Michelle Mulherin (Mayo, Fine Gael)
Link to this: Individually | In context

Question 313: To ask the Minister for Communications, Energy and Natural Resources the way connections to the electricity grid are allocated; his plans for a change of criteria; and if he will make a statement on the matter. [28444/11]

Michelle Mulherin (Mayo, Fine Gael)
Link to this: Individually | In context

Question 319: To ask the Minister for Communications, Energy and Natural Resources the circumstances under which the grid connection has to be paid for in part or in its entirety up to ten years in advance of provision of the actual connection; and if he will make a statement on the matter. [28695/11]

Pat Rabbitte (Dublin South West, Labour)
Link to this: Individually | In context

I propose to take Questions Nos. 313 and 319 together.

The Commission for Energy Regulation (CER) has statutory responsibility for grid connection offers and for oversight of EirGrid grid connection process including the Gate process for renewable energy. The Connection Offer Policy and Process (COPP) is outlined in detail in CER decision paper CER/11/093 and in annexes to that decision paper. The full detail of the COPP is available on the CER website.

The first step to connecting new generation to the system, whether it is CCGT (Closed Cycle Gas Turbine), Hydro, Thermal, CHP (Combined Heat & Power), Wind or other forms, is to assess if the facility would be best suited for connection to the Transmission or Distribution System.

Under 20 MW total export capacity at a single location should initially apply for a distribution connection.

Over 20MW total export capacity at a single location should initially apply for a transmission connection.

All parties applying to connect to the transmission system must submit a formal application to EirGrid as the Transmission System Operator (TSO). Applications are processed through the Connection Offer Process as approved by the CER. This process is in place to ensure fairness, provide transparency and facilitate timely delivery of Connection Offers. It is extremely important that an applicant applying for a generation connection accurately determines and specifies the Maximum Export Capacity (MEC) required. System reinforcements will be designed to facilitate this MEC. If the MEC is amended during the connection application process, then EirGrid may have to re-evaluate the application which may result in a delay in issuing the Connection Offer.

It is also important that generators correctly determine the Maximum Import Capacity (MIC) that will be required by the facility. This is something that is often overlooked by those completing generator application forms as often the focus is on the export MEC capacity. If the MIC is amended during the connection application process, then EirGrid may have to re-evaluate the application which may result in delay in issuing the Connection Offer.

When submitting an application form to EirGrid as TSO, the application must be accompanied by all supporting documentation as requested, including two signed copies of the EirGrid standard confidentiality agreement and the first instalment of €7,000 (inclusive of VAT) of the application fee. The total application fee is dependant on the size of the plant (taking into account the MEC and MIC values) and whether shallow connection works are involved in dealing with the capacity required. The formula for calculating this fee is set out in the Statement of Charges document as approved by the CER annually. When EirGrid receives a direction from the CER to progress an application to the Offer stage the balance of the application fee will be requested in accordance with the direction received.

Once an application has been received and deemed complete it is entered into the List of Complete Applications (Connection Offers Disclosure of Applications document). This document lists all the currently deemed complete applications for all types of generation - wind, hydro, pumped storage, conventional etc., from both the DSO (ESB Networks) and the TSO (EirGrid).

EirGrid progress applications to the Connection Offer stage in line with directions issued by the CER. Once a Connection Offer has been made and accepted it is removed from the List of Complete Applications document and added to the 'Contracted Wind farms' or 'Contracted (Other types of Generators)' documents as appropriate. When the connection works are completed and the generator is connected to the network it moves to the 'Connected' list. Connection, Construction & Commissioning Connection works and timing are project specific in nature. Details regarding connecting, connection works, commissioning and key dates will be outlined in the Connection Agreement between EirGrid and the applicant.

Under current policy, transmission connected generators and demand customers are entitled to procure large elements of their shallow connection themselves. However, there will still be work required to be done by the TSO with respect to design, approval, commissioning, final connections and remote station work. When a generator or demand customer executes a Connection Agreement with EirGrid a number of forms of security cover will be required and a number of charges will apply to the generator or demand customer under the agreement:

Connection Charges Bond - the connecting demand customer or generator must provide security in the form of a bond in respect of the connection charges set out in the Connection Agreement. It is calculated using the shallow costs of the connection.

Capacity Bond - is required to ensure that only the required capacity has been requested and provided, and that no capacity is being unnecessarily reserved or hoarded.

Generator Connection - Maximum Export Capacity (MEC) Bond: A generator Capacity Bond is often referred to as the Maximum Export Capacity (MEC) Bond. Amongst other things, the bond may be drawn upon should the generator fail to timely meet their capacity test (within a reasonable tolerance). The bond amount is calculated at EURO 10,000 per MW of MEC.

Demand Connection - Maximum Import Capacity (MIC) Bond: A demand customer Capacity Bond is often referred to as the Maximum Import Capacity (MIC) Bond. Amongst other things, the bond may be drawn upon should the customer fail to construct their facility within the specified time frame (within reasonable tolerance). The bond amount is calculated at the network capacity charge x 18 (months) x MIC (MW).

A Decommissioning and Reinstatement Bond is required to ensure that should the demand customer or generator cease operation and be unable to pay the Decommissioning and Reinstatement Charge that these costs do not accrue to the system or other customers. A Connection Charge is levied in respect of the works required to connect a demand customer or generator to the system in accordance with the currently CER-approved shallow connection policy.

It is important to note that EirGrid is required to identify the Least Cost Technically Acceptable (LCTA) connection method and this is the option that will be presented to the applicant. However, for system reasons EirGrid may choose an alternative connection method to the LCTA, should this be the case the applicant will only be charged for the LCTA connection method. Alternatively, an applicant may request a connection method that deviates from the LCTA solution and where this method is acceptable to EirGrid the applicant will be liable for 100% of any additional costs.

For Generator Connections the generator must pay 100% of the construction of the LCTA physical connection to the transmission system, the shallow connection works. Any deep reinforcements required to facilitate the connection are not charged to the generator. For Demand Connections the demand customer must pay for 50% of the construction of the LCTA physical connection to the transmission system. Any deep reinforcements required to facilitate the connection are not charged to the customer. For clarity, as set out above, should the customer request a connection method that deviates from the LCTA solution, which is acceptable to EirGrid, the customer will be liable for 100% of any additional costs incurred.

Transmission Generator and Demand customers are entitled to build or procure large elements of their own shallow connections in line with the Contestability of Connection Assets paper as approved by the CER. However, there will still be works carried out by the TSO such as design approval, supervision, commissioning, final connections and remote station work, against which connection charges are payable to the TSO.

An ongoing service charge is levied on an annual basis for operation and maintenance of shallow connection assets provided in respect of the Connection Charge. A Decommissioning and Reinstatement Charge is levied upon termination of the Connection Agreement. It covers any costs incurred for the site restoration and the removal of the transmission station and related shallow connection facilities provided in respect of the Connection Charge. A Use of System Charge is levied for the generator or demand customer's ongoing use of the transmission network as set out in the CER approved Statement of Charges. For further information on Use of System Charges please refer to the Transmission Use of System Charges page on the EirGrid website.