Tue 27 May 2008
European Court’s findings
A ruling from the European Court of Justice (ECJ) which found for a case in Germany that a monopoly for onsite power generation runs contrary to European law will cast shadows on the financial validity of many UK zero-carbon schemes, says a leading London law firm.The ECJ’s findings on Leipzig airport’s onsite energy system, which is supplied by only one company, with no provisions for access for third party operators to supply electricity to the airport, ruled that although this is legal under German law, it runs contrary to a European directive.
This finding may have substantial implications for the UK property industry, says Chris Baker, a partner at Davies Arnold Cooper, in calling into question the economic viability of providing on-site power generation via Energy Service Companies (ESCOs). “The ECJ is prepared to err on the side of consumer protection, in ensuring they don’t face rates set by one single energy company to keep the market competitive, which may bring about a long period of uncertainty for the industry.
“But the value generated by a developer out of such schemes could be detrimentally affected, as energy companies may now be unwilling to pay builders for exclusive supplier rights, a means by which developers have recently been tending to subsidise eco building. On-site power generation is at the heart of sustainability in the industry, and if this becomes unworkable, it is inconceivable that the government’s zero-carbon target can be hit.”
The UK Green Building Council’s recent report on the definition of zero-carbon found that the government must alter its own definition to allow off-site renewable energy, not currently allowed under the Treasury’s existing guidelines, or risk facing a crisis in which 80% of new homes fail to meet the Treasury’s recommendations.
Posted by Natalia Gameson
in Chris Baker, Davies Arnold Cooper, European Court of Justice, News on Tue 27 May 2008
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