Ms Aoife MacEvilly:

I may go a little over time, so the Chair can stop me if needed. At our last meeting, on 15 February, we had the opportunity to discuss a number of topics with the committee, including rising energy prices and costs, customer protections, the roll-out of smart meters, security of supply and renewables. Unfortunately, since then, the shocking Russian invasion of Ukraine has intensified the pressure on the EU to reduce reliance on imports of gas from Russia. The CRU has been asked to accelerate deployment of renewable energy and relevant measures under the climate action plan, while ensuring security of supply. We will, of course, do everything in our power to achieve climate action plan targets. At the same time, we have been overseeing implementation of the Government's emergency electricity credit scheme and ramping up consideration of other protections available to support customers as energy prices threaten to further impact household budgets. For this meeting, the committee asked us to address grid capacity development and interconnection, energy storage, ancillary services and demand response.

Our grid infrastructure was traditionally developed to connect large, centralised, largely fossil-fuelled generators to meet residential, commercial and industrial demand, with this demand driven largely by economic growth. In the coming decade, Ireland’s grid infrastructure will also need to accommodate large-scale electrification of heat and transport; the connection of new large-scale generation, storage and system services technologies; the connection of small-scale renewables and more active energy consumers and communities; and investment in distribution, transmission and control systems to allow for more flexible and responsive demand than ever before. This will require significant investment in, and in addition to, our traditional grid infrastructure, alongside new investment in smarter and more digital solutions that will optimise and drive greater efficiencies from the infrastructure we build.

To facilitate this level of development, the CRU issued its price review 5, PR5, determinations in December 2020, providing our network companies with access to the funds necessary to invest over the 2021 to 2025 period. The PR5 determination is a more permissive and agile framework than previous price reviews and allows greater levels of innovation and adaptation as opportunities and challenges arise. It has also provided a significant increase in the overall level of funding accessible to the network companies, with a 35% increase in transmission level capital expenditure to €1.2 billion and an 84% increase in distribution level capital expenditure to €2.8 billion. I refer to the link provided to the committee to an information note on PR5.

The CRU annually approves the publication of the ten-year EirGrid transmission development plan. The consultation on the 2021 to 2030 transmission development plan is currently under way and we invite committee members to review and participate in the consultation. I refer to the link provided to the committee.

Regarding interconnectors, the CRU defines the regulatory framework and the requirements for supporting cost benefit analyses that establish the appropriate balance of risk between project developers and the Irish consumer. Two existing interconnectors connect the single electricity market to the Great Britain market, which are the Moyle interconnector and East-West Interconnector, EWIC. There are also two interconnector projects, Greenlink and Celtic, currently in the development pipeline, with the North-South interconnector now progressing to construction phase. The 500 MW Greenlink interconnector with the UK secured financial close in the last fortnight and is now progressing to construction phase. It is expected to be operational by the end of 2024. The 700 MW Celtic interconnector with France is planning to go to financial close later this year with operations expected before 2027. With our implementation of the new approach to generator connection policy to date, there are renewable generators producing more than 4 GW that could connect to the electricity grid over the coming years. There will be further opportunities to connect renewables to the grid from small-scale up to large onshore and offshore renewable generators.

More generally, with regard to large-scale infrastructure development in Ireland, the CRU notes the significant time it can take for projects to progress through, and beyond, the current statutory processes and surrounding legal frameworks. We were encouraged by the proposed review of the planning process by the Office of the Attorney General and would welcome an acceleration of this process. We note the focus on the simplification and shortening of national permitting processes for energy projects articulated in the recent REPowerEU document statement published by the European Commission.

Energy storage of varying types will play a key role in helping Ireland to decarbonise, supporting security of supply and driving greater value from our network assets and generation portfolio. At large scale, energy storage has the ability to reduce instances of wind and, in future, solar curtailment and constraint, increasing the use of our natural resources and reducing dependency on fossil fuel alternatives.

It can also contribute to mitigating short-term security of supply challenges by supporting generation during peak demand hours. At a smaller scale, it also has the ability to reduce peak demand when deployed at distribution level and behind the meter when combined with on-site generation. As such, energy storage, and the flexibility and resilience it can provide to us, is something that can be delivered at developer, industrial and commercial, and domestic scale.

Currently, 350 MW of battery storage capacity in Ireland has been procured through the system services programme and a further 110 MW through the fixed contract auction. A further 310 MW has been successfully secured in the single electricity market capacity auction held in January. A review of how the contribution of batteries, and batteries of different duration, are evaluated within the capacity auctions is currently under way with a consultation due to be published by the single electricity market committee, SEM, in the near term.

I shall now turn to ancillary services and system services.The success of the DS3 system services programme has enabled the single electricity market to be a world leader in the penetration of renewable electricity on the grid. This work will need to be further advanced to achieve our goals of 80% renewable electricity by 2030. The SEM committee sets out the market mechanisms by which system services are incentivised in the single electricity market. System services were primarily incentivised through a traditional procurement mechanism with services largely provided by large-scale fossil-fuelled facilities. It is anticipated that system services will increasingly be provided by low and zero-carbon technologies such as batteries and synchronous condensers.

Future system services will be procured through an auction mechanism. In March 2021, the SEM committee put in place a framework enabling the transmission system operator, TSO, to carry out auctions for system services under long-term contracts. In this decision, the SEM committee instructed the TSO to begin procurement of inertia services from low-carbon sources. A high-level auction design, covering all timeframes, was published by the SEM committee in August 2021 for consultation. Further detail is to be provided in the coming weeks with the publication of a decision paper anticipated in early April 2022.

There is continued and ongoing review of both the type of system services required and the volumes of these services required, informed by the expertise and knowledge of SONI and EirGrid, arising from their historic use of system services and their prediction of future system services requirements. The Commission for Regulation of Utilities, CRU and SEM committee have also requested EirGrid and SONI to provide greater transparency to the industry by publishing its volume requirements. System services will give EirGrid additional tools to improve its operational dispatch, which will reduce curtailment of renewable generation and reduce costs for customers.

On demand response, by the end of 2021, there was in excess of 550 MW of demand side unit capacity operating in the single electricity market. The SEM committee has recently brought forward a work package in order to examine specific key market incentives for demand side units with the aim of increasing both the level of contracted participants, and also the declared availability and responsiveness of these participants when called upon. Responsive demand can not only support security of supply outcomes but can also contribute to cost savings on the part of customers, and carbon emissions reductions.

At the distribution level, Ireland now has more than 600,000 smart meters installed in homes. We have been updated and that number is now closer to 745,000 smart meters as of today. Customers with smart meters can track and control their usage of energy across day, night and peak periods. Energy suppliers are now offering time-of-use tariffs so that customers can use energy at cheaper, greener times. A significant impact on peak usage could be delivered by harnessing domestic demand flexibility, by encouraging customers to avoid peak periods and using electricity at cheaper times.

In conclusion, the CRU’s role in energy is to maintain security of supply, ensure efficient network delivery and promote competition and innovation in the interests of consumers. Now, more than ever, as we face the challenges posed by the crisis in Ukraine, the CRU remains committed to delivering safe, secure and sustainable supplies of energy for the benefit of customers.

I thank members for their attention, and I and my colleagues are available to answer questions.