A European Court judgment against Citiworks in Dresden, Germany, is set to make the design for locally generated renewable energy illegal until the law is changed or clarified.

The judgement of the Court (Third Chamber) of 22 May 2008, referred to European Directive 2003/54 Internal market in electricity - Article 20(1) - Open access of third parties to electricity transmission and distribution systems. The Directive establishes common rules for the generation, transmission, distribution and supply of electricity. It lays down the rules relating to the organisation and functioning of the electricity sector, access to the market, the criteria and procedures applicable to calls for tenders and the granting of authorisations and the operation of systems.

The EU Treaty requires free movement of goods, freedom to provide services and freedom of establishment which are only possible in a fully open market, to enable all consumers freely to choose their suppliers and all suppliers freely to deliver to their customers. There were of course some exemptions and one of these was single wire supply covering local generation.

The key conclusions of the judgement were:

(i) The main obstacles in arriving at a fully operational and competitive internal market relate amongst other things to issues of access to the network, tarification issues and different degrees of market opening between Member States.

(ii) For competition to function, network access must be non-discriminatory, transparent and fairly priced.

(iii) In order to complete the internal electricity market, non-discriminatory access to the network of the transmission or the distribution system operator is of paramount importance. A transmission or distribution system operator may comprise one or more undertakings.

This ruling concludes that Article 20(1) of Directive 2003/54/EC precludes the ‘law of energy management’ whereby certain operators of energy supply systems are exempt from the obligation to provide third parties with open access to those systems on the grounds that they are located on a geographically connected operation zone and that they predominantly serve to supply the energy needs of the undertaking itself and of connected undertakings.