In accordance with Article 13, Member States are required to lay down rules on effective,
proportionate and dissuasive penalties applicable in case of non-compliance with the
national provisions adopted pursuant to Articles 9 to 11 and must take the necessary
measures to ensure that they are implemented.

EN EN


EUROPEAN
COMMISSION
Brussels, 6.11.2013
SWD(2013) 449 final

COMMISSION STAFF WORKING DOCUMENT
Guidance note on Directive 2012/27/EU on energy efficiency, amending Directives
2009/125/EC and 2010/30/EC, and repealing Directives 2004/8/EC and 2006/32/EC

Article 14: Promotion of efficiency in heating and cooling




Accompanying the document
COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN
PARLIAMENT AND THE COUNCIL


Implementing the Energy Efficiency Directive – Commission Guidance

{COM(2013) 762 final}
{SWD(2013) 445 final}
{SWD(2013) 446 final}
{SWD(2013) 447 final}
{SWD(2013) 448 final}
{SWD(2013) 450 final}
{SWD(2013) 451 final}


2
TABLE OF CONTENTS
 
A. INTRODUCTION .............................................................................................................................. 3
B. THE COMPREHENSIVE ASSESSMENT ............................................................................................. 5
C. THE COUNTRY-LEVEL COST-BENEFIT ANALYSIS ....................................................................... 10
D. THE INSTALLATION-LEVEL COST-BENEFIT ANALYSIS .............................................................. 16
E. AUTHORISATION AND EQUIVALENT PERMIT PROCEDURES FOR INSTALLATIONS ................... 17
F. EXEMPTIONS FROM THE COST-BENEFIT ANALYSIS FOR INSTALLATIONS ................................ 21
G. RELATIONSHIP BETWEEN COMPREHENSIVE ASSESSMENT AND INSTALLATION-LEVEL
OBLIGATIONS ........................................................................................................................................ 23
 
 

3
ARTICLE 14: PROMOTION OF EFFICIENCY IN HEATING AND COOLING

A. INTRODUCTION
1. Article 14 of the Energy Efficiency Directive
1
(hereafter 'the EED' or 'the Directive') extends
the scope and replaces the substantive provisions of Directive 2004/8/EC
2
on the promotion of
cogeneration (hereafter 'the CHP Directive'). This document therefore covers the new
provisions and will only address provisions of the CHP Directive as necessary to facilitate the
understanding of the new Directive.

2. The overall objective of Article 14 is to encourage the identification of cost effective potential
for delivering energy efficiency, principally through the use of cogeneration, efficient district
heating and cooling and the recovery of industrial waste heat or, when these are not cost-
effective, through other efficient heating and cooling supply options, and the delivery of this
potential. Member States are required to identify the potential for high-efficiency
cogeneration and efficient district heating and cooling and to analyse the costs and benefits of
the opportunities that may exist. Article 14(4) then requires Member States to take adequate
measures to ensure these are developed if there is cost-effective potential.

3. The Directive defines high-efficiency cogeneration, efficient district heating and cooling and
efficient individual heating and cooling supply options. These definitions are found in Article
2(34), (41) and (43) respectively. These together represent all the types of efficient heating
and cooling that Article 14 seeks to promote. The concept of efficient heating and cooling is
defined in Article 2(42).

4. Efficient heating and cooling encompasses principally the use of heat from cogeneration and
renewable energy sources
3
, the recovery of waste heat from industrial processes to meet
demand for heating and cooling
4
, and in general all those heating and cooling options that
achieve primary energy savings compared to a baseline scenario
5
. It is therefore a
comprehensive concept that covers all heating and cooling options
6
in line with the general
definition of energy efficiency provided in the Directive
7
.
                                                           
1
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, OJ L
315, 14.11.2012, p. 1.
2
Directive 2004/8/EC of the European Parliament and of the Council of 11 February 2004 on the promotion of
cogeneration based on a useful heat demand in the internal energy market and amending Directive 92/42/EEC
OJ L 52, 21.2.2004, p. 50–60
3
See points 41, 42 and 43, the first sub-paragraph of Article 14(4) and Annex IX.1(b).
4
The recovery of waste heat from industrial processes can be implemented with cogeneration or through feeding
the heat to a district heating and cooling network or through using the waste heat on site to meet en
economically justifiable demand for heating and cooling.
5
The definition of 'efficient heating and cooling' in Article 2(42) sets primary energy saving, i.e. the reduction of
primary energy input needed to supply one unit of delivered energy, as the main criterion of efficiency.
6
Article 2(42): 'efficient heating and cooling’ means a heating and cooling option that, compared to a baseline
scenario reflecting a business-as-usual situation, measurably reduces the input of primary energy needed to
supply one unit of delivered energy within a relevant system boundary in a cost- effective way [… ]'.
7
The definition of energy efficiency in Article 2(2) is the following: 'energy efficiency' means the ratio of output
of performance, service, goods or energy, to input of energy'.

4

5. Article 14 requires Member States to comply with the following main obligations:

 Carry out and notify by 31 December 2015 to the Commission a comprehensive
assessment of the potential for the application of high efficiency cogeneration and
efficient district heating and cooling based on a country-wide cost-benefit analysis
following the methodology set out in Part 1 of Annex IX and containing the information
set out in Annex VIII. The assessment should be updated every five years, if the
Commission asks for this at least one year before the due date.

 Take adequate measures for efficient district heating and cooling infrastructure to be
developed and/or to accommodate the development of high-efficiency cogeneration and
the use of heating and cooling from waste heat and renewable energy sources, where the
comprehensive assessment identifies a potential whose benefits exceed the costs for
the application of high efficiency cogeneration and efficient district heating and cooling.

 Adopt policies in relation to local and regional levels that encourage the due taking into
account of the potential of using efficient heating and cooling systems, including the
potential identified in the comprehensive assessment.

 Adopt authorisation or permit criteria and procedures for operators of electricity
generation installations, industrial installations and district heating and cooling
installations ensuring that they carry out an installation-level cost-benefit analysis on the
use of high-efficiency cogeneration and/or the utilisation of waste heat and/or connection
to a district heating and cooling network when they plan to build or refurbish capacities
above 20 MW thermal input or when they plan a new district heating and cooling
network. The procedure and criteria must also lay out the conditions for exemption from
the obligation to prepare a cost-benefit analysis, if the Member State decides to use the
exemptions allowed under paragraph 6 (see Section F, points 70-74).

The adopted procedure may specify exemptions based on the comprehensive assessment
(and country-wide cost-benefit analysis), if applicable (see section F, point 76).
The procedure should in any case specify how ad hoc exemptions from implementing the
outcome of the cost-benefit analyses will be granted under paragraph 8 of Article 14, if a
Member States decides to permit those exemptions.
Accordingly, the procedure and criteria should at least include the following:
i. A requirement to prepare a cost-benefit analysis when a new installation with a
total thermal input of 20 MW is planned or is substantially refurbished or when
a new district heating and cooling network is planned (specifying exemption
conditions under paragraphs 4, and 6, if applicable);

5
ii. The methodology, including the assumptions and time horizons, and the
procedure for the cost-benefit analysis to be carried out for installations, on the
basis of the methodology set out in Annex IX, 2;
iii. A definition of how the results of the comprehensive assessment and the
country-level cost-benefit analysis should be taken into account in the
authorisation or permit criteria.

6. In terms of chronological order, the legal transposition measures should be accomplished by
the following dates:

a. Notify exemptions from the cost-benefit analysis for installations as referred
to in Article 14(6) by 31 December 2013;
b. Require installations referred to in Article 14(5) to carry out a cost-benefit
analysis each time a new installation is planned or an existing installation is
refurbished starting from 5 June 2014;
c. Notify the comprehensive assessment referred to in Article 14(1) by 31
December 2015;
d. Notify the update of the comprehensive assessment every five years at the
request of the Commission made at least one year before the due date.

7. Member States should notify their legal provisions transposing the Directive into national law
using the 'NIF' database. To ensure an efficient transfer of information Member States are also
encouraged to use the 'NIF' database for the notifications mentioned above.

8. The note presents the Commission's services' understanding of how the relevant provisions of
the EED are to be interpreted. It aims to enhance legal certainty but does not create any new
rules. In any event, giving binding interpretation of European Union law is ultimately the role
of the European Court of J ustice. The present note is not legally binding.

9. This note aims to provide guidance to Member States on how to apply Article 14 of the EED.
The note states the views of the Commission, does not alter the legal effects of the Directive
and is without prejudice to the binding interpretation of Article 14 as provided by the Court of
J ustice.
B. THE COMPREHENSIVE ASSESSMENT
10. According to Article 14(1), 'By 31 December 2015, Member States shall carry out and notify to
the Commission a comprehensive assessment of the potential for the application of high-
efficiency cogeneration and efficient district heating and cooling, containing the information
set out in Annex VIII.'


6
11. The comprehensive assessment must be based on a cost-benefit analysis covering the Member
State's territory and taking into account climate conditions, economic feasibility and technical
suitability in accordance with Part 1 of Annex IX
8
.

12. This section addresses the purpose of the comprehensive assessment and the information it
must contain. It also provides elements of guidance on how to carry it out.

13. The purpose of the comprehensive assessment is to produce clear results to deliver energy
efficiency in heating and cooling. These results should be reflected in the information notified
to the Commission. They can be divided into mandatory and optional elements.

14. The mandatory information to be provided relates to the potential for high-efficiency
cogeneration and efficient district heating and cooling identified on the basis of the country-
level cost-benefit analysis and on the measures Member States intend to take to achieve that
potential (Article 14(2) and (4))
9
. In addition, Member States may include, as optional
elements, information on the potential for other efficient heating and cooling systems, such as
efficient individual heating and cooling supply options identified as positive alternative
scenarios when conducting the country-level cost benefit analysis
10
.

15. Member States are free to decide the form in which they express the potential. A logical way of
presenting it would be to indicate at least the following: additional expected demand for heat
and cooling by sectors; the potential for additional new and refurbished production capacities
in MW; additional production of heat and electricity in MWh. For district heating and cooling
this capacity and production data would be mutatis mutandis presented and complemented with
the following indicators: the additional length of pipelines; the new area covered; the number
of new connected consumers and the quantity of heat or cooling to be delivered in MWh from
cogeneration, renewable energy, waste heat and other supply source categories
11
. To allow for
assessment of the size of the potential, the figures mentioned above would also logically be
expressed in relative terms, i.e. in percentages comparing the additional capacities, production
and consumption, pipelines length and area covered to the base year, indicating an increase or
decrease.
                                                           
8
Article 14(3): 'For the purpose of the assessment referred to in paragraph 1, Member States shall carry out a
cost-benefit analysis covering their territory based on climate conditions, economic feasibility and technical
suitability in accordance with Part 1 of Annex IX.'
9
Article 14(1): '… a comprehensive assessment of the potential for the application of high-efficiency
cogeneration and efficient district heating and cooling, containing the information set out in Annex VIII'.
Article 14(4): 'Where the assessment referred to in paragraph 1 and the analysis referred to in paragraph 3
identify a potential for the application of high-efficiency cogeneration and/or efficient district heating and
cooling whose benefits exceed the costs, Member States shall take adequate measures for efficient district
heating and cooling infrastructure to be developed and/or to accommodate the development of high-efficiency
cogeneration and the use of heating and cooling from waste heat and renewable energy sources […].'
10
The country-level cost benefit analysis should be 'capable of facilitating the identification of the most resource
/and cost-efficient solutions to meeting heating and cooling needs and in general to help promote efficiency in
heating and cooling, including efficient individual heating and cooling' (Article 14(3), first and second
paragraph and point (d) of Annex IX.1).
11
The capacity should be expressed in MW
e
for electricity and MW
th
for heat. The production of heat and
electricity and the quantity of supplied heat and cooling should be expressed in MWh
e
for electricity and
MWh
th
for heating and cooling. Member States can additionally provide heat production and supply quantities
in GJ .

7

16. Member States must adopt policies which encourage the due taking into account at local and
regional levels of the potential of using efficient heating and cooling systems, taking account of
the potential for developing local and regional heat markets (Article 14(2))
12
. They may use the
comprehensive assessment to define this potential in addition to those for high-efficiency
cogeneration and efficient district heating and cooling.

17. The comprehensive assessment must cover the information listed in points (a) to (j) of Annex
VIII. It must describe a Member State's heating and cooling demand
13
. It must provide a
forecast of how this demand will evolve in the next 10 years
14
. It must include a heat map that
identifies significant demand and supply points for heating and cooling
15
and existing and
planned district heating and cooling infrastructures
16
. The assessment must identify the heating
and cooling demand that could be satisfied by high-efficiency cogeneration, residential micro-
cogeneration and district heating and cooling
17
. Taking the heating and cooling demand as a
starting point, it should then identify the potential for additional high-efficiency cogeneration,
i.e. from building new capacities; from refurbishing existing electricity generation and
industrial installations; and from other facilities generating waste heat
18
; as well as the potential
for developing efficient district heating and cooling infrastructures to accommodate the
development of high-efficiency cogeneration and the use of heating and cooling from waste
heat and renewable energy sources
19
.

Based on the identified potential, the assessment should provide information on the measures,
strategies and policies that may be adopted to achieve the potentials up to 2020 and 2030
20
. The
adoption of measures is only mandatory if the assessment identifies a potential whose benefits
exceeds the costs.

The assessment should also give estimates of the value of public support measures to heating
and cooling broken down by annual earmarked budget, if such support is planned, and an
estimate of the primary energy to be saved by those measures
21
.

Finally, the assessment must include an explanation and comparison of how the potentials and
measures identified under the comprehensive assessment relate to the potentials and progress
achieved under the CHP Directive.

                                                           
12
Article 14(2): 'Member States shall adopt policies which encourage the due taking into account at local and
regional levels of the potential of using efficient heating and cooling systems, in particular those using high-
efficiency cogeneration. Account shall be taken of the potential for developing local and regional heat
markets.'
13
See point (a) of Annex VIII.1.
14
See point (b) of Annex VIII.1.
15
See point 1 (c)(i) and (ii) of Annex VIII.
16
See point 1 (c)(ii) of Annex VIII.
17
See point 1 (d) of Annex VIII.
18
See point 1 (e) of Annex VIII.
19
See point 1 (f) of Annex VIII.
20
See point 1(g) of Annex VIII and Article 14(4).
21
See point 1 (i) and (j) of Annex VIII.

8
18. Member States are free to decide how to prepare the comprehensive assessment and can draw
on assessments or cost-benefit analysis already prepared under other European or national
initiatives. A logical approach would be as follows:

 First, establish the heat and cooling demand of the country
22
. The description of the heat
demand should relate to real, i.e. measured and verified, consumption information as
provided in national and European energy statistics and national energy balances. It
should be provided in a detailed sectoral and geographical break-down, and in any case
not less detailed than in relevant European energy statistics. It should provide information
about the consumption of the industrial, services, agricultural and household sectors. The
description of heat demand should be based on the latest available data. Since official
statistical information at the time of the notification deadline of 31 December 2015 will
probably be available only for 2013, this can be used as the default base year for the
projections made for the purpose of the comprehensive assessment.

 Second, prepare a forecast of how this demand will evolve in the next 10 years. This
forecast should take into account the trends in the major sectors of the economy. It should
analyse the likely evolution of heat demand in industrial sectors, taking into account
longer term structural trends (such as de-industrialisation or re-industrialisation or
efficiency improvements and the impact of new production technologies) as well as
shorter term cyclical changes. The evolution of heat demand in buildings should be given
specific consideration, including an analysis of the impact of energy efficiency
improvements in buildings, such as those required under the Energy Performance of
Buildings Directive (2010/31/EU)
23
and the EED.

 Third, prepare a map of the national territory that identifies at least the main supply and
demand points above certain consumption or production thresholds, and the existing and
planned district heating and cooling infrastructures. The thresholds are listed in points (i)
and (iii) of Annex VIII.1(c). For heating demand, municipalities and conurbations with a
plot ratio of at least 0.3
24
and industrial zones with a total annual heating and cooling
consumption of more than 20 GWh should be shown in the map. For production,
electricity generation installations with a total annual electricity production of more than
20 GWh, waste incineration plants and cogeneration plants of all technology types should
be shown. Both existing and planned demand and supply points should be presented on
the map.

 Fourth, based on the identified heat demand and heat demand forecast, Member States
will have to identify those elements of the heat demand that technically could be satisfied
by high-efficiency cogeneration, micro-cogeneration and efficient district-heating and
cooling. This means establishing the maximum or technical potential.
                                                           
22
A reference to heat and heating should normally be understood as a reference to heating and cooling.
23
Directive 2010/31/EU on the energy performance of buildings, OJ L 153, 18.6.2010, p. 13.
24
An area with a plot ratio of 0.3 currently corresponds to a linear heat density of 2.5 MWh/m, since the current
specific heat demand is about 130 kWh/m2. This is a threshold indicating areas where expert literature
considers district heating directly feasible. In France, there were some 176 city districts in 31 cities with a plot
ratio higher than 0.3 in 2001. At the same time 82 city districts had a higher than 0.3 plot ratio in Paris. (Linear
heat density is the quota of heat annually sold and the total trench length of the district heating pipe system.)

9

 Fifth, Member States will have to identify those parts of the technical potential that can
economically be met by high-efficiency cogeneration, including residential micro-
cogeneration, by the refurbishment of existing and the construction of new generation and
industrial installations, by utilising waste heat, and by refurbishing and building district-
heating and cooling infrastructures meeting the efficient district heating definition of the
Directive
25
. This is the potential whose benefits exceed the costs. It is the only potential
that needs to be achieved (see especially Article 14(3) and Annex IX). This potential can
be called the economic potential.

Establishing the economic potential will not be possible without cost-benefit analysis.
Article 14(3) therefore requires Member States to carry out a cost-benefit analysis for the
purposes of the comprehensive assessment. The cost-benefit analysis is covered in section
C below. The requirement for establishing the infrastructure potential is expressed in point
(f) of Annex VIII.1, which states that [the potential to be identified by Member States
under Article 14(1) also includes the] 'energy efficiency potentials of district heating and
cooling infrastructure'.

 Sixth, based on the economic potential, Member States will have to define strategies,
policies and measures that may be adopted up to 2020 and up to 2030.

When doing so, Member States will have to bear in mind their obligation, in the event that
a cost beneficial potential is identified in their comprehensive assessment, to take
adequate measures for efficient district heating and cooling infrastructure to be developed
and/or to accommodate the development of high efficiency cogeneration and the use of
heating and cooling from waste heat and renewable energy sources, as required by Article
14(4). In the event that potential with a cost-benefit surplus is not identified in the
comprehensive assessment, Member States have no obligation to take measures in the
sense of Article 14(4). When the cost-benefit surplus is not sufficient to cover the
administrative costs of carrying out the cost-benefit analysis for an installation referred to
in Article 14(5), Member States are not required to take measures in relation to that
installation; they may however still need to take other types of measures that are adequate
to ensure the achievement of the identified potential.

Member States should also adopt policies which encourage the due taking into account at
local and regional levels of the potential of using efficient heating and cooling systems, in
particular high-efficiency cogeneration and taking into account the potential for
developing local and regional heat markets, as required under Article 14(2).

19. In addition, and further to the second sub-paragraph of Article 14(4), should a Member State
find and indicate to the Commission that the comprehensive assessment has not found cost-
effective potential in some or all regions of its territory, then an exemption from the
requirements of Article 14(5) may be applied to installations situated in those regions.

                                                           
25
See Article 2(41)

10
20. According to the last sentence of Article 14(3), Member States may use cost-benefit analyses
carried out under Directive 2001/42/EC. This is to ease the administrative burden. If an
environmental impact assessment conducted under Directive 2001/42/EC provides equivalent
analysis to that required under Annex VIII and IX, it can be used for the purposes of the
comprehensive assessment.
C. THE COUNTRY-LEVEL COST-BENEFIT ANALYSIS

21. The comprehensive assessment cannot be prepared without carrying out cost-benefit analysis.
This is necessary in order to identify the economic potential, that is to say cost-efficient
solutions for meeting heating and cooling demand.

22. According to Article 14(3) and the first paragraph of Annex IX.1, the country-level cost-benefit
analysis conducted as part of the comprehensive assessment must be capable of facilitating the
identification of the most resource- and cost-efficient solutions to meeting heating and cooling
needs
26
, and in general of helping promote efficiency in heating and cooling
27
. It must help
decision making and provide a decision base for prioritisation of limited resources
28
. It must
provide an instrument to establish the most cost-effective and beneficial heating and cooling
options in a given geographical area for the purpose of heat planning
29
.

23. Article 14(4) and Part 1 of Annex IX establish the purpose and the scope of the cost-benefit
analysis. They set out the range of heat and cooling options that need to be examined and lay
down methodological principles to ensure the quality of the analysis.

24. The country-level cost-benefit analysis is an economic analysis that must cover all relevant
social, economic and environmental factors
30
. It should be based on the analysis of a
comprehensive inventory of effects
31
.

25. The principle of comprehensiveness is reflected in the requirements that the total long-term
costs and benefits of a heating and cooling option should be assessed
32
. Therefore,
geographical and system boundaries
33
and the time horizons
34
of projects or groups of projects
must be set in such a way that all relevant costs and benefits are included in the analysis.
                                                           
26
Article 14(3): 'The cost-benefit analysis shall be capable of facilitating the identification of the most resource-
and cost-efficient solutions to meeting heating and cooling needs'.
27
This more general mandate is reflected in the purpose of the cost-benefit analysis that should support the
comprehensive assessment. The first paragraph of Annex IX.1 reads: 'The purpose of preparing cost-benefit
analyses in relation to measures for promoting efficiency in heating and cooling as referred to in Article 14(3)
is to provide a decision base for qualified prioritisation of limited resources at society level.'
28
Annex IX,Part 1, first sentence.
29
Annex IX, Part 1, second paragraph.
30
'Cost-benefit analyses for the purposes of Article 14(3) shall include an economic analysis covering socio-
economic and environmental factors.' (Third paragraph of Annex IX, Part 1);
31
'The economic analyses shall take into account all relevant economic effects.' (Point (g) of Annex IX.1)
32
'The total long-term costs and benefits of heat or cooling supply options shall be assessed and compared.'
(Point (e) (i) of Annex IX, Part 1).
33
'The cost-benefit analysis shall take into account all relevant supply resources available within the system and
geographical boundary, using the data available, including waste heat from electricity generation and

11

26. The cost-benefit analysis should cover the entire territory of a Member States
35
. It could – in
practical terms – be carried out by a series of cost-benefit analyses for projects or groups of
projects in the framework of local/regional assessments
36
. It should take into account climate
conditions, economic feasibility and technical suitability
37
.

27. The cost-benefit analysis should be used to establish the potential of high-efficiency
cogeneration and efficient district heating and cooling. However, to arrive at sound results, the
analysis should consider and compare alternative scenarios covering the full range of efficient
heating and cooling supply options. This follows from the requirement that only high-
efficiency cogeneration, efficient district heating and cooling and efficient individual heating
and cooling supply options should be assessed as alternative to the baseline situation
38
and
from the more general requirement that the analysis must be capable of facilitating the
identification of the most resource and cost-efficient solutions to meeting heating and cooling
needs
39
.

28. Part 1 of Annex IX requires Member States to establish and make public the procedure for the
cost-benefit analysis. This means that they need to define by whom, how and on the basis of
which assumptions the cost-benefit analysis will be carried out. Member State must designate
the competent authorities responsible for carrying out the cost-benefit analyses. They must
ensure that the analysis has both an economic and a financial analysis included. They can
assign these tasks to local, regional and national authorities and even to operators of individual
installations or distribute the tasks among different actors. They must provide detailed
methodologies, and assumptions on the prices of major input and output factors and on the
discount rate – for use in establishing the baseline (i.e. reference) and alternative scenarios
40
.

29. These requirements are defined in the last paragraph of Annex IX. Part 1 as follows: 'Member
States shall designate the competent authorities responsible for carrying out the cost-benefit
analyses under Article 14. Member States may require competent local, regional and national
authorities or operators of individual installations to carry out the economic and financial
analysis. They shall provide the detailed methodologies and assumptions in accordance with
this Annex and establish and make public the procedures for the economic analysis.'
                                                                                                                                                                                         
industrial installations and renewable energy, and the characteristics of, and trends in heat and cooling
demand.' (Point (b) of Annex IX.1) See also the second sentence of point (a) of Annex IX.1: 'The geographical
boundary shall cover a suitable well-defined geographical area, e.g. a given region or metropolitan area, to
avoid selecting sub- optimised solutions on a project by project basis.'
34
'The time horizon shall be chosen such that all relevant costs and benefits of the scenarios are included. For
example, for a gas-fired power plant an appropriate time horizon could be 25 years, for a district heating
system, 30 years, or for heating equipment such as boilers 20 years' (Point (e) (iii) of Annex IX.1).
35
Article 14(3): 'For the purpose of the comprehensive assessment [...] Member States shall carry out a cost-
benefit analysis covering their territory based on climate conditions, economic feasibility and technical
suitability [...].'
36
'The cost-benefit analysis may either cover a project assessment or a group of projects for a broader local,
regional or national assessment in order to establish the most cost-effective and beneficial heating or cooling
option for a given geographical area for the purpose of heat planning.'(Second paragraph of Annex IX.1).
37
Article 14(3), see above.
38
Annex IX.Part 1.(d).
39
Article 14(3), second sentence.
40
Annex IX, Part 1, last paragraph.

12

30. As regards the methodology for preparing the cost-benefit analysis, the steps to be taken are
described in Part 1 of Annex IX.

31. The first step is to identify the system and geographical boundary for a given project or
group of projects, which defines the scope of the analysis.

32. Within a given geographical boundary all relevant supply resources and characteristics and
trends in heat and cooling demand need to be taken into account, including the current situation
and future trends in the selected time frame. This means that not only existing heating and
cooling supply should be looked at, but other energy flows within the geographical boundary,
i.e. electricity production and distribution facilities, gas networks and other primary energy
supply sources, including renewable energy, industrial energy production and waste (surplus)
heat from industrial processes. Only when all supply and heat and cooling demand sources are
identified and their possible evolution forecast can there be an assessment of how these energy
flows can be optimised and made more efficient, looking first at the possibility of using
(additional) high-efficiency cogeneration and efficient district heating and cooling, then if these
would not yield cost-benefit surplus under a socio-economic analysis, then at other efficient
heating and cooling supply options, such as efficient individual heating and cooling. This is
because the fundamental purpose of the cost-benefit analysis is to identify 'the most cost-
effective and beneficial heating or cooling option for a given geographical area for the
purpose of heat planning'
41
. The cost-benefit analysis should therefore be understood as
comprehensive energy system planning that covers all relevant technical and economic options.
This is expressed in point (b) of Annex IX. Part1.

33. The second step is to construct a baseline scenario. The baseline scenario should describe the
existing situation and its likely evolution in the selected timeframe, if no parameters of the
existing situation are changed, i.e. the business-as-usual or reference scenario. A critical
element of the baseline scenario, and a key to a successful cost-benefit analysis, is to describe
the heat and cooling demand within the geographical boundary as precisely as possible. The
collection of accurate, reliable and comprehensive heat and cooling data may be a challenge
but is necessary if a Member State is to ensure high quality cost-benefit analyses and a sound
decision base for the comprehensive assessment. If the data gathered for the purposes of the
cost-benefit analysis are also used for the information required under points (a)-(c) of Annex
VIII, no disclosure is needed beyond the level of detail required in the heat map and taking into
account the need of preserving commercially sensitive information
42
.

34. The third step is to identify alternative scenarios. When doing so, Member States have to
consider the relevant possibilities for how heating and cooling can be made more efficient.
43

The Directive provides guidance on what should be considered 'relevant' possibilities, i.e.
'relevant alternatives to the baseline'. Member States must examine cogeneration and district
heating and cooling first. Only when and to the extent that these are not technically or
economically feasible, taking into account long-term costs and benefits within a given
geographical boundary, should Member States proceed with examining other efficient heating
                                                           
41
Annex IX.1, second paragraph.
42
Annex VIII., point (c).
43
Annex IX.1, point (d), first sentence: 'All relevant alternatives to the baseline shall be considered.'

13
and cooling solutions, such as efficient individual heating and cooling
44
. For the purpose of the
comprehensive assessment’s cost-benefit analysis, Member States can only take into account
alternative scenarios that satisfy the definitions of high-efficiency cogeneration, efficient
district heating and cooling and efficient individual heating in particular and the general
concept of efficient heating and cooling in general
45
.

35. The definition of high-efficiency cogeneration is the same as under the CHP Directive. High-
efficiency cogeneration must achieve at least 10% primary energy savings compared to
separate heat and electricity production
46
.

The calculation methodologies required to establish which cogeneration can be considered
high-efficiency, including the related calculation of when electricity can be considered as being
produced from cogeneration, are set out in Annexes I and II of the EED, which incorporate
entirely Annexes II and III of the CHP Directive. Commission Decision 2008/952/EC,
establishing detailed guidelines on the calculation methodology of the quantity of electricity
from cogeneration set out in Annex II of the Cogeneration Directive, also remains in force and
applicable under the Directive
47
. For the purposes of comparison with separate heat and
electricity production, the reference values established in Commission Implementing Decision
2011/877/EU are to be used
48
.

36. Only realistic scenarios need to be examined. Scenarios can be excluded if they are not feasible
due to technical reasons, financial reasons or time constraints or because they conflict with
national law
49
. Financial and time constraint reasons should be in line with the general
principles of the country-level cost-benefit analysis in Part 1 of Annex IX. Accordingly,
scenarios that would likely produce a cost-benefit surplus under the broad socio-economic and
environmental analysis (economic analysis) should not be excluded for financial or time
constraint reasons, even if those would likely produce a negative cost-benefit balance under the
financial analysis.

37. Once the baseline and alternative scenarios are constructed, Member States must set an
appropriate time horizon to ensure that no relevant cost to society is omitted when balancing
the costs and benefits. This follows from the requirement of comprehensiveness, i.e. that the
economic analyses must take into account all relevant economic effects
50
and from the
requirement that the total long-term costs and benefits of heat and cooling supply options must
                                                           
44
This follows from the mandatory content of the comprehensive assessment as set in Article 14(1).  
45
  Annex IX, Part 1, point (d), second paragraph: 'Only high-efficiency cogeneration, efficient district heating
and cooling or efficient individual heating and cooling supply options should be taken into account in the cost-
benefit analysis as alternative scenarios compared to the baseline.' See also the definitions in points (31), (41),
(42) and (43) of Article 2 of Directive 2012/27/EU.
46
Annex III, point (a), second intend of Directive 2004/8/EC and Annex II, point (a), second intend of Directive
2012/27/EU.
47
Commission Decision 2008/952/EC establishing detailed guidelines for the implementation and application of
Annex II to Directive 2004/8/EC of the European Parliament and of the Council, OJ L 338, 17.12.2008, p.55
48
Commission Implementing Decision 2011/877/EU establishing harmonised efficiency reference values for
separate production of electricity and heat in application of Directive 2004/8/EC of the European Parliament
and of the Council and repealing Commission Decision 2007/74/EC, OJ L 343, 23.12.2011, p. 91.
49
Annex IX,Part 1, point (d): 'All relevant alternatives to the baseline shall be considered. Scenarios that are not
feasible due to technical reasons, financial reasons, national regulation or time constraints may be excluded at
an early stage of the cost-benefit analysis if justified based on careful, explicit and well-documented
considerations.'
50
Annex IX,Part 1 point (g).

14
be assessed and analysed when calculating the cost-benefit surplus
51
. This can be achieved only
if a sufficiently long time horizon is chosen, which typically will be the lifetime of an item of
infrastructure or equipment. The time horizon will be specific to each project or group of
projects, but Member States can set typical or standard lifetimes for similar projects for the
sake of simplicity.

38. The Directive provides some examples, such as the likely appropriate time horizon for a gas-
fired power plant, a district heating system and heating equipment
52
. Member States could set
other, longer or shorter, lifetimes if this is justifiable on technical and economic grounds or
needed to cover all relevant costs and benefits to society.

The examples given in point (iii) of Annex IX.1(e) show that the appropriate time horizon
should not be confused with the payback time.

When examining scenarios for efficient heating and cooling, including efficient individual
heating and cooling, the costs of energy required for extraction, conversion, transport and
distribution should be factored into the cost-benefit calculation, as required by the definitions
in Article 2(42) and (43)
53.


39. The valuation criterion must be the net present value (NPV)
54
. That does not mean that
Member States cannot use other valuation methods. However all assessed projects and
scenarios have to be assessed and compared at least under the NPV criterion.

40. NPV analysis requires as input a list of costs and benefits expressed in monetary units. These
costs and benefits will have to be discounted at an appropriate discount rate. NPV above zero
indicates a cost benefit analysis with a positive result or a surplus in excess of costs, while
project with a negative NPV would generate costs in excess of benefits.

41. For the economic analysis, Member States must establish a comprehensive list of input and
output factors and costs and benefits to be taken into account in the calculations. A non-
exhaustive inventory is provided in Annex IX, Part 1, point (g). Member States must use actual
price information for the calculations. They must forecast how these prices would evolve over
the selected timeframe and provide price assumptions
55
. Since the cost-benefit analysis is an
                                                           
51
Annex IX, Part 1, points (e) and (i).
52
Annex IX, Part 1, point (e)(iii).
53
The definition of efficient heating and cooling’ in Article 2(42) reads: '‘efficient heating and cooling’ means a
heating and cooling option that, compared to a baseline scenario reflecting a business-as-usual situation,
measurably reduces the input of primary energy needed to supply one unit of delivered energy within a
relevant system boundary in a cost-effective way, as assessed in the cost-benefit analysis referred to in this
Directive, taking into account the energy required for extraction, conversion, transport and distribution.'
The definition of efficient individual heating and cooling in Article 2(43) reads : '‘efficient individual heating
and cooling’ means an individual heating and cooling supply option that, compared to efficient district heating
and cooling, measurably reduces the input of non-renewable primary energy needed to supply one unit of
delivered energy within a relevant system boundary or requires the same input of non-renewable primary
energy but at a lower cost, taking into account the energy required for extraction, conversion, transport and
distribution.'
54
Annex IX, Part 1, point (e) (ii).
55
'Member States shall provide assumptions, for the purpose of the cost-benefit analyses, on the prices of major
input and output factors and the discount rate.' (Annex IX, Part 1, points (f) and (i)).

15
economic analysis, all relevant long-term impacts of the project, including externalities, should
be included to the extent possible. This is expressed in Annex IX, Part 1, point (f)(iv) which
reads: 'The prices used in the economic analysis shall reflect the true socio economic costs and
benefits and should include external costs, such as environmental and health effects, to the
extent possible, i.e. when a market price exists or when it is already included in European or
national regulation.' There will be costs and benefits for which either no market exists or the
market is incomplete and therefore the price does not reflect the true social value
56
. Where no
market price is available and European or national regulation do not give guidance on that
external cost Member States should to the extent possible, but are not required to, provide
estimates assigning a value for the costs or benefits to society. These estimations can be based
on relevant and accepted economic theories, expressing explicitly the trade-offs associated with
the different uses of the economic and natural resources at a societal level. As an example, the
social benefits can be estimated on the basis of the generally well accepted methods of revealed
or stated preferences, whereas the costs may be defined as the opportunity costs, i.e. the value
that the resources used would have received in the best alternative use. When there is a market
price, but it does not reflect the true social costs, Member States may use correction factors,
such as taxation, as far as these have an impact on market actors' decisions and are not only
internal transfers.

42. The Directive specifically mentions network impacts as factors that may be included in the
cost-benefit analysis.
57
For example, a refurbished power plant converted to cogeneration for
the purpose of district heating and supplying both heat and electricity to nearby consumers,
while also providing balancing services to grid operators, may reduce operational and
investment costs in electricity networks and generation through less power grid congestion, less
need to expand the network and reduced need for peak load and back-up generation capacities,
etc.; an alternative green field investment in an electricity-only plant may have additional costs
to build or reinforce electricity networks, from higher network losses due to longer transport
distances, and higher costs of producing the same amount of heat separately that would
otherwise have been available as a by-product of electricity generation. Potential higher
network losses from higher grid loads, even if seasonal in nature, ensuing from certain
individual heating solutions (e.g. increase in electric heating or air source heat pumps) should
also be taken into account. Electricity and other network impacts therefore need to be
considered in the baseline and alternative scenarios in accordance with the requirements of
Article 15 on network efficiency.

43. Member States must also define the discount rate to be used in the calculation
58
. When they
choose the discount rate for the calculation, they must use European and national guidelines
and take into account data provided by the European Central Bank
59
.

                                                           
56
'The prices used in the economic analysis shall reflect the true socio economic costs and benefits and should
include external costs, such as environmental and health effects, to the extent possible, i.e. when a market price
exists or when it is already included in European or national regulation.' (Annex IX, Part 1, point 1 (e) (iv)).
57
'Member States may assess and take into account in decision making costs and energy savings from the
increased flexibility in energy supply and from a more optimal operation of the electricity networks, including
avoided costs and savings from reduced infrastructure investment, in the analysed scenarios.' (Annex IX, Part
1, point (g), second paragraph).
58
'Member States shall provide assumptions, for the purpose of the cost-benefit analyses, on the prices of major
input and output factors and the discount rate.' (Annex IX, Part 1,points (f) (i)).
59
Annex IX, Part 1, point (f) (ii).

16
44. The analysis should also include a sensitivity analysis to gauge the impact of possible
variations in the most important factors, such as different scenarios for development of heating
and cooling demand, different discount rates, different energy prices and changes in other
major input and output prices
60
.
D. THE INSTALLATION-LEVEL COST-BENEFIT ANALYSIS

45. A core requirement under Article 14 is for Member States to ensure that operators of electricity
generation, industrial installations and district heating and cooling installations listed in point
(a) to (d) of paragraph (5) carry out a cost-benefit analysis when they plan building new or
substantially refurbishing energy production capacities above 20 MW thermal input to assess
the cost-effectiveness of using high-efficiency cogeneration, recovering waste heat and
connecting to a district heating and cooling network. The results of the cost-benefit analysis
must be taken into account in authorisation or permit criteria issued to those installations in
accordance with Article 14(7). Part 2 of Annex IX sets out the principles for the installation-
level cost-benefit analyses that will provide information for measures required under Article
14(5) and (7).

46. The cost-benefit analysis under Article 14(5) for installations 'shall include an economic
analysis covering a financial analysis reflecting actual cash flow transactions'
61
. In contrast to
the country-level cost-benefit analysis described in Part 1 of Annex IX, where the emphasis is
on the economic analysis with a well-defined methodology and accent on socio-economic and
environmental factors, the installation-level analysis described in Part 2 of Annex IX places
more weight on the financial analysis. This analysis must reflect actual cash flows from
investing in and operating individual installations. This is because the outcome of this analysis
should be reflected in authorisation/permitting decisions impacting on the economic activity of
the installations.

47. However, the installation-level analysis has to be embedded in the context of a broader
economic analysis. The economic analysis may be provided either from the cost-benefit
analysis conducted under the comprehensive assessment or by the operators of the installations.
Part 2 of Annex IX requires Member States to set out guiding principles for the methodology,
assumptions and time horizons for the economic analysis.

48. Annex IX Part 2 indicates that both 'existing and potential heat demand points that could be
supplied' should be considered in the cost benefit assessment. Clearly, potential heat load
points may still not exist at the time the installation is commissioned. The cost benefit
assessment and authorisation may therefore need to be made on the basis that the installation is
equipped to operate as cogeneration/waste heat recovery (rather than actually operating as such
at the time of commissioning) and capable of supplying the potential heat loads once they exist.
This case arises when based on the comprehensive assessment there are clear perspectives, i.e.
measures, policies or strategies, that the heat load will come to existence, e.g. the district
heating or cooling network or the missing equipment will be realised and the connection with
the heat consumer(s) will be made as part of a project or groups of projects whose benefits
exceeded the costs under country-level cost-benefit analysis conducted according to Part 1 of
Annex IX.
                                                           
60
Annex IX, Part 1, point (h).
61
Annex IX.2, eighth paragraph.

17

49. It is recommended that Member States adopt detailed guidance on the cost-benefit assessments
to ensure consistent application of this requirement across sites. In addition to the criteria
mentioned in Article 14(6) it is recommended that the guidance establish common assumptions
on payback periods, required rates of return on investment, projected fuel and electricity prices,
policy costs and support levels. These assumptions should be used in the economic analysis
unless the applicant can provide evidence to demonstrate that alternative assumptions are
appropriate in the case of their installation. In line with the requirements of Part 2 of Annex IX
these assumptions should realistically reflect actual investment terms for projects.

50. The Directive does not specify who should be responsible for overseeing and for conducting
the cost-benefit analysis. A common sense solution would be to assign the task of carrying out
the analysis to the operators of installations, while Member States would designate competent
authorities responsible for providing the common methodology, assumptions and timeframes
for at least the economic analysis and would also ensure that the assessments are well-founded.

51. As regards the participants in the cost-benefit analysis, the third sub-paragraph of Article 14(5)
provides that Member States may require the cost-benefit analysis conducted under points (c)
and (d) of Article 14(5) to be carried out in cooperation with the companies responsible for the
operation of the district heating and cooling networks. This provision aims to ensure
coordination between district heating companies and industrial installations when assessing
options of cogeneration and of recovering waste heat.

52. Member States may also choose to be more involved, for example by helping coordinate with
interested parties, such as consumers and district heat companies, or data gathering
62
. This
would have the benefit of creating possibilities of synergies between the Annex IX Part 1 and
Part 2 cost-benefit analyses.
E. AUTHORISATION AND EQUIVALENT PERMIT PROCEDURES FOR INSTALLATIONS

53. Article 14(7) requires Member States to adopt authorisation criteria or equivalent permit
criteria ensuring that installations referred to in points (a)-(c) of Article 14(5) carry out a cost-
benefit analysis and that the outcome of that cost-benefit analysis together with the outcome of
the comprehensive assessment is taken into account in authorisations and permit criteria.

54. 'Authorisation and equivalent permit criteria' means criteria setting conditions for the
construction and/or operation of a power generation or industrial installation. Authorisation and
permitting criteria are therefore conditions the competent authorities should define in a legally
binding decision (i.e. an authorisation, permit or license decision) on the conditions under
which a new or existing installation is allowed to be built, operate and/or modified
(refurbished). Member States are free to decide in which permitting or authorisation procedure
they integrate the criteria listed in points (a) to (c) of Article 14(7). This can be an existing
authorisation procedure under Directive 2009/72/EC or a permitting procedure under Directive
2010/75/EU
63
or any other equivalent procedure, including a newly established one, if some
                                                           
62
Annex IX.2, last paragraph.
63
Directive 2010/75/EU of the European Parliament and of the Council of 24 November 2010 on industrial
emissions (integrated pollution prevention and control), OJ L 334, 17.12.2010

18
categories of electricity generation or industrial installations under Article 14(5) would not
otherwise be covered by an obligation to obtain an authorisation or permit when they are built
or substantially refurbished
64
.

55. For the following installations their respective authorisation or permit criteria must reflect the
requirements of Article 14(7):

1. New thermal electricity generation installation, when planned;
2. Existing thermal electricity generation installation, when substantially refurbished;
3. Industrial installation generating waste heat at a useful temperature level, when
planned;
4. Industrial installation generating waste heat at a useful temperature level, when
substantially refurbished;
5. New district heating and cooling network, when planned;
6. New energy production installation, when planned in an existing district heating or
cooling network;
7. Existing energy production installation, when substantially refurbished in an existing
district heating or cooling network.

56. Substantial refurbishment is defined both in a positive and a negative way. According to
Article 2(44), 'substantial refurbishment' means a refurbishment whose cost exceeds 50% of
the investment cost for a new comparable unit
65
. However, refurbishment that is related to the
fitting of equipment to capture carbon dioxide produced by a combustion installation with a
view to its being geologically stored as provided for in Directive 2009/31/EC does not qualify
as refurbishment and therefore does not trigger the cost-benefit analysis obligation under
Article 14(5) of the Directive
66
.

57. As regards the definition of the concept of 'installation with a total thermal input exceeding 20
MW thermal input', Member States are free to follow their national definitions taking into
account their definitions established under relevant European law, in particular the Industrial
Emissions Directive (2010/75/EU), the EU Emissions Trading Directive (2003/87/EC)
67
and
the Electricity Directive (2009/72/EC)
68
. Under the EED this concept covers all combustion
installations. When calculating the total thermal input of an installation the rated thermal inputs
of all technical units which are part of it and in which fuels are combusted within the
installation should be added together.
                                                           
64
The words 'authorisation' and 'permit' are used interchangeably. They are synonym with each other and with
the word licence', as long as they mean a decision by a competent authority on the technical, design and
operation conditions of a new or substantially refurbished installation.
65
Article 2(44).
66
'The fitting of equipment to capture carbon dioxide produced by a combustion installation with a view to its
being geologically stored as provided for in Directive 2009/31/EC shall not be considered as refurbishment for
the purpose of points (b), (c) and (d) of this paragraph.' (Article 14(5), second sub-paragraph)
67
Directive 2003/87/EC of the European Parliament and of the Council of 13 October 2003 establishing a
scheme for greenhouse gas emission allowance trading within the Community and amending Council Directive
96/61/EC, OJ L 275, 25.10.2003, p. 32–46
68
Directive 2009/72/EC of the European Parliament and of the Council of 13 J uly 2009 concerning common
rules for the internal market in electricity and repealing Directive 2003/54/EC, OJ L 211, 14.8.2009, p. 55–93

19

58. As regards new installations, the cost-benefit analysis obligation should be integrated in the
authorisation or permit criteria when an installation is planned. The concept of 'planned' should
be interpreted in the light of the purpose of the Directive, which is to make energy production
and consumption more efficient and save energy through improving energy efficiency. An
installation is in the 'planned' stage, when an operational decision is considered which has an
impact on its design and operational parameters and thus the energy efficiency performance.
The planned stage is therefore the decision making phase where the authorisation or equivalent
permit on the building or the operation of an installation is under consideration and decided by
the competent authorities. Such an authorisation or permitting decision has to take into account
the results of the cost-benefit analysis. The cost-benefit analysis is therefore part of the
authorisation and equivalent permitting procedure
69
.

59. As regards existing installations, the cost-benefit analysis obligation should be integrated in the
authorisation or permit criteria when there is a substantial refurbishment. Such a refurbishment
should be subject to the installation's authorisation and permits being modified to take into
account the new construction and the changes in operation. The authorisation and permits
should reflect the outcome of the cost-benefit analysis conducted under Article 14(5).

60. It follows from Article 14(7) that authorisation and permit procedures must include the
following requirements:

1. An obligation to prepare a cost-benefit analysis for installations covered under points (a)-
(d) of Article 14(5);
2. An explanation of how the outcome of cost-benefit analysis of installations is to be taken
into account in the authorisation and permit criteria;
3. An explanation of how the outcome of the comprehensive assessment is to be taken into
account in the authorisation and permit criteria;
4. Specification of the conditions for granting installations the exemptions from the cost-
benefit analysis obligation that may be available under Article 14(6) (nuclear
installations, installations that need to be located close to geological storage site
approved under Directive 2009/31/EC, peak load/back-up electricity generating
installations and based on thresholds of available waste heat, heat demand and distance
from district heating networks), if a Member State decides to allow such exemptions;
5. Specification of the exemption conditions, including the imperative reasons of law,
ownership or finance, for those cases where an installation level cost-benefit analysis is
carried out and shows a positive outcome but the authority decides to waive the
obligation of implementing that outcome.

61. Member States may also choose to specify the conditions for granting installations the
exemptions from the cost-benefit analysis obligation available under the second sub-paragraph
of Article 14(4) (on the basis of the comprehensive assessment) in their authorisation or permit
procedures, if a Member States decides to allow such exemptions.

                                                           
69
For the concept of authorisation and permit see footnote 63.

20
62. The Directive requires that installations must carry out the cost-benefit analysis referred to in
Article 14(5) after 5 J une 2014. The authorisation and permit procedures that include the cost-
benefit analysis obligation for installations must therefore be in place by 5 J une 2014, i.e. the
transposition date of the Directive. This cost-benefit analysis obligation applies to installations
with an authorisation or permit decision pending after 5 J une 2014, with the exemption of those
installations that fall under an exemption granted according to paragraph 4 or 6 of Article 14.

63. Authorisation and equivalent permit decisions will meet the requirements of Article 14(7) only
when the outcome of both the comprehensive assessment and the installation level cost-benefit
analysis is fully reflected. However, the outcome of the comprehensive assessment may not be
available and thus reflected in the authorisation/permit decisions before 31 December 2015 (the
deadline of its notification to the Commission, reflecting the substantial time that may be
needed to prepare the comprehensive assessment in a proper way), while Member States must
oblige installations to carry out a cost-benefit analysis under Article 14(5) already after 5 J une
2014. Furthermore, exemptions from the cost-benefit analysis for installations that Member
States may grant on the basis of the comprehensive assessment may also not be available and
thus included in the authorisation/permit procedures until the comprehensive assessment is
completed.

Member States may, but are not required to, issue authorisations or permits that are in full
conformity with Article 14(7) before 31 December 2015.

After 5 J une 2014, Member States must consider the installation-level cost-benefit analysis
when issuing an authorisation or permit for an installation, even if the national comprehensive
assessment is not yet available.

64. As the authorisations and permits should reflect the outcome of the installation-level cost-
benefit analysis under Article 14(5) already from 5 J une 2014, when the results of the
comprehensive assessment are not yet available, Member States may overcome the time lag
between the date of the installation-level cost-benefit analysis obligation and the
comprehensive assessment by bringing forward the date by which the comprehensive
assessment is completed and notified to the Commission.

65. Article 14(9) states that the installations' cost-benefit analysis obligation and the related
exemptions under paragraph 6, the permit criteria under paragraph 7 and the related
exemptions under paragraph 8 are to apply without prejudice to the requirements of Directive
2010/75/EU on industrial emissions. Directive 2012/27/EU and Directive 2010/75/EU both aim
at promoting the energy efficiency of industrial installations, in particular through promoting
cogeneration, the recovery of waste heat and district heating and cooling, which are recognised
as Best Available Techniques (BAT) under Article 13 of Directive 2010/75/EU. Directive
2012/27/EU provides an implementation mechanism for these specific BAT. Furthermore,
permitting procedures under Directive 2012/27/EU can be integrated with permitting
procedures under Directive 2010/75/EU. Authorisation and permit criteria under Article 14(7)
of Directive 2012/27/EU may be included in the permit conditions of installations that are
required under Article 14 of Directive 2010/75/EU. However, the implementation of Article 14
of Directive 2012/27/EU does not require or depend upon the implementation of the provisions
of Directive 2010/75/EU. In case of conflict, the provisions of Directive 2010/75/EU should
apply.

21

66. The purpose of the cost-benefit analysis (CBA) for installations is to establish whether using
high-efficiency cogeneration and/or recovering waste heat in district heating and cooling
networks would be cost-effective
70
.

67. Waste heat is the heat that results from an industrial or power generation process before it is
transformed into useful heat. The Directive defines useful heat in relation to cogeneration in
point 32 of Article 2. Only the recovery of waste heat at useful temperature level needs to be
considered for the purposes of the cost-benefit analysis
71
.

68. Where, under the cost-benefit assessment, there are options for developing an installation in a
way which provides for cogeneration, waste heat recovery and connection to a district heating
and cooling network that yield a positive outcome, such options should be reflected in the
authorisation and permit. An application for a power-only or new heat-only installation should
not therefore be authorised/ permitted, subject to the exemptions discussed below.

69. Positive cost-benefit outcomes of the installation-level cost-benefit analysis are those where the
sum of discounted benefits in the economic and financial analysis exceeds the sum of
discounted costs
72
. Based on the comprehensive analysis, Member States may have identified
that the economic analysis yields a positive result, while installation level financial analyses
may be negative. If the Member States then adopt measures in the sense of Article 14(4) and
Annex VIII.1.(g), the financial value of these measures may be included in the cost-benefit
analysis for the purposes of installations under Part 2 of Annex IX.
F. EXEMPTIONS FROM THE COST-BENEFIT ANALYSIS FOR INSTALLATIONS
70. Member States may exempt installations covered by Article 14(5) from undertaking the
installation-level cost-benefit analysis under certain conditions. There are two exemption paths:
one according to Article 14(6) and one according to Article 14(4).

71. Under Article 14(6) Member States may exempt four types of installations:

                                                           
70
The cost-benefit analysis' objective is defined specifically for each type of installation under Article 14(5). This
for new planned power plants is '… to assess the cost and benefits of providing for the operation of the
installation as a high-efficiency cogeneration installation'; for power when refurbished is '… to assess the cost
and benefits of converting it to high-efficiency cogeneration''', for industrial installations planned or under
refurbishment is '…to assess the cost and benefits of utilising the waste heat to satisfy economically justified
demand, including through cogeneration, and of the connection of that installation to a district heating and
cooling network'; for district heating networks and new or refurbished energy generation plants is '… to assess
the cost and benefits of utilising the waste heat from nearby industrial installations'.
71
The reference to useful temperature level means that heat that does not have sufficient energy content to
enable its utilisation does not need to be considered. The concept of useful temperature level is however not a
static concepts and depends, inter alia, on the range of available technologies for recovery, their costs and the
price of the heat to be supplied. It is for the cost-benefit analysis to define what the useful temperature level in
light of these technical and economic parameters is.
72
Annex IX.2, ninth paragraph.

22
 Peak load and back-up electricity generating installations planned to operate under
1500 operating hours per year as a rolling average over a period of five years
73
;
 Nuclear power installations
74
;
 Installations that need to be located close to a geological storage site approved under
Directive 2009/31/EC
75
;
 Industrial installation and district heating installations covered by points (c) and (d) of
Article 14(5)
76
.

If Member States decide to use one or more of these exemptions they must notify them to the
Commission by 31 December 2013. They must also notify any subsequent changes to them
thereafter
77
.

72. The exemption of nuclear installations does not require further justification beyond showing
that they are what they are.

73. The exemption of 'installations that need to be located close to a geological storage site' may
only be applied to installations that have set aside space for the equipment necessary to capture
and compress CO
2,
in order to feed the CO
2
into a geological storage site with a valid storage
permit granted under Directive 2009/31/EC and are located close to this geological storage
site
78
.

74. Peak load and back-up electricity generating installations planned to operate under 1500
operating hours per year as a rolling average over a period of five years can only be exempted
if a Member State provides together with the exemption notification the verification procedure
that ensures that the exemption conditions are met. The verification procedure must be able to
justify that the limit of 1500 operation hours per year as a 5-year rolling average will be
observed.

75. The second sub-paragraph of Article 14(6) states that Member States may lay down thresholds
– expressed in terms of the amount of available useful waste heat, the demand for heat or the
distances between industrial installations and district heating networks – for exempting
industrial and district heating installations under Article 14(5)(c) or (d) from the cost-benefit
analysis obligation. For this exemption to be available, Member States must lay down the
thresholds that justify the use of the exemption and notify them to the Commission
79
.
                                                           
73
See point (a) of Article 14(6).
74
See point (b) of Article 14(6).
75
See point (c) of Article 14(6).
76
See second sub-paragraph of Article 14(6).
77
Article 14(6), last sub-paragraph.
78
See Article 33 of Directive 2009/31/EC for the requirement to perform CCS-readiness assessment and, if
appropriate, to set aside a suitable space for carbon capture and compressing equipment; see Chapter 3 of
Directive 2009/31/EC for the details on storage permits.
79
In the case of exemptions granted on the ground of the second sub-paragraph of paragraph 6 for installations
covered under points (c) and (d) of paragraph 5, Member States should provide the thresholds (quantity of

23

76. The Commission should be capable of reviewing the continued need for the exemptions under
Article 14(6) based on the Member States' notifications, as provided for in Article 24(5)
80
.

77. Under Article 14(4) there is an additional possibility for Member States to exempt
installations from the cost-benefit analysis. This should be based on the comprehensive
assessment and justified through the country-level cost-benefit analyses. If the comprehensive
assessment shows that e.g. in a given region there is no potential whose benefits exceed the
costs, including administrative cost, they may exempt installations from doing the cost-benefit
analysis.
G. RELATIONSHIP BETWEEN COMPREHENSIVE ASSESSMENT AND INSTALLATION-LEVEL
OBLIGATIONS
78. Article 14 creates several links between the comprehensive assessment and the obligations of
the operators of installations. One link, established in the second sub-paragraph of Article
14(4), is that the comprehensive assessment can be the basis to give exemption for installations
from the cost-benefit analysis obligation, where there is no positive cost-benefit outcome.

79. The cost-benefit analyses carried out under Article 14(5), and the consideration of the results of
those in authorising or permitting new or refurbished installations under Article 14(7), may
follow on from or complement the comprehensive assessment referred to in Article 14(4) and
must contribute to its delivery - i.e. they are part of the 'adequate measures' that Member States
are required to take.

80. The second link, established in the first paragraph of Article 14(4), requires that the adequate
measures taken on the basis of the comprehensive assessment must be in accordance with the
installation-level obligations under Article 14(5) and 14(7). Accordingly, if there is a potential
whose benefit exceeds the costs, the adequate measures should also cover installations under
Article 14(5). The concept of adequate measure therefore also includes issuing authorisation
and permit criteria or decisions for new or refurbished installations using cogeneration or
recovering waste heat via district heating and cooling networks. The same link is contained in
Article 14(7), which requires that Member States must adopt authorisation and equivalent
permit criteria that take into account both the outcome of the comprehensive assessment and
the outcome of the installation-level cost-benefit analysis.

81. In addition, Member States may create synergies between the country-level cost benefit
analysis conducted under the comprehensive assessment and the installation-level cost-benefit
analysis. For example a common set of assumptions or common basic calculation
methodologies could be used while putting the focus on different considerations, e.g. the cash
flow analysis in the case of installations or the wider economic analysis in the case of the
                                                                                                                                                                                         
available useful heat, size of the heat demand and the distances) with an explanation on how those were arrived
at and why those thresholds justify the granting of the exemption.
80
The notification by Member States of the exemptions under Article 14(6) must be sufficiently detailed and
specific to allow the Commission to review the continued need for the possibility of those exemptions already in
the assessment of the first National Energy Efficiency Action Plans due by 30 April 2014, and every three years
thereafter, as required by Article 24(5).

24
country-level analysis. The economic analysis under the comprehensive assessment can waive
the need for an economic analysis for the purposes of the installation-level cost-benefit analysis
or provide a context or a background.

EN EN


EUROPEAN
COMMISSION
Brussels, 6.11.2013
SWD(2013) 450 final

COMMISSION STAFF WORKING DOCUMENT
Guidance note on Directive 2012/27/EU on energy efficiency, amending Directives
2009/125/EC and 2010/30/EC, and repealing Directives 2004/8/EC and 2006/32/EC

Article 15: Energy transformation, transmission and distribution
Accompanying the document



COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN
PARLIAMENT AND THE COUNCIL

Implementing the Energy Efficiency Directive – Commission Guidance

{COM(2013) 762 final}
{SWD(2013) 445 final}
{SWD(2013) 446 final}
{SWD(2013) 447 final}
{SWD(2013) 448 final}
{SWD(2013) 449 final}
{SWD(2013) 451 final}


2
Table of Contents
A. INTRODUCTION .............................................................................................................................. 3
B. NEW ROLES FOR THE DIFFERENT ACTORS IN THE INTERNAL ENERGY MARKET AND NEW
ACTORS ................................................................................................................................................... 5
B1. National energy regulatory authorities .................................................................................... 5
B2. Transmission system operators (TSOs) and Distribution system operators (DSOs) ............... 6
B3. New actors, including aggregators .......................................................................................... 9
C. ENERGY EFFICIENCY CRITERIA IN NETWORK TARIFFS AND REGULATION .............................. 10
C1. Providing incentives for the deployment of smart grids ........................................................ 11
C2. Energy efficiency criteria for electricity network tariffs ....................................................... 12
D. MEASURES TO ENABLE AND DEVELOP DEMAND RESPONSE ...................................................... 13
D1. Role of national regulatory authorities, TSOs and DSOs ...................................................... 15
D2. Effective price signals ........................................................................................................... 15
D3. Market access, participation and transparency ...................................................................... 16
E. ENERGY EFFICIENCY IN NETWORK DESIGN AND OPERATION OF THE GAS AND ELECTRICITY
INFRASTRUCTURE ................................................................................................................................ 17
F. OTHER LINKS TO THE INTERNAL ENERGY MARKET .................................................................. 18

3
ARTICLE 15: ENERGY TRANSFORMATION, TRANSMISSION AND DISTRIBUTION
A. INTRODUCTION

1. The Energy Efficiency Directive
1
(hereinafter also ‘the Directive’ or ‘the EED’) and the
Internal Energy Market package (hereinafter also the ‘IEM’ or the 'Third Package')
2
are
complementary and mutually supportive, notably as regards the objective of promoting an
efficient electricity and gas network and contributing to improved security of supply.

2. Mechanisms to promote energy efficiency in network tariffs and regulation and grid operation
and to remove barriers to demand response are sketched in the IEM

and in complementary
legislation
3
and in the Energy Services Directive (hereinafter also the 'ESD')
4
, which will be
repealed by the EED as of 5 J une 2014.

3. Article 15 on Energy Transformation, Transmission and Distribution of the EED and the
related Annex XI and Annex XII aim at maximising grid and infrastructure efficiency and
promoting demand response. The main obligations for Member States in Article 15 are to
ensure that:

- As regards network tariffs and regulation,
 National regulatory authorities pay due regard to energy efficiency in carrying out the
regulatory tasks specified in Directives 2009/72/EC and 2009/73/EC;
 Incentives in transmission and distribution tariffs that are detrimental to the overall
efficiency (including energy efficiency) of the electricity system or those that might
hamper participation of demand response in balancing markets and ancillary services
procurement are removed;
 Tariffs allow suppliers to improve consumer participation in system efficiency, including
demand response, depending on national circumstances; and
 Network regulation and tariffs fulfil the energy efficiency criteria in Annex XI, taking into
account guidelines and codes developed pursuant to Regulation (EC) No 714/2009
5
.

- Concerning demand response,
                                                           
1
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, OJ L
315, 14.11.2012, p. 1.
2
Directives 2009/72/EC and 2009/73/EC, Regulations (EC) No 713/2009, 714/2009 and 715/2009.
3
Regulation on wholesale market transparency and integrity in energy, REMIT, and the proposed Regulation on
guidelines for trans-European energy infrastructure.
4
Directive 2006/32/EC of the European Parliament and of the Council of 5 April 2006 on energy end-use
efficiency and energy services, OJ L114, 27.4.2006, p.64.
5
Regulation (EC) No 714/2009 of the European Parliament and of the Council of 13 July 2009 on conditions for
access to the network for cross-border exchanges in electricity and repealing Regulation (EC) No 1228/2003, OJ
L 211, 14.8.2009, p. 15–35.

4
 National regulatory authorities encourage demand side resources, such as demand
response, to participate alongside supply in wholesale and retail markets;
 Access and participation of demand response in balancing, reserve and other system
services markets is promoted, requiring that the technical or contractual modalities to
promote participation of demand response in such markets –including the participation of
aggregators- be defined;
 High-efficiency cogeneration operators can offer balancing services and other operational
services, where technically and economically feasible and subject to the safety and
reliability requirements of the grid; and
 Transmission system operators and distribution systems operators, in meeting
requirements for balancing and ancillary services, treat demand response providers,
including aggregators, in a non-discriminatory manner (this is subject to technical
constraints inherent in managing networks).

- In the operation and design of the gas and electricity infrastructure,
 National regulatory authorities, within the framework of Directive 2009/72/EC and taking
into account the costs and benefits of each measure, provide incentives for grid operators
to improve energy efficiency;
 Rules relating to the ranking of the different access and dispatch priorities, where such
priorities are granted in their electricity systems, are clearly explained and published; and
 An assessment and improvement of energy efficiency in the design and operation of the
gas and electricity infrastructure is undertaken.

4. Article 15 includes provisions that apply exclusively to electricity (last paragraph of Article
15(1) and the related Annex XI); rules relating to the ranking of high-efficiency cogeneration
priority access and dispatch (Article 15(5)) and its contribution to balancing and other
operational services (15(6)); and demand response (15(8). The other provisions of Article
15(1) and Article 15(2), (3) and (4) apply equally to gas and to electricity.

5. This note provides further information to guide the implementation of measures in the EED
relating to new requirements on energy efficiency criteria for energy network regulation and
tariffs, demand response and energy efficiency in network design and operation of the gas and
electricity infrastructure. Each section specifies first the relevant provisions of the IEM and
subsequently explains how Article 15 complements those with new obligations. The note
outlines the new requirements that are included in the legislation and the new roles and duties
of Member States, national regulatory authorities (NRAs) and operators.

6. This note aims to provide guidance to Member States on how to apply Article 15 of the EED.
The note states the views of the Commission services, does not alter the legal effects of the
Directive and is without prejudice to the binding interpretation of Article 15 as provided by
the Court of J ustice

5
B. NEW ROLES FOR THE DIFFERENT ACTORS IN THE INTERNAL ENERGY MARKET AND NEW
ACTORS

B1. National energy regulatory authorities
7. The IEM (Article 3(11) of the Electricity Directive
6
and Article 3(8) of the Gas Directive
7
)
establishes that in order to promote energy efficiency, Member States or, where a Member
State has so provided, the regulatory authority ‘must strongly recommend that electricity and
natural gas undertakings optimise the use of electricity and gas, for example by providing
energy management services, developing innovative pricing formulas, or introducing
intelligent metering systems or smart grids, where appropriate’.

8. Such encouragement is reinforced by the general objectives and duties of national regulatory
authorities, which are responsible for promoting a competitive, secure and environmentally
sustainable internal market in electricity/gas networks, taking into account long-term
objectives (Article 36(a) of the Electricity Directive, Article 40(a) of the Gas Directive).
Relevant long-term objectives are European targets for the share of energy from renewable
sources in final energy consumption, energy efficiency and greenhouse gas emission
reductions. Article 36 of the Electricity Directive and Article 40 of the Gas Directive list the
general objectives of the NRA. The specific duties and powers that Member States must grant
to the NRAs are listed mainly in Articles 37 of the Electricity Directive and 41 of the Gas
Directive. The two sets of provisions are complementary and should be understood in
conjunction with each other: whilst carrying out its duties and exercising its powers, the NRA
must follow the general objectives assigned to NRAs
8
.

The core duties of NRAs include:
 Duties in relation to tariffs for access to transmission and distribution networks; fixing
or approving, in accordance with transparent criteria, transmission or distribution
tariffs or their methodologies;
 Duties in relation to unbundling: ensuring that there are no cross-subsidies between
transmission, distribution, liquefied natural gas, storage, and supply activities;
 Duties in relation to the general oversight of energy companies: ensuring compliance
of transmission and distribution system operators, system owners (where relevant) and
electricity or gas undertakings with their obligations under the Directive and other
relevant European Union legislation, including as regards cross-border issues;
 Duties in relation to consumer protection: helping to ensure, together with other
relevant authorities, that consumer protection measures, including those set out in
Annex I (to the Electricity and Gas Directives) are effective and enforced; publishing
recommendations, at least annually, in relation to compliance of supply prices with
                                                           
6
Directive 2009/72/EC of the European Parliament and of the Council of 13 July 2009 concerning common
rules for the internal market in electricity and repealing Directive 2003/54/EC, OJ L211, 14.8.2009, p.55.
7
Directive 2009/73/EC of the European Parliament and of the Council of 13 J uly 2009 concerning common
rules for the internal market in natural gas and repealing Directive 2003/55/EC, OJ L211, 14.8.2009, p.94.
8
For additional clarification on the general objectives, duties and powers of the regulatory authorities, please
look at the interpretative note on Directive 2009/72/EC and Directive 2009/73/EC “The regulatory authorities”,
(http://ec.europa.eu/energy/gas_electricity/interpretative_notes/doc/implementation_notes/2010_01_21_the_regu
latory_authorities.pdf).

6
Article 3 (of the Electricity and Gas Directives); ensuring access to customer
consumption data.

9. Article 15 of the EED adds a specific objective and duty to pursue energy efficiency,
whereby Member States must ensure that national energy regulatory authorities pay due
regard to energy efficiency in carrying out the regulatory tasks specified in the Electricity and
in the Gas Directive regarding their decisions on the operation of the gas and electricity
infrastructure.

10. Furthermore, Article 15(8) of the EED establishes that Member States must ensure that
national regulatory authorities encourage demand side resources, such as demand response, to
participate alongside supply in wholesale and retail markets.

11. In addition, it follows from the wording of recital 45 of the EED that Member States should
ensure that national energy regulatory authorities take an integrated approach encompassing
potential savings in the energy supply and the end-use sectors.

B2. Transmission system operators (TSOs) and Distribution system operators (DSOs)
12. The IEM defines the main tasks of the TSOs and DSOs. Article 12 of the Electricity Directive
(and Article 13 of the Gas Directive) on the tasks of TSOs provide that they must be
responsible for ensuring a secure, reliable and efficient transmission system. In the context of
such an electricity system, Article 12(d) of the Electricity Directive specifies that TSOs must
be responsible for ensuring the availability of all necessary ancillary services
9
, including those
provided for by demand response.

13. Ancillary services are commercial services procured by system operators (the TSOs and the
DSOs) from network users. Ancillary services procurement is one of the tools that enable
system operators to ensure the security of supply and quality of service of the electric system.
The availability of appropriate contractual and technical structures within ancillary services is
necessary for the participation of demand response. Demand response usually provides the
same service as generation. To allow for and encourage its participation, operational and
participation rules are needed.

14. Article 25 of the Electricity and Article 25 of the Gas Directive lay down the tasks of the
DSOs and states that they must carry out their responsibilities with due regard to energy
efficiency. According to Article 25(7) of the Electricity Directive, DSOs must consider
energy efficiency/demand-side management measures or distributed generation that might
                                                           
9
According to Article 2(17) of the Electricity Directive, 'ancillary service' means a service necessary for the
operation of a transmission or distribution system. Similarly, Article 2(14) of the Gas Directive defines
'ancillary services' as all services necessary for access to and the operation of transmission networks,
distribution networks, liquefied natural gas (LNG) facilities, and/or storage facilities, including load balancing,
blending and injection of inert gases, but not including facilities reserved exclusively for transmission system
operators carrying out their functions.



7
supplant the need to upgrade or replace electricity capacity when planning the development of
the distribution network. In this context, Article 2(29) of the Electricity Directive defines
‘energy efficiency/demand-side management as a global or integrated approach aimed at
influencing the amount and timing of electricity consumption in order to reduce primary
energy consumption and peak loads by giving precedence to investments in energy efficiency
measures, or other measures, such as interruptible supply contracts, over investments to
increase generation capacity, if the former are the most effective and economical option,
taking into account the positive environmental impact of reduced energy consumption and the
security of supply and distribution costs aspects related to it’.

Priority access and dispatch rules for high-efficiency cogeneration
15. Article 15(5) of the EED complements the IEM by adding an obligation (with several
exceptions) for TSOs and DSOs to guarantee the transmission and distribution of electricity
from high-efficiency cogeneration, give it priority or guaranteed access to the grid and give it
priority dispatch, when they are in charge of dispatching (i.e. in those Member States with
such a dispatch system is used). These provisions build on and expand on Article 8 of the
Cogeneration Directive, which already required priority dispatch by TSOs, but not by DSOs.
The priority access and dispatch rights of high-efficiency CHP are without prejudice to the
priority access and dispatch rights of electricity from renewable sources provided in Article
16(2) of Directive 2009/28/EC
10
on the promotion of renewable energies and Article 15 of the
Electricity Directive concerning common rules for the internal market in electricity and the
need to ensure continuity in heat supply. In addition to these obligations, TSOs and DSOs
must comply with the requirements set out in Annex XII of the EED (on energy efficiency
requirements for transmission system operators and distribution system operators).
Cogeneration is promoted as one of the major forms of distributed generation capable of
enhancing energy efficiency also in grids due to its close location to consumers. Furthermore,
the requirement of priority access to the grid is new. This priority should only apply to high-
efficiency cogeneration, i.e. cogeneration that ensures at least 10% primary energy savings
compared to the references of separate heat and electricity production according to Annex II
of the Directive
11
. The upgrading and strengthening of the grid rules in the Cogeneration
Directive for high-efficiency CHP aims to maintain the equality of treatment of electricity
from high-efficiency cogeneration with electricity from renewable energy sources following
the strengthening of the grid rules relating to the latter in the Renewable Energy Directive
12
.

16. The priority rules for high efficiency CHP originate therefore from the need to ensure the
continuity of heat supply as indicated in Article 15(5). Priority dispatch for high-efficiency
CHP is needed in view of the operational constraints CHP operators face since when they
produce heat for their heat consumers, they must simultaneously produce electricity to
                                                           
10
Directive 2009/28/EC of the European Parliament and of the Council of 23 April 2009 on the promotion of the
use of energy from renewable sources and amending and subsequently repealing Directives 2001/77/EC and
2003/30/EC OJ L 140, 5.6.2009, p. 16–62
11
The calculation of electricity from high-efficiency cogeneration must follow the calculation methodologies in
Annex I using the detailed guidelines laid-down in Commission Decision 2008/952/EC and the reference
efficiency values for separate heat and electricity production established in Commission Implementing Decision
2011/877/EU (see Article 14(10) and Annex I, last paragraph).
12
See Interpretative Note on grid rules for high-efficiency CHP in Article 8 of the Directive 2004/8/EC on the
promotion of cogeneration (SWD/2012/13) available at:
http://ec.europa.eu/energy/efficiency/cogeneration/doc/2012swd0013.pdf.

8
achieve primary energy savings. Therefore, when they have to ensure continuous heat supply,
they have limited flexibility to adjust the production of electricity. Cogenerators also often do
not select when they produce the electricity, since they are subject to the need of the heat
consumers to provide steam for chemical and industrial plants or to district heating systems
during cold weather. In such circumstances, their electricity should be accepted by the grid, so
as to enable their operation in cogeneration mode. Any curtailment of their ability to produce
electricity may lead to a significant loss of efficiency and thus would defeat the purpose of
cogeneration. For these reasons, when cogeneration operators have to serve a heat consumer,
they should also be able to feed electricity into the grid and have priority over other electricity
sources that are less efficient or more flexible.

17. Under EU law, therefore, both electricity from renewable sources and electricity from high-
efficiency CHP enjoy the right of priority dispatch under certain conditions. Limitations on
priority access and dispatch can be applied when this is needed for the maintenance of the
reliability and the safety of the grid and to ensure its secure operation.

18. In this context of equal priority access and dispatch rights for both electricity from renewable
sources and electricity from high-efficiency CHP, the need to define the operational
conditions for the implementation of these different priority accesses and dispatch rights
arises. The EED therefore requires Member States to ensure that the rules on how the
different rights will be ranked in their electricity systems are clearly explained in detail and
published in view of the need to maintain the grids' operational security and stability, i.e. in
cases where two or more equal priority access or dispatch rights conflict with each other.

19. Due to the characteristics of some renewable energy sources which are not always available
with the same intensity (such as wind or solar energy) and the limited state of development of
storage technologies for the electricity produced from these variable resources, Member
States must in any case ensure that priority access of dispatch for energy from variable energy
sources is not hampered. The differentiation made between electricity from variable and non-
variable renewable sources is based on their physical characteristics and is objective. For
other forms of electricity from renewable energy and high-efficiency cogeneration, all of
which have priority, Member States may establish other rankings.

Demand response
20. In the context of the requirement for Member States to promote access to and participation of
demand response, the EED (Article 15(8)) provides that Member States must require national
regulatory authorities, or TSOs and DSOs where the national regulatory systems so require, to
promote access to and participation of demand response in balancing, reserve and other
system services markets. This requires clarifying, and if necessary changing, what the
technical or contractual requirements for participation in those markets are, e.g. minimum
required capacity, timing and duration of demand response activation, notice time for
activation, etc., in a way that is appropriate for demand side participation. The promotion of
access to and participation of demand response should also include dedicated provisions
organising the relationships between relevant stakeholders, in particular between demand
response service providers (e.g. aggregators or energy saving companies –ESCOs–) and

9
balance responsible parties
13
. These may be part of technical or contractual arrangements or
any other participation procedures and be further defined and harmonised taking into account
future network codes developed pursuant to Regulation (EC) No 714/2009.

B3. New actors, including aggregators
Further to the definitions originating from the IEM (e.g. TSO or DSO), the Directive refers to
other actors in the energy market such as demand service providers and defines in Article
2(45) 'aggregator' as a demand service provider that combines multiple short-duration
consumer loads for sale or auction in organised energy markets. The role of aggregators and
their participation in demand response is further clarified in Article 15(8), which states that
TSOs and DSOs must treat aggregators and other demand response providers in a non-
discriminatory manner and on the basis of their technical capabilities in meeting requirements
for balancing and ancillary services, subject to technical constraints inherent in managing
networks. With regards to the access of demand response to balancing, reserve and other
system services markets, Article 15(8) establishes that the technical specifications for
participation in these markets must include the participation of aggregators
14
.
21. Some types of cogeneration may be capable of a mode of operation that technically and
economically enables them to provide flexible generation and storage. These cogeneration
operators, including micro-cogenerators, should be able to participate in balancing markets,
including demand response. Technical specifications for the participation in balancing,
reserve and ancillary services market should be expanded for the participation of some types
cogeneration installations in accordance with Article 15(6) and (8).

22. In summary, Member States must do the following things;

1. Ensure that national regulatory authorities pay due regard to energy efficiency in
carrying out their regulatory tasks and that they encourage demand side resources,
such as demand response, to participate alongside supply in wholesale and retail
markets.
2. Provide clear and transparent rules on how the different priority rights will be ranked
in their electricity systems, which allow TSO and DSOs to (a) guarantee the
transmission and distribution of electricity from high-efficiency cogeneration; (b) give
it priority or guaranteed access to the grid and (c) when they are in charge of
dispatching, give it priority dispatch.
3. Require national regulatory authorities, or if the national regulatory system so
require TSOs and DSOs, the definition of technical modalities for demand response
participation in balancing, reserve and other system services markets. These technical
                                                           
13
Balance or balancing responsible parties are responsible for compilation of the balance between supply of
energy and anticipated consumption of energy with any numbers of generators or loads in its balance area.
14
The International Energy Agency states that ‘aggregation’ of flexible energy resources means that a third party
collects and implements a portfolio of flexible energy resources and operates them combined as a flexible
resource on the energy market such as the whole sale electricity market. The aggregator may also offer the
aggregated flexible resources to the market for system reserves or as ancillary services for the operators of
energy distribution networks. The term Virtual Power Plant has roughly the same meaning as distributed energy
resources aggregation (‘Integration of Demand Side Management, distributed generation, renewable energy
sources and energy storages. State of the art report’).

10
specifications must include the participation of aggregators and potential actors from
cogeneration installations.
C. ENERGY EFFICIENCY CRITERIA IN NETWORK TARIFFS AND REGULATION

23. The Electricity Directive (Article 37(1)(a) and (6)) provides that national regulatory
authorities must be given the duty of fixing or approving – in accordance with transparent
criteria – transmission and distribution tariffs or their methodologies. In carrying out those
tasks, national regulatory authorities should take account of the long-term, marginal avoided
network costs from distributed generation and demand-side management measures while
respecting that the Electricity Directive (Article 37(6a) provides that those tariffs or
methodologies must allow the necessary investments in the networks to be carried out in a
manner allowing those investments to ensure the viability of the networks. Article 37(8) of the
same Directive establishes that in fixing or approving the tariffs or methodologies and the
rules for balancing services, the regulatory authorities must ensure that TSOs and DSOs are
granted appropriate incentives, over both the short and long term, to increase efficiencies,
foster market integration and security of supply and support the related research activities. It
follows from the text of the Electricity and Gas Directives that NRAs have the duty of fixing
or approving not only network tariffs or their methodologies, but also methodologies used to
calculate or establish the terms and conditions for connection and access to national networks,
the provision of balancing services and access to cross-border infrastructures.

24. Article 10(1) of the Energy Services Directive imposed obligations on Member States on
energy efficient tariffs and regulation, requiring the removal of incentives in transmission and
distribution tariffs that unnecessarily increase the volume of distributed or transmitted energy.
In addition, it gave Member States the possibility of imposing public service obligations
relating to energy efficiency on undertakings operating in the electricity market. With this
provision, the Energy Services Directive supported regulatory incentives that encourage
energy efficiency gains and lower peak investment needs and the removal of volume-based
incentives, moving from a volume-based model into a quality and efficiency based model.

25. The EED builds energy efficiency criteria into the design of network tariffs and regulation. It
also follows from the wording of recital 45 and Article 15(1) that in the context of the
continuing deployment of smart grids, Member States should ensure that national energy
regulatory authorities are able to ensure that network tariffs and regulations incentivise
improvements in energy efficiency, e.g. via providing incentives to make available system
services to network users. Improvements in energy efficiency include facilitating demand side
participation for instance in reserve markets. A possible incentive may the inclusion of an
incentive in the grid tariff to reward flexibility, for instance reducing the fee significantly for
customers that reduce their load during peak times and shift it to off-peak. Similarly, adapting
the technical standards for participating in reserves markets in a way that does not increase the
network fee. Stimulating the participation of such flexible loads may require amendments to
the existing regulatory framework, for instance the network tariff methodology, to avoid
excluding flexible loads from the balancing market and incentivise users to reshape their load
profile in line with network needs.

11
C1. Providing incentives for the deployment of smart grids
26. A common policy view is that regulatory and market structures need to adjust to the
development of renewable energy, electrification of demand (notably transport), the
deployment of smart grids and more generally to a need to increase flexible capacities.
Sources of flexibility can include demand side resources, distributed generation and energy
from cogeneration and storage.

27. The Electricity Directive encourages Member States to deploy Smart Grids, which should be
built in a way that encourages decentralised generation and energy efficiency. The Smart
Grids Task Force (SGTF)
15
suggested that common criteria to assist Member States in the
assessment of costs and benefits of measures needed to deploy smart grids should be put
forward. The SGTF suggested that these should be based on quantifiable indicators such as
improved energy efficiency and energy savings or lower bills due to better customer
feedback. In this context, guidance and advice for conducting cost-benefit analysis of smart
grids projects was provided in 2012
16
.

28. The EED establishes that Member States must ensure that national energy regulatory
authorities, through the development of network tariffs and regulations and taking into
account the costs and benefits of each measure, provide incentives to TSOs and DSOs to
make available to network users (e.g. generators, retailers, consumers, storage owners,
aggregators) system services permitting them to take advantage of the energy efficiency
potential of smart grids (Article 15(1)).

29. As the term is undefined in the EED it is necessary to decide how to interpret 'system
services'. Article 2(18) of the Electricity Directive defines ‘system user’ as ‘a natural or legal
person supplying to, or being supplied by, a transmission or distribution system’. In the light
of this, it would seem sensible to conclude that for the purposes of the EED, the term ‘system
services’ should be understood as everything that relates to supplying to, or being supplied by,
a transmission or distribution system or network and maintaining the balancing of the system,
i.e. supply matches demand. This could include facilities supplying ancillary services as well
as all services to the system which help to increase its efficiency and/or lower consumption
within organised electricity markets. These services can include demand response, demand
management, management of distributed generation and decentralized storage and other such
services. System services could be procured by TSOs and DSOs from network users,
according to their technical capabilities.

                                                           
15
The Smart Grids Task Force (SGTF) was set up by the European Commission (EC) at the end of 2009. The
SGTF reached a consensus over the last years on policy and regulatory directions for the deployment of Smart
Grids. The SGTF has also issued key recommendations for standardisation, consumer data privacy and security.
16
J RC reference report “Guidelines for conducting a cost-benefit analysis of smart grid projects”, 2012
(http://ec.europa.eu/energy/gas_electricity/smartgrids/smartgrids_en.htm ).

12
30. The EED establishes that network tariffs and regulation must not prevent TSOs, DSOs or
energy retailers from offering or making available, as system services, in ‘organised
electricity markets
17
‘ measures listed in Annex XI(2) to:

i. Shift customers’ demand from peak to off-peak (taking into account the availability
of renewable energy, energy from cogeneration and distributed generation);
ii. Induce customers to reduce demand;
iii. Store energy; or
iv. Connect or dispatch electricity from distributed generation.

31. The Commission's Communication on Smart Grids
18
and its accompanying staff working
document on definitions, expected services, functionalities and benefits of smart grids
19

provides similar examples of services to be provided in smart grids, such as the integration of
distributed energy resources (both large and small-scale renewable generation, heat pumps,
electric vehicles and storage), allowing consumers to modify their behaviour according to
price and load signals or promoting the active participation of all actors in the electricity
market through the promotion of demand response programmes.

C2. Energy efficiency criteria for electricity network tariffs
32. With regard to electricity, Article 15(1) requires Member States to ensure that network
regulation and tariffs fulfil the criteria in Annex XI (on 'Energy efficiency criteria for energy
network regulation and for electricity network tariffs').

33. In this regard, network tariffs must reflect reductions in network costs resulting from demand
management, demand response and distributed generation. This means that national
regulatory authorities must take account of these reduced costs (and efficiency gains) when
fixing or approving tariffs, or the methodologies underlying the calculation of tariffs.

34. Cogeneration, like distributed generation, can provide significant grid efficiency improvement
through avoided grid losses. Member States may therefore want to encourage high-efficiency
cogeneration to be sited close to areas of demand by reducing connection and use-of-system
charges, to encourage high-efficiency cogeneration to be located close to areas of demand.

35. Article 15(4) complements Article 15(1) and Annex XI(1) and (2) by requiring the removal of
network tariff rates for transmission and distribution that are detrimental to the overall
efficiency (including energy efficiency) of the generation, transmission, distribution and
supply of electricity. This requires assessing tariffs with respect to their efficiency, including
energy efficiency, and the removal of tariffs or part of tariffs that are detrimental from an
efficiency point of view. This could for example mean looking at whether the tariff design
                                                           
17
For the purpose of this provision the term 'organised electricity markets' includes over-the-counter markets and
electricity exchanges for trading energy, capacity, balancing and ancillary services in all timeframes, including
forward, day-ahead and intra-day markets.
18
‘Smart grids: from innovation to deployment’, COM(2011) 202 final.
19
SEC(2011) 463 final.

13
sends price signals that encourage more rather than less energy consumption or focuses on
fixed rather than volumetric charges that do not encourage customer energy efficiency.
Furthermore, demand response is a way to tap the potential of energy efficient use of
infrastructure and therefore incentives in tariffs and regulations should reflect signals to
power saving or optimal utilisation of energy infrastructure assets resulting from increased
demand side participation, including demand response.

36. Repeating Article 10(2) of the ESD, Article 15(3) of the EED provides that Member States
may permit components of schemes and tariff structures with a social aim for net-bound
energy transmission and distribution, provided that any disruptive effects on the transmission
and distribution system are kept to the minimum and are not disproportionate to the social
aim.

37. In summary, Member States must do the following things:

1. Ensure that national energy regulatory authorities provide incentives to TSOs and
DSOs to make available to network users (e.g. generators, retailers, consumers,
storage owners, aggregators) system services permitting them to take advantage of the
energy efficiency potential of smart grids.
2. Ensure that network tariffs and regulations fulfil the energy efficiency criteria in
Annex XI and are cost-reflective of cost-savings resulting from demand management,
demand response and distributed generation.
3. Ensure the removal of network tariff rates for transmission and distribution that are
detrimental to the overall efficiency, including energy efficiency, of generation,
transmission, distribution and supply of electricity.
D. MEASURES TO ENABLE AND DEVELOP DEMAND RESPONSE

38. Demand response can be defined
20
as changes in electricity usage by end-use customers from
their normal or current consumption patterns in response to market signals, such as time-
variable electricity prices or incentive payments, or in response to acceptance of the
consumer's bid, alone or through aggregation, to sell demand reduction at a price in organised
electricity markets. The objective of such market signals is to induce modulation (increase or
reduction) of electricity usage and to optimise usage and balancing of networks and electricity
production and consumption, for example by consuming less during peak times or by
facilitating the integration of electricity from variable renewable energy sources and micro-
generation. Although sometimes a differentiation is drawn between different types of demand
response (e.g. consumer vs. industrial, price/load led vs. incentive contracts, etc), demand
response includes all intentional modifications to consumption patterns of electricity of end-
                                                           
20
See for instance the definition by the International Energy Agency, which says that ‘demand response or
demand side response are programs and activities designed to encourage consumers to change their electricity
usage patterns, including timing and level of electricity demand, covering all load shape and customer
objectives. Demand response includes time-of-use and dynamic rates or pricing, reliability programs such as
direct load control of devices and instantaneous interruptible load, and other market options for demand changes
(like demand side bidding)’ (‘Integration of Demand Side Management, distributed generation, renewable
energy sources and energy storages. State of the art report’).

14
use customers that are intended to alter the timing, level of instantaneous demand or the total
of electricity consumption.

39. The term 'demand response' in the Directive encompasses demand response both as a result of
innovative pricing to stimulate final customers to modulate their consumption and through
load shifting by e.g. industrial customers or through aggregators.

40. Demand response is at the core of the development of smart grids and the more efficient
management of networks they will bring. Demand response initiatives can and should also be
stimulated without a smart grid.

41. Mechanisms to remove the barriers to demand response are set out in the Electricity Directive
and in the ESD. The EED builds on both and elaborates further, promoting its access to and
participation in the market and the removal of existing barriers. Recitals 44 and 45 read as
follows:

‘(44) Demand response is an important instrument for improving energy efficiency, since
it significantly increases the opportunities for consumers or third parties nominated by
them to take action on consumption and billing information and thus provides a
mechanism to reduce or shift consumption, resulting in energy savings in both final
consumption and, through the more optimal use of networks and generation assets, in
energy generation, transmission and distribution.’
‘(45) Demand response can be based on final customers' responses to price signals or on
building automation. Conditions for, and access to, demand response should be improved,
including for small final consumers. Taking into account the continuing deployment of
smart grids, Member States should therefore ensure that national energy regulatory
authorities are able to ensure that network tariffs and regulations incentivise
improvements in energy efficiency and support dynamic pricing for demand response
measures by final customers. Market integration and equal market entry opportunities for
demand-side resources (supply and consumer loads) alongside generation should be
pursued. In addition, Member States should ensure that national energy regulatory
authorities take an integrated approach encompassing potential savings in the energy
supply and the end-use sectors.’

42. The Directive, in Article 15(8), gives a mandate to national regulatory authorities to
encourage demand response; requires network operators – TSOs and DSOs – to treat demand
response providers (both individual consumers and third parties acting on behalf of groups of
consumers in aggregate) in a non-discriminatory way in meeting requirements for balancing
and ancillary services; and ensures that the appropriate technical or contractual modalities for
participation of demand response in balancing, reserve and other system services markets be
defined.


15
D1. Role of national regulatory authorities, TSOs and DSOs
43. Article 15(8) establishes that Member States must ensure that national energy regulatory
authorities encourage the participation of demand side resources, including demand response,
alongside supply in wholesale and retail markets. This requires the design of operational and
participation rules accordingly, to enable the procurement of flexibility from the market. It
also requires the adaptation of grid connection and access rules for demand side resources to
meet the need for flexibility. Demand-side resources refer to the full range of consumer or
customer-based resources, such as demand response, distributed generation or end-use energy
efficiency, which reduce energy needs.

44. Network operators – TSOs and DSOs – must ensure that balancing services and other
operational services are part of a services bidding process which is transparent and non-
discriminatory. Member States must also ensure that TSOs and DSOs treat demand response
providers, including demand aggregators, in a non-discriminatory way and on the basis of
their technical capabilities (Article 15(8)).

D2. Effective price signals
45. The Electricity Directive establishes that in order to promote energy efficiency, Member
States or, where a Member State has so provided, the regulatory authority must recommend
that electricity undertakings optimise the use of electricity, for example by developing
innovative pricing formulas.

46. Effective price signals are important to encourage efficient use of energy and demand
response. In this context, recital 45 indicates that Member States should ensure that national
energy regulatory authorities are able to ensure that network tariffs and regulations support
dynamic pricing for demand response measures by final customers.

47. Furthermore, and in addition to the measures described in section C2, Annex XI refers to
different possibilities for network and retail tariffs to support dynamic pricing for demand
response, such as:

a) Time of use tariffs, whereby electricity prices are set for a specific time period and
known in advance;
b) Critical peak pricing, which requires that time of use prices are in effect for certain peak
days, where prices may reflect the cost of generating and/or purchasing at wholesale
level;
c) Real time pricing, also referred to as ‘dynamic pricing’, whereby electricity prices may
change as often as hourly, exceptionally more often; and
d) Peak time rebates, which are monetary rewards in exchange for participating in the
market.


16
48. According to Article 15(4), Member States must ensure the removal of those incentives in
transmission and distribution tariffs that might hamper participation of demand response in
balancing markets and ancillary services procurement.


D3. Market access, participation and transparency
49. As explained in section C, Article 15(8) establishes that demand side resources such as
demand response should participate alongside supply in wholesale and retail markets. Recital
45 also indicates that market integration and equal market entry opportunities for demand-side
resources alongside generation should be pursued. This includes both removing potential
regulatory barriers and more direct interventions to ensure demand side participation
Participation of demand response in wholesale and retail markets shall also be possible via an
aggregator.

50. Under the Electricity Directive, Member States must ensure the possibility of providing for
energy efficiency/demand-side management measures through a tendering procedure or any
procedure equivalent in terms of transparency and non-discrimination, on the basis of
published criteria. It is also provided in this Directive that transmission system operators
should facilitate the participation of final customers and final customers' aggregators in
reserve, balancing and other ancillary/system services markets. This possibility of tendering
for new capacity or opting for energy efficiency and demand-side measures is also
acknowledged in the Energy Services Directive (and in the earlier Electricity Directive of
2003).

51. The EED establishes that market access for demand response needs to be enabled by clear
network and market rules. Accordingly, Article 15(8) establishes that Member States must
promote access to and participation of demand response in balancing, reserve and other
system services markets.

52. To this end, Member States must arrange for the technical modalities to be defined to promote
participation of demand response balancing, reserve and other system services markets,
including the participation of aggregators. This may mean in practice providing a detailed
description of tender specifications and of the tendering procedure - or any equivalent
participation procedure - to be followed. These participation procedures will be based on the
technical or operational requirements of the balancing, reserves and other system services
markets and the capabilities of demand response. The aim is to guarantee that technical rules
and requirements exist based on which demand response can be part of the balancing and
other system services. Possible examples of technical modalities to promote participation of
demand response could include providing clarity on the minimum aggregated capacity needed
for participation, baseline measurement methodology, maximum duration of demand response
activation, timing of demand activation, notice time for activation of demand response,
frequency of demand response activation, penalty requirement, tender duration timeframe,
long enough contract terms to incentivize full engagement, the option to bid on positive or
negative capacity as well as clarity on information exchange, when demand response
capacities are activated, between third parties (e.g. aggregators) and suppliers.

17
53. Depending on the requirements of the national regulatory system, Member States may require
the definition of the technical modalities for market participation to be undertaken by national
regulatory authorities or by transmission system operators and distribution system operators in
close cooperation with demand service providers and consumers.

54. In summary, Member States must comply with the following obligations:

1. Ensure that national energy regulatory authorities encourage the participation of
demand side resources, including demand response, alongside supply in wholesale and
retail markets.
2. Ensure – subject to technical constraints inherent in managing networks - that TSOs
and DSOs treat demand response providers, including demand aggregators in a non-
discriminatory way and on the basis of their technical capabilities.
3. Promote - subject to technical constraints inherent in managing networks - access to
and participation of demand response in balancing, reserve and other system services
markets, requiring that the technical or contractual modalities to promote participation
of demand response in balancing, reserve and other system services markets -
including the participation of aggregators - be defined.
4. Ensure the removal of those incentives in transmission and distribution tariffs that
might hamper participation of demand response in balancing markets and ancillary
services procurement.
E. ENERGY EFFICIENCY IN NETWORK DESIGN AND OPERATION OF THE GAS AND
ELECTRICITY INFRASTRUCTURE

55. The Directive requires Member States to incorporate energy efficiency in network design and
operation of the gas and electricity infrastructure.

56. Member States must ensure that national regulatory authorities pay due regard to energy
efficiency in their decisions on the operation of the gas and electricity infrastructure (Article
15(1).

57. Member States must also ensure that network operators have incentives to improve the
efficiency of infrastructure design and operation. By J une 2015, they must ensure that the
energy efficiency potentials of their gas and electricity infrastructure are assessed and
measures and investments for the introduction of cost-effective energy efficiency
improvements in the network infrastructure are identified, with a timetable for their
introduction (Article 15(2)). This assessment may look into the balance to be struck between
the use of the full potential for greater flexibility within the grid of distributed generation and
demand side resources (a large share of which will be connected to low and medium-voltage
distribution networks) and grid optimisation, including reduced grid losses and network
reinforcement. This may require a new approach to grid design, with long term network
planning that properly accounts for demand side contribution to ensuring generation
adequacy.


18
58. In accordance with Article 15(2) the assessment referred to in the previous paragraph must
look in particular at energy efficiency potentials regarding transmission, distribution, load
management and interoperability and connection to energy generating installations, including
access possibilities for micro-generators (both for gas and for electricity infrastructure design
and operation). The assessment may therefore explore an optimal utilisation of energy
infrastructure assets, increased energy efficiency measures and demand side participation and
upgraded or modernised infrastructure for the reduction of technical and operational losses,
which in turn could allow reducing the need for investing in new infrastructure. Additional
examples may be found in connection with CHP and district heating and cooling networks,
natural gas vehicles, optimisation and enhanced automation and monitoring of networks.

59. In summary, Member States have the following obligations:

1. Ensure that network operators have incentives to improve the efficiency of
infrastructure design and operation.
2. By J une 2015, ensure that an assessment is made of the energy potentials of their gas
and electricity infrastructures and measures and investments for the introduction of
cost-effective energy efficiency improvements in the network infrastructure are
identified, with a timetable for their introduction.
F. OTHER LINKS TO THE INTERNAL ENERGY MARKET

60. When implementing Article 15 of the EED, Member States, national regulatory authorities
and network operators should be aware of the network codes that are being developed to
implement the IEM legislation and notably those on system operation, demand connection
and balancing.