Mr. Jim Gannon:

I thank the Chairman for that question. There are two factors relating to capacity procured by the capacity remuneration mechanism that have led in the past 12 months to the capacity challenge in the coming years. The first is that a tranche of approximately 500 MW of previously secured and procured capacity will not now be delivered. That poses a challenge for us in the capacity years 2022-23, 2023-24 and ongoing. That is capacity that was procured by the mechanism but will now no longer deliver. In the same timeframe, as it happens, there will be approximately 700 MW of gas-fired capacity, which has been procured and which will be deliver. There is not as much delivery as we would like but there was a mixed experience by the developers who were successful in that specific auction. The most recent auction which targeted the capacity year 2024-2025, that is, the winter straddling the calendar years of 2024 and 2025, it cleared all the capacity that came to the auction but there was a low appetite from industry to come to that auction. What we have done during the past year, following the results of that auction and experiences of some dropout in capacity, is explored with the developers the delivery risks that have been challenging them and tried to understand some of the economic perspectives those developers have to bring those to bear on the critical forthcoming two auctions, one of which is a three-year auction, which targets that same winter of 2024-25, and the subsequent auction, which targets the winter of 2025-2026. Those are two auctions in the first quarter of next year to do that. With our colleagues on the single electricity market committee, we are taking feedback from industry to understand what those challenges might be.

For our part, as CRU in our jurisdiction, we have picked up on certain aspects and we have acted on them . Recently we issued a direction to the system operators for electricity - EirGrid and the ESB. That has prioritised grid connection for gas-fired capacity successful in those auctions. In effect, it has to expedited, prioritised and reduced risk that generators might perceive to their timeline. We have also issued a similar direction to Gas Networks Ireland. That allows it to consider advanced or anticipatory investment to make sure that should these projects come to the table and require gas, there is sufficient headroom and reinforcements in place. It allows for the commencement of some of the anticipatory work, anticipating these projects will come to the system. In many cases, this is work that is required regardless of what facility or generator specifically may win.

Separately, again with the same committee, we examined the parameters of each auction and in those we considered some quite complex economic parameters but also the fundamental parameter, which is a signal on volume. Critically, and we would have stated this at our previous appearance before the committee, the generator cohort is aware of the capacity challenge we have, which as Mr. Foley indicated, and has been stated in the recent national development plan, is approximately 2,000 MW of gas capacity to complement wind and to allow wind on to our system safely in order for us to reach our 2030 targets. There is a clear signal there. What the generation capacity statement, GCS, has done in recent weeks is to state to industry that we need to advance some of that investment earlier than we would have anticipated for some of the reasons we have outlined. These are signals that we send to the markets. In addition, in the auctions which are out for consultation, specific parameters are now being set for those two auctions in the first quarter.