Why is the future EU Primary Energy Factor important? Framing the debate

March 26, 2018

By Alex Taylor, Policy and Commercial Analyst

To power our lives, primary energy, such as fossil fuels or renewable energies, are converted into useful, final energy, such as electricity or thermal heat. This useful energy flows into our homes to our computers, kettles and heating systems. The Primary Energy Factor (PEF) demonstrates how much primary energy is used to generate a unit of final energy through the use of consumption indicators. The greater the difference between primary energy consumption and final energy consumption, the larger the implied losses throughout our energy system are.

The current PEF for electricity that is prescribed within the European Union, as detailed in the Energy Efficiency Directive 27/2012/EU, is 2.5. So, for every unit of electricity consumed in our homes, 2.5 times more energy was needed to generate it. This translates to a system efficiency of 40% (100 / 2.5 = 40)

There is consensus that this value should be updated; the EU Commission has proposed an improvement to 2.0, the EU Council suggests a more modest modification to 2.3 is appropriate. The value should be lowered to ensure that improvements in the energy system from increased efficiency and renewable penetration is accurately represented in policy, and target evaluation.

The reliance of EcoDesign and the Energy Labelling Directive on the PEF mean that modification of the value may influence consumer decisions. A value too low may encourage the over-consumption of electricity in the heating system as the efficiencies of electrical products may be perceived to be higher than they actually are. Conversely, a PEF rating that is too high may put electrical products at a disadvantage to fossil fuelled products by underrepresenting their actual efficiency. Knock-on effects to consumers may occur as energy bills are increased or savings are decreased through the misrepresentation. It is even feasible to consider that further downstream effects could affect our energy bills indirectly; if the electrification of heat significantly increases the demand on the energy system and grid, any expenditure on infrastructure improvements will of course be passed on to the consumer.

Any decision by the Commission to modify the PEF should be based upon logical policy rationale and clear analysis. By doing so, the ‘energy efficiency first’ principle should be maintained, and the artificial promotion of one fuel or another can be avoided. Furthermore, impact assessments can be undertaken to ensure that the knock-on effects for consumers is fully understood before any changes are made. Ecuity has been working with stakeholders from both sides of the debate and will be engaging with the topic more readily in the coming weeks and months.

Annex: Which Directives and policies are impacted by the PEF decision?

In the Energy Efficiency Directive (EED) and Energy Performance of Buildings Directive (EPBD), the PEF is used to convert final energy consumption in to primary energy consumption to monitor progress against targets. Within these two Directives the PEF value of 2.5 is advisory and Member States may define PEF values individually, where the new value can be justified.

Within the EcoDesign and the Energy Labelling Directive the PEF value of 2.5 is mandated to ensure the comparability, and adherence to regulation, of all energy using products within internal markets. As consumers, we are commonly exposed to the PEF through the Energy Labelling Directive as the energy performance of a product is translated to us using the A – G energy labelling system:

The energy labelling directive is useful as it enables us to compare products of the same functionality but with different fuel sources. For example, in EcoDesign the efficiency of a heating product (i.e. an Air Source Heat Pump or boiler) is defined by the relationship between the Seasonal Coefficient of Performance (SCOP) and the PEF. The SCOP value gives an annual efficiency value of the product, which increases along with technological progress. The corresponding energy label we see in shops across the country is dependent on the efficiency as defined within the Directives, an increased rating can be from an improvement of SCOP (the product itself), a reduction in PEF (an improvement of the energy system), or a combination of the two.

For more information on the Primary Energy Factor debate contact the author: alex.taylor@ecuity.com