The Irish energy regulator, the Commission for Regulation of Utilities ("CRU"), has introduced a new grid connection policy – the Enduring Connection Policy ("ECP-1"). Applications to qualify for ECP-1 are due to open this month. Priority will be given to (1) projects with planning permission and (2) DS3 projects.
It is generally agreed by the industry that Ireland’s existing electricity connection policy is not fit for purpose.
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 in particular. This has led to unmanageable backlogs for the grid operators – EirGrid and ESB Networks. Over 36,000MW of generation is waiting to connect to the grid (for reference, Ireland’s electricity system demand was just under 5,000MW at the time of writing this update). It is also accepted by industry that a significant number of these are speculative applications which are preventing feasible projects from being realised.
On 27 March 2018, the CRU published an important decision on the ‘ECP-1, aimed at resolving the current state of affairs.
We have set out below a summary of the key points of the ECP-1 decision which may be of interest and a brief commentary on the decision. Click the following links for the full text of the Decision, Ruleset (Annex I) and DS3 Prioritisation Ruleset (Annex II).
The 2018 batch will be open to three categories of applicants:
(1) New Applicants
- New applicants must have been granted planning permission by the date of the ECP-1 decision (27 March 2018). The planning permission must have at least one year remaining prior to expiry, or two if it has already been extended.
- New applicants must have a maximum export capacity (“MEC”) of over 500 kW.
(2) DS3 Qualified Applicants
- 400MW will be reserved exclusively for DS3 Qualified Applicants (see here or talk to us for details on DS3).
- Individual projects cannot be larger than 100MW.
- Planning permission is not required to qualify.
- The applicant’s plant must:
- be capable of providing Fast Frequency Response (“FFR”) and/or Primary Operating Reserve (“POR”);
- at least meet Grid Code standards; and
- be included in the TSO’s list of proven technologies (from a DS3 System Services provision perspective).
- Wind and solar technologies will not receive priority connection status (although the CRU has clarified that if a different technology type is installed to increase a wind or solar generator’s MEC then the additional MEC provided by that technology may be prioritised).
(3) Existing Applicants
- Applicants with existing connection applications or offers have been offered the opportunity to “fold in” or transfer their applications to ECP-1. Our expectation is that a significant number of applicants will do so.
- The options available for existing applicants depend on the status of their previous grid connection application (ie, non-GPA applicants in process, non-GPA queued applicants and other applicants).
- Existing applicants will be required to select their preferred approach within 20 business days of receiving a notification from EirGrid.
The 2018 batch will provide at least 1,000MW of new connection offers. However, the CRU have also left the door open for this number to be increased once they have received applications.
A number of existing applications will also ‘fold in’ to the 2018 batch (expanding the number to approximately 2,600MW). Offers will be issued on a non-firm basis before the end of 2018.
The CRU is expected to open applications to the 2018 batch window later this month. Applications will be open for at least one month from that date, with the first connection offers issuing before the end of the year.
The CRU will introduce an incentive mechanism to ensure that system operators are incentivised and held accountable for efficient processing of the 2018 batch, with the aim of opening the next application window in 2020.
The ECP-1 decision also deals with a number of other items, including:
- A limited ‘non-batch’ process (for autoproducers, small-scale generation and DS3 trial projects);
- Capacity relocation;
- Revised application fees;
- Security for shared assets’ costs (for projects that are part of a sub-group); and
- How priority will be decided if a batch is over-subscribed.
ECP-1 is a welcome decision for the industry from the CRU. As mentioned above, the existing grid connection policy has been stymied by the volume of applications received, leaving otherwise viable projects unable to secure grid connection. In our experience, 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 financers in the Irish market.
This update was co-authored by Owen Collins, Solicitor