I will try to be brief. If possible, I will pick on one or two of the points made in the earlier discussion.
We very much welcome the completion of the report, as Mr. Byrne said. While we have a number of observations on it, we believe the conclusions, in the main, concur with EirGrid's position on the comparative benefits of the various transmission technologies available, and with the findings of a number of international studies by other transmission system operators and experts.
I will refer to extracts from the report to summarise those points that are generally common between the commission's findings, our findings and our understanding of international norms. The first key finding in the slide entitled "Key expert commission findings" is that overhead line is still by far the least costly technology option available for on-land transmission development. It is by far the most widely used for on-land transmission requirements. Some of the figures referred to earlier suggest approximately one third of planned development is DC based. That involves almost entirely submarine DC interconnection where overhead line is not possible. By way of example, in the ten-year period to 2009 in Europe, over 10,000 km of new 400 kV overhead lines were commissioned. As the expert commission noted, it is planned that a further 23,000 km of 400 kV overhead lines will be commissioned in the next ten years. It is expected that approximately 98% of the on-land 400 kV development will be by way of overhead line.
The second key finding is that an AC underground design is not realistic for the length of the Meath-Tyrone 400 kV project. We fully concur with this. It is supported by several other international reports considering projects and the maximum length that can be installed with AC underground lines. It is significantly less than the required distance for the Meath-Tyrone project. That is not to say that AC undergrounding is not feasible over shorter distances. The expert commission's report references some overhead line projects which incorporate relatively small amounts of undergrounding, generally in congested, urban or especially sensitive environmental areas. We are aware of a number of such projects around Europe. Typically, they involve undergrounding of sections between 5 km and 10 km.
We are also aware of many projects in Europe that are based entirely on overhead lines. They do not involve any undergrounding. An example is the 220 km Beauly-Denny project, recently approved in Scotland. This involves a double-circuit 400 kV overhead line and it will involve no undergrounding.
The third point that the commission notes is that HVDC voltage-sourced conversion, VSC, technology is developing rapidly and has undergone significant change in recent years. There have been developments on overhead line technology. We agree in this regard. We are developing the east-west interconnector between Ireland and Wales at present. It employs the VSC technology to which the commission referred. When the project is completed later this year, it will be the largest VSC development in the world to date. We are, therefore, very familiar with HVDC technology and what state-of-the-art technology is. We fully intend to adopt HVDC where it is appropriate. We do not believe it is appropriate for the North-South project and I will explain why.
The commission noted that a disadvantage of the choice of VSC technology is that it is less mature than overhead line technology and will lead to operational risks. I will return to this at the end in the context of some of the questions and answers.
Let me refer to the areas in respect of which we differ or differ to a degree regarding the expert commission's conclusions. They fall into two main categories, the first of which is the suitability of HVDC technology for the project in question and, second, the extra cost of an HVDC solution by comparison with that of an overhead line solution.
Let me address briefly the technology challenges. We set these out in more detail in a briefing document, also supplied to the committee. I will only touch on the matter briefly because it is a quite complex area. In comparing European reference projects, including those referred to by the expert commission, it is important to consider some of the differences between the power system on the island of Ireland and neighbouring European systems. Europe is made up of a small number of generally very large synchronous power systems. There are about five on the entire Continent of Europe, each of which has strong conventional AC connections. They are built on AC technology. Even the system in Great Britain, which is probably about the smallest next to ours, is 12 times the size of ours. The mainland European system is vast by comparison. It is approximately 100 times the size of the Irish system.
The Irish system is much smaller than its European neighbours' systems. Owing to its size and low density, we have a relatively low density of demand. Therefore, we have a thin system in Ireland. It is electrically much lighter and inherently less robust by comparison with those of other European countries. The considerable size, sheer physical momentum and electrical inertial weight of conventional generators turning together give the systems in mainland Europe, Scandinavia and elsewhere significant stability. If one is cycling a bicycle and meets a relatively small obstacle on the road, it can still have a significant effect and derail one. If one is driving a juggernaut, the same obstacle will have little or no impact. If there is a disturbance in one of the large systems in Europe, the huge momentum contributes to stability and to riding through that disturbance.
As Mr. Byrne mentioned, Ireland is at the leading edge in terms of developing renewable energy in the system. The combined system on the island of Ireland will have more wind farms installed and operated as a percentage of the overall energy requirement by 2020 than any other synchronous system of any scale in the world. We spoke about this before in terms of a unique set of challenges. Adoption of wind makes the system somewhat more fragile and at the same time we need to be able to accommodate the large amounts of renewable variable generation on the system. Selecting the right grid technology is key to that challenge.
I return to the choice of technology for the North-South interconnector. The key point is that an AC overhead line solution as proposed by EirGrid naturally reinforces and strengthens the overall stability of the all-island network to respond to disturbance. It tightens the coupling of the two electrical systems North and South and makes them more robust operating as a single system. The expert commission uses the term "inertial coupling" to describe this behaviour which occurs when AC systems are linked together or when systems are built using AC technology. While it is an inherent part of AC technology behaviour, it is not an inherent part of HVDC technology behaviour. An AC solution would give us increased coupling between the North and South systems - inertial coupling - but an HVDC solution would not do that. It is possible in theory to put in place complex control systems to make an HVDC circuit act more like an AC circuit. However, it is unclear how far this can be achieved. It is probably impossible to fully emulate an AC solution and it has certainly never been done anywhere in the world to date.
In addition the dependence on control systems in itself introduces more risk and while that may not sound like a major issue, there are a number of instances internationally where control system failures have caused or contributed to major disturbances or blackouts in other countries and continents. The inherently different performance of HVDC is a key point given the particular characteristics of our network. One of the expert commission speakers earlier said it is possible to make an AC and DC circuit operate in parallel. We are not aware of anywhere that this has been done. The examples given by the expert commission are not parallel examples. In the case of the France to Spain interconnection there are two very large systems already connected by several AC circuits. The important inertial coupling we require from the North to South interconnector is not a requirement to the same degree for the France to Spain link.
I move to cost. The commission has provided cost comparators which concluded that an HVDC solution would be €330 million more expensive than a standard 400 kV AC overhead line solution, or three times the cost. In general, cost differences are more reliable than cost ratios so I will generally refer to differences rather than ratios. The commission also presented some HVDC costs for lower-rated solutions, for example comparing a 700 MW capacity HVDC solution with a 1,400 MW capacity AC solution and estimated a cost multiplier of 1.7. We are unclear of the purpose of this but can confirm that a capacity of 700 MW does not meet the goals or requirements of the project. So the only valid comparison is a like-for-like capacity.
From the table on the slide headed "Cost Review" it is clear that the cost of the HVDC to AC convertor stations adds significant costs to the HVDC solution when compared with the AC solution. This is an inherent consequence of the technology choice.
We note three primary points on the commission's estimates. First, the commission has not included the cost of a substation at or close to Kingscourt in its cost estimates. We may not and probably will not include the Kingscourt substation in our initial planning application as the need for it has receded owing to the reduction in demand as a result of the economic situation. However, it is still very much part of the overall project scheme and will be required to provide adequate supply standards to the north east in coming years. Based on the converter station costs estimated by the expert commission, it will add at least €100 million to €150 million to the cost of the scheme when it is required. Further to this, while the County Cavan substation is a known requirement at this time, it is likely in the future that there will be further requirements to tap into the circuit for other development purposes and if an HVDC solution is adopted, these significant additional costs will be incurred each time.
Second, while the Commission has recognised that electrical losses would be significantly greater for an HVDC solution at the typical operating loads for this project, it has omitted this from its cost estimates on the basis that future energy prices are unpredictable. In our experience it is good practice and common practice to include major lifetime cost elements in transmission investment decisions - we do so routinely. Inclusion of electrical losses will add approximately €70 million to the cost of the HVDC solution. Third, the costs of the cable element - more so than the converter elements - proposed by the Commission appear low based on other available data and references.
The first two of these points - leaving aside the cable cost issue - would increase the extra cost of an HVDC solution from €333 million to approximately €500 million to €600 million when compared with an AC solution. However, it should be recognised that there is concurrence at least that an HVDC solution is more expensive than an AC solution to the tune of several hundreds of millions of euro.
I wish to pick up on some points made earlier. Deputy English asked to what extent failures were an issue. I will make two points on that. First, the question was answered in the context of reliability of the scheme. The question might have been aimed not only at that, but at the potential impacts of a failure on the power system and reliability of supply. It was answered that failures are relatively infrequent and can generally be fixed relatively quickly. I wish to draw two examples from a report issued at the end of January. It mentions a 380 kV installation in Berlin which suffered a serious fault in December 2009. That fault was proven to have occurred as a result of a latent defect in the installation of the cable ten years earlier. It took ten years for it to materialise and resulted in the unavailability of the cable for ten to 12 months. Another example is in the Middle East where at present a 55 km cable circuit has been installed. It mentions that there have been ten joint failures - six during service and four during testing. The reported response time to fix those joint failures averaged two months.
There are still significant reliability issues there, but the more significant point is the impact on the power system. In the event of a failure of the control systems, about which some of the commission experts spoke briefly, unless the system is properly managed and its use is limited, a mal-operation could have the impact of putting all or part of the system in blackout. That was possibly what Mr. Hoelsaeter referred to when he said that an HVDC cable could provide black start - I am not sure about that. However, in the event of a blackout in one part of the system, I accept that we can restart it using the cable, but the blackout is not a tolerable event in the first instance.
Supply of cable was mentioned. We do not see supply of cable as being the major issue. There will be a supply chain difficulty with cable because so much more is being used for submarine applications. While it will tend to push up the price, it should not mean there will not be availability of cable to develop these projects. Manufacturing the cable for the east-west interconnector, which uses approximately 500 km of cable, occupied the full capacity of a major cable factory in southern Sweden for two years. It is, therefore, a significant issue. We are not saying that we do not believe it will prevent projects from happening but it may well result in higher prices of projects which are based on cable technology.
I will leave it at that and hand back to Mr. Byrne if he has any concluding remarks.