Energy Efficiency Obligation Schemes

Energy Efficiency Obligations (EEO) Schemes are regulatory mechanisms that support the implementation of energy efficiency measures. These mechanisms require obligated parties to meet quantitative energy savings targets by investing in their end-users’ energy efficiency measures. The EEO scheme mechanism defines the energy efficiency measures and activities that can be implemented to meet set targets; it also defines the procedures for monitoring, verification and reporting the achieved energy savings, which confirm that the activities actually took place. The EEO schemes are typically enforced by regulation by financial penalties for the parties that do not comply.

As of October 16, 2015, the new Energy Efficiency Directive (Directive 2012/27/EU) introduces legally binding measures for the Energy Community Countries to increase energy efficiency, including the legal obligation to establish an Energy Efficiency Obligation scheme. The Directive stipulates that savings should start as of January 1, 2017, and that contracting parties shall notify the Energy Community as to what policy measures they plan to adopt by October 15, 2017. Once this became an obligation for Bosnia and Herzegovina, it is necessary to include these provisions in the existing laws or develop new laws, as well as to develop the necessary regulations and processes.

EEO schemes typically place obligations on distributors and/or providers of network energy, not only for electricity and natural gas, but also providers of district heating, heating oil and transport fuels, which can be included in the mechanism. EEO schemes are established with an aim to overcome well known obstacles to the implementation of energy efficiency measures on a larger scale, most importantly access to funding; and they have proven in numerous countries to be an excellent mechanism for the development of the energy efficiency industry, job creation, energy security, and emission reductions.

When preparing the EEO model it is most important to define the correct policy objectives, which outline what the mechanism intends to achieve. The policy objectives define the high level objectives of the EEO schemes: they need to be simple, clear and focused on achieving energy savings, which is the primary purpose of the EEO scheme.