Plan to open power grid to green generators could cost €400m

THE STATE energy regulator’s plans to open up the national grid to “green” electricity generators could cost consumers €400 million, an industry report says.

The Commission for Energy Regulation (CER) plans to licence renewable power projects with a total capacity of 3,000 megawatts (MW) under the so-called “gate three” process that it is scheduled to begin this year.

The CER intends issuing licences on a first-come, first-served basis, a move that will see wind farms backed by players such as Airtricity, Coillte and Finavera losing out.

A report commissioned by four of them, Airtricity, Viridian, SWS and Coillte, says the CER’s approach will require an investment of more than €550 million.

However, it has established that there are cheaper methods of getting green power on to the grid which cost as little as €150 million, €400 million less than the approach the commission is proposing.

The sums involved are the estimated cost of developing the national grid, the backbone of the system for getting electricity from generators to end-users, so it can carry the extra power.

These costs are ultimately passed on to consumers and businesses in their electricity bills.

Multinational consultancy TNEI, which has worked on energy industry studies for the State, completed the report. It compared the estimated cost of the CER’s approach with a number of alternative scenarios. These cost between €100 million and €400 million less.

Eirgrid, the agency which manages the ESB-owned national grid, plans to redevelop the system to boost its capacity to handle both conventional and renewable power generators.

Some industry players argue that the CER should licence projects as the grid is being redeveloped, an approach which they say would be the most cost-effective.

The commission has already said it believes that the first-come, first-served approach is the fairest.

It is limiting the licences to 3,000MW, less than half the 7,000MW for which renewable generators are seeking permits, as it believes this is enough to meet the Republic’s green energy targets. The commission has also made it clear it has to cater for new conventional power plants which the Republic needs.

Companies such as the Scottish Southern Energy-owned Airtricity argue that allowing more renewable power on to the system would ultimately give the Republic scope to export surplus electricity.

Its director of strategy and communications, Mark Ennis, said yesterday that this represented a significant opportunity for Ireland.

“Maximising this opportunity while delivering value for money for the consumer is crucial. All parties, including the regulator, must work together to ensure the most cost-effective solution is delivered.”

Airtricity has applied for licences for projects with the capacity to produce 900MW of electricity, but is only likely to get permits for 100MW.

It is understood that one of the other players, SWS, which stands to get licences for a number of its projects, could lose out if the CER were to take the approach recommended by the TNEI report.