1 June 2022

REGOs and REPowerEU - is the Protocol working for the all-island electricity market?

Written by Le-ann Campbell

With the approval of the Climate Change Bill, and the new Energy Strategy, Northern Ireland is finally starting to catch up with the UK and Ireland by setting a renewable electricity target of 80 per cent by 2030 and net zero emissions target by 2050.

Much has been written about the impact of Brexit on NI’s renewable energy sector such as; loss of investor confidence, concern over energy security and delays in much-needed investment in both the UK and the NI energy infrastructure. However, an inadvertent oversight within the NI Protocol (the Protocol) has disadvantaged NI renewable generators. Energy Guarantees of Origin which prove the environmental attributes of electricity from a specific renewable energy source (called REGOs in Northern Ireland and GOs in the EU/Ireland) issued in the UK have not been recognised by the EU since January 2021.

The provisions in the Protocol provide the legal basis for the continued operation of the all-island Single Electricity Market (SEM) following the Brexit transition period. The Protocol seeks to apply provisions of European Union law (EU law) in NI insofar as such laws apply to the electricity sector. The sole purpose of GOs and REGOs in the SEM is fuel mix disclosure (FMD) (i.e. proving to a final customer in the SEM that a given share or quantity of energy was produced from renewable sources) and the NI Regulations[1] were introduced to implement what is now Article 15 of the Renewables Directive in NI[2]. However, Article 15 of the Renewables Directive was mistakenly omitted from Annex 4 of the Protocol thus resulting in the non-recognition of REGOs in any EU member state for FMD purposes.

Recognition of REGOs issued in accordance with Article 15 of the Renewables Directives across the SEM is an integral part of the proper functioning of the Protocol with regard to the SEM and despite preliminary discussions having occurred between the NI, Irish and GB governments, an effective solution remains outstanding. Although this issue is instrumental to the integrity of the SEM, it is not surprising that it ranks low in the UK’s list of priorities as it seeks to address the larger political issues of the NI Protocol not least of all the current stalemate at Stormont following the recent NI elections.

On 10th May this year, the Department for Business, Energy and Industrial Strategy (BEIS) closed its consultation period on the proposal to cease the recognition of GOs through legislation so that, longer term, domestic recognition of GOs issued in EU countries will take place only on a reciprocal basis. Whilst the BEIS consultation was specific to GB, Renewable NI (the trade association acting on behalf of the renewable electricity industry in NI) formally responded to the consultation to ask that BEIS considers the policy context of Northern Ireland and the potential impacts on projects and suppliers within Northern Ireland.

This divergence on the treatment of REGOs between NI and Ireland, coupled with the absence of an incentive scheme supporting the development of new renewable electricity generation here and the possibility of a fast-tracked planning system for renewables in the EU as part of a package of proposals to phase out its dependency on Russian fossil fuels, all serve as a material challenge to the integrity of the all-island SEM.

We are hopeful that progress can be made this year on NI joining the UK Contracts for Difference scheme, which will go some way to addressing the divergence between NI and Ireland. It is imperative however to the successful operation of the SEM, that the current market distortion with regard to REGOs is addressed as a matter of priority.

Please contact our Energy & Renewables team members or your usual Carson McDowell contact for further information or to discuss any potential renewable energy opportunities for your business.

[1] Electricity (Guarantees of Origin of Electricity Produced from Renewable Energy Sources) Regulations (Northern Ireland) 2003 (as amended)

[2] Article 15 of Directive 2009/28/EC

About the author

Le-ann Campbell

Senior Associate

Le-ann is a Senior Associate in the Corporate team at Carson McDowell, with particular expertise in the energy and renewables sector. Le-ann joined the team at Carson McDowell in June 2015 and has experience in a wide range of corporate matters including company disposals, mergers and acquisitions, shareholder arrangements, corporate reorganisations and restructuring, private equity and venture capital.

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