Energy Update: Form an Orderly Queue – Ireland’s New Electricity Connection Policy
06 December 2017
Since the liberalisation of Ireland’s electricity system in around 2000, the policy around the allocation of grid connections has changed several times. In the latest major policy development, the Commission for Regulation of Utilities (CRU), Ireland’s energy regulator, has proposed an Enduring Connection Policy (ECP).
A sudden stop
In order to prevent a “speculative rush” to submit connection applications or seek to relocate capacity, the ECP package included a direction, made by the CRU to the system operators on 2 November 2017, to suspend with immediate effect:
- the acceptance of any new applications for the connection of generators or storage assets requiring capacity of more than 11kW
- the processing of connection applications that have been received but are not yet “in process”, and
- the acceptance of any new applications for the relocation of connection capacity, and that involve relocation by more than “100 meters from the original site specified in the relevant application”
While it may frustrate parties whose projects or transactions are directly affected, this standstill direction seems reasonable in order to give the CRU the breathing space to consult on, and implement, its proposed new connection policy.
The most significant aspects of the ECP are the proposals relating to the treatment of the connection applicants that are currently awaiting a connection offer. This is an enormous pool of projects, representing generation capacity in excess of 33GW, on a system that already has 10.8GW installed and has a historical peak demand of only 5.1GW.
Applicants with “live connection offers”, and non-GPA applicants “in process”, may transfer their connection applications into the new ECP process without first obtaining planning permission (which is otherwise a requirement for new applicants). Since the right of these projects to receive a connection offer does not seem to be affected by any transfer, the main purpose of this facility seems to be to allow projects to have their proposed connection methods revised by the system operators.
Applicants with less advanced connection applications, and those who have applied outside the categories of generator identified by the CRU for special treatment, may also transfer their connection applications into the new ECP process. However, in this case they are required to obtain planning permission, and they also run the risk of their application being deemed to be withdrawn if, under the ECP process, it is not prioritised highly enough to be allocated the generation capacity that is available under the first ECP tranche.
A key consequence of the “queue management” element of the ECP is that it effectively removes any preferential status that many applicants – particularly smaller renewable / low carbon / experimental generators – previously enjoyed over other applicants. This will be felt most keenly by the solar applicants whose applications are less advanced.
Significantly, the ECP will (from the effective date of the final decision) be open to new applicants, in addition to the queued applicants that transfer into ECP using the mechanism described above. The ECP is open to any technology that meets certain general qualifications.
The proposed ECP ruleset sets out detailed allocation rules in relation only to a “2018 batch”, which is described as a tranche of connection capacity that is delimited by:
- 1,000MW capacity, or
- 50 connection offers, subject to any proposed amendment that the system operators advise is “warranted”
The 2018 batch will be the first of an enduring sequence of connection “batches”.
At this point the CRU’s proposed decision paper diverges from the ECP ruleset that is published alongside it. The decision paper suggests that the capacity associated with the applications that are transferred into ECP from the existing queue, will be added to the capacity available for allocation in the 2018 batch. The CRU note that this may potentially triple the size of the 2018 batch (with resulting implications for speed of processing). By contrast, the ECP ruleset document includes no mention of this “additive capacity” proposal, and mentions only the 1,000MW / 50 offer limit. This discrepancy is material and requires clarification through the consultation process.
A key explicit priority of ECP is the facilitation of projects that are capable of supplying services under the system operator’s “DS3” programme. Of the 1,000MW that comprises the 2018 batch, 40% is prioritised for applications related to projects that will be capable of supplying the DS3 fast frequency response and primary operating response products. DS3 projects in this category do not require planning permission in order to apply for connection capacity. However, they must meet grid code standards and use proven technology.
At the core of the ECP are two methods for prioritising projects, for the purpose of allocating the scarce grid capacity. This prioritisation occurs at two levels:
- between the DS3 projects for the purpose of allocating the 400MW DS3 tranche, and
- between all remaining projects for the purpose of allocating what remains of the 2018 batch
The latter prioritisation rule ranks projects according to the remaining validity period of their planning permission (which must, as a precondition, exceed a stated minimum period). A project with a shorter validity period will be prioritised over any project having a longer validity period. Developers of electricity generators who have invested early in permitting and avoided some of the vagaries of the Irish planning system will be rewarded through prioritisation for their grid.
The CRU has made eligibility and priority dependent upon the holding of planning permission – despite the fact that an applicant for connection will, by definition, not have been in a position to include a settled connection methodology within its planning application. For so long as any uncertainty remains as to the effect of the O’Grianna decision and the prospect of legislation in respect of Section 5 declarations, this sequencing can be expected to cause problems for projects. The CRU commits to engaging further with the planning authorities on this issue, and hints that these requirements may change for capacity allocated in future “batches”.
The CRU’s proposed ECP is likely to polarise the opinion of existing and potential connection applicants, depending on how it affects their individual projects.
While one would not necessarily “start from here”, if given complete freedom to design a connection policy, it is understandable why the CRU has proposed proceeding as outlined. From a wider perspective, the ECP is a welcome initiative to revive the allocation of grid capacity under what should be a sustainable and flexible model, and to provide a way forward for many projects whose connection process appears to be stalled.
As an acknowledgement that a viable generation project depends on the interaction between grid connection rights and a number of other regulatory elements, the CRU undertakes explicitly to ensure that future iterations of the ECP are informed by the Renewable Energy Support Scheme (RESS) that is currently being developed by the Irish government.
The CRU welcomes comments on the proposed ECP, up until close of business on Friday 15 December 2017. The CRU then anticipates making and implementing a final decision on the ECP in 2018.
For more information on the provisions of the ECP and how they may affect your project, contact a member of our Energy & Utilities team.
The content of this article is provided for information purposes only and does not constitute legal or other advice.