Use of existing grid connection rules for Irish offshore projects ‘makes absolute sense’

Out-Law News | 13 Oct 2022 | 10:28 am | 2 min. read

The decision of the Commission for Regulation of Utilities (CRU) to apply some of the existing grid connection and charging policies to new offshore energy projects in Ireland has been welcomed by one legal expert.

Richard Murphy of Pinsent Masons said: “Speed to market is key with developing a new offshore regulatory model in Ireland, so using existing policy where possible makes absolute sense. Projects need to be prepared and have as much certainty as possible before entering the offshore auctions.”

His comments came after the CRU published its decision (67 pages / 1.28MB PDF) on the offshore connection policy for ‘Phase One’ projects – a handful of early-stage Irish offshore energy projects. The regulator said that, broadly, the current onshore grid connection and charging policy rules will also be applied to Phase One projects.

The CRU said it was “reasonable to apply the existing connection and charging policy where appropriate” and added that the current policy was “well established with existing precedent” and is “the most effective and efficient way of meeting policy objectives”. The CRU said that offshore policy would only differ from the existing onshore grid connection and charging policy rules “where there is good reason”.

Murphy Richard

Richard Murphy

Partner

Speed to market is key with developing a new offshore regulatory model in Ireland, so using existing policy where possible makes absolute sense

The move follows the CRU’s decision to require EirGrid, Ireland’s state-owned electric power transmission operator, to issue grid connection assessments (GCAs) to each Phase One applicant. A GCA, which details the method and cost of connecting a project to the transmission system at its onshore connection point, is required for Phase One projects to participate in the first upcoming offshore auction.

Murphy added: “There are a number of inter-dependencies between all the processes that relate to consents, the auctions process, and grid connections for offshore generation projects. Because of this, continued close collaboration and co-ordination will be needed with DECC, EirGrid and industry as this work continues. Work in some areas, such as the process for transferring transmission connection assets to EirGrid, needs to be clarified as quickly as possible ahead of the first offshore auction.”   

Following an earlier consultation on grid connection and charging policies, the CRU’s decision set out a number of changes to its initial proposals, including the timing of milestone payments and extension of the connection offer validity periods. It also provided further clarity on pass-through costs, explaining that EirGrid’s new standard process for such costs onshore will be used for offshore Phase One projects too. EirGrid will also communicate pass-through statements to Phase One projects every financial quarter after the Full Connection Offer has been executed.

The CRU decision also includes greater flexibility with Maximum Export Capacity (MEC) modifications, which it said will not necessarily cause a GCA to become invalid. It extended the MEC capacity testing period duration from twelve months – plus an additional one month for every 10MW of MEC above 50MW – to 24 months up to 400 MW of MEC, with an additional month for every 50 MW above 400 MW.

It also made changes to the MEC capacity testing bond payment timing, which will now be €25,000 per MW of MEC for renewable generation due on the earlier of three years post consents issue date (CID) or prior to energisation. Under the CRU’s initial proposals, the bond would have been due on the earlier of two years post CID or prior to energisation.

The CRU also extended the term of connection agreements, which will now commence upon the date of execution and end no earlier than 30 years after the operational date, with an automatic one-year rolling extension. The regulator said this will continue until either party serves written notice of termination on the other party of no less than two years. The connection agreement term had previously been set at 25 years with one-year automatic rolling extensions.

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