Ms Aoife MacEvilly:

I thank the Chair and committee members for the opportunity to talk through the major change agenda under way in the Irish and all-island electricity market to ensure security of supply while also addressing the twin challenges of decarbonisation and rapidly-increasing demand. From 2014, the CRU and SEM committee embarked on a major redesign of the wholesale electricity project and launched the new I-SEM in 2018. Ireland received state aid clearance for the new capacity market design in 2017 and capacity auctions commenced from 2018 onwards. These capacity auctions, in tandem with the new system services and energy markets, are delivering new lower carbon and flexible capacity on the island. So far, the capacity auctions have procured significant volumes - and by that, I mean over 4,000 MW - of new gas-fired generation capacity, batteries and demand-side units, some of which is either already operational, under construction or due for delivery in a short period over the coming years.

In addition, the CRU has designed regulatory frameworks to support two new electricity interconnectors, one of which, the Greenlink interconnector, is at construction phase and due for delivery in 2024.

The Celtic interconnector with France is due for completion in 2026. However, in late 2020 and early 2021 it became clear that there were security of supply risks caused by the dropout of 513 MW of contracted capacity which was due to come into service this winter; significant increases in electricity demand, primarily in the large energy user sector; an accelerated decline in the availability of the current generation fleet; and a low market offering into the capacity auction targeting winter 2024-25.

To address this, the CRU, working with EirGrid and the Department, published a programme of work which includes the delivery of at least 2,000 MW of enduring gas generation capacity. Two auctions have been completed since the programme of actions commenced and have secured contracts for new gas-fired capacity, with significant work under way to support delivery, given that both generation and transmission network infrastructure remain particularly challenging to deliver in Ireland. We are also working on the provision of temporary emergency generation, the retention in service of older generators, demand-side mitigation measures and other actions, including the progression of the Greenlink and Celtic interconnectors, and the critical importance of delivering the North-South interconnector. A copy of this programme has been provided to committee members alongside my written statement.

The security of supply programme steering group is overseeing delivery and addressing the variety of challenges arising, such as by procuring an enlarged second tranche of temporary generation. Other mitigations for this winter include optimising our battery fleet to provide increased support for security of supply and enhancing our ability to call upon the significant back-up generation of large energy users at times of system stress.

The consequences of the Russian invasion of Ukraine are being felt across Europe and have seen a policy response from the European Commission, crystallised in the REPowerEU policy communications. These have fed into the suite of actions comprising the national energy security framework. In line with this framework, the CRU is delivering on actions addressing security of supply, emergency planning, energy demand and demand flexibility, energy cost and consumer protection.

A critical component of the work of the CRU is a continued focus on demand and, in particular, demand flexibility. This helps security of supply but is also critical to ensuring a secure low-carbon transition for Ireland, reducing the need to call on fossil fuel generators and optimising the use of renewable generation. A number of measures are under way in order to progress this, including, for example, the roll-out of smart meters and smart tariffs to empower consumers to use electricity when it is cheaper, enhancing market signals to demand-side units and the recent proposal of new network tariffs that will incentivise demand reduction, demand flexibility and off-peak consumption. Similar actions are being taken across Europe, with recent examples in Spain and Germany targeted at reducing energy consumption. Increased demand flexibility can contribute to security of supply, cost savings for consumers and our low-carbon transition, and the CRU will continue to enhance the incentives by which this can be delivered.

Turning to the protection of vulnerable customers, the CRU is keenly aware of the price increases that customers are facing and continues to work with our customer stakeholder group and industry to address these challenges. Last week, we announced a suite of enhanced consumer protection measures targeted at protecting both vulnerable customers and customers in debt. In summary, these measures include extended moratoriums on household and vulnerable customer disconnections, extended debt repayment periods for customers in debt, reduced debt repayment burden on pay-as-you-go customers and better value for those on financial hardship meters, as well as the promotion of the vulnerable customer register. The CRU will continue to track the effectiveness of these measures in order to support and protect Irish consumers.

In conclusion, the CRU is committed to working with our colleagues across government, agencies and the energy sector in order to overcome our national security of supply challenges and to protect consumers as Europe faces a period of sustained high energy prices.