Austrian national legal bases of renewable energy

Module 6: General legal and economical frameworks

Benedikt Ennser, Federal Ministry of Sustainability and Tourism

 MSc Program
Renewable Energy in
Central & Eastern Europe
newenergy.tuwien.ac.at

Legal aspects of renewable energy

according to the EU regulatory system
Benedikt Ennser
Federal Ministry of Climate protection, Environment,
Energy, Mobility, Innovation and Technology
February 16, 2020
 Overview

• Basics of EU Law and Institutions

 Institutions
 Legislative procedure
 Competences

• Competition Law
 Relevant cases

• Liberalisation of energy markets

 3rd Liberalisation package
 Clean Energy package

• EU legal framework of renewable energy

 2030 Targets, new Directive („RED II“)
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BASICS OF EU LAW AND INSTITUTIONS
 The European Union: 500 million people – 28 countries

Member States of the

European Union

Candidate countries and

potential candidates
Source: European Commission Renewable energy according to the EU regulatory system
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 The treaties – basis of EU legal framework

1952 The European Coal and Steel Community

1958 The treaties of Rome:

• The European Economic Community
• The European Atomic Energy Community
(EURATOM)

1987 The European Single Act: the Single

Market

1993 Treaty on European Union - Maastricht

1999 Treaty of Amsterdam

2003 Treaty of Nice

2009 Treaty of Lisbon

Source: European Commission

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 The EU institutions

European Council (summit)

Council of Ministers
European Parliament (The Council) European Commission

Court of Court of Economic and Social

Justice Auditors Committee Committee of the Regions

European Investment Bank Agencies European Central Bank

Source: European Commission

 European Parliament

• Exercises legislative and budgetary functions

(together with the Council)
 New budgetary procedure ensures full parity
between Council and EP (EP says it has the “final” word)

• Maximum 750 members plus the President

 Degressively proportional, min. 6 MEPs per MS, max. 96 MEPs per MS
 Next EP elections in May 2019!

• Main competences:
 Adoption of legislative acts requiring “codecision” of the EP together with the Council
(i.e. to be adopted via the ordinary legislative procedure)
 An “indirect initiative right”, i.e. the EP may request the EC to submit any appropriate
proposal on matters on which it considers that a Union act is required (Art. 225 TFEU)
 Comitology: right of EP (as well as Council) to withdraw the Commission’s power to
adopt delegated acts

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 European Council

• Heads of States and Governments

 Plus its President
 Plus the President of the Commission
• Gives the EU its political directions
and sets its priorities
 No legislative functions
• Operates by consensus
• Permanent Presidency
 Permanent President (elected for a term of 2 1/2 years): Charles Michel
 Chairs the European Council and drives forward its work
 Ensures the preparation and continuity of the work of the European Council
 Ensures the external representation of the Union
• High Representative of the Union for Foreign and Security Policy
(HR)
 At the same time: Vice-President of the Commission
 European External Action Service 8
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 Council of Ministers

• Exercises the legislative and budgetary

functions (together with the EP)
• Rotating presidency of the MS
for a term of 6 months
 Except for Foreign Affairs Council: chaired by the High Representative
 Trio Presidencies foreseen for each 18-months-period (currently RO-FI-HR, followed by
DE-PT-SI)

• Council meets in public when deliberating on a draft legislative act

• Council now usually acts by qualified majority
• “Double majority” system: A qualified majority is defined by
 55% of the members of the Council,
 comprising at least 15 of them, and
 representing MS comprising at least 65% of the population
 Blocking minority = at least 4 Council members (and representing more than 35% of the
population plus 1 member) 9
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 EP - European parliament

European Commission

• Proposes legislation (general monopoly

for initiative), BUT:
 EP: “indirect initiative right”
 Citizens Initiative: 1 Mio. Citizens
• Currently 27 members
 Lisbon Treaty: Number of members = 2/3 of the number of MS, unless the European Council
decides differently – which it did after negative referendum in Ireland
 BREXIT: UK has not nominated EU Commissioner
• Candidates to be chosen “on the ground of their general competence
and European commitment from persons whose independence is
beyond doubt”
• Appointment of Members of the Commission for a term of 5 years
• Commission is responsible to the EP
 Motion of censure to be carried by 2/3 majority of the votes cast (representing a majority of
component members)  if so, the Commission shall resign as a body
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 Legal acts of the EU

• Regulation
• Directive Legally binding acts
• Decision

• Recommendation
Non-binding acts
• Opinion

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 How EU laws are made

Citizens, interest groups, experts: discuss, consult

Commission: makes formal proposal

Parliament and Council of Ministers: decide jointly

National or local authorities: implement

Commission and Court of Justice: monitor implementation

 Ordinary legislative procedure

• Joint adoption by the EP and the Council of a regulation, directive or

decision on a proposal by the EC

• Key elements of the “codecision procedure” remain the same:

 3 readings for Council and EP, with the possibility to conclude at each reading
 Majorities in the EP for adoption of positions remain the same (Council mainly qualified
majority instead of unanimity)
 Deadlines remain the same

• Special legislative procedure

 Adoption of a regulation, directive or decision by the EP with the participation of the
Council, or by the latter with the participation of the EP
 Only applicable in the cases specified explicitly in the Treaties

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 Comitology

• “Delegated acts” (Article 290 TFEU): a legislative act may delegate

to the Commission the power to adopt non-legislative acts of
general application to supplement or amend certain non-essential
elements of the legislative act; if provided for by the legislative act:
 Power of EP and Council to revoke the delegation
 Possibility for EP and Council to raise objections to the adoption of a delegated act

• “Implementing acts” (Article 291 TFEU): where uniform conditions

for legally binding Union acts are needed, the legislative act shall
confer implementing powers upon the EC (or the Council)
 EP and Council to lay down the rules and general principles concerning mechanisms for
control by MS of the Commission’s implementing powers

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 Principles of EU policy and competences

• Ensure consistency
• Eliminate inequalities
• Promoting sustainable development through integrating
environmental protection requirements into the definition and
implementation of Union policies and activities
• Consumer protection requirements to be taken into account
• Conferral of competences is governed by the principles of
subsidiarity and proportionality

• Competences may be exclusive or shared

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 Exclusive competences

• Only the Union may legislate and adopt legally binding acts
 MS: only set acts if so empowered by Union of for the implementation of Union acts

• Areas of exclusive competence (exhaustive list!)

 Customs union
 The establishing of the competition rules necessary for the functioning of the internal
market
 Monetary policy for the MS whose currency is the euro
 The conservation of marine biological resources under the common fisheries policy
 Common commercial policy
 Conclusion of an international agreement (under certain conditions)

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 Shared competences

• The Union and the MS may legislate and adopt legally binding acts
 MS shall exercise their competences to the extent the Union has not exercised its
competences or to the extent the Union has ceased exercising its competences

• Examples for areas of shared competences (non-exhaustive list):

 Internal market
 Social policy, for the aspects defined in this Treaty
 Environment
 Consumer protection
 Trans-European networks
 Energy
 Area of freedom, security and justice
 etc

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 Energy under the Lisbon Treaty

• Article 194 TFEU  legal basis for all energy related legislation
 Before Lisbon: mainly internal market (ex-Article 95 EC-Treaty = now Article 114 TFEU)
 After Lisbon: an EU policy area in its own right

• Aims of future energy policy

 Ensure functioning of the internal market
 Security of energy supply
 Promotion of energy efficiency & saving
 Development of renewable and new energy
 Promotion of interconnection of energy networks

• Special regimes for questions affecting the energy mix of MS

 Cf Art 192(2)(c) TFEU): “2. By way of derogation from the decision-making procedure provided
for in paragraph 1 and without prejudice to Article 114, the Council acting unanimously in
accordance with a special legislative procedure and after consulting the European Parliament,
the Economic and Social Committee and the Committee of the Regions, shall adopt:
 […] (c) measures significantly affecting a Member State's choice between different energy
sources and the general structure of its energy supply.”
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 Article 194 TFEU - Energy

Article 194

1. In the context of the establishment and functioning of the internal market and with regard for the
need to preserve and improve the environment, Union policy on energy shall aim, in a spirit of solidarity
between Member States, to:
a) ensure the functioning of the energy market;
b) ensure security of energy supply in the Union;
c) promote energy efficiency and energy saving and the development of new and renewable forms
of energy; and
d) promote the interconnection of energy networks.

2. Without prejudice to the application of other provisions of the Treaties, the European Parliament and
the Council, acting in accordance with the ordinary legislative procedure, shall establish the measures
necessary to achieve the objectives in paragraph 1. Such measures shall be adopted after consultation of
the Economic and Social Committee and the Committee of the Regions.

Such measures shall not affect a Member State's right to determine the conditions for exploiting its
energy resources, its choice between different energy sources and the general structure of its energy
supply, without prejudice to Article 192(2)(c).

3. By way of derogation from paragraph 2, the Council, acting in accordance with a special legislative
procedure, shall unanimously and after consulting the European Parliament, establish the measures
referred to therein when they are primarily of a fiscal
19 nature.
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COMPETITION LAW
 EU Competition Law

• Article 101: prohibition of cartels

• Article 102: abuse of a dominant position
• Article 106: Specific provisions for undertakings carrying out services
of general economic interest
• Merger Regulation
• Articles 107 + 108: general prohibition of state aid
• European Commission in charge of the EU competition rules
• Competition rules also applicable in the energy sector
 See sector inquiries of DG COMP
 See several competition cases over the last years

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 Article 101 - Cartels

All agreements between undertakings, decisions by associations of

undertakings and concerted practices which
• affect trade between MS
• have as their object or effect the prevention, restriction or distortion
of competition within the internal market

 are prohibited
 and the agreements are therefore automatically void

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 Article 102 – Abuse of a dominant position

Any abuse
• by one or more undertakings
• of a dominant position (definition of the relevant product and
geographical market!)
• within the internal market or in a substantial part
• affect trade between MS

 is prohibited

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 Mergers

Article 3 Merger Regulation (Definition of concentration):

“1. A concentration shall be deemed to arise where a change of control on a
lasting basis results from:
(a) the merger of two or more previously independent undertakings or parts
of undertakings, or
(b) the acquisition, by one or more persons already controlling at least one
undertaking, or by one or more undertakings, whether by purchase of
securities or assets, by contract or by any other means, of direct or indirect
control of the whole or parts of one or more other undertakings.
…
4. The creation of a joint venture performing on a lasting basis all the functions
of an autonomous economic entity shall constitute a concentration within the
meaning of paragraph 1(b).
…”
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 Articles 107 and 108 – State aid

• State aid is incompatible with the internal market

• State aid =
 Any aid granted by a MS or through State resources
 Which distorts or threatens to distort competition favoring certain undertakings
 As far as it affects trade between MS

• Exemptions in Article 107(2) and (3)

• Obligation to notify state aid to the Commission
• Energy and Environment Aid Guidelines (EEAG)

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LIBERALISATION OF ENERGY MARKETS
 Basic principles of liberalisation

The industry value chain is divided into a regulated

and a competitive field

Erzeugung
generation trading
Handel transmission
Übertragung distribution
Verteilung Vertrieb
supply

competitive field regulierter

regulatedBereich
field Wettbewerbsbereich
competitive field

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 Power market characteristics – regulatory implications

Transport of electricity is grid-bound non-discriminatory and

transmission and distribution reasonably priced access to
networks are natural
the grids
monopolies

Non-storability
short-run security of supply
electricity must be produced and
consumed simultaneously must be guaranteed –
balancing market
Planning and construction of power
plants
takes years and is very capital long-run security of supply
intensive must be sustained

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 The 3rd internal energy market package

• Regulation establishing an Agency for the

Cooperation of Energy Regulators 713/2009
 NEW: Regulation 2019/942
• Electricity Regulation 714/2009 Amendments
 NEW: Regulation 2019/943 adopted with
the Clean
• Gas Regulation 715/2009 Energy Package

• Electricity Directive 2009/72/EC

 NEW: Directive 2019/944
• Gas Directive 2009/73/EC
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 Electricity Directive 2019/944

New rules for TSO Unbundling

• 3 forms of TSO unbundling possible:

 Ownership Unbundling
 Independent System Operator (ISO)
 Independent Transmission Operator (ITO) = Detailed transposition of the unbundling
provisions of the 2nd package

• Main goals:
 To ensure non-discriminatory access for all network users to the grid
 To promote competition in the internal market
 To ensure investments into the network

• Certification of TSOs
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 Electricity Directive 2019/944

Unbundling of distribution system operators (DSOs)

• Unbundling based on the 3nd package:

 Accounting Unbundling
 Operational & Informational Unbundling
 Legal Unbundling

• NEW:
 DSO shall have at its disposal the necessary resources, including human, technical,
physical and financial resources
 Compliance officer of the DSOs to be fully independent
 Proper monitoring to be ensured so that the DSO cannot take advantage of its vertical
integration to distort competition
 An independent branding and communication policy has to be set up to avoid confusion
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 Electricity Directive 2009/944

National regulatory authorities (NRAs)

• Organisation:
 One single national regulatory authority per MS
 Legally distinct and functionally independent from any other public or private entity
 No direct instructions from any government or other public or private entity when
carrying out the regulatory task
 Separate annual budget allocations
 Top management to be appointed for 5 to 7 years; renewable once

• Additional tasks:
 Ensure the compliance of TSOs and DSOs with the new framework
 Strong cooperation on cross border issues
 Monitoring, especially concerning all unbundling provisions
 Impose effective, proportionate and dissuasive penalties
 Investigation rights
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 ACER Regulation (EC) 713/2009

• Agency for the Cooperation of Energy Regulators (ACER)

established in Ljubljana

• Tasks related to cross-border issues, e.g.

 Provision of framework guidelines
 Monitoring of the European Networks of Transmission System Operators (ENTSOs)
 Peer reviews of decisions of NRAs
 Individual decisions concerning exemptions or access to cross-border infrastructure
 Monitoring of the internal natural gas & electricity market, in particular the retail prices,
access to the network and compliance with the consumer rights

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EU LEGAL FRAMEWORK
OF RENEWABLE ENERGY
 Energy policy triangle

Source: European Commission Renewable energy according to the EU regulatory system

Benedikt Ennser
 Clean Energy Package

The EU Clean Energy Package (adopted 2018/19) at a glance:

Renewables Electricity market design

Energy efficiency ACER

Buildings Risk preparedness

Governance
NECP
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 Current share of renewables

• Overall EU
target: 20%
until 2020
• 12 MS have
already met
their national
target
• EU target
achievement
jeopardized by
decreasing
growth rate
and increasing
consumption

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 Objectives of the Renewables Directive

Source: European Commission

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 What are „Renewables“?

• Definition (Article 2 of the Renewables Directive):

Energy from renewable sources = “energy from renewable non-fossil

sources, namely wind, solar (solar thermal and solar photovoltaic)
and geothermal energy, ambient energy, tide, wave and other ocean
energy, hydropower, biomass, landfill gas, sewage treatment plant
gas, and biogas”

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 Targets

Binding EU target + enhanced

governance
• RES share of at least 32 % until
2030
 ~320 GW of net additional RES-E
 Upward review in 2023
 Transport sub-target: 14 %
• National contributions
 Formula to assess contributions
(in case of ambition gap)
• Collective responsibility of
target achievement
• Joint measures
 EU financial platform Source: European Commission

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 Financial support

Support scheme design

• Stable, cost-efficient & non-distortive support schemes
• Market-based, market-responsive, maximizing market integration
• Market premium (instead of feed-in tariffs)
 Sliding or fixed
 Exemptions for small-scale installations and demonstration projects
• Competitive tendering procedures
 Exemptions for small-scale installations and demonstration projects
 Technology-specific auctions where justifiable
• Optional: opening of support scheme towards 3rd countries
• Stability: revisions must not negatively effect existing rights
• State aid rules remain applicable (case-by-case assessment)
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 Cooperation mechanisms

• Where MS are not be able to meet RES

target contributions in their own territory:
Statistical
 flexibility mechanisms Transfer
 Statistical transfer between MS
 Joint projects between MS or with 3rd countries
 Joint support schemes
Joint Projects
• New EU trading platform for statistical
transfers
 CEF window for cross-border renewables
Joint Support
projects (MFF proposal) Schemes

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 Guarantees of origin

• ONLY purpose of the GOs: Disclosure

 To prove the share or quantity of energy
from renewable sources in a supplier’s energy mix
 Exemption for producers receiving financial support
 No function in terms of Member States’ compliance
Source: E-Control

• Transferable separately or together with physical transfer of energy

• Market value of GOs to be taken into account in support schemes
• May be used for labelling requirements under the Electricity
Directive

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 Administrative procedures

• Single contact point for permit-granting process

• Clear time limits for procedures:
 Two years (+ 1 year extension)
• Swift procedure for repowering:
 One year (+ 1 year extension)
 Notification Procedure
• Small installations (< 10,8 kW): simple-notification procedure for
grid connection
 Instead of fully-fledged application for grid access

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 Active customers

• Renewable self-consumer
 operating within its premises located within confined boundaries
 may generate renewable electricity for its own consumption, store or sell self-
generated renewable electricity
 may act jointly with other self-consumers in the same building or multi-apartment
block
 No charges behind meter (except units > 30 kW, RES receiving support)

• Renewable energy community

 Members: Natural persons, SMEs, authorities located in the proximity of a RES
project (generation/storage facility)
 Provides environmental, economic or social community benefits (rather than
financial profits)
 REC may produce, consume, store & sell electricity produced by its units
 Electricy sharing
 Member States to provide enabling framework to promote RECs
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 Discussion

Questions?

Answers?

Comments?

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Contact Benedikt Ennser
Federal Ministry of Climate action, Environment,
Energy, Mobility, Innovation and Technology
Head of Division Energy – Legal Affairs
 + 43 1 711 00 - 603009
 benedikt.ennser@bmk.gv.at
 www.bmk.gv.at

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