The possibilities for policy supporting DSM in the liberalised Internal European Electricity and Gas Markets

This paper presents results from a study analyzing the possibilities of IRP and DSM in the recently created European internal electricity market. The study, supported by the European Commission and finished in May 2000, is based on empirical surveys of electricity and gas market structures as well as of IRP and DSM activities in the European Union (EU) countries. A second paper for this Conference focuses on the empirical results; this paper presents the analysis of, and recommendations on, energy policy actions to support DSM (i.e., energy efficiency and load management programs and services by energy companies and ESCOs) in (fully or partly) liberalized electricity and gas markets like the EU. The paper first presents an analysis and assessment of the possible DSM and IRP support mechanisms, including public benefit charges, ratemaking, obligations, support for energy efficiency services, and negotiated agreements. A common set of criteria for the evaluation of effectiveness and applicability in the various contexts of the support mechanisms was developed for this analysis. Based on the analysis, a set of proposed combinations for policy actions to support DSM in electricity markets at different stages of liberalization were discussed with practitioners from the eight countries participating in the study. From this, proposals for common policy at EU level but allowing flexible implementation in the Member States, as well as country specific proposals, were developed.