Failure to lure new power plant investment behind electricity squeeze

A failure to lure new power plants is behind the squeeze on electricity supplies facing the Republic through this decade, according to Mark Foley, chief executive of national grid operator EirGrid.

The State company recently warned in a report that the Republic faces “capacity deficits” in electricity supply up to 2032.

Mr Foley blamed the problem on a failure to secure investment in new power plants in a statement to the Joint Oireachtas Committee on Environment and Climate Action on Tuesday.

“This failure must be resolved as a matter of urgency, we cannot continue to rely on temporary generators,” he warned TDs and Senators.

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EirGrid’s report, published earlier this month, noted that since 2018, just 30 megawatts of new natural gas-fuelled electricity generators had been built here, while plans for several power plants had been dropped.

The single electricity market offers so-called “capacity payments” through auctions that are designed to secure investment in new natural gas generators, but Mr Foley said this mechanism was not working.

Power companies have dropped plans to build generators contracted under this system that would have been able to supply about one million homes.

Last November, an auction run by EirGrid and the Commission for the Regulation of Utilities (CRU) failed to attract bids to build any large-scale gas-fired electricity plants, even though Mr Foley said it should have resulted in securing “a significant number of projects”.

He told the committee that the November auction could have attracted developers willing to build generators capable of producing more than 3,000MW of electricity.

The EirGrid chief said the State needed to increase the payments by at least 10-15 per cent to bring in the investment needed.

He said the Single Electricity Market Committee, made up of regulators from both sides of the Border, which sets the terms of the capacity auctions, was not making decisions in the Republic’s best interests.

Mr Foley explained that the committee took both jurisdictions’ needs into account when making these decisions, so was influenced by the fact that the North was not facing similar problems to the Republic.

Instead, he said that responsibility for deciding the terms of auctions meant to secure new power plants for the Republic should rest solely with the CRU.

Electricity users ultimately cover the cost of capacity payments through the network charges on their bills.

Mr Foley said the State needed reliable natural gas generators as a back up to the electricity system, even as it moved to taking on more wind and solar power to meet the Republic’s climate targets.

Eamon Ryan, Minister for Environment, Climate and Communications, and his department, last year sought emergency planning permission for several temporary power plants to plug the gap in the Republic’s electricity supplies.

The first of these, in Dublin, began generating electricity before Christmas, while others will start this year.

However, according to recent reports, the cost of these plants could ultimately run to €1 billion, from an initial estimate of €480 million.

Regulators have also allowed ESB to keep its Moneypoint power plant open beyond its scheduled closure next year as a “generator of last resort”.

Moneypoint will switch from burning coal to heavy fuel oil and will remain open up to 2029 under the plan, approved late last year.

London-based EP Energy last year scrapped proposals for a 260MW gas-fired electricity plant in Co Galway, blaming inflation and regulators’ refusal to index link payments.