Energy regulator and Eirgrid row over security of supply system which is 'not fit for purpose'

The energy regulator has said it has "noted" strong criticism from Eirgrid over the system to bring new energy generation to the grid, in which it said it was "not fit for purpose".

Eirgrid was responding to a report — conducted by EY for the Commission for Energy Regulation — on the workings of the system, which is known as the Capacity Remuneration Mechanism.

Eirgrid said: "Eirgrid holds the view that the current capacity remuneration mechanism is not fit for purpose. As of now, circa 650MW of capacity procured through the auction processes since 2018 has withdrawn and has failed to deliver capacity to the electricity grid."

It also said that it had "highlighted to the CRU (Commission for Regulation of Utilities) the failure of the market mechanism to deliver" and had asked the CRU "to urgently amend the mechanism to ensure security of supply".

Eirgrid said it would consider the EY report and respond in due course, adding: "The future of the capacity markets is critical to the success of our country. 

"If we cannot successfully procure and, more critically, deliver on the procurement of conventional generation we cannot support social and economic growth, ensure the security of our electricity supply or secure the very necessary transition to renewable energy in line with the Government’s Climate Action Plan."

According to the CRU: "The Minister for Environment, Climate and Communications, requested the Commission for Regulation of Utilities in 2021 to review the performance of the SEM capacity remuneration mechanism (CRM).

"Following this request, the CRU included this piece of work under the Security of Supply Programme which commenced in September 2021.

"The CRU procured EY to perform this review. EY prepared the report following engagement with both regulators, DECC, market participant representative bodies and the TSOs.

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"It should be noted that the CRM is jointly governed by CRU and Utility Regulator (UR) under SEM arrangements through the SEM Committee. The current market design was the subject of a State aid clearance process by the European Commission and is in line with EU requirements for such capacity mechanisms.

"The EY report on CRM has been reviewed by the SEM Committee which is already progressing some of the recommendations and has issued this current call for comments on further proposed steps. 

"In the call for comments, the SEM Committee welcomes the views of the industry and stakeholders on the recommendations. The CRU notes Eirgrid’s comments and will take them on board in the context of the consultation."