Insights Blog

The Government is consulting on an Electricity Storage Policy Framework for Ireland, as envisaged under the Climate Action Plan. The closing date for responses is 27 January 2023.

The Consultation Paper notes that in the SEM there is approximately 500MW rated capacity of batteries which provide system services. Although it may be possible for grid-scale batteries to store enough electricity to cope with peaks in demand, they are not yet a solution for monthly or seasonal fluctuations. Ireland also has pumped hydro storage with a storage capacity of 1.7 GWh.

Responses are invited in relation to the role of energy storage, barriers to development, and required regulatory and policy measures. Questions also address technologies to be deployed in Ireland, the relationship between storage and demand-side response, the role of hydrogen as a medium for electricity storage up to 2050, the role of thermal storage, and the policy and market arrangements that would support long duration storage. 

Grid connection policy is also addressed, although firm access policy is not, and storage is not included in the scope of the recent firm access methodology consultation (SEM-22-068).

The consultation seeks views on whether the arrangements for the procurement of system services, advance generation capacity, and flexibility services provide an effective marketplace for electricity storage units, whether arrangements adequately compensate storage units for system services, and whether storage units could be used more effectively for advance generation capacity and flexibility. Views are also invited on whether any changes to RESS would allow a more effective and beneficial use of electricity storage in hybrid projects.

This consultation is therefore a good opportunity to consider the potential of storage in a holistic way across markets.

Procurement of System Services

System Services are procured through the DS3 Programme, due to expire in 2024. As the energy system transitions to support high volumes of renewable energy, it is intended that procurement of system services and long duration storage will move towards market-based arrangements that are more integrated with energy markets.

The Regulatory Authorities and TSOs in the SEM are in the process of developing a daily ex-ante market auction for system services, as envisaged in the System Services Future Arrangements High Level Design Decision Paper (SEM-22-012). The new market arrangements are not anticipated to be fully in place before 2026. Clear mechanisms around how this market will interact with the Balancing and Capacity Markets will need to be developed, as well as the detailed implementation of positions taken on firm access, locational and volume requirements, and commitment obligations.

In the meantime, there will be a review of regulated tariffs and transition to more competitive procurement arrangements. The Regulatory Authorities have indicated that they will, in Q1 of 2023, publish an Information Paper setting out a timeline and further details for the development of this transitional path. Consultation is also expected soon on the procurement of Low Carbon Inertia Services.

More imminent is the SEM Committee’s decision, expected in late 2022/early 2023, on DS3 System Services Tariffs for the 2022/23 tariff year. Unless or until the overall expenditure cap is increased, it seems from EirGrid’s consultation that some form of tariff reduction is likely.

At sufficient scale, electricity storage can facilitate the integration of renewable generation onto the grid, increase security of supply, reduce greenhouse gas emissions in line with sectoral emissions ceilings for the electricity sector, and improve the affordability of energy.