Europe Energy Regulatory Update | January 2025

Our energy regulatory teams across Europe provide updates to clients on a regular basis. This newsletter contains, for each of the countries covered, a selection of recent news items of relevance to the energy transition - including its impact on the non-retail electricity markets. Although it is not intended to be exhaustive, it identifies developments of a policy or regulatory nature considered to be of interest by the contributors.

This month's edition includes updates from the following jurisdictions: Czech Republic, France, Germany, Norway, Portugal, Romania, Sweden, United Kingdom.

Czech Republic

Government approves amendment to accelerate gas power plant permitting

The Czech government has approved an amendment to the Energy Act (Lex Plyn) to streamline the permitting process for gas-fired power plants over 100 MW. This measure aims to accelerate the energy transition by reducing administrative hurdles and ensuring a stable electricity supply as coal-based sources phase out.

The new framework prioritises three key pillars: nuclear for stability, renewables for sustainability, and flexible technologies for grid balancing. The amendment also grants the Energy Regulatory Office (ERO) authority to impose operational obligations if controllable sources are insufficient. The transmission system operator (?EPS) will manage compensations through system service charges, ensuring market fairness.

Ministry of industry and trade launches strategic investment program

The Czech Ministry of Industry and Trade has initiated the acceptance of applications for the Strategic Investment Program, aiming to support key technologies such as batteries, solar panels, wind turbines, heat pumps, and electrolysers. The program seeks to attract investments exceeding CZK 100 billion between 2025 and 2033, with approximately CZK24 billion sourced from public funds and the remainder from private investors.

Eligible projects must focus on the production and innovation of technologies essential for decarbonising the economy, including critical components and raw materials. Applicants are required to meet stringent environmental standards, ensuring high efficiency and sustainability in their initiatives. The minimum investment per project is set at CZK2.8 billion. The program complements existing investment incentives by offering a flexible response to emerging opportunities, with support primarily based on the investment's focus rather than regional development status. The application period is open until September 2025.

LEX OZE III update

On January 29, 2025, the Senate returned the Lex OZE III amendment to the Chamber of Deputies with proposed modifications, potentially delaying key energy measures planned for mid-2025 and late 2027. A major controversy surrounds a proposal to cut operational support for large photovoltaic plants built in 2009-2010, sparking concerns over investor arbitration and economic impacts. Industry representatives and foreign investors have strongly opposed these changes, citing legal risks. In response, the coalition has agreed to withdraw two of the four contested amendments, including one that would have removed subsidies for solar electricity during negative market prices. The Chamber of Deputies must now reconsider the amendment, weighing investor confidence, energy security, and decarbonisation goals.

France

French energy regulatory commission on the government’s draft energy plan for 2025-2035

The French Government is currently preparing the multiannual energy plan (programmation pluriannuelle de l’énergie or PPE), which is a planning document governing the energy transition in France. In November 2024, the government submitted the draft PPE for 2025-2035 – the so-called “PPE3” – for consultation to various stakeholders. On 24 January 2025, the French energy regulatory commission (Commission de régulation de l’énergie or CRE) published its opinion on the PPE.

The key takeaways are the following:

• For nuclear generation, the main objectives in the long run will be the extension of the operating lifetime of existing plants and the development of a new generation of nuclear reactors to be commissioned from 2038.
• While acknowledging that the development of renewable energy still needs to be subsidised, the CRE highlights that one of the major challenges for the government will be the establishment of a predictable and stable framework aimed at facilitating project financing and attracting investors. The CRE emphasises that the PPE should provide clear and sufficiently detailed objectives for each technology and a breakdown of the objectives for each type of installation.
• In respect of projects awarded through calls for tenders, the CRE stresses the importance of publishing the call for tenders’ timelines sufficiently in advance and sticking to these timelines so that bidders can anticipate and prepare accordingly.
• In respect of projects benefiting from open or closed counters, the CRE highlights the need to ensure proper scaling of the support schemes, considering the requirement to contain public expenditure while preventing “bubble” phenomena and avoiding “stop-and-go” situations.
• The CRE questions the government’s strategy of developing small-scale solar power generation projects through the open counter system, given that their overall production cost (including subsidies through the support scheme and grid connection costs) is generally higher than that of larger facilities. The CRE highlights that state support schemes, such as feed-in tariffs or contracts for difference, should avoid, as far as possible, any risk of excessive remuneration detrimental to the state’s budget.
• Regarding offshore wind, the CRE supports the government's strategy to move from calls for tenders on a project-by-project basis to calls for tenders comprising several lots and setting up development plans for each maritime coast, as this will increase visibility and foreseeability for project developers. It is worth noting that the government’s objectives regarding offshore wind are very ambitious since draft PPE3 anticipates awarding offshore wind projects for up to 10 GW of capacity (in addition to projects already being tendered) by the end of 2026.
• The CRE endorses the government's strategy to set a reasonable trajectory for biogas production certificates to support biomethane technology until 2035 in order to increase visibility for developers of projects using this technology.
• The CRE highlights that eventually, the most mature renewable energy sectors should grow without benefiting from state support schemes. To support this transition, the state is encouraged by the regulator to lift constraints that currently slow down the development of PPA contracts in France. This would require, in CRE’s view, reshuffling current risk-sharing schemes in support contracts, with producers bearing most of the endogenous risks.
• The CRE stresses the importance of anticipating certain network investments, such as connection works for offshore wind farms and network reinforcements necessary for industrial projects. Improving connection timeframes requires, pursuant to the CRE, simplifying permitting processes. In addition, the CRE emphasises prioritizing construction of shared connection facilities that meet several projects' needs, which has already proven successful in large industrial electrification areas or areas with high potential for renewable energy generation.
• The CRE supports developing battery storage without state support since analyses it carried out show that battery storage will be cost-effective in the short term.
• The CRE considers it a priority to complete two major current interconnection projects with Spain (Bay of Biscay, 2000 MW) and Ireland (Celtic Interconnector, 700 MW) between 2025 and 2030. In addition, new interconnections may be considered if supported by positive cost-benefit analyses.
• Given uncertainties around business models for developing hydrogen projects, the CRE considers it appropriate to prioritise local generation development as close as possible to consumers while focusing on a few industrial hubs. Large-scale deployment should only be considered afterward.
• The CRE does not recommend setting out a specific regulatory framework for CCUS projects in the short term. The CRE stresses that regulatory constraints should be adapted to each underlying activity's characteristics and anticipates a higher need to regulate carbon transportation and storage compared to carbon capture.

Germany

New energy regulations approved by the German Bundestag

On 31 January 2025, the German Bundestag has passed various amendments to statutory energy regulations. Relevant amendments include the following:

• For newly erected renewable energy installations, the EEG remuneration will no longer be paid for electricity generated during periods of negative electricity prices on the stock market. Operators of existing installations can voluntarily apply the new regulation and therefore receive a compensation of 0.6 cents per kWh which increases the applicable value (anzulegender Wert) for their installation.
• For wind installations, the simplified application process for preliminary decisions (Vorbescheid) for installations outside priority areas (Vorranggebieten) has been revoked. However, exemptions are provided for repowering projects, allowing them to proceed with the simplified application process.
• Furthermore, statutory rules have been introduced to allow establishing grid connections with an initial capacity below the installed capacity of the renewable energy installation (“overbuilding”) – a practice which is used in particular for “cable pooling” (i.e. the sharing of a single grid connection point among multiple renewable energy installations).

In view of the upcoming federal elections in February 2025, it is however expected that the changes passed by the Bundestag will soon be up for debate again when a new government is formed.

Norway

Change in government due to the implementation of EU's fourth energy package into the EEA agreement and Norwegian law

In January, the Norwegian government has suffered an internal split, which ultimately resulted the Centre Party leaving the government and the Norwegian Labour Party to govern Norway alone. The Norwegian Labour Party wanted to introduce three of the directives, which it describes as uncontroversial, while the remaining five will be dealt with after the general election in September this year. The Labour Party considers it important to incorporate the directives in order to ensure alignment to the EEA Agreement and thus help to ensure a good relationship with the EU. The Centre Party refused to implement these directives and has stated that all of the directives in the energy package must be processed simultaneously, including the directives that are considered controversial in the current Norwegian political climate.

The background for the conflict was the increasing pressure from the EU to implement EU's fourth energy package into the EEA agreement and Norwegian law. The package consists of a total of eight directives and regulations, and continues legal acts that have already been made part of the EEA Agreement, to which Norway is already committed. Although it is not unusual for the implementation of EU legal acts in the EEA countries to take place later than in the EU member states, the fourth energy package is overdue and has become an issue for the Norwegian state. The EU is no longer as patient with the EFTA countries implementation of legal acts from the EU. As an example, the Vice President of the European Commission has made it clear that he expects parts of the package to be implemented before 21 May 2025, which is the next meeting of the EEA Council.

The Norwegian Labour Party has confirmed that the government will propose that the following directives are included in Norwegian legislation:

1. The Renewable Energy Directive 2018 (RED II), which sets an overall requirement of at least a 32% share of renewable energy in consumption for the EU as a whole by 2030.
2. The Energy Efficiency Directive 2018 (amendment), which sets an overall energy efficiency target of at least 32.5% by 2030 at EU level.
3. Energy Performance of Buildings Directive II (amendment), which contains additions and amendments to the previous buildings directive. For example, there is a requirement to draw up a long-term strategy for the renovation of all buildings with a view to making the building stock highly energy-efficient and carbon-free by 2050, as well as various technical requirements. The previous Energy Performance of Buildings Directive has been incorporated into the EEA Agreement.

It is expected that the proposal will be accepted by the Norwegian Parliament, and that a majority will be formed with the Conservative Party, Liberal Party and the Green Party.

Portugal

Government approves areas with greater potential for offshore wind auction

The Allocation Plan for Offshore Renewable Energies (PAER) was approved in the Council of Ministers. The PAER identifies potential areas that have “the best natural conditions” for the installation of parks to produce energy from the ocean, “making it possible to fulfil the government's objective of installing a capacity of 2 GW by 2030”.

The president of the National Energy and Geology Laboratory (LNEG) had already stated that four lots would be involved: Viana do Castelo North, Viana de Castelo South, Leix?es and Figueira da Foz.

The aim is for the areas identified to be included as potential spaces for the exploitation of renewable energies in maritime spatial planning, so that there is “the legal certainty needed to go ahead with the first auction”.

Rectification of the regulatory framework applicable to renewable energies

Rectification Declaration No. 6/2025/1 corrects an inaccuracy in Decree-Law No. 99/2024, published on December 3, 2024. The correction concerns Article 62, paragraph 6, of the annex to the decree, which republishes Decree-Law No. 15/2022. The original text stated that the repowering of solar or wind power plants within existing facilities would not be subject to prior assessment procedures or environmental impact assessment (AIA) requirements, provided certain conditions were met.

The initial wording implied that the exemption depended on compliance with environmental decisions or previously issued licenses. This created a conditional framework that could lead to varying interpretations regarding the necessity of further assessments. By clarifying the text, the rectification removes the ambiguity surrounding the regulatory requirements for such projects.

The corrected version eliminates references to prior environmental decisions and licenses, making the exemption from prior assessment and AIA procedures absolute. It now simply states that the repowering of solar or wind power plants is not subject to these procedures under the applicable legal framework.? This adjustment is particularly relevant for the energy sector, as it clarifies the compliance obligations for repowering projects and reduces potential administrative uncertainties.

Government to launch tenders for sustainable aviation fuel production

The Portuguese government is moving forward with tenders for the production of sustainable aviation fuel (SAF) and has already received expressions of interest from multiple companies, according to the Minister for the Environment and Energy, Maria da Gra?a Carvalho. Portugal is positioned to play a leading role in this sector, benefiting from competitive renewable energy prices that support the development of these fuels.

As part of this initiative, the government has introduced new regulatory measures, approved by the Council of Ministers in October 2024, to allocate up to EUR40 million from carbon tax revenues. This funding will be directed towards decarbonisation initiatives in the civil aviation sector, reinforcing the country’s commitment to reducing emissions and promoting sustainable alternatives.

Financial support will specifically target the production of sustainable aviation fuels (SAF) and sustainable aviation electrofuels (eSAF), aligning with the National Roadmap for Aviation Decarbonization (RONDA) for 2026. The resources will be sourced from the Environmental Fund, utilising revenues from the Aviation Emissions Trading Scheme (ETS) and the carbon tax, ensuring a structured approach to sector-wide decarbonisation.

The tenders for SAF production will be managed by the Climate Agency, which is currently in the process of being established.

Romania

A new controversial tax for renewable energy producers has been introduced

At the very end of 2024, on 31 December 2024, the GEO no. 156/2024 related to some fiscal and budgetary measures in the field of public expenditure for the substantiation of the consolidated general budget for 2025, for amending and supplementing some normative acts, as well as for extending some deadlines has been published in the Official Gazette and, among other new taxes, has re-introduced the obligation to pay the so-called "pole tax". A similar tax on special constructions (wind turbines, solar panels, electrical aerial lines, poles, etc.) was applicable until 2016 but has been eliminated at that time following several successful claims brought in court by renewable energy producers. Now the pole tax is reintroduced at the level of 1% of the value of the respective special constructions. The Ministry of Finance is expected to publish methodological norms within 90 days to clarify how the tax will apply to the value of equipment.

CFD contribution from end-consumers has been postponed

Law no. 312/2024 on the approval of GEO no. 54/2024 on amending the GEO no. 27/2022 states that the CFD contribution invoiced to end-consumers by electricity suppliers is postponed and it shall start as of 1 April 2025; invoices already issued from 1 October 2024 to date are to be annulled and re-issued without the CFD contribution.

Sweden

Plans for more offshore wind power submitted to the Swedish government

A proposal for new marine plans to significantly increase electricity production from offshore wind power has been submitted by the Swedish Agency for Marine and Water Management to the Swedish government for decision. The Swedish Agency for Marine and Water Management has been tasked with developing new marine plans that create conditions for an annual production of 120 TWh from offshore wind power. In comparison, Sweden’s current electricity consumption is around 140 TWh per year.

The biggest change, compared to the current marine plan, is more energy areas. The proposal designates a total of 23 areas for energy extraction, where approximately 26 percent of the total area of the energy areas is located in the territorial sea and 74 percent in the economic zone. In total, the proposed energy areas constitute about 6 percent of the total area of the marine plans.

A more efficient process for environmental permits

The Environmental Permit Investigation was presented on 21 January 2025 and contains a series of proposals for a coordinated and uniform environmental assessment process. The task has been to take a comprehensive approach to environmental assessments according to the Environmental Code. The environmental permit processes need to be simplified and shortened by making the assessment more flexible, efficient and predictable.

Among other things, a new environmental assessment authority is proposed at the first instance, which will take over responsibility from 330 municipalities and authorities. The proposal means that the role of the land and environmental courts will be streamlined to review already made decisions.

The Swedish government will now analyse the investigation’s proposals and has already appointed a working group within the department to assess the need for additional proposals and to take the second step towards a more efficient environmental assessment.

The Swedish government proposes increased property tax for wind power

On 21 January 2025, the Swedish government presented a memorandum containing a proposal to increase the property tax for wind turbines. Property tax must be paid, among other things, for properties that are classified as electricity production units during property assessment. For electricity production units consisting of an assessment unit with wind turbines, the property tax is 0.2% of the assessed value. For other electricity production units, the property tax is 0.5% of the assessed value. The memorandum proposes that the property tax on wind turbines be increased from 0.2% to 0.5% of the assessed value.

The legislative change is proposed to come into force on 1 January 2026.

United Kingdom

Electricity connections reform

On 8 January 2025, Ofgem (the energy regulator for Great Britain) published an update on connections reform headed 'Looking ahead in reforming the connections process'. This references the proposed package of connections reform methodologies sent to it by National Energy System Operator (NESO) on 20 December 2024 for its decision; it reflects on the key actions taken in 2024 with regard to connections reform; and it signposts what can be expected for 2025, which is when we "move from policymaking to decision and implementation".

The original transitional arrangements on the way to implementation of enduring transmission connections' reform (involving the use of ‘transitional offers’) were introduced from 2 September 2024 with the intention of bridging the period between 2 September and the implementation (if approved) of the reformed two-gate connection process (known as TMO4+) in quarter 2 of 2025.

Given the continuing growth in connections' applications, NESO decided that a pause in applications from 29 January 2025 (except for demand projects and specific modification applications) would better allow it to implement the TMO4+ programme in 2025 (subject to the programme being approved by Ofgem). NESO sent a letter to Ofgem dated 15 January 2025 formally requesting the 'pause' and other modifications to the original transitional arrangements. This letter was published by NESO, along with an open letter to industry, in an update headed 'Next steps in grid connections reform' which was released after publication of Ofgem's decision letter of the same day (see below).

On 15 January 2025, Ofgem announced the publication of its 'Decision on joint direction and letter of comfort requests on cut-over arrangements for new connection applications', as made in response to the requests (see above) from NESO, and from Great Britain's three transmission owners (TOs), regarding proposed modifications (Required Modifications) to the original transitional arrangements. By its decision letter, Ofgem has approved the relief requests necessary for the Required Modifications, as described in its letter.

The Required Modifications consist of three elements: (i) modifying the original transitional offer process so that it applies only to new directly connected demand projects (ie. demand projects directly connecting to the transmission network) and not to others applying for a connection offer (such as generation); (ii) a pause in responding to all applications (other than new directly connected demand as above) received from 29 January 2025; and (iii) an exceptions process in respect of the above-mentioned pause – this is to allow the continuing issue of firm offers for modification applications in the circumstances set out on page 3 of Ofgem's decision letter.

Offshore renewable energy

The Contracts for Difference (Miscellaneous Amendments) Regulations 2025 (No. 25) were made on 13 January 2025 in exercise of powers conferred by sections 6(1) and (6) and 10(3) of the Energy Act 2013, which enable the Secretary of State, for the purpose of encouraging low carbon electricity generation, to make regulations about contracts for difference between a 'CFD counterparty' and an eligible generator. The regulations were published together with an explanatory memorandum which notes how they amend the Contracts for Difference (Allocation) Regulations 2014 (Allocation Regulations) and the Contracts for Difference (Definition of Eligible Generator) Regulations 2014 (Eligible Generator Regulations). The purposes of the amendments are to: (i) extend the existing phased contracts for difference (CfD) policy to floating offshore wind projects to allow the option for floating offshore wind projects within the same Crown Estate seabed lease area to be built in up to three phases, with each phase being party to its own CfD agreement; and (ii) permit repowering renewable electricity projects to apply for a CfD. This amendment will enable repowering to be eligible for a CfD, subject to further eligibility criteria. These amendments are made in support of policy changes to CfDs, as outlined in the explanatory memorandum, which are expected to be implemented at the opening of CfD allocation round 7 later in 2025.

On 22 January 2025, the Department for Energy Security and Net Zero (DESNZ) announced that the CfD Clean Industry Bonus (CIB) Allocation Framework had been updated to: (i) extend the time that the CIB application window will remain open (the application closing date is now 14 April 2025); (ii) clarify the information eligible generators should provide when submitting CIB proposals; (iii) clarify how scores will be calculated for extra proposals; and (iv) correct a minor error in the calculation of minimum standards. Under the CIB, fixed and floating offshore wind applicants can obtain extra?CfD?revenue support if they choose to invest in more sustainable supply chains. On the same day, DESNZ published a revised version of the statutory notice on the CIB Framework.

Sustainable aviation fuel

On 29 January 2025, the Department for Transport published the outcome of its consultation on a sustainable aviation fuel (SAF) revenue certainty mechanism – the response is in a document headed 'Revenue certainty options to support a sustainable aviation fuel industry in the UK'. The response confirms that: (a) a guaranteed strike price (GSP) revenue certainty mechanism will be proceeded with using a private law contract to be concluded between the SAF producer and a counterparty; (b) the first tranche of signed revenue certainty mechanism contracts will be with?UK?SAF projects that produce using non-HEFA?technology and feedstock; and (c) the counterparty of the SAF producer under the revenue certainty contract will be a government-backed entity. On the same day, the Department for Transport published a written statement to Parliament headed 'Transport and growth update: airport expansion and transition to greener aviation' – this reports on measures (including the revenue certainty mechanism) to support SAF production.

National Energy System Operator

On 6 January 2025, DESNZ published a document entitled 'Framework document between the Department for Energy Security and Net Zero and National Energy System Operator'. NESO is the company designated by the Secretary of State as the independent system operator and planner (ISOP) pursuant to section 162 of the Energy Act 2023 – it is (since 1 October 2024) wholly owned by the Secretary of State. The framework document sets out the broad governance framework within which NESO, as ISOP, and DESNZ, operate.

On 6 January 2025, Ofgem published its 'Decision to grant NESO a derogation from requirements of Article 6(9) of the Electricity Regulation and exemption from requirements of Article 32(3) of the Electricity Balancing Guideline for Mandatory Frequency Response'. This relates to a derogation request from the requirements of Article 6(9) of Regulation (EU) 2019/943 (ER), as amended by the Electricity and Gas (Internal Markets and Network Codes) (Amendment etc.) (EU Exit) Regulations 2020, and for an exemption under Article 32(3) of Commission Regulation (EU) 2017/2195 establishing a guideline on electricity balancing (EBGL), as amended by the Electricity Network Codes and Guidelines (Markets and Trading) (Amendment) (EU Exit) Regulations 2019, for the frequency response product called Mandatory Frequency Response (MFR). MFR is an ancillary / balancing service provided to and used by NESO to manage system frequency so as to keep it within statutory and operational limits.? A power station may, depending on size and location, be obliged to have the capability to provide MFR (this requirement will be set out in its connection agreement). The Ofgem decision letter provides background on MFR, explains the request made by NESO, and gives Ofgem's rationale behind granting the derogation and exemption.

Capacity Market

On 9 January 2025, Ofgem launched a statutory consultation on five proposed changes to the rules of the Capacity Market (CM), entitled 'Statutory Consultation on Capacity Market Rule change proposals CP371, CP376, CP377, CP378, and CP381'. Each of these change proposals is described in the consultation document under the headings: CP371 – Protection from Very Late Network Connections; CP376 – Clarifying Restrictions on the Role of Agent; CP377 - Increasing Flexibility for Satisfactory Performance Day Portfolios; CP378 - Removing 50MW Limit on Individual Capacity Market Units in a Portfolio; and CP381 – Change to the definition of Station Connection Entry Capacity in Rule 3.5.5.

The Electricity Capacity Mechanism (Amendment) Regulations 2025 (No. 74) were made on 24 January 2025 in exercise of the powers conferred by section 14(1) and (3) of the Retained EU Law (Revocation and Reform) Act 2023 – they were published with an explanatory memorandum. These Regulations revoke and alter provisions of?Regulation (EU) 2019/943?of the European Parliament and of the Council of 5 June 2019 on the internal market for electricity (recast) (EUR 2019/943) which relate to resource adequacy in the electricity sector, in particular capacity mechanisms.

Carbon capture and storage network code

On 13 January 2025, DESNZ announced the publication of the 'Carbon capture and storage (CCS) Network Code: Government response to consultation'. This relates to the consultation launched on 1 December 2023 which sought views on the heads of terms for the 'CCS Network Code', which is part of the new regulatory regime describing the arrangements between carbon dioxide (CO2) transport and storage (T&S) network operating companies and CO2 T&S network users. The Energy Act 2023 enables the government to grant economic licences to the UK’s first CO2 T&S network operators (the licensing regime prohibits the carrying out of the activities of CO? transportation and storage unless authorised by a licence or exempt in limited circumstances). The licence conditions will require T&S companies to maintain and administer a network code.

On 17 January 2025, DESNZ announced updates to its carbon capture, usage and storage business models page, including the addition of the CCS Network Code (Code) (January 2025 version) regarding CO2 T&S companies (T&SCos) licensed to operate a T&S network. The Code sets out the commercial and technical rules and arrangements between the T&SCos and the users of a T&S network (ie. those who require transport and storage services in respect of CO2), and between individual T&SCos. The Code is given legal effect by, and made binding on a T&SCo or a user pursuant to, the 'Code Agreement' or the 'Code Accession Agreement' (as the case may be).