Sunday 17 February 2019

Brexit is just one of the challenges facing the Irish electricity market

Proposals have been drawn up to ensure a UK departure should not end all-island energy, writes Ailish O'Hora

London warned that in the event of a no-deal Brexit, cross-border supply would not be possible and could be left ‘without any legal basis’
London warned that in the event of a no-deal Brexit, cross-border supply would not be possible and could be left ‘without any legal basis’

It's hardly surprising that the energy/electricity market got a special mention in the Government's newly-published 'no deal' Brexit plan, given its importance to the Irish economy in terms of growth and competitiveness.

The proposals are designed to allow for the continued operation of the all-island Single Electricity Market if Britain crashes out of the EU at the end of March, pending longer-term provisions for the area (see panel).

More specifically, they will ensure that the Commission for the Regulation of Utilities has the powers necessary to make changes to licence conditions of stakeholders in the Single Electricity Market to allow Ireland to meet its obligations under EU energy rules.

According to Fergal O'Brien, economist at business and employer association Ibec, this is one of the areas that all sides want to support and there's a strong willingness there that agreements on both sides will be reached.

"I am confident that this can be achieved even if there is a hard Brexit. We are significant importers of energy and the North/South and East/West interconnectors are very important in that context," O'Brien said.

Brexit may be a challenge that can be overcome, but the industry is facing other commitments. According to the Department of Communications, Climate Action & Environment, the EU has set binding targets for Member States to reduce greenhouse gas (GHG) emissions by 20pc by 2020.

In addition, under the EU Renewable Energy Directive (2009/28/EC) Ireland is committed to produce from renewable sources at least 16pc of all energy consumed by 2020 - it has committed to meet this national target through 40pc renewable electricity, 12pc renewable heat and 10pc renewable transport.

A big focus is getting more renewable energy into the system, said David Martin, spokesperson for Eirgrid, the country's electric power transmission generator.

"The Government made a commitment that 40pc of our electricity would come from renewables by 2020. We are currently running at about 30pc, the target is doable.

"Most of the wind energy is in the west of Ireland. At Eirgrid, our biggest challenge is to get that energy across to where the most demand is and that's the greater Dublin area. We're working on a big transmission project to reinforce the electricity transmission in Meath and Kildare to that end.

"Currently, we have two very powerful lines - from West to East - that are used for this purpose. These two lines are carrying more power than ever before, particularly due to increased demand and the growth of wind energy in the south west of the country.

"This is an important project that will secure energy supply in Meath, Kildare and Dublin and underpin economic growth in the region," he added.

A new wholesale electricity market also began operating late last year after utility regulators and grid operators came together to shake-up the electricity industry in a bid to align it more with the EU. In addition, plans for a second Northern Ireland/Ireland interconnector are on ice pending a court ruling while proposals for another linking us with continental Europe - the Celtic Interconnector - is also on the cards.

The sub-sea electricity line between Ireland and France would be capable of carrying approximately 700 megawatts of electricity in either direction, enough to power 450,000 households.

Ireland is both an importer and exporter of electricity.

"The Celtic Interconnector, which is due to be up-and-running in 2025, will send our renewables and it will make us less dependent on the UK and put downward pressure on prices. The flows on the interconnectors are also largely dependent on price," said Martin.

Another commitment to change is the plan to decommission the ESB's Moneypoint, the country's largest coal-powered station, which is located in Co Clare.

Moneypoint consists of three, 305-megawatt steam generating boilers and its maximum power output is the equivalent of about 20pc of the electricity demand in the Republic of Ireland. It uses about two million tonnes of coal a year. Despite being environmentally unfriendly, it remains an important part of Ireland's energy infrastructure. However, it's likely to be decommissioned by 2030.

ESB Networks also recently announced the results of major tenders for a €1.2bn programme to upgrade the country's electricity meters. The upgrade will begin this autumn and continue to 2024, with the replacement of older meters a priority.

A consortium of Siemens Ireland and Kamstrup A/S won the contract to provide meters and provide technical infrastructure support.

 

IMPACT OF NO-DEAL ON SUPPLY ACROSS THE BORDER

The importance of Northern Ireland to the Republic's electricity supply was recently highlighted in a warning from the British government in a technical note.

It said that in the event of a no-deal Brexit, cross-Border supply between the Republic and Northern Ireland would not be possible and could be left "without any legal basis."

The note added that while the British government would do what it could to ensure current arrangements are maintained, it had to prepare for a worst-case scenario.

Ireland and the North essentially share a wholesale electricity market known as the Single Electricity Market that is covered by EU Law. After Brexit, this law will no longer apply to the North, but the two governments believe these agreements would stand even in the event of a hard Brexit.

"However, if such an agreement cannot be reached, there is a risk that the Single Electricity Market will be unable to continue, and the Northern Ireland market would become separated from that of Ireland," the document warned. "Separate Ireland and Northern Ireland markets will be less efficient, with potential effects for producers and consumers on both sides of the border."

In such a scenario, the Northern Ireland Transmission Systems Operator (SONI), and the Northern Ireland Utility Regulator, would work to lessen the impact on Northern Ireland.

There are two interconnectors in Ireland - one linking us with the North, and another across the Irish Sea that provides a link with Wales. We also access electricity from continental Europe via the UK.

A no-deal Brexit could mean stakeholders having to renegotiate deals under new trading rules.

"In Northern Ireland, electricity market participants should continue using the Single Electricity Market processes and arrangements," the briefing document said.

"However, market participants should be aware of the risk that the Single Electricity Market may not be able to continue, in which case government and the Northern Ireland Utility Regulator will take action to seek to ensure continued security of supply and market stability," said the briefing note.

It added that the British government would do what it could to ensure current arrangements would prepare for a worse-case scenario.

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