The Commission for Regulation of Utilities (“CRU”) is consulting until 5 January 2026 on a policy for connecting biomethane producers to the gas network, including in relation to rules on centralised grid injection (“CGI”) facilities.
Grid access is critical unless producers intend to transport biomethane directly to customers (for example by road transport), as outlined in our briefing: Biomethane: Guide to project development in Ireland.
Key points in the proposed policy are summarised below.
Connection model
GNI currently installs, owns and operates most of the connection assets involved in connecting a biomethane production facility to the network. The consultation refers to this as a ‘maximum connection model’. Under a ‘minimum connection model’, much more of the connection could be provided by the connecting party. The direction of travel as the market matures is towards a ‘developer choice’ model (which would allow the connecting party to choose between the maximum or minimum approach).
Grid connections: economic test for upfront costs
Biomethane plants currently make an upfront payment of 30% of the connection costs. They undertake an economic test to evaluate whether the remaining 70% will be collected through the network tariffs they pay over the next 10 years. Any assessed shortfall must be paid upfront, additional to the 30% payment.
It is proposed to extend the economic test appraisal period to 15 years, with the intent of reducing the upfront financial burden on connecting parties and facilitating smaller or more remote projects.
Grid connections: security requirements
The economic test outlined above is based on a producer’s forecasts of the volumes of biomethane it will inject. Currently, a producer is required to provide financial security for seven years to cover the risk of injected volumes falling short of forecasts. However, it is considered that this may be challenging for many biomethane producers.
It is proposed instead to base the security requirement on volume required for the project to break even under the economic test, rather than time period. The connecting party would submit a forecast injection profile; GNI would calculate the associated tariff revenues and the ‘break-even’ volume; and the developer would provide financial security for 70% of the total tariff revenue associated with the break-even volume for the period it takes to inject it. Once the plant begins injecting in the network, the financial security requirement would reduce annually in line with actual injections until the cumulative volume of gas injected has reached 70% of the break-even volume.
CGI facilities: cost allocation
Smaller or more remote plants may not have a pipeline connection to the network but instead transport biomethane by road to CGI facilities. GNI proposes to develop two CGI facilities, the first at Mitchelstown, which has been allowed for in Price Control 5 (“PC5”), the fifth gas network price control carried out by the CRU.
Multiple parties could contract for firm capacity and choose their own shipper at the CGI, which would be treated as a biomethane connection, with 30% of the connection cost being charged upfront. GNI proposes to allocate costs pro-rata based on a party’s contracted capacity. It is proposed that GNI will take the risk of a second phase of development being delayed, cancelled or not fully subscribed until the assumed full capacity of the CGI is contracted and the full proportion of capex is recovered in future years.
The approach to developing future CGIs is to be further assessed and consulted upon, taking into account transition to a developer choice model as it becomes appropriate. More generally, consideration of shared-asset solutions where technically feasible and economically efficient is encouraged.
Reverse compression
When supply is greater than demand in the distribution network, reverse grid compression can allow gas to be moved upstream to the transmission network. Under PC5, a flexibility pot was established and access to this pot has been approved for a pilot reverse grid compression project. Some of the cost of reverse compression is to be included in the connection costs for biomethane plants. A policy on reverse compression is to be further developed and consulted upon.
Next steps
It is positive to see development of a more tailored pathway to network access for the biomethane sector. Developers will wish to test the impact of the proposals on their project costs to ensure they align with the overall intention of the consultation to facilitate market entry.