Energy Update: Overview of 2017
12 January 2018
2017 saw a continuation of the main trend in Irish energy infrastructure: namely, strong development, financing and construction activity in onshore wind farms, as Ireland makes its contribution to decarbonisation.
Approximately 310MW of renewable generation was connected to the Irish electricity grid during the year, bringing the total to approximately 4,710MW. This annual connection figure represents a slight decrease in the 350MW that was connected in 2016. However, at more than double the figure achieved in 2015, the sector remains in good health.
North-South Interconnector Project
A positive development for the all-island electricity grid was continued progress of the North-South Interconnector Project, a major electricity transmission line planned for construction across the border between Ireland and Northern Ireland. EirGrid plc, the developer of the line in Ireland, published a tender notice for works on the project in September 2017. In November 2017 the Planning Appeals Commission in Northern Ireland issued its recommendation to the Department for Infrastructure in relation to the Northern Irish element of the project. Three judicial review applications were brought during 2017 in relation to the Irish planning decision, with one of these challenges dismissed and another struck out.
Irish energy policy developments
One year ago, our summary of Irish energy policy developments noted that following a bumper 2015, 2016 had been a relatively quiet year for energy policy. By contrast, policy and regulatory activity experienced a sharp uptick in 2017, including:
Ireland’s independent energy regulator was renamed the Commission for Regulation of Utilities (CRU) and received, in April 2017, enhanced statutory powers to better facilitate the enforcement of the licences that it issues in relation to the generation and supply of electricity. Whereas previously the CRU’s primary tool of energy licence enforcement had been the binary threat of licence revocation, the new powers now allow the CRU to impose tailored financial penalties on errant licence-holders.
In June the Irish government launched a “preferred draft approach” to its ongoing review of the 2006 Wind Energy Development Guidelines. The key feature of the approach is the application of a more stringent noise limit, in tandem with a new robust noise monitoring regime.
In July the Irish government published its National Mitigation Plan strategy, including a number of mitigation measures designed to address the carbon reduction challenge to 2020 and to prepare for the EU targets that Ireland will take on for 2030. The plan focuses on the electricity generation; built environment; transport; and agriculture, forest and land use sectors.
In September the Irish government published a final consultation paper on the Renewable Electricity Support Scheme (RESS), the proposed support scheme for renewable energy that is set to succeed the now-closed REFIT schemes. It seems clear that the RESS will take the form of a series of auctions for Contracts for Difference.
In November the CRU published a consultation draft of an elaborate revised electricity connection policy. The proposed revisions are intended to deal with the long queue of connection applications that are awaiting processing, particularly in relation to proposed solar photovoltaic projects.
Preparations for I-SEM
Followers of Irish energy regulation will be aware that changes to the all-island wholesale electricity market, designed by way of the I-SEM project, are due to “go live” in May 2018. Considerable progress was made towards this objective during the course of 2017, including the finalisation of substantially all of the industry codes that will support the amended market.
One element of the amended market will be new arrangements for the remuneration of generating capacity, and the first auction under these arrangements was held in December 2017 in preparation for the May 2018 go-live.
An aspect of the amended wholesale market that is of particular interest to Ireland’s wind energy industry is the proposed interaction of this market with the existing REFIT renewable energy support schemes. Progress has been slow in this regard: it was not until November 2017 that the Irish Government made, by way of a public consultation, a proposal as to how market prices would be calculated following I-SEM go-live.
What’s on the horizon for 2018?
I-SEM go-live is likely to be the most significant single event to occur in the Irish energy sector during 2018. All electricity generators and suppliers are affected, to at least some extent, by this market change. A considerable amount of work remains to be done to ensure that remuneration arrangements for Ireland’s generators accommodate these changes.
Due to the presence of the various energy interconnectors that link Ireland to the United Kingdom, and the cross-border design of the wholesale electricity market, the Irish energy sector is particularly exposed to any legal and regulatory changes that result from Brexit. It is to be hoped that the Brexit negotiation process delivers clarity as to what these changes might be.
For more information on these developments and how they may affect your business in 2018, please contact a member of our Energy team.
The content of this article is provided for information purposes only and does not constitute legal or other advice.