CRU Welcomes Government Decision on Temporary Emergency Generation

CRU Welcomes Government Decision on Temporary Emergency Generation
  • Eirgrid identified potential generation gap in Winter 2023/24 due to increased risk of unavailability of older generators
  • Additional temporary emergency generation to serve the year 2023/24 is a component part of the Security of Supply Programme of Work
  • CRU requested Minister of Environment, Climate and Communications to consent to the procurement of up to 450MW of emergency generation
  • Temporary emergency generation will only be used as a last resort
  • CRU Security of Electricity Supply Programme of Actions will continue to progress actions to deliver additional supply and appropriate demand reduction

The CRU has welcomed the decision today by Government to approve the procurement of 450MW of temporary emergency generation for the Winter 2023/24 period.

The CRU communicated advice to the Department of Environment, Climate and Communications that additional temporary emergency generation should be sought in order to address any potential shortfall in the available capacity for the Winter 2023/24 period.

This advice was based on an Eirgrid assessment of the potential risks to the generation capacity for future winter periods as part of the CRU Security of Supply Programme of Actions.

The CRU Security of Supply Programme of Actions was published in September 2021 in response to EirGrid’s most up to date All Island Generation Capacity Statement 2021, that identified a potential capacity shortfall, if no action is taken, for the winter periods of 2022/23 to 2024/25.

One of the actions of the Programme was to extend the operation, on a temporary basis, of older generators to delay the loss of up to 1200MW of existing capacity that these provided to the grid. Due to their lower efficiency and higher carbon emission, it was anticipated that these units would only be called upon as a last resort, should they be retained.

As the Programme of Work has progressed and the likelihood of these units to remain in service was assessed, Eirgird identified that the future unavailability of the generation units at Tarbert and Aghada 11 due to Industrial Emissions Directive requirements, and forecast demand growth, could create a generation gap for Winter 23/24 of up to 700MW if no additional mitigation or contingency measures are put in place. The procurement of up to 450MW of emergency generation is one of a number of complementary measures to address this potential generation gap.

While EirGrid’s projections have shown the generation gap decreasing significantly in each subsequent winter, following that of 23/24, with the delivery of the new capacity secured in the most recent capacity auctions, there remains a risk that increased data centre demand, above that estimated by EirGrid, could further increase the 2023/24 gap currently advised by EirGrid.

The CRU considers that all potential demand side mitigation measures should be pursued, alongside those on the supply side. As such, the portfolio of mitigation measures includes the mitigation of the above risk through the temporary deferral of data centre ramping where possible for winter 22/23 and, in particular for winter 23/24, whether by dialogue or through other processes.

 

Generation Procurement Volumes

EirGrid have identified a potential generation gap of 700MW for the winter of 23/24, in the absence of any mitigation measures being implemented. The Security of Supply Programme of actions contains a number of both demand and supply-side mitigation measures that are anticipated to address this gap.
Many of these mitigation measures, already underway, are more closely aligned to Ireland’s longer term decarbonization objectives and are more preferable options to further increased procurement of temporary generation capacity. European legislation also requires that all market-based measures are exhausted, prior to implementing non-market-based measures such as temporary emergency generation.

The CRU considers the impact of the current mitigation measures will have the effect of reducing the generation gap for Winter 2023/24 by between 300MW to 500MW.

The CRU has therefore advised the Department that up to 450MW of additional temporary emergency generation should be sought to address the remainder of this gap. This second tranche of generation is in addition to the previous ca 200MW identified and currently in the process of being procured.

Given that 450MW of emergency generation would represent an increase in the Transmission System Operator tariffs and electricity transmission tariffs and could translate into a ca €40 overall increase in an average domestic bill for the forthcoming tariff year, with slightly lower costs in the following years of operation.

The CRU has recently issued a direction to Eirgrid to begin the procurement of the 450MW of temporary emergency generation.

Security of Supply Programme of Actions

On 29 September 2021, The Commission for Regulation of Utilities (CRU) published an Information Note, outlining a programme of work to address the increase in forecasted generation capacity needs over the next four to five years, and how it will provide additional stability and resilience to the Irish energy system.

To address the challenge, the CRU, incorporating the recommendations of EirGrid and in conjunction with the Department of Environment, Climate and Communications (DECC), developed a programme of actions to be delivered by this group in the coming months and years.
The delivery of temporary emergency generation capacity was a key action under this Programme and a further progress update on the overall Programme will be published in the coming weeks.