CRU Consultation on MEC Sharing

Hybrid electricity projects, which typically involve combinations of multiple generation and storage technologies, have long been touted in Ireland as a more efficient way to utilise existing grid infrastructure. The efficiency is, in theory, gained as the operation of these assets can be optimised to ensure that, for example, the connection spends more time “exporting”.

A major obstacle for hybrid projects in Ireland is that under the standard form of electricity grid connection agreement, the contracted Maximum Export Capacity (MEC) at a connection point is not permitted to be shared between different technology types.

CRU consultation

The Commission for Regulation of Utilities (CRU) has now published a consultation on “Sharing of Maximum Export Capacity (MEC) behind a Single Connection Point” and is seeking comments on a policy that will facilitate a degree of MEC sharing. The consultation will be open for feedback until 14 April 2025.

This is not the first time that hybrid projects have been part of a public consultation. The “FlexTech Initiative”, organised by EirGrid and SONI (System Operator for Northern Ireland) in 2019, also consulted on hybrid technology. One of its priority areas was to investigate the “viability of 0 MW MEC units with an allowance to trade MEC between units behind the same connection point”. However, no policy changes were subsequently made in order to facilitate such MEC trading.

Rationale for the consultation

The main reasons stated for this consultation are:

• Environmental goals, as MEC-sharing is hoped to increase the amount of electricity generated from renewable sources, and
• Improving the use of existing infrastructure, as allowing MEC to be shared between technologies with complementary generation profiles is hoped to increase the capacity factor at any given connection point

For the purposes of the current consultation, the CRU proposes to limit the scope to Hybrid Co-located Projects. These are “any project that combines multiple forms of generation and/or storage technology behind a single connection point.” Regarding the generation units, these will be:

• Registered separately in the wholesale electricity market
• Operate independently of one another for market, settlement, and dispatch purposes, and
• Be sub-metered

Notably, the consultation explicitly does not apply to “integrated” hybrid projects – ie. those with multiple generating units which would be registered in the wholesale market as a single market unit behind a single meter. Nor does it apply to interconnection or offshore projects.

Questions and requests for feedback

There are eighteen questions / requests for feedback set out in the consultation, on issues such as:

• Whether participants envisage challenges with managing the interaction of different market and availability requirements at the connection point
• whether respondents have concerns over potential unintended consequences on the SEM Energy Markets, Capacity Market and System Services and, if so, how these can be prevented or mitigated
• Whether there are any other risks that should be considered as part of the decision-making process, and how these risks can best be mitigated
• Whether stakeholders believe that conducting a pilot project is warranted, in order to provide learnings in advance of full implementation of the MEC-sharing proposals, and
• Whether there are risks associated with the sharing of MEC being applicable to all potential combinations of renewable, conventional and/or storage technologies

The CRU notes that at present, its proposal does not in fact facilitate energy sharing between units behind a connection point, e.g. the use of otherwise constrained or curtailed wind energy to charge co-located storage. Nor does the proposal accommodate the sharing of connection points by multiple legal entities – although it is hinted that this issue will, at some future stage, be “addressed as part of the wider work to facilitate hybrid connections”.

The Consultation also notes that MEC sharing between generators may result in a higher level of “dispatch down”. “Dispatch down” will of course require compensation under EU rules and will therefore impose a cost on consumers. This hints at an unintended consequence of EU rules on redispatch – their generosity may in fact operate to hinder the deployment of hybrid assets. Reference is also made to analysis by the System Operators, that suggests that any increase in dispatch down will not be significant when compared to the benefits associated with the deployment of hybrid projects.

Another aspect that may invite commentary is the CRU’s position that the sharing of MEC, by a renewable generator that has priority dispatch, is “likely to be classified as a significant modification”, which may deprive the project of priority dispatch under Article 12(6) of Regulation 2019/943.

Conclusion

A consultation by the CRU on the sharing of MEC is a welcome step in the process of hybrid project deployment and grid use optimisation, both of which are arguably necessary in order to preserve the integrity of the Irish energy transition.

Various items mentioned in the consultation – the fact that energy sharing is not included, the limited range of projects affected, the interrelationship with redispatch – hint at the complexity of the issues. It may explain why the relaxation of connection policy is proceeding so cautiously.

For now, interested parties – including those that already have projects connected and who would like to explore the optimisation of their existing connection – are encouraged to respond to the consultation.

For more information and expert advice, contact a member of our Energy team.