Opinion of Advocate General Campos Sánchez-Bordona delivered on 15 November 2016

I – Legislative framework

II – Facts

16. J.D. held a licence to produce electricity from renewable sources from 20 November 2004 to 20 November 2014. Specifically, the licence covered two biogas power stations and a small-scale hydroelectric power station (with a capacity of 0.160 MW) located at the point of discharge of waste water from another plant (PKN Orlen SA), which was not involved in electricity production.

17. When an extension of the licence was sought, the Prezes Urzędu Regulacji Energetyk (Chairman of the Polish Energy Regulatory Office, ‘ERO’), by a decision of 6 November 2013, refused the application in respect of the hydroelectric power station on the grounds that ‘only hydroelectric power stations using energy obtained from wave, current and tide and the downward flow of rivers could be regarded as producing energy from renewable sources’.⁽⁹⁾

18. On 5 November 2014, the decision of the Chairman of the ERO was upheld by a judgment of the Sąd Okręgowy w Warszawie (Regional Court, Warsaw), which referred to the definition of renewable energy sources in Article 3(20) of the Law on energy, in the version in force at the time when the contested decision was taken.

19. J.D. brought an appeal in the Sąd Apelacyjny w Warszawie (Court of Appeal, Warsaw, Poland) against the judgment at first instance. In support of its claims, it argued that Article 3(20) of the Law on energy was incompatible with Directive 2009/28.

20. That is the background against which the Sąd Apelacyjny w Warszawie (Court of Appeal, Warsaw) has referred a question for a preliminary ruling.

III – Question referred for a preliminary ruling

21. The question referred was lodged on 4 January 2016 and is worded as follows:

‘Is the term “hydropower” as a renewable energy source, set out in Article 2(a) of Directive 2009/28 … in conjunction with Article 5(3) thereof and recital 30 in the preamble thereto, to be interpreted as relating only to energy produced by a hydroelectric power station using the downward flow of inland surface waters, including rivers, or as relating also to energy produced in a hydroelectric power station (which is not a pumped-storage power station or a hydroelectric power station with a pumping installation) sited at the point of discharge of industrial waste water from another plant?’

IV – Procedure before the Court of Justice and submissions of the parties

22. J.D., the Polish and Italian Governments and the Commission have presented written observations. In accordance with Article 76(2) of the Rules of Procedure, the Court decided not to hold a hearing.

23. J.D. submits that, under Directive 2009/28, the only energy produced by a hydroelectric power station which is not deemed to be from renewable sources is energy produced in pumped storage units. It argues that energy produced using the water which a third party has discharged upstream after use can be considered energy from renewable sources under Directive 2009/28.

24. The Polish Government maintains that the terms ‘energy from renewable sources’ (Article 2(a) of Directive 2009/28) and ‘renewable energy sources’ (Article 2(30) of Directive 2009/72) refer to non-fossil energy sources which are either renewed naturally, without human intervention, within a relatively short period of time, or which do not run out, the use of which will help to achieve the environmental benefits set out in Directive 2009/28.

25. Consequently, as far as the Polish Government is concerned, the term ‘hydroelectric power produced from renewable sources’ refers to energy from the natural downward flow of inland surface waters, including rivers.

26. Furthermore, the Polish Government points to the fact that energy produced in pumped storage units is not considered electricity from renewable sources under Directive 2009/28. It concludes from this that the operation of hydroelectric power stations which, although not pumped storage units, use water which other units have pumped uphill, is not based on the use of renewable sources which occur naturally in the environment.

27. According to the Italian Government, energy produced using the gravitational flow of water within artificial structures must be covered by the term ‘energy from renewable sources’, as long as those structures were built for purposes which are economically unconnected with the production of electricity.

28. In the Italian Government’s submission, recital 30 of Directive 2009/28 contemplates two scenarios: (a) where hydroelectric power is produced using an artificial downward flow of water which was created precisely for that purpose; or (b) where energy is produced using an artificial downward flow which was created for purposes other than energy production. In the first case, there is no ‘energy from renewable sources’ because –– since other energy is needed in order operate the pump — the energy used as against the energy produced would result in practically no net gain, which would remove the environmental benefit. In the second case, by contrast, structures and facilities already in existence would be used, which would optimise the environmental benefit and the economic investment.

29. Furthermore, the Italian Government argues, given that it is only electricity generation by pumping that is expressly excluded from the notion of ‘electricity from renewable hydropower’ under Directive 2009/28, the exception does not cover the situation where electricity is obtained using discharged water, which is similarly artificial but which has been created for economic purposes other than producing electricity.

30. The Commission submits that, in the absence of a definition of hydroelectric power in Directive 2009/28, it is necessary to refer to the definition of hydroelectricity in point 5.1.1 of Annex B to Regulation No 1099/2008, to which Article 5(7) of Directive 2009/28 refers.

31. Taking that definition and the method of calculating the gross final consumption of electricity from renewable energy sources (Article 5(3) of Directive 2009/28), the Commission goes on to state that the EU legislature considered ‘electricity from renewable energy sources’ to be energy produced in a hydropower plant by converting the potential or kinetic energy of water, except energy generated in pumped storage systems from water that has been pumped uphill. Finally, the Commission notes that the legislature has drawn no distinction based on the type of water used, whether from natural or artificial flows.

V – Assessment

32. This reference for a preliminary ruling is not concerned with explaining, in an abstract way, what ‘renewable sources’ are or in what circumstances it might be said that hydropower is produced using such sources. The question raised by the Sąd Apelacyjny w Warszawie (Court of Appeal, Warsaw) is much more specific, since what the court would like to know is whether a very particular type of hydropower, namely that produced by a small-scale hydroelectric power station using the water discharged by another plant which has previously used it for purposes unrelated to electricity generation, can be categorised as ‘energy from renewable sources’within the meaning of Directive 2009/28.

33. I have placed an emphasis on Directive 2009/28 because it is all too easy to be drawn down the path of general, non-legal concepts and forget that it is in the discussion on legal concepts that the courts, including the Court of Justice, have a role to play.

34. My reason for saying this is that it seems to me that we should not be using here a preconceived notion of ‘renewable energy sources’, by which we mean those that are renewed naturally, without human intervention, as the Polish Government is suggesting.⁽¹⁰⁾ If we start from this preconceived notion we will of course find it difficult to see energy produced using artificial water flows, for example, as ‘energy from renewable sources’.

35. In fact, the only concept that matters is the one used in Directive 2009/28 itself, which, for the purposes of its scope, defines ‘energy from renewable sources’ in the following terms: ‘energy from renewable non-fossil sources’ (Article 2(a)).⁽¹¹⁾ That provision does not give a definition of ‘renewable non-fossil sources’ but it does give a precise list: ‘wind, solar, aerothermal, geothermal, hydrothermal and ocean energy, hydropower, biomass, landfill gas, sewage treatment plant gas and biogases’. So, for the purposes of Article 2(a) of Directive 2009/28, a reference to ‘renewable non-fossil sources’ is equivalent to a reference to the sources which it goes on to mention, hence the use of the word ‘namely’.⁽¹²⁾

36. Consequently, whatever energy from renewable sources may mean in other spheres, and irrespective of whether or not it is correct in those other fields to equate it with energy from ‘renewable non-fossil sources’, the fact is that, in legal terms, and specifically in terms of Directive 2009/28, it includes hydropower. Regulation No 1099/2008,⁽¹³⁾ defines this type of energy, for statistical purposes, as ‘potential and kinetic energy of water converted into electricity in hydroelectric plants’, including energy produced using pumped storage.

37. That being the case, in principle, all ‘hydropower’ must be classified, for the purposes of Directive 2009/28, as ‘energy from renewable sources’, whether it originates from the downward flow of water along artificial channels or from the use of natural watercourses.⁽¹⁴⁾ Consequently, national legislation which, for the purposes of determining whether energy should be regarded as energy from renewable sources, makes a distinction between the watercourses used for electricity generation according to whether they are natural or artificial, is not compatible with Directive 2009/28.

38. The sole exception to this rule is that expressly provided for in Directive 2009/28 itself, recital 30 of which states that ‘electricity produced in pumped storage units from water that has previously been pumped uphill should not be considered to be electricity produced from renewable energy sources’. In keeping with this explanation, Article 5(3) of Directive 2009/28 provides that electricity thus obtained is not to be taken into consideration when calculating gross final consumption of electricity from renewable energy sources.

39. According to the information provided by the referring court,⁽¹⁵⁾ the small-scale hydroelectric power station in question ‘is not a pumped-storage power station or a hydroelectric power station with a pumping installation’.⁽¹⁶⁾ If that is the case (which is ultimately a matter for the referring court to determine), the station would not fall within the case mentioned in recital 30 and Article 5(3) of Directive 2009/28 and the hydroelectric power which it produces would therefore qualify as being ‘from renewable sources’.

40. The exception in Directive 2009/28 relating to pumping plants is the result of a decision on the part of the legislature, which has opted, even though other legislation⁽¹⁷⁾ acknowledges (albeit for statistical purposes) that this operating system produces ‘hydro power’, not to designate it electricity from renewable sources. Whatever the reasons for this energy policy decision,⁽¹⁸⁾ the exception in Directive 2009/28 relating to pumping plants is not open to question. However, as I have said, this does not apply to the hydroelectric power station at issue here.

41. The order for reference states that the hydroelectric power station at issue uses the waste water discharged by a third party, which is independent of the operations of the power station and entirely unrelated to electricity generation. It is therefore not a pumping plant (within the meaning already considered) but rather a station which takes water which would otherwise flow away without being put to any subsequent economic or environmental use and uses it to generate electricity.

42. The power station under consideration makes use of waste water which is only destined to flow away, so that putting it to further use to produce electricity is beneficial in environmental terms. Moreover, it could be said that, by means of this process, ‘clean’ electricity is produced, which to some extent offsets any environmental damage which may have been caused either by the manner of obtaining the water in the first place or by the construction of the artificial channel along which it runs.

43. The Commission notes⁽¹⁹⁾ that if, in addition, the water used in the hydroelectric power station comes from an undertaking which carries out waste water treatment, the electricity thus obtained would complete a ‘virtuous’ circle of compensating for environmental damage: the activities of that undertaking not only treat the waste water, but also give rise to a surplus of water which, in turn, allows the production of electricity without the need to use other sources which emit greenhouse gases.

44. In short, in the light of the wording of Article 2(a) and Article 5(3) of Directive 2009/28 and of the objectives of the directive, I take the view that the answer to be given to the referring court should be that the concept of ‘hydropower’ as a renewable energy source includes energy produced by a hydroelectric power station using waste water discharged by a third party which is independent of the operations of the power station and entirely unrelated to electricity generation.

VI – Conclusion

45. In the light of the foregoing considerations, I suggest that the Court reply as follows to the question raised by the Sąd Apelacyjny w Warszawie (Court of Appeal, Warsaw, Poland):

The term ‘hydropower’ as a renewable energy source, set out in Article 2(a) of Directive 2009/28/EC of the European Parliament and of the Council of 23 April 2009 on the promotion of the use of energy from renewable sources and amending and subsequently repealing Directives 2001/77/EC and 2003/30/EC in conjunction with Article 5(3) and recital 30 thereof, is to be interpreted as including energy produced by a hydroelectric power station using waste water discharged by a third party which is independent of the operations of the power station and entirely unrelated to electricity generation.