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Heavy Industries Go Light: Energy transition in industrial parks21 October 2024

As the drive towards net zero continues, the amount of energy generated from renewable sources needs to increase. The revised EU Renewable Energy Directive (RED III) of 18 November 2023 provides for detailed quotas for the use of renewable fuels of non-biological origin (“RFNBOs”), including green hydrogen and its derivatives. The key innovation is the introduction of precise targets for industry. According to these quotas, the proportion of renewable energy used for final energy consumption purposes must be increased and the share of RFNBOs in the industry must amount to at least 42% of the hydrogen used for final energy consumption and non-energy purposes by 2030. This quota will increase to 60% cent by 2035.

"For industrial parks sourcing (additional) renewable electricity verifying their 'green footprint' is crucial."

These requirements must be converted into national law by EU member states by 21 May 2025, and will have significant short, medium and long-term impacts on industry and thus on industrial parks. Given the significant influence of energy supply on the economic viability of industrial facilities, it is essential to review and enhance existing strategies taking into consideration the relevant legal frameworks.

When transitioning to hydrogen as an energy source, ensuring its classification as renewable or “green” is critical. This entails navigating numerous legal requirements whilst undertaking a thorough review of the overall strategy to increase the use of electricity from renewable sources and hydrogen, as well as taking into consideration the specifics of each industrial park. Additionally, specific provisions in power purchase agreements must be addressed, despite many regulatory details still pending.

For industrial parks sourcing (additional) renewable electricity verifying their “green footprint” is crucial. This also applies to self-generation from renewable sources in which case also permitting, operations, maintenance, and construction requirements must be considered. Battery storage systems may be employed to secure renewable energy supplies and hydrogen generation, with a thorough legal review to ensure investment viability.

Upcoming changes to the Combined Heat and Power Act should also be monitored as well as issues related to customer installations, closed distribution networks and grid fee reductions. Additionally, matters such as heat supply and industrial waste heat utilisation should also be considered.

WFW offers comprehensive legal services advice on all such matters, including the planning, permitting, financing, state funding utilisation, energy laws and related legal issues. We leverage extensive experience and expertise to provide clients with tailored solutions, from full project planning and support to addressing specific legal issues, conducting workshops and dispute resolution.

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