Degree of reliance on imported energy:
Luxembourg produces no fossil fuels, refines no petroleum, and half of its electricity is imported. Imported oil accounts for some 58% of its total primary energy supply. Net imports of electricity supply 8% of the country’s energy needs. Mainly due to the very small size of its power market, Luxembourg’s ratio of electricity export + imports compared to the power consumption is the highest in the EU. In proportion to its consumption, Luxembourg also has the highest rate of net electricity imports (61% of consumption). An increase in domestic electricity production is welcome, since it decreases the need for electricity imports.
Main sources of Energy:
Power generation in Luxembourg is dominated by gas and hydropower. In 2010, Luxembourg consumed 6.7 TWh, more than double than the EU average of 6.2 MWh per capita. Luxembourg has the third highest consumption per capita in the EU. In terms of electricity intensity of the economy, Luxembourg in 2010 consumed 174.2 MWh/million EUR GDP. This is one of the lowest levels in the EU. Considering the development of electricity consumption in time (EEA 2010), with an average growth rate of circa 3% in the period 1990/2007, Luxembourg registered a growth rate well above the EU average.
In terms of electricity, the total generation capacity amounted to 689 MW in 2012, excluding the pump storage plant of Vianden which is directly connected to Amprion grid. The total generation capacity of the Creos zone it is about 313 MW, which constitutes an increase compared to 2011(264 MW). This increase is due to the increase in capacity of photovoltaic plants (+34 MW) and wind power plants (+ 13.8 MW).
Country:
Extent of the network:
The Grand Duchy of Luxembourg is fed with electricity via two connections to the 220 kV high tension network in Germany from substations at Quint and Bauler. Electricity is routed to 220/65 kV transformer substations at Flébour, Roost, Heisdorf, Bertrange and Schifflange, for distribution at 65 kV to some 64 65/20 kV distribution substations and certain clients.
Capacity concerns:
In coming years, Luxembourg will have to deal with major changes in the transport and distribution of electricity. The development of renewable energies, new sectors such as heat pumps and electro-mobility as well as demographic evolution challenge Luxembourg to develop additional capacities vis-à-vis neighbouring countries in order to cover electricity demand requirements by 2020 and 2030.
Potential for Renewable Energy:
The renewable energy potential of Luxembourg is limited by its physical size, the inaccessibility of major water resources and the lack of a geothermal energy resource. Solar, wind and biomass energy have yet to be fully assessed but are likely to be constrained by unfavourable meteorological conditions and lack of land available for installations or for energy crop production.
Luxembourg is the EU country with the second smallest forecast penetration of renewables, with the NREAP assuming that only 11% of electricity consumption will be covered by renewables in 2020. At the end of 2010 the installed capacity of wind power covered on average 1.1% of electricity use, which is among the lowest in Europe; only Latvia, Czech Republic, Finland, Slovakia, Slovenia and Malta generate a smaller share of their electricity from wind power. In comparison Ireland can generate over half of its electricity from wind power under optimal wind conditions in 2010.
Potential for Energy Efficiency:
Significant potential exists in both the transport and industrial sectors for further energy savings, although major structural changes in industry (for example, the electrification of the steelmaking plants in the country) and voluntary agreements for efficiency in industry have led to some savings. Voluntary savings targets of 1% per annum have been agreed since 1995. Transport energy consumption is dominated by road traffic, and Luxembourg’s unique position at the heart of Europe mean that a significant amount of this consumption can be attributed to transit traffic (over 50%). Low fuel prices also contribute to this significant proportion of external transport consumption. New energy efficiency building regulations have led to significant decreases in residential energy consumption, although continuing population increases have mitigated this somewhat.
Ownership:
Luxembourg’s electricity market has been fully open since 1 July 2007. The market is regulated by the Institut Luxembourgeois de Régulation (ILR). Market concentration was always very high in Luxembourg. In 2009, three former suppliers of electricity and gas (Compagnie Grand-Ducale de l’Électricité – Cegedel, Société de Transport de l’Electricité – SOTEL and the German Saar Ferngas) merged to form the ENOVOS group, which belongs to Enovos International S.A.
As Luxembourg by itself does not have much installed capacity – there is just one plant connected to the SOTEL grid – competition is driven basically by imports and exports of foreign electricity supply. Thus, Luxembourg’s electricity wholesale market is highly interconnected with and dependent on its neighbouring countries.
Structure / extent of competition:
Electricity
The main electricity generators in Luxembourg are SEO SA, operator of a 1100MW pump storage power station and Twinerg SA, operator of a 350MW combined-cycle gas turbine plant. Two industrial cogeneration plants (CEGYCO and CEDUCO) as well as a certain number of domestic cogeneration plants do also play a major role.
Luxembourg disposes of one Transmission System Operator (both for gas and electricity transport), namely Creos Luxembourg SA, which is a subsidiary company of Enovos International SA. The shareholders of Enovos International are the Luxembourgian State, Arcelor Mittal, RWE, Eon and Electrabel. Additionally, Luxembourg has an industrial grid operator, Sotel SA, which also operates with high wire voltage of 220 and 150 kV and which operates the interconnection with the Belgian transmission grid.
According to the regulatory authority, there are five Distribution System Operators in Luxembourg: Creos Luxembourg SA, Electris (Hoffmann Frères S.à.r.l.), Sudstroum S.à.r.l. & Co S.e.c.s, as well as the local administrations of the cities of Diekirch and Ettelbruck.
Gas
Luxembourg’s natural-gas market is dominated by a small number of vertically integrated companies. Creos Luxembourg S.A. (formerly SOTEG) owns and operates the transmission system, and it supplies the majority of the market. Creos also operates one of the two main electricity-transmission systems in the country. The State of Luxembourg and municipalities maintain minority ownership of the company, via direct shareholdings and through the Société Nationale de Crédit et d’Investissement. The other main electricity grid operator is the Société de Transport de l’Electricité (SOTEL). Some electricity-distribution companies are owned by municipalities.
Luxembourg has been granted a derogation from the unbundling provisions on the basis of Article 44 of the Electricity Directive and Article 49 of the Gas Directive. Creos Luxembourg SA, which manages transmission and distribution of electricity and natural gas, is obliged to only legally separate its activities.
Existence of an energy framework and programmes to promote sustainable energy:
National targets have been defined:
In the National Action Plan on Energy Efficiency:
- Increase energy efficiency by 9% by 2016.
In the National Action Plan for Renewable Energy:
- Share of renewables in final energy consumption in 2020: 11%,
- Share of renewables in final energy consumption in the transport sector in 2020: 10%.
National Renewable Energy Action Plan (NREAP)
The National Renewable Energy Action Plan (NREAP) for Luxembourg was submitted in August 2010. The target according to Annex I of Directive 2009/28/EC is 11% for the year 2020 and the projected NREAP share in that year exactly matches the target, based on a contribution from flexible mechanisms. According to the projection, the most important contribution in the year 2020 is expected from biodiesel (renewable transport) (193 ktoe, 40% of all renewable energy). Second important contribution is expected from biomass (renewable heating and cooling) (83 ktoe, 17% of all renewable energy). The third largest contribution is from biomass (renewable electricity) (0.3 TWh or 29 ktoe, 6% of all renewable energy). Onshore wind power contributes with 0.1 GW (0.2 TWh) in the year 2020. For solar photovoltaic the 2020 contribution is projected to be 113 MW (84 GWh). For solar thermal, the 2020 contribution is projected to be 8 ktoe. The two most important biofuels are projected to contribute 193 ktoe (biodiesel) and 23 ktoe (bioethanol / bio-ETBE) by 2020. The renewable electricity production from solid biomass amounts to 0.2 TWh (16 ktoe) and for biogas it is expected to be 0.1 TWh (12 ktoe). The consumption of renewable heat is expected to amount to 70 ktoe for solid biomass and 13 ktoe for biogas.
National Energy Efficiency Action Plan (NEEAP)
Luxembourg has adopted a National Energy Efficiency Action Plan (NEEAP) that sets an energy savings target of 1582 GWh (136 ktoe) in 2016, to be achieved in buildings, transport and small industries (excluding sectors under ETS). The former plan, called the National Sustainable Development Plan, set a 20% energy intensity reduction target for 2020 (compared with 1993 levels).
In Luxembourg, electricity from renewable sources is mainly promoted through a feed-in tariff as well as through subsidies. Private individuals operating small solar installations are entitled to tax benefit. The production of heat from renewable energy sources is promoted through four different subsidy schemes. Finally, the only support scheme for renewable energy sources used in transport is a quota system.
In Luxembourg, access of electricity generated from renewable energy sources to the grid is subject to the general provisions of energy law. Renewable-energy-sourced electricity is not given priority; Access to the grid shall be granted according to the principle of non-discrimination. However, electricity generated from renewable energy sources is granted various privileges like cost reductions or its preferential use in case of power loss.
Several policies aim at promoting the development, installation and usage of RES-installations, such as a training programme for RES-installers; a general research, development and demonstration (RD&D) programme and support schemes for RES-H infrastructures.
- The training programmes for installers of RES-systems: No trainings for the installation of renewable energy devices are proposed in 2012.
- As far as the RES-H building obligations are concerned, the government introduced in 2012 a schedule of due dates in order to reach the objectives defined in the European directive 2010/31/UE regarding energetic performance of buildings. The regulation takes into consideration renewable energies.
- Concerning research, development and demonstration programmes, there are no policies in Luxembourg especially devoted to the promotion of research and development in the field of renewable energies. However, the Law of 5 June 2009 provides for a general support scheme for companies willing to develop research and development activities.
- There are two support schemes for RES-H infrastructures, one supporting companies and the other supporting municipalities in the construction of a district heating network.
Regarding energy efficiency, several actions have been initiated by the Government and are currently underway to achieve this goal. It should be noted in particular:
- the transposition of EU requirements on the energy performance of residential buildings and functional buildings;
- the introduction of the Energy Performance Certificate (energy passport) for residential and functional buildings to increase transparency in the real estate sector;
- the application of strict energy criteria for the construction of new buildings;
- the investment of significant funds in the renovation of existing buildings of the State;
- the continuation of the ambitious program of financial support for citizens who opt for energy efficient buildings, such as houses for low-energy and passive houses;
- the continuation of initiatives in advocacy, information, training and consulting basis.
Current energy debates or legislation:
As the smallest Member State in the European Community, Luxembourg has a minor role to play in the provision of renewable energy. However, growing concern for the environment means that renewables are receiving more attention in Luxembourg than in the past.
Major energy studies:
European Energy Network
Luxembourg is member of the EnR, which is a voluntary network of European energy agencies which aims at promoting sustainable energy good and best practice. EnR also strengthens cooperation between members and other key European actors on all sustainable energy issues (energy efficiency, sustainable transport and renewable energy).
Role of government:
Ministry of the Economy and Foreign Trade
According to the Grand-Ducal Regulation of July 27, 2009 on the constitution of ministries, energy policy falls within the remit of the Ministry of the Economy and Foreign Trade. It focuses on increasing energy efficiency in all sectors and the development of renewable energy. Within the ministry, the Directorate General for Energy is responsible for the coordination of the national energy policy.
Ministry of Sustainable Development and Infrastructure
According to the Grand-Ducal Regulation of July 27, 2009 on the constitution of ministries, the Ministry of Sustainable Development and Infrastructure has missions related to the environment, including also energy aspects. Within the ministry, the Department of the Environment conducts activities primarily related to:
- climate change;
- emissions of greenhouse gas;
- promotion of energy savings, new and renewable energy;
- studies of environmental impact;
- environmental and energy audits;
- classified establishment;
- missions and tasks of economic interest grouping myenergy GIE.
Government agencies in sustainable energy:
Ministry of the Economy and Foreign Trade
According to the Grand-Ducal Regulation of July 27, 2009 on the constitution of ministries, energy policy falls within the remit of the Ministry of the Economy and Foreign Trade. It focuses on increasing energy efficiency in all sectors and the development of renewable energy. Within the ministry, the Directorate General for Energy is responsible for the coordination of the national energy policy.
Ministry of Sustainable Development and Infrastructure
According to the Grand-Ducal Regulation of July 27, 2009 on the constitution of ministries, the Ministry of Sustainable Development and Infrastructure has missions related to the environment, including also energy aspects. Within the ministry, the Department of the Environment conducts activities primarily related to:
- climate change;
- emissions of greenhouse gas;
- promotion of energy savings, new and renewable energy;
- studies of environmental impact;
- environmental and energy audits;
- classified establishment;
- missions and tasks of economic interest grouping myenergy GIE.
Energy planning procedures:
There is one formal connection procedure for all grid levels in Luxembourg, and increases in domestic electricity production are favoured, as the country currently imports the vast majority of its electricity. Grid access in Luxembourg is guaranteed provided that the maintenance of the reliability and safety of the grid is guaranteed. Electricity from renewable energy sources injected into the grid is remunerated by the grid operator through a mandatory take-off scheme based on a feed-in-tariff model. The government’s Commissioner of Energy publishes a biennial report analysing the grid situation, focusing on further interconnection with the country’s European neighbours to reinforce security of supply. The grid operator (Creos Luxembourg S.A) is obliged to ensure the long-term capacity of the grid, and is bound to undertake grid reinforcements if producers can support the costs of such measures. Due to the limited potential of renewable energy sources in the country, development of these sources is considered after supply security in grid development contexts.
Energy regulator Date of creation:
The Luxembourg Institute of Regulation, “Institut Luxembourgeois de Régulation” (ILR) is the regulator of the electricity and natural gas market as defined by the law of August 1, 2007 related to the organization of the electricity and natural gas market.
Degree of independence:
The ILR is an independent regulator, not funded out of the public state funds but financed by the operators of the sector supervised and regulated by the ILR.
Regulatory framework for sustainable energy:
Staring from 2008 onwards, the Règlement grand-ducal du 8 février 2008 relatif à la production d’électricité basée sur les sources d’énergie renouvelables applies.
The new Règlement Grand-Ducal of 28 April 2009 introduces a series of modifications to the financial incentives for energy saving and renewables in the domestic sector. This concerns mainly an extension of the application fields, reorganisation of energy supply, and simplification of criteria for eligibility and time windows, as well as district heating.
A law of December 18, 2009, requires that in 2010 biofuels make up at least 2% (calculated on the basis of the heat value of the fuel of the transport fuels), and a law of December 2012 changes this percentage at 3.75%. Up to now the rate has been established annually. The NREAP of 2010 should serve as a guideline for the use of the instruments of the rate in the years 2011 to 2020. The measures offer investment incentives. Companies can benefit from the measure. The measure applies to all technologies in the area of energy production based renewable energy sources, including the production of sustainable biofuels. The measures have been implemented since 1 January 2007 and for a time period of 7 years.
From 5 March 2011 onwards, the "Règlement grand ducal du 27 février 2011 fixant les critères de durabilité pour les biocarburants et bioliquides" has been operational. It defines sustainability criteria for biofuels and other liquid energy carriers.
Regulatory roles:
Both Luxembourg’s natural-gas and electricity markets are regulated by the Institut Luxembourgeois de Régulation (ILR), whose responsibilities include monitoring competition and preventing the abuse of dominant position. ILR also sets the calculation method for approved network tariffs and the conditions for access to the network. The ILR is funded by the network operators.
The duties of the Institute include overseeing and ensuring the full functioning of the energy market, as well as a basic universal service in the interest of consumers. Ensuring effective and sustainable competition by avoiding discrimination in access for new entrants, the Institute allows consumers to freely choose between a growing number of offers and products at fair and competitive prices.
Role of government department in energy regulation:
The Government Commissioner for Energy is responsible for monitoring the security of electricity supply in the country, notably the balance between supply and demand. The Commissioner reports on these issues to the ILR biennially. No other government department takes an active role in energy regulation.
References:
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