The last few months have seen momentum building in Ireland behind offshore wind. The Climate Action Plan has set a target of reaching 3.5GW of offshore wind in Ireland by 2030.  Kristen Read and John Dallas from A & L Goodbody have prepared this Insight to provide an overview of recent developments which have been introduced to set Ireland on course for achieving this target.

Relevant Projects

The recent announcement from the Department of Housing, Planning & Local Government (DHPLG) that seven Irish offshore wind projects have been designated as ‘Relevant Projects’ in the context of the forthcoming Marine Planning and Development Management legislation (MPDM) is a welcome step forward to give greater certainty and confidence to developers of offshore wind projects in Ireland.
In the past, there has been significant uncertainty for developers of offshore wind projects in Ireland, particularly in relation to the offshore and onshore consenting process for their projects. The Climate Action Plan (CAP) published in July 2019 (which underpins the Government’s policy for incentivising offshore wind projects) committed to address the question of how ‘legacy projects’ would be treated under any new legislative regime for offshore renewable energy projects. The designation of Relevant Projects is the latest step by Government to clarify the position of these projects.
The seven Relevant Projects, together with SSE’s 520MW Arklow Banks project, have the potential to deliver 4.4GW of capacity as part of Ireland’s strategy to support very significant deployment of offshore wind projects between now and 2030.

For the Relevant Projects it means that they will be granted a ‘Planning Interest’ under the new MPDM (when enacted) and will therefore have priority over earlier stage projects in accessing the new offshore consenting regime.

Timing for Consents

Given ongoing delays in the formation of a new Government, it is unclear when the MPDM will be enacted and therefore uncertain when the Relevant Projects will be able to commence the planning process under the new regime. However, it is encouraging to see that MPDM will be priority legislation for the likely future Government and that significant progress is also being made in relation to other pillars of the offshore consenting regime, in particular on the development of our National Marine Planning Framework (NMPF).

Whilst the single consent principle will remove unnecessary duplication in the offshore consents process, the MPDM general scheme does not include a clear statutory timetable for An Bord Pleanála to carry out its examination and issue its decision. If we look to our nearest neighbours in the UK and the Development Consent Order process, having a clear and statutory timetable to obtain consent has certainly facilitated the timely delivery of offshore wind projects in the UK. If the ambition for offshore wind energy, as set out in the CAP, is to be realised by 2030, then the timely delivery of planning consents will be key. A statutory time period for decisions would be very helpful in this regard, as well as an appropriate resourcing strategy in An Bord Pleanála to deal with the likely volume and complexity of applications for offshore development consents under MPDM.

Grid Connection

Only one offshore wind project currently holds a grid connection agreement (namely Oriel). Clearly, securing a grid connection offer is a priority for most offshore wind developers. On foot of a direction issued by the Commission for Regulation of Utilities in January 2020, EirGrid is required to commence processing grid applications from projects that are designated as a ‘Relevant Project’ under the Transitional Protocol. It is expected that the formal designation of Relevant Projects by DHPLG will facilitate engagement between EirGrid and these projects.
On 10 June, the Department of Communications, Climate Action and Environment published a formal consultation to inform the grid development policy for offshore wind in Ireland. The consultation document and accompanying report by Navigant sets out a number of approaches from ‘Developer-Led’ (decentralised) to ‘Plan-Led’ (centralised) and includes helpful comparisons across a number of European jurisdictions. It is expected that this consultation will guide Government policy on grid delivery for offshore wind projects and will address important questions such as responsibility for consenting, construction and operation of offshore grid assets. It is possible that a different or ‘transitional approach’ may be taken in respect of Relevant Projects to avoid potential delays to these projects in making the regulatory and legal changes required to implement an enduring offshore grid connection policy.
We anticipate that the approach to ownership and operation of offshore transmission infrastructure will come into sharper focus as part of this policy design process.

Route to Market

The CAP targets a first offshore wind RESS auction in Q2 2021. On the assumption that only ‘consented’ projects (i.e. projects with a development consent / a Marine Area Consent (MAC) under MPDM or an appropriate foreshore lease) will be eligible to participate in that auction, it is difficult (for that and other reasons) to see sufficient offshore wind projects being in a position to participate in an auction within those timeframes.
The timing of the first RESS auction allowing offshore wind to compete as a ring-fenced technology category requires deliberate coordination with other key workstreams including (i) enactment of MPDM and finalisation of NMPF, (ii) delivery of development consents under MPDM, (iii) finalisation of the charging regime for MACs, and (iv) issuing of grid connection offers. Each of these are important to confirm overall project design and costs in the context of competitive auctions.
The MPDM also suggests that only projects that have been granted support through a competitive process established under Section 39 of the Electricity Regulation Act (i.e. RESS) will be eligible to receive a MAC. We would suggest that this is a relatively inflexible approach in that it pre-supposes that the only viable route to market for offshore wind projects (now or in the future) is through a RESS supported power purchase agreement. We would suggest that the industry should be allowed greater flexibility to innovate in relation to alternative routes to market for offshore wind (as is being seen in the US and Europe) whilst recognising that Government will require sufficient comfort on the viability of any alternative route to market when granting exclusive rights over the Irish marine area.

Supply chain challenges and opportunities

The recent report, Harnessing our Potential, commissioned by IWEA and prepared by the Carbon Trust, outlines that significant investment is needed in the Irish supply chain to ensure that the wider economic benefits of offshore wind development can be captured domestically. The report highlights a number of issues including:-

• At present, Irish firms only stand to capture approximately 20% of the likely investment that will be generated through development of offshore wind in Ireland unless steps are taken urgently to grow the local supply chain;
• Currently, Ireland does not have a port capable of supporting the construction and operation and maintenance of offshore wind farms, meaning developers will have to depend on ports in the UK; and
• SSE has recently announced its selection of Arklow harbour as the preferred operations and maintenance base for the Arklow Bank windfarm. This is a welcome development and one which is hoped to be a sign that Ireland can capture as much of the offshore wind value chain as possible.

Recession and the Economic Impact of Covid – 19

Whilst Covid-19 has wreaked havoc on the Irish economy, and the full economic impact of the pandemic is still unknown, the European Commission’s proposal for a major recovery plan places the Green Deal at its core. As part of the European Green Deal and to help drive the energy transition and to ensure that it’s a just transition, the European Commission has tabled a Sustainable Europe Investment Plan worth €1 trillion. Specific measures for offshore wind are included in the Green Deal. This means that there is an opportunity for offshore wind to not only be instrumental in Ireland achieving its 2030 targets but to also be a part of Ireland’s economic recovery story. This should only serve to drive further momentum in the burgeoning Irish offshore wind sector.

For more information please contact Kristen Read, associate on A & L Goodbody’s Environmental & Planning team or John Dallas, partner on A & L Goodbody’s Energy, Infrastructure & Natural Resources team.

Authors

The post Guest Blog: Recent Developments in Irish Offshore Wind appeared first on ElectroRoute.

Leo Varadkar’s Washington D.C. address to the nation may feel an eternity ago, but it has been just over 4 weeks since schools were closed, gatherings limited and the global COVID-19 pandemic began to feel real. In the background, the Irish electricity system has continued to operate – and with increased reliance from medical centres and the workforce working from home, the requisite of security of supply has perhaps never been greater. Under this pressure, we investigate how the market has reacted to these extraordinary times.

Demand

There has been evidence across Europe of a reduction in electricity demand as a result of lockdown measures, and Ireland has been no different – but perhaps the decrease in demand has been overstated so far.

The Irish electricity demand for the last six weeks is shown in Fig. 1 and compared to the same period in 2018/2019 (and adjusted to match day of week). Firstly, there is significant demand variation evident in each year during this period as we transition from a dark, cold February to a brighter, warmer March. From March 13, demand has decreased – 10% lower compared to the three weeks previous, and from the introduction of the 2km travel limit demand has decreased by 12% – but compared to 2019 demand is only down 3% and 8% respectively for these two periods. In 2018 demand dropped by 7% after March 13. It is important to remember that, while demand has decreased, it always decreases at this time of year. Notwithstanding this, it is evident from the graph that demand over the last week in particularly has been noticeably below data from the previous two years, and perhaps this is the trend we are likely to continue along.

Fig. 1. Average Daily power consumption Feb 24 – Apr 4. (Note: 2019 and 2018 data shifted to match 2020 day of week)

Fig. 2 shows the average electricity demand in MW for each hour of the day since March 13 for 2020, 2019 and 2018. Additionally, the average 2020 Feb/Mar demand is also plotted. While as expected there is a material drop in demand now compared to the average Feb/Mar data, this difference is not as apparent when compared with the 2019 and 2018 data. However, when comparing with previous years there does appear to be some decrease in demand ahead of and during normal office hours with typically a 7% decrease during the mid-morning period.

Fig. 2. Demand consumption average by hour of day

EirGrid’s usually accurate demand forecasts have been impacted – perhaps not surprising considering the uniqueness of the situation. Fig. 3 shows the average forecast percentage error for each hour of the day since March 13 (positive % indicates over-forecast). The tendency to over-forecast has increased. The largest error occurs close to the morning demand rise, around 08:00. With many people working from home, the usual rise in electricity demand associated with morning routine, commuting and beginning the working day in offices and schools is no longer present. Interestingly, the error has decreased between the hours of 23:00 and 01:00 – perhaps with pubs, concerts and other evening entertainment cancelled it has become easier to forecast when electricity demand is likely to come down for the night.

Fig. 3. Demand forecast percentage error on average for each hour of day

In summary, there appears to be some reduction in demand due to Coronavirus behavioural change particularly early in the day – however some of this change is caused by the normal seasonal demand reduction. More data will be needed to make firmer conclusions.

Market Prices

Fig. 4 shows the average day ahead and imbalance prices for each hour of the day since March 13, with the 2019 prices for the same period and average 2020 Feb/Mar prices shown for reference. As can be seen, prices are lower in both markets. Day ahead spot prices are down 9% and imbalance prices down 19% compared to the Feb/Mar average; they are down 32% and 46% respectively compared to 2019 over the same period. Market volatility is also down. There is a lot more at play here than simply a reduction in demand – the recent low oil and gas prices combined with healthy levels of wind generation over the last few weeks have primarily contributed to lower prices.

Fig. 4. Market Prices since closure of schools (March 13)

Carbon Dioxide Emissions

Reports of cleaner Chinese air and aquatic life returning to canals of Venice has resulted in commentators claiming that the only benefactor of this crisis could be planet Earth. As Fig. 5 shows though, there is little to suggest that there has been a beneficial impact on CO₂ emissions from the generation of electricity in Ireland so far – in fact, emissions increased slightly on average over the study period. Of course, this is very much dependent on the availability of wind generation, and you would expect that as demand decreases CO₂ emissions should too.

Regardless, electricity systems are unlikely to be the major cause of decreased emissions – transport and industry are more than likely the sectors which will see the largest reductions. In truth though, it may be best to simply ignore any emissions statistics during what is obviously a colossal anomaly in the data. The only impact of widespread praise for emission reductions this year would be complacency towards the issue of decarbonisation from politicians, engineers and the public – which would have catastrophic consequences in us reaching our 2030 targets.

Fig. 5. Emissions from electricity generation (estimated using SEAI emission factors)

The full extent of how this crisis has impacted our electricity system, and livelihood, will likely only become clear after life has returned to some form of normality. For now, stay safe.

All market data obtained from SEMO.

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