I am grateful for the opportunity to address the Joint Committee on Transport and Communications. I am accompanied by Ms Rosemary Steen, director of public affairs; Mr. John Fitzgerald, director of grid development; and Mr. Aidan Geoghegan, project manager on the North-South interconnector project.
Last month we published a draft strategy for the development of Ireland’s transmission grid. The draft strategy, on which EirGrid is now seeking public feedback, is shaped by three key pillars, namely, open engagement with communities, making the most of new technologies and a commitment to make the existing grid work harder before building new transmission infrastructure. The strategy takes account of the changing technical and economic context for Ireland’s electricity transmission system, examines the energy challenges facing Ireland and identifies the steps we need to take to develop a strong and secure transmission system for homes, farms and businesses throughout Ireland in order that the electricity grid is capable of providing for the energy needs of our country now and into the future.
The strategic review includes an independent report from Indecon which shows that investment in the electricity grid will directly benefit Ireland’s economy and can help reduce energy costs. As well as supporting indigenous businesses and consumers, a modern transmission grid will put Ireland in a strong position to continue to attract foreign investment and support new and emerging opportunities in the energy sector. This approach will also support Ireland’s current policy objectives, including the Government’s Action Plan for Jobs and the IDA’s regional development strategy. The draft strategy reflects the change in economic circumstances and our current circumstances as a country, an economy and a society. In recent years we have seen technological advances, some of which we have deployed already to great effect and others which are now emerging. Based on all these advances, our new strategy is firmly focused on maximising existing assets and deploying appropriate advanced technology solutions.
In respect of the North-South interconnector, the review determined that there remains a clear need for the project and that a 400 kV overhead line remains the most appropriate solution. The interconnector is a 400 kV overhead line linking a substation in Woodland, County Meath, with a new substation in Turleenan, County Tyrone. It will provide a second high capacity transmission line between Ireland and Northern Ireland. The project will more than double the power transfer capacity between North and South, thereby improving the efficiency of the all-island electricity market.
It will enhance the security of the electricity supply throughout the island of Ireland, which is essential for economic growth, the creation of jobs and improving the standard of living and quality of life for all. In addition, it will enable more renewable energy supplies to be connected to the network, thereby reducing our production of greenhouse gases and our reliance on imported fossil fuels. The interconnector is needed now, as a cross-Border bottleneck has developed on the all-island electricity system, which is having serious financial consequences. Last year the Economic and Social Research Institute, ESRI, reported that the North-South interconnector would remove the bottleneck and reduce electricity costs by €30 million per year.
The proposed scheme has been the subject of public scrutiny and debate for some time, with the focus on whether it can be put underground. Several independent reports on the issue have been published. In 2008 the Government commissioned the Dutch energy consultancy company Ecofys to produce a Study on the Comparative Merits of Overhead Electricity Transmission Lines Versus Underground Cables. In 2009 EirGrid published a report produced by industry experts, PB Power, which examined overhead and underground options for the project. A key component of the study was a comprehensive and site-specific underground cable evaluation that identified and evaluated a specific route corridor. The report was reviewed and updated in 2013. Another report commissioned by EirGrid was a technical study by TransGrid Solutions of Canada that investigated the impact of high voltage, direct current, HVDC, schemes in the Irish transmission network. We also commissioned an assessment by Tokyo Electric Power Company of the technical issues related to significant amounts of underground cable in the all-island transmission system. In 2012 the Department of Communications, Energy and Natural Resources published a study by an international expert commission which had reported on the case for, and cost of, undergrounding the North-South interconnector. The Government-appointed independent panel, headed by Mrs. Justice Catherine McGuinness, acknowledged that the evaluation of undergrounding of the North-South interconnector was compatible with the methodologies being employed on the Grid West and Grid Link projects.
We do not have time to examine in detail the findings of all these reports, but there are two themes that emerge from them, the most prominent of which is the finding that undergrounding the project would be more expensive. The international expert commission's report concluded that an underground solution would be three times more expensive than an overhead option. Our own estimate is that an underground system would cost in excess of €500 million more than the overhead option. As a State-owned company the mission of which is to develop, maintain and operate a secure, economical and efficient transmission system, this is an additional cost EirGrid cannot pass on to consumers. It is an additional cost that would not be acceptable to the regulator, the Commission for Energy Regulation, CER. This is made clear in a joint letter to EirGrid in 2013 from the CER and the utility regulator in Northern Ireland which stated:
[T]he project must not only be progressed quickly but also cost effectively. The Committee understands from the Irish Government review that the cost for the undergrounding of the project would be significantly higher than the AC overhead line construction employed elsewhere in Europe. The regulatory authorities would therefore be of the view that customers should not be expected to pay for any unnecessary costs associated with undergrounding of the cables given there would be no enhancement in service.
I will deal briefly with some of the technical aspects of the project. In its 2012 report the international expert commission made only one recommendation, namely, that the North-South interconnector not be undergrounded using AC technology. We agree with that recommendation. The commission, while not recommending that the interconnector be undergrounded, stated that if it were to be undergrounded for all or a significant portion of its length, the best solution would be to use HVDC technology. EirGrid is very familiar with HVDC and keeps abreast of the development and application of the technology which we successfully deployed in our east-west interconnector project. However, while it was, in fact, the only technically feasible option available for the east-west interconnector, the same cannot be said for the North-South interconnector project. There are technical options to be considered and they have been.
The international expert commission found that AC overhead line technology was the standard in Europe for implementing projects similar in application to the North-South interconnector. That remains the position. There are significant technical issues with putting projects such as the North-South interconnector underground using HVDC technology.
One of the key benefits of the North-South interconnector is the ability to operate the networks North and South as if they were one system. This will bring cost savings for electricity consumers as a larger electricity system can be operated more efficiently than smaller ones. However, if the project was to be put underground, it would be an HVDC system linking two alternating current or AC networks. As HVDC is not compatible with AC, there would be additional complexities as it would require equipment to convert the power from AC to HVDC and back again. In order to function properly, an HVDC interconnector would also require a computerised control system. Such a system would be bespoke and very complex and introduce a risk of mal-operation. Taking such a risk when there is a technically superior and less risky option readily available is unnecessary. In addition, "tapping" into an HVDC interconnector at an intermediate point to provide a new grid connection or for network reinforcement in the future would add to the already complex control system. It would also be significantly more costly, potentially in excess of €100 million more, than tapping into the proposed AC overhead line. This would disadvantage future development in the region.
Where are we with the project? EirGrid has recently republished its proposed line route that will form the basis of an application for planning approval to An Bord Pleanála. The review resulted in the proposed tower locations being repositioned along the alignment. The alignment has not changed and the owners of the land holdings affected were notified prior to publication. We are looking to submit a planning application to An Bord Pleanála in the coming weeks. In fact, we have been liaising with the board on the planning application for some months. We have been doing this because 18 months ago the European Commission designated the interconnector a project of common interest, PCI. This is a significant development and means that the project is subject to a new EU regulation for trans-European energy infrastructure that is designed to facilitate a more efficient permit granting process. An Bord Pleanála was designated as the competent authority for managing the PCI process in Ireland and, as per the EU regulation, we submitted a draft application file to it for review. Last month we submitted additional information to the board which it is reviewing. Once it is satisfied with the draft application, it will draw up a schedule for formally submitting the planning application. We expect this to happen very soon.
As I mentioned, open engagement with communities is a key pillar of the draft strategy. During the course of the project we have endeavoured to meet every landowner affected by the development and have had productive discussions with many. Others have chosen not to deal with us directly, appointing intermediaries to represent them. This is their undoubted right and prerogative. However, it is also a barrier to effective engagement and we encourage all landowners to talk to us.
Recently we have opened offices in counties Meath and Monaghan and will shortly open a new office in Cavan. We are encouraging anyone interested in the project to call in and discuss it with our project team. These offices will remain open right through to the submission of the planning application and afterwards. Our staff will be on hand in the local offices to provide assistance for landowners and members of the public who wish to make a submission to An Bord Pleanála once the statutory consultation process starts following the submission of the planning application.
The interconnector is critical to ensuring a safe, secure supply of electricity throughout the island of Ireland. It will bring major cost savings and address significant issues around security of electricity supply, particularly in Northern Ireland. On behalf of the EirGrid representatives present, I thank the committee for giving us the opportunity to brief it on this critical development. We are happy to take questions members may have
