INTRODUCTION Contributed by: David P. Flynn, Phillips Lytle
Transformation in the Power Industry We are pleased to present the Chambers Global Prac- tice Guide for Power Generation, Transmission 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 advancement, new energy consumers such as data centres, engaged and educated cus- tomers, evolving regulatory requirements, economic impacts, and the constant reminder of significant cli- mate 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 driving some of these changes; at the same time, these same sys- tems are, in certain instances, in conflict and/or 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 foster, 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 driver in the evolution of this sector was once the unbundling/ deregulation of the utility industry, that has clearly changed. Though the unbundling of utilities continues, the legal and regulatory framework in many jurisdic- tions 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 transmis- sion 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 regu- latory frameworks that pertain to the energy sector are impacted – if not driven by – unparalleled techno- logical change. While wind and solar generation have been around for many years, the scope and deploy- ment of these energy resources is approaching levels that require changes to the existing legal framework in place in many jurisdictions. In addition, emerging technologies, which are critical to addressing and
supporting efforts to decarbonise, are becoming 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 frameworks. 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 alter- native energy sources – impact the energy consumer. At the individual consumer level, this results in poten- tially significant impacts to power quality, increases in energy costs to facilitate and underwrite the increased electrification of our economies and expansion of electric transmission and distribution systems, as well as potentially more costly sources of energy genera- tion. The impacts to large energy consumers, such as large manufacturing operations and other energy- intensive businesses such as data centres, can be game-changers. For large industrial users of electric- ity, energy is tantamount to a raw material. An indus- try’s ability to manage potentially significant increases in cost over a relatively short period of time can have material consequences. Therefore, it is important for the legal and regulatory frameworks in the various jurisdictions that are aggressively moving forwards with decarbonisation and/or electrification to man- age the process, such that the costs do not escalate out of control or lead to unintended economic con- sequences. Decarbonisation Ongoing efforts to decarbonise the energy and power sector, together with a push to use renewable ener- gy resources to replace carbon-based generation, is creating both opportunity and tension across the globe. The opportunity is an almost limitless market to provide new and/or emerging technologies that do not rely on carbon or a carbon-based fuel to provide electric energy. There is also a very significant effort focused on further electrification of our economies and life – for example, transitioning from natural gas or coal as a source of heat, with an ever-increasing reliance on electric energy. This is creating incredible pressure on generation, transmission and distribution capabilities around the world.
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