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Sustainability

‘Legislation not yet ready for energy transition’

The Netherlands must abandon the use of fossil fuels in favor of sustainable sources. But current legislation stands in the way on this ‘energy transition’, contends Saskia Lavrijssen, whose research has examined how the new role of consumers should be embedded in law. Text: Rutger Vahl, Photo: Dolph Cantrijn

Saskia Lavrijssen

An increasing number of households have installed solar panels. The glasshouse horticulture industry generates electricity from residual heat, while windfarms provide another clean, although less predictable, source of energy. Electric vehicles are growing in popularity. Not only do they provide clean mobility but their batteries can form the basis of a local storage and distribution system. In short, the energy landscape is changing. Legislation drafted during the fossil era cannot keep pace, states Prof. Saskia Lavrijssen, who since September 2015 has held the chair of Economic Regulation and Market Governance of Network Industries. Her research, conducted under the banner of the Tilburg Law and Economics Center (TILEC), is concerned with the position of water and energy consumers. She is particularly interested in how their rights and obligations are to be established within the new situation. This is highly relevant research, since the role of smaller users is changing rapidly now that energy production and distribution are shifting to the local level.

What are your main research themes?

“I examine the regulation and governance of sectors which rely on large infrastructures, such as transport, energy and water. Recently, my main focus has been the energy transition. The Netherlands has committed to meeting the objectives of the 2015 Paris Climate Agreement. This entails a significant reduction in carbon emissions in order to limit the rise in average global temperatures to no more than 1.5° C. The Dutch energy sector remains heavily reliant on fossil fuels, which still represent 95% of the ‘fuel mix’. Greater use of renewables and measures to increase energy efficiency are needed as a matter of urgency.”

The discussion about the energy transition seems to be mostly concerned with new technology and the divergent views of the environmentalists and the climate change skeptics. We hear much less about the legislative aspects…

“That’s right, and yet a firm basis in law is crucial to the success of the transition. Current legislation is based on the traditional model of huge centralized generating stations running on fossil fuels. But there has been a wave of smaller market entrants and alternative technologies. The legislation is no longer fit for purpose. By law, a consumer with a solar panel on the roof must obtain a permit to supply electricity to his next door neighbor. That is obviously a disincentive. Decentralized production also has major implications for the transport grids. The electricity must be used somewhere; we cannot have a surplus. There must be DSOs (distribution system operators) who can match supply and demand at any given moment. The grid managers such as Alliander and Tennet are already doing so, but their role and function will change. Current legislation does not establish how they should be organized in the new setting. Similarly, it does not establish the rights and obligations of the DSOs, or how their independent status is to be safeguarded. There is no long-term perspective.”

What recommendations can you make?

“On the one hand, it will be necessary to redefine the roles of the various players on the energy market, including the DSOs and consumers themselves. Procedures must also be amended. At present, consumers have very little say in how they wish to be connected to the electricity grid and cannot influence the distribution charges. One important recommendation is that consumers, either individually or organized into local ‘energy communities’, should be able to exert influence at the earliest possible moment. In my view, consumers should be entitled to determine the conditions and charges for network access. While the commodity price for energy is established by supply and demand, that is not true for the costs of the physical infrastructure, grids and connections. They are all imposed from above and make up a third of the consumer’s final energy bill. Consumers must be given a say in how these costs are calculated.”

Do you spend most of your time at your desk, poring over law books?

“No. I have a lot of contact with colleagues and I am often ‘out and about’. This research is very multidisciplinary in nature. I work alongside economists and experts in public administration, for example. In recent months, I have been working with Henk Akkermans, Martijn Groenleer and Wendy van der Valk, all from Tilburg University, on a research proposal concerning the data revolution and how it will affect the energy transition and sectors such as transport and water. Everything will soon be ‘smarter’ as huge volumes of data become available. Big data will support more accurate forecasts of supply and demand, and hence help to determine costs. But there are legal implications: who actually owns the big data? How can information be shared in a way which enables new parties to enter the market?”

Is energy your only field of interest?

“No, my research is concerned with all sectors which can be considered public utilities and which have been nationalized at one time or another, such as water and transport. There is ongoing convergence between these sectors. Take Mainport Rotterdam, for example, the site of a huge new electricity generating station, or Amsterdam Airport Schiphol’s developing role as a mobility hub. Legislation is fragmented; each act or directive is concerned with one individual sector. Our legislation is not ready for a society in which the sectors are integrated and neither does it address the new business models which will emerge.”

The Netherlands Organization for Scientific Research (NWO) encourages universities to work alongside social partners. How do you do so?

“My chair and department are co-funded by the Royal Netherlands Association for Energy, Environment and Water. This is a center of expertise to which various large energy consumers contribute. It has extensive knowledge of all aspects of the energy transition and regulation. My research into the new role of DSOs is co-funded by grid manager Alliander and conducted with the help of Tilburg University graduate Ruud Berndsen as part of a program run by the Centre for Regulation in Europe. Other partners include the Netherlands Authority for Consumers and Markets, the European Shippers’ Council, ProRail and the Port of Rotterdam Authority.”

Are there any concrete results to report?

“My research is concerned with matters of great depth and complexity. Change will not happen overnight. Nevertheless, I believe that I have had some impact. For example, I called for the appointment of an independent Climate Commissioner, someone who stands above party politics and who would advise and coordinate the field. This idea has been picked up, as have my calls for the consumer’s position to enjoy better protection. A column I wrote prompted questions in parliament.”

What drives you?

“I enjoy the challenge of working on an extremely complex social issue, whereby I can join others in shaping the future of the Netherlands and Europe. I also enjoy training the next generation of scientists to continue the process. It is very motivating to see students embarking on an internship and discovering the practical value of the theory they learned in the lecture room.”