Energy

KEY DEVELOPMENTS

Biomethane connection policy

The CRU is consulting until 5 January 2026 on connection policy specific to biomethane production facilities. We look at the proposals in our post: Renewable Energy: Consultation on Biomethane Connections.

Data centre connection policy

It has been reported in the Irish Times that the Commission for Regulation of Utilities is expected to publish the connection policy for data centres this month: CRU to rule that new data centres supply electricity to market in return for grid connection. The Times reports that the decision will likely require that new data centres have power plants or batteries on site or close by matching facilities’ energy demands, broadly in line with the CRU’s proposed decision.

We looked at the CRU’s proposed decision here: Data centres: Key points in consultation on electricity connection policy | Arthur Cox LLP. We noted that grid connection and demand response are areas governed by EU and domestic law regimes with which connection policy must align. Connection policy must be non-discriminatory, and there are prescribed circumstances in which connections may be refused, and norms with which flexible connections must comply. Demand response under EU law is an activity undertaken by final customers in response to market signals or the acceptance of their bid to sell demand reduction.

Data centres: energy efficiency

The Commission is expected to publish a data centre energy efficiency package in early 2026. It will include a label for data centres showing information on energy, renewable energy and water use. A strategic roadmap for digitalisation and AI in energy will also be finalised in 2026.

ORESS Tonn Nua

Results of the ORESS Tonn Nua auction were announced: the winning applicant is Helvick Head Offshore Wind DAC, a joint venture partnership between ESB and Ørsted, which bid a strike price of €98.719 per MWh.

Offshore Phase 1

The CRU decided that for Oriel Windfarm, North Irish Sea Array, Dublin Array, Codling Wind Park, and Arklow Bank Wind Park 2:

the Final Connection Offer (“FCO”) will be valid for the later of: (i) six months after issue of the FCO, or (ii) three months after receipt of the final planning consent, and
the longstop date for the FCO validity period will be extended by two years to 31 December 2027.

The CRU is also consulting until 26 January 2026 on the Phase 1 Guarantee of Availability (“GoA ”) Regime, which deals with how developers will be treated when there are relevant offshore transmission network outages. Key elements of the regime will relate to EirGrid’s planned maintenance allowance, the duration of relevant outages, calculation of compensation for developers, and cashflow arrangements via EirGrid to developers. The CRU is considering inclusion of measures including force majeure provisions, monitoring and oversight of the asset transfer process, and the availability incentive applied to EirGrid under PR6. A decision on the GoA design is expected in H2 2026.

Grids Package

The European Commission adopted the anticipated European Grids package and it is to be discussed at a Council meeting on 15 December 2025. The package includes both legislative and non-legislative measures to tackle bottlenecks relating to permitting procedures, as well security considerations, cross-border infrastructure and investment challenges. The legislative proposals include: (i) a Directive amending the Renewable Energy Directive, Internal Market in Electricity Directive and Internal Market in Gas Directive to accelerate the permitting of energy infrastructure projects, including transmission and distribution grids, storage and recharging stations and renewable energy projects, and (ii) a proposal for a revised Trans-European Network for Energy (TEN-E) Regulation to support timely and efficient development and interoperability of resilient energy infrastructure across the EU.

Accelerating infrastructure

The Accelerating Infrastructure Report and Action Plan has been approved by the Cabinet, with several actions throughout 2026 aimed at legal and regulatory reform and simplification to streamline consenting and delivery of infrastructure. 30 actions and their sub-actions are itemised in tabular form at pages 72-102.

EU DEVELOPMENTS

Infringement procedures: energy efficiency and renewable energy

The European Commission opened infringement procedures by sending letters of formal notice to several States, including Ireland, for failure to transpose: (i) the recast Energy Efficiency Directive (EU) 2023/1791. The Recast Directive sets binding 2030 targets around energy consumption, with the public sector required to lead by example. The Directive also promotes energy efficiency services, including through energy service companies and innovative financing solutions, and (ii) the amendments to Annex IX of the Renewable Energy Directive (EU) 2018/2001 made by Delegated Directive (EU) 2024/1405. Annex IX lists feedstocks mainly used to produce biogas and advanced biofuels (Part A), and other biofuels and biogas (Part B). Biofuels and biogas produced from feedstocks listed in Annex IX are used in the transport sector and promoted in the Directive because they have a better environmental effect than conventional biofuels (biofuels produced from food and feed crops). The Delegated Directive introduced new feedstocks to the list.

Ireland has two months to respond and transpose the Directives.

Data centres: energy efficiency

Electricity

Flexibility: ACER and CEER analyse how retail markets can contribute to flexibility. Recommendations include completing rollout of smart meters, facilitating dynamic and time-differentiated offers, phasing out general price interventions while maintaining targeted support for vulnerable consumers, and encouraging competition and innovation. ENTSO-E’s recent position paper on flexibility is available here: Flexibility from Renewable Energy Sources.
Grid Planning Hub: ENTSO-E has launched an information platform to make grid planning processes more accessible and transparent. It is intended to show how climate ambitions influence the processes and tools used in electricity transmission system planning.
Resource adequacy: ACER is considering proposals to amend the European Resource Adequacy Assessment methodology in order to support capacity mechanism approvals, simplify the methodology, and improve adequacy modelling.
Security of supply: ACER has concluded that almost €11 billion was spent in 2024 across the EU on a fragmented set of nearly 40 security-of-supply measures. It sets out recommendations as regards capacity mechanisms and regional and cross-sectoral coordination.

Gas

Hydrogen progress: ACER has found that market growth remains insufficient to meet EU and national targets. A decarbonised electricity sector is key to renewable hydrogen. Delays in transposing EU rules at national level persist.
Hydrogen mechanism: The submission phase in the first call for interest under the Hydrogen Mechanism closes on 2 January 2026. It is intended to connect potential suppliers with buyers of hydrogen and its derivatives in the EU.
Infrastructure repurposing: ENTSOG and ENNOH have published a report on criteria to consider when repurposing natural gas infrastructure for use for hydrogen.
Low-carbon fuel: Article 9 of the Fourth Gas Directive provides for certification of renewable gas and low-carbon fuels. Delegated Regulation (EU) 2025/2359 has been made under Article 9(5) to supplement the Directive by specifying the methodology for assessing emissions savings from low-carbon fuels.
Russian imports: Political agreement has been reached on the Regulation to phase out imports of Russian natural gas. Member States will submit national diversification plans. The text will be published in the Official Journal of the EU after the formal endorsement of the Council and Parliament.

Carbon

EU CBAM: It is reported in the Financial Times that the EU will present proposals before the end of the year to extend the Carbon Border Adjustment Mechanism to certain downstream products and commodities: EU expands carbon border tax to garden tools and washing machines. It is also intended to set up a subsidy scheme for EU exporters.
EU/UK: The European Commission and UK will begin negotiations to link their emissions trading systems. An agreement would facilitate exemptions for the UK and EU from each other’s Carbon Border Adjustment Mechanisms.
ETS2: Co-legislators have agreed to postpone the full introduction of the EU’s ETS2 from 2027 to 2028. The Commission also proposes to amend the Market Stability Reserve Decision to support a smoother start for ETS2. Postponement of ETS2 was agreed in the context of amendments negotiated to Regulation (EU) 2021/1119 on climate neutrality, which would introduce the 2040 target of 90% emissions reductions compared to 1990. The Parliament also supports domestic carbon removals to be used as a mechanism to compensate for hard-to-abate emissions in the EU ETS.
Carbon market: The European Commission’s annual report on the EU ETS indicates that emissions in the power sector and industry continue in a declining trend, around 50% below 2005 levels. It states the EU ETS is on track to achieve the 2030 target of -62% emissions. EU ETS revenue in 2024 was €38.8 billion.

Batteries

Regulation (EU) 2023/1542 concerning batteries and waste batteries includes minimum requirements for extended producer responsibility, the collection and treatment of waste batteries and for reporting. Implementing Regulation (EU) 2023/1542 has been made setting out the format for reporting data and assessment methods and operational conditions for collection and treatment of waste batteries. A consultation was also held to help identify substances of concern in batteries, including substances that hamper recycling of end-of-life batteries.

PCIs and PMIs

The European Commission granted 235 projects the status of Projects of Common Interest / Projects of Mutual Interest. They will be eligible to apply for EU financing and to benefit from expedited permitting and regulatory processes. PCIs include the Celtic Interconnector and Silvermines Pumped Hydroelectric Energy Storage. PMIs include the North-South Interconnector and MaresConnect.

Clean transition technologies

Three new funding opportunities open under the Innovation Fund, with a budget of €5.2 billion from EU ETS revenues. A Net-Zero Technologies call is open until 23 April 2026 and auctions for hydrogen and industrial heat decarbonisation are open until 19 February 2026.

Energy Taxation Directive

With negotiations on the revision of the Energy Taxation Directive seemingly stuck, MEPs sought views from experts on next steps. The record of the meeting is available here: Clean industrial deal and Energy Taxation Directive. Themes included alignment with decarbonisation goals, tax incentives for clean investment, and avoiding structures that inadvertently incentivise fossil fuel consumption.

Nature restoration and bioeconomy

A new Delegated regulation (EU) 2025/2188 supplements Regulation (EU) 2024/1991 on nature restoration by establishing a science-based method for monitoring pollinator diversity and pollinator populations, with the intent of helping Member States to reverse the decline of pollinator populations by 2030. Our summary of the Nature Restoration Regulation is available here: Where Nature Restoration meets Infrastructure Development: Council approves new Regulation.

The Commission has also adopted a new Strategic Framework for a Competitive and Sustainable EU Bioeconomy to support activities that provide sustainable practical solutions using biological resources in sectors such as agriculture, forestry, fisheries, aquaculture, biomass processing, biomanufacturing and biotechnologies.

Climate resilience

The European Commission is consulting until 23 February 2026 on a proposed Regulation to establish a more ambitious, comprehensive and coherent approach to climate resilience and preparedness. It will also consider the need for simplification, for instance by reducing the administrative effort to monitor and report on climate adaptation.

FURTHER DOMESTIC DEVELOPMENTS

Grid infrastructure investment

The Electricity (Supply) (Amendment) Act 2025 amends previous Electricity (Supply) (Amendment) Acts to increase the aggregate amount that may be borrowed by ESB to €17 billion and to allow for the issue of additional capital stock by ESB.

Heavy loads

It was reported in the Irish Times that officials are considering imposing limits of between 400 and 450 tonnes on Irish roads when transporting extra-heavy loads, and that permits are sought up to 12 months in advance.

Sectoral plans to protect against the impacts of climate change

The Government approved 13 Sectoral Adaptation Plans including in relation to the electricity and gas networks. These are statutory plans which are required to specify the adaptation policy measures the relevant Minister, having regard to the approved national adaptation framework, proposes to adopt for the purposes of: (a) enabling adaptation to the effects of climate change to be achieved in relation to the matter to which the sectoral adaptation plan relates, and (b) enabling the achievement of the national climate objective.

Sectoral Capital Plan

The Department of Climate, Energy and the Environment’s Sectoral Capital Plan for 2026-2030 provides for a capital funding envelope of up to €5.640 billion and sets out priority investments in the energy, climate and circular economy sectors.

Responsible Business Compass

The Minister for Enterprise, Tourism and Employment is consulting until 15 January 2026 on a Responsible Business Compass for Ireland, intended to help navigate EU law on sustainability and responsible business practices. It focuses on nine EU instruments relating to due diligence obligations and product and consumer measures for the Circular Economy, as well as the Carbon Border Adjustment Mechanism.

CRU BUSINESS

Compulsory acquisition of land

The CRU is consulting until 23 January 2026 on its guidance relating to applications for special orders for the compulsory acquisition of rights over land pursuant to section 47 of the Electricity Regulation Act 1999.

High efficiency combined heat and power

The CRU revised the certification process for HE CHP units. Further information is available here: Certification Process for High Efficiency Combined Heat and Power.

Non-domestic gas works

The CRU intends to roll-out aspects of the regulation of non-domestic gas works throughout 2026. Further information is available here: Information Note - Non-Domestic Gas Works Implementation Update.

SEMC BUSINESS

Balancing market

The SEM published an addendum to SEM-13-010(ii), one of the documents relating to curtailment in tie-break situations. The addendum relates to rebalancing, which it indicates is a new operational concept designed to enhance the equitable distribution of dispatch down instructions among non-synchronous renewable generation units. It defines rebalancing as the adjustment of constraint or curtailment setpoints within a group of renewable generation units to reflect each unit’s current availability and ability to contribute to the group’s overall constraint or curtailment target.

Capacity market

The regulatory authorities are consulting until 8 January 2026 on auction parameters for 2026/27 T-1. The auction price cap will be €160,545/MWd/year.

In January 2026 the regulatory authorities will consult on the modification proposals discussed at Workshop 46: CMC_19_25 Information on Remedial Actions – Extensions and Terminations; CMC_20_25 Modification to Support Online Secondary Trading; and CMC_21_25 Consumer-developer NPV sharing mechanism for delayed capacity projects.

NORTHERN IRELAND

Lir interconnector

The Utility Regulator is consulting until 15 January 2026 on its approach to assessing the needs case for a regulated operating revenue regime for the Lir interconnector, which will connect Northern Ireland and Scotland. This follows from Lir’s request for a regulated cap and floor revenue regime.

Customer grid connection costs

The Department of the Economy is advising the Utility Regulator to implement a new policy to replace current connection charging policy, whereby customers seeking a new connection to the distribution network are charged for the cost of reinforcement to the network triggered by their connection request, as well as the cost of the lines and plant directly needed to make the connection.