Ireland’s first flexibility needs assessment ‘significant’ for evolution of energy policy

The assessment provides the first detailed picture of the resource flexibility that will be required to support the country’s transition to a highly renewable electricity system and is expected to shape future regulatory, market and investment decisions.

Richard Murphy, energy law expert at Pinsent Masons, said: “While the Irish market has focused for many years on resource adequacy and renewable generation deployment, this report shifts attention to an increasingly important question: what level of flexibility will be required to operate a highly renewable electricity system efficiently and at the lowest cost.”

The FNA (297 pages/8.9 MB PDF), published by the Commission for Regulation of Utilities (CRU) and prepared under the EU Electricity Market Design reforms, examines Ireland’s electricity system flexibility requirements for 2028 and 2030 – the initial target years that have been agreed to be used for this first iteration of the assessment. The assessment, however, serves a much broader purpose and is intended to inform future policy, regulatory and market decisions relating to energy storage, demand-side flexibility, flexible generation and other flexibility solutions.

Murphy said: “Flexibility, provided by resources such as demand-side response, energy storage and flexible generation, will be required to play an important role in maintaining security of supply, managing network constraints efficiently and enabling cost-effective decarbonisation.”

The publication is particularly relevant to developers and operators of battery storage projects, demand-side response providers, large energy users, aggregators, renewable generators, investors, network operators and policymakers. It is also significant because the assessment will help inform Ireland’s indicative national objective for non-fossil fuel flexibility, which must be set in 2027 under EU law.

The report highlights the increasing importance of flexibility in supporting Ireland’s transition to a highly renewable electricity system. The report finds that transmission network congestion – in the form of system-wide curtailment and surplus – is expected to be a major driver of renewable dispatch down in 2028, while localised flexibility needs are emerging at distribution level, particularly in the Dublin region.

The assessment also notes the differing roles that various forms of storage may play in supporting the electricity system. Shorter-duration storage is expected to assist in addressing localised constraints on distribution networks, while longer-duration storage can play a greater role in managing renewable energy surpluses at system level and reducing curtailment as core components of dispatch down.

“The assessment highlights that storage duration and use case matter”, said Murphy.

“A single MW figure can obscure important differences in energy duration, seasonal capability, deliverability and overall system value. Longer duration flexibility is particularly important in helping reduce renewable energy surplus and curtailment, which are becoming increasingly significant challenges as renewable penetration grows,” he said.

Matthew McMurray, energy regulatory expert at Pinsent Masons, said: “Investors should review the report carefully to assess how emerging flexibility markets, procurement mechanisms and regulatory reforms may affect project development strategies, investment decisions and commercial opportunities. The findings provide an important indication of where future flexibility products and market signals may emerge.”

The CRU said flexibility should complement, rather than replace, traditional network reinforcement and acknowledged that it is unlikely to be economic to eliminate all renewable dispatch down through flexibility resources alone.

The assessment identifies a range of barriers that could hinder the deployment of flexibility solutions, including challenges around revenue certainty, grid access and coordination between transmission and distribution system operators.

The assessment highlights that flexibility is no longer being viewed solely as a system service issue. The CRU further identified needs across the transmission and distribution networks and highlighted the growing role that storage, demand-side response and other flexible resources may play in managing renewable integration and local network constraints.

McMurray said: “This creates an important policy signal for investors and developers. Although the report does not prescribe particular technologies or procurement mechanisms, it strengthens the case for further market reforms and investment frameworks that support flexibility deployment.”

“From a commercial perspective, the identification of barriers around revenue stacking, market signals, grid access and transmission and distribution system operator coordination reinforces issues regularly raised by market participants. Addressing these barriers is likely to become an increasingly important area of regulatory and policy focus over the coming years,” he said.

Additionally, grid access remains a fundamental constraint on the deployment of flexibility resources.

Murphy said: “The ability of flexibility projects to connect to and operate on the system is often limited by the availability of network capacity, irrespective of the value that asset could deliver. There is a degree of irony in the fact that the network itself can become a constraint on the deployment of flexibility, despite flexibility having the potential to help manage network constraints and improve utilisation of existing infrastructure.”

The assessment also emphasises the importance of coordination between transmission and distribution system operators and highlights the growing role of digitalisation and smarter network solutions in meeting future flexibility needs.

Flexibility policy will also require alignment with a range of other ongoing energy transition initiatives, including storage policy development, future arrangements for system services, large energy user policy and the National Energy Demand Strategy. Cross-border coordination is also a factor.

“Whilst the assessment has been prepared on a jurisdictional basis, alignment with future flexibility assessments and regulatory arrangements in Northern Ireland will be important given the operation of the all-island Single Electricity Market,” said Murphy.

McMurray said: “This publication is a first step for Ireland and will serve as an important evidence base for the next phase of Irish flexibility policy. The next phase will require significant work to translate the flexibility needs identified into workable market arrangements, procurement frameworks and investment signals. Policymakers will also need to prioritise where flexibility can deliver the greatest value for consumers and ensure that the benefits identified in the assessment can be realised efficiently and at scale.”