The European Commission recently published guidance
for EU Member States adopting domestic measures to scale up their renewable energy deployment.
The guidance, published on 2 September 2024, relates to the third revised Renewable Energy Directive (2023/2413/EU), commonly known as RED III. The Directive entered into force in November 2023 and, according to the guidance, is intended to expedite the EU’s green transition and energy independence following the outbreak of conflict between Russia and Ukraine in 2022.
RED III sets an EU-wide target of 42.5% renewable energy consumption by 2030, which stands as a significant increase relative to the equivalent 32% target under RED II. It introduces a range of new requirements across various sectors and technologies designed to facilitate the achievement of this new target, some of which were required to be implemented by 1 July 2024.
Most notably, Member States must speed up and simplify renewable infrastructure permitting procedures by ensuring that procedures for granting permits to build, repower and/or operate energy assets do not exceed certain timelines, depending on the asset type, size and location. We expect that this will accordingly speed up development and transaction timelines.
These procedures must also adhere to simplicity requirements for contact points, dispute resolution and appeals. Member States were required, no later than 21 February 2024, to give effect to a legal presumption that renewable energy plants are in the “overriding public interest” when carrying out certain environmental and planning assessments under EU law. Member States will further be required to protect biodiversity in their promotion of bioenergy, among other things. However, the deadline for implementing most domestic measures under RED III is 21 May 2025.
From RED I to RED III
The original Renewable Energy Directive (2009/28/EC), or RED I, entered into force from June 2009 and was required to be implemented in Member States’ domestic law from December 2010 until June 2021. It set an EU-wide goal for 20% renewable energy use by 2020, with each Member State assigned different national targets to help meet this overall goal.
In practice, RED I established a policy framework for EU renewable energy deployment within which Member States had some flexibility in adopting domestic measures. RED I was subsequently replaced by RED II[1], which entered into force in 2018 and has been required to be implemented in Member States’ domestic law from June 2021. This revised Directive retained much of the framework established under RED I while setting a new, binding EU-wide target of 32% renewable energy consumption by 2030.
By way of comparison, the 42.5% target now set by RED III underlines the ever-increasing ambition and intervention of the EU in its attempts to ensure as much electricity consumption as possible has come from renewably generated sources.
European Commission’s guidance on RED III
Among the measures to be implemented by 21 May 2025, the new European Commission guidance focuses on three policy areas in particular:
- Heating and cooling
- Energy system integration, and
- Renewable fuels of non-biological origin (RFNBOs)
1. Heating and cooling
The new guidance observes that the use of renewable energy in heating and cooling has been slower than in other parts of the economy. To promote an increased uptake in this area, RED III has introduced a target share of renewable energy use in buildings by 2030. It also introduced concurrent average annual increase targets for industry heating and cooling, and district heating and cooling.
RED III allows Member States some flexibility in their choice of methods for achieving renewable energy uptake. It lays down criteria, however, for calculating this uptake and measuring progress towards achieving targets – including the extent to which the use of waste heat and cold is permitted.
2. Energy system integration
The European Commission’s guidance notes that more flexible and smarter grid infrastructure will help integrate a greater share of variable renewable electricity. Enhanced deployment of ‘distributed energy resources’ must also be achieved, including electric vehicles, solar panels and heat pumps. More responsive demand to supply and vice versa will mitigate price spikes and congestion and allow a larger share of lower-cost renewables to meet energy needs.
Towards these aims, RED III introduced new information-sharing obligations which Member States will be required to apply to transmission and distribution system operators, and battery and electric vehicle manufacturers. Member States will also be required to introduce measures for smart recharging, interface with smart metering systems, and bidirectional recharging functionalities. Small and mobile batteries and storage assets will be entitled to non-discriminatory access to balancing and flexibility services markets.
3. Renewable fuels of non-biological origin
RFNBOs are liquid or gaseous fuels produced using renewable electricity. This includes green hydrogen and its potential derivatives such as ammonia, methanol and e-fuels.
The Renewable Energy Directive previously only contained RFNBO-related provisions in the context of transport. RED III, however, introduced new obligations and incentives focused on industrial applications of RFNBOs, both as fuels and as feedstock for industrial products such as fertilisers. Within transport, RED III has also gone further than RED II by establishing a target that 1% of energy used in transport be powered by RFNBOs by 2030.
The guidance explains how this target will be calculated, what counts as “industry” under the directive, and that the RFNBO-related obligations are not required or intended to be borne by individual hydrogen consumers directly.
Looking ahead – RED III in practice
While the Commission’s guidance is for EU Member States, it gives detail on how various market actors can expect to be regulated and/or incentivised once all binding measures come into force from 1 May 2025.
RED III aims to expand renewable energy as a market but also to create new markets for technologies such as distributed battery storage, district heating, and RFNBOs. It signals to industry how commercial investment should anticipate market shifts towards renewable and renewable-derivative technologies.
In common with much of the renewable energy legislation emanating from Europe, the practical impact in Ireland will depend on:
- How the ambitions of the legislation are translated into Irish law, applied by local regulators and embraced by commercial entities, and
- The extent to which the constraints presented by a small, relatively isolated market are taken into account.
For more information on the impact of RED III, contact a member of our Energy team.
[1] Renewable Energy Directive (2018/2001/EU)
The content of this article is provided for information purposes only and does not constitute legal or other advice.
