Wednesday 23 October 2019

Warning French power link cost could soar by €180m

EirGrid chief executive Mark Foley
EirGrid chief executive Mark Foley

Fearghal O'Connor, Deputy Business Editor

A new subsea electricity line between Ireland and France could cost as much as €180m more than previously estimated, the Commission for Regulation Utilities (CRU) has said.

Transmission system operators in both countries ­- including EirGrid - have estimated that the proposed new Celtic Interconnector would cost €930m.

The link would be capable of carrying approximately 700 megawatts of electricity in either direction, enough to power 450,000 households.

Project promoter EirGrid - the State agency that operates Ireland's electricity grid - expects it to be completed in 2025 or 2026. But a high-level assessment of the Celtic Interconnector's technical parameters and costs by CRU found costs may be up to 20pc more than an earlier €930m estimate.

The link will bring benefits to Irish and French energy consumers but only if further renewables projects are rolled out, it said.

CRU's modelling indicated that the interconnector would drive benefits for both Irish and French consumers.

But it questioned whether security of supply benefits predicted by EirGrid and other project backers would be as high as had been stated.

British politics is also likely to play its part, with the regulator stating that development of a new interconnector between Ireland and Britain would significantly reduce the benefits from the Celtic Interconnector.

"Depending on the form of Brexit, it could be even more beneficial for both Ireland and France to become interconnected," it said.

But Ireland may end up bearing up to 70pc of the costs of the project and a grant of more than €400m would be required "to mitigate the risk of a negative consumer impact in case the benefits from the project turn out to be significantly lower than expected".

Following its assessment, CRU said that a potential split of Celtic's costs, reflecting each country's forecasted benefits, could range from anything between a 50:50 split in the best-case scenario for Ireland, to a 70:30 split in the worst-case scenario.

Celtic's regulatory model in Ireland, as proposed by EirGrid, is very light on detail at this stage. Further work is required to fully understand its potential impact on consumers, including whether, and to what extent, any cost overruns would be shared between EirGrid and consumers.

EirGrid welcomed the launch of stakeholder consultation on the proposed project and said that CRU's paper "endorses the view that the interconnector would drive benefits for both Irish and French consumers".

EirGrid chief executive Mark Foley said that the grid operator was "obliged to explore and develop opportunities for interconnection for Ireland".

"We have, and continue to carry out rigorous studies and assessments on opportunities for connection, and are confident that the Celtic Interconnector will bring benefits to Ireland," he added.

Approval of the investment request will pave the way for the continued development of the project "facilitating the Irish energy industry to play its part in the creation of a future low-carbon, secure energy network throughout the EU", said a statement from EirGrid.

The grid operator pointed out that once Britain leaves the EU, the Celtic Interconnector, if built, would be the only direct Irish energy connection to another member state.

In September, EirGrid and its French counterpart submitted an investment request for the development of the Celtic Interconnector to CRU and the Commission de Regulation de l'Energie.

Possible financial assistance from the EU's Connecting Europe Facility, which backs major energy investments such as Celtic, may be available to cover up to 75pc of project costs.

Sunday Independent

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