Russia’s invasion of Ukraine has once again highlighted the strategic nature of energy.2 The last revision of the Renewable Energy Directive, known as ‘RED III’,3 comes at a time of extreme geopolitical tensions. And it is the same tensions that are putting the case for a massive expansion of renewable energy in the EU back on the agenda. For this reason, the aim here is to give a brief, succinct account of the main developments in the promotion of renewable energy. This presentation is not intended to be exhaustive but rather to provide the key to understanding the partial revision of the legal framework for renewable energy. The RED III Directive was published in the Official Journal of the European Union on 31 December 2023 and follows the Green Deal’s objective of climate neutrality by 2050.4 In the short term, RED III makes possible to achieve the objectives of the ‘Fit-for-55’ plan, which guarantees a reduction in greenhouse gases of at least 55% by 2030.5
RED III Directive substantially amends the previous Directive,6 in particular by setting a binding target of 42.5%, and ideally 45%, of renewable energy in the EU’s gross final energy consumption (compared to 32% in the RED
1. Ph.D. Candidate, CERIC, UMR 7318, Aix-Marseille Université, France.
2. On this matter, see e.g.: Bjarne Steffen, Anthony Patt, ‘A historical turning point? Early evidence on how the Russia-Ukraine war changes public support for clean energy policies’, Energy Research & Social Science, Vol. 91, 2022.
3. Directive (EU) 2023/2413 of the European Parliament and of the Council of 18 October 2023 amending Directive (EU) 2018/2001, Regulation (EU) 2018/1999 and Directive 98/70/EC as regards the promotion of energy from renewable sources, and repealing Council Directive (EU) 2015/652, (OJ 2023 L 2413), hereafter, ‘RED III’; Christine Le Bihan-Graf, Laure Rosenblieh, Hadrien Lemoine, ‘Analyse des principales mesures de la directive RED III, des modalités et des enjeux de sa transposition en droit interne’, Énergie – Environnement -Infrastructures, no 1, janvier 2024, comm. 1.
4. Ibid
5. Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions ‘Fit for 55’: delivering the EU’s 2030 Climate Target on the way to climate neutrality, COM(2021) 550 final.
6. Directive (EU) 2018/2001 of the European Parliament and of the Council of 11 December 2018 on the promotion of the use of energy from renewable sources (recast), (OJ 2018, L 328, p. 82). Hereafter, ‘RED II’.
EU’s renewable energy ambitions will be ensured through cooperation between Member States and spatial planning and simplification of permit-granting procedures
II Directive).7 The target is broken down by sector and energy type: 49% in buildings,8 29% in transport (plus a 5.5% sub-target for advanced biofuels).9 In industry, the share of renewable energy must increase by 1.6% per year compared to the previous year’s target.10 Also in the industrial sector, 42% of the hydrogen used must come from renewable fuels of non-biological origin by 2030 and 60% by 2035.11 For sustainable biomethane, the target has been increased to 35 billion cubic meters (m3) by 2030.12 To this end, RED III seeks to accelerate the large-scale deployment of renewable energy sources and improve their attractiveness.13 EU’s renewable energy ambitions will be ensured through cooperation between Member States and spatial planning and simplification of permitgranting procedures.14 With regard to the economic attractiveness of projects, the focus has traditionally been on modernising existing support schemes and promoting power purchase agreements (PPA’s).15 This Long-Read is divided into two parts. Firstly, it is necessary to highlight the factors that will accelerate the development of installations at a large-scale (1). Secondly, we will look at how the European legislator intends to improve the attractiveness of projects (2). Those elements are presented hereafter.
7. RED III, Art. 1; amending RED II, Art. 3.
8. RED III, Art. 1; RED II, Art. 15a, (inserted).
9. Ibid.; RED II, Art. 25 (replaced).
10. Ibid.; RED II, Art. 22a (inserted).
11. Ibid. ; É. Durand, ‘La contribution de l’hydrogène à la réalisation des objectifs du Green Deal’, Revue juridique de l’environnement, vol. 48, 2023/4, pp. 835-842.
12. RED III, para. no 9.
13. See e.g., Marcin Relich, ‘Renewable Energy in the European Union: The State of the Art and Directions of Development’, WSEAS Transactions on Business and Economics, vol. 21, 2024, pp. 630-637; see also, Council Regulation (EU) 2024/223 of 22 December 2023 amending Regulation 2022/2577 laying down a framework to accelerate the deployment of renewable energy, (OJ 2024 L 223).
14. RED III, paras. 20 and 35.
15. Ibid., paras. 15 and 88 ; Louis de Fontenelle, Marie Lamoureux, ‘Les contrats de vente directe d’électricité et de gaz, AJDA, 2023, no 22, juin 2023, p. 1145
In this first part, we will focus on cooperation and planification mechanisms. Indeed, those are the main instruments used by the EU’s legislator for the large-scale development of renewable energy. Indeed, the Commission precises that ‘cooperation mechanisms, should aim to ensure that renewable energy production will be sufficient to achieve Member States’ contribution to the overall Union renewable energy target set in Article 3(1) of Directive (EU) 2018/2001’.16 To that end, mapping is a necessity that Member States may use to aim the overall Union renewable energy targets.17
Several types of measures should enable the large-scale development of installations and their associated components. Firstly, Article 9 of RED II has been amended.18 This amendment requires each Member State to establish a cooperation framework for joint projects. This framework must be in place by 31 December 2025. By 31 December 2030, the framework must enable at least two joint projects to be established between Member States. In addition, by 31 December 2033, Member States whose annual electricity consumption exceeds 100 TWh must agree to implement a third joint project.19 Here, the legislator has been very precise: only States whose annual electricity consumption exceeds 100 TWh are concerned have to implement a third joint project – and only them. In addition, the RED III Directive specifies that joint offshore renewable energy projects fall within the scope of the newly amended Article 9. These projects are primarily covered by the provisions of Article 14(2) of Regulation 2022/86920 and the EU-wide 10-year network development plan adopted and publish by the ENTSO.21 This last article specifies that a ‘[…] high-level strategic integrated offshore network development plans shall provide a high-level outlook on
16. Ibid., para. 32.
17. Ibid., Art. 15 (b)(1).
18. Ibid., para. 13 and Art. 9(1)(a).
19. Ibid
The legislator has been very precise: only States whose annual electricity consumption exceeds 100 TWh are concerned have to implement a third joint project – and only them
20. Regulation (EU) 2022/869 of the European Parliament and of the Council of 30 May 2022 on guidelines for trans-European energy infrastructure, amending Regulations (EC) no 715/2009, (EU) 2019/942 and (EU) 2019/943 and Directives 2009/73/EC and (EU) 2019/944, and repealing Regulation (EU) no 347/2013, (OJ 2022 L 152, p. 45).
21. RED II (amend.), Art. 9(1)(a) ; Regulation (EU) 2019/943 of the European Parliament and the Council of 5 June 2019 on the internal market for electricity (recast), (OJ 2019 L 158, p. 54), Art. 30 §1, b).
offshore generation capacities potential and resulting offshore grid needs, including the potential needs for interconnectors, hybrid projects, radial connections, reinforcements, and hydrogen infrastructure.’
But, although Member States have to publish such plan, RED III precises that they may ‘go beyond these requirements and involve local and regional authorities and private undertakings’.22 Said otherwise, it seems EU’s legislator urges States to develop significantly offshore renewable energy projects, offshore grids and interconnectors –in collaboration with local authorities and undertakings– because those technologies can importantly participate in the reach of the ‘Fit-for-55’ objectives. In other words, the EU’s energy transition depends on the diversification of renewable energies and offshore technologies have the potential that Member States are looking for: to product important quantity of energy with less intermittency.
In order to facilitate the emergence of joint projects, Member States shall endeavor to share fairly the costs and benefits of such projects. That is why joint projects shall be the subject of a cooperation agreement which they shall notify to the Commission. The agreement shall include a date for the operational character of the joint project. Regarding this last point, Member States may refer to the Guidelines on the sharing of costs and benefits in the context of cooperation projects in the field of renewable energy of 29 December 2001.23 Indeed, this guidance aims to ‘shedding light on the options and design elements available for cost-benefit sharing, […] [and] to facilitate the overcoming of this barrier to further use of the cooperation mechanisms.’24 In our opinion, RED III urges Members States to joint their effort to create favourable conditions for the largescale development of renewable energy projects, especially offshore.
22. RED II (amend.), Art. 9(1)(a).
It seems EU’s legislator urges States to develop significantly offshore renewable energy projects, offshore grids and interconnectors –in collaboration with local authorities and undertakings– because those technologies can importantly participate in the reach of the ‘Fit-for-55’ objectives
23. Commission Notice, Guidance on Cost-Benefit Sharing in Cross-border Renewable Energy Cooperation Projects, (2022/C 495/01), C/2022/9284, (OJ 2022 C 495, p. 1).
24. Ibid
In order to achieve their national contributions to the overall target of 42.5% of the EU’s gross final consumption of energy from renewable sources, Member States must, by 21 May 2025, carry out a coordinated mapping of the areas available for the development of installations and their associated components.25 In particular, States shall identify in their territory the domestic potential and the available land surface, sub-surface, sea or inland water areas that are necessary for the installation of renewable energy plants and their related infrastructure.26 Within this framework, the mapping must include Renewable Acceleration Areas (‘RAA’) by 21 February 2026.27 These areas may cover one or more type of energy sources. These areas exclude Natura 2000 sites and areas designated under national nature and biodiversity protection schemes. States are free to determine the size of these RAA, taking into account the specific characteristics and requirements of the type of technology installed. However, Member States are encouraged to designate significant RAAs in such a way that they contribute to achieving the objectives of the Directive. In addition, Member States may adopt one or more plans to designate specific infrastructure areas for the development of networks or storage infrastructure. Indeed, those elements are a necessity for the integration of renewable energy into the electricity system. The purpose of these infrastructures areas is to complement the RAA and to create synergies.28
The mapping must include Renewable Acceleration Areas (‘RAA’) by 21 February 2026. These areas exclude Natura 2000 sites and areas designated under national nature and biodiversity protection schemes
25. RED II (amend.), Art. 15b).
26. Ibid
27. Ibid., Art. 15c).
28. RED II (amend.), Art. 15e).
The amended Article 16 creates a ‘contact point’ to which project applicants must apply.29 The procedure will be dematerialised by 21 November 2025. The competent authority will have 30 days to declare the application complete in the case of renewable energy installations located in RAA - compared to 45 days for projects outside these areas. Within this framework, Member States must ensure that administrative and judicial appeals relating to the development of the installation and all the elements necessary for its operation are subject to an expeditious procedure.
The duration of the permit-granting procedure falls under two conditions. Firstly, it depends on the type of installation. Secondly, it depends on the location of the installation, meaning whether it is outside or inside an RAA. In general, and subject to specific provisions, the duration of the permitting procedure for renewable energy projects is extended to 2 years and 1 year in RAAs. In exceptional cases, Member State may extended these deadlines by 6 months.
The European legislator is tending to create an increasingly favourable framework for the largescale development of renewable energy installations. However, it is up to the Member States to apply these provisions within the deadlines set
For example, for offshore renewable energy projects, the permit-granting procedure may not exceed 2 years in RAA, but may be spread over 3 years outside these areas. While this timeframe seems conducive to the development of technologies such as offshore wind turbines, it is harder to imagine that Member States will actually respect this deadline when it comes to marine renewable energy projects where the technology is less mature.
Certain categories of installations located in RAA may be exempted from the requirement of an environmental impact assessment (‘EIA’).30 This applies in particular to wind and solar energy projects. Outside these areas, where an EIA is required, it is carried out as part of a single procedure. In this way, the procedure combines all relevant assessments for a given renewable energy project.31
The European legislator is thus tending to create an increasingly favourable framework for the large-scale development of renewable energy installations. It should be noted, however, that it is up to the Member States to apply these provisions within the deadlines set.
29. RED II (amend.), Art. 16 ; Christine Le Bihan-Graf, Laure Rosenblieh, Hadrien Lemoine, ‘Analyse des principales mesures de la directive RED III, des modalités et des enjeux de sa transposition en droit interne’, op. cit.
30. Ibid., Art. 16(a).
31. Ibid., Art. 16(b) (2).
2. Making renewable energy installations and their associated components more economically attractive
RED III Directive encourages Member States to establish a framework to remove remaining barriers to the development of renewable energy installations. The European legislator therefore urges Member States to develop appropriate support schemes32 and to adopt measures to facilitate the use of PPA’s for electricity from renewable energy sources.33
Public support for renewable energy projects plays an important role in large-scale development and so regarding security of supply.34 In terms of support schemes, the elements that deserve to be highlighted concern biomass and bioenergy. Indeed, RED III recognises the need to align bioenergy policies with the principle of the cascading use of biomass.35 The latter aims at the efficient use of resources by giving priority to the material use of biomass. Indeed, RED III precise the principle of the cascading use of biomass seeks ‘to achieve the resource efficiency of biomass use by prioritising, wherever possible, the material use of biomass over its energy use, thus increasing the amount of biomass available within the system. Such an alignment is intended to ensure fair access to the biomass raw material market for the development of innovative, high value-added bio-based solutions and a sustainable circular bioeconomy.’36 In this context, Member States should adopt schemes for raw materials for which there is little or no competition and whose supply is positive for the climate and for biodiversity . In other words, support schemes for bioenergy must not create a disincentive that would favor unsustainable bioenergy sectors. In addition, States cannot grant direct financial support for the use of sawlogs. Again, they may not grant new or renewed aid for the production of electricity from forest biomass in exclusively electrical installations, but this affirmation can
32. RED II (amend.), Art. 3(3).
33. Ibid., Art. 4a (inserted).
RED III recognises the need to align bioenergy policies with the principle of the cascading use of biomass
Member States should adopt schemes for raw materials for which there is little or no competition and whose supply is positive for the climate and for biodiversity. In other words, support schemes for bioenergy must not create a disincentive that would favor unsustainable bioenergy sectors
34. Mariia Kozlova, Kaisa Huhta, Alena Lohrmann, ‘The interface between support schemes for renewable energy and security of supply: Reviewing capacity mechanisms and support schemes for renewable energy in Europe’, Energy Policy, vol. 181, 2023.
35. RED II (amend.), Art. 3(3).
36. RED III, para. 10.
support some exceptions.37 However, the European legislator recognises that the principle of cascading depends largely on national specificities, so that Member States may derogate from it, in particular for reasons of security of supply.38 Finally, RED III encourages Member States to make use of PPA’s, which are presented hereafter.
Managing the price risks in the long term is essential to make investments in renewable projects bankable. In this regard, PPA’s seek to manage time price risks.39 A renewable energy purchase agreement is ‘a contract under which a natural or legal person agrees to purchase renewable energy directly from a producer, which encompasses, but is not limited to, renewables power purchase agreements and renewables heating and cooling purchase agreements’.40 It is therefore a long-term purchase contract for renewable energy. This new market complements the market for renewable energy production in addition to support schemes or direct sales on the wholesale electricity market. However, these contracts concern only a small part of the Member States and specific undertakings. This is mainly due to the fact that significant administrative, technical and financial barriers remain in a large part of the European energy market. This is why RED III encourages the development of PPAs through the use of credit guarantees. These guarantees must limit the financial risks associated with these contracts. When these guarantees are public, they are complementary to private financing and are not intended to replace it. In order to develop PPAs for renewable energy in the EU more broadly, the Commission must analyse the remaining obstacles. In the near future, the Commission will have to publish guidelines on how to remove these obstacles, in particular with regard to the use of cross-border agreements –which will undoubtedly play a decisive role in the large-scale development of renewable energies in the EU.41
Significant
administrative, technical and financial barriers remain in a large part of the European energy market. This is why RED III encourages the development of PPAs through the use of credit guarantees
37. See: RED II (amend.), Art. 3(c) and (d).
38. RED III, para. 10.
39. Saara Hollmén, Fabian Levihn, Gustav Martinsson, ‘When markets don’t deliver: bilateral hedging by means of PPAs in managing intertemporal price risks in power generation investments’, IEEE, 2022.
40. Ibid., Art. 1(d), 14q.
41. On this point, see: Art. 15(8).
RED III creates new renewable energy targets that are in line with the EU’s climatic and geopolitics challenges. RED III aims to facilitate the implementation of new onshore and offshore projects in accelerating granting permitting procedures and facilitating joint projects. It should be noted, however, that the implementation of projects will depend on the resources allocated to the national services responsible for permitting. Finally, it should be emphasised that the acceleration of the deployment of installations depends –importantly– on the development or the maintenance of energy networks. On this matter, investments will be essential. That is why the development of the networks shall be carried out in a joint and coordinated manner by the Member States. This joint and coordinated development seems to be, in my opinion, the only way to go neutral by 2050.
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