The Primary Energy Factor: the grain of sand holding back the phase out of fossil fuels

The Primary Energy Factor (PEF) is really just a technical conversion tool that allows regulators to go from final to primary energy when needed. Yet, it has tremendous impact on the perception of electricity consumption in energy efficiency rules which in turn serves as a de facto incentive for the consumption of fossil fuels.

Its ongoing review, dealt with by the Commission with a delegated act, is an unmissable opportunity for EuropeOn to be active on this issue by taking part in the stakeholders’ meetings and consultations. We now have a chance to ensure this review can both redress the inconsistencies of the PEF framework and contribute to the objectives of the Climate Law and REPowerEU initiative.

With the EU’s aims for climate neutrality and the new push to reduce our consumption and dependence on fossil fuels, this situation has become untenable and calls for a deep rethink on how the PEF is applied, if it should at all.

The Energy Performance of Buildings Directive (EPBD) defines primary energy as “energy from renewable and non-renewable sources which has not undergone any conversion or transformation process”, and this is exactly what the PEF framework wants to account for. This means that when primary energy is used as the metric of compliance for any energy efficiency legislation, a multiplier or conversion coefficient (i.e. the PEF) will be applied to the final consumption of electricity. On the other hand, fossil fuels are considered to be primary energy sources and usually have a PEF of 1. As always when multiplying something by 1, it has no effect.

While the PEF can at first seem like a reasonable tool to use, where and how it is applied is much more questionable, if not preposterous.

Indeed, the PEF is currently in application for calculations under the Energy Efficiency Directive, where Member States have to report their energy savings in primary or final energy, under the Energy Performance of Buildings Directive, where Energy Performance Certificates can express the energy performance of buildings in primary energy, and under Ecodesign and Energy Labelling rules, which include the PEF when assessing the energy performance of a product.

In some cases, Member States are at liberty to choose their own PEF values but in the case of product policy, the default EU PEF of 2.1 is applied across Europe for electricity. This means that final electricity consumption is multiplied by 2.1 to work out primary energy consumption, making electric end-uses seem 2.1 times less efficient than they really are.

When considering EPBD, Ecodesign and Energy Labelling, using a PEF leads to severe distortions of the energy performance ratings that are meant to guide policy decisions as well as consumer decisions. Indeed, the PEF for grid electricity is determined upstream of the point of consumption and is not at all indicative of the intrinsic efficiency of buildings or products, as it is rather reflective of the average efficiency of power plants in a given area.

In practice, electricity consumption will count double (when the EU default PEF is used) compared to fossil fuels, exactly in the cases where minimizing energy consumption is the rule of the game. Those who seek to maximize their energy performance will then keep away from electric solutions, regardless of GHG emission, and turn to fossil fuels.

With regards to the Energy Efficiency Directive, using a PEF can be useful to accurately statistically assess the energy that was used at a national or European level. However, the way the PEF is calculated shows a strong bias towards favoring fossil fuels. A set of parameters in the PEF methodology must change in order to remove incentives for fossil fuels:

  • The PEF can be based on forward-looking values. Currently, the PEF is based on data from Eurostat on the state of power systems in Europe dating from 2018 and before. However, instead of looking backwards, the PEF should look at where our fast-evolving energy system is headed, e.g. on the basis of National Energy and Climate Plans (NECPs) projections, and be based on where we want to be rather than on the situation we are trying to leave behind us.
  • Non-combustible renewables should be accounted for differently. While they currently have a PEF of 1, which is already lower than average grid electricity (but equal to fossil fuels), this figure is still based on the premise that an energy source is actually consumed to create renewable power. It could be easily argued in the case of solar, wind or hydro, that no energy source was used up to actuate solar panels of turbines, leading to a PEF of 0.
  • A life cycle perspective should be applied to PEF calculations. This is currently not the case but doing so would internalise some heavy externalities, especially in the case of fossil fuels where methane leakage, energy used for extraction and transport are not taken into account.

EuropeOn is a strong believer that the PEF must evolve in order to for EU energy policy to remain consistent and effectively lead Europe towards climate neutrality. To this end, we have sent in a detailed position paper, along with 10 other stakeholders, in order to make sure our grievances are well taken into account during the ongoing review of the PEF.