By reducing greenhouse gas emissions in Austria by 2030, another important step towards the extensive decarbonization of the energy system by 2050 is to be achieved. In addition to the fact that protecting the climate should already be sufficient motivation to drive forward the energy transition, the necessary legal basis is still required at an upstream level. The draft of the new Electricity Industry Act ("ElWG") - the review period for which expires on February 23 - is intended to create this legal and regulatory framework for Austria.

Objective of the ElWG 

The Electricity Industry and Organization Act is intended to transpose European requirements, such as the "Internal Electricity Market Directive", into national law and replace the somewhat outdated Electricity Industry and Organization Act 2010. In addition, the draft Electricity Act avoids the current two-tiered implementation via basic and implementing legislation and takes into account the fact that the electricity market has changed significantly in recent years - firstly due to the ongoing decarbonization of the energy system and secondly due to the increasing decentralization of energy generation. In view of the dynamic legal area of electricity law, modernization is urgently required, particularly with regard to a revised market design and a modern and effective legal framework for the electrification of all sectors - irrespective of the need in connection with the energy transition. 

The most important changes to the ElWG at a glance

The most important key points and innovations of the ElWG can already be seen by taking a systematic look at the structure of the law. After the general provisions that are usual for a law at the beginning, there are - to name just a few - provisions on customer rights, decentralized supply and community energy as well as on the supply of electrical energy.

Strengthening customer rights

In connection with improving and strengthening the rights and protection of end customers, it is planned that contractual aspects - in particular regarding changes to the general terms and conditions of supply and options for switching suppliers - must be made available to the regulatory authority in a transparent and "concise and easily understandable" form based on model formulations. 

Customers - provided they have a digital electricity meter - should be able to conclude so-called aggregation contracts in order to bundle their electricity requirements with other customers. With the free choice of supplier, it will also be possible to conclude several electricity supply contracts with different suppliers in future. Dynamic energy prices are also planned, whereby suppliers who supply more than 50,000 metering points will be obliged to offer electricity at dynamic energy prices. This means that instead of the usual static price per kWh, price fluctuations on spot markets will also be taken into account. 

Decentralized supply through active participation in the energy market

In line with the motto "the tried and tested lasts the longest", the ElWG provides for the promotion of active consumer participation in the energy market as a continuation of the already well-known energy communities. The will of the population to participate in the energy transition themselves is to be increased within the framework of peer-to-peer trading. From now on, it should be possible - provided this is not a commercial activity - to sell (surplus) electricity that is not consumed by oneself to third parties at a profit as a self-supplier, without falling into the category of an electricity supplier. In contrast to energy communities, peer-to-peer contracts can be concluded with people throughout Germany, which means that there are no restrictions with regard to concession areas or grid levels.

There are also innovations in the ElWG draft in connection with direct lines. The scope of application, which was previously very limited by case law, has been extended to the effect that from now on electricity may be drawn from the distribution grid for the electricity generation plant's own requirements and the unused (surplus) electricity can be fed back into the public grid. 

Grid connection and grid access

By agreeing flexible grid access, it should be possible in future to connect renewable energies to the grid more quickly. The plan is for the grid operator to be able to specify the maximum grid capacity for a certain period of time. In simple terms, this means that the operator of a photovoltaic system, for example, can feed electricity into the grid even if it is not guaranteed that 100% of the power will be fed in at all times. A stricter grid expansion obligation for distribution system operators is provided for in the draft, as is a general connection obligation for energy storage systems. Closed distribution grids are now also planned, in which - unlike regular distribution grids - the distribution grid serves a closed user group (e.g. industrial and commercial parks). 

Conclusion and outlook

Even if there is no "one" right measure to achieve an energy transition, the Austrian legislator is taking a long overdue step in the right direction with the planned Electricity Act, although "legal fine-tuning" will still be necessary in one or two places. 

A comprehensive information obligation, for example, entails the risk that, on the one hand, grid providers will be required to provide excessive information and, on the other hand, end customers will be threatened with densely printed information sheets that probably fail to achieve the initiated goal of transparency. In the current ElWG draft, the provisions on basic supply for household customers and price adjustments, which have been in the spotlight recently, remain essentially untouched from a content perspective. 

Peer-to-peer trading offers an exciting instrument, which represents competition - in particular because it does not require membership of a legal entity - to energy communities, which mainly rely on surplus feeders. However, the obligations applicable to peer-to-peer sellers (duty to inform the distribution system operators about the conclusion of the contract and about certain contents of the contract) will require legal expertise in order not to diminish the attractiveness and, above all, the legal certainty of peer-to-peer trading. 

It must also be taken into account that in connection with the necessary grid expansion and the associated legal requirements - such as environmental impact assessments, planning procedures or public participation - there is a risk that the planned legal changes will not correspond to the reality of the existing grid and its expansion speed.