Energy
“Chapter V requires energy regulatory authorities to apply the energy efficiency first principle in carrying out the regulatory tasks provided for in the IME Regulation and Directive.”
KEY DEVELOPMENTS
RESS 3
Provisional results for the RESS 3 auction are published, indicating an average bid price of €100.47, which is higher than final results in RESS 1 (€74.08) and RESS 2 (€97.87).
Volumes to be awarded are down as compared to previous competitions, as follows:
- RESS 1: 86 projects were provisionally successful, representing a total Deemed Energy Quantity of 2236.652 GWh or Offer Quantity of 1275.536 MW.
- RESS 2: 80 projects were provisionally successful, representing a total Deemed Energy Quantity of 2747.89 GWh or Offer Quantity of 1948.201 MW.
- RESS 3: 23 projects were provisionally successful, representing a total Deemed Energy Quantity of 934.48 GWh or Offer Quantity of 646 MW.
While RESS 3 rules took steps to de-risk downward dispatch for curtailment and oversupply, concerns had been raised around the decision to restrict participation of projects that were unsuccessful in previous RESS auctions and to require projects to have a grid connection agreement or offer (whereas earlier auctions had permitted projects in ECP processing).
Fit for 55: Renewable Energy Directive
The consolidated text of RED III has been published following adoption by the Parliament. It is anticipated that the Council will adopt RED III on 9 October, following which it will be published in the OJEU and enter into force.
On 25 September 2023, a statement by Ireland on RED III was published by the Council. It includes the following:
“Ireland welcomes agreement on the update to the text of the Renewable Energy Directive and acknowledges the need to be ambitious …The achievement of ambitious targets in a relatively short time frame will require an unprecedented effort from all in society, and it is crucial that we bring everyone with us on that journey.
It is Ireland’s view that failure to consider all the implications of the significant increases to the renewable energy targets – such as the current operation of the interim targets under Regulation (EU) 2018/1999 on the Governance of the Energy Union and Climate Action - will be counterproductive.
The failure to consider the implications carries with it the risk of undermining the support required to promote renewable energy….”
Fit for 55: Energy Efficiency Directive
Directive (EU) 2023/1791 on Energy Efficiency comes into effect on 10 October 2023 and, except where otherwise stated in the Directive, is to be transposed in domestic law by 11 October 2025. Further information is available here.
The Directive increases the energy efficiency target to be met across the EU in 2030. In pursuit of this, there are changes to provisions on energy efficiency obligation schemes, including that Member States shall designate obligated parties among transmission system operators, distribution system operators, energy distributors, retail energy sales companies and transport fuel distributors or transport fuel retailers.
The Directive requires Member States to revise requirements around energy management systems and energy audits, so that the threshold for determining which entities are in scope is not based on company size, but rather annual level of energy consumption.
Note also that one of the obligations with an early transposition date of 15 May 2024 is Article 12(1) in relation to data centres. It states: “By 15 May 2024 and every year thereafter, Member States shall require owners and operators of data centres in their territory with a power demand of the installed information technology (IT) of at least 500kW, to make the information set out in Annex VII publicly available, except for information subject to Union and national law protecting trade and business secrets and confidentiality.” Article 12(3) requires the Commission to establish a European database that includes the information communicated by the obligated data centres, which shall be publicly available on an aggregated level.
The Directive embeds in a number of obligations the “energy efficiency first” principle, as defined in Regulation (EU) 2018/1999 on Governance of the Energy Union and Climate Action. Energy efficiency first means “taking utmost account in energy planning, and in policy and investment decisions, of alternative cost-efficient energy efficiency measures to make energy demand and energy supply more efficient, in particular by means of cost-effective end-use energy savings, demand response initiatives and more efficient conversion, transmission and distribution of energy, whilst still achieving the objectives of those decisions”.
A new obligation under Article 3(1) will require Member States to ensure that energy efficiency solutions, including demand-side resources and system flexibilities, are assessed in planning, policy and major investment decisions of a value of more than €100 million each or €175 million for transport infrastructure projects, relating to the following sectors: (a) energy systems, and (b) non-energy sectors, where those sectors have an impact on energy consumption and energy efficiency such as buildings, transport, water, information and communications technology (ICT), agriculture and financial sectors.
Chapter V, on Energy Efficiency in Supply, requires energy regulatory authorities to apply the energy efficiency first principle in carrying out the regulatory tasks provided for in the IME Regulation and Directive. Member States shall ensure that gas and electricity system operators apply the energy efficiency first principle in their network planning, network development and investment decisions. Member States shall ensure that system operators monitor and quantify the overall volume of network losses and, where it is technically and financially feasible, optimise networks and improve network efficiency.
There is also a change to the definition of efficient district heating and cooling systems: minimum requirements will gradually change to increase integration of renewable energy and waste heat and cold. Support for new high-efficiency cogeneration using natural gas and connected to district heating in efficient district heating and cooling may only be provided until 2030. Member States will be required to promote local heating and cooling plans in municipalities with populations over 45,000.
Member States are required to promote the energy services market and access to it for SMEs by disseminating clear and easily accessible information on energy services contracts, financial instruments, incentives, grants, and energy service providers. Member States shall facilitate the establishment of financing facilities, or the use of existing ones, for energy efficiency improvement measures.
Fit for 55: Alternative Fuels Infrastructure Regulation
Regulation (EU) 2023/1804 on the deployment of alternative fuels infrastructure is published in the OJEU and comes into force on 12 October 2023. We looked at the draft form of the Regulation in a briefing here: EV Charging Infrastructure: Legal aspects in Ireland as the 60km interval gets closer - Arthur Cox LLP. Also now published in the OJEU, coming into force on 12 October 2023, is Regulation (EU) 2023/1805 on the use of renewable and low-carbon fuels in maritime transport.
In Ireland, the Department of Transport is consulting until 10 November 2023 on the National En-Rute Charging Network Plan.
Fit for 55: Carbon Border Adjustment Mechanism
As outlined in the Construction section, reporting obligations under the CBAM begin for the period starting on 1 October 2023 for certain products being imported to the EU, including electricity. Further information is available here.
“It is Ireland’s view that failure to consider all the implications of the significant increases to the renewable energy targets – such as the current operation of the interim targets under Regulation (EU) 2018/1999 on the Governance of the Energy Union and Climate Action - will be counterproductive.”
EU
Green Deal Industrial Plan
The four-column document setting out the position of the institutions as regards the proposed Critical Raw Materials Regulation is available here. The next stage is informal trialogue negotiations.
Ecodesign for Boilers
The Commission is calling for evidence until 21 December 2023 on ecodesign requirements for solid fuel boilers.
INTERNAL MARKET
Hydrogen
ACER recommended improvements in its Opinion on ENTSOG’s draft cost-benefit analysis methodology for hydrogen infrastructure, required to be submitted to the Commission by the end of 2023.
TYNDPs
Both ENTSO-E and ENTSOG have published draft guidance on project inclusion in the TYNDPs 2024.
CLIMATE ACTION LITIGATION
The challenge by six young people alleging that failure by 32 Governments to act fast enough on climate change is violating their human rights was heard by the European Court of Human Rights in Strasbourg recently. Further information is available here.
FURTHER DOMESTIC DEVELOPMENTS
Offshore Projects
ENTSO-E has invited relevant projects to apply for inclusion in the next EU TYNDP. TYNDP 2024 administrative criteria for transmission projects now includes an eligibility requirement for promoters to have a letter of support from at least one of the competent ministries or regulatory authorities.DECC has indicated the following as an interim approach pending development of the Offshore Transmission Strategy:
“As set out in the National Policy Statement on Electricity Interconnection 2023, Ireland is in the process of developing an offshore transmissions strategy (OTS) that is intended to map out future transmission requirements and supporting procedures and processes with publication anticipated in Q1 2024. This presents an obvious challenge in determining support for any given proposed project in advance of this detailed forward planning. As an interim measure and pending development of the OTS, Ireland will consider requests from project promoters for a letter of support in the TYNDP 2024 on a provisional and conditional basis.
- Any letter of support will be exclusive to the eligibility requirements of the TYNDP process administered by ENTSO-E
- No other rights, benefits or status is conferred to a project by any letter of support.
- The Department also reserves the right to withdraw support from a proposal if it does not align with the OTS.
- If a project does not align with the offshore transmission strategy, no further letter of support for inclusion in future iterations of the TYNDP or for PCI/PMI status will be considered.
There is no obligation on a member state to provide a letter of support. It is intended that this procedure will be superseded by processes developed under the offshore transmission strategy.”
CRU BUSINESS
Offshore Connection
The CRU has requested EirGrid to outline its approach and timeline for developing the Offshore Connection Agreement Documents. It states that, at a minimum, the Offshore Connection Agreement Documents are expected to include a template connection agreement offer letter, a template connection agreement and a template asset sale and purchase agreement.
Clean Export Guarantee
The CRU is consulting until 3 November 2023 on Enduring Arrangements for Remuneration of Microgeneration Exports under the Clean Export Guarantee. The consultation also reviews the interim arrangements for deemed payments for exporting customers. (CRU/2023/112)
Consent to Construct Gas Pipeline
The CRU published a Decision Paper on the grant to GNI of consent to construct a gas transmission pipeline to connect a new data centre facility. (CRU/2023/110)
RESS 3
The CRU published the final competition ratio.
Compliance & Enforcement
The CRU published a compliance and enforcement annual report for 2022. (CRU/2023/109)
Customers
The CRU published an update on arrears and disconnections for H1 of 2023. (CRU/2023/115)
SEMC BUSINESS
Tariff Year 2023/24
The RAs published the Imperfections tariff (through which constraints costs are recovered) to be applied in Tariff Year 2023/24. The Imperfections Charge will be €448.81m, equivalent to an estimated Imperfections Price of €11.52/MWh. (SEM-23-067).
Testing Tariffs 2024
The Decision on SEM Testing Tariff rates applicable to Generator Units Under Test from January 2024 is available. The RAs are engaging with the TSOs on a more detailed review of the testing tariff methodology ahead of the consultation for 2025 rates. (SEM-23-076)
Capacity Market
The RAs are consulting until 13 October 2023 on the relevant parameters to apply in the T-1 2024/25 auction. (SEM-23-075) Information on the exception application and opt-out notification process is available. (SEM-23-070)
An Information Paper is available on single value of lost load to be used from the T-4 2027/28 Capacity Auction onwards. (SEM-23-072)
The RAs have accepted a Code Modification to allow extensions to the Interim Secondary Trading Arrangements (ISTA) to cover capacity that cannot operate for the whole Capacity Year but could still make an important contribution to security of supply. (SEM-23-077)
A consultation until 17 November 2023 will look at a further Code Modification aimed at implementing the SEMC Decision in SEM-23-038 and SEM-23-045 on Indexation of Capacity Payments to apply indexation to capacity payments for new capacity already awarded (without indexation being a term of the auctions) in 2024/25 T-3 and 2025/26 T-4. (SEM-23-078)
Directed Contracts
Indicative subscription dates for Directed Contract Rounds 25 to 28 are available. (SEM-23-071)
NORTHERN IRELAND
Offshore
DfE commissioned a Strategic Environmental Assessment and Habitat Regulations Assessment for Offshore Renewable Energy. Further information is available here.