Energy and Infrastructure
Key developments
EU PACKAGE ON ENERGY INDEPENDENCE AND AFFORDABILITY
The European Commission’s package on energy independence and affordability is relevant to stakeholders across the sector including those in generation, supply, transmission and distribution, energy services, consumption, finance, and government.
We look at the package in our briefing: EU package on energy independence and affordability: What it signals for the energy sector.
While the package was developed before the conflict in the Middle East, it reflects structural priorities around energy security, affordability and resilience that have become more pronounced. The European Council adopted conclusions following its 19 March meeting, calling, among other things, for a moratorium on strikes against energy and water facilities. The Council also called for:
- the Commission to report to the Council on the potential impact on energy security and prices and to propose measures as appropriate,
- the Commission to present a toolbox of targeted temporary measures to address price spikes and actions to lower electricity prices and address excessive volatility in the short term,
- the Commission and Member States to work together on national temporary and targeted measures to mitigate the impact of fuels and related cost components on electricity generation costs,
- the Commission to review the EU emissions trading system by July 2026 at the latest to reduce the volatility of the carbon price and mitigate its impact on electricity prices,
- co-legislators to agree the grids package in 2026 to quickly build necessary infrastructure, ensure its protection and resilience, and enhance interconnections, and
- accelerated implementation of the Energy Union 2030 agenda to rapidly allow increased and affordable electrification.
The European Council will return to the issues above in June 2026 to review progress. It has been reported in the Financial Times that the European Commission intends to announce a measure that would "stop carbon prices from surging by keeping credits in the market that would normally be cancelled".
INDUSTRIAL ACCELERATOR ACT
The European Commission proposed a Regulation to establish a framework of measures for the acceleration of industrial capacity and decarbonisation in strategic sectors. The proposed Regulation would introduce ‘Union origin’ requirements, low-carbon requirements, or both, to certain public procurement procedures and public support schemes. It also sets conditions on foreign direct investments in emerging strategic sectors.
We look at the proposed Regulation in our briefing: The EU Industrial Accelerator Act: Impacts on renewable energy auctions, public procurement and FDI.
BIOMETHANE
The CRU published two decisions that are significant to the biomethane sector. The first approves GNI’s interim reverse compression solution and the second sets out a supervisory framework for guarantees of origin for renewable gas.
We look at these developments in our briefing: Biomethane Sector in Ireland: Decisions on Guarantees of Origin and Reverse Grid Compression.
CONNECTION POLICY FOR DATA CENTRES
In 2025, the CRU issued a policy on connection to the electricity grid for data centres, which we outlined in a briefing here: New connection policy for data centres in Ireland. An application to the High Court for leave to apply for judicial review of the decision has been made by Friends of the Irish Environment, Friends of the Earth, and Client Earth. We are not aware of a Court order having been granted to prevent implementation of the policy, but the existence of a Court challenge may slow down its implementation. We are monitoring developments in this area.
CAPACITY REMUNERATION MECHANISM (“CRM”)
The SEM Committee advises that a programme is underway to develop the next phase of the CRM ahead of the expiry of the current State aid approval in May 2028. The programme is to include a strategic review of the existing CRM and proposals for a future CRM design (“CRM 2.0”). The SEM Committee has published a note on background, scope, and key milestones, indicating that the review will consider performance of the CRM relative to future needs of the electricity system, issues within the existing arrangements, and changes required to comply with EU law and State aid guidelines. The SEM Committee is to publish a consultation paper on design proposals for CRM 2.0 in July 2026.
DS3 SYSTEM SERVICES
The SEM Committee published a decision on 10 March 2026 on DS3 System Services Tariff Review, which takes effect one month from the date of the decision. Tariff rates will remain at the current rates. However, temporal scarcity scalar (“TSS”) values are to be reduced to 3.5 (from 4.0) when system non-synchronous penetration (“SNSP”) is greater than 70% and 1.75 (from 2.25) when SNSP is greater than 60%.
TSS values are intended to increase DS3 payments at times of system stress or scarcity. They signal the increased value of system services at these times. The decision means that, while DS3 tariff values remain the same, there is a lower scarcity uplift on tariffs at times when the system is operating with high levels of renewable energy penetration.
The decision states that the TSOs will continue to monitor the effectiveness and costs of these arrangements and, if appropriate, recommend revisions to current tariff rates. The SEM Committee states that it is unable to take a decision at present on TSS values effective from 1 October 2026 and requests that the TSOs carry out further consultation to recommend a broader range of options.
LOW CARBON INERTIA SERVICES
The SEM Committee has published a decision endorsing plans for Phase 2 of the Procurement of Low Carbon Inertia Services. EirGrid and SONI propose to procure a target volume of 14,000 MVA.s (with a maximum of 18,000 MVA.s). There are changes to this procurement as compared to Phase 1. For the EirGrid procurement, these include a requirement to have planning permission with no appeal or judicial review outstanding, and the introduction of a two-step tender process. The TSOs are to commence the procurement process with the aim of awarding contracts in January 2027 by EirGrid and in May 2027 by SONI.
POST-2030 EU LEGAL FRAMEWORK
Regulation (EU) 2026/667 amending the EU Climate Regulation as regards the setting of a Union intermediate climate target comes into effect on 7 April 2026. (The Regulation also postpones the operation of emissions trading for buildings, road transport and additional sectors until 2028.)
Under the revised Climate Regulation, the intermediate climate target is to reduce greenhouse gas emissions by 2040 by 90% compared to 1990 levels. The Commission is required to review relevant EU legislation to enable the achievement of this and the 2050 climate-neutrality objective. The Commission must ensure that several elements are reflected in legislative proposals, including in relation to high-quality international carbon credits, domestic carbon permanent removals, and flexibility within and across sectors and instruments.
In this context, the Commission is calling for evidence until 16 April 2026 and consulting until 12 June 2026 in relation to the following two areas of law.
- The renewable energy legal framework post-2030: The intent is to tackle problems preventing increased uptake of renewable energy, including in relation to grid capacity, flexibility, increase of hours of low and negative prices, electrification of demand, and price competitiveness of certain renewable fuels. The Commission intends to adopt a proposal in Q4 of 2026.
- The energy efficiency legal framework post-2030: The intent is to tackle structural challenges including by implementation of current rules, fragmented financing schemes, incentives and support tools, the need to better leverage public funding to unlock private investments at scale, and challenges that arise in emerging sectors (including in relation to energy and water consumption, excess heat and waste heat recovery and the availability of electricity grids).
EU developments
ELECTRICITY
- Non-fossil flexibility: ACER issued guidance to regulators on reporting barriers to non-fossil flexibility in electricity markets. The IME Regulation requires Member States to carry out flexibility needs assessments to determine how much clean flexibility their systems require. Member States are expected to complete their assessments by July 2026.
- Power purchase agreements: ACER is consulting until 8 May 2026 to identify key regulatory, market and financial factors affecting the development and functioning of PPAs across Member States.
- Resource adequacy assessment: ACER’s decision amending the resource adequacy assessment methodology to streamline capacity mechanism approvals processes is available.
- System modelling: ACER is consulting until 27 March 2026 on economic input data to improve electricity system modelling across Europe.
- Ten Year Network Development Plan: ENTSO-E is consulting until 3 April 2026 on the methodology to identify future system needs for 2035, 2040 and 2050.
- Iberian peninsula blackout: The Expert Panel Report into this grid failure indicates that the blackout was caused by fast voltage increases and cascading generation disconnections caused by several interacting factors. As reported by the FT, the problem did not lie with wind and solar power.
GAS
- EU DSO entity: The entity’s statutory documents are in the process of being updated to incorporate its expanded scope which now includes natural gas and hydrogen DSOs.
- Ten Year Network Development Plan: ENTSOG is consulting until 31 March 2026 on the methodology to identify future system needs for hydrogen and natural gas networks.
- Hydrogen transmission network operator: A decision on the certification of a first hydrogen TNO (in Poland) is expected on 6 April 2026. Further information is available here: ACER supports certification of the first European hydrogen transmission network operator.
- Renewable gas injections: ENTSOG has reported on renewable gas injection into natural gas networks. It indicates that renewable gas injections increased from 38.1 TWh to 43.2 TWh over the last two gas years, an annual increase of 12%.
- Russian gas phase-out: The European Commission published updated guidance on the implementation of the REPowerEU Gas Regulation, which provides for phase out of natural gas imports from Russia.
REMIT
- Reporting guideline: ACER plans to consult on a new guideline on REMIT transaction reporting to reflect evolving obligations under the revised REMIT framework. ACER has also published new Rules of Procedure for cross-border investigations as part of its quarterly report. Further information is available here: How ACER will conduct cross-border investigations.
- LNG: ACER is strengthening transparency and reliability in the EU liquefied natural gas market through updated guidance on market data reporting and a new Expert Group on price assessment and benchmarks. Further information is available here: ACER improves LNG market transparency with updated guidance and new Expert Group.
ENERGY EFFICIENCY AND ENERGY PERFORMANCE OF BUILDINGS
Commission Recommendation (EU) 2026/536 sets out practical guidance on one-stop shops services for energy efficiency and the energy performance of buildings. The Commission states that the low demand for energy renovations and energy efficiency improvements, in particular medium and deep renovations, is a critical barrier to meeting EU objectives.
One-stop shops are intended to provide information and assistance to citizens and to activate and aggregate demand for energy efficiency and energy renovation investments. The Commission has also assessed public spending for energy efficiency and the energy performance of buildings.
Commission Recommendation (EU) 2026/537 sets out 12 actions for Member States and market actors to unlock private investment in energy efficiency. They include, for example, setting up a national energy efficiency fund and scaling-up long-term financial instruments and blended financing solutions.
ENERGY COMMUNITIES
Energy communities are provided for in EU law and are under the spotlight as a potential means to make more cost-efficient use of energy infrastructure. In a special report, the European Court of Auditors analyses the implementation of EU law and policy and makes recommendations to fulfil the potential of energy communities. For example, it recommends that the Commission publishes guidance on legal ways to involve apartment owners in the production, sharing and selling of renewable energy.
RENEWABLE BIOLOGICAL RESOURCES
The EU Environmental Council endorsed a Strategic Framework for a Competitive and Sustainable EU Bioeconomy. The Commission indicates that, in the context of a new 2026 Energy Union package for the decade ahead, it will take account of experience in implementing Renewable Energy Directive sustainability and GHG emissions saving criteria, and technological developments in energy from renewable sources. Further information is available here: Bioeconomy: Council backs moving bio-based innovations from lab to production - Consilium.
MEASURING INSTRUMENTS DIRECTIVE
The Council and Parliament adopted the Directive amending the 2014 Measuring Instruments Directive, which comes into effect on 9 April 2026. It is intended to set common standards for electric chargers and gas dispensers. Further information is available here: Technical harmonisation: Council approves new requirements for car chargers and other measuring instruments.
NUCLEAR FUSION
The EU plans to invest €330 million to accelerate fusion energy and support nuclear technologies and skills, as outlined in the Work Programme for the 2026 and 2027 Euratom Research and Training Programme. A press release is available here: EU to invest €330 million to accelerate fusion energy and support nuclear technologies and skills.
ENERGY MARKETS
ACER began the 2026 Monitoring Report with a detailed overview of key insights into the EU energy markets, including that renewables lead the power mix, providing 50% of total EU electricity generation. Recommendations include harnessing flexibility and ensuring efficiency across all price components.
Further CRU and SEMC business
SYSTEM OPERATORS
The CRU approved the TSO and TAO’s annual transmission performance report 2024 and the investment planning and delivery report 2024. Further information is available here: The Annual Transmission Electricity Performance Report and Investment Planning and Delivery Report.
INTERCONNECTORS
The CRU is consulting until 16 April 2026 on the Celtic Interconnector Operating Licence. The Celtic Interconnector will operate under a fully regulated model, similar to the approach applied to the East–West Interconnector.
The CRU has set the final cap and floor levels for the Greenlink interconnector following the post construction review. Further information is available here: Greenlink Electricity Interconnector.
CAPACITY MARKET CODE
- The SEM Committee is consulting until 31 March 2026 on a modification to prevent units achieving Substantial Financial Completion from terminating and re-entering the same capacity into the next two T-1 auctions.
- The SEM Committee published approved legal drafting for CMC_07_24 on treatment of Capacity Contracts of Varying Duration in Constrained Auction Solution.
- A timetable has been published to address proposed modifications CMC_01_26 (Capacity Auction Monitor Report Timelines), CMC_02_26 (F.4.1.1 Submission Information), and CMC_03_26 (Section F Amendments). Further information on the proposals is available here: Capacity Market Modifications.
Northern Ireland
CONNECTION COSTS
The Utility Regulator issued a decision on licence modifications to NIE Networks’ Distribution Licence to implement socialisation of connection costs, which it indicates is intended to shift responsibility for covering the costs of reinforcing the network from the connecting customer to the wider customer base. Further information is available here: Decision on licence modifications to NIE Networks’ Distribution Licence to implement socialisation of connections.
© 2026 Arthur Cox LLP | All rights reserved
