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Utilities regulator opens new consultation on Celtic Interconnector

Out-Law News | 21 Dec 2018 | 3:17 pm | 2 min. read

Ireland's utilities regulator, the Commission for Regulated Utilities (CRU), has opened a new consultation paper on an investment request by the promoters of the Celtic Electricity Interconnector, a planned project linking the electricity transmission systems of Ireland and France.

The planned project would be Ireland's first direct energy link with continental Europe, something which is becoming "increasingly important" as the UK prepares to leave the EU in March 2019, according to the CRU's consultation.

According to the CRU, the project as currently planned would benefit both Irish and French energy consumers, even when excluding potential security of supply benefits. However, these benefits could be significantly reduced should a new interconnector between Great Britain and Ireland be built at the same time.

"Security of supply is the number one policy issue across the island of Ireland at the moment," said energy law expert Richard Murphy of Pinsent Masons, the law firm behind Out-Law.com.

"With Brexit looming large, the government is hedging its bets on the importance of a direct physical interconnection with continental Europe. The cost-benefit analysis modelling outlined in the consultation document indicates that Celtic would drive benefits for both Irish and French consumers. With the announcement of the new renewable energy support scheme (RESS), more value could be captured from the project with the projected growth of renewable generation that is forecast for Ireland," he said.

The Celtic Interconnector is a planned electrical link which, if built, will enable the movement of power between Ireland and France. The project is being sponsored by the system operators (TSOs) of both countries: EirGrid in Ireland and the Réseau de Transport d'Electricité (RTE) in France.

The European Commission has designated the Celtic Interconnector as a Project of Common Interest (PCI), which means that it is considered of particular importance by the Commission to completing a single European energy market and achieving the EU's energy policy and climate objectives. PCIs can benefit from streamlined planning processes, improved regulatory conditions and possible EU financial assistance from the Connecting Europe Facility, from which the project has already received €3.9 million.

The CRU's consultation indicates that the Celtic Interconnector could reduce curtailment of renewable electricity generation in Ireland, as electricity which could not be used by the system could instead be exported. By encouraging renewable generation, the project could also reduce CO2 emissions in both Ireland and France. The project would provide the most value for money when renewable generation capacity is high, and would provide less value should renewable generation be brought on-line more slowly.

However, cost benchmarking by the CRU suggests that the project may turn out to be up to 20% more expensive than the €930 million estimated by the TSOs in their investment request. This would have a knock-on effect on Irish consumers, whose numbers are relatively small in comparison to other large EU countries. The CRU is also concerned that the regulatory model proposed by EirGrid remains "very light on detail".

"Further work is required to fully understand [the project's] potential impact on consumers, including whether, and to what extent, any cost overruns would be shared between EirGrid and consumers," the CRU said.

The CRU is seeking views on the investment request and its response by 15 February 2019.