Energy - Horizon Scanner: Infrastructure, Construction, Energy, April 2024 - Oil, Gas & Electricity - Ireland (2024)

KEY DEVELOPMENTS

Onshore Renewable Electricity Support Scheme: FourthAuction

The provisional timetable for the RESS 4 auctionis available. The qualification information pack will be publishedon 1 May 2024 and final auction results are expected in lateSeptember 2024.

Day-Ahead System Services Auction("DASSA")

As part of Future Arrangements for System Services (a condensedoverview of which is here), EirGrid is consulting until 10 May 2024 on the design ofthe DASSA. Key proposals are summarised at page 5 and include theelements set out below.

• The DASSA will initially procure reserve services on anall-island basis.
• The DASSA will take place after the Day Ahead Market and beforethe first day-ahead Balancing Market Long-Term Schedule. It will becleared on a pay-as-cleared basis per Trading Period (30-minuteintervals).
• A DASSA Order, and associated commitment obligation, will beallocated to auction winners for each service for each TradingPeriod. It is proposed to have performance incentives andscalars.
• Secondary trading will take place after the DASSA results arepublished and up to 90 minutes before the relevant TradingPeriod.
• Where service volume requirements are not fully met by DASSAOrder Holders, an ex-post reconciliation mechanism, the FinalAssignment Mechanism, will be used to remunerate service providerswho were available to meet volume requirements, on a merit orderbasis.
• Service providers will be required to register with the TSOsand accede to the System Services Code. Settlement for the DASSAarrangements will take place monthly in arrears.

System Services: DS3 Tariffs

EirGrid is consulting until 26 April 2024 on DS3 tariffs.The consultation paper states that the TSOs are proposing one ormore of the following options:

• reduction in the Temporal Scarcity Scaler,
• reduction in tariffs for Reserve Services, and/or
• ceasing procurement of certain system services from the nextprocurement gate.

The TSOs also seek information to assist in determining whetherthey should increase the reactive power tariff to encourage morevolumes from low carbon providers.

EU DEVELOPMENTS

Legislation

• Energy Performance of Buildings Directive: The consolidated text of the Directive amendingthe EPBD is available. Once formally adopted by the Council it willbe published in the OJEU and enter into force 20 days later.
• REMIT Regulation: The Council adopted the Regulation updating the REMIT Regulation toimprove protection against manipulation of wholesale energymarkets. Once signed by the Presidents of the Parliament andCouncil, it will be published in the OJEU and enter into force 20days later. Further information is available here.
• Green Claims Directive: Parliament adopted its position on the proposed Directive, whichwould impose obligations on companies in relation to marketingclaims and penalties for breach of obligations. Development of theDirective will continue after the European elections in June 2024.Further information is available here.
• Nature Restoration Regulation: The consolidated text of the draft Regulation isavailable, and the last step is formal Council adoption. However,it has been reported that the Council Presidency wasunable to secure a majority vote. If passed, the Regulation wouldestablish targets to restore certain habitat types to goodcondition. It would include provisions relevant to deployment ofrenewable energy infrastructure, as well as the builtenvironment.
• Industrial Emissions Directive: The consolidated text of the proposal to amend theDirective is available. Once formally adopted by the Council, it isexpected to be published in the OJEU and enter into force 20 dayslater.
• Critical Raw Materials Regulation: The Council adopted the Regulation to establish a framework to ensurea secure and sustainable supply of critical raw materials. Oncesigned by the Presidents of the Parliament and Council, it will bepublished in the OJEU and enter into force 20 days later. Furtherinformation is available here.

Delegated / Implementing Legislation

• Energy Efficiency - Data Centres: We previously referencedArticle 12 of the Recast Energy Efficiency Directive, whichimposes obligations on owners and operators of data centres, andthat the Commission had invited feedback until 15 January 2024 on adraft Delegated Regulation on the energyefficiency of data centres. The Commission has now adopted theDelegated Regulation on the first phase for establishing an EU-widescheme to rate the sustainability of EU data centres. It requiresdata centre operators to submit information as against performanceindicators to the European database by 15 September 2024, 15 May in2025 and on subsequent dates each year. Further information isavailable here.
• Renewable fuels of non-biological origin: The Commissionadopted a Delegated Regulation to amend Regulation (EU) 2023/1184, which sets outproduction rules, in order to align terminology with the revisedRenewable Energy Directive.
• Compliance of fuels with the Renewable Energy Directive: Thedate for accreditation or recognition of certification bodies underImplementing Regulation (EU) 2022/966 has beenextended to 1 January 2025 by a Commission Implementing Regulation.
• Cybersecurity: The Commission adopted a Delegated Regulation under the IME Regulationwhich sets out a network code on cybersecurity for the electricitysector. Further information is available here.

Electricity

• SEM integration: The Core Capacity Calculation Region (CCR)will include the Celtic Interconnector once it becomes operational.The formal decision is available here. ACER has also amended the methodology for intraday flow-based capacitycalculation in the Core Region.
• TYNDP – CBA Implementation Guidelines: ENTSO-E publishedan updated version of the guidelines. Further information isavailable here.
• Grid: ACER and CEER made recommendations around anticipatory investmentin grid (in the context of the Commission's Grid Action Plan). They include improvingcoordination and information exchange among users, operators andregulators, and making improvements around identifying transmissionsystem needs. The paper sets out comparative information acrossMember States. A recent high-level roundtable, summarised here, considered common challenges requiringpolitical leadership and forward looking engagement withregulators.
• Markets: ACER's report on 2023 wholesale market trends isavailable. A report from the Commission to the Parliamenton energy prices is also available.
• REMIT: Updated guidance on transaction reporting isavailable, with the aim of improving reporting of LNG supplycontracts and power purchase agreements.
• Regional Coordination Centres: The first monitoring report on RCC reporting obligations isavailable. RCCs will in the future report on further tasks asmethodologies for those tasks are finalised.
• Risk-preparedness: ACER amended the methodology for identifying regionalelectricity crisis scenarios to be followed by competentauthorities in risk-preparedness planning.
• Pumped storage: One of Europe's largest energy storagefacilities is expanding with assistance of EIB lending. Read moreabout the Kruonis hydroelectric power plant in Lithuania here.
• Smart power grid: Spain is to invest €1.44 billion insmart power grid development and expansion, with the assistance ofEIB lending. Read more here.
• PPAs: ACER seeks experts by 19 April 2024 to join a groupon PPAs, to advise on the need for standardised PPA contracts.

Gas

• Demand reduction: The Council made a Recommendation to Member States on continuingdemand reduction measures for gas. Further information is availablehere. ACER and the CEER have also publishedthe second part of a study on the impact of gas storageregulations.
• Markets: ACER's report on 2023 wholesale market trends isavailable. A report from the Commission to the Parliamenton energy prices is also available. The outlook for 2024 hasimproved but some emergency measures have been prolonged to addressremaining risks.

Carbon

• Progress: The Commission reported that last year'semissions under the EU ETS show the most significant annualreductions since launch of the ETS in 2005 (15% down in 2023compared to 2022, or 47% below 2005 levels, viewed as good progressto the 62% target in 2030). Read more here.
• EU ETS: A Corrigendum has been published to the Directive which recently amended the EU ETSDirective (consolidated here to 1 March 2024).

Offshore Development

• Defence: Efforts to foster coexistence between defenceactivities and offshore renewable development are underway,reported here by the European Defence Agency.

Climate

The Commission's Communication to the other EU institutions onmanaging climate risk sets out steps needed to ensure that, in theface of worsening climate risks, the public and businesses can relyon the EU and Member States to maintain societal functions andcontinued access to basic services. It seeks to clarify who isresponsible for making difficult choices and taking action, and howthe EU can get ahead of climate impacts. It states thatpreparedness and resilience must be factored in to EU and MemberState action by default across policy areas.

On the international front, the European Council agreedconclusions to bolster climate and energy diplomacy and a JointCommunication on a new outlook on the climate and security nexus.Further information is available here.

Supply Chains

The Commission's Communication on Advanced Materials forIndustrial Leadership sets out a strategy to enhance EUcompetitiveness in materials renewable energy, batteries,zero-emission buildings and semiconductors. Recent developments insupply chain collaboration include launch of an Enhanced Dialogue with Japan to facilitateinformation sharing and collaborative research and an EU-Norway strategic partnership to develop land-basedraw materials and battery value chains.

CLIMATE ACTION LITIGATION

Appeal in Milieudefensie v Shell

In June 2021, we looked at the judgment in Milieudefensie v Royal Dutch Shell, a firstexample of a private company being ordered to take action to complywith climate targets to vindicate citizens' rights. The HagueDistrict Court in the Netherlands agreed with NGOs that Shell'semissions contribute to climate change and create risks thatimpinge on human rights under international law and engage the"the unwritten standard of care" in the Dutch Civil Code.The Court ordered Shell "to limit or cause to be limited theaggregate annual volume of all CO2 emissions into the atmospheredue to the business operations and sold energy-carrying products ofthe Shell group to such an extent that this volume will havereduced by at least net 45% at end 2030, relative to 2019levels".

It has been reported (for example in the FT) that the hearing of Shell's appeal hasbegun, and that lawyers for Shell will argue that there was nolegal basis for the order and that the Court overstepped itsremit.

Green Claims

A Dutch Court ruled that KLM's claim to be committed to thegoals of the Paris Agreement was among statements that weremisleading and therefore unlawful. Overall, 15 of the airline'sstatements were found to be misleading. Press reports are availablein the FT and Guardian and ClientEarth's press releaseis here.

Judgment in Portuguese Children and Swiss Elders'Cases

The European Court of Human Rights ruled that Article 8 of theConvention on Human Rights encompasses a right to effectiveprotection by State authorities from the serious adverse effects ofclimate change on lives, health, well-being and quality of life.The Court held that there had been a violation of the right torespect for private and family life and of the right to access tothe court. The Swiss Confederation had failed to comply with itsduties under the Convention concerning climate change. Find outmore here.

FURTHER DOMESTIC DEVELOPMENTS

Future Investment

The Future Ireland Fund and Infrastructure, Climate and NatureFund Bill is available on the Oireachtas website.The Bill would establish:

• a Future Ireland Fund to support, in a consistent andsustainable manner, State expenditure in 2041 or any yearthereafter, and
• an Infrastructure, Climate and Nature Fund to support Stateexpenditure (a) in 2026 or any year thereafter, where there hasbeen, or is likely to be in the subsequent year, a significantdeterioration in the economic or fiscal position of the State, and(b) in each of the years 2026 to 2030, on designated environmentalprojects. These projects would be designated by a Minister of theGovernment if he or she is satisfied that the project contributesdirectly or indirectly, or is likely to contribute to any of theobjectives set out at sections 20(a)(a). These objectives include,for example, reduction of greenhouse gas emissions and theachievement of certain environmental objectives enshrined in otherlegislative instruments.

The funds would be controlled and managed by the NationalTreasure Management Agency and ownership in them would vest in theMinister for Finance.

Electricity Market Revenue Cap

The CRU made S.I. No. 86/2024 - Energy (Windfall Gains in theEnergy Sector) (Cap on Market Revenues) Act 2023 (Returns)Regulations 2024 which we looked at here.

CRU BUSINESS

Gas Network Development

The CRU is consulting until 3 May 2024 on GNI's proposedTen-year Network Development Plan 2023 (CRU/2024/24). The CRU states that the GNI bestestimate scenario for total Republic of Ireland overall demand isthat it is expected to peak at circa 62.5TWh/yr in 2025/26, andthat there are enough sources of gas to meet this level of demand.However, the 1-in-50 and average peak day gas demand are bothexpected to increase during the forecast period. Beyond 2030, thegas network could be fully decarbonised through injection ofbiomethane and hydrogen, but this will require the gas andelectricity networks to be further integrated.

System Operators

The CRU is consulting until 24 May 2024 on specification ofstandards of performance ("SoPs") in the TSO and DSOelectricity licences. It proposes to specify all or part of 22conditions as SoPs in the each of the licences (CRU/2024/13 and CRU/2024/15). The CRU alsopublished, in the context of Price Review 5, the 2022 electricitytransmission performance report (CRU/2024/19) and investment, planning anddelivery letter (CRU/2024/19b) and report (CRU/2024/20), as well as the 2024 BalancedScorecard Information Paper (CRU/2024/05). The CRU's letter drawsattention to the need to include curtailment costs, and to improvetracking of project progress against expected performance relativeto planned timelines.

Regulation of Non-domestic Gas Works

The CRU published an updated Information Note (CRU/2024/23) to supplement its Decision Paperon the Regulation of Non-Domestic Gas Works (CRU/2022/23) and previous Information Notes(CRU/2023/60) and (CRU/2023/119). This concerns the regulation ofinstallers through the Registered Gas Installer scheme. The CRU hasdecided that this will be implemented on 1 January 2025.

Customer Tariffs

The CRU is extending the consultation deadline on dynamicelectricity tariffs to 19 April 2024. It is proposed the tariffwill vary by hour to reflect wholesale prices. (CRU/2024/08) An update on electricity and gastariffs available to customers is available. (CRU/2024/17)

SEMC BUSINESS

Capacity Market

The SEMC is consulting until 15 April 2024 on introducing earlydelivery incentives into the CRM. It intends to issue a decisionahead of the T-4 auction in November 2024 (SEM-24-024). The SEMC is also consulting until21 March 2024 on auction parameters and de-rating factors for T-4CY2028/29 (SEM-24-019).

Interconnectors

The SEMC's decision on compensation arrangements for NetTransfer Capacity ("NTC") reduction on SEM-GBinterconnectors is as follows:

• in terms of capacity allocated in the forward timeframe,compensation should be provided to the interconnector owner whenallocated capacity is reduced due to a TSO decision,
• in terms of capacity allocated through an auction, where NTC isreduced post-auction, current arrangements are clear that theinterconnector owners should be compensated for any imbalance costsincurred due to a TSO decision,
• in terms of capacity that remains unallocated following theauction(s), the SEMC states that compensation is not appropriate,and
• TSOs should not compensate interconnector owners forunallocated capacity when NTC is reduced prior to the coupledauctions. However, the SEMC may review this position if thetransparency and reporting measures do not demonstrate NTCreductions taking place only as a measure of last resort. (SEM-23-024)

SEMOpx Revenue Recovery

The SEMC is consulting until 17 April 2024 on a new regulatoryrevenue recovery framework for SEMOpx from 2024/2025 onwards. TheSEMC propose to broadly follow SEMOpx's proposed approach,whereby an enhanced annual submission process will be implementedrather than conducting a full detailed price control for SEMOpxevery three years. The decision is anticipated in Q2 of 2024. (SEM-24-022)

Tariff Timetable

The SEMC has made available the indicative tariff timetable forgenerators, suppliers and all market participants for 2024/2025 and2025. (SEM-24-021)

Annual Report

The SEMC's Annual Report is available. (SEM-24-020)

This article contains a general summary of developments andis not a complete or definitive statement of the law. Specificlegal advice should be obtained where appropriate.

Energy Act 2023: Electricity And Gas Market Reform

Norton Rose Fulbright Hong Kong

In the fifth in our series of briefings following the passing of the Energy Act 2023 (the Act) on 26 October 2023, our team at Norton Rose Fulbright look at the framework adopted under the Act...

Legal Battle In The Spanish Energy Sector Over 'Greenwashing' Claims

Global Advertising Lawyers Alliance (GALA)

In a significant move within Spain's energy sector, Iberdrola, a prominent Spanish electric utility, has initiated legal proceedings against Repsol, the country's leading oil company.

CfD Scheme For Renewables To Go Live In 2024

Schoenherr Attorneys at Law

In March the European Commission approved a EUR 3bln (RON 15.22bln) Romanian scheme to support installations producing electricity from onshore wind and solar photovoltaic.

Herbert Smith Freehills

Energy markets have endured numerous jolts in recent times as competition for resources, geopolitical tensions and the increasing demands of net zero targets...

Renewable Energy Organizations Take A Closer Look At Pay

WTW

As companies worldwide embrace cleaner energy, renewable energy organizations need to ensure they have the right talent to meet increased demand.

Managing The New Political Risks In Oil And Gas

Nazali

In an era defined by rapid geopolitical shifts, the oil and gas sector faces a transformed landscape compared to our 2020 study. Based on a series of structured interviews...