Facilitation of Renewables Report: Discussion with EirGrid

I welcome Mr. Dermot Byrne, chief executive officer of EirGrid, who is accompanied by Mr. Fintan Slye, executive director of operations, and Mr. Jon O'Sullivan, operations policy and performance.

Before we begin I wish to remind members the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the House or an official either by name or in such a way as to make him or her identifiable. By virtue of section 17(2)(l) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of their evidence to the committee. If witnesses are directed by the committee to cease giving evidence on a particular matter and they continue to do so, they are entitled thereafter only to a qualified privilege in respect of their evidence. Witnesses are directed that only evidence connected with the subject matter of these proceedings is to be given and they are asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against any person, persons or entity by name or in such a way as to make him, her or it identifiable.

I invite Mr. Byrne to make his opening remarks following which I will invite members to put their questions to him.

Mr. Dermot Byrne

I thank the Chairman for the opportunity to brief the committee on what we believe is a ground-breaking piece of work, one which will enable us to move forward with confidence in terms of meeting the technical challenges and the Government's target of 40% renewables by 2020.

Most members of the committee will be aware of EirGrid. This slide summarises the responsibilities that EirGrid has in respect of the operation of the power system on the island of Ireland and also the operation of the wholesale market. As members can see, through our subsidiary company, System Operator for Northern Ireland, SONI, we operate the power system in Northern Ireland. We operate the power system in the South through EirGrid TSO and on the island of Ireland we also operate the wholesale electricity market through SEMO, the single electricity market operator. Members of the committee will also be aware that we are developing the east-west interconnector between Ireland and Wales, which is a key enabler in terms of achieving the targets that have been set for us.

To set the study in context, policy in regard to renewables in Ireland has evolved in the past ten years. A key driver in all of that is Ireland's reliance on imports of energy. A total of 95% of energy requirement is from fossil fuels and given the challenges of climate change, the depletion of fossil fuel reserves over time and also the reliance on imports, Ireland needed to develop a policy in that space to address all of those policy challenges.

In 2003 the policy was developed whereby a target was set that 15% of electricity would be generated from renewable sources by 2010. I am happy to say that already we have enough capacity to deliver that target in Ireland.

Looking to the longer term, in 2005 the target of 33% of electricity from renewable sources was set. To examine the feasibility of delivering that target the two Governments on the island caused to be undertaken an all-island grid study which examined what is technically feasible on the island of Ireland by 2020. That study, which was presented to the Oireachtas and to various committees, showed that 42% was possible but that further studies were required in terms of the technical and dynamic characteristics of the power system. That is the point we want to address today. We want to brief members on those further studies.

Based on the output of the all-island grid study which stated that a target of 42% was possible, the Government set a revised target from 33% up to 40% of electricity from renewable resources. That is the policy to which we are all working. This has been a very clear policy statement by Government and one that has galvanised all the parties in the industry towards making that happen. As a key player in that, EirGrid is very focused on delivering that 40% target in so far as we have any control over that.

In 2009, we had the renewable directive, which is a binding directive on all the countries in Europe. As members will recall, that goes back to the 20-20 by 2020 target which requires that by 2020, 20% of energy in Europe will be delivered from renewable sources. When that is translated to Ireland, the target for Ireland is 16%. That is across electricity, transport and heating. That 16% was broken down recently in NREAP, the national renewable energy action plan and for Ireland to deliver 16% by 2020, it requires that renewables in electricity must achieve about the 40% target. That aligns with the 40% target that has been set by Government. That leads me on to the work we are doing in EirGrid to facilitate the integration of what is a very challenging target for Ireland and which in turn leads to the facilitation of renewable studies. I mention this by way of setting the study in context.

On the question of targets, the slide shows the challenge we have set for ourselves in Ireland in terms of electricity produced from wind. As we have some hydro sources a very small amount of hydro energy will contribute to the 40% target, which means we will require 38% from wind, but members can see that relative to most other countries in Europe our target of 2020 is significantly higher.

This slide is based on figures published by the European Wind Energy Association in 2009. As I said, binding European targets are on energy overall and not on electricity specifically nor on any one technology. However, this is the information we have available and we believe it is accurate.

We are aware that other European countries are in the process of setting higher targets for later years. Denmark is talking about going beyond 40% for 2025 but these are the targets for 2020, and members can see that Ireland has set itself a much more challenging target for 2020.

The issue for Ireland in this is it is an island. To become somewhat technical, we are what is called a synchronous system on the island of Ireland. A synchronous system means that all of the generators on the island are held together and move together in synchronism. The frequency in the plug in this room, for example, is the same frequency as the frequency in Belfast, Derry or elsewhere. All of the machines turn in synchronism and they are held in synchronism by that synchronising power in the system.

Great Britain is another synchronous system in its own right. The totality of mainland Europe is a very big synchronous system. Members should think of this in terms of the weight of the system turning. Ireland is relatively light but because of the sheer number of nuclear and coal fired power plants all turning at the same speed in mainland Europe, the sheer physical momentum or weight turning gives a huge stability to that system. That is important when we talk about wind power because wind has a very different dynamic characteristic than the heavy machinery that goes in to generate coal fired or gas fired power or whatever. The heavier the system, the more stable it is. When we put a great deal of wind power on a light system it causes particular challenges for Ireland. In a double challenge we are faced with much higher levels of wind and also a lighter system.

I want to make one other point regarding this slide. This figure of 38% is an average figure across the year. It is average because we are all aware that some days the wind blows but some days it does not; today is a very strong wind day. I was looking in the control centre before I left and we were generating 25% of electricity from wind at lunch-time today. One only has to go outside to know that but one day last week it was effectively down at zero. If we are to get 40% on average, we have to go much higher at times when the wind is blowing to compensate for the time the wind is not blowing. The issue for us as operators of a reliable, secure power system is what we let that go to at a point in time without compromising the security and the safety of the electricity supply we all enjoy. That is the essence of what we are talking about.

In terms of the all-island grid study conducted and in which we participated and which was a ground-breaking piece of work at the time, this is the output of it. It states that the limitations may affect the technical feasibility of the dispatches, and follow on studies were required. Three different types of study were required. One was a focus on the technical issues surrounding the dynamic behaviour of the system, which is what I am talking about today, to accommodate very high levels of renewables at points in time to get to the average 40%.

There were also other actions we had to take collectively in the industry. The second one shown is around the detailed network planning studies in terms of the kind of grid we need to develop to take the power from where it is generated to the market where it is needed. We have briefed this committee previously on our Grid25 strategy which addresses that issue.

The third issue is an evaluation of the portfolios under the conditions of real markets. In other words, we need to ask does the wholesale market facilitate the integration of renewables and how does the market deal with what is effectively a zero incremental cost but a high capital cost source of power. The Commission for Energy Regulation undertook to do that work and we are working with it because we operate the market. Therefore, we have a good sense of what is happening there. Today the focus is on the technical follow up dynamic studies.

Before Mr. Bryne proceeds, I want to advise him that I do not understand the first two points in the presentation, namely, the limitations and the focus of technical follow-up studies on the dynamic behaviour of the system. I have not grasped those points.

Mr. Dermot Byrne

This is the essence of what we want to discuss. This slide may help. It shows the wind output onto the system for last week. The green line on the graph shows the wind output onto the system. At the start of the week the wind generation was 400 MW, then it dropped to 50 MW and then on 6 September it went up to 1,160 MW, which is a very high level. Given that we have installed capacity of approximately 1,460 MW, 1,160 MW is a very high level. The record at that point in time last week is our all-time record of wind generation on the system. Members will note how the wind generation varied up and down over the course of the week.

The issue for us is that at the very high level reached wind was generating approximately 41% of the total generation on the system. If we have more wind on the system, which is lighter, we must have less of the heavier machinery on the system. We then begin to worry about the stability of the system. If members can imagine a heavy truck being driven across a rough road, they will appreciate that the sheer momentum of truck will keep it going, but if one was driving a much lighter vehicle, it would be all over the place, so to speak. Therefore, the weight of the system is critically important. Effectively, wind generation has very little weight on the system, whereas the sheer momentum of the big rotating masses at Moneypoint and Tarbert, rotating at 3,000 revs per minute, keep the system stable at a point in time. As the heavier machinery is taken off and lighter machinery is added to the system, the system gets to a point where we begin to worry about its stability. If the frequency bobs around too much, suddenly we start tripping off and losing customers off the system. The issue for us, as prudent operators of a system, is how can we keep the system stable.

What critical mass is required in terms of the weight on the system?

Mr. Dermot Byrne

That is exactly what this study was intended to examine, how far we can push the envelope, so to speak. The Senator's question is spot on. The purpose of this study was to examine how far we can push that envelope without compromising security. This is a cause of worry for all countries but more so for a small island because the sheer weight of the size of mainland Europe means that it will not reach this level for many years.

This study is ground-breaking because we have to be first in this area. It has already been picked up around the world and we have been asked to travel to other countries to talk about it. It is a ground-breaking study. It was undertaken over a period of 18 months. It required more than 100 man-months of efforts. It is a joint venture between EirGrid and SONI, our company in Northern Ireland. This is an all-island issue because of the nature of the all-island system.

We set out to examine the technical challenges involved in integrating these huge volumes of wind power onto the system. We brought on board research consultants who worked with us, Ecofys, Siemens and Ecar. They were all commissioned by EirGrid and SONI to examine different aspects of this. Overall, we carried out thousands of modelling simulations, using sophisticated modelling software, to explore the limits of what it is technically feasible to do.

If there is wind, the technical character alters the dynamic characteristics of the power system and understanding these changes is fundamental if we are to develop operational strategies to manage the power system. If we do not know what problems we face, we can be sure they will hit us. Our strategy is to identify the problems through modelling well in advance of being hit by them to enable us to develop strategies to manage them and effectively learn ahead of incurring the problem on the system. None of us wants to compromise the security of the power system in any way and we certainly will not do that. Our fundamental mandate is to have a secure and reliable power system. We will be careful but we want to make sure we understand the issues in order to develop strategies to address them.

This is the first study of its kind to examine operating a system with up to 100% wind in real time. We had peer reviews on this study because it is critical for Ireland. We wanted to make sure that we were on the right track. We worked with competent peer reviewers who examined what we were doing at every stage along the way. We also involved the industry at every stage along the way. Therefore, there are no surprises in it for anybody in the industry. That was critical to bringing stakeholders on board. The wind industry and the Wind Energy Association have had an input into this study and are familiar with its findings.

I will now turn to the main findings of the study of which members probably had a copy. It is a technical study and I want to keep the presentation at a high level in order that the members understand it. The main findings of the study indicate that the integrity of the frequency response and the dynamic stability of the power system are potentially compromised at high instantaneous penetrations of wind. We know there is a problem there. The modelling used in the studies suggest that voltage and reactive behaviour of the system is also directly related to the performance of all generators on the system. This will require significant management over the coming years. This is not only about wind energy, we also have to manage the other generators who are providing essential services to the system. Everybody has a part to play in this.

The core message from the study is a positive one in terms of Ireland meeting its 40% target. That is the message I want to leave the committee with today. The area covered in green on this slide, which represents 50% of supply coming from wind energy, shows that we are comfortable operating to the level of 50% of our supply coming from wind energy. The figure of 50% is shown on the top of the graph and the area represented by that 50% is coloured green. There was a point in time in April where we operated the power system with wind power delivering 50% of our energy supply. That was a milestone we reached last April.

The issue for us is how far can we push that boundary. The studies show that we can potentially go to 75%. That means that on a particular day, be it winter or summer or day or night, we could be sitting here with lighting and everything with the same security of supply with 75% of our supply coming from wind energy. That is staggering and we are saying it can be done. However, there are things that have to happen to make it possible but we know what they are. We must examine, for example, the protection systems on all distribution connected generation. Currently, if there is a problem on the system, the danger is that if the frequency falls very quickly, as well as the problem, we will exacerbate matters by tripping off all of the other generators. That would be a negative spiral effect. We have to work with our colleagues, ESB Networks, to address that issue and change out the protection on the system to ensure that does not happen. There are other things we have to do in terms of our operational procedures in the national control centre. We are currently working to put in place sophisticated systems and decision support tools for the engineers who have to operate this potentially unstable system around the clock. What we are saying is that we do not see a way of going beyond 75%. The good news is that even if we stop at 75%, that delivers the 40% target; we have done the sums and it is all set out in the report. That is the good news story here.

To summarise, the power system with 40% of renewables can be technically operated. However, there is work to be done to make that happen, and we have time to do this work. New generator and distribution protection schemes are required and we will work with our colleagues in ESB Networks to put those in place. We must also ensure that the existing conventional generators comply with the grid code. The more they do not comply, the less space there is for wind on the system. We are doing much work in that regard and we will work urgently on those issues.

The network is an essential enabler, but we are not here to talk about the network today. That is the Grid25 on which we have already briefed the committee. Interconnection is another key enabler. We have already briefed the committee on interconnection. As members know, we are building the east-west interconnector. We have also carried out studies to examine further interconnection beyond the east-west interconnector. Much work is taking place in that regard. At this point in time, the upper limits to instantaneous power from wind, subject to doing all this work, is of the order of 75%. The good news is that it enables us to reach the 40% target. This is an all-island study, so it applies on the island of Ireland, north and south.

That is a very high level summary of what is a very technical report. I sought to keep it at a high level for the committee.

Thank you, Mr. Byrne for an interesting submission. I call Deputy Doyle.

I thank Mr. Byrne. In his summary he said that interconnection helps. Is it more critical than that? Is the 75% attainable without interconnection? There are a couple of issues. One is the supply of other sources when the wind does not blow and the other is to allow the complementary, more traditional systems to continue to operate at an economic level. Will they have to be able to go into the system when the wind is not blowing? As Mr. Byrne said, they build up momentum when they are working so one does not shut them down and start them up too easily. How will they continue to work in a system if they are enclosed on an island that is moving towards the 75%? I do not see how that is possible without interconnection. I am not picking holes in Mr. Byrne's statement that interconnection helps but I would have considered it to be critical.

Mr. Dermot Byrne

The Deputy is right that interconnection is critical. It could technically be done without interconnection but the cost of it would be enormous. It would mean considerable constraining of the wind, which would have huge implications for the market and for the developers. If we did not have interconnection, we would have to constrain wind off to keep the conventional generators on. That would be very expensive, so interconnection is absolutely critical. When the wind is not available, it means we can import, and when the wind is blowing, we have something we can export. We believe further interconnection is economical and beneficial. Certainly, the interconnector we are building is critical.

On that point, we have concentrated on wind energy today but when we talk about renewables, we talk about other technologies. We had a discussion prior to the meeting about some of them. If one is to build up a core of energy delivered in a renewable fashion, it will be necessary to have interconnection to allow it all to stack up. Otherwise, one will have a rattley bus full of people with everybody falling off.

It is exclusively wind energy at present. Does Mr. Byrne envisage any potential for wave energy?

Mr. Dermot Byrne

Much good work is taking place on wave and ocean technology at present. Ireland, in particular, has very good entrepreneurial companies working in that area. The Government has set a target within the 40% of 500 MW by 2020. I do not know what will actually be delivered. The technology will have to be proven in a very harsh environment but we are working very closely with the industry and we are involved in the various bodies examining this. We are very supportive and we are working with the industry on it. It will be some time. Wind is commercially available at present.

It is more advanced.

Mr. Dermot Byrne

Yes.

I thank Mr. Byrne for, as ever, a most impressive, progressive and informative presentation. He is aware of my basic worry about EirGrid, that despite all its good work some right-wing Government will sell it. I thought about that again last month when I saw a report that Davys recommended National Grid as an investment stock in the UK. I intended to telephone Mr. Byrne to bring it to his attention. That is my worry. My criticisms are never about EirGrid's work but about what a disreputable Government looking for a couple of hundred million or half a billion euro will do.

What Mr. Byrne has told us today is mind blowing but also extraordinarily worrying. I am open to correction but this is the first time we have heard in such stark terms that we need a stability and growth pact in the wind energy sector. That is hugely important. Mr. Byrne gave us a number of figures. Our objective is to have an average of 40% renewable energy. He said we would maintain stability up to 75% instantaneous penetration of wind energy at a given time. I have in mind wind farms and people who are trying to build up business plans or to set up in this area. It is a fact that the wind does not generally blow all over Ireland at any one time every day. Assuming that we generally need 5,000 MW for 100% capacity and assuming the grid wished to achieve the 75% when it was available, what would be the potential output of wind energy farms all over Ireland, given that the wind will not always be blowing and they will not all be generating together? Perhaps that is part of the study EirGrid is conducting but it is crucially important to all the people who are currently developing wind farms in different parts of the country. We need to know where that is going.

The other issue is one which I hope Mr. Byrne can explain in simple terms. I am a primary school teacher and I want to be able to explain it to a sixth class if I must. Take the example of the day two weeks ago when 50% of energy was coming from wind. Who decides whether a turbine will be turned down in Ardnacrusha or to stop energy coming in from overseas? Mr. Byrne said it must be checked and balanced and I understand that; but how does that work?

There is another matter on which I am not clear. I understand EirGrid does the spot price of electricity every half hour or every two hours or whatever. I also understand that when it is doing that, it is required to give priority to renewably generated electricity. How does that fit in with the regulator, the Competition Authority and the market? In other words, is EirGrid buying dearer electricity than what might be available because of the legislation?

In addition, when importing electricity via the interconnector from the UK and elsewhere, can EirGrid make a decision as to whether it wants electricity that is non-nuclear sourced, for example? I would like an explanation of how that works.

We have never discussed stability in any great detail. This is a new concept to me but it has been explained very well in that wind is a bit jittery while ocean is very solid. This brings me back to the point raised by my two colleagues about ocean. Ocean is not jittery. Off the Mayo coast, the average wave height over the course of the year is 2.5 m. Mayo and the Chairman's constituency have the most potential in Europe. Would that not provide stability? Would it not be a driving force? The ocean does not shut down. Would that not make a difference if one was getting it from there?

EirGrid told the committee some years ago that it was also in charge of Turlough Hill. That is very inefficient but at least it gets approximately 75% back of what is pumped up the hill. Is there a way that EirGrid could take the excess energy generated through renewables, which it does not want to put into the system because it might create instability, and put it back into electricity generating electricity coming through a turbine system? I know that would not be 100% efficient but considering Turlough Hill is only 75% efficient, in other words, one only gets back 75% of the energy one pumps up the hill, is that something which could be considered? That is very important.

I asked earlier about the critical mass of legacy generators that EirGrid requires in the system. I think EirGrid said 25%. How does that deal with REFIT, regulators, the market and all the things I mentioned? I want to get a picture of that. In the main, this committee supports the excellent work EirGrid is doing but I have concerns about the market, about there being not enough renewables, although I think what its representatives said today has reassured me on that, and about what we are importing, which is a bit like abortion in that we will not allow nuclear energy to be generated in Ireland but we do not have a problem importing. If we are importing nuclear energy, I would like us to know we are doing that.

What are we putting into research and development on an intellectual and third level basis? I asked EirGrid that before and we discussed this earlier in the private session of the meeting. For instance, if we are going to have fuel cell developments in rural Ireland, it will have to be hydrogen in the future. Hydrogen cars are now on the market in California and other places. Is EirGrid putting money into scholarships, fellowships and third level places where this kind of work should be done? What EirGrid needs to be complimented on and what we need to look at again is in regard to what Mr. Byrne said today. His team is leading Europe in this development about the critical mass issue in the system. The reason I say that is that we have been here before and we lost the initiative. We lost it in terms of Internet access. It is interesting that the point was made about testing ocean energy. We tested it off the west coast of Ireland. Wavebob was the main one. We have now been overtaken by north Scotland and perhaps by Portugal to where Wavebob has gone. It is now tied into the system in those two countries. I worry that we could make advances here on which we could lose the initiative some time in the future.

Mr. Dermot Byrne

I will call on my two colleagues to help me because a lot of good technical questions were asked. I will top and tail them if that is okay and will then hand over to my colleagues. We have talked about the potential of selling off EirGrid before.

It will not be EirGrid's decision.

Mr. Dermot Byrne

It will not be our decision. All I can say is that I think there is political uniformity across all spectrums of political life. The networks, the grid and the people who operate the grid are very much national infrastructure and people have learned the lesson from Eircom so I would be very surprised if that happened. However, the Senator is right. It is not our decision; it is our shareholders' decision. Obviously, we would work with them on that but I do not see it happening.

We are very active in research and development more at the development end but not so much on generation technologies because we must be market neutral. It must be about how one integrates these new technologies. We are market neutral and we cannot favour one or the other. Obviously, we will work with Government policy. Once a policy is set down, we will work very clearly on that.

We do a lot of analysis. We briefed members on the Pöyry report the last time we appeared before the committee. It looked at 2035 and at the options for Ireland in 2035 across the different technologies. We put that into the public domain to facilitate a debate on it.

I refer to the work at which we are looking today. Jon O'Sullivan was the manager of that piece of work. It is very much in the development space, not so much research. We work very closely with universities. We support and are a founding member of what is called the electricity research centre in UCD. Recently, we participated with a large part of the industry, UCD, various other colleges, Intel and other parties, in putting together what is called a strategic research initiative which is looking for funding from Science Foundation Ireland, SFI. We made a very strong presentation collectively to SFI in terms of getting funding for that strategic research initiative, of which we are very much part. We do work in terms of building the intellectual capacity of EirGrid and the country.

I refer to our founding membership of the electricity research centre which has generated high quality people. My two colleagues come from that process. Jon O'Sullivan is a PhD who came out of that ERC process. Fintan Slye also came out of that process. The benefit for companies like EirGrid is that it gets quality people working well up the learning curve joining it and who are able to continue that development work. I will hand over the operational questions to Fintan Slye and Jon O'Sullivan.

Mr. Fintan Slye

The Senator asked about some of the numbers, how they stack up and the 40% and the 75%. When one has a maximum instantaneous penetration of 75%, it can get one 40% average over the year. That is what we looked at. In terms of the numbers and how that stacks up on a real-time basis, the Senator is right that the maximum demand on the system is approximately 5,000 MW at peak demand. To meet the 40% renewables target, one needs approximately 4,600 MW of installed wind. They are approximately the numbers based on projected demand.

What is it at the moment?

Mr. Fintan Slye

It is approximately 1,400 MW, so we need about another 3,000 MW.

It is important to reassure people. That means the development of wind farms should continue apace for quite a while without any problems and that EirGrid will be prepared to take up to 75% of the 5,000 MW, which is our current usage. I am speaking in broad figures. Is that correct?

Mr. Fintan Slye

Broadly, yes. There needs to be a year-on-year significant plan for wind farms to 2020 to do this.

Mr. Fintan Slye

What we have seen is that the systems and processes we have in place today can allow us to manage 50% instantaneously on the system. By dealing with a number of the issues we identified in the report, over the next number of years we will be able to push that limit from 50% to 75%. We need to do a number of things to get to 75%.

Is EirGrid rejecting energy from renewables at the moment? Has it reached a stage of curtailment, to use that terrible word?

Mr. Fintan Slye

At times we have had to curtail. It typically happens overnight when demand is at its lowest. While 5,000 MW is the winter evening peak demand, overnight it can get down as low as 2,000 MW and when one considers one needs a certain tranche of the conventional generation in place, we have had to curtail. In terms of overall energy from wind, the amount of curtailment to date has been very small — on a few occasions overnight to manage the situation for a number of hours — but as the amount of wind energy increases, we need to push that 50% up to 75% to manage that level.

That is an improving scenario.

Mr. Fintan Slye

That is an improving scenario over time. In terms of the amount of wind that needs to come on stream, one needs to get perhaps 300 MW plus each year to reach the level of 40% by the end of the decade.

Senator O'Toole asked who decides which turbine to turn down when we must do so. That is done by the national control centre on apro rata basis across all wind farms that have control systems. Those large wind farms that are connected to the transmission system have control systems that allow the national control centre to send signals to wind farms. In physical terms, it slightly fetters the blades of the specific wind turbines.

How does that work? That still does not answer my question. What is closed down? That is how it is done, but how is a decision made to do so, not from here but from there?

Mr. Fintan Slye

If, for example, there is 1,000 MW of wind energy and the forecast projects it is to increase and there is a need to get rid of 50 MW of it, the control engineer in the control centre would decide he needed to curtail 50 MW of wind energy to keep within the security limits. The systems then apply thatpro rata.

It ispro rata, I understand.

Mr. Fintan Slye

He would put that in and it is distributed. The generators get compensated for that within the market today. They get what is called constraint payments in the market today to compensate for that.

My interest in this, as Mr. Byrne will know well, is that when EDF eventually buys EirGrid out, it will be Henri in Paris who will press the button. I want to know which button he will press to turn off the west coast of Ireland.

Mr. Fintan Slye

No, Henri will never switch off the wind farms. Senator O'Toole need not worry. It is currently done on the basis that it ispro rata. These systems that allow us to control the wind farms directly from the control centre are unique to us. They are ground breaking in terms of the level of control we have put in place. That is how we decide where to do it.

Senator O'Toole asked about priority of dispatch. This is in place today for renewables, peat and combined heat and power, CHP. These are given priority of dispatch within the control centre and within the market as well.

Has EirGrid told the Competition Authority?

Mr. Fintan Slye

Yes.

Were there any problems?

Mr. Fintan Slye

There have been no problems. From a wind perspective, wind energy has zero variable cost and such generators are almost always the cheapest and would bid in at zero. In the market, generators bid in at their variable cost, 95% of which would be the avoided fuel cost of gas, oil or whatever they are burning. In terms of cost, wind would always be at the bottom of that anyway.

The priority of dispatch for wind is underpinned by a European directive. Mr. Byrne mentioned the RES directive which enshrines the priority of dispatch for renewable sources within wind.

The Senator asked whether EirGrid can decide on importing. We do not decide the source of the import. The Commission for Energy Regulation publishes on its website the energy fuel mix by supplier at the end of each year. It asks each supplier which has imported over the interconnector where it got the energy from and whether it had any contracts in the UK, for example, with a gas-fired generator or whatever. If the supplier has contracts for it, the regulator will reflect that in the fuel mix scenario. If there is any significant proportion of nuclear in it, it is reported. There was one year; it was 0.01%. The statistics on it are available after the fact, but it is tiny as a percentage.

Senator O'Toole also asked about wave energy and the degree to which that would add stability to the system. In part that depends on which wave technology ultimately wins and becomes commercial. At present, there are a number of different——

I refer to wave as opposed to tidal energy.

Mr. Fintan Slye

Even within wave energy, there are a number of technologies where companies are investing substantially to try to get to the commercial stage and some of them are synchronous. Most of them are non-synchronous though, which means that they do not add weight to the system.

There are a number of technologies and there is significant investment worldwide in different technologies because for the one that wins out ultimately, there is a huge prize. Wavebob is a good example of one that is under way. It is investing massively in Scotland and Canada, and there is the ocean test bed place in Belmullet.

I think that Canadian one is from the Irish company.

Mr. Fintan Slye

Yes.

I thank Mr. Slye.

I have two or three short questions. The consultants stated in their report that there are challenges for power system economics, project viability and regulation, and these matters were out of the consultants' control. How does EirGrid propose to address these issues?

On interconnection, how will we know if and when we need more interconnection and how quickly can it be provided? Are there downsides to the increased interconnection? Is there a risk of higher wholesale prices for electricity as a result and are we being more exposed to the British market? Will interconnection be freely available for wind exports when required for systems stability reasons?

Mr. Dermot Byrne

On the issue of economics, this is a very technical report and it looks specifically at the technical challenges of that point in time and how we stretch the boundary on that. It does not deal with the economics but I suppose the economics is dealt with separately. All we are talking about here is the 40% target which we are obliged to meet under our EU obligations.

Mr. Fintan Slye

In terms of economics, there is a consultation with the commission on the scheduling and dispatch of wind farms which also goes to how they are paid in the event that they are curtailed, which is one of the key economic challenges to which Senator O'Toole referred at the outset of his questions. There is work under way in conjunction with the regulators on how that economic problem will be solved.

Mr. Dermot Byrne

As the committee will be aware, EirGrid is developing the east-west interconnector with a 500 MW capacity, import or export. There is an existing interconnector from Northern Ireland to Scotland, the Moyle interconnector, which has a nominal capacity of 500 MW but is limited from an export point of view. We have carried out and published work on the economic feasibility of further interconnection. Everything we have done, all of our studies, including the Pöyry report on which we reported to this committee in June last, indicates that further interconnection is economically advantageous to Ireland, and more so the more we go to higher levels of renewables. There is a high degree of compatibility between high levels of renewables and interconnection for the reasons of which we have already spoken.

We are providing an interconnector and the facility for market operators and developers to trade over it. We are making that available in an operational sense. The rules around this are regulated by the European Union anyway and this is a regulated interconnector. We are making this interconnector available to any party that wishes to trade through it. The process will be open and transparent.

On the question of whether there is a risk of higher wholesale prices, the more interconnection we put in place, the more the two markets will be coupled. EU policy in this area is, ultimately, to develop a single electricity market. That will happen through the development of regional markets. Such markets will come about by virtue of the coupling of adjacent or neighbouring markets. There may well be times when the price in Ireland will be set by a generator in the UK orvice versa. What we must consider is the totality of that and the overall economic impact. We believe the latter is positive for Ireland.

I thank Mr. Byrne and his colleagues for their presentation. I apologise for the fact that I was obliged to leave for a short period but I was following proceedings on the monitor. I welcome this opportunity to pose a couple of brief questions.

It is clear that there is a need to improve our level of interconnection. The EU supergrid is probably what Mr. Byrne was referring to when he mentioned an EU single market. Will he elaborate on where matters stand in the context of making such a market a reality? On the question of further interconnection, adopting an approach whereby centres of population are avoided might perhaps make matters somewhat easier in the context of implementing the policy required in this area. Notwithstanding the technical details involved, people do not need to be reminded that it can be quite difficult to deal with the political aspects relating to it.

I wish to inquire with regard to the equation relating to the import and export of energy. In political terms, this is quite important. Some almost poetic statements relating to Ireland's potential to be the Saudia Arabia of wind energy production, etc. have been made. To a large extent, the interconnectors will be dealing with exports of energy. The graphs provided by our guests show current levels of wind energy generation. Is it possible to average out over a year what might be the potential balance between imports and exports when interconnection is fully operational? It was stated that the Moyle interconnector is not great in terms of exports but perhaps our guests might indicate the position regarding the east-west connector. Is there a target figure in respect of the balance to which I refer? Will it be 50-50, is it the aim that Ireland will predominantly export energy or will we be obliged to rely on imports? What is the overall target in this regard?

Mr. Dermot Byrne

Everyone is familiar with the concept of the supergrid. Perhaps it might be best to draw an analogy with the evolution of the terrestrial grid that is currently in place. The latter began with the Ardnacrusha scheme in the 1920s. To get that energy to market — at the time the project in question was deemed to be a white elephant and it was stated that it was too big for the country — a double-circuit 110 kV line between Ardnacrusha and Dublin and another line to Cork had to be put in place. That was the genesis of the grid, which — with the development of peat-fired generating stations in the midlands and hydroelectric projects on other rivers and the industrialisation of the country — evolved over time. We developed the 110 kV network in the 1950s and 1960s and in the 1970s we developed the 220 kV network. In the early 1980s we developed the 400 kV network to bring energy generated at Moneypoint to market. That is how the grid evolved.

I am of the view that a similar evolutionary process will apply in respect of the supergrid. The technology relating to the supergrid is HVDC rather than AC. We are developing a point-to-point link between Ireland and Wales, which is easy. Matters become more complicated, however, when dealing with multi-terminal HVDC systems. A great deal of research is being carried out in this area and it will be very interesting to see how the supergrid evolves. It will evolve on the basis of the roadmaps people develop. Its evolution will also be driven by European and national policies. I expect to see it evolve over time as individual projects become commercially viable. When the latter occurs, developers make things happen.

Everyone is aware that in the next ten years Europe will be taking a strategic interest in this area in the context of developing and using the concept of the supergrid to tap into the resources that exist, for example, in the northern seas and — in the context of solar power — in north Africa and the southern Mediterranean. A huge amount of work is going to be done and it will interesting to see how the supergrid evolves.

We are playing a part in all of that. EirGrid is a founding member of the European Network of Transmission System Operators for Electricity, ENTSO-E, which has now been placed on a statutory footing within EU legislation. We are carrying out studies at present in respect of the level of interconnection among the ten countries of the northern seas that will ultimately be both feasible and economic. Those studies will feed into the European Commission's considerations later this year.

In the context of the Deputy's question on interconnection, when the east-west interconnector is in place by 2020 and when our level of renewables has reached 40%, there will be an overall net import of energy. However, there will be times when we will be exporting and times when we will be importing. That is really what one would expect. The level of trading through the interconnector will be determined by the cost of gas, coal and carbon. Those factors will vary over time. On any particular day, the level of trading will be determined by these factors. When we include the forecast cost of carbon, gas and coal — we are using International Energy Agency, IEA, forecasts in this regard — our research shows a net import. However, this masks a significant export and a significant import. Energy will be exported when there are high winds and imports will occur when there is no wind. That is really what we expect to see happen.

The assertion that Ireland might become the Saudia Arabia of wind energy generation relates to a different question, namely, whether we can go beyond the 40%, develop an export industry, either from offshore wind generation or by means of ocean technology, and work with Europe to export many of the resources that exist here. The question to which I refer will require a different solution and might even involve not bringing energy generated offshore to Ireland but rather supplying it directly to Europe. A great deal of work is being carried out in this area.

The other issue to which I referred involves ensuring that future interconnection projects do not involve laying cables, etc., down the middle of main streets.

Mr. Dermot Byrne

This matter is being discussed at a separate forum. The planning system has been significantly strengthened by the establishment Strategic Infrastructure Board, SIB, which the Oireachtas put in place, and this gives people the opportunity to lodge objections and tease out alternatives. As a developer, EirGrid must be guided by what the Legislature puts in place. There is no doubt that we must work with communities — we are also working with the committee in this regard — in the context of addressing the issues that are raised with us. I hope progress will be made in this regard.

I would have a question along those lines myself, Mr. Byrne, while my colleagues have addressed the wider issues. Your target of 40% by 2020 is very ambitious. Wind energy is a very live issue in my own neck of the woods and along the western seaboard. Do you foresee obstacles from the point of view of planning? I am aware of one application in my own county for, I think, 32 turbines which has been cut by half to 17 or thereabouts. That is a very big reduction. Counties and local authorities are currently publishing their county development plans. Would it be a good idea to incorporate into those plans certain areas that would be suitable locations for these facilities? That might prevent continual objections that prevent you reaching your target.

Mr. Dermot Byrne

We are very conscious of that. If there is a wind farm we have to develop grid to get the output of that wind farm, or collection of wind farms, to market. The 40% target is set by Government. What we have to do is find ways of delivering the target. I agree that there is a range of issues, including planning. Some counties are, perhaps, more advanced than others in their thinking on designating certain areas for wind development. I am not an expert in this area but it is my understanding that some counties work very constructively in identifying those parts of the county that are better suited for wind. What we then have to do is develop the grid to take that wind energy to market. That is a big challenge for us.

It is not just a challenge for us. We are a public service organisation. It requires everybody working together, including public representatives. It will not be EirGrid alone doing this. Everybody must work together to deliver it. This is a big challenge and I do not underestimate it. This is what we have to do. We must all work together on this.

As there are no further questions I would like to express my own thanks and that of the committee to you, Mr. Byrne, and to your colleagues for the way in which EirGrid studies have contributed to and advanced the agenda of this committee. We look forward to further interaction with you in the future. Thank you very much. Your presentation has been very helpful.

The joint committee adjourned at 4.35 p.m. until 2.30 p.m. on Wednesday, 29 September 2010.