March 4, 2024

Vision Cim

Thank Business Its Friday

EirGrid poised to name new suppliers for electricity generation

National grid operator EirGrid is poised to name new players seeking to enter the Irish electricity market on Friday.

The Single Electricity Market Committee – made up of regulators on both sides of the Border – recently sought offers from electricity generators to build new power plants to begin providing energy in 2024-2025 to head off a likely shortage.

It is understood that several new players will be named among the companies that successfully bid to build power plants here when EirGrid confirms the results.

No one connected with the process has named the successful bidders, but several sources say the list is likely to include significant new entrants to the electricity generation market.

While all generators were welcome to make offers, most of the new generation recruited in the T-3 auction will be gas fired.

Electricity suppliers, who buy power from generators at wholesale prices to sell on to homes and businesses, are likely to welcome new competitors in the market. The announcement comes at a time of surging energy costs.

A letter from the Commission for the Regulation of Utilities to EirGrid states that it sought the power plants because the likely demand for electricity in 2024-2025 would exceed existing capacity.

A similar process held last year failed to lure enough generators to tackle the feared shortfall in supplies.

Electricity shortage

Last year both EirGrid and the commission warned of a looming electricity shortage, driven by the closure of old power plants and an absence of replacements.

They calculated that the deficit could be 260 megawatts (MW) of electricity in 2022-2023, rising to 1,050MW in 2023-2024 and 1,850MW in 2024-2025.

One MW of electricity is enough to power 1,000 average homes. Peak demand in the Republic is more than 5,000MW.

If the trend continues, the State will be forced to keep the ESB’s coal-burning plant on the Shannon estuary open beyond its projected 2025 closure date.

Bidders in the T-3 auction sought capacity payments, which are monthly contributions paid by the market operator to each generator for being available to generate power.

They are linked to the amount of power each generator can produce and are designed to defray fixed costs.

Electricity customers ultimately fund these payments through network charges on their bills, so the auctions are meant to favour the lowest bids.