Ireland’s new electricity connection policy can ‘speed up’ renewable projects

Ireland’s Commission for Regulation of Utilities (CRU) has finalised its new electricity connection policy (104-page/1.4MB PDF), following a review of the responses to its consultation published in December 2023. The new policy is set to overcome a variety of challenges in relation to renewable energy’s permit-granting processes and help Ireland meet its climate action targets and timelines while protecting the consumer.

As outlined by the policy, one way to support the delivery of Ireland’s renewable electricity targets is by facilitating more frequent processing of grid connection applications for onshore renewable and conventional generators, storage, and other system services technology projects connecting to the electricity system.

The regulator will introduce a bi-annual batch application process, with the first batch closing deadline under the new policy set for 30 September 2025. After that, the deadlines will be on 31 March and 30 September each year. Currently, the CRU’s enduring connection policy (ECP) only provides project developers with a single annual window, lasting two months, in which to submit grid connection applications. There will be one final ECP batch later this year.

Under the new regime, there will be two different grid application and connection offer processes. One will apply to projects covered under the EU’s revised Renewable Energy Directive (RED III), which includes renewable projects and co-located energy storage projects. The other process applies to non-RED III projects, such as conventional projects, energy storage projects which are not co-located as per the RED III definition, and other system services technology projects.

A key feature of the newly introduced process for RED III projects is the alignment between the grid connection application process and the planning permission process, allowing projects to apply for their grid connection following the acknowledgement of a complete planning application by the relevant planning authority. Its aim is to help reduce the overall time it takes for developers to obtain the relevant permissions for their projects and to bring them online. Currently, projects which are not community-led projects must have been granted planning permission to be able to submit a grid application under the ECP regime. This requirement remains the same for non-RED III projects under the new policy.

Richard Murphy, an expert in renewable energy projects at Pinsent Masons, said that the decision to streamline the permit-granting process marks a significant development, as it will speed things up dramatically if the authorities are properly resourced and funded and stick to the timelines in RED III.

“Meeting net zero requires a fundamental rewrite of many of our current policy and implementation frameworks. Trying to parallel as much activity as we can across grid and planning is the right first principle and this decision is a welcome step forward. The challenge will be how to operationalise consistency and accountability of decision making and implementation of the RED III time periods across what are effectively two self-standing processes in planning and grid,” he said.

According to the new process, a RED III project can enter into a “pre-engagement process” with the system operator before submitting its full application and the system operator can undertake a “high-level technical assessment”, which must be included in the project’s grid application. Developers can submit their grid applications once the project’s planning application has been acknowledged as complete by the relevant planning authority and prior to the planning permission being granted. However, a project must have received planning permission consents before the grid connection offer can be accepted.

The CRU said in its policy paper that “unless the planning- and grid-permitting processes are conducted in parallel, permit-processing timelines for RED III projects will not be achievable”.

Under article 16 of RED III, the permit-granting procedures for new renewable energy projects located outside renewables acceleration areas shall not exceed two years. This includes grid permit-granting processes as well as planning and other associated permits. The CRU clarified that the RED III timelines will begin upon acknowledgement of completeness of a planning application by the relevant planning authority.

However, Murphy pointed out that review and updates of the policy may be required as the interactions between the different permitting processes are monitored under the new framework. One potential issue is the risk of planning permission not being granted within the expected timelines outlined in the policy paper.

“Given the significant delays currently being experienced in the planning system in Ireland, there is a risk for projects in making a financial commitment on a grid application prior to planning permission being granted – particularly with developers needing to have secured planning permission before accepting any subsequent grid offer and the time period for acceptance of a grid offer being reduced from 90 days to 60 days. That aspect will need to be closely reviewed and monitored to ensure the interactions work in practice,” said Murphy.

A further aim of the new regime is to promote efficient and optimal use of existing grid infrastructure and development of future infrastructure to deliver value to the consumer – including by facilitating ‘repowering’. Repowering is where systems or equipment used to produce renewable energy are replaced in whole or in part to replace or increase the capacity of those assets or improve their efficiency. As required by RED III, the overall timeline to grant permits to repowering projects should be under one year. For repowering projects that don’t increase the maximum export capacity (MEC), and those with less than a 15% increase in MEC that do not give rise to any system safety concerns, the timeline for grid connection permits should be within three months. 

The Irish government has set out a target of delivering 80% of electricity from renewable energy sources by 2030 – including 9GW of power from onshore wind and 8GW from solar. It has further committed to delivering ‘net zero’ emissions by 2050 – and achieving a 51% reduction in emissions compared to 1990 levels by 2030, as a stepping stone towards the longer-term objective.

The CRU policy paper makes it clear that enabling repowering projects and ensuring their quick delivery is important to achieving Ireland’s net zero targets, as repowering projects “may be more economical and faster to deliver than developing a new project in a new location”.

“As substantial numbers of the earliest developed renewable generation projects approach the end of their design life, repowering could be a viable option to extend operations and contribute further to clean energy targets,” it stated.

The CRU has clarified that the timelines set out in RED III apply to both refurbishment or life extension projects and to full repowering projects, but that the intention of the streamlined permit-granting process for repowering detailed within RED III is to encourage full repowering over refurbishments or lifetime extensions.

The policy also covers new hybrid projects comprising a mix of renewable energy technologies or renewable energy combined with co-located storage. These projects are connected to the grid through a single connection point. They will be considered as RED III projects under the new framework and are required to apply through the batch process. The CRU said that its connection policy to date has facilitated the connection of new hybrid projects and this will be continued in the new policy, recognising that “hybrids are important for supporting renewable energy integration, more efficient use of grid infrastructure, reducing dispatch down, achieving Ireland’s carbon reduction targets and ensuring value to the consumer”.

Project developers can expect changes in costs and charges as part of the policy update. The CRU has indicated its intention to review its current charging and rebating methodologies and consider potential reform to address the industry’s concerns over the appropriateness of network charges and the perceived lack of transparency as to how pass-through costs are calculated.

EirGrid has been asked to submit detailed proposals on how the changes should work to the CRU by the end of 2024. These submissions will form the basis of a new consultation on the costs and charges reform. According to the CRU’s recent consultation, one of the proposed changes is a “streamlined charging methodology”, which is designed to increase transparency by providing visibility of costs to developers at a much earlier stage of the process and by reducing the menu of standardised charges. Other proposals include fixing the charges at the offer stage to provide increased certainty to developers and simplifying the allocated charging and rebating rules.

Meanwhile, the application fees will also be reviewed by the ESB Networks, which will provide the CRU with the updated fees for approval in the first quarter of 2025.

Across the EU, member states, including Ireland, have been warned by the European Commission to swiftly implement RED III by transposing the directive into national law. RED III entered into force on 20 November 2023 with an 18-month period for member states to transpose most of the directive’s provisions into national law. However, there is a shorter deadline of 1 July 2024 for some provisions related to streamlining and accelerating permitting procedures for renewable energy projects. On 26 September 2024, the Commission opened infringement procedures by sending a letter of formal notice to 26 member states for failing to fully transpose these permitting related provisions into national law. They now have two months to respond and compete their transposition.

“The Commission has fired a warning shot to the member states, including Ireland, on transposing the rules to simplify and speed up the planning approval and other permits for renewables. It’s important that the governments get on with this body of work as quickly as possible,” said Murphy.