Mr. Mark Foley:

My thanks to the committee for the opportunity to appear before it to discuss the critical issues facing us all regarding energy supply and security and the solutions we can effect together. EirGrid is responsible for planning the power system for the future of Ireland. Much of this is set out in our strategy, which was launched three years ago and which underpins the Government's decarbonisation ambition for the electricity system as set out in the climate action plan.

Where the security of our electricity supply is concerned, SI 60 of 2005, European Communities (Internal Market in Electricity) Regulations 2005, clearly sets out that it is the responsibility of our regulator, the Commission for Regulation of Utilities, to protect security of supply. When EirGrid is of the view that security of supply is threatened or likely to be threatened, we will advise the CRU and make recommendations on measures to address it. The CRU will then have responsibility for taking such measures as it considers necessary to protect security of supply.

Generation capacity is procured through the all-island single electricity market, SEM. The single electricity market committee, SEMC, of which the CRU is a member, is the decision-making authority for all SEM matters. Under section 38 of the Electricity Regulation Act 1999, EirGrid, as transmission system operator for Ireland, is tasked with preparing a forecast statement for Ireland in accordance with the methodology and format approved by the CRU. An all-island generation capacity statement is produced annually by EirGrid and the System Operator for Northern Ireland, SONI. The latest iteration will be out in approximately two weeks' time. I will reference this document on several occasions in this statement, as is the critical mechanism by which we advise our regulators, the overall market and the Government as to our considered view of the projected demand for electricity over the next ten years, and our view as to the extent to which we have the necessary generation capacity to meet this demand.

Members will recall that when EirGrid appeared before them last October, we were clear that Ireland at that point in time did not have enough generation on the system to meet our predicted demand. While the two large generators that were offline returned to service just in time for the winter, our system engineers managed a system that had very tight margins and we came through that period without any loss of electricity supply. At this same session last October, the CRU pointed to the fact that approximately 500 MW of previously secured and procured generation capacity would not be delivered. Last September, the CRU published its security of supply programme of work, in which it took ownership of delivery, working in co-operation with EirGrid, the Department of the Environment, Climate and Communications, the energy industry, and other stakeholders.

Delivery of new gas generation, which can back up our substantial renewable generation resources when the wind does not blow and the sun does not shine, must be viewed as the point of success in that it builds capacity and security to enable social and economic growth for our country, as well as facilitating the transition of the electricity system to a less carbon-intensive one. The 2 GW of new dispatchable gas generation plant that EirGrid has signalled as required to support the energy transition and social and economic growth must be delivered by the capacity remuneration mechanism. Growth in demand is not the core problem in our view. The performance of existing plant and the delivery of new generation through a robust auction process is the challenge.

EirGrid's statutory role is to identify the gap between demand for electricity and the electricity generation capacity in Ireland on an annual basis over a ten-year horizon. The annual generation capacity statement, GCS, follows a methodology prescribed by our regulators and is for the benefit of regulators, Government and the industry at large. Since 2017, EirGrid has identified, via the annual generation capacity statements, increasing tightness between supply and demand and adequate generation capacity challenges. We very much welcome and support the Minister's appointment of Mr. Dermot McCarthy to conduct an independent review into the circumstances requiring emergency measures to be introduced to secure electricity supply over the coming winters. The EirGrid board, following a request from the Minister in December 2021, commissioned its own independent review and has provided this report into Mr. McCarthy’s process. We will not be commenting on this matter until Mr. McCarthy's process has concluded.

I will now address the three topics which the committee raised in its invitation to EirGrid on Wednesday of last week. On energy supply and demand, I will start with demand and I will deal with the supply element in response to the committee's second question. EirGrid’s forecast of demand, as set out in the GCS process over many years, has been within 1% to 2% of actual demand. These are factual data that we can provide to the committee if it requires same. EirGrid’s forecast accuracy of demand is not an issue.

Second, demand for electricity is growing. We are fortunate, as a country, to be experiencing social and economic growth. The total growth in demand for electricity over the past five years has been 9%. This is not excessive for a vibrant western economy and as a country, we should be capable of meeting this demand without emergency intervention. There is a move towards the electrification of heat and transport, as set out in the Climate Action Plan 2019, and specific targets for more in the Climate Action Plan 2021. Much of this growth in demand will not necessarily manifest at peak times, for example, electric vehicles, EVs. Trends in the data centre and tech load sector show demand levels increasing significantly, whereby we forecast data centres and new tech load will represent approximately 28% of demand in 2031 in comparison with 17% in 2021. However, we have a new policy proposition for data centres from both the CRU and Government which we believe provides for a controlled and orderly growth in demand over the remainder of this decade.

The committee's second question related to electricity generation capacity. The reason we are here is that we have a shortfall in electricity generation capacity and are over-dependent on old fossil fuel plant which, ideally, should have been expedited off the system in an orderly manner. The reason we have a shortfall in generation capacity is that the capacity market system has not delivered the necessary volumes of new gas-generating capacity. Gas is critical for the energy transition because the wind does not always blow and the sun does not always shine. All stakeholders, I believe, acknowledge the robustness of EirGrid's statement that approximately 2,000 MW of dispatchable gas generation is needed to support the secure transition. Where possible, we should seek to ensure this investment is in low-emissions, renewable, gas-ready technology. The reason the CRU has directed us to seek to secure upwards of 700 MW of emergency generation is to meet this gap, which was identified in previous generation capacity statements arising from the non-delivery of new gas generation.

The committee's third question related to plans to best manage supply-demand and protect vulnerable users. Last autumn, the CRU published a programme of work to increase generation capacity to provide additional stability and resilience to the Irish energy system over the next four to five years. This range of actions, agreed between the CRU, the Department of Environment, Climate and Communications and EirGrid, includes the procurement and delivery of sufficient generation capacity through the capacity auctions; extending the operation, on a temporary basis, of a number of older generators scheduled to close in 2023-24 and 2024-25; demand-side mitigation measures; and procurement temporary emergency generation capacity. I will let the representatives of the CRU speak to this programme, with the exception of temporary emergency generation where EirGrid has a very particular and critical role because of our technical expertise.

Regarding the procurement of temporary emergency generation capacity, EirGrid, having received directions from Government and the CRU, is currently seeking to procure two tranches of this generation. We are at an advanced stage of negotiations with potential providers of 250 MW to be delivered and available in advance of winter 2023-24. Unfortunately, and EirGrid is disappointed about this, it will not be available for this winter despite the best efforts of all parties involved. Second, following the enactment of the EirGrid, Electricity and Turf (Amendment) Act earlier this summer and the receipt of a CRU direction, EirGrid is working with both the Department of Environment, Climate and Communications and the CRU to advance the procurement and location of an additional 450 MW of temporary generation, to be available as early as possible. That is all I can say about it at this point in time. We are at a very delicate stage of negotiations with a range of third parties, including equipment suppliers and sites on which this equipment may be located. Therefore, it is premature to go into detail about this until contractual matters have concluded and we can provide the committee with greater certainty around the delivery timelines. However, I must say that we are all collectively committed to delivering it at fast as is humanly possible.

EirGrid's view is that we need to do four things. We must secure the 250 MW of temporary generation and have it available as early as possible next year, and in advance of next winter. We must secure the 450 MW of temporary generation and also have it available to us as early as possible. We must work with CRU and the Department of Environment, Climate and Communications so that we can be assured that the new renewables-ready gas generation plant - the 2,000 MW of which I previously spoke - is delivered as soon as possible, and that the older fossil fuel carbon-intensive plants are exited from the system. Lastly, and very importantly because it speaks to this winter, we must continue to work closely with generators to ensure they deliver high plant availability through this winter period, we collaborate on maintenance outages and we get the best out of the existing fleet over the next number of months. I commend the various actors in the system - the generators - which are working in a very engaging and collaborative manner with us to try and achieve that.

Mindful of time, I will conclude by saying that we have an immediate short-term and complex challenge around the procurement of an unprecedented amount of temporary emergency generation, which is being managed collectively by the CRU, the Department of Environment, Climate and Communications and EirGrid. We must improve the performance of the existing market mechanism to deliver new generation capacity. When we were before the committee in October of last year, we spoke about the tight winter to come. Despite the challenges we faced, we managed to maintain the balance between supply and demand at all times. As we look into this winter, we see a heightened challenge, in that we have marginally less generation available than last winter. Our greatest risk will manifest at times of very low to zero wind and low imports from Great Britain. We will again utilise the tools available to us to manage the supply-demand relationship. These include trading with our counterparts in Great Britain across the interconnectors, bringing on demand-side units and asking our large customers to use their on-site generation. I must say that the co-operation from that customer base in Ireland this year has been exceptional. We feel very confident that we can count on our customers when we call on them. We are grateful for their support.

It must be said that there will be alerts throughout the autumn and winter at times of low wind, limited interconnectivity and low generation availability. The contingency plans, which we have agreed in forensic detail with the ESB and major industrial users, are robust. We believe we can seriously count on them when we have to trigger same. Neither I nor anyone else before the committee today can offer a cast-iron guarantee for this winter; nobody can. I can say that we are very well prepared and when the wind blows, we will not have issues. The risk of end customers being impacted is increased this winter because all jurisdictions across Europe are tight and interconnectors are stressed. There will be times when it will not be just a stressed Irish system but a stressed European system. I assure the committee, on behalf of my team, that at those times we will undertake every measure available to us before end customers are impacted.