On 16 December, the energy regulators of Jordan (EMRC), Lebanon (LCEC) and Morocco (ANRE) jointly participated in an online workshop to “Analyse Mechanisms to Promote Low Carbon Innovation and Market Design Principles to Support Energy Transition”.

The three regulators explored regulatory mechanisms likely to support and sustain the energy transition in light of the acceleration and coincidence of multiple agents of change, incentivising investments, innovation, and research and development.
The role of tariffs to enable fair recovery of grid maintenance and investment costs, based on usage by different consumer groups, was discussed at length.
In addition, the role of Transmission System Operators to support the energy transition and the creation and operation of grid-scale storage facilities were analysed.

This workshop took place in a context of high momentum for the energy transition, accelerated by consistent advances in technology, lowering costs, and increased confidence toward renewable energy sources (RES)-based electricity generation. Regulators and System Operators are particularly involved by the rapid pace of this change.

Participants stressed the fact that energy transition will require that all market actors develop new skills capable to deliver on the ambitious objectives set by national strategic plans, while coping with growing electricity demand.

Most of these changes will take place at distribution level, demanding substantial
investment to reinforce and update the grid. The regulatory framework will have to deal with the need to devise financial rewards that can prize cost-effective innovations, which can keep energy transition on track.

Additionally, energy transition will not be achieved through operators alone. The changing use of the network to allow greater participation by the growing energy community has to be considered. Whether we think of prosumers, aggregators, peer-to-peer traders or providers of flexibility services, regulation should make it economically possible for all these actors to participate in the generation and exchange of energy through adequate incentive mechanisms as well as transparent and competitive regulatory framework.

In this regard, the participants drew attention on the EU’s Clean Energy Package which provides indications and ambitions on RES, efficiency increases and network performance that could also be considered by Southern shore regulators.

When shaping regulatory reforms in the Mediterranean region, the regulators were invited to consider the following key aspects:

• Accompany the evolving role of TSOs and DSOs, to harness the benefits of flexibility by giving them targets, rather than restrictions;
• Encourage forward-looking investments on the grids;
• Support the “smartening” of power networks, reaping the benefits coming from innovation and digitalisation;
• Support and protect consumers, avoiding financial inequalities;
• Determine the best risk allocation for emerging technology investments with limited lifespans;
• Create a level playing field for all market players, not prioritising one particular business model, but ensuring that tariffs are designed so all users contribute fairly to network and policy costs.