Energy efficiency is a fundamental aspect of the European strategy for sustainable development, being one of the most cost-effective ways to enhance the security of energy supply and reduce emissions of other pollutants and greenhouse gases.

To this end the 2012/27/EU directive was defined from the European Parliament, which created a common framework to promote energy efficiency within the European Union and implemented concrete actions to introduce some of the proposals included in the 2011 Energy Efficiency Plan and set a limit of 20% reduction in energy demand by 2020. However, many of the countries members of the European Union have already reached objective forced by the economic crisis:

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Source: Foundation for energy and environmental sustainability

As shown in the previous figure, Spain (- 30%) and Portugal (29%), among others, had already reached the objective of the directive, allowing to predict with very high probability that the goal will be full filled in 2020.

In absolute terms, the consumption of primary energy on Europe may not exceed the 1,483 Mtoes (oil equivalent energy unit) by the year 2020, in the context of the last years has not come down from the 1,800 Mtoes. On Spain the target for 2020, are 121.6 Mtoes, this objective is already achieved in the 115 current Mtoes per year.

However, the norm obliges Spain to implement a series of additional objectives with a goal of overall savings between 2014 and 2020 of 15.979 Mtoes:

· Alternative measures (art 7.9): tax incentives measures of efficiency, information, communication, financial support programs. Those would mean 29% of the objectives, that means, saving 4.662 Mtoes;

· Community for a low-carbon economy funds. Those would mean a 31% of the goals resulting in a reduction of 4.961 Mtoes;

· The directive determines that each Member State should establish a system of energy efficiency obligations(40%: 6.356 Mtoes savings)

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Source: Climate Policy Info Hub

To meet two firsts target for energy savings, the Government of Spain is currently working, and to meet the third one,  the Administration drew up the law 18/2014, on 15 October, approval of urgency for growth, competitiveness and efficiency, which articulates the creation of a national system of energy efficiency obligations, managed by the Institute for the Diversification and Saving of Energy (IDAE) whereby the energy distributors and/or retail energy sales companies will be required to achieve the goal of savings savings equivalent to 1.5% of their annual energy sales throughout efficiency measures by 2020.

These obligations must contribute to the national energy efficiency fund with the amount resulted from multiplying its obligations of annual savings by the financial equivalence established, or performing direct actions for the improvement of energy efficiency, accredited with Corresponding Energy Savings Certificate (CAE).

However, in the European Directive makes mention of the creation of an alternative mechanism for accreditation of energy savings based on negotiable certificates that would reflect the performance of energy efficiency actions done. So far it has not been regulated in Spain.

Subsequently, in February last year, was published the Order IET / 289/2015 in which was established the allocation of obligations to the FNEE. Specifically, to enforce compliance with energy saving obligations, the obligors should make an annual financial contribution to the fund. In economic terms, the final cost of the contribution to the fund is about 0.20 to 0.40 € / MWh depending on their market share.

The norm that mentioned an overall saving targets of 0.262 mtoes (3,046 GWh) has been established in 2015. The total value of contributions to the fund were more than 200 million (243.960.873€). However, it is not possible to predict the value of the parameters for the calculation of the obligation to 2016-2020, since there is no legal provision regarding the distribution of obligations.

For the current year, the Government has published another order IET/359/2016 which establishes the obligations of contribution to the National Fund for Energy Efficiency, this time for 2016. The economic amount of obligation to the FNEE for 2016 is 216.771.504 euros.

This situation raises the next question. Is it a cost that the distributors will be covering with the current margins of their contracts? (With the consequent decrease of their profits) or on the other site will shift this increase to the final customer?

Since the transposition of the directive perspective we have seen that, suppliers mostly assume this cost within their commercial margin only for current contracts. However, this is not true for negotiated contracts subsequent to the regulations. In those cases they add the extra cost of contribution to the Fund’s efficiency.

As a result, this year will have at least 216 million euros for energy efficiency grants. It will be a good time to consider actions that will help us saving more energy, being more efficient, being more competitive and helping to meet the goals set by the European Union.

Sonia Díaz | Energy Consultant

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