New Grid Connection Policy In Ireland
Connection policy can influence which generators can access markets and when they can secure that access. Consequently, connection policy can have a wide-ranging impact on the electricity system, from determining the level of competition in wholesale markets, facilitating the delivery of renewable energy targets, to helping ensure that new technologies can connect to provide required system services.
It is generally agreed by industry that Ireland’s existing electricity connection policy is not fit for purpose. Almost ten years have passed since the last gate process which allowed large generators to connect.The non-gate process intended for smaller generators and experimental technologies is vastly oversubscribed, following a surge in applications from small-scale solar projects. These projects can be subject to lengthy delays to connection. The combination of these factors has led to a volume of over 36,000 megawatts (MW) of generators and other technologies waiting to connect or to gain a connection offer. Many of these projects might be speculative in nature, and hold up genuine projects that have been waiting to connect for several years.
The Irish energy regulator, the CRU, has introduced a new grid connection policy – the Enduring Connection Policy (ECP-1). Applications to qualify for ECP-1 opened on Friday, 27 April 2018 and will close on Monday, 28 May 2018. Priority will be given to (1) projects with planning permission and (2) DS3 projects.
Large generators were last processed for connection using the ‘Group Processing Approach’ (“GPA") almost ten years ago.The ‘Non-Group Processing Approach’ (“Non-GPA"), intended for small generators and experimental R&D projects, has been completely overwhelmed by small-scale solar applications.
This has led to unmanageable backlogs for the grid operators – EirGrid and ESB Networks. Over 36,000 MW of generation is waiting to connect to the grid (for reference, Ireland’s electricity system demand was just under 5,000 MW at the time of this update). It is believed that many of these are speculative applications could be preventing feasible projects from being realised.
On 27 March 2018, the Commission for Regulation of Utilities (“CRU") published a decision on the ‘Enduring Connection Policy – Stage 1’ (“ECP-1"), aimed at resolving the current state of affairs. The principal objective is to allow those projects which are ‘shovel ready’ to have an opportunity to connect to the network, along with laying the foundations for future, more regular batches for connection.
Table 1 highlights the policy decisions made to meet the objective and how they differ from those outlined in proposed decision.
The system operators are expected to open an application window for the 2018 batch within one month from this decision, and close it within two months from this decision. This should give potential applicants at least one month to submit their applications. The first connection offers should be issued before the end of 2018. We expect that those applicants which have been successfully prioritised to receive an ECP-1 connection offer will be notified of this within a few months from the closing date for applications. The CRU is seeking to introduce a new incentive for system operators to process applications according the planned timetable. This incentive will be outlined in the price review 4 (PR4) incentives decision.
The CRU expects the system operators to hold a further batch as soon as reasonably practical following the conclusion of the 2018 batch. The CRU expects that efficient and timely processing of the 2018 batch by the system operators will allow the next batch to start in 2020. The policy for that batch will be set in advance along with the batch size. When considering that next batch and future batches, CRU expect to examine the merits of using a more price-based approach to allocate capacity to applicants. In theory, this can provide several benefits but recognise that it would be a significant change requiring detailed rules to be developed. In due course, CRU will invite stakeholders’ views in this area as we continue to develop our proposals. CRU note that the decisions listed in Table 1 above apply to the 2018 batch only, and should not necessarily determine the CRU’s policy for the next batch and future batches. As an exception, the decision to stop capacity relocation will, following the three-months grace period for existing contracted projects, apply to all applicants whether existing or new, and on a permanent basis.
CRU says this decision constitutes the first step in revising the existing connection policy, allowing the first of a set of more regular batches of connection offers. As the system cannot, at present, accommodate all the projects seeking to connect, this decision first allows those ‘shovel ready’ projects (i.e. with planning permission) to get a connection offer, ahead of less mature projects. It also prioritises connection of new, more flexible technologies able to provide specific system services currently required by the system operators.
CRU believes that as grid connection delay is consistently brought up as one of the key risks in both project development and securing project finance. ECP-1 aims to eliminate speculative applicants and allow viable projects to be delivered. If it works as intended, we would expect that the project development / project finance risk will significantly diminish, reducing one of the key barriers for developers and financiers in the Irish market.
This exercise comes at a great cost to many and only time will tell if this is the driver to release the potential of solar in Ireland.