Latest electricity capacity auctions end EirGrid-Viridian dispute

The latest round of Eirgrid capacity auctions has drawn a line under a dispute between the State company, which operates the national electricity grid, and energy supplier Viridian.

“Capacity auctions” determine which power plants get paid for being available to generate electricity. Up to October this year, all generators received the payments along with income for producing and supplying power to the market.

Shake-up

However, a shake-up of the electricity market changed this, and Eirgrid, working with the Commission for the Regulation of Utilities, introduced a new system designed to reward the more efficient power plants.

One of Viridian's two generators at Huntstown Co Dublin failed to qualify for capacity payments in the first auction held under the new system earlier this year. The company warned that this could force it to shut both generators, with the loss of 40 jobs.

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However, it successfully appealed the outcome to a panel of three lawyers appointed by the then minister for communications, climate action and the environment, Denis Naughten.

They found that Huntstown was needed to help guarantee electricity supplies to Dublin, where demand is obviously highest. On that basis, Viridian settled with the utilities regulator and the power plants kept trading.

Eirgrid held a second auction this week to determine which power plants get the payments for 12 months from next October. Both Huntstown plants were among the 95 that succeeded, mainly because the auction this time took account of the need to have generators close to Dublin, something the appeals panel recommended. This clearly lifts any immediate threat to the Viridian power plants.

The 95 successful bidders - there were a total of 100 - will receive €345 million in capacity payments over 12 months beginning next October. That money will come from network charges paid by all electricity users.

While the figure is €12 million more than the €333 million allocated to generators in the first auction, it is €205 million less than the €550 million a year that consumers shelled out under the old system.