Regulation is an important instrument for governments and regulators to promote the transition to a more sustainable energy system. This system should meet society’s needs, such as efficiency, safety, environmental protection, fair competition in energy markets and the reduction of greenhouse gas emissions.
To meet these needs, regulation in the energy sector can take many forms. This could include setting standards for safety and environmental protection, the establishment of tariffs and prices for energy, or licensing energy companies.
It could also be a tool to promote innovation and investment in the energy sector. Tax credits and subsidies could encourage businesses and households to develop new technologies, for example, or to invest in renewable energy sources or energy-saving measures.
Energy policy objectives can vary from country to country. Some countries might prioritize the reduction of greenhouse gas emissions and the transition to renewable energy sources, yet other countries might prioritize energy security and affordability instead.
In the Netherlands, the Authority for Consumers and Market (ACM) is responsible for regulating and supervising the market. Its tasks include safeguarding competition, protecting consumer interests, and regulating grid and network operators. Grid and network operators, as natural monopolists, are regulated in several ways. The Authority for Consumers and Market (ACM) sets grid and network tariffs, so that grid and network operators are able to cover efficient costs but are also given an incentive to operate efficiently. Grid codes define the rights and obligations of grid and network operators and grid and network users have towards each other.
Collective heat for heating homes and buildings
Energie-Nederland is in favor o robust regulation of collective heat systems as these have a monopoly position. However, there is competition before connection, between technologies and heat companies. This competition contributes to cost-effective, (more) sustainable and innovative heat solutions.
Heat sector regulation must find a balance between the major growth ambitions and customer protection. Energie-Nederland is in favor of introducing a cost-plus methodology and supports bidding farewell to the No-More-Than-Usual tariff.
Furthermore, tariff regulation must offer sufficient room for achieving healthy returns: this would also get new investments off the ground. However, the returns must be reasonable, to protect customers against tariffs that are too high. Energie-Nederland advocates for a regulation of returns over a longer period so that a company can achieve a capped reasonable return on average but has sufficient room to absorb setbacks.
Regulations should not limit competition or hinder innovation. As such, regulation should strike a balance between promoting the public interest and enabling market flexibility and innovation.