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The legality of the UK government’s strategy for zero-carbon buildings has been thrown into doubt by a European Court of Justice (ECJ) ruling, lawyers says.
In Citiworks AG (Case C‑439/06) the ECJ ruled that a German law that permitted a monopoly for onsite power generation in certain circumstances breaches European law. The exemption, the court said, is contrary to a European Directive which requires open third-party access to energy supply systems.
Davies Arnold Cooper partner Chris Baker says the ruling is important because in the UK a class exemption permits smaller distributed energy systems to operate outside the licensing regime and in practice to create a monopolistic supply. “While the judges did not rule on the UK exemption it does question the legality of any class exemption,” he says.
Baker says a central part of the government’s drive to a zero-carbon building industry is the use of on-site power generation through energy service companies (ESCOs). The economic sustainability of ESCO models in part depends upon service providers having some certainty of consumption. “On-site power generation is at the heart of the current sustainability in the real estate industry and if this becomes unworkable it is inconceivable that the government’s zero-carbon target can be hit,” he adds.
