Market boosts energy transition X Commissione Camera dei Deputati, July 9 2019 Michele Governatori, President European Energy Retailers

Energy transition: main drivers More distributed generation, local energy trade communities (“citizens energy communities”) Energy retailers will increasingly offer services (Electricity becomes more important than fuels and it is generated increasingly without variable costs) Energy networks (including metering) will be key in providing a good energy service

Energy transition: main drivers 1 - More distributed generation, local energy trade communities (citizens energy communities) Distribution network operators should provide timely info on network capacity in order to empower community energy trade

Energy transition: main drivers 2 - Energy retailers will increasingly offer services (Electricity becomes more important than fuels and it is generated increasingly without variable costs) Customers’ detailed consumption data must be available to retailers in order to develop services On equal footing with respect to integrated retail/distribution companies

Energy transition: main drivers 3 - Energy networks (including metering) will be key in providing a good energy service The distribution/metering infrastructure is the empowerment tool for all energy retailers. Network companies should not directly offer services (including efficiency, audits) to energy customers (Unbundling needs to be re-thought in the new energy era)

Customers at the driving seat All technological changes are triggered by customers’ wills/needs Customers should be encouraged to chose Regulated tariffs should be phased out (or at least made contestable) (see Stefano Besseghini’s – president Italian Energy Authority - speech at the Camera dei Deputati on last July 4th)

Wholesale markets efficiency Power generation will be more fixed costs-driven in the near future. An issue for short term markets? Long term energy sourcing agreements should be market based (wholesale/retail PPAs) Generation capacity remuneration mechanism (capacity markets) should not interfere with short term markets

Sustainability needs fair economic signals Decarbonization and renewables can be achieved within the markets provided price signals are consistent Carbon markets need to be efficient An EU border carbon tax would be a better tool than subsidies to heavy emitters to cope with carbon leakage Subsidies to fossils need to be phased out See the freshly published subsidies report by MATTM sent to the Italian Parliament (over 19 billion Euros / year environmentally harmful subsidies in Italy)

michele.governatori@gmail.com Michele Governatori, President European Energy Retailers Rome, July 9 2019