Energy

KEY DEVELOPMENTS

Reform of Internal Market in Electricity and Gas

The Council has endorsed the amendments to the internal market in electricity Regulation and Directive, and the Recast Regulation and Directive on the internal market for renewable gas, natural gas, and hydrogen.

The instruments are due to be published in the OJEU and enter into force 20 days after publication. They represent significant reform.

As regards electricity, the reforms recognise that the wholesale market price for energy is not necessarily appropriate to attribute to other elements of the energy system. A new aim of the Regulation is supporting long-term investment in renewable generation, flexibility and grids. Capacity mechanisms are no longer considered to be temporary measures of last resort, and there will be a process at EU level to simplify their adoption. There is also a framework to recognise the place of support schemes for renewable generation and non-fossil fuel flexibility as part of the internal market, as well as provisions to remove barriers to the corporate PPA market.

As regards gas, the 2009 Regulation and Directive are significantly updated to provide for transition of the natural gas system towards an integrated and highly efficient system for renewable and low-carbon gas. The third-party access regime is developed as regards renewable and low-carbon production facilities, including through use of discounted tariffs and provision of firm capacity. The new instruments significantly develop the framework for consumer empowerment and protection and retail markets. They also provide a third-party access regime for hydrogen systems, and provisions to facilitate a properly functioning and transparent market for hydrogen.

Methane Emissions

The Regulation to reduce methane emissions in the energy sector has been formally adopted. It will be published in the OJEU and come into force 20 days later. Further information is available here and a Q&A is here.

The Regulation will lay down rules for the measurement, quantification, monitoring, reporting and verification of methane emissions in the energy sector, as well as the abatement of those emissions. It will apply to (a) oil and fossil gas exploration and production, (b) natural gas transmission, distribution, underground storage and LNG terminals, and (c) operating underground and surface coal mines, and closed or abandoned underground coal mines.

The Regulation will also impose obligations on importers (persons who, in the course of a commercial activity, place natural gas, crude oil or coal from a third country on the EU market, including any natural or legal person established in the EU appointed to carry out acts and formalities required under Chapter 5 of the Regulation).

New EU Guidance on Deployment of Renewable Energy

The Commission published guidance for Member States to accelerate deployment of renewable energy. It relates to implementation of the obligations in the revised Renewable Energy Directive, focusing on permit-granting and auction design. Our update is available here.

Biomethane Strategy

In Ireland, a new National Biomethane Strategy aims to set out how Ireland will deliver up to 5.7TWh of indigenously produced biomethane by 2030. It sets out 25 strategic actions, including assessment of schemes to mobilise feedstocks, and engagement around a biomethane grid connection policy.

In Northern Ireland, DfE is calling for evidence until 9 August 2024 on development of biomethane production in Northern Ireland.

EU DEVELOPMENTS

Energy Efficiency

The Commission has published Recommendation (EU) 2024/1590 on transposing Articles 8-10 of the Recast Energy Efficiency Directive, which provides for the energy saving obligation, energy savings obligation schemes, and alternative measures. The obligation is intended to encourage long-term investment in energy efficiency and was strengthened in the latest iteration of the Energy Efficiency Directive.

Energy Council

Outcomes of the 30 May 2024 meeting of EU Energy Ministers included the following:

Sustainable Electricity Grids: Ministers approved conclusions on sustainable grid infrastructure and called on Member States and the Commission to forge ahead with actions. Further information is available here.
REPowerEU: Ministers consider that further efforts are needed around security of supply. The Commission was invited to develop further guidance on phase out of Russian fossil fuels. Further information is available here.
European Green Deal: Ministers discussed additional steps towards a genuine Energy Union to pursue energy sovereignty and climate neutrality.
Energy Communities: Ministers underlined that action needs to be taken to integrate renewable energy communities into existing energy markets. They invited the Commission to develop an action plan to resolve unjustified barriers to market entry.
Energy Charter Treaty: Ministers formally adopted the decision to leave the Energy Charter Treaty. The EU considers that the Treaty, which contains an investor-state dispute settlement mechanism, has become outdated and out of step with the Paris Agreement. Further information is available here.

Electricity

Cyber-Security: A new EU Network Code on Cybersecurity enters into force on 13 June 2024. Further information is available here.
Demand Response: ACER will consult until 31 October 2024 on the system operators’ proposal for a network code on demand response. It is intended to establish rules for market access for demand response, and to enable market-based procurement of services by SOs.
PPAs: ACER will consult until 18 July 2024 on introducing voluntary templates for PPAs in the EU.
SDAC: ACER invites views until 28 June 2024 on a proposal from TSOs to amend the methodology for calculating scheduled exchanges resulting from single day-ahead coupling. TSOs deem it necessary to improve the SDAC algorithm to enable effective implementation of the 15-minute Market Time Unit (expected for January 2025). ACER also invites views until 19 June 2024 on a study on implementing co-optimisation in the day-ahead coupling algorithm.
Connection: ACER will consult until 8 September 2024 on amendments to the connection network code in relation to requirements for high voltage DC systems and related power park modules. The aim is to align this code with other connection codes and ensure the interconnected system is adapted to emerging developments like increased offshore, storage and demand facilities.
Grids: A report is available on best practices to achieve network efficiency and smart grids. ENTSO-E and ENTSOG have also published joint scenarios which will be the basis for the TYNDP 2024.
Fuels of non-biological origin: Delegated Regulation (EU) 2023/1184 lays down rules for determining when electricity used for the production of renewable liquid and gaseous transport fuels of non-biological origin can be considered fully renewable. It has been amended to align a technical term with the Renewable Energy Directive.
Biofuels and Biogas: Delegated Directive (EU) 2024/1405 amends Annex IX of the Renewable Energy Directive to add eligible feedstocks for the production of biofuels and biogas.
Security Analysis: ACER amended the methodology for Coordinating Operational Security Analysis.

Gas

Hydrogen: The Commission launched a pilot mechanism to collect, process and give access to information on demand and supply for renewable, low-carbon hydrogen. A new hydrogen infrastructure map is available, identifying PCI/PMI status projects.
Grids: ENTSO-E and ENTSOG published joint scenarios which will be the basis for the TYNDP 2024.
Congestion: ACER reported that congestion diminished in 2023, but that price convergence between European gas hubs has not reached pre-crisis levels.

Net Zero Industry Act and Renewable Energy Auctions

The Council adopted the proposed Regulation to establish a framework of measures for strengthening Europe’s net-zero technology products manufacturing ecosystem. Once signed by the Presidents of the Council and Parliament it will be published in the OJEU and come into force. As mentioned previously, it will impose requirements in relation to renewable energy auctions for strategic net-zero technologies (which include solar, wind, energy storage, grid and other technologies). Further information is available here and here.

Ecodesign for Sustainable Products Regulation

The Council adopted the new Regulation to build on the previous Ecodesign Directive. It will set performance and information requirements for certain products placed on the EU market, based on energy and resource efficiency, durability and reusability, recycled content, and carbon and environmental footprints. Once signed by the Presidents of the Council and Parliament it will be published in the OJEU. Further information is available here.

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FURTHER DOMESTIC DEVELOPMENTS

Marine Planning transfers to DECC

Responsibility for Ireland’s marine planning system transferred to the Department of the Environment, Climate and Communications from the Department of Housing, Local Government and Heritage. This represents a welcome consolidation of the regulation of marine development. DECC has provided further information here.

National Adaptation Framework

DECC published the second National Adaptation Framework. 13 main actions are identified, including a request to the NTMA to encourage applicants to the Infrastructure, Climate and Nature Fund to incorporate the principles in the Framework in their business cases for funding.

SEM-GB Trading

Minutes of the fourth meeting of the Specialised Energy Committee under the Trading and Cooperation Agreement are available. Regret was expressed about delay in developing trading arrangements over UK–EU electricity interconnectors. The parties agreed to move at pace to a next phase, which will require TSOs to provide further analysis, and then development of the MRLVC. ENTSO-E has made available responses from the TSO group to technical questions on MRLVC between the EU and UK.

Tomorrow’s Energy Scenarios

EirGrid published Tomorrow’s Energy Scenarios 2023 to build further on Shaping our Electricity Future by setting out potential pathways to achieve a net zero power system by 2050. Pathways are based on four scenarios: (self-sustaining, offshore opportunity, gas evolution, and constrained growth). Key conclusions include: analysis shows demand doubling by 2050; there will be increasing need for efficiency and flexibility; and stakeholder support is essential for whole energy system transition. EirGrid indicates that the next stage of this work is a System Needs Assessment to be done in 2024.

RESS 4

Updated FAQs for the RESS 4 auction are available.

NECP

DECC is consulting until 27 June 2024 on revisions to the National Energy and Climate Plan. The Commission’s Recommendation on the draft plan submitted in December 2023 is available here.

Climate Targets

The EPA reports that Ireland is on track to miss 2030 emissions targets in every sector. It predicts that emissions will fall by 29% by 2030 compared to 2018 (whereas the Government’s target is 51%). The RES-E share is projected to be 68.9% in a ‘With Existing Measures’ scenario, and 80.1% in a ‘With Additional Measures Scenario’. The statement by the Chair of the Climate Change Advisory Council is available here.

Offshore Cooperation

Ireland, Belgium and the UK have signed a Joint Statement committing to cooperate on renewables and interconnection opportunities. A working group is to report on shared challenges.

Wholesale Market Industry Roundtable

DECC published minutes of a latest quarterly meeting aimed at bringing stakeholders together to discuss developments in wholesale electricity policy.

Small-Scale RESS

The second phase of a Small-Scale Renewable Electricity Support Scheme has been launched. This export phase is intended to provide fixed tariffs for groups established for solar and wind projects between 50kW to 6MW. It is intended to complement the microgeneration supports for small projects and competitive auctions for larger projects under the RESS.

Recovery and Resilience Plan

The Commission has positively assessed Ireland’s recovery and resilience plan which includes a REPowerEU chapter and is worth €1.15 billion in grants. Further information is available here and here.

CRU BUSINESS

Offshore Phase 1 Merchant Projects

The template Director’s Declaration for Phase 1 Projects to confirm route to market is available. It is required to be returned to CRU by the end of June 2024, failing which the Grid Connection Assessment becomes invalid (CRU/2024/42).

Gas Transmission Tariff Methodology

The Gas Transmission Tariff Methodology for gas year 2024/5 is available with no changes to multipliers, seasonal factors, and level of discount for Virtual Reverse Flow (CRU/2024/53).

Customers

A comparison of household energy prices as between Ireland and other European countries is available. The paper attributes Government Electricity Credits and the negative PSO as moving Ireland from third to ninth most expensive country as between 2021 and 2023 in the most common electricity consumption band (CRU/2024/41). The CRU also published recent arrears and disconnections for domestic and non-domestic customers (CRU/2024/46) and latest data on Estimated Annual Bills of domestic gas customers (CRU/2024/40).