Supreme Court: Questions concerning regulation providing for compensation for electricity generators referred to ECJ

About this case:

• Citation:
  [2025] IESC 1
• Judgment:
  External link
• Court:
  Supreme Court

Delivering its judgment, the seven-judge Supreme Court observed that “it is apparent from the evidence in these proceedings that renewable generators, including those with the benefit of priority dispatch, are frequently redispatched downwards and that the rate at which such redispatching occurs has increased in recent years. The issue of the proper calculation of the compensation payable where such redispatching occurs is therefore one of huge commercial significance.”

Background

The applicants consisted of operators of wind farms and renewable generators in Ireland and Northern Ireland, all participating in the single electricity market (SEM) in Ireland.

The appellant, the Commission for the Regulation of Utilities (CRU) is the statutory body responsible for the regulation of the Irish electricity market, with its functions being exercised by the Single Electricity Market Committee (SEMC).

Regulation (EU) 2019/943 provides for the dispatching of power-generation and demand response in a non-discriminatory, transparent and market-based manner, and for the provision of financial compensation upon redispatching, defined as “a measure, including curtailment, that is activated by one or more transmission system operators or distribution system operators by altering the generation, load pattern, or both, in order to change physical flows in the electricity system and relieve a physical congestion or otherwise ensure system security”.

In particular, Article 13(7) of the Regulation provides inter alia that where non-market based redispatching is used, it shall be subject to financial compensation by the system operator requesting the redispatching to the operator of the redispatched generation, energy storage or demand response facility except in the case of producers that have accepted a connection agreement under which there is no guarantee of firm delivery of energy.

In March 2022, the SEMC adopted a Decision Paper on Dispatch, Redispatch and Compensation Pursuant to Regulation (EU) 2019/943 (SEM-22-009) to implement the requirements of the Regulation. The CRU identified Article 59 of Directive (EU) 2019/944 on common rules for the internal market for electricity and amending Directive 2012/27/EU as the legal basis for the Decision.

The High Court

The applicants issued judicial review proceedings challenging the lawfulness of the Decision, contending that Article 13(7) required that compensation for non-market-based redispatching should fully compensate the affected generators for any loss arising from the redispatching, such that they would be “indifferent” to the prospect of being redispatched, and that the Decision restricted their entitlement to compensation in a manner inconsistent therewith.

In particular, the applicants objected to:

(i) the postponement of compensation for curtailment until 2024;
(ii) the separation of compensation for market revenue foregone and compensation for foregone market support and the deferral of any compensation for foregone market support;
(iii) the proposed methodology for calculating compensation involving foregone financial support, including the proposed differential treatment of generators depending on the date they were commissioned and whether they had the benefit of priority dispatch;
(iv) the exclusion of generators who do not participate in the ex-ante (i.e. day ahead) market, such as de minimis generators, from compensation;
(v) the failure to provide for compensation to be paid to the affected generators and
(vi) the limitation of the compensation payable to generators who supply electricity pursuant to certain Power Purchase Agreements (PPAs).

The High Court upheld the applicants’ challenges and quashed the Decision.

Leave to Appeal

The Supreme Court granted the CRU leave to appeal due to the importance of the issues raised for the State electricity market.

The CRU argued the Regulation is binding and directly applicable in the State, but that Article 13(7) lacks direct effect as the reference therein to “unjustifiably low or unjustifiably high compensation” left such a broad discretion to Member States in implementing that provision that it could not be said to be sufficiently “clear, precise and unconditional” to have direct effect.

On that basis, the CRU said that Article 13(7) could not be relied upon to disapply a provision of a national law measure, being the Decision, and that it could not be enforced before a national court. The Attorney General, a notice party, broadly supported the position of the CRU.

The Supreme Court

The Supreme Court noted at the outset of its reference that “While there is a significant dispute between the parties as to the proper interpretation of Article 13(7) of the Regulation, their dispute is even more fundamental, extending to the legal status and effect of Article 13(7) in the Irish legal order and whether and to what extent it is justiciable in these proceedings and whether it may properly be relied on by the Applicants as a basis for challenging the legality of the Decision before the Irish courts at all.”

Having heard the parties’ submissions, the Court considered that whether Article 13(7) has direct effect depends on its proper interpretation, which it found was not so obvious as to leave no scope for reasonable doubt.

Conclusion

In circumstances where the issues were of systematic importance for the functioning of the electricity market in Ireland, the Supreme Court sought priority from the European Court of Justice’s consideration of the questions referred for preliminary ruling to the pursuant to Article 267(3) TFEU:

• The requirements of Article 13(7), what is meant by “unjustifiably low or unjustifiably high compensation” and the benchmark against which that assessment is to be made, and whether Article 13(7) permits the adoption of a measure distinguishing between electricity generators in relation to their entitlement to compensation depending on whether the generators enjoy the benefit of priority dispatch or not;
• Whether Article 13(7) is sufficiently clear, precise and unconditional such that it is directly effective in national law and the extent to which it requires or permits the adoption of national measures of implementation or application.
• If not directly effective, whether Article 13(7) can nonetheless be invoked before a national court for the purposes of challenging the legality of a provision of national law (including any purported implementing measure) and as a basis for annulling or setting aside such a provision or measure, or whether the exercise of such a jurisdiction by a national court is excluded by Case C-573/17 Popławski ECLI: EU:C:2019:530 and if so, what remedies are available to an undertaking claiming unlawful restriction on its entitlement to compensation.
• Whether it was open to the CRU as the National Regulatory Authority (NRA) to adopt measures of application deferring payment of compensation to 2024, deferring the decision as to whether compensation is payable and the extent thereof in respect of foregone financial support, and whether Article 13(7) permits measures restricting compensation to generators participating in the ex-ante market, excluding de minimis generators from compensation for redispatch and providing for payment of compensation to suppliers rather than the generators who have been redispatched.
• Where a renewable generator that is a party to a Corporate Power Purchase Agreement (CPPA) is redispatched downwards, whether the compensation payable under Article 13(7) must include compensation for the loss of any payments that would have been payable under the CPPA (in the event that the generator had not been redispatched) due to the contract strike price exceeding the relevant market price or whether such payments constitute a form of financial support falling outside the scope of Article 13(7)(b).

GR Wind Farms 1 Ltd & Ors v The Commission for Regulation of Utilities; Energia Group Holdings (ROI) DAC & Ors v The Commission for Regulation of Utilities [2025] IESC 1