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In this year’s end of year comment, our Lexis®PSL Energy team consider what their standout legal development was in Energy Law in 2018. Our Lexis®PSL Energy team also preview the anticipated talking points for Energy in 2019.
First published on Lexis®PSL on 12 December 2018.
It has led to significant changes to energy regulation but also (like for many areas of legal practice) increasing encroachment of technology and data regulation. On the energy regulation side, 2018 has seen comprehensive price controls imposed
on energy supply tariffs, continued challenges with smart metering roll-out and impending electricity settlement reform. Even more fundamentally, the Office of Gas and Electricity Markets (Ofgem) is looking at reform of the ‘energy supplier
hub model’ and a spate of energy supplier insolvencies has led Ofgem to recently issue a wholesale supplier ‘licensing review’.
Alongside energy specific regulation, we have seen recognition that in future consumer data (rather than electricity and gas) may be the most valuable commodity held by suppliers. This has seen the sector specific ‘Energy Data Taskforce’,
together with wider developments like the Smart Data Review and sector agnostic data protection regulation, emerging as key focus points for the energy supply market. Finally, the use of remote communication in energy consumption and demand management/self
supply by sophisticated ‘prosumers’ has meant that fast developing regulation around cybersecurity, peer to peer trading, and technology more widely is an area the retail market can ill afford to ignore.
You will find evolving coverage recognising the transition of the energy supply market available through the Energy module and in particular in our GB electricity and gas supply/retail regulation subtopic, including:
Ensuring sufficient future electricity capacity to efficiently meet Great Britain’s electricity demand continues to feel unresolved. Further clarity is expected on the future development of new gas-fired powered stations, onshore renewables, storage capacity, electricity interconnections, nuclear projects, demand side response and Carbon Capture Usage and Storage. This will be partly driven by what forms and level of support will be available to them but will also be determined by how these sub-sectors minimise their need for subsidy. Linked to this wider issue, both the proposed total closure of the Feed-In-Tariffs (FIT) scheme and the recent Capacity Market suspension following Tempus State aid judgment have been important developments and will remain a key focus going into 2019.
The technological winners and losers will inevitably have an impact on the project types and regulatory areas where significant numbers of lawyers spend the bulk of their time advising. For example, should the economics for onshore renewables projects improve (through the balance between project costs and regulatory support available tilting in their favour) then we might expect to see a new wave of such projects. Alternatively (or indeed in addition) the Tempus State aid judgment may see the Capacity Market become more favourable for demand side response, the government may decide to more wholeheartedly facilitate new gas generation, or perhaps energy storage on an aggregated and/or large scale basis may become mainstream. Such developments, or a wide range of alternative directions on meeting our energy needs, will present new opportunities and challenges.
We will also be watching with interest:
As the UK prepares to withdraw from the EU in March 2019, Brexit will continue to be essential reading for all legal practitioners. See: Brexit—Lexis®PSL comments on key developments in 2018 and 2019.
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