CRU decision to remove Installed Capacity Caps
On 17 January 2023 the Commission for Regulation of Utilities (CRU) published its decision paper (CRU/2024/02) revising its existing policy on Installed Capacity Caps (ICCs) for electricity generators in the Irish market (the ICC Decision). The existing ICC has been in place since 2014 and limited the maximum generation capacity that generators could install to 120% of a project’s maximum export capacity (MEC), as awarded under a project’s grid connection agreement (GCA). The ICC Decision means that the ICC will be removed and that, going forward, generators will be free to over-install capacity irrespective of the MEC awarded under their GCA.
The CRU has decided that:
- The ICC will be removed for single technology sites and
- The ICC will be removed for hybrid co-located (multi-technology) sites (subject to a review and update by the TSO/DSO of operational processes “relating to aspects such as forecasting, and availability associated with mixed technology sites”).
This welcome development will allow onshore generators to maximise their output and ensure that they utilise the full potential of their allocated MECs. Given the fluctuating and sometimes unpredictable nature of renewable energy generation, the ability to over-install capacity will be a real positive for the industry. This decision will be of particular benefit for sites utilising multiple technologies, some of which have inverse generation profiles, such as solar and wind. It will also allow generators to design their projects to offset the risk of under-generation (for example, where there is limited solar generation on cloudy days or wind generation on windless days) by installing varied generation assets. Given MECs are awarded on the basis of grid capacity, allowing generators to over-install to utilise full MEC should also result more efficient use of existing grid infrastructure.
Generators should be aware, however, that the ICC Decision will only apply to new GCAs being issued. A generator who wishes to increase its installed capacity under an existing GCA will need to request an amendment to their agreement, which will be subject to assessment by the TSO/DSO. Further, the terms and conditions of existing Renewable Electricity Support Schemes (RESS) have not been amended and any project participating in RESS will remain subject to the cap of 120% of their RESS offer quantity. The CRU has alluded to a potential for this cap to be removed from future RESS (and ORESS) policies, however any such amendments remain within the remit of the Department of the Environment, Climate and Communications.
In its decision, the CRU acknowledged that the removal of the ICC could potentially lead to increased network constraints/curtailment (i.e. that increased generating capacity could lead to higher level of dispatch down) which in turn could result in additional costs to consumers who will ultimately pick up the tab for any compensation payments. The CRU, however, has determined that, on balance, the increased efficiency associated with over-installation will balance out any additional cost to consumer.
The CRU has also acknowledged that amendments to existing policies may be required to accommodate the removal of the ICC, and confirmed that the TSO/DSO will be reviewing existing codes and standards in the coming months to establish the extent of the changes required. The Energy, Infrastructure and Renewable Resources team at A&L Goodbody LLP will be monitoring these changes and will keep industry apprised of any potential impacts for generators arising out the ICC Decision.
For more information please contact John Dallas, partner, Ivor Deeleman, solicitor, or a member of the Energy, Infrastructure & Natural Resources team.
Date published: 31 January 2024