Mr. Fintan Slye:

I thank the Chairman and members for the invitation to appear before the committee this morning to outline our decision to pursue the regional option for the Grid Link project. I am joined, as the Chairman mentioned, by Ms Rosemary Steen, our director of external affairs; Mr. John Fitzgerald, director of grid development; and Mr. Mark Norton, network planning manager. In April, we presented to the committee specifically on the North-South interconnector, and we are pleased to be back today to update members on the Grid Link project.

In March we launched our draft strategy for Ireland's grid development and carried out a ten-week consultation process. The strategy looked at the changing technical and economic context for Ireland's electricity transmission system. It examined the energy challenges facing Ireland and identified the steps we need to take to develop a strong, secure transmission system for homes, farms and businesses across Ireland, so that the electricity grid is capable of providing for the energy needs of the country now and into the future. A key objective of the draft strategy was to ensure it aligned with, and supported, the broader economic policy landscape, including the Government's Action Plan for Jobs and IDA Ireland's regional development strategy. The draft strategy reflects the change in economic circumstances and where we as a country, an economy and a society are now. When first developed in 2008, Grid 25, as it was then named, which included plans for the Grid Link project, was designed to ensure the electricity grid would continue to support the Celtic tiger economy with its high economic and energy growth rates. The past five years have changed that reality. There has been demand reduction to the point where estimated demand levels for 2010 will not materialise until 2025 - a 15-year delay - and, even then, growth rates will be less than a third of the rates previously forecast.

In reviewing the way in which EirGrid develops the electricity grid on behalf of electricity customers, we committed to a number of core strategic pillars upon which our work would be based. First was a commitment to open engagement and inclusive consultation with local communities and stakeholders in our approach to network development; second, an undertaking that practical technology options will be considered for network development; and, third, a focus on optimising the existing network to minimise the need for new infrastructure. It is in this context that the draft strategy we brought forward included the new innovative regional option to deliver the Grid Link project. Previous strategies had looked at delivering the project via either a 400 kV overhead solution or a fully underground option delivered using high-voltage direct current, HVDC, technology.

In reviewing our grid strategy, we set about marrying existing and developing technology via an advanced technology called series compensation. This option would use the existing network and avoid the need for significant new overhead infrastructure. Following the publication of our draft strategy in March, and at my previous appearance before this committee in April, a number of Members, here and across the Oireachtas, expressed support for the adoption of series compensation to deliver the Grid Link project. In addition, the feedback from communities as part of our consultation on the draft grid development strategy was very favourable to the regional option. It is important to stress that series compensation is only possible for the Grid Link project due to the extensive transmission network in the Munster and Leinster region, more specifically the lines that run from Moneypoint in the west to Leinster and the wider eastern seaboard. Such a network is not available to us in the development of other major projects such as the North-South interconnector.

If we proceed with series compensation, EirGrid will be among the first transmission system operators, TSOs, in Europe to deploy it on the grid. It is a technology that enables more power to be transported on a transmission line, provided the underlying transmission network is strong enough to support it. We have carried out extensive analysis of the network in the area and determined that it is appropriate in this case. Coupling the deployment of this technology with a new cable across the Shannon and a series of line upratings across the south east will enable us to deliver a good solution for the area, which will negate the necessity for significant new overhead or underground infrastructure for the Grid Link project. As a technology, series compensation has been used over very long distances in some parts of the world, such as Brazil and California, but recent advances mean it is now suitable for use on smaller transmission systems like ours.

Questions have been posed as to why this technology was not put forward by EirGrid previously. Series compensation is not a new technology. However, it would not have addressed the need the Grid Link project was originally designed to address for any reasonable period of time. The key point here is that changing demand forecasts and a slower rate of growth than originally forecast, combined with advances in technology, mean the series compensation option now represents a viable solution to meet projected needs for the foreseeable future. In addition, series compensation has the benefit of offering significantly reduced costs to electricity consumers from the delivery of Grid Link. To deliver the project via overhead lines or through the underground option would have cost hundreds of millions, as has been previously set out. The series compensation option we have now committed to pursue will ensure the project is delivered in the most cost-effective manner available to us. We will ensure electricity costs to both businesses and homes are kept to a minimum by adopting this option.

The more detailed technical workings of series compensation were set out in the report presented to the independent expert panel in September and published last month on our website. Furthermore, this solution was peer reviewed by London Power Associates in the report published in March. However, my colleagues and I will be happy to provide detailed information to members today, or we can meet them at a later date to provide further detailed briefings as required. We welcome any questions members may have.