Joint Committee on Environment and Climate Action debate -
Tuesday, 25 Jun 2024

Long-Duration Energy Storage: Discussion

An Cathaoirleach

The purpose of the meeting today is to discuss long-duration energy storage. On behalf of the committee, I welcome the following witnesses to the meeting: Mr. Bobby Smith, head of Energy Storage Ireland; Mr. Brian Kennedy, chairperson and head of client origination at ElectroRoute; and Mr. Paul Blount, portfolio director with FuturEnergy Ireland and chair of Energy Storage Ireland's long-duration storage working group.

I will read the note on privilege, which reminds our guests of the long-standing practice that they should not criticise or make charges against any person or entity by name or in such a way as to make him, her or it identifiable, or otherwise engage in speech that might be regarded as damaging to the good name of the person or entity. If their statements are potentially defamatory in relation to an identifiable person or entity, witnesses will be directed to discontinue their remarks and it is imperative that they comply with any such direction.

Members of the committee are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside of the Houses or an official by name or in such a ways to make him or her identifiable. I remind members that they are only allowed to participate in the meeting if they are physically located on the Leinster House complex. I ask those members joining us online to confirm that they are on the grounds of Leinster House prior to making their contribution to the meeting.

I invite Mr. Smith to make his opening statement.

Mr. Bobby Smith

I thank the Cathaoirleach and members. Energy Storage Ireland is a representative body for the energy storage industry in Ireland and Northern Ireland. We represent 70 member companies from across the energy storage supply chain, and all energy storage technologies that will play a vital role in decarbonising Ireland’s electricity sector. Our aim is to deliver the energy storage technologies needed to support Ireland’s climate action plan and ultimately to enable a secure, carbon-free electricity system on the island of Ireland by 2035.

The climate action plan has set ambitious targets for carbon emission reductions in the electricity sector by 2030. However, the EPA recently projected that we will overshoot our carbon budgets this decade by nearly 5 million tonnes of CO2, even with onshore and offshore wind and solar PV providing 80% of our electricity by 2030. These missed targets will be factored into the post-2030 carbon budget, which means that the electricity sector will need to be zero carbon well before 2035.

As more and more wind farms and solar PV are built out, this will bring significant challenges to the power system in terms of accommodating large volumes of intermittent renewable electricity. EirGrid’s Shaping our Electricity Future analysis, which modelled the 2030 power system, projects significant renewable surplus as there will be many periods where supply of renewables exceeds demand. Its analysis shows that without substantial investment in solutions such as energy storage,nearly one third of all renewable electricity will go to waste. There is also the issue of congestion, which occurs where the grid cannot carry the available renewable electricity and it must be turned off or turned down. Grid congestion is a significant issue today in several areas of the grid, most notably the west and north west, where renewable generation tends to be located far away from demand. The grid needs to be upgraded but these projects will take substantial time and even the projects that are planned will not fully solve the congestion issues that many areas are facing. All this means that, without appropriate solutions, the cost of renewable electricity will be higher than it needs to be and we will not remove our dependence on fossil fuels during those times when we cannot access our abundant renewable energy resources.

With the volumes of onshore and offshore wind and solar PV which the Government has targeted to deliver by 2030, it is very likely that we will be able to generate enough renewable electricity in aggregate to enable a fully decarbonised power system by the end of this decade or very soon after. The problem is that this renewable electricity is dependent on weather patterns, is not always being generated at the exact times and in the exact quantities we need and is often generating more than we could feasibly use. Energy storage is a key piece of the solution that bridges the gap between renewables and zero-carbon electricity. Energy storage is any technology that can store renewable electricity when there is surplus or when the grid cannot accommodate it and move it to another time when we can use it. This ability to time-shift large amounts of renewable electricity means we can remove our reliance on fossil fuels and deliver a secure, carbon-free system. Wind and solar will get us to 80% renewable electricity and energy storage can provide the majority of the remaining 20% of electricity we need to decarbonise.

Ireland has seen a very successful deployment of short duration lithium-ion battery storage with 750 MW of batteries currently operational providing important grid stability services via EirGrid’s DS3 framework. These batteries are helping to remove our reliance on fossil fuel generators for fast-acting reserves that ensure electricity supply remains stable through any potential short-term system instability issues. However, these batteries have relatively limited energy durations. The length of time they can supply their full power is between 30 minutes to two hours on average. As such, we need storage which can absorb large volumes of energy and can supply power over long periods, ranging from several hours to days and potentially even weeks. There are a variety of established technologies such as pumped hydro storage and lithium-ion batteries, as well as emerging technologies such as liquid air, compressed air, green hydrogen and new batteries using sodium or iron to name a few. It is unlikely that any one of these solutions will meet Ireland’s long-term storage needs alone, rather a portfolio of storage solutions will likely be required.

The issue in Ireland is that there is no investment signal today for long-duration energy storage. The electricity market was designed around short-term price signals and optimising the costs of fossil fuel generators. Large infrastructure projects require certainty to secure financing. The RESS scheme exists for wind and solar PV and the capacity market for conventional generation to provide this certainty. We need to do the same for energy storage as a national strategic asset.

The Climate Action Plan 2024 contains a KPI to have long-duration energy storage operational by 2025. Action EL/24/24 also calls out the need to create "a route to market for medium and long duration storage facilities which can provide flexible demand" by quarter 3 this year. This action lists the CRU and EirGrid as lead stakeholders, with the Department of the Environment, Climate and Communications as a reporting lead. However, we are concerned that this action will not be achieved given the timelines still needed to develop a robust route to market framework, including consultation with industry. EirGrid published a call for evidence on long-duration storage procurement in quarter 4 last year, to which we submitted a response, but we have yet to see a follow-up to this paper. EirGrid noted in recent engagements with industry that it is awaiting a direction on next steps from the CRU. We are also aware that the Government’s electricity storage policy framework is expected to be published this summer, which will be important to ensure clarity on the future direction of long-duration storage policy.

Given there are a variety of storage solutions that have different capabilities and costs, the procurement process needs to be well designed to achieve the best outcomes for the system and for consumers, which includes ensuring decarbonisation at least cost. The process should procure the right projects, in the right locations, at the best value for consumers. Given the lead time for project development can take several years, delivering long-duration storage by 2030 will require us to start designing the procurement process now and putting the appropriate time and resources into it. The aim should be to hold the first auctions for these technologies in 2025, with delivery before the end of the decade.

We have a significant problem emerging with excessive wastage of renewable energy as we seek to fully decarbonise our power system. Long-duration storage can solve this problem but there is no investment signal at present. We are asking for co-ordination by the Government, EirGrid, CRU and industry to put in place the necessary resources to design a framework that ensures the successful delivery of energy storage, supports our climate action plan targets and ultimately delivers a zero-carbon power system.

An Cathaoirleach

I thank Mr. Smith. The first member indicating is Deputy Bruton.

Deputy Richard Bruton

I thank Mr. Smith for his presentation. Everyone recognises that driving forward our renewable energy ambitions is complex. Storage is an integral part of that. How far short are we of surviving on the normal revenue that would come from being able to access one third of the renewable capacity, which he said is the stream of potential? There is potentially a very substantial amount of revenue that could be generated. What is Energy Storage Ireland looking for from the system? Is Mr. Smith talking about a guaranteed price, with clawbacks above and below it? What is the scale of that compared with spot pricing the market?

I am interested in regional locations. Will storage be located close to centres in which renewable energy is generated? If so, what are the implications for expenditure and jobs, the impact on regional locations and environmental impact? Does ESI face planning constraints similar to some of the issues that have arisen from efforts to reinforce the network to accommodate renewable energy generally?

What is Mr. Smith's projection of the amount of long- to medium-term storage needed for 2030, 2040 and 2050? Is there a guide path? He seemed to signal that there are loads of competing technologies. I presume there would be one auction and all bidders would have to sink or swim. The market would take care of which is the superior technology. Is that how it will work?

Mr. Bobby Smith

Mr. Kennedy might take some of the Deputy's questions. I will start by addressing the third one and we will then work backwards. The question of the amount of storage required is a good one. We are asked about it a lot. In 2022, we did an analysis with Baringa, which is an energy market consultancy that does a lot of modelling work on power markets and future energy systems. We asked for an analysis of the 2030 power system and how much energy storage might be beneficial to consumers. It was not designed as a study to optimise the amount of storage we need. Baringa came up with a figure of 2 GW of long-duration storage, or up to 100 hours, as having a net benefit of €85 million per year in consumer savings. That saving would mainly come through avoided fossil fuel costs and reduced dispatch-down costs for renewables.

We could say that is the amount of no regrets long-duration storage that will be needed by 2030. EirGrid has estimated we will need at least 2.5 GW. It is looking at slightly different types of storage as well. A figure of 2 GW to 2.5 GW seems to be the minimum we will need for 2030. As we build towards 2040 and 2050, demand will increase and we will need to build energy storage in parallel with that, along with our renewable generation. We could say 2 GW to 2.5 GW is the very minimum. Ultimately, we will need a lot more by 2030, 2040 and definitely by 2050.

On the auction question, that is essentially what we are talking about. This is a complex auction process. We are not shying away from that. We have to compare different technologies and different characteristics with different durations, efficiencies, cost, lead times, etc. In principle, we want an auction that can sort through that and deliver the technologies that are the best cost for consumers that can deliver decarbonisation at least cost.

I will ask Mr. Blount to come in on the specifics on the revenue gaps and some of the regional questions.

Mr. Paul Blount

If you design the auction properly, you want to make sure you are not paying more for the solution than the problem is costing. We are often asked what is the missing money problem, or what is the gap in the market. The issue is that not all missing money should be filled. It depends on the technology and the system benefits associated with that technology as to how much of the missing money should be filled.

I apologise that this is an indirect answer to the question but I would step back for a second and ask: "What is the problem we are trying to solve?" We have very ambitious targets to decarbonise the power system. When you look at the carbon budgets, we effectively need to deliver something very close to a net-zero system as soon as possible after 2030. If we attempt to do that simply by building onshore wind, offshore wind and solar, eventually there is the wastage of that energy where there is oversupply at times when there is more renewables than there is demand. There are network constraints and curtailment. As you continue to build those, that gradually gets more expensive and as that happens, the surplus energy that is available for storage increases which means the cost effectiveness of storage in general starts to increase and eventually storage starts to become the next-best investment to make. Therefore, the trick to all this is to design an auction scheme where the storage of all the different shapes, flavours, colours and varieties in terms of efficiency duration can all compete and the technologies that perform best in terms of decarbonising the power system at least cost to the consumers win. If you do that, it is not really about the missing money relative to the market design. The market design today does not really work especially well in the context of a net-zero power system so you are actually developing new market mechanisms with long-term auctions that allow the system to evolve to the lowest possible cost decarbonise power system.

I would add that there are probably issues in the existing market design that are not helping. For instance, storage at the moment would pay a demand-to-use-the-system charge on the transmission side. That is effectively a cost for using the grid. In reality, this category of technologies is actually solving network congestion. It is reducing the need for investment in the grid and, as such, should probably be in receipt of a congestion-management payment as opposed to paying a fee. That is one example where the existing market is sending the wrong signals. It is saying that something is a burden on the system whereas in reality it is an enabler of the system. I am not sure if that fully answers the Deputy’s question. I appreciate it is a slightly indirect answer.

Deputy Richard Bruton

We are not going to design a new market here but it sounds as though it is extremely complex if you are watching one rising curve of surplus renewable and another one of these competing technologies with their different features. It sounds tricky enough. Is Energy Storage Ireland a long way off trading off a spot price to be able to justify some of these longer term things?

Mr. Paul Blount

The charging regimes in place at the moment and the uncertainty in the revenue streams that come from the spot market increases the cost of capital because it is increasing the risk. The total amount of revenue you would need to forecast in the spot market needs to be a lot higher than the revenue you would need if you had certainty on that revenue. As a result of some inappropriate charging, combined with that uncertainty, there is a reasonably substantial gap but the gap gets much smaller if the revenue certainty is there. If this auction is designed appropriately, then with an appropriate design you could be confident you were getting consumer value and that it would be the cheapest way to decarbonise the power system.

Yes, the design is complex but if you want to simplify it for the purposes of the committee, what we are advocating is if you could develop an integrated network and market model.

For this, the committee does not necessarily have to understand all of the fine details of the DC load flows and the different aspects of that. The principle is that you have a model that is capable of examining technologies and their technical capabilities at different nodes on the system and effectively translating that into a net marginal abatement cost of carbon. You can use such a model to rank the bidders based on how effectively they decarbonise. You do not have to have a deep understanding of exactly how that model works but I agree that it is not a trivial exercise.

There are countries around the world trying to do this type of thing, some better than others, and none of them are doing it as well as they could be. We have the skills in this country, with some of the best people in EirGrid, to be able to develop these kinds of tools but it will take a little bit of time. There is a good degree of sophistication to doing it very well but if you do it well, the prize is enormous. There are huge savings to be made as we attempt to deliver a decarbonised system if we can get that right. It is worth the investment of time, resources and expertise on the transmission system operator side and with other key stakeholders to try to build that tool that is able to make those determinations efficiently.

Mr. Bobby Smith

On the regional aspects the Deputy asked a question about, this would essentially be very strategic in nature in terms of location of projects. Where there is congestion on the grid in terms of renewables, whether it is wind or solar, that is an optimal place to build out long duration storage to solve that issue, as well as providing other system benefits as well. That would be factored in to the model we are talking about, which would also consider the network and locations where there is congestion and where storage would be of most value.

As for what this means for local economies, we did a piece of work with KPMG that we published earlier in the year. Energy storage is a relatively new sector in Ireland but given the targets we have and given our renewable ambitions, it is going to grow quite a lot. KPMG did some analysis on the jobs potential in the energy storage sector and they looked at 2035 and different scenarios for a build-out and growth of energy storage. It depends on the pace of renewable build-out and it depends on the types of energy storage technologies that ultimately are deployed but its estimate was that this could create between 2,500 and 5,000 jobs in the sector. These would mostly be in construction and operation but the problem KPMG identified is that we do not necessarily have the skills today to develop that.

What is happening today in the renewables industry is that there is a small pool already that has built out the onshore wind sector and now those concerned are being pulled into offshore wind, solar and increasing energy storage as well. As that is putting a strain on the resources we have today, we need to grow that and build out those skills gaps through new graduates coming into the sector, through learning opportunities and through specific training courses, which are really important. There is a huge benefit in terms of the jobs potential for local economies, similar to the wind industry. I think there are 5,000 jobs in the wind industry today and that has been a huge benefit to local economies. As the storage sector is essentially an extension of that, it can be looked at that way.

On planning issues, I mentioned 750 MW of battery storage currently connected to the grid. As those projects are relatively small in scale, planning to date has not been a major issue. We often hear about how that is often the defining issue with wind and solar projects and about how the planning system is not fit for purpose. It has not to date been an issue for storage but I definitely caveat that with the sense that this sector is going to grow, we are going to see more technologies come in and they are going to be bigger scale. Consequently, we need a planning system that is fit for purpose. It is about translating national strategic objectives about renewables, decarbonisation and the technologies that are behind that and which we need down to a local area level and making sure those local area plans and planning authorities are able to progress the projects that we need.

Deputy Darren O'Rourke

I thank the witnesses for their presentation. To pick up on the specific ask for the need for investment signals and an auction system or something along those lines, similar for wind and solar, the witnesses made a submission at the back end of last year. They are waiting to hear more and obviously, there are imminent deadlines there. Is there an indication of work going on or have they had engagement with the Department in one way or another? I presume, not to put words in their mouth, that they are asking the committee to raise this with the Department. If that is the case, they might give me a little more detail in that regard.

Mr. Smith referred to having a fit for purpose planning system. What does he mean by that? I presume he is referring to capacity. Are there particular elements that are unique to battery storage and are not available for other renewables? Is Mr. Smith satisfied that there is a regulatory regime? Obviously, different technologies are used. We hear from communities that these are new technologies and there are question marks over sustainability, critical elements, safety and decommissioning and that type of thing. Is Mr. Smith satisfied that the regulatory regime exists for that?

The private wires consultation was not mentioned. Are the witnesses interested in that? I know the Government is looking at a hybrid connections policy. Is that of interest? We hear from different stakeholders about energy hubs with renewables, large energy users and storage. Is that of interest to Energy Storage Ireland?

Mr. Bobby Smith

The Deputy asked whether there are any investment signals. There was a consultation at the end of last year and the perception of industry at that time was that there was momentum behind the policy. Our view is that momentum has shifted in more recent months and that is why we call this out today. Hopefully we can get that momentum back on track. We are engaging with the Department and we are also engaging with the CRU and EirGrid. The upcoming Government electricity storage policy framework, which is being developed by the Department of the Environment, Climate and Communications, will be very important in giving a mandate to the relevant stakeholders to take this forward. There has been a lack of co-ordination between the different actors so far. This has led to some of the momentum we are seeing being shifted. Coming out with a strong statement that this is something that is going to happen and we want to put the necessary resources into it would be useful. Given that it is complex to design, we are not going to shy away from that. At the same time, there are countries that are doing it and we need to be fast followers in a sense. We do not want to lag behind too much but we realise this takes an appropriate amount of design work.

We are not necessarily calling out today that quarter 3 needs to be the deadline for this. If, however, a strong signal is given by quarter 3 that this is going to do be done and done right and that, let us say, over the next 12 months, this work will be put into it and a timetable will be offered on how this work will happen, that would give confidence to the industry that this is being looked at and that there will be something there for it to start developing projects around.

On the planning system, I might bring in Mr. Blount to talk about the specifics of different technologies.

Mr. Paul Blount

I suppose when we talk about fit for purpose, we are trying to learn some lessons. The wind sector, for example, has been struggling to get projects through planning in recent times. What we have seen at a national level has been great ambition and leadership and targets being set, so everything is being put in place at national level. When that is translated to the local level, however, what we have seen is that sometimes local policy is shifting in the opposite direction, against national policy. We are trying to work to make sure there is good alignment between what is happening at the national level and at the local level to try to enable projects. We have a good robust process in Ireland in which people have lots of opportunities to engage. There is the informal engagement stage and then, as we go through the formal planning process, there are appeal processes and the judicial review process. That is probably all proper and correct and it means we do not necessarily move as fast as the people developing projects would like move. However, it should give some confidence that we have a very robust process. Putting appropriate resources in place and making sure good, robust decisions take six months rather than 18 months are important improvements. However, there is an emergence of a misalignment between national policy and local policy in the area of wind power. This is an area that we in the storage sector would be keen to learn lessons from. I hope that answers the question on planning.

I can also speak briefly to the Deputy's question on regulation. In the storage space, I am not aware of existing regulation creating any impediments to the specific technologies I am working on.

I believe there is an appropriate process in place and very robust certification processes, and the technology providers are working through this. If others felt there was a need to introduce additional regulation to ensure the safety of the systems being installed, I do not think we would see people in the storage sector objecting to that. Through the lens I am looking at it and given the technologies we are looking at, I think it is robust. I will leave it to Mr. Smith to comment on the lithium-ion space.

Mr. Bobby Smith

It is important for those in the energy sector to have certainty on the planning framework and the rules, guidelines and regulations they need to meet. Lithium-ion batteries are a common technology today but in terms of long-duration energy storage, they are just one of multiple technologies that will likely be part of the solution. Lithium-ion batteries have been around for 50 years. They are common everywhere in our daily lives, including in our phones, laptops, EVs and multiple appliances. When they are put into a battery storage system, of course, there are different design considerations around safety and prevention of incidents, and multiple international regulations and guidelines manage that. The systems being built in Ireland are the same systems that are being developed in the UK, Europe and the US to those same international standards.

What would be useful here is having a consistency in approach between different local authorities. We have seen in the past that different local authorities have treated some of these projects differently. Having national guidance or a framework for developers, planning authorities or anybody else to assess these projects would be very useful, and I believe the Department is looking at that in its upcoming policy.

That said, we do a lot of work with our members on safety. We have done engagements with the fire service and the Health and Safety Authority, and we are happy to talk to anybody. We have published an information paper on battery storage safety. We did a best practice guideline on battery storage safety through working with our members and we have socialised that with relevant stakeholders. We are happy to talk to anyone about that, so it is absolutely not an issue.

In terms of the supply chain, again, this tends to be focused on batteries given they are the dominant technology at the moment. As they come through things like EVs and consumer electronics, the supply chain does get raised quite a lot. It is important to remember there are regulations to guide this, both at the international and EU level. There is a new battery regulation in force at the EU level which stipulates things around the supply of materials for batteries, recyclability and end-of-life, so that is being built into these projects.

It is important to say that there is going to be some impact from sourcing the materials for these batteries, and there is no way of getting around that. However, it is important to remember that this impact pales in comparison to the impact of the fossil fuel extraction that we are doing daily. An important thing to remember about fossil fuels is that we extract them and that causes environmental damage, we burn them and then they are gone, and we have to find another place to extract them, which is a never-ending cycle. It is a matter of getting off that and moving to lithium and other materials in batteries, which are valuable commodities that will be recyclable. The materials that are in use today will likely be in use for decades and can be reused, which is a core benefit of these technologies that I want to highlight.

I will bring in Mr. Kennedy on private wire.

Mr. Brian Kennedy

The Deputy asked more generally about hybrid connections and large energy users. For energy storage, the sector generally has an interest in hybrid connections. That is about utilising better the existing connections for wind or solar energy, as well as future connections. We see throughout Europe that other markets and systems have policies in place to better utilise those connections. What we often find is that for shorter-duration storage, that fits very neatly. There are questions in Ireland about how that would sit within the subsidy regime to ensure the green value of a renewable or a solar project retains its certification as it goes through storage.

For longer-duration energy storage, LDES, more specifically, EirGrid did a call for evidence around this. The feedback from participants was that hybrid connections are of interest, although the scale of projects probably outstrips the hybrid connections. It is definitely part of the solution but not in itself a solution.

Energy Storage Ireland does not have a particular policy or position on large energy users.

We note that the CRU is consulting on LEUs now. As part of that consultation, there is clearly discussion around 24-7 greening, the glide path towards that and what it looks like in practice. It is quite clear to us and to anybody in the sector who is looking at this that in order to get to 24-7, storage is needed, particularly long-duration energy storage, to bridge the gap between the last 10% of renewables. We do not see that at the moment from industry because that industry - the corporate power purchase agreement, PPA, space - is developing. However, we will see that in the years to come. We see it in the US and in places in the United Kingdom whereby storage is actively utilised to bridge that gap towards 100% renewables.

Senator Pauline O'Reilly

I thank the witnesses for their presentations. We are looking at a plan-led approach if we are talking about an auction, which was different from how things developed in onshore wind and more akin to offshore. What size storage facilities are the witnesses talking about? What is in their head? What does that look like in respect of the amount of space it takes? I think Deputy Bruton asked this question but I am not sure it was answered – perhaps it was. How far away from the source does the storage facility need to be?

I have two more questions. What is the length of time for development from the point of having an auction to having it up and running? It takes a very long time for offshore wind. The witness talked about having 2 GW by 2030, which seems quite significant.

Finally, what is the comparison internationally? Which other countries are at that level of development? When talking about lithium, it was said that this is what we have now – lithium-ion. However, there will be many different types of different technology. How fast do we expect that to come online?

Mr. Bobby Smith

The answer to much of that, which is not very helpful, is that it depends. It is not a very useful answer. The space the projects take, the lead times and where they are in respect of technology readiness is quite different depending on what one is looking at. That again goes back to the auction design process. We will probably say this a few times. If there is a robust framework that can sort through that and pick out the technologies that can deliver quickest and are ready to go, that should be built into it. There are different elements you can do that around, for example, having potential planning requirements, planning submissions and bonds in place – people putting money upfront before they can participate, so it is not speculative.

Senator Pauline O'Reilly

Sorry to interrupt but what are minimum and maximum times? I know "It depends" is the answer to everything in every technology in every industry. Do the witnesses have any idea with regard to the people they are working with and the different types of technology that they know exist?

Mr. Bobby Smith

Yes. I will bring in Mr. Blount on this because he is working on a particular technology and he looked at different technologies. With regard to 2 MW minimum by 2030, that is a lot, but it certainly can be done. Looking at the battery storage technology that we have on system today, 750 MW – 1 GW all-island if Northern Ireland is included as well – was built out in the space of two to three years when the market conditions were there. The industry can deliver if the right policy and incentives are there.

As to different technologies and what their lead times might be, I will hand over to Mr. Blount, who will answer that.

Mr. Paul Blount

I would not like to make this session about any particular technology, but we have done quite a bit of work to look at the full spectrum of potential solutions. One technology we found to be particularly interesting, which we are actively developing projects on, is iron-air technology. The storage process would be reversible rusting. You basically allow iron to rust. That releases electrons and creates a discharge circuit. You apply the current to the cells and it reverses the rusting process. It has the benefits of being incredibly low cost. Iron is one of the most abundant metals on Earth and it is readily available. It is not a rare earth metal by any manner or means. I think they have raised more than €1 billion, give or take, in equity funding for that technology. They are building their first major manufacturing facility in the US now.

They expect to be able to manufacture at least 500 MW per annum of 100-hour storage. That would be 50 GW hours. To put that in perspective, Turlough Hill is about 1.8 GW, let us call it 2 GW. Therefore, in a factory it would be possible to manufacture the energy capacity of 25 Turlough Hills per annum, probably by 2027 or 2028 with the latter being more realistic. That is just one technology.

I attended an event on the fringes of COP26 conference in Glasgow, where the long duration energy storage, LDES, global council was launched. There are about 40 different technologies on the LDES global council. We have not looked at all of those by any means. We have looked at about 15 or 20 different technologies. That is why I bring it back to the importance of getting the right auction design and the right market.

I would not characterise it as plan-led. If the auction is designed such that the entire market is told that we want the technologies that reduce emissions at the least cost and request them to provide us with their best solutions then, provided there is a clearing mechanism that is able to pick the most cost-effective solutions in reducing emissions, the right blend of technologies will be obtained. However, it will be driven by competitive market forces. It involves tapping into the collective intelligence not just of the company I work for, but of all the members of Energy Storage Ireland, all interrogating the full spectrum of potential solutions for the system. They would bring those forward at the fastest pace they can. They would compete and the best solutions the market can provide will be obtained. It is about the planning, as in designing the auction scheme so that it is an effective, efficient auction scheme that picks the best and most effective technologies. That is where the planning is but after that, it is about tapping into the collective ability of the market to provide solutions. That is one of the neat aspects of the proposal we have. I hope that helps to answer the question.

In regard to the timing question on development, by the time land is secured, planning obtained, grid connected and the project gets to market, it depends but let us say it takes five to ten years. Five years would probably be quite quick from the start to the end and it would be disappointing if it took more than ten years. That is a rough, ballpark estimate on lead times of development.

Senator Pauline O'Reilly

The other question related to the context internationally.

Mr. Brian Kennedy

Ireland is not alone in looking at long duration energy storage. In a report last night by Wood Mackenzie, I read that $57 billion was committed between 2019 and 2022 between governments and companies on LDES. There is recognition that this needs to happen. With that in mind, other systems are looking at this. Australia is a really good example. It is looking to procure 1 GW of LDES. The tender process on that closes this week. That is on a floor-price model similar to the procurement strategy that ESI has proposed, with varying different contract terms, such as 14 years for chemical batteries, 40 years for pump storage or per the life asset for other technologies. It is very much depending on the particular technology and looking at it on its merits.

Other examples include Italy with a duration-specific procurement mechanism. That is one that Energy Storage Ireland will probably not propose, insofar as it almost picks a winner in terms of the duration and leaves out some technologies on the duration. Japan has procured long duration, albeit it is more medium duration. It is three hours. The commercial structure Japan put in place is instructive, insofar as it provides a floor with an option for the asset owner - the economic operator - to earn more than the floor but to give back most of that benefit to the consumers. Some 90% of that benefit goes back to the consumer. It ensures that you sweat the asset and really make the most of it. Great Britain is looking at this also. It is technology agnostic insofar as it has not picked a technology. It has ruled out some technologies. Again, this is not a structure that ESI necessarily would be proposing but it is very far advanced in terms of the technological readiness that it is looking to procure alongside technology readiness level, TRL, 8 and 9 projects.

ESI has looked at the various different frameworks that are put in place. Insofar as Ireland can be fast followers, we are trying to make sure that the process we put in place is robust, coherent and an investable strategy.

Senator Pauline O'Reilly

I thank the witnesses. That was very interesting. There is a great deal of information, which is great to be able to look back on.

I have one final question, which the witnesses may not wish or be able to answer. Is there a move away from rare minerals? While Mr. Blount said he did not wish to down the route about talking about particular technologies, he mentioned iron there, which is not rare. One of the concerns has always been about the rare minerals. Mr. Kennedy mentioned Great Britain ruling out certain technologies. Is there any relationship in that regard? Is that something which is happening in the industry?

Mr. Brian Kennedy

I can probably speak to the second point first. The reason to rule out certain technologies is not necessarily because of concerns around rare earth minerals or anything. Great Britain is probably taking a view that it is looking beyond the existing technologies and looking to create a hub for investment in new technologies. Hence, it has left 50 MW for what is called TRL 8. The lower technological readiness stream is a mechanism it is putting in place to incentivise the development of new technology. It is more about that than concerns for particular rare earth minerals.

Mr. Paul Blount

To add to that, that is actually a mistake. We need an auction framework that asks for the best solutions to be provided. On the Great Britain side, my understanding is that part of the reason was because there was a feeling that investment is happening today in lithium-ion batteries in the market in Great Britain because it can just about scrape together a business case with two-hour batteries arbitraging in the energy market and participating in system service markets. It can just about build an investment case for that. There may have been a view that it does not need the support, but support is probably the wrong word to use. The best solutions are needed.

Even though we are not developing lithium-ion technologies - we believe other technologies might provide better solutions - it is right they should compete. There certainly is not a business case today to build six-hour or eight-hour lithium-ion batteries. If there are projects like that which want to turn up in an auction to compete, they should be fairly assessed. Whoever can bring down emissions at the least cost should be awarded contracts. The more it can be made technology-agnostic the better, even if there are supply chain issues or challenges on the project side. While there probably will be environmental, social and governance points to be considered at a certain point, the developers should be allowed to work through their challenges to bring the projects to the system and then the system will procure the best solutions. That is the right way to go forward.

Mr. Kennedy covered the international examples well. When looking at the likes of the Italian auction, it will get the cheapest storage of the duration it specified, which may or may not be a good solution for the system. The Australian market is probably a lot more in line with what we are proposing. The way in which I characterise this is that the simplest possible procurement is to specify the duration and procure that. If it is not duration-specific procurement but rather value-based procurement, there will be different levels of sophistication. The Spanish auction has value-based elements to it but they are quite crude, which means the risk of not getting brilliant solutions exists. The more sophistication is brought into the design of the auction, better and better signals will be sent to the market to develop the very best solutions for the system. If it is simplified too much, the wrong behaviours will be seen. People will solve for the crude design rather than trying to give the very best fundamental solutions to the system. That is why it is really worthwhile investing, even if it costs several million euro, to build this auction clearing mechanism. The reward will be ten times or one hundred times that by incentivising the right technologies. It is worth taking the time to have a sophisticated design.

As for Mr. Kennedy's point about looking at what has been done internationally, looking at the best of them and then seeking to build on that to take it another step forward from what they have done, I point to Australia as probably being the closest to getting it right. It may not be quite right yet on the specifics on its model but it is probably the closest to getting it right at the moment internationally.

Mr. Bobby Smith

I will add a bit to that. The view in industry is that the maximum duration lithium-ion batteries can provide is approximately eight hours. That seems to be the prevailing view at the moment. They are particularly well suited to shorter-term applications, which we have seen in Ireland in the context of those frequency response services that require a millisecond response and maybe 30 minutes to one hour in terms of the duration of that response. That is what they are very good at. There certainly will be applications for them within day balancing, that is, balancing evening peaks, night-time troughs and that kind of thing. They will be very good at that and will be part of the solution. However, when we look at longer duration forms of technology and that game-changer report I talked about earlier that looked at up to 100 hours, it is going to be something else.

The technology Mr. Blount talked about uses iron, for instance. Other technologies like hydrogen seem to be particularly well suited there. Many battery manufacturers are now looking at sodium as a potential mineral because it is abundant and can do longer durations. It is more suited to that application. We will see a lot of innovation in this space, with new technologies coming to the fore.

Regarding the auction, just in case we were giving the impression that we want to do this all in one big go, that is not the case. Having a staggered, iterative approach that we can learn from is the best option, we believe. We can potentially run the first auction in 2025. There are probably more established technologies that can compete in this. Then we can have auctions in subsequent years or every two years, or whatever it turns out to be, in which newer technologies can compete, once they are more established. It is a case of learning from the process all the time and trying to build on it.

On the question of how far away from the source, if we are looking at hybrid projects there is policy in that area that needs to be fixed, for want of a better word. If we get hybrid policy sorted, it is likely that we will see energy storage projects co-located with wind or solar farms, using the existing or planned grid connections. That is a very effective use of the current grid infrastructure. In any case, storage is a very flexible asset so we will likely see projects built close to renewable generation or strategic areas of the grid, where they can be of most benefit. That will be developer-led, but developers will be modelling these solutions and knowing the areas of the grid where their projects will be of most benefit.

Deputy Steven Matthews

I am not a member of this committee but I was briefly listening in because I am interested in this area. If I repeat questions or if something has been covered already, please accept my apologies. Mr. Smith provided a good synopsis at the end. What I am trying to figure out is that we have this good battery storage system that we know can provide back-up when we get drops in supply or faults. The batteries can come into play pretty quickly. As Mr. Smith described it, the long-duration technology can store up to 100 hours of electricity. Mr. Smith also mentioned the iron-to-air technology. What does that look like? I know in my mind what a whole load of battery packs look like, the space they take up and the technology to switch them in. How does the iron-to-air technology create current in a wire? How does the process work?

Mr. Paul Blount

I did not intend to make it about a specific technology.

Deputy Steven Matthews

I am just interested to find out what the process actually looks like from generation to transmission.

Mr. Paul Blount

It looks a lot like the lithium-ion batteries in that it is a containerised solution. Containers are filled with iron-battery cells. The electrical process of storing the energy is that during the discharge cycle the iron is allowed to rust. As this happens, the iron releases electrons, creating an electrical current. That is the discharge cycle. The rusting process can effectively be reversed by applying a current to the cell. Basically it is containers filled with these cells with iron and with an alkaline electrolyte. It works in a similar way to many other battery set-ups. The chemical mechanism consists of rusting and reversing the rusting process.

Deputy Steven Matthews

It is a similar process to other batteries but in this case using iron to create that potential and generate electricity. Is that correct?

Mr. Paul Blount

Yes.

Deputy Steven Matthews

It is fascinating. The technology has probably been known for a long time but it now has the potential to be used commercially. Given that the technology changes so quickly, is it difficult to get State-led investment? What I mean is that this is a signal to investors that this is the direction in which the country is going. Do people hold back because things may change in two or three years? Is this a challenge in the area?

Mr. Paul Blount

I tend to work on the basis that we need to move forward with the best solutions we have at any point in time. We are under pressure globally to decarbonise as quickly as we can. As workable, cost-effective solutions come to the market, they will be employed. There may even be some solutions that might be deployed earlier than the technologies we are deploying and maybe we should not slow down and wait for this either. This will come when it comes. It is not very far away. It is not a particular issue if it can be shown to be affordable, cost-effective and workable. We should progress those solutions.

From our perspective, we think this particular technology is promising enough that we are developing and progressing some projects with it today. At the same time, we are keeping a close eye on the market. If we see any solutions that we think provide better options for the system, we will look to maybe start developing those in parallel.

I apologise for constantly bringing it back to the market point, but if the market is saying that it will give long-term contracts for the best technical solutions to decarbonising the power system, then that is where we will get innovation and the best possible solutions as fast as possible in the system. We could always wait five or ten years. In 20 years' time, there will be better technology. These technologies have limited lives. It is not the case that we are buying something today that will be in place for a hundred years; 20 years is the kind of timeframe involved. We can keep making progress as better technologies keep coming, and the system will keep iterating its way forward with better and better solutions over time. The key is whether something is affordable and works. Once we get to that point, we should drive on.

Deputy Steven Matthews

Did Mr. Smith refer to 2 GW of long duration storage by 2030? How much short duration storage will there be by 2030?

Mr. Bobby Smith

The short duration storage operational today comprises roughly 750 MW. It is assumed that will still be in place by 2030, providing those short-term system instability services. On top of that, 2 GW will be built. I referred to 2 GW of varying durations of storage. A scenario was considered involving 2 GW of four-hour storage, 2 GW of 16- to 20-hour storage and 2 GW of 100-hour storage. They were compared and all had net consumer benefits, but the 100-hour storage delivered the most consumer benefit.

Deputy Steven Matthews

We touched on the hybrid model. In the case of a generating station currently correcting to the grid, it probably makes a lot of sense to install whatever energy generation we are going to use, whether it is battery, hydrogen or whatever. That probably addresses planning issues because there is no change of use, but rather some modification. In terms of battery, is it prudent technology for that short-term duration? Are we better off with many multiples of short duration storage dotted around the grid rather than one or two large generation points, such as is the case with the fossil fuel generation sites?

Mr. Paul Blount

Distributed storage helps because if we can distribute the projects to a variety of nodes on the system, we are effectively creating more space on the transmissions grid in all of the locations where that is deployed. There are two different versions of that question. For example, 10 MW of 100 hours is 1 GW hour. That is a lot of energy in one place. It is very valuable to have 50 MW or 100 hours in different nodes on the system. We could achieve the same energy capacity by, for example, having 200 MW of four-hour storage. A much shorter duration provides the same energy capacity.

Ultimately, it is a techno-economic project that the auction design we are describing solves. The 250 MW four-hour storage has the same energy capacity. It has a lot of benefits in terms of the extra power that it provides for that short period, but it comes at a cost. The capital cost associated with that might be a lot higher. If we get the auction design right, the auction solves that problem and answers the question of which combinations of different technologies with different deficiencies, energy capacities and locations represents the most effective decarbonisation solution. That is why we keep bringing this back to getting the auction design right. If we do that, we send all of the right signals, get all of the right incentives and get the best solutions and the best places on the grid at the right scale. I hope that answers the question on how to distribute the solutions.

Mr. Bobby Smith

The best solution depends on what is cheaper. It could involve multiple smaller types of projects or a handful of larger projects.

Deputy Steven Matthews

It depends on what we are trying to use that stored energy for. If there is a catastrophic fault situation, we will pull down that supply very quickly because it will be absorbed while people are trying to get a plant back online. If there is a drop in renewables or solar drops off and we bring in Turlough Hill power station or whatever else, we will still need that storage.

There are different situations. What I find confusing is when we talk about having a two-hour duration. That two-hour duration may be gone in half an hour under certain circumstances or it may last for six hours under other circumstances. Where we have battery storage in place at the moment and we say there is a 1 GW on the island at the moment in battery storage plus 270 GW in Turlough Hill, that is approximately 1.25 GW in storage. As we approach 2030 and beyond and as we go to more renewables, that amount of storage is going to have to be increased as well. Are they directly related in that the more we come off fossil fuel on to renewables the more storage we are going to need?

Mr. Bobby Smith

Yes, absolutely. They are complementary.

Deputy Steven Matthews

Is pumped storage just a technology of the past? I like it. It is very reliable. It has worked for 50 years up there and is still chucking out power every morning and evening. It is proven technology. It is gravity-fed. You are not going to break that. Is pumped storage an old technology despite having delivered?

Mr. Bobby Smith

I will have a go at this and if the other guys want to come in, that will be absolutely fine. We do see some interest in it but pumped storage is very geographically specific and there are other countries which have those features that are much more conducive to it. We are looking at Scotland, countries in Scandinavia and Switzerland, for instance, where they have lots of it built out with large valleys, peaks and everything they can naturally use. We do not necessarily have a lot of that landscape in Ireland, so we have not seen a lot of projects go forward. That being said, I have seen new types of pumped-storage technology which is an evolution of the older technology. It is a bit more efficient and needs less voluminous reservoirs and heights between the different reservoirs even. There could be an angle there for projects to progress. Again, they should compete and if they are the best technology, they can absolutely win. That is where we stand on that. Again, we are technology agnostic. It should be allowed. If we are looking at the traditional style of pumped storage, that is pretty limited in terms of the feasibility in Ireland at the moment. The others may want to add something there.

Mr. Brian Kennedy

I would just add it is quite invasive from an environmental perspective and they are some of the challenges we have seen in GB. Nonetheless, in the procurement mechanism for long-duration storage in GB, pumped storage is in there and can avail of a 40-year-contract term. As Mr. Smith says, if it can compete, it can be considered.

Mr. Paul Blount

I agree with all that. There are a lot of planning challenges associated with a pumped-hydro project but if someone can develop it and it provides a good solution, it should compete in the auction. Regarding the innovations in that space, we would have had conversations developing a high-density pumped hydro where they basically add minerals to the water to increase the density. If you can double the density of the fluid, you can effectively get twice as much energy for the same project which is quite an interesting innovation in the pumped-hydro space. There were other countries looking at disused mine shafts. I actually spoke to the two of those companies and put them together, so that you could have the disused mine shaft with the high-density fluid. It is really important to incentivise the market to keep innovating, keep pushing the boundaries and developing the best solutions and then let everyone compete on a fair and equal basis. Every storage technology will have its own unique challenges in getting it to the starting gate of an auction but you can probably leave those development challenges with the developers to take those risks and place their bets. What you want is when they get to the point of having a project, that is ready to bid into the auction, they know it is a fair competition and if they provide the best solutions, they win. That is just a little bit more colour on the pumped hydro. I do not think it is a doubt internationally. I know in Scotland there are some big projects being developed. SSE Renewables has got planning for large pumped-hydro projects in Scotland but it is very location-specific. It is not easy to distribute it around the grid and solve all network problems. That is not to say you could not have a small number of projects that would bring benefits to the system.

Deputy Steven Matthews

I have one last question if we have time. I know we are talking about large-scale, long-duration storage. I want to look at a much smaller version of it, a short term and almost individual version in the electric vehicle market. As the number of electrical vehicles increases and in businesses, you have these 80 kW, or possibly 100 kW, batteries sitting in the driveway. There is a massive potential of power there for domestic use. If you add a neighbourhood together, you have real potential in that grid.

I read recently about advancements in smart grid technology, with people's houses telling them when to use power. Is there potential in that as well? Is there resistance from or difficulty with car manufacturers? Obviously, the number of times a battery is cycled affects the warranty on that battery. Is this approach being used successfully anywhere or is it just a potentiality?

Mr. Brian Kennedy

We are seeing examples in Great Britain where there is a simpler interaction between behind the meter and the wholesale market, insofar as a group of electric vehicles can combine together into a virtual power plant, trade into the market and, using those signals, find the optimum time to trade or discharge. The approach the Deputy raised is part of the equation. It will not solve the long-duration storage aspect, but it will provide better flexibility to the system and a better demand-side response. In Ireland, it can probably be seen in its earliest stages with the development of the smart meter scheme. I charge my car during the cheapest window. Responding to signals is what that is about. We probably need to see advancements in the ability of the demand side to trade into the market. While that is more a question for the Demand Response Association of Ireland, the association would probably say that we were starting to see movement in that direction.

Deputy Steven Matthews

When Mr. Kennedy charges his vehicle, is his decision based on when the cheapest rate is or is that decided by his smart tariff?

Mr. Brian Kennedy

In Ireland, the process is predominantly led by the owner of the vehicle as opposed to by participating in a virtual power plant. In other countries, owners participate in schemes and give the rights to their charge cycles. As to whether it impacts warranties, I cannot say, but limits can be set on vehicles to enable virtual power plants.

Deputy Steven Matthews

There is no way to turn that around at the moment so that I can use my vehicle’s charge if it is sitting there, I am working from home for the next two days and the sun is shining. Is that approach available to us currently?

Mr. Brian Kennedy

Vehicle to grid exists. Some more recent cars are utilising vehicle to grid.

Deputy Steven Matthews

Is the domestic user in Ireland able to use the battery in a car to power a home?

Mr. Brian Kennedy

I am not sure. It is not my area of expertise.

Deputy Steven Matthews

I do not know either. I am just wondering.

Mr. Bobby Smith

Some charging technologies allow for it, although that was traditionally not the focus. A shift is happening.

Regarding market signals, the price signal will become more common as smart meters are rolled out and we have more dynamic price signals in the market. ESB Networks is working on local flexibility markets that will give signals and provide flexibility to the grid. This will be done through, for example, aggregators and managing and selling that product into the market on behalf of users. Similar to the microgeneration export scheme, people will get a return. Once it is up and running, that scheme will be a boost to users. Something like that is coming in respect of local flexibility.

As to how it will benefit people, we work with consultants on modelling that. Such a scheme is particularly useful for peak demand shifting. EVs can provide an hour or two of key flexibility during the evening peak periods or other times of system stress. That is useful and provides a great deal of energy, but it is generally for shorter periods. It exists in parallel with the need for long-duration storage.

Mr. Paul Blount

Everything we have said is about flexibility rather than storage in particular. If flexibility can be provided through a demand-side response, that should be done as well. The cheapest form of flexibility is probably a demand-side response that can respond to short-term price signals. The issue is that one would never get anywhere near enough flexibility from only that source. If one can do it, though, then one should.

Other demand-side response technologies are a bit like storage, insofar as they may require capital investment. We have not been framing this as purely a storage auction. The term I have been using recently is “bulk energy time-shifting auctions”, which are auctions to time shift lots of energy. All sources of flexibility should be allowed to compete in such auctions if they want to, including demand-side response technologies.

From my perspective all sources of flexibility should be allowed to compete. In the context of EVs, the demand-side response aspect is probably easier to do. Vehicle to grid is probably trickier for the reasons outlined by the Deputy, which is that you are utilising the battery. That will degrade the battery quicker. I would not rule it out as a possibility. It should be in the mix, but that would be a challenge to it.

Mr. Brian Kennedy

I will circle back to an earlier question. The Deputy asked whether, if technologies advance, we should be cautious about locking into technologies. It is important to say, by way of context, that as we approach an electricity system that is 80% RES-E, the predominant cost of participation in that market will move away from fossil fuel generation into capital infrastructure. With long-duration energy storage, we are talking high capital expenditure and low operating expenses. The way that transpires for the investment community is that it needs to see certainty because the existing markets do not incentivise or pay for the long-run costs. They pay for the short-run costs like fuel and avoidable costs. The reason we are looking at this procurement framework is to provide that investment certainty out the distance, which is why GB is looking at 40 plus year contracts for investors to come back around and replace the technology here. I agree there has been historical nervousness about locking into technologies. However, the flip side of that is technologies will not get built because existing markets do not incentivise. They work to provide flexibility but maybe do not work to incentivise development of the right technologies for LDES.

Deputy Steven Matthews

That capital investment surely gets comfort from knowing that, as we have set out in Ireland, there is huge investment into electrifying transport like bus and rail. There are mandates there. There are heat pumps for heating houses too. The demand for that product will always be there. Knowing your service will be required surely provides comfort for that high level of up-front capital investment.

Mr. Brian Kennedy

It is certainly some help to understand there is a broad need for it, but it does not necessarily provide the low cost of capital and certainty that investors would need, which is more security that policymakers can stand behind their own objectives. If they say they need to decarbonise and electrify their transport system, they will stand behind that to provide some level of certainty to the investment community. I understand what the Deputy is saying, and I agree. While it contextualises and provides a picture and it helps, it probably does not do enough to attract inward investment.

Mr. Bobby Smith

The fundamentals are strong in Ireland. It is a relatively isolated island system. We have a lot of wind energy and demand will grow. You can see that in principle there is a huge need for energy storage. That is not necessarily something you can take to a bank and get a loan for by just saying there is a need. You would need to have something to underpin it. That is where this framework is key. It provides the floor to underpin that investment. As Mr. Kennedy said, we are moving towards a more capital-driven market. This is a key element of that. It is the same for wind and solar. We have the RESS that gives 15-year contracts because of that uncertainty in the market, and they need something to underpin that investment.

An Cathaoirleach

Deputy Matthews saw his opportunity and took it. Meanwhile Deputy Devlin has been waiting patiently.

Deputy Cormac Devlin

That is all right. Deputy Matthews is welcome to the committee. I know he is sometimes torn because of chairing his own.

I thank the witnesses this morning for their insightful input into energy storage. It has been beneficial for the committee to hear about various new, or not so new, technologies, but which are new in the marketplace. I found it informative. Deputy Matthews touched on EVs.

It is one of the biggest challenges, steering a little bit away from energy storage but maybe energy storage can provide some of the solutions. I would be interested in the panel's view on this. Could energy storage play a part in increasing the potential for charging points around the country?

Mr. Paul Blount

One of the challenges as we seek to electrify heat and transport is the power system effectively gets much bigger, which puts strain on, potentially, the transmission grid, but more acutely the distribution grid where, at the lower voltage levels much more power is trying to flow through the distribution grid than would have previously. ESB Networks is currently working on that. There has been a consultation process with the CRU. That is something where shorter-duration storage could help the problem. The problem tends to arise when the largest volumes of power are trying to flow during the peak demand periods. If we can install short-duration storage on the far side of that distribution system constraint, we can effectively charge the storage during the off-peak period and allow more power to flow through the distribution system to that storage point. That then sits there as a provider of power during the peak period.

That is not necessarily just for EVs. The challenge of accommodating more EVs is effectively a challenge of accommodating more demand and storage can certainly play a role there. The other point is obviously that charging an EV off-peak reduces that need as well. Schemes allowing EVs to charge at night would also very much help with that. Where there are particular problems if we are not able to build additional distribution grid, shorter-duration storage could help get us through those peaks if it is put in exactly the right places.

Deputy Cormac Devlin

Regarding that peak-time demand, would it be possible to roll out that shorter-duration energy storage into more rural areas, for example? People are saying that there still are not enough charging points across the country or that charging points are not even available.

I believe one of the witnesses spoke about new technology for recharging EV batteries and the battery life diminishing over time. Is there technology evolving to allow for swapping out of batteries making it more universal to try to make it easier?

Mr. Paul Blount

I can answer the first question. It is possible to do that. The choice is whether to invest in strengthening the distribution grid and build more grid or building storage. Putting more storage in allows us to sweat the grid we have up to a point but we would also reach a ceiling. Effectively it would be possible to connect more to the same grid with some short-duration storage, but that is not unlimited. It is not possible to keep building more and more storage and the problem does not go away. We can certainly get more from the grid we have with storage and it is just an economic decision. It may be a practical implementation decision and an economic decision to find the most effective way to solve the problem we are trying to solve. Technically, storage could help sweat what we have better.

Mr. Bobby Smith

On the new technology, it is not an area that Energy Storage Ireland is that close to and so I could not speak to that specifically. There is a use-case for flexibility from EVs. We talked a bit about the incentives that ESB Networks is developing in that area. Regarding degradation of batteries, that is probably an individual consumer choice rather than anything else. From speaking to EV owners, I have heard anecdotally that there may have been preconceptions that the batteries would degrade at a much quicker rate than has actually occurred. It has not been as major an issue as was flagged at the start. Mr. Kennedy might be able to speak to that. This is something that has been slightly overplayed regarding the ability for EVs to provide these services and still maintain a relatively healthy battery life. That is not speaking for everybody here. There could be individual choices at play there.

Deputy Cormac Devlin

That can be seen in the resale value as well.

An Cathaoirleach

I thank the Deputy. A lot of my questions have been addressed at this point. I am curious about the role of renewable developers and operators in the development of long-duration storage. Obviously, there is an incentive there, for anyone who is in that space, to be able to send the power somewhere to put it back into the grid at a later date. Does Energy Storage Ireland have members who are developers, and is this why we are seeing a lot of the interest, or is it stand-alone energy storage providers?

I am interested as well - and it seems very clearly set out - in that there is a need for a RESS-style auction but what is the gap between the incentive that is already there for the developers and owners to operate storage and any State subsidy? I would be curious about that.

We have veered into the jurisdiction of the Demand Response Association of Ireland in some of the points that have been raised so it might be an idea for the committee to bring it back in to talk about virtual power plants, its role and the frameworks that would support demand response in the country as well. I presume Energy Storage Ireland works with the association reasonably closely. I would be interested in what kinds of engagements they have.

We are a room full of engineers at the moment so we got into the technology discussion a little bit and I am not going to stop there. I am interested in synchronous compensators. Are these part of Energy Storage Ireland's thinking as well? Perhaps they are for the more short-term system service storage more than the long term. However, it seems to me there is a role for more synchronous compensators. We have the largest one in the world down in Moneypoint. A distributed system of synchronous compensators seems to make sense for system stability.

The last question I have is about the ask of the Department, the Minister and the CRU. It has been laid out in the statement. I would be a little concerned on the timelines, and Energy Storage Ireland has noted its own concern. As a committee, we have jurisdiction over the CRU, so the witnesses might elaborate on the ask of the regulator. Mr. Smith said that EirGrid is waiting for a direction on next steps from the regulator. The committee would be keen to press the regulator for progress there. If Mr. Smith would articulate the ask of the regulator and the Department, I would appreciate that.

Mr. Bobby Smith

My two colleagues can come in as well if they want. On the association, Energy Storage Ireland started five years ago. At that time, we had approximately 20 member companies. It was sort of an evolution of the wind sector. There were a lot of developers in Ireland who were also looking at storage for the obvious reasons we have talked about today. The two technologies are complementary. It started out as that. It was a wind developer-driven association. We had all the big developers - not only Mr. Blount's company but the likes of ESB, SSE and Energia. All of them, essentially, have been members.

Since then, we have seen a huge growth in the sector here. We have 70 member companies, as I highlighted at the start of the meeting. What is interesting to see is that we have taken on a lot more stand-alone energy storage companies. They see Ireland as a potentially very attractive market for investment. We have seen that not only in the battery storage build-out so far but now in this new evolution of long-duration storage technology. We are seeing a lot of interest, internationally and nationally, in the sector here and we have taken on a lot of members in new and exciting technologies.

As well as that, the association has grown to take on solar developers as well because that sector is really going great at the moment. It has taken off in the past few years so there is obviously a natural symmetry between storage and solar as well.

That is something we have also tapped into. In general, we represent all of the big developers, and also some smaller developers, in the wind, solar and energy storage space, as well as the systems suppliers, whether it is in battery storage or new forms of technology such as, for instance, the iron-air technology Mr. Blount discussed earlier. A great deal goes into the supply chain, whether it is banks, legal services, operation construction companies and operation maintenance providers. We also represent all of those companies which tend to be smaller in scale but are a vital cog in the whole system.

As for the subsidy gap, I am not sure if we can speak to exact figures but I will perhaps highlight that there are essentially three ways of earning revenue in the market today. There is the energy market, which is the daily wholesale electricity market. While there are some markets that are longer term and forward trading, most of the trading tends to be done close to real time. You can earn revenue between the price spreads, so essentially if you are buying low and selling high between night-time and peak demand, you can earn revenue that way. As we talked about, it is very difficult to predict and we do not know what the price will be this week or even in ten years' time. It is very difficult to build an investment based on that. It will still form part of the revenue of these long duration storage assets and they will still participate in the energy market. They will just not be enough to get the investment done.

Then there are system services, the DS3 services we talked about earlier that battery storage is providing. That has been very good for short-duration batteries and has been the foundation that has built out those batteries but it is very short term in scope. That is what it is designed to do, however. It is designed to pay to provide services at a millisecond's notice for about a half an hour or an hour in duration which can keep the power systems stable. That is where the value has been. That will continue to exist although its value is likely to go down as the market has delivered and those investments are there. Nevertheless, it will still be there is a small source of revenue.

There is also the capacity market which members may be aware of. That is basically designed to procure capacity adequacy on the system which has traditionally been fossil fuel generation. That provides some long-term certainty. You can receive a ten-year contract in the auctions, which are run every year, but they are very much geared around fossil fuel generators. For instance, the price caps at which the auctions are set are based around the cost of a new fossil fuel generator. There are things called de-rating factors, which are essentially reliability factors. These are very much geared against energy storage and weighted more towards fossil fuel storage. There are reasons behind that. We are not saying the capacity market should be redesigned for energy storage. That is not the case. We think the capacity market needs to be changed but not to the extent that it is only geared towards energy storage. It needs to deliver capacity adequacy, and that is fine, but the energy storage procurement we are talking about should exist outside of that.

That is just to give a sense of the markets. All of those markets exist and will form part of the revenue stack but they are not enough to drive investment. It is that floor that we are keen to highlight today. I do not know if we can speak to exact figures but Mr. Blount might give a sense of the gap he is facing.

Mr. Paul Blount

I will not speak to specific figures. Looking at the markets today and where it is working and not working, in the energy market there are issues with scheduling and dispatch of storage that EirGrid is currently working on. We think there are solutions coming to that. There is an interim solution, which should be there in the next year or 18 months, and then there is a more enduring solution required that will allow storage to be dispatched efficiently to solve things like network congestion. That is a little further down the line. The effect of that is that the market design today would not allow surplus energy to be captured at close to zero cost, which is what it should be, and give it back to the system at another time. The first point, therefore, is that basic work is ongoing and there are good people working on delivering those systems to try to get the energy market functioning a little better for storage.

Looking beyond that, network charging is a huge issue and one we mentioned earlier. To give the committee some figures, we looked at a 10 MW commercial demonstration site for the long duration storage technology. For a 10 MW 100-hour battery, which a huge amount of energy is put through, storage currently pays the demand use-of-system charge which has a usage component. It effectively acts as a double charge for consumers. A good analogy I heard recently was VAT. For example, where someone pays a construction contractor to come in and build a house, under today's storage, that person would pay VAT for the materials and then pay VAT again for the construction work. Wee have recognised that we do not want to tax twice, so the contractor today can claim the VAT back on the materials and the VAT is only paid for the end product.

Effectively, what storage is doing for the system is that if there is a generation use-of-system charge to pay for the network, and if a demand customer is paying a demand use-of-system charge for the network, at certain times the network will not be able to carry the power from one point to the other, so storage can come in, absorb that energy and move it to a point in time where the network can carry it. That makes better use of the network and provides more utility to both the users, and while we are paying a charge for using the network, we are solving a network problem and should receive a fee for that. That is just one of the bigger examples of existing charging structures that are creating these big investment gaps.

Some of those issues can be fixed, but if we fix the scheduling of dispatch and amend network charging, the last issue we will have is that we will be moving from a system where the majority of the cost is fuel. There is a marginal cost of generation and the short-term optimisation of that to minimise fuel cost is an important part of the market. We are now moving to a market that is really capital intensive, and if we want to deliver that cost-effectively, we will need to reduce the cost of capital, and the way to do that is by giving revenue certainty to investors. Without being specific on figures, in the case of a project that has revenue certainty and might be perfectly happy with €10 million a year, if we create huge uncertainty, it might want to see a model that says it will often get €12 million, €13 million or €14 million a year but there could be years when it gets €6 million. A project needs to see much greater revenue potential than it really needs to pay it for the risk.

To illustrate how volatile this can be, I read recently that two-hour storage projects that have been just about able to cobble together business cases in Great Britain have seen variation in year-on-year revenues of multiples of ten. During the peak of the Ukrainian crisis, there was huge volatility in pricing and a lot of storage projects made a lot of money during those periods, but as it has settled back, they are now feeling a lot of pain in not having the revenue they thought they did. When we are moving to a power system where 70% or 80% of the cost used to comprise burning fuel, we are now moving to a power system where 90% or 95% of the cost could be capital investment. We need to start developing the market systems that lower the cost of capital and get us to a more efficient system.

If members wish, I could speak briefly question on synchronous compensators as well. Being an engineer, I cannot resist.

An Cathaoirleach

Very briefly. I am mindful Senator Higgins has arrived and I am sure she has questions, and we need to finish the meeting shortly.

Mr. Paul Blount

Basically, what synchronous compensators do for the system is replace inertia provided by conventional generation, and provide reactive power if they are put in the right places. As we decarbonise the power system, the single most important thing we need to be able to do is turn off the conventional generation and still have a stable system, and synchronous compensators are one of the key things we need to deploy to achieve that. Any of the cost-benefit analyses we have carried out in respect of consumer benefit always reflect an enormous consumer benefit. We need only about 20,000 MWs. For example, ten sizeable synchronous compensators that are put in the right locations on the grid will provide all the inertia and reactive power we need to keep the system stable. I am sure EirGrid could speak a lot more accurately on the technical points, but synchronous compensators are critical.

Mr. Bobby Smith

The Cathaoirleach asked a question about the CRU, which might be important to touch on. Each of these stakeholders, whether it is the CRU, the Department or EirGrid, will have a different role to play in this procurement, alongside industry, of course. The Department sets the overall energy policy, specifically for energy storage as well, and this upcoming policy framework is going to be very important to do that. It has a key role in setting that high-level guidance or mandate. EirGrid is best placed to design the procurement. It has the highest number of technical experts on the market, the grid and what needs to happen, so we feel that it is the most appropriate in that regard. The CRU has a key role in ensuring this is delivering the best value for consumers and ensuring matters such as security of supply and decarbonisation as part of its mandate.

There is a role for each of them; none of them is going to do it on its own. That is why our key ask today relates to the co-ordination of those stakeholders. The CRU is absolutely going to be involved in the cost-to-consumer mandate to EirGrid, but we need all these actors to speak to one another.

An Cathaoirleach

I thank Mr. Smith. The next time we invite in representatives of the CRU, we will put this on the agenda.

I hope that will be sooner rather than later. I call Senator Higgins.

Senator Alice-Mary Higgins

It is heartening that the technologies, as a collective set, are there. That is clear. It is clear we are not hearing an obstacle. Mr. Smith said in his opening statement that while any one of these solutions might not meet the storage needs, there is a portfolio of relatively sustainable technologies that together can combine. That is very important in the context of something this committee has examined previously, namely the importance of avoiding and moving away from the excessively long hangover from gas and discussion of LNG and so forth, which are dangerous on a lot of levels, both physically and as regards volatility, as well as in tying us into the long term, if we are going to look at a proper shift fully from fossil fuels. What the witnesses are describing to us is that they need levels of certainty. There are certain certainties that are really appropriate, and should be, and there are certain certainties that we need to come to with a grain of salt. I am struck by the two pieces Mr. Smith mentions: EirGrid and the idea of co-ordination. He spoke about this portfolio and the technologies that are there as a set of it. The witnesses are looking, as I understand it, for almost a co-ordination piece around that, such that there is a vision of how they will fit together and so on. Is procurement one of the key pieces? I refer to the length of procurement and the long-term contract. Those are things I think we can deliver. Sometimes when I hear about wanting to know how much profit will be made, I hear the "reasonable expectations" language, which moves into something the fossil fuel industry has exploited to quite a degree in respect of court cases and the energy charter, which I believe is on the way out. What we do not want is to fall into the misery of the litigious model of reasonable expectations under the Energy Charter Treaty, which we know is effectively close to dead in the water, if Ireland would only realise it, catch up and get ahead with that.

Mr. Blount mentioned certainty. Can we just be clear? Procurement does deliver that. Is that the case in terms of long-term procurement contracts or clarity on that? Could the witnesses elaborate a little on the kind of co-ordination they see happening? Maybe they could elaborate a little on the different technologies, such as hydro-storage and lithium-ion batteries, and then the emerging piece - the liquid air, compressed air and green hydrogen. Is there a procurement piece for the existing ones and then an investment piece for the State, maybe, as regards those emerging technologies? Could the witnesses clarify what security looks like for them, their sectors or those they represent in terms of delivering what we all want, which is genuinely green energy storage for the long term?

Mr. Bobby Smith

Of course. I will speak to that. I will start and then I am sure Mr. Kennedy and Mr. Blount will want to come in as well.

The Senator mentioned moving away from gas. We have not mentioned it yet, but long-duration storage can be viewed as a huge insurance policy against volatile gas price, which has obviously had a massive impact in Ireland in recent years. We spend 1.3% of GDP just on shielding consumers from the worst impacts. That does not even include the full cost, which runs to billions of euro. This is therefore a no-brainer in moving away from that volatility and protecting consumers. Investment in all this would deliver for a lot less than the cost impacts we have seen recently from fossil fuel gas volatility.

As regards that long-term certainty and what long-term contracts look like, I will answer the question about co-ordination. We are asking for co-ordination here because each of the stakeholders wants this to happen - EirGrid, the CRU and the Department. They want this to happen. They recognise that long-duration storage is one of the key solutions to the challenges we face. The problem is that each of them almost has a different role to play, and that is why they need to be co-ordinated in this. I mentioned that EirGrid has the technical expertise around the grid and operational and market experience, but it is not a policymaker in the sense we are talking about here today. It will not go ahead and just procure this itself without direction from the CRU on whether this is best value for consumers or whether it fits the mandate that the CRU is designed to fulfil, nor will it happen without a direction from the Department that this is part of broader national energy policy and energy security. That all needs to tie together.

Senator Alice-Mary Higgins

That national energy policy need-----

Mr. Bobby Smith

Yes, it is absolutely part of that. What we are talking about is that long-term contract aspect. I mentioned previously the RESS for wind and solar has 15-year contracts. I think we could even unlock a little more but that is not really important. This is to give that long-term certainty for investment, and that is what we are asking for this procurement to design. We need to co-ordinate the actors to design the procurement, as we talked about. It is not straightforward - we fully admit it will take time - but we need to progress it now, design it right and put in place those long-term contracts, ultimately from that procurement, that will give certainty for investment.

Senator Alice-Mary Higgins

On the emerging technologies aspect, the witnesses said they are liquid air, compressed air and the new batteries piece. Is that also an investment element?

Mr. Bobby Smith

Yes, it is all investment. It is investment in a cleaner energy future, in reducing carbon emissions and in removing our reliance on imported fossil fuels. It is all investment and if we design it right, it should deliver a significant net saving to consumers, but designing it right is important. We should not just pick one technology at the outset and say we are going to build that and that that is what we are going to invest in. It is about putting the resources and processes into designing a procurement framework that recognises there are multiple solutions for decarbonisation and that we want to pick the best ones for the grid and consumers.

Senator Alice-Mary Higgins

It strikes me that, as Mr. Smith said, the cost of gas has been so high that this would have been an insurance policy. Back in the day, however, we had the national oil reserve idea and we perhaps need to look to something equivalent in the form of a sustainable energy reserve.

Mr. Bobby Smith

Yes. There are different flavours of energy storage in that sense, which we find interesting. There is storage that can provide energy for hours, which can meet within-day changes in demand and supply, and there is storage that can do that over days or even weeks, such as the 100-hour storage Mr. Blount was talking about earlier. There is also more of a strategic asset of storage, such as seasonal storage, which can get us through potentially weeks of a cold snap when we need that. There are different elements for doing this. We might not necessarily do it all in one procurement framework, but it is certainly something we could consider as part of designing it.

An Cathaoirleach

I thank Mr. Smith. We are out of time. This was a super-interesting session. We got so much information. We hear the witnesses' asks. I have no doubt the Department, the regulator and EirGrid have been watching the meeting in any case but, as a committee, we will certainly push the asks in any engagements we have with them in the coming weeks and months. It is very exciting. It is really good to know there is a representative organisation that is really on this. It is clear from today's engagement that it is, which bodes well for the development of the sector and the market, I hope, when we know a little more about it in a few months.

The joint committee will now adjourn, to be followed by a meeting of the select committee at 1 p.m. I thank the witnesses for their attendance.

The joint committee adjourned at 12.48 p.m. until 11 a.m. on Tuesday, 2 July 2024.