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JOINT COMMITTEE ON CLIMATE CHANGE AND ENERGY SECURITY debate -
Wednesday, 30 Sep 2009

Infrastructure and Grid Planning: Discussion with EirGrid.

I welcome the delegates from EirGrid: Mr. Dermot Byrne, chief executive officer; Mr. Andrew Cooke, director of grid development and the commercial division; and Mr. Aidan Corcoran, manager of Grid 25 implementation. I thank them for their co-operation with the joint committee. I invite Mr. Byrne to commence the presentation, after which we will have a question and answer session.

Mr. Dermot Byrne

We are delighted to appear before the joint committee once again to discuss the work being done by EirGrid to address Ireland's long-term electricity needs. At the previous meeting we attended in January we set out the key challenges facing the industry, namely, security of supply, competitiveness and sustainability. There has been a dramatic change since in the working environment for everybody and these issues are of even greater importance in the new climate.

We are pleased to outline to the committee the progress we have made on our various work programmes since the beginning of the year. I understand copies of our presentation have been circulated to members, detailing the agenda we propose to cover. I propose to begin by dealing with the electricity demand forecast. A primary consideration in any review of Ireland's long-term electricity needs is a forecast of future demand. This is particularly the case in the current economic environment where we have experienced an unprecedented reduction in demand, with year to date figures indicating a decline of some 6.5% on the figures for the same period last year.

I propose to brief the committee also on progress in meeting our renewable energy targets of 15% by 2010 and 40% by 2020. Interconnection will play a key role in enabling us to achieve these goals as efficiently as possible. I will brief the committee on progress in developing EirGrid's east-west interconnector project, as well as our study of the economic case for further interconnection. A topic of particular interest to the committee is the post-2020 generation portfolio. I propose to bring members up to date on the work we are doing in this area.

I also want to brief the committee on Grid 25 and the work to implement our grid development strategy, which is critical to achieving our renewable energy targets.

Regarding the electricity demand forecast, fall-off in demand in the year to date is approximately 5.6% compared with this time last year. We expect the final demand figure for this year to be approximately -4% or -5%. Based on economic forecasts, we expect a further fall-off of between 1% and 3% next year. Thereafter, based on forecasts from the ESRI and the Central Bank, we expect an upturn in economic activity and, therefore, electricity demand.

The screen shows three demand growth forecast scenarios — low, median and high. In the median and high scenarios, the red and green lines show a demand rebound of 2.5% until 2015 or so. Thereafter, long-term growth is estimated at 1.1% to 2% per annum. This is consistent with the ESRI's forecasts in its medium-term review and reflects the economy's reducing energy intensity with a major shift towards services. This is the forecast from which we are working. I have marked it "Provisional", as it is not yet finalised. However, the finalised demand forecast will underpin the generation adequacy report to issue in December of this year. Every year, we issue a report on future generation capacity.

In Mr. Byrne's explanation, is he referring to home consumption?

Mr. Dermot Byrne

Electricity demand in Ireland.

In terms of EirGrid's responsibilities, how can we ensure that the grid will be able to supply demand outside Ireland? Where planning and grid upgrades are concerned, I am not solely interested in what Ireland needs. I am particularly interested in the opportunities for Ireland to be an exporter of power into a European grid. I want to avoid an M50 situation, that is, planning for a future into which we have not seen far enough and spending a fortune to correct our mistake. One need only consider the inconvenience posed to the public by the M50 and the cost of adding one or two lanes.

The grid is Ireland's greatest opportunity. We could be the Dubai of exported renewable energy if we had the infrastructure. Whether Europe develops an integrated supergrid in 2020 or 2050, it will happen. Given our natural resources, our planning should prepare us to become a net exporter of power.

I was anxious to have Mr. Byrne attend this meeting because I wanted to share my view and that, I am sure, of other members. We are thinking along these lines, namely, that Mr. Byrne and his team should get the resources to enable Ireland to plan so far into the future. Whatever the cost, the capacity to export power would be worth it. Can Mr. Byrne imagine the sorts of resource that would be made available to us were we to drop wells and send oil spouting into the sky? The joy on people's faces would be enormous. This is a similar situation but it does not involve oil because wind and wave are natural resources. If we have a grid that can export this, that is an asset for the future. When making this point, we are not just talking about Ireland, we are talking about the capacity to enable us to develop a natural resource to its maximum.

Mr. Dermot Byrne

Thank you. Our starting point in fulfilling our legislative mandate — to develop a grid that is fit for purpose — must be the demand forecast. That is why I am starting with this slide but we will deal with developing the grid later in the presentation. We will be happy to discuss the issue and answer questions on what we are doing. The demand forecast determines what Ireland will need internally in order to underpin economic growth, to make sure we have a reliable power supply into every county and region and to tap into the fantastic renewable resource in this country. We will return to the issues raised by the Chairman.

I propose to brief the committee on how we are doing in meeting the renewable targets. We have two targets, one of which is for 2010. This is a national target, and refers to 15% of total electricity demand being met by renewables. Our 2020 target is for 40% of demand to be met by renewables. One of the slides in my presentation summarises where we are at. The bar on the left hand side shows that we currently have 1,161 MW of wind connected to the Irish system. Our analysis shows that we need 1,365 MW of wind, along with the existing hydro power, to meet the 2010 target. This means an additional 200 MW of wind to be connected between now and the end of 2020. We are on track to connect significantly more than that, more than double that amount before 2010. I can report that we are on track to meet the 15% target for 2010.

Can Mr. Byrne give us those statistics again?

Mr. Dermot Byrne

We currently have 1,161 MW of wind connected to the Irish system.

Is that the red square on the presentation?

Mr. Dermot Byrne

Yes. We need the blue line on the presentation to grow to 1,365 MW of wind. By the end of 2010 we need an additional 200 MW of wind to meet the 15% target.

Is this 15% of median demand?

Mr. Dermot Byrne

Yes. In 2010 the three forecasts are very close so we will more than meet the 15% target. We expect to connect more than double the 200 MW needed. We will have capacity to spare.

Is this true if demand decreases?

Mr. Dermot Byrne

Even if demand increased, there is a considerable amount of wind coming on in the next two years and we would expect to have met it in any case. If demand goes down it reduces the amount needed to meet the 15%.

If the interconnector was up and running, how much of our electricity could we sell abroad next year or the year after? This is a hypothetical question.

Mr. Dermot Byrne

I will deal with the interconnector shortly. The amount of wind on the system is less than we need for Ireland. The market in Ireland is big enough to accommodate 1,365 MW. We do not need to export it apart from on exceptional occasions where we might have to constrain wind generation; for example in a summer night valley when the wind is blowing very strongly we might have to turn down wind generation because we cannot accommodate it on the network. Under such circumstances, if we had interconnection we could export it. Such situations are few and far between in the short term. When we reach higher levels of wind integration we will need interconnection. The interconnector is due in 2012 and that is about right. From then on the interconnector will come into its own in enabling us to export when wind is high and import when wind is low. We will discuss this later in the meeting.

If Mr. Byrne does not mind I have a question on this. The price of electricity in Ireland is a good deal higher than elsewhere so why would anybody buy it?

Mr. Dermot Byrne

The price varies and there is a different wholesale market price every hour. We have a single electricity market and every hour or every half-hour is a different market. We have 48 markets in every day and the system marginal price varies every half-hour. Later I will discuss the analysis we carried out in which we compared our wholesale prices to those in the UK, France and other parts of Europe in the context of further interconnection.

Before Mr. Byrne leaves this point I am trying to work out the 2020 target, which appears to require 300 MW per year on average over the ten years from 2010 to 2020. It seems like a huge investment; in rough terms the investment cost is approximately €1 million per 1 MW, which amounts to €3.5 billion. The amount announced yesterday by the ESB is still less than the requirement for one year. Is Mr. Byrne confident that this investment will come onstream?

Mr. Dermot Byrne

To answer that question, to reach the 2020 target we need an additional 3,300 MW. Connection agreements are in place with the EirGrid and ESB networks for approximately 1,000 MW of that 3,300 MW. That 1,000 MW of capacity is being built as we speak and will come onstream progressively over the coming years and this leaves 2,300 MW.

I am sure committee members are aware that we are involved in the gate 3 connection offer process and this is for a total of approximately 4,000 MW of renewables plus approximately 2,000 MW to 2,500 MW of conventional plant. The gate 3 offer process is up and running and is a major project involving many EirGrid and ESB network staff and the Commission for Energy Regulation. Over the coming 18 months we will process those 6,500 MW of applications and make offers. At the end of that process an additional 4,000 MW will have connection offers from EirGrid and the ESB networks. This is more than enough to meet the 2,300 MW requirement. Even if some projects fall by the wayside we will still have a comfort factor to meet the 2020 target.

Are there any foreseen or anticipated chokes in the system?

Mr. Dermot Byrne

Absolutely. No other country has a target of 40%, which is a very demanding target involving many challenges. EirGrid has always welcomed challenges because they help us to find solutions. We have a policy of being world leaders in integrating this because we have to. The interconnector is a key enabler of this but the biggest enabler is the Grid 25 development strategy to develop the grid so it is able to take the power from where it is generated, mainly in the north west, west and south west because that is where the resources are, to where it is needed. That is the purpose of a grid. As we do not have a plug-and-play grid, we have to plan its development. We have a strategy in place to develop it, namely, the Grid 25 strategy, on which we briefed the committee in January. I will speak presently about our progress in implementing this strategy.

We are currently developing the east-west interconnector from a strong point on the Irish network at Woodland to a strong point in the British network at Deeside in Wales. It will have capacity for importing or exporting 500 MW. We have reached several key milestones over the past few weeks, including planning permission from the strategic infrastructure board in Ireland and the equivalent authority in Wales. This week we signed a major funding contract with the European Investment Bank for up to 50% of the total cost of the interconnector at very favourable terms. We are also going through the formal application process on a European Commission grant worth €110 million. The project is developing smoothly and we expect to be in a position to tell the contractor to commence manufacturing the cable in the first quarter of next year. We plan to begin laying the cable in the Irish Sea in the summer of 2012. The ship will need a weather window between April and August 2012 to lay the cable. We are on track to fully commissioning the interconnector by our target of autumn 2012.

Why is it only 500 MW?

Mr. Dermot Byrne

This has gone through a number of iterations over a long period of time. Various sizes were considered but a 500 MW line was deemed optimal for Ireland on the basis that it has to connect to strong points. There is no use in having 1,000 MW if the points at either end cannot handle the line. The Government decided to ask Eirgrid and the regulator to develop a 500 MW interconnector. This could be seen as the first phase of 1,000 MW over a period of time. For the present, however, we believe 500 MW is the right size for Ireland but that does not preclude developing another interconnector.

Will the interconnector be subsequently upgraded or will a new one be constructed?

Mr. Dermot Byrne

It is most likely that a new interconnector would be in a different location. We have studied the economic case for further interconnection.

Will it connect to a different country?

Mr. Dermot Byrne

It could go to Britain or France. In October we will present a study which we conducted on the economic case for further interconnection.

Am I correct to say that the cable which Eirgrid's plans to lay next year can only take 500 MW?

Mr. Dermot Byrne

It is optimally sized for 500 MW.

It cannot be increased to 1,000 MW, therefore.

Mr. Dermot Byrne

The cable is not the only factor. Major converter stations will be constructed at both ends. The AC power which is used in both Ireland and Britain will have to be converted to DC in order to pass through the interconnector. This is a major piece of infrastructure and can only be purchased in chunks. To double the capacity effectively, two new stations and further cable capacity would be required.

We were told at one stage there were options outside of AC/DC. Was there something in between which was a light-heavyweight version?

Mr. Dermot Byrne

That is the particular technology of HVDC and there are two options. We went through a procurement process to identify best value for Irish customers and out of that came a decision to go with the newer technology, which is a voltage source conversion technology. Different manufacturers have their own brand on it, such as light or plus.

We have detailed two interconnectors between the island of Ireland and Britain. An existing interconnector goes from Northern Ireland to Scotland, the Moyle interconnector, which is about 450 MW and uses the older type technology. We are going with the newer technology. The procurement process was designed to give best value and out of that came a decision to go with the newer technology.

This relates to my earlier comments. Are we really thinking only of our own needs as distinct from our potential? I am horrified to think that even if we got this up and running and wave power came on stream, or we had significant development in offshore wind power, there is nowhere for it to go only through an interconnector that is only capable of carrying 500 MW.

Mr. Dermot Byrne

We must take one step at a time as these are major investments amounting to €600 million. The fact that we have built one interconnector does not preclude us from building a second.

I know EirGrid will do whatever it is asked to but does the witness see what I am getting at? This committee is trying to help develop an export industry that can create jobs. The industry should not just be for jobs within this country and it should be ready for the export of power to Europe. We are on the European periphery and of all those countries, we should seek investment to connect us to others so we can export power. I am considering the export business.

Mr. Dermot Byrne

I do not disagree with any of the Chairman's comments but I want to get to the next point. As a result of the size of the Irish system, if there was a fault on a 1,000 MW cable, we could not withstand the impact that would have on the system. At any time we must plan for any piece of interconnection or infrastructure developing a fault. If we imported or exported 1,000 MW on one line and it developed a fault, the shock to the Irish system would cause a blackout, which we cannot have. We must size this process optimally for our system.

That does not preclude us building a second interconnector. If there are two and one develops a fault, the other would still work. I will come to the issue mentioned by the Chairman. The consideration of further interconnection was a requirement from the Government's White Paper. We have carried out a very detailed analysis taking in a wide range of scenarios, and we have carried out detailed modelling of the power systems in Ireland and Britain in terms of comparative cost at any point. We have also carried out modelling of the European system, although we carried out simplified modelling because that is so big. We have ultimately identified under a range of different scenarios that there are substantial benefits to further interconnection. The easiest benefits to quantify relate to total production cost savings.

I refer to the comment about wind. If there is a great deal of wind on the Irish system — let us say, a high-wind scenario in which the system is 53% wind — and if we are obliged to constrain this for 10% of the time, that will be lost production. However, if we have more interconnection, we will be able to export that wind. That is where the majority of savings will be. The total production cost savings of the additional interconnection — let us say 500 MW — are of the order of €30 million to €55 million per annum, with the higher figure of €55 million corresponding to a high wind production scenario. It seems this is the area in which the committee is interested — moving wind to a higher level. What this study will say is that further interconnection is even more justified when moving to a high-wind scenario.

Even taking storage into consideration?

Mr. Dermot Byrne

Storage is another issue. We are doing studies on storage. I will come back to this in the context of the post-2020 generation portfolio. What this is showing is that there are benefits. The initial indicators point to a strong case for further interconnection but at this stage more study is required. We are finding that more detailed study is required to model the French system. We will publish the existing results because we want to get them into the public domain so people can see them and debate them. We will be happy to come back to the committee and brief it on the details of the study when have issued the report.

I have two brief questions about interconnectors. There are three interconnectors, one of which is between Northern Ireland and the northern UK, while the others are across the English Channel. What size are these interconnectors in megawatts?

Would it not be sensible, as the Chairman said earlier, to put a cable from Ireland to the UK that has the capacity to increase even though the hardware at either side is designed to cope with 500 MW? If there is a need to export at a later stage, it could easily be upgraded for the same overhead costs of installation. Surely it would be cost effective to install a higher capacity cable on day one — for example, 1,000 MW, even though it would only carry 500 MW at the start — to have the extra capacity available after an upgrade of the stations on either side? Has EirGrid considered that?

Mr. Dermot Byrne

More study is required. Much of that study would be concerned with optimising the size and the project and getting the timing right. Would the right time be 2015 or 2020? That is the more detailed study to which we now want to move so that what we put in place will meet requirements. In this study, which we will make public, we are saying there is a case but there is more work to be done to fine-tune it, optimise the size of the project and consider where it might be located within the Irish system and with respect to the British or French system. We also need to consider the timing. When is the right time to do this? The east-west interconnector will be up and running for 2012, and in the meantime we are powering ahead to reach our target of 40% by 2020. We will go on to talk about the post-2020 generation portfolio.

We need to synchronise all these things so they make sense from an Irish point of view. It must all be paid for; there are significant costs involved. The cost of the east-west interconnector is €600 million, which is a significant amount, although it will pay its way. This study further strengthens the case for the existing interconnector. There is even a strong case for looking at further interconnection, arising from the results of this study.

Will the interconnector we are now planning to rush over to North Wales supply energy into Ireland or out of it?

Mr. Dermot Byrne

An interconnector is infrastructure that is a bit like a line on the Irish system. It can flow two ways.

In terms of meeting our targets, will we export or import?

Mr. Dermot Byrne

Wind is a variable resource. There are times when it just does not blow and there is no or very little output from all the wind generators we have. They are sitting idle or turning very slowly. Under those circumstances, the interconnector strengthens our security of supply because we are able to import. Similarly, at a time of very high wind on the Irish system when we approach almost full output from wind capacity, we will be able to export.

Within the next ten to 15 years, in the main will we export through that interconnector?

Mr. Dermot Byrne

The flow will be two-way. On balance, in the earlier years we will import and in the later years we will export, as we get up to 40%. It will change through time. That is the work we have done on further interconnection. We would be very happy to come back and brief the committee on the details.

I shall move on to the post-2020 generation portfolio study which I know to be of particular interest to the committee. The rationale for this study relates to when we look ahead — beyond 2025. We all appreciate that some of the existing power plants such as Moneypoint, which is coal-fired, will close. Some of our peat stations will have run out of peat and will close. Under a business-as-usual scenario we will have renewable energy sources and gas. There will be times when a renewable source such as wind will not blow and at those times we will be very reliant on gas. The question then arises whether Ireland, as a society or as a nation, will be comfortable with the exposure we will have to the volatility of the gas market, from the points of view of both price and physical availability. We are all aware of what happened in Ukraine last year and there are noises that the same will happen this year. Are we always to be exposed to risks to that extent?

If we take away the third leg of the stool we are down to those two legs. What will replace it? That is the question we must ask ourselves. From talking to stakeholders we see there is genuine concern that we will be very exposed unless we look at the options in a very objective way. I know the committee has taken a role to get a debate going. We have started the process. We have engaged consultants to work on this with us. We engaged Pöyry, a major international company which has a great deal of experience in the different technologies, namely, clean coal, nuclear and all the different technologies one would expect. Pöyry has recently completed a major study of wind capacity in the Irish and British systems and is well placed to bring all the work it has already done to bear on this study. We have carried out an initial scoping meeting with stakeholders to scope out the study. We have decided we will look far enough ahead but not too far and so 2035 is the study year we have selected. We will look at a range of technologies and portfolios and assessing those against a set of criteria which would include cost, CO2 emissions, security of supply and public acceptability. All those kinds of criteria will be looked at.

Perhaps we should take a look now at some of the scenarios we will examine. The next slide shows gas and 40% renewable energy sources, with 1 gigawatt of interconnection to Britain. To make that a palatable option we will probably have to look at gas storage and how that interacts with the system. That is one scenario. We will also look at clean coal technology and how it will perform in the Irish system. For completeness we will also examine nuclear generation and how it would perform on the Irish system. There are concerns about the size of nuclear units available and how it would interact with wind on a system. We are all very well aware of the public acceptability issues related to nuclear generation. However, we will put factual information into the public arena for debate and we would not recommend any particular course of action but simply facilitate a debate on the issues.

We will examine a scenario with a considerably higher level of renewable energy, perhaps up to 80% and in doing so we would have to consider further interconnection with Britain and France. We will also consider large scale pumped storage in conjunction with higher levels of renewable energy generation. We are all aware that if large scale pumped storage is technically and economically viable then it can work very well with renewable energy generation.

Will Mr. Byrne explain large scale pumped storage?

Mr. Dermot Byrne

Turlough Hill is an example.

That is where water is pumped up a hill and let back down.

Mr. Dermot Byrne

Yes. We are considering a scale larger than Turlough Hill, something with significantly more storage because to complement wind one needs to have more than simply a day-night operation. One may need to have three or four days of storage. The storage is important.

Why is EirGrid restricted? Mr. Byrne will be aware of the work this committee has done on electric vehicles and other forms of storage, as well as developments in the conversion of electricity to nitrogen storage. It seems if one is looking ahead that far there should be one more permutation in the mix. I hesitate to use the term "battery storage", but storage that might arise from electric vehicles to which the Government is already committed. Surely it comes into this equation somewhere in terms of the Government's current policy on electric vehicles?

Mr. Dermot Byrne

Electric vehicles are factored in several places, including our demand forecast.

Is it factored in from a storage point of view?

Mr. Dermot Byrne

From a storage point of view they will play some part. However, the Government target for electric vehicles is 10% of the fleet by 2020 and it will grow beyond that. Many such electric vehicles would recharge overnight. The committee will be aware we have carried out work as part of our last generation adequacy report which examined the impact they would have on the system. It would contribute certainly but to really complement large scale renewable power, which is intermittent, one needs something far more significant.

Are we not making the mistake that because Government sets a target that could be either too small or two great, we are gearing everything towards that target and that we are not examining the potential of this country in terms of the production of power and our capability to install the infrastructure that would enable that to take place? I am not interested especially in whether the Government has a 10% or a 20% target in terms of examining opportunities for inward investment to this country.

We should look beyond all of this and consider the potential. Senator O'Toole made a point about electric vehicles. We have been given information that our proposals in respect of electric vehicles go some way beyond the Government target because of the information available to us and their capability. The only impediment that would stop progress is if the infrastructure is not in place.

Let us consider public transport. It is inexcusable that we have not made any advances in any real sense — this is nothing to do with EirGrid — in terms of our public transport not being run on renewable energy. In every other city one will see such public transport. We are not thinking in this way at all. We are satisfied; the agency that has been charged with the most important thing of all, namely, the infrastructure, is just gearing itself to particular targets set, without looking at the potential. This has huge potential, way beyond what anyone is discussing in terms of our personal needs. We cannot do anything as a little island unless we are connected to Europe. Just thinking about the interconnectors, really we should look at a direct connection into Europe, as distinct from going via Britain which causes us to become dependent once again. Does the delegation know what I am getting at? We could enter a bigger market. That sort of forward planning is very important. The company is key in all of this.

Mr. Dermot Byrne

We have to be careful how we spend money, but there is a separate process of policy formation, in which this committee plays a key role. We also play a key role, in terms of solid analysis that informs policy formation. The work I have discussed here, in terms of further interconnection, is in the public domain for the committee to consider and is information for it to be able to develop and formulate policy. Our role is to do the analysis and present it. We are not constrained and do not feel constrained in terms of how we do it. As the committee can see, some of the scenarios outlined in our presentation refer to 80% renewables, which is way beyond the 40% target. From a policy point of view, in terms of putting information or solid analysis into the public domain, we see ourselves as influencing policy through sound analysis.

What I am concerned about is whether our infrastructure will be capable of taking 80% renewably sourced energy and taking more than 80% for export.

Mr. Dermot Byrne

Only when we as a country decide that is what we want.

That is exactly what we as a committee can make happen, namely, that people start thinking that way. That is what I am trying to get at. Instead of thinking we are meeting a target set by somebody a number of years ago, which may have been too low, are we advancing in terms of putting in the infrastructure? While it is expensive, it is a good investment if it will form the building up of a massive industry for the future. I am sure people will lend the delegation money for that purpose. The Lisbon treaty makes reference to energy security and becoming self-dependent. I have no doubt there will be large scale grants available from Europe in the future for the building of a super grid and we would have a key part in that, with our natural resource going into it.

Mr. Dermot Byrne

If I can come back to the analysis we undertake, we are doing a study on offshore grids because we recognise it is a key area of policy in which this, other committees and the Government are interested in examining. Our role is to do the authoritative analysis and put it into the public domain, which then informs policy. Policy is made, and when it is decided to go in a direction, we see ourselves as implementers of policy.

We have two roles. One is influencing policy through analysis and the other implementing policy once it is made. In a sense, we are jumping between the two roles we have. In terms of the east-west interconnector, we are implementing policy, which is in the Green Paper. In terms of influencing the evolution of policy, we are also doing the studies on which I briefed the committee today. They are the range of scenarios we are working on. When we finish this work our report will present the technical and cost information on the potential generation technologies and how they will or will not work on an Irish system.

We intend to write this from an objective perspective, showing the pros and cons, and putting it into the public domain to inform the debate on future energy policy. It is not our role to determine the policy. That is for the Members of the Oireachtas. We expect the final report in November and will be happy to return with our consultants to brief the committee and answer any questions it might have.

The development of the grid is critical to everything we do so that we can tap into this resource. We published our grid development strategy in October 2008. There will be a significant upgrade of the existing Grid 25 in the next 20 years. We will also have to build new overhead power lines with a total investment of the order of €4 billion. That will be distributed into different regions. We briefed the committee on this last January.

We are briefing stakeholders around the country to win support for what we have to do to implement Grid 25. It is critical we have the support of stakeholders and local and national politicians so that everybody understands that this is essential infrastructure. It is being well received and has been mentioned favourably internationally as an example of what Ireland is doing to meet the climate change challenge, tapping into our resources. We are also doing detailed optimisation planning studies to put bones on the strategy and adapt it to meet changing circumstances. Once we have that we will bring the individual projects into the public domain for consultation and then to the strategic infrastructure board for determination. When we have planning approval for the individual projects we will proceed to construction. That is the process in which we are engaged.

We are doing detailed studies in each region so that we can bring forward the project proposals. We are also doing significant work on new technologies. We are undertaking a range of technology investigations, some of which we have taken through to the implementation phase, for example, we will upgrade over 2,000 km of the existing network because if we can put more power through that network we minimise the impact on communities through which the lines pass. It is better value. If we can significantly improve the existing network that is the right thing to do. We have identified a new technology conductor type, called a high-temperature, low-sag conductor, which will enable us to significantly upgrade the existing network without having to rebuild the support towers or pole sets.

That has several benefits, it will save hundreds of millions of euro compared with how we would have done it in the past. We will remove the lines for shorter periods because we are not rebuilding the structures we are only what may be termed "re-conductoring", which minimises the impact on security of supply. We have done major work to identify the best type of this new technology and will start to implement that next year. We plan to take out several lines next year and refit this new technology.

Is that new information? I do not think we have heard this before.

Mr. Dermot Byrne

We have not briefed this committee because this is part of our Grid 25 implementation project and the work was completed in May of this year. We plan to implement that new technology next year.

We are also undertaking some major studies. We have engaged Tokyo Electric power company to do a study with us on the extent to which it is technically feasible to install underground circuits. That is a major investigation; Tokyo Electric has the longest cable network of 400 kV underground cable, with 40 kilometres in the Tokyo area. It is expensive tunnel technology but the company is the world expert. We want to tap into best practice so we know the constraints we will work under in the Irish system. Our system is different from the Japanese system but we have engaged the best to give us the technical information. We will publish that report, as we publish all our reports. All of our information is put into the public domain so it can be discussed and debated.

We are also tapping into best practice on the use of HVDC technology within the grid. We are using it already between grids but we are now examining the extent to which it can be used within a grid. We have commissioned TransGrid to look at this area. Much of the technology workstream is well developed within Grid 25, however, which will help us to come up with the best solutions for Ireland to implement the strategy.

We are working with the public planning process to ensure the importance of transmission infrastructure is recognised and is taken into account through national, regional and county development plans. It is important that people who developing the plans understand the importance of Grid 25 and we are working closely with them to achieve that. Sessions like this are taking place around the country for stakeholders and they are going well so far.

We are engaged on an ongoing basis with our international counterparts, particularly European transmission system operators through the new organisation European Network of Transmission System Operators for Electricity, ENTSOE, which is under the third package. We engage with our peers, who face similar issues, to share information and to ensure we all make use of the best solutions available. It is interesting to say that what we face in terms of opposition and consultation is being faced in many other European countries. There is public opposition to overhead transmission, and in other countries there is also a disconnect in understanding the key link between a robust transmission grid and economic stability and security of supply. Other countries are experiencing similar difficulties with building infrastructure and even underground provision.

Other countries are responding in various ways. They are looking at initiatives to speed up the planning process, similar to the system we have here under the Strategic Infrastructure Act. Environmental and community strategies that focus on community gain and structured compensation schemes are being considered, along with policy on underground and overhead transmission. Universally, overhead transmission is considered necessary for 400kV transmission because no one has cracked the technology to put it underground, never mind the cost.

We are tapping into that and getting good information on what is happening elsewhere through our contacts.

I refer to my last slide. In terms of the next steps and Grid 25, we have developed an implementation plan with a number of work streams, including the technology work stream which is well developed. Our strategy will be flexed to respond to changing circumstances because even since we developed Grid 25 we have had to revise our demand forecast because of the economic tsunami that hit us all. However, much of Grid 25 is driven not by the underlying economy but by the transformation happening on the generation portfolio with increasing amounts of wind.

On the investment programme to give effect to Grid 25, we are in discussions with the Commission for Energy Regulation for the five year period 2011 to 2016 because it is the regulator ultimately who sanctions the investment. That is the system we work within.

The high priority projects will be brought into the public consultation process during 2010. That is to give effect mainly in the west, where there is a significant amount of wind in the Mayo area, and also in the south west where there is a great deal of new generation coming on stream. We have two new combined cycle plants commissioning in Cork plus very extensive wind generation in the Cork and Kerry areas. We will have to significantly develop the grid from the south west up towards the east. Those are two important projects that will be brought into the public consultation process early in the new year.

What is the progress on wave power?

Mr. Dermot Byrne

We closely watch developments in wave power and participate in the various committees. Wave power is very much at the research and development stage. It is not yet at a stage where we would begin to see it coming onto the grid in significant amounts but the Grid 25 strategy was developed with wind and wave power in mind. The strategy is adaptable and flexible to be able to accommodate significant amounts of wave power when it becomes commercially developed.

Offshore wind could be integrated——

Mr. Dermot Byrne

I will ask Mr. Cooke to brief the committee on the work we are doing in that space.

Mr. Andrew Cooke

We have several initiatives under way in that area. Mr. Byrne has already mentioned the Gate 3 process which is making connection offers to approximately 4,000 MW of wind generation. That includes three offshore projects which have made that gate in accordance with the criteria of the Commission for Energy Regulation.

We are also undertaking a study we expect to publish before the end of the year. If and when major offshore wind power develops off the east coast of Ireland beyond those three projects — potentially 3,000 MW or 4,000 MW offshore wind projects are being talked about by developers — how would we integrate that into the Irish transmission system? Would it be simple point-to-point connections from the wind farm straight to coast or would an offshore transmission network develop? Some work remains to be done on that but it appears that at that level we would start to see a significant offshore transmission network but within that there is a number of assumptions we must test and ratify. There is not much of a track record of submarine transmission and therefore estimates around the cost of that, the reliability effects and so on must be closely examined.

Is Mr. Cooke saying that the offshore wind fields would be interconnected?

Mr. Andrew Cooke

Potentially, yes.

Mr. Andrew Cooke

They have to come into the grid.

Yes, in separate connections.

Mr. Andrew Cooke

That is the way it will start initially. Regarding the initial ones, which are relatively close to coast, one will see submarine lines coming in straight from the wind farms into the nearest point at which they can be connected to the grid. However, if offshore wind power is developed out much further — I refer to the 3,000, 4,000 or 5,000 MW space, which potentially exists, one starts to see a more sophisticated network developing offshore connecting the wind farms together and potentially using that at times as a substitute for onshore transmission. It can be used to move power around and not just to harvest the wind but to work side by side with the onshore transmission network. That work has still some way to go. There is not a great deal of history in terms of submarine transmission development. There is probably some way to go to ascertain at what costs it will develop in the future. Our aim is to be ahead of the game. I do not know how fast offshore wind energy generation will develop on that scale but we want to know the transmission grid for that, if and when it happens.

Mr. Dermot Byrne

Returning to the slide with which we are dealing, the transmission upgrade programme with new conductor technology will commence in 2010 and the physical construction of the east-west interconnector will commence in quarter one of 2010. This slide relates to the implementation of Grid 25.

We have given the members a good sense of the work we are doing in the policy area in terms of the sound economic and technical analysis we are doing, which we hope will influence and inform policy and inform this and other committees. We would welcome the opportunity to return to brief the committee on these various studies as they reach fruition.

I thank the witnesses for their contributions. They have answered nearly all the questions put to them. They have addressed all the issues concerning bigger potential generation systems, but what about smaller generation systems, such as small wind farmers and small combined heat and power plants? A presentation was made to the committee by a geothermal company which seeks to work with the provider of some other form of renewable energy in terms of a combined heat and power plant. One of the witnesses mentioned a system possibly operating in conjunction with a storage capacity. Examples are waste recycling plants using animal slaughter house waste that has been streamed and can generate power, compost and so on. As Mr. Cooke said, not all offshore wind energy will necessarily land at the connection point nearest, so to speak, which may only have a local network capacity as opposed to a higher capacity. Regional power points could be generated that would supplement the national grid and by having combined heat and power, it could reduce the demand on electricity by providing heat in a different way. That is the only question that has not been answered.

Mr. Dermot Byrne

I am happy to address that question. In regard to smaller generation systems and smaller CHP systems, they would connect to the distribution network and not to the transmission network. It would be an issue for ESB Networks to connect those. We work closely with it. In terms of the wind energy we mentioned, roughly half of it will be connected at the lower voltages in terms of the distribution network — half of it will be connected to the transmissions network. We work closely with the ESB Networks in Gate 3.

When we talk about reaching a target of 40% by 2020, that 40% target takes account of the smaller amounts of CHP, biomass and that kind of waste to heat. It will never be very significant, it will always be small. What we are talking about at transmission level is big utility sized entities with corresponding economies of scale.

With regard to EirGrid working closely with the ESB Networks, is there an obligation on it to provide the network capacity to accommodate smaller scale regional systems? In terms of being the provider of power and the provider of a network operating in competition with other networks which provide power, it is necessary to separate those two roles for ESB Networks.

Mr. Dermot Byrne

ESB Networks is ringfenced from the rest of the ESB. It will take purely a network view. I should let ESB Networks speak for itself. In terms of our working with it, we make sure that we are the network people, we are not involved with the power. Certainly our grid is not in conflict with anybody because we are totally independent. There is no conflict in that respect within the ESB.

The power grid or transmission grid we are talking about is the backbone of the total power system. That ensures that customers everywhere on the system have access to the cheapest generation. It is the most efficient way to do this, rather than splitting up the network into different regional networks. Having a single network ensures that everybody in the country has access to the cheapest power at any point in time.

I thank Mr. Byrne and his team. They have answered all my questions. There are issues and questions on which we might have slightly different views but I compliment the team on such a comprehensive, plausible and strategically important outline of where we are going. I am impressed by the strategic nature of the presentation. It certainly gives me much confidence about how we are moving forward, particularly in the area of flexibility. It allows it to duck and dive as matters change, which, as the Chairman said earlier, will be the most crucial element. Things will change and events we have not planned or expected will occur. What we have heard today is a good job of work and I am most impressed. I thank our guests.

I compliment EirGrid on its informative presentation, and I apologise for being a little late to the meeting. Mr. Byrne spoke about grading existing lines but my recollection of the last time he discussed this is that he spoke about the provision of new lines. Is this something EirGrid is examining at present, the upgrade of existing lines rather than the provision of high powered lines? Mr. Byrne mentioned that it is not feasible to run 400KV cables underground. What is feasible to run underground?

Mr. Dermot Byrne

On the upgrading issues, the strategy of Grid 25 is a combination of upgrading and new build. There are parts of the network where the existing transmission network just does not go. That is where the resource is, for example, west Mayo, so we must reinforce the grid into those areas. It is not just upgrading; it is both. One is not a substitute for the other. The Grid 25 strategy expects approximately 1,000 kilometres of new build and approximately 2,200 kilometres of upgrading.

Mr. Cooke can answer the question on undergrounding.

Mr. Andrew Cooke

Undergrounding 400KV cable is a very complex issue. TEPCO is doing the study with us at present and we expect to have that study complete and a report on it within the next four to six weeks. We gave TEPCO a number of representative scenarios to examine that reflected the future development requirements in the Irish system, such as Cork to Dublin, the north-east projects and several others.

Unfortunately, this is a very complex electrical area and there are problems arising in the studies TEPCO has done, some of which can certainly be mitigated or managed through design and operational techniques. However, the one that appears to be most limiting on the Irish system is an electrical phenomenon known as "parallel resonance". What happens is an interaction between the cable and the rest of the system at times of routine switching operations occurring on the system. That places voltage stresses on the cable that are well beyond the levels to which manufacturers design and warrant today. It is interesting that while this is very dependent on the power system in which we are doing the analysis, we have seen a number of other international studies, from the US and Europe, that identified the same problem as a limiting factor in other systems. In the north-east projects, for example, which are approximately 140 kilometres long, it would not be possible to underground on that scale in the Irish system. We are still working on exactly where that limit is, but on those projects the TEPCO analysis shows that the voltage stresses would be well outside design criteria and manufacturers' recommendations at present.

Before we close, could you give us some idea of how the 40% renewable target is broken down between offshore wind, onshore wind, tidal, and so on?

Mr. Dermot Byrne

I will ask my colleagues to come in on this one. The 40% target is renewable. There is an element of hydro, which already exists — the Shannon scheme. On current projections, we would expect approximately 36% of it to be wind and approximately 4% of the 40% to be other than wind.

How much of the wind will be onshore and how much will be offshore is really up to the developers. There are three offshore wind projects in Gate 3. We are working through Gate 3 and we will make connection offers to those when we have the analysis done. Then I suppose it will be up to the developer to develop the projects. Within the 40% there is potential to have those three projects coming through.

Is there mention of wave power in that 40%?

Mr. Dermot Byrne

We do not have any solid applications for wave.

Is it anticipated?

Mr. Dermot Byrne

It is not yet commercial. It is still in the development stage and any wave projects talked about are very much developmental, as opposed to commercial, wave projects. We have received no such commercial applications.

Mr. Andrew Cooke

That is correct. Obviously, the Grid 25 strategy would be robust to deal with it, as and when it comes along, as Mr. Byrne mentioned. There are certainly some smaller scale projects such as biomass and waste facilities included. They probably do not yet add up to a large about of megawatts but that is a developing area.

The Commission for Energy Regulation is looking at how to deal with projects of that nature in the future with a view to facilitating them getting access to the grid rather than having to wait for Gate 4, or whatever is the next step after Gate 3.

Is wind is a big factor?

Mr. Andrew Cooke

In the short to medium term, wind is very much the predominant renewable technology that is economical.

Is there room for private investment in infrastructure in the future, for example, in a major interconnector between Ireland and the Continent? If the State does not have the money, can we encourage others, joint ventures or public private partnerships?

Mr. Dermot Byrne

There is another developer who has a project between Ireland and Britain. I am not sure of the status of that project at present but it is a well-publicised one. Certainly, in terms of its application to us, it is a customer of ours. We deal with it as a customer and we will make——

Does Mr. Byrne see any problem in terms of EirGrid's workings?

Mr. Dermot Byrne

In terms of our workings, there is no issue.

Is where the money comes from irrelevant to EirGrid?

Mr. Dermot Byrne

The issue will be how bankable is the project because there is considerable uncertainty with these projects. There is also a view that has been expressed by the ESRI that these projects, in terms of ensuring that one has open access to them, should be regulated rather than merchant.

Mr. Andrew Cooke

One of the problems for merchant interconnectors tends to be that it is hard for them to get a business case together. As Mr. Byrne pointed out, we would expect the east-west interconnector to contribute a benefit of €50 million to €60 million per annum but, as the ESRI report pointed out, it would be difficult for the owner of the interconnector to capture all of that value because a significant amount of the value goes to the electricity customer in the form of reduced prices and goes to, perhaps, wind developers in the form of export of wind. It makes it a good project and very logical from the point of view of Ireland Inc. and the Irish electricity customer, but not necessarily a good project from the point of view of a commercial investor. It is, therefore, difficult to do on a purely commercial basis.

I thank our guests for their attendance and co-operation. This meeting has been extremely interesting. It is obvious that tremendous potential exists in this area. Let us set our sights high and hope that our efforts will bear fruit in the not too distant future.

The joint committee adjourned at 4.40 p.m. until 2.30 p.m. on Wednesday, 14 October 2009.
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