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Electricity supply

Eirgrid declares Utilities Commission system a 'failure'

Eirgrid made the comments in a statement released tonight.

LAST UPDATE | 27 Aug 2022

EIRGRID HAS LAUNCHED a stinging attack on the Commission for the Regulation of Utilities (CRU) declaring its system a “failure” and “not fit for purpose”.

In a statement, Eirgrid said that, since 2018, 650 megawatts of new power has been withdrawn from the system and has not delivered “capacity to the electricity grid”.

The company, which operates the power supply grid has called on the CRU to immediately deal with the problem to ensure that it can meet supply. 

“Being able to secure the appropriate portfolio of conventional generation technologies is critical to securing our electricity supply. It ensures that Eirgrid can work to support social and economic growth of the country whilst the electricity sector is transformed in line with the Government’s Climate Action Plan and legislative targets.

“The Regulatory Authorities are responsible for the design, rules and parameters of the Capacity Remuneration Mechanism.  Eirgrid operates the Capacity Remuneration Mechanism auctions on behalf of the Regulators,” the statement said. 

The problem, Eirgrid said, lies in the system used by CRU. 

“Eirgrid holds the view that the current Capacity Remuneration Mechanism is not fit for purpose. As of now, circa 650MW of capacity procured through the auction processes since 2018 has withdrawn and has failed to deliver capacity to the electricity grid. 

“Eirgrid has highlighted to the CRU the failure of the market mechanism to deliver and we have asked the regulator to urgently amend the mechanism to ensure security of supply.

“When very necessary changes failed to materialise, EirGrid established our own independent due diligence of market participants to at least attempt to establish if a risk-based view of the deliverability of their projects were viable before they proceeded to auction,” it added. 

Eirgrid said it believes the failure of the system would affect Ireland’s economy and have a broader societal impact. 

The grid operator said it would support a review order by Government into the issue. 

“The future of the capacity markets is critical to the success of our country. If we cannot successfully procure and, more critically, deliver on the procurement of conventional generation we cannot support social and economic growth, ensure the security or our electricity supply or secure the very necessary transition to renewable energy in line with the Government’s Climate Action Plan.

“Eirgrid supports the independent review into security of supply initiated by the Government and led by Dermot McCarthy.

“In deference to this process, Eirgrid has not published our own independent report into the need for market reform and we will not be commenting further on this matter until such time as this independent review is completed,” it concluded. 

In a statement, the CRU said it had noted Eirgrid’s comments and that it would take the remarks on board during its consultation.

“The Minister for Environment, Climate and Communications, requested the Commission for Regulation of Utilities (CRU) in 2021 to review the performance of the SEM Capacity Remuneration Mechanism (CRM),” the statement said.

“Following this request, the CRU included this piece of work under the Security of Supply Programme which commenced in September 2021. The CRU procured EY to perform this review. EY prepared the report following engagement with both regulators, DECC, market participant representative bodies and the TSOs.

“It should be noted that the CRM is jointly governed by CRU and Utility Regulator (UR) under SEM arrangements through the SEM Committee. The current market design was the subject of a State Aid clearance process by the European Commission and is in line with EU requirements for such capacity mechanisms.

The EY report on CRM has been reviewed by the SEM Committee which is already progressing some of the recommendations and has issued this current call for comments on further proposed steps. In the call for comments, the SEM Committee welcomes the views of the industry and stakeholders on the recommendations.”

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