INTRODUCTION Contributed by: David P. Flynn, Phillips Lytle LLP
Transformation in the Power Industry We are pleased to present the Chambers Global Practice Guide for Power Generation, Transmis- sion and Distribution. Much is occurring in this dynamic space. A fundamental transformation of the electric energy and power industry is under way, and a number of things are driving change, growth and innovation. Technological advance- ment, engaged and educated customers, evolv- ing regulatory requirements, economic impacts, and the constant reminder of significant climate change are all driving growth and development in this space. As the market continues to evolve at a fast pace, the legal and regulatory systems are often driv- ing some of these changes; at the same time, these same systems are, in certain instances, forced to play the difficult role of catch-up. That is certainly the case with the power industry. This Guide seeks to inform readers as to what various jurisdictions are doing to drive industry changes, respond to significant market evolution, and fos- ter, encourage and manage the development of their energy resources. While change in the energy sector has always occurred, it has been at a much different pace and scale in recent years. While the primary driv- er in the evolution of this sector was once the unbundling/deregulation of the utility industry, that has clearly changed. Though the unbun- dling of utilities continues, the legal and regu- latory framework in many jurisdictions is also evolving to encourage – if not mandate – new non-carbon sources of electric energy as well as new entrants into the energy generation and transmission market. Every indication is that this will continue, and most likely accelerate, in many jurisdictions.
Legal and Regulatory Frameworks Today, many of the changes in the legal and regulatory frameworks that pertain to the energy sector are impacted – if not driven by – unpar- alleled technological change. While wind and solar generation have been around for many years, the scope and deployment of these ener- gy resources is approaching levels that require changes to the existing legal framework in place in many jurisdictions. In addition, emerging tech- nologies, which are critical to addressing and supporting efforts to decarbonise, are becom- ing more impactful. Things such as large-scale energy storage, hydrogen and even a potential resurgence in nuclear energy are all creating pressures on existing legal and regulatory frame- works. These changes are causing jurisdictions to adjust in order to respond to these new and/ or emerging technologies. All of these changes – whether they relate directly to decarbonisation or to the further penetration of alternative energy sources – impact the energy consumer. At the individual consumer level, this results in potentially significant impacts to power quality, increases in energy costs to facilitate and underwrite the increased electrification of our economies, as well as potentially more costly sources of energy generation. The impacts to large energy consumers, such as large manu- facturing operations and other energy-intensive businesses, can be game-changers. For large industrial users of electricity, energy is tanta- mount to a raw material. An industry’s ability to manage potentially significant increases in cost over a relatively short period of time can have material consequences. Therefore, it is impor- tant for the legal and regulatory frameworks in the various jurisdictions that are aggressively moving forwards with decarbonisation and/or electrification to manage the process, such that
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