Decarbonization, Decentralization and Digitalization in the Mediterranean

12 August 2019 - // Features
Francesco Valezano
Ph.D. candidate international relations university, External Collaborator at REVOLVE

Energy cooperation between different markets requires a convergence of regulation amongst the energy sectors. The first step towards a macro-regional energy system, particularly in transmitting electricity, in this case around the Euro-Mediterranean, is achieved by bringing together energy regulators to exchange of experiences, technical knowledge and sharing of information.­­

Continental interconnections become an indispensable element for reducing congestion, maximizing the exploitation of renewable sources, and promoting the energy security of the national energy systems. The biggest challenge for the regulators is the fostering of a progressive harmonization of the national systems on the way to establishing a common regional energy market.

Technical and regulatory cooperation on energy in the Mediterranean passes through the coordinated action of the Association of Mediterranean Energy Regulators (MEDREG) . MEDREG stands for the Association of Mediterranean Energy Regulators and gathers 27 energy regulators from 22 countries, spanning the European Union (EU), the Balkans and the MENA region.

MEDREG brings together Mediterranean regulators to seek a common regulatory framework with the goal of implementing an integrated macro-regional energy market. MEDREG strives for the progressive regulatory harmonization of energy systems around the Mediterranean. Only a model of secure and shared rules can promote the infrastructural investments essential for the establishment of a future Euro-Mediterranean energy system. In this sense, regulation is a fundamental tool for the development and integration of energy markets. MEDREG acts to implement solid energy policies and improve the security of supply ensures a competitive market based on assured rules and reduces the cost of risk capital.

Regulation is a fundamental tool for the development and integration of energy markets

Today, energy sectors are experiencing three inter-related dimensions of a massive paradigm shift: decarbonization, decentralization and digitalization. An optimal combination of all three could be an effective and affordable way to face the energy transition. For this reason, regulators from all over the world have to tackle this challenge and set a proper integration strategy capable of balancing the security of the grid, the market access of operators and the protection and the consciousness of an end user. It is essential that the regulatory systems adapt to the evolution in the technological context, with the aim of offering the consumer greater transparency and better access to the market.

The progressive penetration of renewable energies sources (RES) helps decarbonize a sector that, just a few decades ago, was dominated by fossil fuels. The intermittent nature of RES also poses new challenges for the management, operation, and balancing of the grid that is being addressed increasingly by energy storage technologies. The correct administration of transmission systems is of vital importance and regulators must favor the development of resilient grids and dynamic market structures.

The use of digitalized innovations is changing the traditional architecture of the electricity grid and the role of the actors involved. Smart grids, intelligent storage systems and smart meters are capable of distributing the energy of many small producers in an efficient manner, supplanting the ancient role that relegated the consumer to being a mere passive customer.

Workshop on Factors influencing prices at renewable energy auctions 2/3 October 2018 Algiers.

On the one hand, the regulators are faced with the dilemma of ensuring competition between the sources and promoting the integration of renewables in the market by applying the most technologically neutral measures possible. On the other hand, regulators will have to guarantee the availability of the power necessary to cope with the limited programmability of the RES. Therefore, it is important that regulators safeguard the stability and safety of the electricity grid through a fair remuneration of the most flexible systems; and with a market framework that can balance the cost-opportunity ratio by authorizing new grid investments and provide competitive tender mechanisms for the dispatching of distributed resources. An important role therefore opens for new prosumers by supporting their engagement in the process of smart technological deployment. Finally, decarbonizing, decentralizing and digitalizing the Euro-Mediterranean electricity system should go hand-in-hand with the progressive integration of national networks.

MEDREG addresses these challenges by fostering cooperation between various national regulators. There are countless fruitful collaborative experiences endorsed by MEDREG within the Mediterranean. MEDREG supports to the Palestine Energy Regulatory Commission (PERC) in evaluating the possibility to establish a net metering system in the country considering the description of the role of net metering in the electricity grids through the presentation of several international experiences. Here, three examples of pivotal regional cooperation approach to addressing the triple challenge of decarbonization, decentralization and digitalization in the Mediterranean.

Examples of Regional Cooperation. Morocco, Palestine and Algeria, reforming national energy systems.

The MEDREG Renewable Energy Sources Working Group (RES WG) supported Palestine in evaluating the possibility to establish a net metering system based on a net billing scheme. Under a net metering and billing scheme, the supplier’s invoice is based on the value of withdrawn energy, thus bringing down costs and decreasing the use of energy. The RES WG also improved an analysis of the Palestinian legal and technical situation in relation to net metering application, while considering the economic impact that net metering could have on the Palestinian grid. Other recommendations were advanced for regulatory, economic and technical steps to implement net metering in Palestine. This is an example of pivotal approach to addressing the triple challenge of decarbonization, decentralization and digitalization.

In Morocco, the legal and institutional context required for the development of energy markets, and more particularly for RES development and the improvement of energy efficiency has been improved due to close cooperation between MEDREG and ANRE (Autorité Nationale de Régulation du secteur de l’Electricité). MEDREG provided technical support to ANRE officials, through regular meetings, seminars and training courses. MEDREG advised ANRE on improvements to its legislation on renewable energies and energy efficiency as well as on developments to its regulatory system and long-term energy scenarios, which will enable Morocco to achieve the objectives of its 2030 and 2050 climate action goals.

Starting from 2018, cooperation between the Association of Mediterranean Energy Regulators (MEDREG) and the Algerian Electricity and Gas Regulation Commission (CREG) has contributed to changing the structure of the Algerian electricity market to integrate more competitive renewable energy sources (RES). Algeria is implementing its new strategy for renewable energy development that comprises the introduction of public tenders as a method to determine the renewable energy selling price. To support CREG in this process, MEDREG organized a technical workshop over two days on “Factors influencing prices in renewable energy auctions – Lessons for Algeria”

On 2-3 October 2018 in Algiers. This tailor-made activity looked at how to include stakeholders’ view in the design of auctions, define appropriate requirements to participate in the auction and select a winner to implement the project.

The MEDREG workshop for the Algerian regulator CREG presented the perspectives of different stakeholders on RES auctions mechanisms, including the industry, international financial institutions, policy-makers as well as research projects, in order to give CREG a complete overview of the different positions to be taken into account when developing a tender procedure based on auction mechanisms.

MEDREG’s support to energy regulatory reforms in the Southern Mediterranean: What have we achieved?

MEDREG plays an essential role, as depicted by these three examples, in providing a platform for macro-regional cooperation. During a one-day conference on 19 September 2019 in Brussels, MEDREG and its members from Algeria, Egypt, Israel, Jordan, Morocco and Palestine will illustrate some of the actions taken to promote the development of energy systems around the Mediterranean. There have been many attempts to create regional energy governance, which have led to little fruition due to different dynamics. Join us in Brussels to learn more about what MEDREG proposes and offers as a viable and effective initiative:

Contact Francesco Valezano (e: | t: 0034 644 34 8685 or 0039 3202113684 if you would like to cover the event and organize an interview with any of the speakers

Francesco Valezano
Ph.D. candidate international relations university, External Collaborator at REVOLVE

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