Flaws in energy generation highlighted by grid operator

The operator of the national grid has warned the State’s capacity to generate electricity suffers from systemic flaws, as a row between it and the energy regulator, the Commission for the Regulation of Utilities (CRU) deepens.

The CRU has published a report into how energy capacity is being delivered across the State and what steps need to be taken to boost supply.

Among the key aspects of the report, commissioned by the CRU and conducted by EY, are proposals that operators seeking to build power plants should have planning permission in place before they qualify for auctions at which new contracts are awarded, rather than being able to bid and subsequently seek planning.

The report also calls for State-funded incentives for building power plants to be enhanced.

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However, in response, EirGrid said the system as it stands is unfit for purpose and it pointed out that as much as 650MW of capacity that should be coming on stream following deals agreed in 2018 had “failed to deliver capacity to the electricity grid”.

It said it had “highlighted to the CRU the failure of the market mechanism to deliver”, adding that it had “asked the regulator to urgently amend the mechanism to ensure security of supply”.

Eirgrid said it had decided not to engage further after encountering what it said were “fundamental aspects of the report with which we disagree”.

It said that despite its call for “very necessary changes”, they failed to materialise, after which it withdrew from the review process and carried out its own review instead, details of which have yet to be published.

The grid operator said it would give the CRU report “careful consideration and respond in due course”.

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It also warned that “if we cannot successfully procure and, more critically, deliver on the procurement of conventional generation we cannot support social and economic growth, ensure the security of our electricity supply or secure the very necessary transition to renewable energy in line with the Government’s Climate Action Plan”.

In response to the EirGrid statement, a spokesman for the CRU said the “current market design was the subject of a State aid clearance process by the European Commission and is in line with EU requirements for such capacity mechanisms.”

He said the committee behind the report welcomed “the views of the industry and stakeholders on the recommendations”.

“The CRU notes EirGrid’s comments and will take them on board in the context of the consultation,” he added.

The procurement of energy is the latest in a series of issues that have arisen between the State’s electricity grid operator and the regulator.

EirGrid has also questioned whether the regulator’s bid to prevent power cuts by boosting peak-time charges would work.

The CRU has proposed increasing electricity charges for the 5pm-7pm peak this winter. The commission is partly focused on cutting peak demand from large energy users, mainly employers, including pharmaceutical makers, food processors, data centres and other industries.

However, EirGrid wrote to the commission in June warning that parts of this proposal may not be feasible and cautioning against the regulator’s approach. It said significant numbers of large energy users cannot simply adjust their demand at different times.