How the EU Data Act is accelerating the digital transformation of the energy sector

Impact of the new EU Data Act on energy digitalisation

With the EU Data Act, the European Union is implementing another milestone in its European data strategy. After the formal adoption of the European Parliament and the Council, the new legislation entered into force on 11 January 2024. Its provisions aim to increase transparency and make data more usable. This opens new potential also for the use of data in the energy sector and for a further push in energy digitisation leading to much greater implications than many currently realise.

In February 2023, the EU Commission adopted the "Proposal for a Regulation on harmonised rules for fair data access and use of data (Data Act)" (COM(2022) 68 final). Another important political agreement was reached by the European Parliament and the Council of the EU on June 28 2023. The Data Act was formally adopted by the European Parliament on November 9 2023 and by the Council on November 27 2023 (PE-CONS 49/23).

Most of the obligations of the Data Act will apply from September 2025, while some obligations will only apply from September 2026 or September 2027.

Better data availability for users

In principle, users of connected products will in future have the right to access the data generated by its use under the Data Act. The "data holder" is obliged to make the data generated when using an Internet-of-Things product or related service directly accessible to the user by default where relevant and technically feasible (Art. 3 Par. 1), or otherwise make the data available to the user without undue delay, easily, securely, free of charge, in a comprehensive, structured, commonly used and machine-readable format and, if possible, continuously and in real time, insofar as this is technically feasible (Art. 4 Par. 1). Data covered by these obligations is broadly defined, as it includes not only intentionally recorded data, but also, for example, data resulting indirectly from the user’s action, data collected during periods of user inactivity and relevant metadata. The future significance of this amendment can hardly be underestimated.

Users will also be able to transmit data themselves or request data holders to share it with third parties of their choice based on contractual agreements (Art. 5 Par. 1). This will significantly change the energy sector. The EU is hoping for significantly improved use and more transparent data trading. Pre-contractual information requirements and the content of contracts relating to products whose use generates data will also be regulated.

The Data Act covers both personal and non-personal data generated by connected products. The scope of application ranges from smartwatches to industrial plants.

It will also make it easier for public sector bodies to access data in case of emergencies. The Data Act votes for increased data interoperability by enabling users to take their data with them when they switch data processing service providers.

Potential for energy digitalisation

The changes brought about by the Data Act have great potential to fundamentally change the energy sector. Data is already generated during generation, transmission, deployment and use of energy. It's just that users often don't get it and/or only get it in a way that makes it difficult to process electronically.

It isn’t only conventional power plants, wind turbines and solar plants that are equipped with sensors and measuring technology, but transmission lines and switching stations are increasingly being equipped with corresponding technology. Consumption data is also being collected in a new quality via the extensive use of smart meters, which has been planned for some time.

However, in the case of some of the use cases mentioned, it is not certain whether these are to be regarded as products within the meaning of the Data Act and thus whether it applies. The scope of application does not include objects whose primary function is the storing, processing or transmission of data (Art. 2 No. 5). In the case of measuring devices, it is not clear how the primary function is determined. For example, certain products that are primarily designed to display or play content, or to record and transmit content, amongst others for the use by an online service should not be covered by the Data Act (Rec. 16).

Obligations and authorisations already exist ordering to transmit certain data and to make it available to network operators, for example. The Data Act is explicitly intended to enable transparent access to data and the development of interoperability requirements as provided for in the EU Electricity Regulation ((EU) 2019/943) and the EU Electricity Directive ((EU) 2019/944) (p. 6 of the draft explanatory memorandum).

The protection of business and trade secrets as well as intellectual property rights are particularly problematic. A decisive role will play service providers who offer an evaluation and classification of the data then available and thus make it usable. Without appropriate data processing, the intended optimisation of processes and more efficient control will probably not be feasible.

The user is the person who owns, rents or leases a product or receives a service. This means that not (only) data of the user himself, but also, for example in the case of smart meters, data generated by third parties (the end user) would be covered by the regulations of the Data Act.

Finally, it remains to be clarified how to deal with the classification of certain items to be included under the product concept, which themselves constitute or form part of critical infrastructure. It is true that the Data Act is not intended to affect the competences of the Member States with regard to activities in the areas of public security, defence and national security (recital 10, Art. 1 Par. 6). However, it remains open at what point such a reservation takes effect (is a certain relevance threshold necessary, for example?) and whether the owner of the critical infrastructure should not also have a right to access the data vis-à-vis the manufacturer of the respective product.

An overview of the basic contents and innovations that the EU Data Act brings with it can be found here and here. Please also see the recent episode of our Privacy Unpacked podcast on the issue.

Our team will be happy to advise you on the potential impact of the regulations in your business context. Please get in contact with our experts for more information.