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Government backup crucial for energy transition support from consumers, OIES says

Economy Materials 11 August 2022 11:54 (UTC +04:00)
Government backup crucial for energy transition support from consumers, OIES says
Maryana Ahmadova
Maryana Ahmadova
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BAKU, Azerbaijan, August 11. Energy consumers should be encouraged to contribute to the energy transition through the support from the government, the Oxford Institute for Energy Studies (OIES) said, Trend reports via the latest update from the Institute.

“One means of doing so is to support demand-side flexibility, encouraging consumption when electricity prices are lower and avoiding consumption when prices are higher; and creating opportunities for consumers to sell their energy and flexibility in all electricity markets. This allows consumers to lower their energy costs and reduce overall system cost, facilitating the transition. Governments should remove the barriers impeding demand-side flexibility, including restrictions on consumer participation in energy and capacity markets, insufficient information provided by system operators, and barriers to entry for aggregators that act as intermediaries that sell consumer flexibility into energy and flexibility markets,” the report said.

In order to support demand flexibility and energy efficiency, governments should also consider promoting electrification by eliminating fossil fuel budget subsidies, subsidizing electric vehicles in public transport and providing tax incentives for investments in electric vehicles, electric car charging networks, heat pumps, batteries and other electrical devices, which allow consumers to be flexible and shift their consumption from fossil fuels to electricity, the OIES noted.

“Governments should offer targeted relief such as transfers to lower-income households who suffer the most from higher energy bills. However, they should not shield most consumers from those prices. Rather, they should encourage energy saving and assist citizens to mitigate the impact of high energy prices while at the same time contributing to the energy transition,” the report added.

As the OIES noted, electrification and the integration of intermittent renewables (solar, wind) will occupy a crucial role in securing supplies and following the path to energy transition.

“Electricity is certainly central to the transition. Today it accounts for 20-25 percent of energy demand in EU countries; by 2050, it will be responsible for more than 50 percent of demand, and in some scenarios significantly more, especially where green hydrogen becomes an important part of the energy mix,” the report said.

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