UNIVERSITY OF ULSTER

John Lynch

Adequacy of the onshore wind energy measures in place

in support of Ireland’s target
of 40% of electricity consumption
to be sourced from renewables by 2020

SCHOOL OF THE BUILT ENVIRONMENT

Submitted: July 2010

ENE 802J MSc Thesis

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 UNIVERSITY OF ULSTER

SCHOOL OF THE BUILT ENVIRONMENT

Academic Year 2009-2010

John Lynch

Adequacy of the onshore wind energy measures in place

in support of Ireland’s target
of 40% of electricity consumption
to be sourced from renewables by 2020

Supervisor: Dr Philip Griffiths

Submitted: July 2010

This thesis is submitted for consideration for the degree of

Master of Science (MSc)

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The views expressed in this dissertation are solely the views of the author and may
not reflect the views or policy of any particular entity unless explicitly stated or
referenced.

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I. ABSTRACT
Ireland has set itself a very ambitious target for the generation of electricity from
renewable energy sources. The target is for 40% of total electricity consumption to be
generated from renewable sources by the year 2020. The attainment of this target is
of national importance as it is key to reaching the country’s binding RES target of
16% set by the EU. A very large share of the 40% target will be generated from wind
energy.

As Ireland moves towards achieving the 40% target by 2020, the Irish electricity
power system will increasingly have to cope with significant challenges in
accommodating very large amounts of intermittent and variable power generated
primarily from wind energy. One of the direct key challenges posed is the delivery of
the required network infrastructure. Another is to facilitate renewable generation and
to make it sufficiently attractive so as to entice wind powered generation into the
electricity market.

Another key challenge is to provide sufficient reward to retain other types of

generation technology which complement wind energy. This includes conventional
generation which can quickly and flexibly vary its output on request from the system
operator. Additional generation will be needed to ensure that the electricity system
remains stable during and at the end of this transition to greater wind energy
penetration. Substantive measures are already in place to address some of the
known challenges and obstacles to achieving the target.

At the time of undertaking this project less than one year ago there was no single
report publicly available which assesses the broad spectrum of factors or measures
which together contribute to the attainment of the 40% target. There are many Irish
and international publications which address a single particular challenge. An
example of this is the recent Facilitation of Renewables Study [Ecofys 2010] which
examines the impact on the stability of the electricity power system of high
penetration of renewables. However, there is a deficit of publications which identify
all the particular challenges which apply to Ireland and evaluate the adequacy of the
measures in place, or planned, to address the challenges.

This study aims to identify and assess the adequacy of the measures and actions to
be taken which have been recommended by Irish and international industry
stakeholders, expert consultants, energy regulators, system operators, academics
and policy makers.

The combination of installed wind power and consented wind power provides for
connection of about 6,500 MW of wind power by 2020. This study finds that this is
more than adequate to meet the 40% RES-E target. In fact, this may be sub-optimal
as excess wind power makes conventional plant uneconomical, increases
curtailment and potentially destabilises the power system. The future is less certain
as the penetration of wind powered generation increases. The greatest uncertainties
and challenges include the stability of the power system, the financial viability of
conventional generators, the level of curtailment, the adequacy of interconnection
and the level of public acceptance.

Coincidentally, many of the findings of this study mirror the issues and actions
identified and detailed in the recently drafted National Renewable Energy Action Plan
[NREAP 2010] which is currently in preparation by the Department of
Communications, Energy and Natural Resources.
.

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II. ACKNOWLEDGEMENTS

Thanks to Professor Neil Hewitt and the University of Ulster for accepting me on the
MSc in Renewable Energy course.

Thanks to my supervisor for this project, Dr Phil Griffiths, for his direction during this
work.

Thanks to Caitriona Diviney of IWEA who initially suggested the general topic for
this dissertation and willingly shared her views.

Many thanks to work colleagues many of whom have unwittingly been subjected to
my questions, probed for information and have tested my comprehension.

Thanks to my three children, Aoife, Laoise and Barry, who have foregone many hours
of computer games on the PC and have nevertheless humoured me and patiently
allowed me the time and space to complete this study.

Finally, thank you to my wife Mary for the moral support and encouragement in
helping me to complete this project.

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III. TABLE OF CONTENTS
i. Abstract .................................................................................................4
ii. Acknowledgements ................................................................................. 5
iii. Table of Contents ................................................................................... 6
iv. List of figures ......................................................................................... 9
v. Abbreviations ....................................................................................... 10
1. INTRODUCTION ................................................................................... 13
1.1 Background ................................................................................... 13
1.2 Published Work in this Area........................................................... 13
1.3 Relevance and importance ............................................................. 15
1.4 Contribution .................................................................................. 15
1.5 Objectives ...................................................................................... 15
1.6 Adequacy ....................................................................................... 17
2. LITERATURE REVIEW.......................................................................... 17
2.1 Background - Wind Potential in Ireland ......................................... 18
2.2 Target increased from 33% to 40% ................................................. 18
2.3 Electricity demand ......................................................................... 20
2.4 Conclusion of Literature Review ..................................................... 20
3. RESEARCH METHODOLOGY ............................................................... 21
3.1 Scope ............................................................................................. 21
4. BACKGROUND AND STATEMENT OF PROBLEM ................................. 21
4.1 Background and context ................................................................ 21
4.2 Energy Flow in Ireland ................................................................... 21
4.3 Challenges – universal ................................................................... 22
4.4 Challenges – Variability and Availability ......................................... 23
4.5 High and Low Winds - Availability .................................................. 23
4.6 Intermittent and Variable ............................................................... 24
4.7 Capacity Credit of Wind Powered Generation ................................. 25
4.8 Outlook for Generation Adequacy .................................................. 26
4.9 Ireland’s Particular Energy Characteristics .................................... 27
5. POLICY, TARGETS & LEGISLATION ..................................................... 28
5.1 Irish Government policy and targets .............................................. 28
5.2 40 % RES-E Target ........................................................................ 29
5.2.1 Current level of wind energy penetration in Ireland ................. 29
5.2.2 Potential for wind energy in Ireland ......................................... 30
5.2.3 EU binding target .................................................................... 31
5.2.4 Target based on energy produced ............................................ 32
5.3 A projection to 2020 of the energy generated from wind ................. 33
5.3.1 Energy Requirement Forecast .................................................. 35
5.3.2 Benchmarking – how Ireland’s traget compares ....................... 37
5.3.3 Optimal Penetration Level of Wind ........................................... 39
5.3.4 Conclusion on RES-E target .................................................... 41
5.4 Institutional arrangements and market structure .......................... 42
5.5 Market Share ................................................................................. 43
5.6 Applications for connection to the network .................................... 45
5.7 The legislative context .................................................................... 45
5.8 Existing Support Schemes ............................................................. 46
5.8.1 Feed-in tariffs .......................................................................... 46
5.8.2 Green Certificate System ......................................................... 46
5.8.3 Tendering Systems .................................................................. 47

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 5.8.4 Effectiveness of Support Schemes ............................................ 47
5.8.5 AER Scheme ............................................................................ 47
5.8.6 REFIT in Ireland ...................................................................... 48
5.9 The Role of the Energy Regulator ................................................... 49
5.10 Regulation 28: Security of Supply ............................................... 49
5.11 EU 3rd Legislative Package .......................................................... 50
5.12 Steer from EU on support schemes for wind ............................... 51
5.13 Regulatory uncertainty impact on costs ...................................... 51
6. COSTS AND RETURN ON INVESTMENT .............................................. 53
6.1 Installed Costs of Wind Farms ....................................................... 53
6.1.1 Wind power costs..................................................................... 53
6.1.2 Financing wind energy ............................................................. 54
6.1.3 Trends in wind farm costs ....................................................... 55
6.1.4 Experience factors and learning curves ................................... 55
6.1.5 The Installed Cost of Wind Energy ........................................... 56
6.1.6 Production Costs of Electricity ................................................. 59
6.2 The price of wind energy ................................................................ 62
6.3 The current economic environment; contraction in energy demand 62
6.4 Production Cost Trends ................................................................. 62
6.5 Discussion and Conclusions .......................................................... 64
7. THE ELECTRICITY NETWORK AND INTERCONNECTION .................... 66
7.1 Scope ............................................................................................. 66
7.2 Actions from the All-Island Grid Study ........................................... 66
7.3 From sequential to group processing ............................................. 67
7.4 The group processing approach (“Gates”) ....................................... 68
7.5 Gate Process .................................................................................. 69
7.6 Gates 1 , 2 and 3 - “Wind Generation Expansion” ......................... 69
7.7 Gate 3 & Conventional Plants ........................................................ 72
7.8 Acceptance of Connection Offers .................................................... 72
7.9 Permits and Licences for Generation .............................................. 74
7.10 Plans to develop the network ...................................................... 74
7.11 Dynamic ratings of transmission lines ........................................ 74
7.12 Interconnection – benefits, policy and outlook ............................ 76
7.12.1 Current interconnection ....................................................... 76
7.12.2 Interconnection under Development ..................................... 76
7.12.3 Benefits of Interconnection ................................................... 77
8. STABILITY AND FLEXIBILITY OF THE POWER SYSTEM ...................... 79
8.1 Operating Reserve and System Flexibility Options for Increasing
Wind Power ............................................................................................. 79
8.2 The need for flexibility .................................................................... 81
8.3 Storage Options for System Flexibility ............................................ 84
8.4 DSM as source of flexibility ............................................................ 85
8.5 Hydropower ................................................................................... 85
8.6 Conventional Thermal Flexible Plants ............................................ 86
8.7 System Flexibility in Ireland - Discussion ...................................... 87
8.8 Operational Constraint for Stability Reasons ................................. 88
8.9 Conclusions re Flexibility and Stability .......................................... 89
9. DESIGN OF THE WHOLESALE MARKET FOR ELECTRICITY ............... 90
9.1 Electricity Market Arrangements .................................................... 90
9.2 Market Payments and Price............................................................ 91
9.3 Constraint Payments ..................................................................... 92
9.4 Existing efforts to achieve high wind penetration ........................... 92
9.5 Wind Forecasting ........................................................................... 95
9.5.1 Variability Versus Predictability of Wind Power Production ...... 95

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 9.5.2 Output forecast error due to weather patterns ......................... 95
9.5.3 Variations within the Hour ...................................................... 97
9.5.4 Prediction and Scheduling ....................................................... 97
9.5.5 Conclusion ............................................................................ 100
9.6 Gate Closure Times ...................................................................... 100
9.7 Curtailment ................................................................................. 102
9.7.1 Constraints............................................................................ 102
9.7.2 Curtailment : ......................................................................... 103
9.7.3 High curtailment scenario ..................................................... 104
9.7.4 Conclusions: .......................................................................... 106
9.8 Investment in the grid .................................................................. 107
9.9 Firm access to the network .......................................................... 107
10. SOCIAL ACCEPTANCE AND ENVIRONMENTAL CONSIDERATIONS ... 109
10.1 Noise & Sound .......................................................................... 109
10.2 Conservation of Birds and Habitats .......................................... 110
10.3 Planning Considerations ........................................................... 111
10.3.1 National planning policy and implementation ..................... 112
10.3.2 Expiration and Extension of Planning Permissions ............. 113
10.3.3 Alignment of Planning and Grid Access .............................. 113
10.3.4 Strategic Infrastructure Process ......................................... 114
10.3.5 Discussion and Conclusions............................................... 115
10.4 Social awareness and acceptance ............................................. 115
11. BRIEF OVERVIEW OF OFFSHORE CHALLENGES ............................. 117
11.1 Offshore Wind Farm Characteristics ......................................... 118
11.2 Availability of Wind Farms ........................................................ 118
11.3 Offshore Wind in Ireland ........................................................... 118
12. STORAGE........................................................................................... 120
13. IMPACT OF HIGH WIND PENETRATION ON CONVENTIONAL PLANTS
122
13.1 Societal Costs of High Levels of Renewables .............................. 122
13.2 Discussion regarding the future viability of conventional plants 124
14. DISCUSSION OF ADEQUACY of EXISTING MEASURES ..................... 125
14.1 General challenges.................................................................... 125
14.2 Challenges identified by CEER .................................................. 126
14.3 Challenges and actions identified by IEA .................................. 127
15. CONCLUSIONS AND SUGGESTIONS FOR FURTHER RESEARCH ..... 132
15.1 Further Studies ........................................................................ 134
16. REFERENCES .................................................................................... 136
APPENDIX – Power of the Wind ................................................................ 140
Power of the Wind Formula ................................................................... 140
16.1 Wind properties – Height, Turbulence and Roughness .............. 141
16.2 Relationship of Wind Speed with Turbine Height ...................... 142
17. GLOSSARY ......................................................................................... 144

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IV. LIST OF FIGURES
Figure 1.1: Electricity Domain: Key Contributors to high RES-E................. 14
Figure 4.1: Flow of Energy in Electricity Generation, 2008 ......................... 22
Figure 4.2: Percentage frequency of Wind Direction in Ireland ................... 26
Figure 4.3 : Capacity credit of wind powered generation. ............................ 27
Figure 5.1: Installed Renewable Capacity in Ireland up to March 2010 ...... 29
Figure 5.2: Europe wind map at 80m ........................................................ 31
Figure 5.3: National overall targets for the share of energy from RES in final
consumption of energy 2020....................................................................... 32
Figure 5.4: Total Energy Requirement (TER) to 2020 ................................. 35
Figure 5.5: Denmark - Interconnection to neighbouring countries ............. 38
Figure 5.6: Current Wind installation “density” MW/1,000 km2 in Europe 39
Figure 5.7: Integration of main energy players in Ireland ........................... 44
Figure 6.1: Cost structure of a typical 2 MW onshore wind turbine installed
in Europe ................................................................................................... 54
Figure 6.2: Using experience curves to illustrate the future development of
wind turbine economics until 2015. ........................................................... 56
Figure 6.3:: Total investment cost by country, ............................................ 58
Figure 6.4 Wind energy costs, discount rate and capacity factor ................ 59
Figure 6.5: Lifetime generation costs by technology (€/MWh) .................... 61
Figure 6.6 Projected 2020 generating costs (€/MWh) for various technologies. ... 61
Figure 6.7: Trend in turbine production cost. ............................................. 63
Figure 6.8: Expected annual wind power investments from 2000 to 2030 . 64
Figure 6.9: CO2 costs and fuel costs avoided by installing wind energy ...... 64
Figure 7.1: Renewable Generator Capacity in Ireland ................................. 70
Figure 7.2: Geographical distribution of Gate 2 and Gate 3 Wind farms ..... 71
Figure 7.3: Wind curtailment with increasing interconnection ................... 79
Figure 8.1: Plant load factors in Ireland reduce as wind penetration
increases .................................................................................................... 87
Figure 9.1: Forecast Vs. Actual on Global Wind Day 2010 .......................... 96
Figure 9.2: Wind forecast and Actual on a “windy day” ............................... 96
Figure 9.3: Decrease of the forecast frror of prediction for aggregated wind
power production, due to spatial smoothing effect ...................................... 99
Figure 9.4: Time between closure of forward market and real-time delivery
................................................................................................................. 101
Figure 9.5: 2020 curtailment scenario – low summer night valley ............. 105
Figure 10.1: Comparison of the Irish wind atlas with Natura 2000
Candidate Sites ........................................................................................ 111
Figure 10.2: The planning process ........................................................... 113
Figure 12.1: The effect a large amount of storage could have on a typical
daily electricity demand profile (source: EirGrid) ....................................... 120
Figure 13.1: Societal cost for different levels of RES-E penetration .......... 122

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V. ABBREVIATIONS

BETTA British Electricity Trading and Transmission Arrangements

CAES Compressed Air Energy Storage
CCGT Combined Cycle Gas Turbine
CER Commission for Energy Regulation
CER Commission for Energy Regulation
CHP Combined Heat and Power
CHP Combined Heat and Power
COE Cost of Electricity
DCENR Department of Communications, Energy and Natural Resources
DCMNR Department of Communications, Marine and Natural Resources
DETI Department of Enterprise, Trade and Investment in Northern Ireland
ERA Electricity Regulation Act
EREC European Renewable Energy Council
ESB Electricity Supply Board
ETS Emission Trading Scheme
EU-ETS EU Emissions Trading Scheme
EWEA European Wind Energy Association
GAR Generation Adequacy Report
GHG Greenhouse Gases
GW Gigawatt = 1x109 Watts = 1000 MW
GWEC Global Wind Energy Council
IEA International Energy Agency
ITC Incremental Transfer Capability
IWEA Irish Wind Energy Association
kW Kilowatt = 1x103 Watts = 1000 W
MW Megawatt = 1x106 Watts = 1000 Kw
NIAUR Northern Ireland Authority for Utility Regulation
OCGT Open Cycle Gas Turbine
PAC Pumped Hydro Accumulation Storage
PHES Pumped Hydro Energy Storage
PPA Power Purchase Agreement
REFIT Renewable Energy Feed-In Tariff
RES Renewable energy sources

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RES-E Electricity generated from renewable energy sources
RES-H Heating and cooling from renewable energy sources
RES-T Transport powered by RES-E or fuel from renewable energy source
SEAI Sustainable Energy Authority of Ireland
SEI Sustainable Energy Ireland (now SEAI)
SEM (all-island) Single Electricity Market
SEMO Single Electricity Market Operator
SMP System Marginal Price
SRMC Short-Run Marginal Cost

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1. INTRODUCTION
1.1 Background
The binding EU 2020 national “RES” target for Ireland of 16% requires that
16% (or more) of the final national energy used will be derived from
renewable energy sources. In order to meet this Ireland has set itself a target
that by the year 2020, at least 40% of total electricity consumption will be
sourced from renewable sources. A very large share of this will be generated
from wind energy.

1.2 Published Work in this Area

The literature relating to the penetration of wind powered generation reveals
the existence of copious studies and publications on technical and economic
aspects of wind energy and various findings on the potential problems, the
challenges and the actions needed to achieve high levels of wind energy
penetration. Some of these are generic publications by international
organisations such as the European Wind Energy Association or the
International Energy Agency. It is clear from the literature that the challenges
and solutions to high wind energy penetration are specific to each country or
control area which is being studied. This is because of the particular
geographical, meteorological, electrical, infrastructural, regulatory, fossil fuel
dependency and market characteristics of each country and in particular for
Ireland. Whilst the international literature does not generally address Ireland‟s
specific needs, some of the information or analysis can be informative and
applied to Ireland.

There has also been a plethora of studies and reports on (or closely related
to) Ireland‟s migration from 95% fossil fuel energy dependency towards a
more sustainable climate friendly, low carbon scenario. However, these
existing reports almost exclusively present one particular compartmentalised
aspect of the full picture and do not tell the full story. It may also be the case
that some reports have a bias towards a particular conclusion.

A lot of studies are focusing on the economics of high wind energy

penetration and the adequacy of existing (or planned) market design. The
studies and modelling of the power system is revealing potential power
system stability issues which will require different performance and services
from conventional plants and the modification of system operation and
planning standards.

The review of the literature published to date, as summarised in Chapter 2,

has revealed many challenges to wind energy penetration in general and to
40% RES-E penetration in Ireland in particular. In this context, Figure 1.1
below illustrates the many factors identified in this study which contribute
directly or indirectly to the security of supply, sustainability and
competitiveness of the electricity domain in Ireland. These three key
considerations and all of the factors identified are not isolated but are inter-
related.

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Figure 1.1: Electricity Domain: Key Contributors to high RES-E

Most of these factors are indentified in Figure 1.1, all of which impact on the
achievability of high levels of wind energy penetration and are discussed in
this paper. Some are identified as being of more critical importance than
others. These key elements are given greater consideration and have, for the
purpose of this study, been categorised as follows:

 Policy, targets and legislation;

 Costs and return on investment;
 The electricity network and interconnection;
 Stability and flexibility of the power system;
 Design of the wholesale market for electricity; and,
 Social acceptance and environmental challenges.

This study collates fragmented information on:

a) the current status of installed wind farm capacity;

b) the international and domestic challenges which have been identified
by energy experts and key stakeholders;
c) the measures and actions which are already in place or planned in
Ireland to meet the challenges, and,
d) the adequacy of the identified measures and actions to achieve the
stated target.

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1.3 Relevance and importance
In order to meet the EU‟s binding 16% RES target by 2020 Ireland has opted
for a mix of measures which includes a RES-E target of 40%. The scope for
significant contributions from the transport (RES-T) or heat sectors (RES-H)
over-and-above their existing contribution is very limited. Therefore there is a
strong imperative to reach the 40% target and to identify and address all
challenges which are presented.

1.4 Contribution
The study outlines some of the specific issues and challenges that relate to
grid-development and grid-access as a consequence of the transition from a
traditional, stable, tried-and-tested generation portfolio dominated by fossil-
fuelled conventional generators to a new power system dynamic featuring a
delicate balance of renewable and conventional generators.

1.5 Objectives
The title of this study is:

“Adequacy of the onshore wind energy measures in place

in support of Ireland’s target
of 40% of electricity consumption
to be sourced from renewables by 2020”
This study will be progressed by accomplishing the following objectives:

1. Areas to be studied will include:

i. The potential and the expected generation of onshore wind farms in

Ireland;
ii. A projection to 2020 of national electricity consumption;
iii. Adequacy of the Irish grid and power system to absorb the wind
power and to export the excess, whilst providing a safe, secure and
reliable supply of electricity;
iv. Social pressures for and against growth of wind energy or
associated infrastructure;
v. Environmental influences which affect penetration of wind energy;
vi. The capability of the wholesale electricity market to facilitate and
promote wind energy; and,
vii. Adequacy of energy policies, regulatory issues, the financial
environment and support mechanisms.

Outputs:

2. Compilation of the power system characteristics which uniquely

distinguishes Ireland from other countries.

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3. Analysis and comparison of the current penetration and future targets of
other countries and the extent to which they share any of the key
challenges faced by Ireland

4. Identification of Ireland‟s key challenges by distillation of the existing,

published roadmaps, recommended actions, studies and challenges as
identified by Irish and international stakeholders including; expert
consultants, energy regulators, system operators, academics, policy
makers and industry players.

5. Author‟s assessment and conclusions as regards the adequacy of the

measures and actions which have been identified. Suggestions for futher
studies are also identified.

The measures1: In this study the term “measures” is used to collectively

represent all of the following elements:

With Reference
The measures
to:
the EU and Irish energy and electricity legislation,
policies, targets, support and the policy decisions and
Policy
directions which shape the electricity domain by a) EU,
b) government and c) regulators
Return on
Support Schemes and market design
Investment
Power System the (grid) codes and planning and operating standards
Market the rules or code (the design) of the electricity market
Network the plans and strategies
the directives, bills, acts, frameworks and instruments
Legislation which directly impact on the energy and/or electricity
sector and indirectly such as planning and environmental
Planning &
the guidelines, strategic bills, policies and EU directives
Environment

1Definition [Collins Dictionary]

Measures n. degree or extent; a particular action intended to achieve an effect

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1.6 Adequac y
In assessing the adequacy of the measures and actions to achieve the stated
target it is informative to examine the definition in the context of energy:

Adequate adj. Just enough in amount or just good enough in quality,

such as meets the needs

In many instances this study will specifically examine the adequacy rather
than the capability of the measures in place or planned.

This is because capability is only a measure of whether the action will meet or
surpass the target whereas adequacy is a measure of whether the action is
sufficient to meet the need without exceeding it.

This is important from an economic point of view as one of the three pillars of
energy policy is competitiveness. The task of installing the 4,000 (or so) MW
of wind generation capacity to achieve 40% RES-E is only half the battle. The
other big challenge, and less obvious perhaps, is the knock-on impact on the
running regime and viability of other conventional plants and the detrimental
impact on the stability of the power system. Security of supply can effectively
be bought. The grid can, at a price, be designed, reinforced and operated with
lots of headroom and minimal risk. Any excess imposes unnecessary costs
onto the electricity domain which in-turn translates into higher tariffs for the
end-customer. Likewise the electricity market can reward unnecessary
generator characteristics or outputs.

The biggest challenge is to find and strike the right balance between security
of supply and competitiveness as Ireland moves from 95% fossil fuel
dependency2 towards sustainability.

2. LITERATURE REVIEW
The literature reveals the existence of copious studies and publications on
technical and economic aspects of wind energy and various soundings on the
potential problems, the challenges and the actions needed to achieve high
levels of wind energy penetration.

A review of the literature shows that there is a wide range of challenges and
opportunities facing this sector of a technical, economic, logistical and
environmental nature. In particular, it shows that the challenges and solutions
to high wind energy penetration must be tailored to the country or control area
which is being studied. This is because of the particular geographical,
meteorological, electrical, infrastructural, fossil fuel dependency and market
characteristics of each country and in particular for Ireland.

2SEAI’s published energy statistics [SEAI 2010] states (provisional) that the
contribution of renewable energy to overall energy demand in 2009 was 4.7%. i.e.
95.3% from fossil fuels.

17
However there are few published studies or reports which take stock of all of
the relevant measures which are in place, identify the challenges and major
risks and identify the critical actions needed to overcome the challenges to
achieving high wind energy penetration.

Ireland is entering unchartered water as it will be at the forefront of the move

to very high levels of penetration of wind into an small electricity market which
is quite isolated electrically. There are many unknowns and every detailed
study seems to unearth more question (and potential problems) than answers.

The review below illustrates this, firstly by summarising the main focus area of
key studies to date, mainly in the economic field, and then examining what
measures are in place to achieve 40% RES-E. In this way, it highlights where
there appear to be gaps in the actions being taken or a lack of knowledge
which is specific to Ireland‟s case.

2.1 Background - Wind Potential in Ireland

The worldwide potential for the harvesting of wind energy into electricity has
been studied and documented in detail. The worldwide growth in generation
capacity from wind energy is staggering. The Global Wind Energy Council
predicts [GWEC 2009] that in 2014, four years from now, global wind capacity
will stand at 409 GW.
Ireland is recognised as having one of the best wind profiles in the world for
the generation of electricity. Indeed, in 2004 SEI calculated [SEI 2004] that
there was approximately 30 GW of national accessible wind resource in
Ireland. This is substantial, considering that less than 1.5 GW of wind
generation capacity is currently installed
There has been much analysis over recent years of energy policies, of the
risks, of the electricity market and of the infrastructure to assess the viability of
harvesting this natural resource of free “fuel”.
According to many reputable sources the overwhelming consensus around
2006, including the view of the Global Wind Energy Council [GWEC 2006],
was that existing control methods together with back-up capacity could deal
with penetration levels up to around 20%.
2.2 Target increased from 33% to 40%
The Irish government‟s White Paper on Energy [DCENR 2007] set out the
government policy for the share of national consumed electricity to be sourced
from renewable generation. The “RES-E” target was set at 33% by 2020.
Subsequently, in 2008 this target was revised to 40%. This new target was set
as a result of the outcomes of various studies, one of the most significant
being the All Island Grid Study [AIGS 2008]. The study assessed the technical
feasibility and relative costs and benefits associated with various scenarios for
increased shares of electricity sourced from renewable energy in the all island
power system. This indicated that wind penetration of 42% is possible in
Ireland without imposing additional costs on the end customer.

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 A subsequent modelling study conducted in 2008 and published in January
2009 by the regulators [SEM-09-002] suggested that increased wind
penetration in 2020 would broadly be beneficial from an economic point of
view and increasingly so the more wind there is on the system.

In parallel with the aforementioned studies the government was analysing and
apportioning the EU‟s binding 2020 overall RES target of 16%. On foot of this
national targets were set for the growth in the share of energy sourced from
renewables in the transport (RES-T), heat (RES-H) and electricity categories
(RES-E). Informed by various studies and reports, including the
aforementioned, it was decided by Government late in 2008 that the RES-E
target of 33% could be extended to 40%.

Also in 2008 the CER, published in December its Gate 3 decision paper
[CER/08/260] which directed the system operators to issue by mid-2011
connection offers to 3,900 MW of renewable generation in order to meet the
revised national target of 40%. In the same context, EirGrid published [Grid25
2009] their long-term development strategy for the grid up to 2025. It is
designed to address the challenges posed for the transmission of electricity in
Ireland in order to meet such challenging renewables targets.

Many studies and reports, such as EirGrid‟s Generation Adequacy Report

[GAR 10-16], Transmission Development Plan [TDP 08-12] or Forecast
Statement [Forecast 10-16] have traditionally assessed the near-term
adequacy of the network or the generation portfolio to meet the needs of the
system in order to provide a safe, secure and reliable system. These assess
adequacy for the forthcoming five to seven year period. However, there is no
report which systematically and periodically (perhaps updated every few
years) assesses the longer term needs of the system or of the adequacy of
the market design, the system stability or energy policies. In addition, the
adequacy of the generation portfolio could be assessed with regard to not
only the generation of energy but to also the maintenance of the stability of
the system.

In 2009 EirGrid‟s GRID25 strategy document [Grid25 2009] for the

development of the grid infrastructure up to 2025 is a step in the right
direction.

Subsequent studies are unearthing potential challenges. One example is the

recent Facilitation of Renewables Study [Ecofys 2010]. This study has
indicated that there are system stability issues which will need to be
addressed in the migration to a high penetration of wind energy. For system
stability and operational reasons it is also likely that wind generation will have
to be curtailed to an extent which was not previously anticipated.

A possible interpretation from the Ecofys study is that the type and mix of the
current conventional portfolio is quite inappropriate in a system with very high
wind powered generation. Whilst these challenges may have previously been
suspected the study goes some way towards identifying the nature of

19
potential problems and takes a step forward in broadly quantifying possible
maximum capacity limitations of wind energy.

Stand-alone studies (some preliminary) have been carried out on the

adequacy of: a) the infrastructure; b) the design of the electricity market; c)
the planning framework administered by local authorities and An Bord
Pleanala; d) the generation portfolio; e) the stability of the power system.
There have also been some observations questioning the adequacy of the
existing mechanism for balancing supply with demand in an environment with
significant share of variable and somewhat unpredictable generation such as
wind power. A concept of power system “flexibility” is emerging which needs
to be developed and defined. The requirements for system flexibility need to
be quantified and mechanism for the most economic and effective
procurement of flexibility needs to be identified.

However, the dynamics of wind energy penetration, system stability, system

supports needed, market design and the arrangements for the remuneration
of conventional or supporting technologies all need further extensive and
intensive work.

2.3 Electricity demand

The decision [CER/08/260] to issue nearly 4,000 MW of grid connection offers
to wind powered generators and the associated plans to reinforce the grid to
accommodate these wind farms was made in 2008 prior to the economic
downturn. The economic downturn has put a dampener on the projected
increase in electricity consumption to 2020. Accordingly, the wind powered
generation capacity on the system in 2020 may far exceed the 40% target.
This could have a detrimental effect as: a) the profitability of all wind farms on
the system is reduced as excess wind increases the level of curtailment b) the
capacity payments to all generators is diluted c) conventional plants have
even less runtime; and, d) the grid reinforcements as currently envisaged may
be excessive

2.4 Conclusion of Literature Review

There are many challenges to be overcome as Ireland migrates from 95%
fossil fuel dependency to a more sustainable and climate friendly space.
Some of the problems and issues are emerging as a result of various
separate and fragmented incremental studies on different aspects of the new
“wind rich” electricity environment. Many actions have already been identified.

There is a need to take stock of: the current status; of Ireland‟s particular
energy characteristics and needs; of the changing pattern in electricity
demand; of the emerging challenges and issues; of the actions and plans and
decisions in place or being developed.

The aim of this study is to collate this information into a single report so as to
better understand the adequacy of the measures which exist to meet the
known challenges at this time.

20
3. RESEARCH METHODOLOGY
3.1 Scope
This study focuses on the penetration of wind energy in Ireland. A similar
study on an all-island basis would be difficult and possibly quite meaningless.
There are some common structures in place in Northern Ireland, such as the
all-island market for the wholesale trading of electricity. However, there are
many more areas which are distinct and different, such as governance,
legislation, targets, regulation, system operation, system ownership, energy
policies, targets, planning authorities, etc. Therefore, a completely separate
study on Northern Ireland would be more appropriate.
This study focuses on wind power only as wind powered generation will
constitute the vast share of the RES-E target of 40%.
The study is restricted to the contribution of large wind farms as it is these
which dominate the impacts on the electricity market, the power system
stability, the planning challenges and the attainment of the 40% RES-E target.
The study does not include a review of the performance of wind turbine
technology or wind farm design as it is a proven, mature technology and these
issues are already covered extensively in various studies, text books and
publications.
This study concentrates on onshore wind energy because offshore wind
energy has different characteristics to onshore. Offshore is technologically
less mature than onshore wind. The planning regime, support schemes, grid
integration, availability and most particularly the levelised cost are different to
onshore.

4. BACKGROUND AND STATEMENT OF PROBLEM

4.1 Background and context
In order to understand the challenge of the 40% RES-E target it is necessary
to understand the context, such as the current energy flows in Ireland, the
challenges posed by the intermittent and variable nature of wind and the
energy related characteristics which are specific to Ireland. These issues are
outlined in the chapter.

4.2 Energy Flow in Ireland

Figure 4.1 below shows the flow of energy in electricity generation in Ireland
for 2008. Of the total primary energy inputs into electricity generation in
Ireland only 45% are converted into consumed electricity at users‟ premises.
The remaining 55% corresponds to energy lost in transformation and
transmission.

21
Figure 4.1: Flow of Energy in Electricity Generation, 2008
Source: SEAI [SEAI 2009a]

Some of the key observations are:

 in 2008, renewables accounted for 6.4% of the energy inputs to generate

electricity (up from 5.1% in 2007) with wind contributing 4% of total inputs.
Wind generation increased by 23% in 2008.
 energy inputs to electricity generation increased by 1.3% in 2008 while at
the same time final consumption3 of electricity increased by 3.1%.
 electricity generated from renewable energy accounted for 11.9% of gross
electricity consumption in 2008, up from 9.4% in 2007.
 Ireland is on target to exceed 15% RES-E in 2010.

4.3 Challenges – universal

The delicate and precise balance between the electricity generated and the
electricity consumed must be maintained at all times; total electricity
generation across the network must, at every instant match the sum of:
 the sum of the loads/consumption at every point;
 plus electricity exported over the interconnectors;
 plus electricity stored (e.g. pumped hydro storage or compressed air,
etc.);
 plus losses on the system.

3 The discrepancy between significantly higher increase in the electricity

consumption despite a much smaller increase in the fuel input could be on account
of a) higher usage (dispatch) of more efficient OCGT conventional plant and b) higher
penetration in wind. Indeed, it is likely that in coming years we will see decreases in
energy inputs despite substantial increases in electricity consumption.

22
In addition:
a) the electricity must be supplied to meet all points of consumption,
where the demand may change suddenly and in large amounts
without notice;
b) the electricity must be transported within the safe carrying capacity of
the wires, transformers and protection equipment;
c) the reliability of supply must be kept at very high levels. Reliability of
99.975% is typically required in most systems, i.e. approximately 2
hours of service interruption is acceptable4 each year. To achieve this
level of reliability requires protection, control equipment and a level of
redundancy. All of this leads to reliability accounting for 50% of the
cost of most Transmission and Distribution systems [Willis, 2004].
The above challenge is common to every power system and system operator
of electricity throughout the world and systems and operating policies
procedures and systems have been developed and refined to cope with it.
In addition to the above, new challenges are posed by increasing levels of
wind penetration. These challenges are widely acknowledged and
documented by energy experts, academics, system operators, regulatory
authorities, international energy agencies, wind energy associations and state
enterprises. The ambitious RES-E targets for Ireland are pushing beyond the
current safe frontier of knowledge and experience.
4.4 Challenges – Variability and Availability
Ireland is at the frontier in terms of seeking to explore the limit to which wind
energy can be economically, technically and safely extended without
sacrificing system security or the quality of supply. The ambitious limits are
more difficult for Ireland because of the unique combination of characteristics5
which compound the difficulty. Ireland is leading the way in relation to
exploring and experiencing some of the challenges in extremis which will be
experienced to a lesser extent by other power systems.

4.5 High and Low Winds - Availability

The wind speeds at which wind turbines commonly operate are between 2.5
to 25 m/s. Thus, wind power can become unavailable at times of low wind
speeds, but also at times of very high wind speeds when wind turbines need
to be shut down in order to avoid damage to equipment. Thus, for entire grid
system control areas, power generation will gradually decrease at mean wind
speeds higher than 25 m/s. The annual power output of a given turbine varies
greatly with location. Capacity factors of up to about 45% can be achieved for
individual wind farms and for many offshore wind farms. The capacity factor

4 Generation adequacy is essentially determined by comparing electricity supply

with demand. To measure the imbalance between them, a statistical indicator called
the Loss of Load Expectation (LOLE) is used. When this indicator is at an
appropriate level, called the generation adequacy standard, the supply/demand
balance is judged to be satisfactory. The accepted generation adequacy standard for
Ireland is 8 hours LOLE per year.
5Refer to section 4.9.”

23
for wind powed generation in Ireland, in aggregate, averaged over the year,
currently6 works out at 31%. Wind energy is typically variable on time-scales
from minutes to hours but can also be seasonal. Geographical distribution
across the grid control area partly compensates for short term fluctuations.

4.6 Intermittent and Variable

Wind is an intermittent7 and variable resource and unfortunately the electricity

generated from wind powered generators cannot be adjusted to match
demand like a conventional power station. During winter anti-cyclones,
characterised by periods of cold settled weather when wind speeds are
typically very low, electricity demand is often highest. This is one example of
an extreme situation, during which the wind power generated – irrespective of
the installed wind power capacity – will make a very small contribution to the
nation‟s electricity demand. In this situation the country still needs a full
conventional portfolio of generating plants to meet electricity demand 8. During
the milder conditions associated with cyclonic Atlantic weather systems wind
output is often highest. Also, during any given day, electricity demand9 varies
enormously. It is lowest during the middle of the night when most people are
in bed, work-places empty, and industrial output is at its minimum.

This winter, output from Ireland's wind farms was particularly low, and often
failed to reach 5% of total system demand. On occasion, output from wind
powered generation was below 1% of total demand. The average for the
period from the start of December to the end of February was about 9%. This
should not be taken to imply that 11 times the current installed capacity of
1,100 MW would have met Ireland's electricity requirements during this
period, as an installed capacity of 1,2000 MW would have led to massive
oversupply on occasion, whilst still only contributing a small fraction of
electricity requirements during periods of settled weather.

Despite the intermittent nature of wind powered generation it is a valuable

source of zero-cost, carbon-free“fuel”. The variable output from wind energy
poses new but not insurmountable difficulties for power system operation at
moderate to high levels of wind penetration (e.g. circa 20%). However, the
challenges posed by increasing wind powered generation increases
disproportionately with the level of penetration. Some of the challenges are
universal whereas others apply more to some power systems depending on
their particular circumstances. The particular characteristics of the electricity
sector in Ireland are described in Section 4.9.

6 The capacity factor for wind, in aggregate, varies from year to year and is
particular to each transmission system control area. Refer to section “The Cost of
Wind Energy”
7 Some proponents of wind powered generation argue that wind power is not

intermittent in nature but rather that it is variable in output. This paper suggests
that it is both intermittent and variable and has poor unit-commitment.
8 Net demand may be somewhat reduced by interconnector imports and demand

side reduction.
9 Refer to intra-day demand profile – Figure 12.1

24
4.7 Capacity Credit of Wind Pow ered Generation
Generation adequacy is a measure of the capability of electricity supply to
meet the electricity demand on the system. The capacity credit of a
generation unit is a measure of its contribution towards generation adequacy
(i.e. maintaining the demand-supply balance). The amount of conventional
plant which can be removed from the system whilst maintaining the
generation adequacy is taken to be the capacity credit of wind.

This capacity credit has been determined by subtracting a forecast of wind‟s

half hourly generated output from the customer electricity demand curve. The
use of this lower demand curve results in an improved adequacy position.
Analysis of wind data has established that this capacity credit is roughly
equivalent to its capacity factor at low levels of wind penetration. However, the
benefit tends towards saturation as wind penetration levels increase.

This capacity credit is determined by considering to what extent a half-hourly

forecast of wind-generated electricity, in aggregate, subtracts from the
national electricity demand curve. The use of this lower demand curve results
in an improved generation adequacy position.

In contrast, as stated in EirGrid‟s Generation Adequacy Report [GAR 10-16]

the forced outage probabilities for all thermal and hydro units are assumed to
be independent of each other. Therefore, the probability of these units failing
simultaneously is negligible. For example, a wind powered generator which
has a name plate rating (full output capability) of 1 MW may provide a
capacity credit of only 0.2 MW or even lower with high wind penetration. As
illustrated in Figure 4.3 below.

The perfect generation unit, from a generation adequacy perspective, is one

which is always available and capable of being dispatched by the
Transmission System Operator to contribute towards meeting the totality of
instantaneous electricity consumption at all times.

In practice, all generators of every type (renewable and conventional) are

imperfect and provide less than the capacity credit provided by a „perfect
plant‟. There are a number of possible reasons for this:

1. The generation unit is unavailable for a number of hours due to planned

maintenance or mechanical failure;
2. The primary energy source (e.g. fossil fuel for conventional or thermal plant
- wind for wind powered generators - water for hydro, etc) is not available;
3. The generator cannot run at full output due to energy storage limits (e.g.
pumped storage, hydro);
4. The output from the generation unit cannot be delivered to the customer at
certain times due to the physical inability of parts of the network to transport
the electricity (i.e. constraints) due to limitations such as exceeding the
capacity of transformers or protection devices or the ratings of the wires.

25
In Ireland the prevailing wind direction is between south and west as
illustrated in Figure 4.2 below.

Figure 4.2: Percentage frequency of Wind Direction in Ireland

(Circled number = % calm) Source: Met Eireann

There are periods when the outputs from almost all wind-powered generators
are low (or conversely, high) at the same time. This characteristic of
simultaneously low output causes the capacity credit to saturate with
increasing penetration of wind. Therefore at high levels of penetration of wind
powered generation the incremental generation adequacy benefit of additional
wind powered generation capacity on the system approaches zero. This is
illustrated in Figure 4.3 below; with 5,000 MW of wind capacity on the system
the capacity credit reduces to 500 MW.

Hence, the capacity credit provided by wind powered generation in Ireland

may be less than other countries against which it is often benchmarked.

4.8 Outlook for Generation Adequac y

According to EirGrid [GAR 10-16] the generation adequacy situation is
strongly positive for the next seven years. A surplus of at least 700 MW is
observed for all scenarios studied for each of the seven years. This is due to
the commissioning of new generation, increased interconnection, improved
generator availability and a reduction in the annual growth in electricity
demand.

26
Source: EirGrid
Figure 4.3 : Capacity credit of wind powered generation.

Nevertheless, the unprecedented growth in wind energy over the coming

decade in Ireland will change the entire context for the assessment of
generation adequacy. Whilst generation adequacy is not a problem in the
short or mid-term it may become an issue as it becomes necessary to
maintain and financially support a large capacity of conventional generators in
tandem with possibly 6,800 MW or more of wind powered generation
capacity.

4.9 Ireland’s Particular Energy Characteristics

Ireland has specific energy and electricity characteristics which differentiate it
from other countries:

 The fact that there is a single Transmission System Operator and single
Distribution System Operator differentiates Ireland from many other
countries who have to deal with the additional interactions, alignment and
co-operation of several organisations.
 With regard to energy, Ireland has very little indigenous active fossil fuel
reserves;
 extremely high reliance on imported fuels. In 2009 Ireland imported 95% of
its energy;
 Ireland‟s only significant indigenous source of energy from fossil fuel is
peat which is being run down. Currently, peat fired power stations have a
legacy priority dispatch in the historical interests of security of supply.
Peat is on par with coal in terms of its CO2 emissions and is likely to play a
diminishing role in meeting Ireland‟s electricity needs;
 With regard to electricity generation Ireland has no nuclear power and
minimal potential for further development of hydroelectric power;

27
 Ireland is poorly interconnected with other electricity or gas regions or
jurisdictions. Currently, the single electricity interconnector serving the
island of Ireland is the Moyle Interconnector. This is a 500 MW
interconnector but has limited available capacity (also refer to Section
7.12).
 The best wind power generation sites are located along the western
coastal region which are distant from the main centre of demand (greater
Dublin area).

in
Technology or Compared
Factor Ireland Member
Source with
State
% of primary energy
Nuclear 010 39% France
consumption
As % of gross
Hydro electricity 2.3% 48% Sweden
consumption
% of primary energy
Coal + Lignite 9% 61% Poland
consumption
Renewable RES 2020 target 16% 49% Sweden
Interconnection - 0 MW >4000 MW Denmark
Table 4.1: Sources of Energy: How Ireland is different
(Source [RES2020])

Table 4.1 above further demonstrates some of the individual characteristics

which differentiates Ireland‟s energy and electricity environment from other
countries.

Clearly, each country has individual energy characteristics which necessitates

bespoke solutions to address energy related challenges..

5. POLICY, TARGETS & LEGISLATION

5.1 Irish Government polic y and targets
The achievement of renewable targets and the associated support for
renewables are a matter for the Irish government. In 2007 the Irish
government‟s White Paper on Energy [DCENR 2007] established
government policy for the share of electricity (measured by output) to come
from renewable sources of generation, The RES-E target for the year 2020
was set at 33%. In 2008 this target was subsequently revised to 40%. In
December 2008 the CER, published [CER/08/260] its Gate 3 decision paper,
which dictated the issuance of connection offers to 3,900 MW of renewable
generation on the basis of meeting the revised national target of 40%. In the
same context, EirGrid published [Grid25 2009] their long-term development

10 Not including the contribution from imported electricity via Moyle interconnector

28
strategy for the grid up to 2025. It is designed to address the challenges
posed for the transmission of electricity in Ireland in order to meet such
challenging renewables targets. More recently, the Department of Enterprise
Trade & Industry in Northern Ireland consulted [DETI 2009] on a similarly
challenging target. The renewables agenda is firmly established at both a
national and an all-island level consistent with the obligations under the EU‟s
climate change package and the significant role for renewables in this context.

5.2 40 % RES-E Target

This section examines the current level of penetration of wind energy in
Ireland, the future potential for wind energy penetration and the binding target
imposed by the EU and how it translates into a government policy target for
renewable energy (including wind). It also discusses the notion of an optimal
penetration level of wind followed by some conclusions.

In considering the 40% target this paper presents - based on readily available
data - firstly a projection of the possible energy generated from wind by 2020
and secondly a projection of the expected consumption of electricity by 2020.
The resultant projections are then discussed in the context of the 40% target.

5.2.1 Current level of wind energy penetration in Ireland

According to recent statistics from SEAI [SEAI 2010] the share of electricity
generated from renewable energy sources (RES-E) in 2009 was 14.4%
(provisional) which means that Ireland has already surpassed the EU interim
target of 13.2% RES-E by 2010. There has been a steady increase in the
capacity of wind powered generation in Ireland in recent times. As illustrated
in Figure 5.1 below the capacity has increased from about 200 MW in 2004 to
almost 1400 MW at the end of 2009.

Source: EirGrid March 2010

Figure 5.1: Installed Renewable Capacity in Ireland up to March 2010

29
Table 5.1 shows recent statistics for the capacity of wind powered generation
(both onshore and offshore) connected to the electricity network in Ireland.
The installed wind powered generation capacity (onshore and offshore) of
1379 MW is almost equally divided between the capacity connected to the
electricity distribution system (694 MW) and the electricity transmission
system (685 MW).

Monthly electricity demand 2,320 GWhr February 2010

Maximum (Winter evening on Thursday 07
4,950 MW
peak) load all time January 2010
on Thursday 07
2010 – Maximum load 4,950 MW
January 2010
2010 – Minimum load 1,804 MW on 03 May 2010
Installed Dispatchable
6,209 MW As at 31 May 2010
Capacity11
Installed wind capacity 1379 MW May 2010
Connected Renewable
1,687 MW As at 31 May 2010
Capacity12
Maximum Wind Output 1,120 MW 5 April 2010
Table 5.1: System Statistics and Records for Ireland
Source: [EirGrid Stats]

5.2.2 Potential for wind energy in Ireland

As can be seen from the wind map of Europe, illustrated in Figure 5.2 below,
Ireland has excellent potential for the onshore and offshore generation of
electricity from wind. The areas with the best wind profiles are predominantly
close to the west coast of the country. The transfer of the electricity generated
from wind farms, which are predominantly located in areas where the grid is
weak and distant from the main large urban load centres, presents a
challenge. The strength and availability of the wind means that a typical wind
turbine located in Ireland should have a high energy yield with the result that
wind farms located in the optimal regions in Ireland should have relatively low
energy production costs which is likely to enhance their financial viability and
bankability. The costs of wind energy are discussed in greater detail in
Chapter 6.

11 Includes conventional thermal, large hydro and pumped storage; commissioning

units (e.g., new Aghada CCGT) not included
12 Includes wind, large & small scale hydro and other (e.g. biomass and landfill gas)

- based on installed distribution & transmission capacity.

30
Figure 5.2: Europe wind map at 80m
Source: 3TIER, Inc

5.2.3 EU binding target

In December 2008, EU leaders reached agreement over an energy and

climate change 'package' to deliver the EU‟s ambitious objectives of slashing
greenhouse-gas emissions and boosting renewable energies by 20%
by 2020. The package is designed to reduce the Union's dependency on
imported fuels and set the pace of "a new global industrial revolution".
The EU‟s Climate and Energy Package, adopted in April 2009 provides a
framework to promote increased sustainability in energy and transport
markets in the EU. The new Renewables Directive 13 sets an overall EU
binding target of 20% of energy consumption from renewable sources in the
EU by 2020. The binding EU 2020 national “RES” target for Ireland of 16%
(refer to Figure 5.3 below) requires that 16% (or more) of the final national
consumption in electricity, heat and transport be derived from renewable
energy sources.

13[Directive 2009/28/EC] of the European Parliament and of the Council of 23 April

2009 on the promotion of the use of energy from renewable sources

31
.Source [EWEA 2008]
Figure 5.3: National overall targets for the share of energy from RES in
final consumption of energy 2020

The Renewables Directive 2009/28/EC [2009/28/EC] requires each Member

State to produce an action plan showing how they intend meet their
renewable obligations. Ireland has recently published a draft of the action plan
for consultation. This plan is called the National Renewable Energy Action
Plan (NREAP). Ireland has elected to set national targets for RES-E, RES-H
and RES-T as shown in Table 5.2 below in order to meet the EU‟s binding
16% RES target.

Category Target for Ireland

Electricity RES-E 40.0% of consumption
Heat RES-H 12.0% of consumption
Transport RES-T 10%
Overall RES 16%
Table 5.2: 16% RES Target for Ireland

5.2.4 Target based on energy produced

It is important to differentiate between a penetration level based on

electricity/energy produced as opposed to (for instance) total registered
capacity. To demonstrate the difference it is instructive to study the 2008
figures in EirGrid‟s Generation Adequacy Report [GAR 10-16].

 Total aggregated generation portfolio capacity (all types) in 2009 was 8059
MW.
 Total aggregated wind-only generation portfolio (registered) capacity was
1400MW.

Therefore, as a percentage of generation capacity:

32
The total aggregated energy (GWhs) generated by wind in 2008 was
approximately 2,450 GWh [GAR 10-16] out of a total electricity requirement of
28,830 GWh for the year. As a percentage of consumed electricity:

This demonstrates that the target based on energy rather than capacity is
much more onerous.

5.3 A projection to 2020 of the energy generated from w ind

As shown in Table 5.3 below as a result of pre-existing schemes and Gates14
1 and 2, approximately 2,800 MW of renewable generation was either already
connected by the end of 2008 or financially committed to connecting over the
next few years.

Wind Capacity Renewable Energy

(MW) Capacity (MW)
+ Connected at end of 2008 1,007 1,273
+ Contracted at end of 2008 1,418 1,443
+ Other live offers 123 123
Total pre-Gate 3 2,548 2,839
+ Estimate of additional capacity 3,000 3,000
to achieve 40% target
+ Plus supplementary 900 900
Total 6,448 6,739
Table 5.3: Capacity connected or with/due connection-offers to connect

CER‟s 2008 Gate 3 policy document [CER/08/260] reckons that an additional

renewable capacity of circa 3,000 MW needs to be connected by 2020 to
facilitate achievement of the Government‟s 40% renewable target. To allow
for the possibility of non take-up of offers a supplementary 900 MW of
capacity was included, thus proving for a total of 3,900 MW of renewable
generation in Gate 3. It assumed that approximately 5,800 MW of renewable
generation will be needed to reach the 40% target.

14 Gates 1 and 2 provided for the potential connection of 1,600 MW of RES-E. Refer
to Section 7.4 for details of Group Processing and Gates.

33
 Assuming 6,739 MW RES-E capacity achieved by 2020
Annual Energy
Capacity Capacity
Type Produced
(MW) Factor
(GWh)
Onshore Wind 5,589 0.31 15,177
Offshore Wind 785 0.45 3,094
Biomass 150 0.5 657
Hydro 215 0.7 1,318
Total A (potential) 6,739 20,247
Curtailment @ 10% 2025
Total B (delivery) 18,223
Table 5.4: Possible RES-E by 2020 based on existing grid access
consenting

Note:
 Total A - potential electricity generated in 2020 if all onshore and offshore
wind farms are built, connected and fully operating at rated capacity but
also factored by the capacity factor.
 Total B - indicates notional level of curtailment (including constraints) of
10% of potential/available wind powered generation
 The estimates above, or indeed in this section, do not take into account
electrical power losses in transporting the electricity across the network or
the impact of export/import of electricity over interconnectors or the
possible additive impact of significant growth in electric vehicle usage.
Whilst all of these have an impact they do not have a material impact on
the “big picture”.

In Ireland most of this electricity is expected to be generated from wind energy

as shown in Table 5.4 above.

If constraints and curtailment are also taken into account then the contribution
from wind/renewable could be reduced. Estimates of the projected levels of
constraints and curtailment up to 2020 are not publicly available and any
attempts at estimation would be highly speculative as they are dependent on
the status of many variables in 2020, including:

i. the portfolio mix;

ii. the take-up of Gate 3 grid connection offers;
iii. the availability of finance to fund Gate 3 wind powered generation
projects;
iv. the completion of planned grid reinforcements;
v. constraints as a result of system operational issues as detailed in
Section 8.8;

34
 vi. the completion of planned interconnectors with Great Britain and the
resultant exports and imports of electricity;
vii. the penetration of electric vehicles and the possibility of a significant
distributed electric vehicle battery storage capability;
viii. the realisation of a multitude of pumped hydro storage projects which
are at the planning stage;
ix. the increase in electricity consumption and the shifting of daily demand
patterns as a consequence of electric vehicles15 and smart metering;
x. the migration from oil fired space and water heating to electric or
renewable heating (via pumps and solar).

Therefore, at the higher limit of projections, it is possible that circa 18 TWh of

wind energy (offshore + onshore) could materialise.

5.3.1 Energy Requirement Forecast

Based on the projected annual increase in demand of 3% per annum prior to

the economic downturn in Ireland and the consequent sudden decrease in
national electricity consumption up to 2009 the projected electricity
requirement in 2020 was approximately 43,000 GWh (pre-downturn forecast)
as shown in Figure 5.4 below.

Figure 5.4: Total Energy Requirement (TER) to 2020

Source: Adapted from EirGrid‟s Generation Adequacy Report 2010 – 2016

15 The Irish Government has set a target of 10% of all vehicles in the transport fleet
to be powered by electricity by 2020. This will represent some 250,000 electric
vehicles on Irish roads over the next 11 years.

35
According to the data in the draft National Renewable Energy Action Plan
[NREAP 2010] the expected increase in electricity consumption from 2010 to
2010 is 17% (or less depending on the success of energy efficiency
measures) as opposed to the 70% increase16 previously assumed, as shown
in Table 5.5 below. This corresponds most closely to the “low demand”
scenario depicted in the Total Energy Requirement (adapted) projection in
Figure 5.4 above.

Expected Expected
%
consumption consumption
increase
NREAP June 2010 2010 (ktoe) 2020 (ktoe)
Reference Electricity
2511 2937 17.0%
Consumption
Additional Energy Efficiency
2473 2813 13.7%
Scenario
Table 5.5: Expected Increase in Gross Electricity Consumption from
2010 – 2020

Using the consumption in 2010 indicated in [GAR 10-16] as the reference

point and applying the growth in electricity consumption indicated in the recent
renewable energy plan [NREAP 2010] from DCENR, as calculated in Table
5.5 above, the energy requirement in 2020 could be in the region of 30 to 32
TWh as shown in Table 5.6 below. This is lower than the LOW projection
indicated in Figure 5.4 above.

Expected Expected
Consumption Consumption %
2010 (GWh) 2020 (GWh) increase

Electricity TER 27,500 32,16517 17.0%

Energy Efficient Scenario 27,084 30,807 13.7%

Table 5.6: Expected Electricity Consumption to 2020

Ireland electricity consumption rose by over 5% per annum from 1990 to

2007. Following a drop off in 2008 and 2009 it has started to rise again. It is
difficult to predict how consumption will pan out over the coming 10 years.
Some of the factors which could influence future consumption are:

o Increase in awareness in energy efficiency measures and in

implementation
o Roll out of smart metering and changes to usage patterns
o Price of electricity as:

1670% increase from 2004 to 2020 as depicted in Figure 5.4.

17Note: 2020 expected TER is based on 2010 Figure from [GAR 10-16] with NREAP
% increase from 2010 to 2020 factor applied.

36
 • wind penetration increases
• more interconnection capacity becomes available
• fossil fuel price varies
• carbon costs are factored-in
o Impacts on electricity consumption of migrations to different types of space
heating such as (micro) CHP, ground-source heat pumps, etc.
o Increase in electricity consumption as electric cars are promoted through
advertising and subsidies. Also dependent on the roll out of charging point
infrastructure and the availability of mass-produced economical vehicles

Nevertheless, total electricity consumption in 2020 could be in the region of 30

TWh.

5.3.2 Benchmarking – how Ireland‟s traget compares

Ireland‟s 40% RES-E target is significantly more than the targets set by many
of Ireland‟s neighbouring countries, including the UK whose RES-E target is
officially “>30%”. As discussed in section 4.9 each power system has its own
individual characteristics which means that benchmarking is somewhat futile.
Nevertheless, it is informative and there may be areas of commonality from
which knowledge, studies and experience(s) can be shared. Some of these
are presented as follows. It is not intended to be an exhaustive list.

Wind Powered 2020 2020

State Generation RES RES-E
Penetration (2008) Target Target

Denmark 20% 30% 50% 18

Ireland 9.3% 16% 40%
Iowa 13.3% - -
Portugal 31%
UK 2.5% 15% >30%19
Table 5.7: Penetration of Wind Powered Generation

In relation to Ireland‟s challenges Iowa is interesting because it is comparable

in many regards in terms of size, wind energy potential, population as shown
in Table 5.8 below. However, it is very well interconnected and integrated with
neighbouring states and power systems and hence can absorb higher
penetrations of wind energy with relative ease.

18 In Denmark, the volume of electricity generated from wind power is expected to

increase from 6.6 TWh in 2005 to 20.2 TWh in 2025, corresponding to 51% of
electricity consumption. Source: [Energinet 2007]
19 According to the UK’s Department of Energy and Climate Change [DECC 2009]

their “lead scenario” indicated “more than 30% of electricity generated from
renewables by 2020”.

37
 Iowa Ireland
Total Generation/annum 53 GWh 27 GWh
Current Wind Penetration 20% 14%
Population 3.0 million 4.5 million20
Wind Dispatch Factor 33% 31%
Interconnection Excellent Poor
Electrically isolated No Yes
Table 5.8:Ireland Vs Iowa power system characteristics

Denmark plans to increase its wind energy penetration to 50% by 2025,

relying on electric vehicles and heat pumps to absorb surpluses, plus
extensive use of demand side management. However, it also is well
interconnected as illustrated in Figure 5.5 below.

Source [Parbo 2008]

Figure 5.5: Denmark - Interconnection to neighbouring countries

Interestingly, as can be seen in Figure 5.6 below, in comparison with Ireland,

Denmark has six times the density21 of wind powered generation. Therefore
Denmark should provide a good model and a source of “lessons learnt” which
Ireland could draw on to explore the issues and challenges which arose in
overcoming the social acceptance of high penetration of wind turbines and
associated connection infrastrucure.

20 The population of Ireland and Northern Ireland combined is 6.2 million.

21 “Density” is the wind capacity in MW per unit area of the country.

38
Source [EWEA 2008]
Figure 5.6: Current Wind installation “density” MW/1,000 km2 in Europe

In the UK, National Grid (NG) envisages that some 32 GW of wind capacity
will be connected by 2020, of which about 20 GW would be offshore and 12
GW onshore. If such a high share of offshore does transpire then it is likely to
be staggeringly expensive and to drive up electricity costs and prices unless
some novel groundbreaking technology or market solution and massive
political will and endeavour can be quickly established. NG have assumed
that UK electricity demand up to 2020 will not substantially differ from the
current level. NG argue that the effect of economic growth will be offset by
improved energy efficiency, reduced losses and an increase in small-scale
embedded generation not visible to the grid. NG postulate that
interconnections between networks, including trans-nationally, will be key,
along with measures to reduce peak demand, enlist other reserve sources
such as standby generators and, as a last resort, “to impose demand side
measures if necessary”.

As discussed above and in section 4.9, which details Ireland‟s particular

energy characteristics, it is not hugely informative to compare Ireland‟s targets
or plans or measures for RES-E with those of other countries although the
knowledge, expertise and experiences of all can be leveraged in progressing
Ireland‟s bespoke strategy, plan and realisation of “optimal” RES-E.

5.3.3 Optimal Penetration Level of Wind

In assessing the optimal penetration of wind one needs to consider and

quantify and value the overall impact of high wind energy penetration on the
three pillars of energy policy: competitiveness, sustainability and security.
Unfortunately, because there is no existing or historic data to draw on and
there are so many unknowns it is impossible to accurately evaluate the
holistic purist cost-benefit to society and even to agree as to what factors
need to be taken into account. In order to do so a value would have to be put
on the following:

 The avoided costs of the impacts of reduced greenhouse gases and

the consequent impacts on the environment

39
  Cost-reflective inclusion of all external costs for all generation
technology types
 Net cost (costs - net of benefits) of the additional interconnectivity
needed
 The value of lower reliance on imported fossil fuels
 The real additional/incremental cost of capacity payments to
generators and power system stability measures (e.g. new or
enhanced ancillary services) to complement the evolving penetration
level of wind
 The overall year-round impact on the wholesale electricity market price
when it is optimised to complement high wind penetration
 The cost of over-capacity of wind powered generation, including
incremental curtailment and constraint costs.
 The additional/incremental cost of the network reinforcements required
to accommodate

Whilst many studies are being carried out worldwide and in Ireland the
process of establishing the 40% target appears to be somewhat arbitrary and
aspirational. The process followed appears to be:

 Assess in 2007-2008 Ireland‟s renewable potential (incl. wind energy)

 Take an initial stab at assessing the extent of the challenges based on
available knowledge
 Carry out an extensive detailed studies (but limited nevertheless) of the
capability of the grid to support several penetration levels up to 60%
 Select an ambitious target of 40% RES-E because RES-H and RES-T are
too inflexible, too expensive and too difficult.

Following the commitment to the 40% objective many more detailed studies
have followed. Many of these are predisposed to a positive outcome of RES-
E penetration of 40% or higher. The extent of the challenges and the cost
implications will transpire as the transition to 40% RES-E evolves over time.
Only time will tell if the cornerstones of competitiveness and stability are
maintained in the transition to high RES-E.

In order to determine the optimal solution for the benefit of society it is

necessary to examine and evaluate the holistic costs and benefits of high
wind energy penetration. Despite the fact that wind energy can be regarded
as a source of free fuel there are costs associated with wind powered
generation. These costs include:

 the initial capital and construction costs

 the ongoing operating and maintenance costs of the wind farms
 the capital costs and operating costs of the additional deep reinforcements
to the transmission network required to facilitate high renewable
penetration

40
 the cost of constraints and curtailment (discussed in Section 9.7) as the
level of penetration of wind energy increases
 the capital cost and operating costs of electricity interconnection to Great
Britain and/or France to complement high wind penetration (however this
also improves Ireland‟s security of supply
 the capital costs and ongoing maintenance charges for the local (shallow)
connection to the network
 additional costs of providing reserve generation capacity
 additional costs incurred by conventional generators due to more frequent
and stressful cycling of generators
 additional costs in operating the power system so that it remains stable
and the power quality is maintained

The benefits include:

 Helps to reduce greenhouse gas emissions which reduce the

environmental and health damage caused and helps to mitigate against
climate change - and thereby assists hugely in meeting EU targets
 Capacity benefit so that somewhat less22 conventional capacity is required
 Reduction in imported fossil fuels; a significant quantity of which originates
or traverses countries with variable political and economic stability
 Lower wholesale electricity prices23 (assuming optimal portfolio)
 Better long-term security of supply situation as the global supply of fossil
fuels is depleted.
 Possibility of exporting electricity if interconnection with Great Britain
improves significantly

It is difficult to separate the particular costs and benefits which accrue

specifically from penetration of renewables from those which would have
given rise to costs and benefits to the system in any case, even in the
absence of high renewables.

5.3.4 Conclusion on RES-E target

In order to understand the dynamic between the binding EU targets and the
Irish Government‟s energy policy it is important to understand the distinction
between:

a) the binding nature of the EU-imposed 2020 target for Ireland of 16% of
Ireland‟s energy consumption to be derived from renewable sources
(RES = 16%); and,
b) the elective nature of the Irish Government‟s target (RES-E = 40%
objective) of 40% of electricity consumption to be generated from
renewable energy sources.
22 It is questionable as to whether the capacity benefit resulting from high wind
penetration results in less conventional capacity being needed.
23 According to Awerbuch [Awerbuch 2007] even small incremental additions of wind

powered generation will provide sizeable cost and risk reductions in the context of
an optimal generation portfolio mix.

41
It is up to each Member State of the EU to work out how to achieve the target
imposed by the EU. The apportionment of the 16% target between various
categories of energy usage is up to each member state. Ireland has, with
somewhat limited information available, opted for a mix of measures which
includes a RES-E target of 40%. Early studies, such as the detailed All-Island
Grid Study [AIGS 2008] have indicated that it is possible to achieve high
levels of wind penetration of 42%.

It is not unreasonable to expect, based on the current plans and the

projections above for 2020, that wind powered generation could provide 18
TWh out of total consumption of 30 TWh; i.e. RES-E = 60%. In fact, this does
not take account of any additional generation from other renewable sources
such as tidal, wave, biomass, CHP, etc.

There is no doubt that the migration of the power system towards a portfolio
with substantial renewable generation meets sustainability criteria. However, it
is less clear as to whether it will lead to competitive prices of electricity for the
end-customer once all of the system security and stability issues have been
identified and factored into the cost in a truly cost-reflective manner.

5.4 Institutional arrangements and market structure

The legal titles for the two jurisdictions on the island of Ireland are “Ireland”
and “Northern Ireland”. This document refers to the “Republic of Ireland” or
the “Ireland” to mean the Irish state. When reference is made to the “island of
Ireland” or “all-island” it encompasses the combination of the two jurisdictions
of Ireland and Northern Ireland.

In Northern Ireland, the electricity industry was privatised in 1992 when the
generation capacity was sold to four different firms who received longterm
contracts. The transmission, distribution and retail sections of the industry
remain vertically integrated within Northern Ireland Electricity (NIE) which is a
private company. The transmission system is owned by NIE. It also manages
the electricity supply business, builds and maintains the network and is also
engaged in generation. Electricity Supply Board (ESB) announced in May
2010 that it had entered into discussions over the possible acquisition of
Northern Ireland Electricity (NIE) from its parent Viridian.

With the completion of the Moyle electricity interconnector to Scotland in 2002

and the construction of a new natural gas plant in 2005 Northern Ireland now
has more than adequate electricity generation capacity for its current needs.

The Northern Ireland electricity system had effectively been isolated from that
of the larger market in the Republic for decades until connection between the
two systems was restored in the late 1990s. A further connection between the
two systems is due to be completed in 2012. When this is completed it will
turn two weakly-linked electricity systems into an integrated electricity system
for the island. The Northern Ireland electricity system is regulated24 by the

24 Utility Regulator of Northern Ireland was up until recently called the Northern
Ireland Authority for Utility Regulation (NIAUR).

42
“Utility Regulator”. It is completely independent of OFGEM, the energy
regulator in Great Britain.

The Republic of Ireland started liberalising the electricity market much later
than Northern Ireland. The implementation of EU law meant that the market in
the Republic was opened up to new entrants in generation and in supply. The
strong growth associated with the Celtic Tiger period prompted a large steady
increase in electricity consumption up to 2007 followed by a sharp decrease in
2008/9 (refer to Figure 5.4). At the same time the portfolio of generating plants
was ageing, with several scheduled to shut down in the period to 2015.
Deregulating the market at a time when extensive new investment was
needed compelled the regulators to adopt a system of strong investment
incentives. In the Republic the current arrangement is that the grid is owned
by ESB, a wholly owned government company that is responsible for
maintaining and extending the network. This company also owns a substantial
share of the generation capacity on the island and is the major supplier of
electricity in the Republic of Ireland. The management of the system in Ireland
rests with EirGrid, the Transmission System Operator. EirGrid is a
government agency which is also responsible for network planning. A joint
study [NERA 2006] commissioned by the regulators in the two jurisdictions
suggested that there were likely to be significant long-term benefits from
developing an integrated electricity system on the island. A single electricity
market was considered likely to be beneficial to the consumers since it would
allow for a lower level of installed capacity for a given level of security of
supply [FitzGerald, 2004]. It would also allow for more efficient dispatch and
finally it would increase competition in the two jurisdictions [ESRI 2009].

In the case of the Republic of Ireland, the Electricity Supply Board (ESB) is
still state owned.

5.5 Market Share

At the end of 2004 the top three generators held 94 percent of the total
wholesale market in Ireland and the ESB, the state-owned incumbent, was by
far the dominant player [CER 2005]. The electricity supply market has been
gradually liberalised culminating in full market opening in February 2005. As
can be seen from Table 5.9, ESB PES share of the supply sector in the
Republic has steadily decreased from 94% in 2000 to 41% in 2009.

Table 5.9: Supplier’s Market Share since 2000 in the Republic

43
The following was the market share for generation on an all island basis:

2007 2008
ESB Power
35% 30%
Generation
ESB Independent
12% 14%
Energy
Independent
53% 56%
Power Producers

Table 5.10:: Market share of Generation

Source: ESB Annual Report (ESB 2008)

The structure of the electricity market in Ireland has transformed over the last
decade. The market was previously dominated by ESB, the vertically
integrated dominant electricity player with a near monopoly of the electricity
sector. Since then the generation and supply side have been opened up to
competition and there are now several players with considerable market
power.

Figure 5.7: Integration of main energy players in Ireland

Source; Adapted from [Deloitte 2005]

The competitiveness of the generation sector was further enhanced with the
acquisition by Endesa in 2007 of a chunk of ESB‟s generation assets. Bord
Gais have also diversified into the electricity generation sector and more
recently became licensed as an electricity supplier as well as acquiring the
considerable wind power portfolio of SWS. As illustrated in Figure 5.7 above
Ireland now has a number of vertically integrated utilities. which is good for

44
competition in Ireland as long as the electricity market structures can extract
the benefits.

5.6 Applications for connection to the netw ork

In Ireland applications for grid connection are currently entered into a
connection queue by date order. The CER decide on the criteria for selecting
which of the applications in the queue are to be included in the batch of
applications25 to be processed by the System Operators. All of the applicants
within that selected batch then receive, at a later date and on a phased basis,
a connection offer.

The System Operators work out a “firm” access date which indicates the
calendar year up to the year 2025 in which the System Operators plan to have
the necessary reinforcements completed in order to accommodate the
particular project on the grid. This process is called the Incremental Transfer
Capability (ITC) programme and involved carrying out complex remodelling of
the Transmission network as each and every element of generation or load is
added incrementally to (or removed from) the network and as each element of
the network is uprated or added for the purpose of upgrading or extending the
network.

5.7 The legislative context

The EU‟s Climate and Energy Package, adopted in April 2009, seeks to
provide a framework to promote increased sustainability in energy and
transport markets in the EU. While the package is rather wide-reaching26, it is
the new Renewables Directive27, which must be implemented by Member
States by December 2010, which is of particular relevance to this paper. This
sets an overall EU binding target of 20% of energy consumption from
renewable sources by 2020. The Irish Government has apportioned the
percentage to be contributed by each of the energy consuming sectors. The
biggest contribution to the targets will come from the electricity sector as
discussed further in Section 5.2. To help meet this target, the new
Renewables Directive establishes certain provisions. The includes the
provision that Member States shall provide for either priority access or
guaranteed access to the grid system for electricity produced from renewable
energy source, subject to requirements relating to the maintenance of the
reliability and safety of the grid.

Member States shall ensure that when they dispatch electricity, TSOs give
priority to generating installations using renewable energy sources in so far as
the secure operation of the national electricity system permits28; and

25 The “Gate” process is discussed in Section 7.5

26 It includes provisions on geological storage of carbon dioxide (i.e. carbon sequestration), the
improvement and extension of the EU emissions trading scheme (ETS) and the allocation of
greenhouse gases (GHG) not covered by the EU ETS.
27 Directive 2009/28/EC of the European Parliament and of the Council of 23 April 2009 on

the promotion of the use of energy from renewable sources

28 The new Directive (2009/28/EC) gives additional weight to the security of the system.

45
Member States may engage in statistical transfer of renewable energy
production and establish joint renewable projects in one or more Member
States. They may also combine their support schemes for the promotion of
renewable energy.

5.8 Existing Support Schemes

The existing support schemes in Europe cover the following:

5.8.1 Feed-in tariffs

Feed-in tariffs are payments per kilowatt-hour for electricity generated by a

renewable resource. There are many variants and many names for this
support mechanism, including: Electricity Feed Laws, Feed-in Laws, Feed-in
Tariffs (FITs), Renewable Energy Payments, Advanced Renewable Tariffs
(ARTs) and Renewable Tariffs. Feed-in-tariffs are the world's most successful
policy mechanism for stimulating the rapid development of renewable energy.
Feed-in-tariffs exist in most of the Member States. Some features of Feed-in-
tariffs are as follows:

 enhance the financial viability of renewable projects;

 The tariff stipulates how much the renewable generator is paid for their
electricity and over how long a period; this provides financial certainty and
reduced risk to project developers and for the investment and financial
institutions; A consequence of this financial support is cheaper financing
as a lower (equity premium) is required;
 widely used in Europe including Germany, France, Spain and Ireland;

Advanced Renewable Tariffs (ARTs) are the modern version of feed-in-tariffs

and include the following key differentiating characteristics:

 tariffs are differentiated by technology; there is one price for wind

energy, another price for biomass, solar, hydro, and so on.
 Tariffs within each technology can be differentiated by project size or
by the productivity of the resource (for example; onshore versus
offshore wind).
 Tariffs for new projects are subject to periodic review to determine if
the tariffs are sufficiently robust to meet the targets desired in the time
allotted.

5.8.2 Green Certificate System

Variants of the green certificate system (RES-E) are currently in force in

Sweden, the United Kingdom, Northern Ireland, Italy, Belgium and Poland.
RES-E is sold at the conventional market price. In order to finance the
additional cost of producing green electricity, and to ensure that it is
generated in sufficient quantities, all consumers are obliged to purchase a

46
certain number of green certificates from RES-E producers according to a
fixed percentage (quota) of their total electricity consumption/generation.

5.8.3 Tendering Systems

Tendering systems exist in France and in Ireland up to 2006 (refer to AER

below) . Under this support scheme, the State issues a series of invitations to
tender for the supply of RES-E, which is sold at market price. The additional
cost is passed on to the final consumer in the form of a special tax.

5.8.4 Effectiveness of Support Schemes

To assess the performance of these support schemes, it is necessary to:

 take into account the substantial differences between the national, regional
and agricultural resources of different Member States. The wider the gap
between the cost of generation and the support mechanism, the less the
cost-efficient the system is;
 take into account the effectiveness of the different support schemes.
Effectiveness refers to the ability of a support scheme to deliver green
electricity;
 compare the profits with other potential investment vehicles (investor
perspective)
 compare effectiveness so as to indicate whether the success of a
particular policy results above all from substantial financial incentives or
whether there are other factors that have had a crucial impact on market
distribution in the countries in question; these factors may include
considerations such as environmental, indigenous resources (of wind,
insolation, hydro, etc.), contribution to security of supply, variability,
predictability, and so on.

Accordingly, the support schemes in place differ from country to country for
good reason. In Ireland feed-in tariffs are currently regarded as the most
effective support system for wind energy.

5.8.5 AER Scheme

From 1996 to 2006 a tender scheme called “Alternative Energy Requirement”

(AER) was the support mechanism for promoting RES-E technologies.
.Applications were ranked on the basis of bid price per kilowatt-hour supplied.
Successful applicants were awarded Power Purchase agreements (PPA) of
up to 15 years from the national Electricity Supply Board (ESB). There were in
total 6 AER rounds. However, the schemes generally failed to reach the
targets set. The AER scheme was therefore abandoned and replaced by the
feed-in-tariff support scheme.in 2006.

47
5.8.6 REFIT in Ireland

Since early 2006, feed in tariff has become the main support mechanism for
promoting RES-E technologies in Ireland. The current scheme in operation in
the Republic of Ireland for the support of wind energy is the Renewable
Energy Feed-in-Tariff (REFIT). This scheme provides a guaranteed reference
price for renewable energy for the suppliers with an additional payment of 15
% of the reference price.

The arrangements of the REFIT process are that the generator applies for a
“letter of offer” from the Department of Communications, Energy and Natural
Resources (DCENR). To get the letter they must have must have planning
permission and a grid connection offer for their project. The letter of offer
confirms to any electricity supplier (licensed to supply in the Republic of
Ireland) that in return for entering into a Power Purchase Agreement (PPA)
with the generator for 15 years they will receive a “balancing payment” in
accordance with the terms of the REFIT scheme. Applicants in REFIT will be
able to contract with any licensed electricity supplier up to the notified fixed
prices, which are presented in Table 5.11 below:

Technology 2010
Large Wind (over 5 MW) €66.353
Small Wind (under 5 MW) €68.681
Hydro and other biomass €83.814
Landfill €81.486
Biomass (landfill gas) €83.814
Table 5.11: Refit Rates per MWh in Ireland

This scheme was put in place to support the Irish Government‟s target (in
2006) to comply with Directive 2001/77/EC to increase the capacity of
renewable energy based electricity generating plant to at least 1,450
megawatts (MWs) installed, by 2010. This scheme provided support for an
additional 400MWs, in the period to 2010, of new electricity generation plant
powered by biomass, hydropower or wind energy under the “Renewable
Energy Feed in Tariff” programme (REFIT).

Of the 3,900 MW in Gate 3 currently being processed for connection offers, it

is likely that only a very small percentage will be eligible to avail of the current
REFIT scheme. Developers in the application process who do not know what
support system might be available at the end of the process face considerable
uncertainty. The focus of new support schemes, which are currently being
developed, is on the longer term from 2010. It is likely that the new support
schemes will differentiate between onshore wind and offshore wind
generation.

The support scheme in Northern Ireland for renewable generators is a system

of redeemable Renewable Obligation Certificates or ROCs. Some of the older
and established wind farms in the Republic of Ireland are still being supported
under the terms of the older Alternative Energy Requirement Scheme.

48
5.9 The Role of the Energy Regulator
The Commission for Energy Regulation (CER) is the national regulatory
authority in Ireland. The primary statutory duty of European energy regulators
is to protect and promote consumers‟ interests. The CER does this by helping
to facilitate competitive, efficient and sustainable energy market whilst having
due regard to the environment.

The CER was initially established under the Electricity Regulation Act, 1999.
The functions and duties of the CER have been altered and expanded
significantly by legislation transposing EU directives into Irish law, including SI
60 of 2005.

Pursuant to of the Electricity Regulation Act29 (ERA), the CER has (inter alia)
a responsibility not to discriminate unfairly between relevant stakeholders, to
protect the interests of final customers, to promote competition and to
promote the use of renewable, sustainable or alternative forms of energy. The
CER also has a duty to take account of protection of the environment in
carrying out its functions.

Legislation30 allows for the safety and security of the electricity system to be
considered when granting generation licences.

5.10 Regulation 28: Security of Suppl y

The CER is granted the statutory role of monitoring security of electricity
supply. The key issues to be monitored include:

 the balance between supply and demand

 the level of expected future demand
 the envisaged additional capacity being planned or under construction
 the quality and level of maintenance of the transmission networks
 the measures to cover peak demand
 the measures to deal with a shortfall of capacity by one or more
suppliers

EirGrid, as Transmission System Operator in the Republic of Ireland, is

responsible for reporting to the CER on any item relating to security of supply.
The CER is given the power to take any measures necessary to protect
security of supply. This includes holding a competition to acquire additional
generation capacity and/or securing the provision of energy efficiency/demand
side measures. The provisions require the CER to publish a report every two
years on its monitoring of security of supply.

29 Section 9 of the Electricity Regulation Act 1999, as modified.

30 Section 18(2) of the Electricity Regulation Act 1999 and SI 309 of 1999 state that the Minister shall specify criteria
on which an application for an authorisation to construct or reconstruct a generating station may be determined and
that these criteria may relate to (inter alia):
(a) the safety and security of the electricity system, electric plant and domestic lines

49
The CER is empowered to license and regulate the generation and supply of
electricity, authorise the construction of new generating plant and oversee
third party access to ESB‟s transmission and distribution networks. The CER‟s
primary duties are to not discriminate unfairly and to protect the interests of
consumers.

Competition in the electricity sector is restricted to the generation and supply

businesses due to the existence of natural monopolies in the transmission
and distribution of electricity. One of the primary regulatory functions is to
ensure that access to the natural monopoly elements of the industry, the
transmission and distribution elements, is on a fair and equitable basis and
that an unfair advantage is not given to one market participant over another.
First and foremost, the function of regulation is to protect consumers.
Regulation must maintain a long term view, encourage investment and
facilitate the financial viability and long-term sustainability of all elements of
the sector. The mission of the CER, acting in the interests of consumers, is to
ensure that:

 the lights stay on;

 the gas continues to flow;
 the prices charged are fair and reasonable;
 the environment is protected; and
 electricity and gas are supplied safely.

However, this does not extend to the promotion of any one type of generation.
Within this context, regulators recognise that wind is one form of low-carbon
generation and generally keep an open mind in relation to other types of
generation, such as nuclear and solar, and carbon capture and storage.
Nevertheless, the expected growth of wind generation gives rise to new
issues relating to the design of market and network arrangements. Regulators
have a duty to consider these issues and to consider also whether the
regulatory regime facilitates - or creates barriers - to the deployment of wind
generation.

5.11 EU 3 r d Legislative Package

The EU 3rd Package legislation was recently-agreed. Some of the impacts of
this legislation package on the penetration of wind energy in Ireland are as
follows:

 It provides for more strict separation between network ownership and

generation and supply interests. Ireland already has an independent
Transmission System Operator (EirGrid) and the legal separation of the
Distribution System Operator, which is currently a ring-fenced entity
within ESB, is under way;

 It provides for increased transparency, independence and a stronger

voice for European regulators;

50
  It should help to address some of the fundamental barriers to the
deployment of new generation, including wind generation;

 Furthermore, the forthcoming legally-binding network codes for cross-

border trading, such as those relating to network connection, third-party
access and balancing, should facilitate high penetration levels of
renewable energy. National Regulatory Authorities and the forthcoming
Agency for the Cooperation of European Regulators (ACER) will play a
role in their monitoring and development through non-binding
Framework Guidelines, which will set the objectives for the codes.

5.12 Steer from EU on support schemes for w ind

To ensure the investment is economic and efficient, the European Regulatory
body CEER publish guidelines [CEER 2009] which signal that Member States
of the European Union concentrate on providing support for wind generation
through the aforementioned support schemes rather than through grid or
market support schemes.

CEER also guide that support schemes should be volume-based, transparent

and provide clear signals to the market. For example, where support is
provided through exemption from costs paid by other market participants,
such as connection charges or imbalance (e.g. constraint) payments, the
incentives in choosing where to locate or in managing system constraints may
be dulled. Support schemes which are transparent, explicit and separate from
market and network arrangements, such as a feed-in tariff or certificate
scheme, are generally considered to be better at providing the appropriate
incentives.

From 2013 onwards it is planned to introduce the next phase of the EU

Emissions Trading Scheme which will introduce full auctioning of carbon
emissions in the power sector. This should provide clearer signals and
increased economic efficiency to the market. This will, in future, have the
effect that the price for electricity produced from carbon fuels reflects the
environmental impact it causes so that the market receives the appropriate
signals in choosing where to invest.

5.13 Regulatory uncertainty impact on costs

The formation of the all-island Single Electricity Market required harmonised
legislation to be passed by both the parliament in Westminster and the
Oireachtas in Dublin, providing for a single market jointly controlled by the two
regulators. Because the legislation required the joint approval of two
sovereign governments, any changes in legislation in the future would be very
difficult. This solidity helps boost the credibility of the new market – it is less
likely to be prone to regulatory “surprises”. Regulatory certainty [ESRI 2007] is
vital in a system where entry involves significant fixed costs. Uncertainty has a
direct effect on the cost of capital available to project developers. This is a
factor which impacts on the bankability of wind farms, which are, by their
nature, capital intensive.

51
Therefore the regulator must find a palatable and workable middle-ground
between the conflicting requirements of having to make the substantive policy
changes that are needed to facilitate the penetration of renewable whilst also
providing stability and certainty.

52
6. COSTS AND RETURN ON INVESTMENT
Wind farms are highly capital intensive but have low operating costs. This
chapter discusses the financial aspects of wind farming which determine how
attractive (i.e. profitable) it is for investors to commit to the substantial capital
up-front outlay to develop wind farm projects The extent and certainty of the
stream of income which will accrue to wind farm developers and investors over
the lifetime of a project will determine - over the next year or so - the uptake
and execution of 4,000 MW of connection offers from the system operators. In
the current risk-averse financial environment there is clearly a need for a
stable, enduring revenue structure and support mechanism.

This chapter presents information on the levelised costs – or production costs

- of a unit of electricity generated from wind energy and examines trends in
costs, ownership and financing to see if any projections can reasonably be
made as regards future costs of onshore wind in Ireland.

This chapter discusses the elements which contribute to the profitability of

wind farms. These include:

 Installed cost and trends

 Production (or levelised) cost per kWh generated
 The price paid for energy (€/MWhs) in the electricity market
 Other market payments such as payments for capacity
 Support schemes – REFIT

6.1 Installed Costs of Wind Farms

There are many publications such as EWEA‟s “Facts” publication [Windfacts
Part 3] detailing the general costs of wind energy. In considering the costs
one must consider them in their entirety; this includes the turbine and project
capital costs, the construction costs, the fuel costs, the finance costs, the
expected lifetime, the extracted profit, the operating and maintenance costs
and the decommissioning costs. This chapter seeks to apply these generic
cost elements to onshore wind energy production in Ireland.

6.1.1 Wind power costs

Key parameters which determine wind power economics include:

 investment costs: the capital costs - tend to be low for fossil fuel plants;
high for wind/renewable and nuclear; very high for waste to energy, wave
and tidal, PV and solar thermal;
 operation and maintenance costs - tend to be high for fossil (due to ash
disposal, emissions clean up) and low for wind/renewable and nuclear;
 Capacity factor - as low as 3% for diesel peakers, 30% for wind, and up to
90% for nuclear;.
 Fuel costs - high for fossil fuel and biomass sources, very low for nuclear;
and renewables, zero for wind, possibly negative for waste to energy;
 Lifetime of 15 -20 years for wind compared with 50 for conventional;

53
 discount rate

One of the most striking elements in terms of wind energy investments

compared with conventional forms of electricity generation is the upfront
outlay of capital. The early-stage capital investment costs account for about
75-80% of the total cost (see Figure 6.1 below) of onshore wind projects over
the projects lifetime.

1% 1%
1% 0%
1%

4% Turbine (ex works)

7% Grid Connection
Foundation
9% Land / Site
Electric Installation
Consultancy
Financial Costs
76% Road Construction
Control Systems

(Adapted from EWEA data 2006)

Figure 6.1: Cost structure of a typical 2 MW onshore wind turbine
installed in Europe

This fact marks a fundamental difference with most conventional electricity

production options, where the fluctuating and uncertain nature of fuel costs
contributes significantly to the production costs. The wind regime at the
chosen site, the turbine hub height, the optimal arrangement of the turbines
and the efficiency of electricity production due to better equipment design
determine the power production of a wind farm. Taking into account these
aspects, the overall wind power production efficiency has increased by 2-3%
annually over the last 15 years.

The economic consequences of this trend are clear. For a coastal position, for
example, the average generation costs have decreased from around 9.2
c€/kWh for the 95 kW turbine (mid 1980s typical turbine) to about 5.3 c€/kWh
for a new 2,000 kW machine, an improvement of more than 40% over 20
years.

6.1.2 Financing wind energy

Most commercial wind farms have been funded through project financing.
This is a loan which is issued by the lending institution on foot of the the
expected cash flow of a project. In the last few years new forms of financing
have arisen using renewable energy funds, pension funds and even high net
worth individuals seeking efficient investment vehicles. Although many small

54
privately owned projects remain, there has been a substantial shift towards
bigger utility-owned and state or semi-state owned projects. These changes
bring new funding and certainty to the industry and decrease dependence on
banks for initial funding. In Ireland this trend is evident from:

a) the large and increasing share of the existing or developing wind powered
generation capacity owned by Irish state or semi state bodies, e.g. Bord na
Mona, Bord Gais, Coillte, ESB (and Hibernian), etc.
b) the developers of the projects entitled to receive a connection offer under
Gate 3 are predominantly state enterprises.

6.1.3 Trends in wind farm costs

This section discusses some trends and factors which could impact on the
levelised cost of energy from wind. The factors considered include:

a) “Experience factors” which attribute a “learning rate” to the development of

wind powered generation
b) Reduction in wind-turbine manufacturing costs as volumes and
productivity and competitiveness increase worldwide based on growth (i.e.
volume of windturbines manufactured)
c) Reduction in wind-farm installation and commissioning costs as
productivity and competitiveness increase based on worldwide growth of
the sector
d) Increase in levelised cost as the penetration of wind powered generation
increases and hence the optimal wind farm sites are used up. i.e less
energy generated per annum for a given wind-turbine size.

6.1.4 Experience factors and learning curves

Experience factors and rates which are synonymous with learning curves and
rates have been used extensively to understand past cost trends and to
forecast future cost reductions for a variety of energy technologies, including
wind. Learning curves start with the premise that increases in the cumulative
production or installation of a given technology leads to a reduction in its
costs. The principal parameter calculated by learning curve studies is the
learning rate: for every doubling of cumulative production/installation, the
learning rate specifies the associated percentage reduction in costs.

Based on historical installed cost data and global cumulative wind

installations, learning rates [US DoE 2008 ] can be calculated as 10.8% (using
data from 1982 through 2008) Therefore, every time the total installed
capacity (worldwide) is doubled then the costs per kWh is reduced by 10%.

According to EWEA [Windfacts Part 3] wind power capacity has developed

very rapidly in recent years, on average by 25-30% per year over the last ten
years. So, at present the total wind power capacity doubles approximately
every three to four years. Figure 6.2 shows the consequences for wind power
production costs, based on the following assumptions:

55
  The 2006-2010 price is static as no price reductions are foreseen in
this period is due to a persistently high demand for new wind
turbine capacity, and sub-supplier constraints in the delivery of
turbine components.
 From 2010 until 2015, a learning rate of 10% is assumed, implying
that each time the total installed capacity doubles, the costs per
kWh of wind generated power decreases by 10%.
 The growth rate of installed capacity is assumed to double
cumulative installations every three years.
 The curve illustrates cost development in Denmark, which is a fairly
cheap wind power country. Thus, the starting point for the
development is a cost of wind power of around 6.1 c€/kWh for an
average 2 MW turbine, sited at a medium wind regime area
(average wind speed of 6.3 m/s at a hub height of 50 m). The
development for a coastal position is also shown.
 These costs should be very similar to the costs in Ireland (refer to
Figure 6.7) which is similar to Denmark in many respects in relation
to wind powered generation,.

Source: Risoe
Figure 6.2: Using experience curves to illustrate the future development
of wind turbine economics until 2015.

6.1.5 The Installed Cost of Wind Energy

The capital costs of wind energy projects are dominated by the cost of the
wind turbine itself (ex. works). Table 6.1 shows the typical cost structure for a
2 MW turbine erected in Europe. According to the EWEA an average turbine
installed in Europe has a total investment cost of around €1.23 million/MW. As

56
illustrated in Figure 6.1 above the turbine‟s share of the total cost is, on
average, around 76%, while grid connection accounts for around 9% and
foundation for around 7%.

A big advantage of wind powered generation is that fluctuating fossil fuel

costs have no impact on wind power generation costs. Thus a wind turbine is
capital-intensive compared to conventional fossil fuel fired technologies such
as a natural gas power plant, where as much as 40-70% of costs are related
to fuel and O&M. The table below gives the price structure of a typical 2 MW
wind turbine.

Operation and maintenance (O&M) costs for onshore wind energy are
generally estimated to be around 1.2 to 1.5 c€ per kWh of wind power
produced over the total lifetime of a turbine. Spanish data indicates that less
than 60% of this amount goes strictly to the O&M of the turbine and
installations, with the rest equally distributed between labour costs and spare
parts. The remaining 40% is split equally between insurance, land rental and
overheads.

Investment
Item % of Total
(€1,000/MW)
Turbine (ex
works) 928 75.6%
Grid Connection 109 8.9%
Foundation 80 6.5%
Land Rend 48 3.9%
Electric
Installation 18 1.5%
Consultancy 15 1.2%
Financial Costs 15 1.2%
Road
Construction 11 0.9%
Control Systems 4 0.3%
TOTAL 1228

Table 6.1: Installed Cost of a typical 2 MW wind turbine in Europe (year

2006 €)

The installed costs for an onshore wind turbine in Ireland is similar to the UK
at about €1200 per MW as shown in Figure 6.3 below.

57
Source : Adapted from Riso (based on data from the IEA)
Figure 6.3:: Total investment cost by country,

The costs per kWh of wind-generated power, calculated as a function of the

wind regime at the chosen sites, are shown in Figure 6.7 below. On average,
for large-scale grid connected wind the costs as applied to Ireland should be
approximately 5.5-6.5 c€/kWh as the capacity factor in Ireland averages 31%.
As the installed costs are hugely influenced by the material costs (turbine
accounts for 75% of total installed costs) the above costs should also be
largely applicable to Ireland.

Note that the average capacity factor will vary year by year. The trend
towards ever increasing wind turbine size for new installations tends to
increase the capacity factor as the larger turbines tend to be more efficient.
Also the higher hub-height. of larger turbines leads to a better wind profile with
higher wind speeds and hence greater capture of wind energy.

However, as wind penetration increases the optimal wind sites are used-up.
Progressively less optimal sites with lower wind speed or less persistent wind
are then available.

Assuming:
 capacity factor of 31% on average in Ireland; and,
 average installed costs in Ireland of €1,228 per MWh; and,
 discount rate of 10%.

Then the wind power generation cost which applies to Ireland averages at
approximately 6.0 c€/kWh as shown in Figure 6.4 below.

Note: a wind site with average wind speeds (i.e. assume that “average wind
speed” means the aggregated energy output averaged over a period of time).

58
Source: Adapted from EWEA/RISU
Figure 6.4 Wind energy costs, discount rate and capacity factor

Figure 6.4 above shows how discount rates affect wind power generation
costs. The rapid European and global development of wind power capacity
has had a strong influence on the cost of wind power over the last 20 years.

6.1.6 Production Costs of Electricity

A measure of the costs of electricity production is the levelised cost. Levelised

Energy Cost is the cost per unit of energy produced for a particular type of
technology (e.g. wind energy, hydro, solar, etc). It is an economic
assessment of the cost of the energy-generating system including all the
costs over its lifetime: initial investment, operations and maintenance, cost of
fuel and cost of capital. The costs are adjusted to remove the impact of
inflation (i.e the present value) and are stated in terms of the cost of producing
a single unit of energy (i.e. levelised).

When comparing the levelised costs for different systems, it is very important
that the included costs are consistent. For example, in the case of wind farms
(or any power generation technology) the following costs may be considered,
depending on the particular study:

59

Cost
costs of the local, dedicated connection
to the grid
cost of any incremental reinforcements or
uprating of transmissions lines and
distribution systems driven by the
development of the wind farm(s)
R&D
Tax
environmental impact studies (EIS)
impacts on public health and
environmental damage
costs of government subsidies
costs of operating the grid securely (via
ancillary services and - to some extent -
capacity payments).
Table 6.2: Cost elements included in the levelised cost
(Generally) included in the
Levelised Costs of Wind Powered
Generation in Ireland
Yes
No. This cost is socialised. i.e. it is paid
for by the end customer. It is included in
the electricity tariffs and charged per unit
of electricity consumed.
No
No
Yes; for case-specific EIS
No
No; REFIT support payments are funded
by the end customer via the Public
Service Obligation levy on their bills.
No.

When comparing the levelised costs of different technologies it is important

that any assumptions with regard to the cost factors listed in Table 6.2 are
consistent for each of the technology types compared.

Another key issue in assessing the financial viability of wind powered

generation (or any energy source) are the various financial rates, including the
discount rate, the internal rate of return and the cost of capital. The cost of
capital includes a decision on the balance between debt-financing and equity-
financing and an assessment of the financial risk. This is a very important
consideration for wind farm development as there is a large per MW up-front
capital outlay. Figure 6.6 below compares the share of capital costs for
various types of generation technology. As can be seen the projected capital
costs share of the levelised cost for new wind power (circa €36/MWh) are far
greater than for conventional plants such as new CCGT (circa €5/MWh). This
is especially important in the current economic climate as the investment
institutions are very risk averse which tends to drive up the cost of capital and
therefore the levelised cost.

According to Lyons [Lyons 2007]. regulatory certainty is vital in a system

where entry involves significant fixed costs and uncertainty has a direct effect
on the cost of capital. This is a factor which impacts on the bankability of wind
farms which are capital intensive.

60
Source:[Poyry 2010]
Figure 6.5: Lifetime generation costs by technology (€/MWh)

Interestingly, Poyry‟s 2020 report to EirGrid entitled “Low Carbon Generatoion

options for the All-Island Market” [Poyry 2010] attributes a levelised cost
(lifetime generation costs) of about €70/MWh to onshore and about
€130/MWh to offshore. i.e. Over the lifetime of the project the cost of each unit
of electricity generated from an offshore wind farm will be approximately twice
that from an onshore wind farm. (discussed in Chapter 11).

Source: [ Awerbuch 2007]

Figure 6.6 Projected 2020 generating costs (€/MWh) for various
technologies.

61
This contrasts sharply with the levelised cost of offshore wind in 2020 as
projected by Awerbuch [Awerbuch 2007].. As shown in Figure 6.6 above
Awerbuch indicates that offshore will be approximately 20% more expensive
than onshore.

6.2 The price of w ind energy

The wholesale price of electricity is determined by the electricity market. This
is discussed in Section 9,2.

6.3 The current economic environment; contraction in energy

demand
According to the Global Wind Energy Council [GWEC 2009] the financial
situation for renewables seems to be easing. Liquidity in debt markets is
beginning to improve and commercial banks, under the influence of new
public ownership, that had previously abandoned the wind-energy sector are
now starting to return. Investors are now being very selective and are looking
for quality and track record, a trend that was also observed after the collapse
of the IT bubble in the late 90s. That means small companies have a hard
time securing finance, and consolidation will continue. Small projects, on the
other hand, may find it easier to raise funds than large ones, because of the
lack of capital currently available. Small, distributed wind projects also look
more attractive to developers having to cope with siting, permitting and
transmission access challenges. As long as developers can provide the
increased amounts of equity required, they will be able to secure loans from
local banks.

It suggests that investing agencies and institutions will, for some time, be
more risk averse and will therefore seek to maintain a lower debt equity ratio
for wind generation projects. “Small” in the context of this analysis from the
global GWEC organisation may need to be reinterpreted in the context of
Ireland‟s size and contribution on a global scale.

State sponsored enterprises, on account of their state backing and capital

asset ownership, enjoy favourable credit ratings, easier access to finance and
lower interest rates for borrowing compared to public companies. State
sponsored enterprises may be largely immune to the restrictions outlined by
GWEC above. It is interesting to note that a very significant share of Ireland‟s
wind powered generation is already in the hands of state sponsored
enterprises such as ESB, Bord Gais Eireann, Bord na Mona and Coillte
Teoranta.

6.4 Production Cost Trends

Figure 6.7 below illustrates the trend31 towards larger turbines and improved
cost-effectiveness. For a coastal site, the average cost decreased from
around 9.2 c€ /kWh for the 95 kW turbine (mainly installed in the mid 1980s),

31 The trend curve applies to Denmark only although a similar trend has been
observed for other countries..

62
to around 5.3 c€ /kWh for a 2,000 kW machine by 2005, an improvement of
more than 40% (constant €2006 prices).

Figure 6.7: Trend in turbine production cost.

Using the specific costs of energy as a basis (costs per kWh produced), the
estimated progress ratios range from 0.83 to 0.91, corresponding to learning
rates of 0.17 to 0.09. That means that when the total installed capacity of wind
power doubles, the costs per kWh produced for new turbines goes down by
between 9 and 17%.

Figure 6.8 below shows the expected annual wind power investments from
2000 to 2030, based on the European Wind Energy Association‟s scenarios
up to 2030(1). The market is expected to be stable at around €10 billion/year
up to 2015, with a gradually increasing share of investments going to offshore.
By 2020, the annual market for wind power capacity will have grown to €17
billion annually with approximately half of investments going to offshore. By
2030, annual wind energy investments in EU-27 will reach almost €20 billion
with 60% of investments offshore. It should be noted that the European Wind
Energy Association will adjust its scenarios during 2009, to reflect the
December 2008 Directive on Renewable Energy, which sets mandatory
targets for the share of renewable energy in the 27 EU Member States.

63
Figure 6.8: Expected annual wind power investments from 2000 to 2030

Figure 6.9 below shows the total CO2 costs and fuel costs avoided during the
lifetime of the wind energy capacity installed for each of the years 2008-2030,
assuming a technical lifetime for onshore wind turbines of 20 years and for
offshore wind turbines of 25 years. Furthermore, it is assumed that wind
energy avoids an average of 690g CO2/kWh produced; that the average price
of a CO2 allowance is €25/t CO2 and that €42 million worth of fuel is avoided
for each TWh of wind power produced, equivalent to an oil price throughout
the period of $90 per barrel.

Figure 6.9: CO2 costs and fuel costs avoided by installing wind energy
Source: [EWEA 2008].

6.5 Discussion and Conclusions

According to Awerbuch and Yang [Awerbuch 2007] mature technologies with

increasing penetration levels, such as onshore wind powered generation,
might become more expensive in the future because, as favourable locations
for onshore wind farms become scarce, additional wind farms are forced to

64
locate in sub-optimal marginal sites with higher if not prohibitive production
cost.

As onshore wind energy penetration increases the production or levelised

costs will increase due to lower energy yields and/or higher installation costs
from sub optimal locations and the increasing cost of winning over public
sentiment and the increases in constraints and curtailment at high penetration
levels. In this environment offshore wind will become more economically
attractive as there are also additional benefits.

Awerbuch contends [Awerbuch 2007].that an optimal generation portfolio mix

will provide sizeable cost and risk reductions.

Regulatory certainty [ESRI 2007] is vital in a system where entry involves

significant fixed costs. Uncertainty has a direct effect on the cost of capital
available to project developers. This is a factor which impacts on the
bankability of wind farms, which are, by their nature, capital intensive.

65
7. THE ELECTRICITY NETWORK AND
INTERCONNECTION
7.1 Scope
It is not intended in this section to explain the process32 involved in obtaining a
grid connection for a generator installation. Rather, it is intended to outline
some of the specific issues and challenges that relate to grid-development
and grid-access as a consequence of the transition from a paradigm of a
generation portfolio traditionally dominated by fossil-fuelled conventional
generators to a new power system dynamic featuring a delicate balance of
renewable and conventional generators. Although somewhat intuitive, the
need to develop the grid and to provide for access to the grid in order to
achieve the 40% target has been identified by energy sector experts and
academics and by reputable international energy organizations:

 According to the All Island Grid Study [AIGS 2008] the timely development
of the transmission networks is important;
 According to Diffney et al [ESRI 2009] the likely deployment of wind
generation in the future will require continued investment in the electricity
transmission system and parallel investment in interconnection;
 According to the IEA [IEA 2007] one of the six main areas of structural
change which directly benefit renewable is increased grid capacity and
cross-border connections;
 One of the key actions, identified in the International Energy Agency‟s
Wind Energy Technology Roadmap [IEA 2009], is to “Appoint lead
agencies to coordinate advance planning of transmission infrastructure to
harvest resource-rich areas and interconnect power systems and to set
incentives to build transmission.”;
 The European Commission stresses the necessity of developing grid
infrastructure so as to be able to absorb the future increase in RES-E
generation. Transparent and non-discriminatory rules are required in order
to meet and share out the necessary cost of investment in the grid;
 According to the CEER [CEER 2009] additional grid infrastructure
reinforcement and uprating will be required to transport the bulk of wind
energy from where it is generated to where it is consumed.

The challenges of appropriate grid-development and grid-access for wind-

powered generation are discussed in this section.

7.2 Actions from the All-Island Grid Study

The actions which are required in order to achieve high levels of wind power
generation in Ireland has been studied in depth and published [AIRGS 2006]
in a comprehensive assessment entitled the All-Island Renewable Grid Study.

32The process involved in obtaining a grid connection for a generator installation is

detailed in SEAI’s guide [SEAI 2009] entitled “Connecting Renewable and CHP
Electricity Generators to the Electricity Network”

66
The study identified the following “complementary actions” as being essential
in order to reach the very high level of renewable energy penetration in the
range from about 30% to more than 40% of total demand:
 extensive transmission network development costing in the ranges
0.8-1.2 €/MWh. The developments will require considerable resources
to be deployed by the transmission owners and operators, in addition
to the work necessary to implement the East-West and North-South
interconnectors, and other extensive transmission infrastructure
development required to accommodate non-renewable generation.

 successful and timely development of the infrastructure is essential.

The lead times for the individual transmission reinforcements
envisaged will be considerable – in many cases 7-10 years. The work
on identifying the detailed scope and timing of the transmission
reinforcements and their subsequent implementation must proceed and
continue without delay.

 in order to connect renewable generation to the distribution networks,

4,000 – 5,500 km of new lines need to be built.

 1000MW of interconnector capacity must be available to be used. This

usage includes the availability of the interconnector to provide flexible
dispatch (refer to section 10.9) such that it can be dispatched up/down
as required by the TSO and to participate in reserve markets33.

 The installation of complementary plant (i.e. flexibly dispatchable plant)

must be effectively incentivised so as to maintain adequate levels of
system security. Such plant will be dominated by non-renewable
options for technical and economical reasons.

 With increasing electricity supply from renewable plant, revenues from

electricity markets for certain conventional generation technologies and
capacity factors of respective units tend to decrease. Nevertheless,
availability of these generation capacities is essential for maintaining
generation adequacy and for “keeping the lights on”. Mechanisms such
as capacity payments and/or ancillary service payments will be
required to supplement the energy market income of all generators and
ensure that they can earn sufficient revenue to remain in business.
Analysis of any support mechanisms for renewable generators is
needed.

7.3 From sequential to group processing

The transportation of electricity from the multitude of sources of generation
across the meshed transmission grid and the distribution of that electricity to

33 The reference to “reserve markets” in the study would seem to indicate that
“reserve” is procured through a market mechanism. Currently, operating reserve is
procured on an all-island basis by means of bilateral contracts between the
generator and the Transmission System Operator as part of Ancillary Services.

67
every point of demand is a challenge which has for decades been met by
system operators across the globe by means of well proven connection
policies, grid access rules, grid design and planning methodologies, grid
codes and operational policies.

High levels of wind penetration pose new challenges for all of these
interrelated areas which all have to be incrementally modified and developed
in unison to facilitate high wind penetration in the most efficient, secure,
sustainable and economical manner.

At any given time the grid has a finite capacity at each and every entry or exit
point. Therefore the capability of the grid to accommodate increased
generation (or demand) at any entry/exit point must be carefully assessed.
Most transmission system operators, including EirGrid produce an annual
transmission system forecast statement [EirGrid TFS] which forecasts the
expected capability of the grid to accommodate additional capacity on a
regional and nodal basis.

Most system operators have in the past predominantly dealt with the
connection of large conventional power plants and have allocated grid
capacity on a sequential, case-by-case basis. However, with the progressive
growth of the number of interacting smaller generators (mainly wind powered)
seeking to connect to the grid, the system operators have had to change their
approach.

7.4 The group processing approach (“G ates”)

Traditionally a handful of connection applications were received by the system
operators on an annual basis and these were almost exclusively for the
connection of conventional thermal plants. These were processed
sequentially on a case-by-case basis and independently of all other
applications in the application queue.

However, coincident with the move towards a greater penetration of

renewable generators the system operators started to receive, from about
2003 onwards, increasing numbers of applications from renewable and
conventional developers.

The renewable applications were predominantly for wind powered generation.

This posed problems for the system planners as each connection offer
necessitates the prior study of load flows, short circuit levels and the
modelling of the impact on the dynamic performance of the system. In
addition, every new connection has the potential to interact with any existing
or future connection. Therefore, in 2004 the CER allowed the system
operators to put in place a moratorium on connection offers until the system
operators had studied the impact of connecting a multitude of projects and
devised a system to address this issue. This moratorium ended with the
introduction of the Group Processing Approach (GPA) for connecting clusters
of generation.

68
The GPA allows for certain generator applicants to be processed for
connection by EirGrid and ESB Networks together in geographic groups or
clusters, instead of the sequential, case-by-case process for generators
applied previously. Applications in a Gate are segregated into groups
depending on their geographical location and level of interaction with other
potential developments that have an application in the same Gate. The
generation projects in each group are then processed by the system
operators and the resulting connection methods are designed by the system
operators to efficiently connect all the generators in each group in accordance
with the system planning criteria. The rules for inclusion and processing
methodology are unique to each gate. These rules are defined by CER as
referenced in Table 7.1 below. The group processing approach is especially
relevant to wind farms, which are typically scattered around the country. This
results in fewer power lines than would otherwise be the case and means that
the networks are developed more efficiently, economically, strategically and
systematically to the benefit of the generators, the system operators, the
consumers and the environment.

7.5 Gate Process

Since 2004, the CER has developed policies for three tranches - or “Gates” -
of connection applications to be processed for connection in the Republic
through the GPA. These Gates involve a certain numbers (refer to Table 7.1
below) of specified renewable generator applicants being offered contracts to
connect to the networks by the system operators EirGrid and ESB Networks
according to criteria determined by the CER.

Gate Year Number of Renewable Onshore CER Policy

projects Capacity to be Paper
offered connection
contracts

1 2004 30 365 100% CER/04/381

2 2006 120 1300 100% CER/07/028
3 2008 168 3900 80% CER/08/260
Table 7.1: Gates 1,2 and 3 in Ireland

7.6 Gates 1 , 2 and 3 - “Wind Generation Expansion”

The first Gate was launched by the CER at the end of 2004 and provided for
network connection offers issuing to over 30 wind farms, with a combined
capacity of 365 MW. Gate 2, launched by the CER in 2006, was more
ambitious and provided for connection offers to issue to about 120 wind farms
across the country, equivalent to 1,300 MW in capacity. Almost all of the
Gate 1 and 2 wind farm projects have accepted their connection offers. They
have either already connected to the networks or are still in the process of
being connected as the connection wires are being built. As a result of Gates

69
1 and 2, Ireland has seen a dramatic rise in the amount of renewable
generation connected to the network over the last few years, rising from about
500 MW in 2004 to almost 1,500 MW at present. This increase is illustrated in
Figure 7.1below.

Figure 7.1: Renewable Generator Capacity in Ireland

As a result of this increased connection of wind farms, about 15% of Ireland‟s

electricity consumption now comes from renewable sources. 10.4% is from
wind power. This is ahead of EU targets for Ireland and means that Ireland is
now becoming a world leader in facilitating wind in what is a relatively small
and isolated network. With more Gate 2 wind farms continuing to connect it is
expected that the amount of renewable generation connected in Ireland will
increase to about 2,900 MW over the next couple of years.

The CER published [CER08260] in December 2008 the “Gate 3” policy

decision for the connection of 3,900 MW of additional renewable generation.
This was followed by a decision [CER/09/199] in December 2009 on the
treatment of non-renewable - known as “conventional” - generator
applications. Both of these CER policy decisions are designed to ensure that
a very large capacity of renewable and conventional generators connect to
the Irish networks over the next decade, in a way that is efficient, maintains
Ireland‟s security of supply and provides for the achievement of Ireland‟s 40%
renewables target by 2020.

The CER‟s Gate 3 policy allows for an extra circa 3,900 MW of new wind
farms to connect the networks across Ireland. These new wind farm projects
are selected for a connection offer by order of those which applied earliest for
connection to the network. About 80% of the 3,900 MW are on-shore wind
farms. The remaining 20% are off-shore wind farms off the east-coast. If all of
these new wind farm projects get built, Ireland will have more than 6,000 MW
of wind farms connected over the next decade or so. The geographical
distribution of the existing and planned wind farms is depicted in Figure 7.2

70
below. Gate 3 therefore provides the policy framework for the network
connection of the 40% renewable target.

Figure 7.2: Geographical distribution of Gate 2 and Gate 3 Wind farms

To allow for the connection of these new wind farms, new grid lines are
needed to transport the wind, primarily from the western half of the country,
where most of the wind farms will be located, to the eastern half which has
most of the demand for electricity. The strategy [Grid25 2009] for identifying
and delivering these and other big upgrades to the grid up to the year 2025
are contained in EirGrid‟s “Grid25” strategy. This strategy was announced in
October 2008 and includes a €4 billion program to double the capacity of the
country‟s grid to 15 GW by 2025. The capital expenditure necessary to
accomplish this ambitious build-out of strategic infrastructure is approved at
various stages by the CER and will be reflected in the tariffs for the use of the
transmission and distribution systems. Ultimately the grid developments will
be paid for by the electricity customer through electricity charges.

The Gate 3 wind farms will be granted full access to the grid for their output
over the coming years, in line with the capacity already on the grid and the
Grid 25 grid upgrades planned for the areas in which they are connecting.

Delivery of new grid lines over the next few years is vital for the connection of
the new Gate 3 wind farms and for achievement of Ireland‟s 40% renewable
target.

71
7.7 Gate 3 & Conventional Plants
To complement the very large rise in new wind farms, CER also provided in
the 2009 policy paper [CER/09/199] for network connection offers to be
issued to about 1,350 MW of conventional projects, including a 350 MW
interconnector project from Ireland to the UK (in addition to the 500 MW East-
West interconnector already under construction to the UK). This will
complement the wind powered generation by providing for security of supply
and competition, while it also retains flexibility for other new generators to
connect in the future. These conventional generators will also be connected
over the years in line with the Grid 25 upgrades as described for wind farms
above.

The combined additional capacity of Gate 3 renewables, conventional

generators and a new interconnector project amounts to about 5,400 MW.
This compares with the current total generation capacity on the Irish system of
about 8,500 MW

7.8 Acceptance of Connection Offers

These circa 5,400 MW of connection offers are being issued from EirGrid and
ESB Networks over an 18 month period, from December 2009 through to mid
2011. However, the acceptance of these offers depends on a number of
factors as follows:

 the bankability of the individual projects

 the general availability of finance in a risk averse economic climate
 the ability of developers to secure and retain planning permission
 the capability of the system operators to deliver massive increases in
network build-out
 the availability of sufficient qualified personnel to design, install, test
and commission the grid developments and separately, the developers‟
bespoke internal wind farm works and “shallow” connections to the
network
 the acceptance, by the public, of a significant impact on the
environment resulting from a possible quadrupling of the number of
wind turbines and associated network connections

The income stream in aggregate from a wind farm project, although variable
from day-to-day, can be forecast with reasonable accuracy based on the
precise location, wind maps and historical wind-data. However, there is some
uncertainty as to the level of curtailment which may need to be imposed on all
wind farms as penetration levels increase and whether any compensation will
be paid. There is also uncertainty as to the level of uncompensated
constraints which will be experienced by those non-firm wind farms which are
connected in advance of all of the necessary transmission system
reinforcements being in place. This uncertainty increases the risk for investors
and is detrimental to the bankability of projects and hence poses a risk to
project developers. This risk, in turn, leads to a reluctance to accept

72
connection offers. A low take-up of Gate 3 offers could jeopardise plans for
the attainment of the 40% RES-E target.

It is envisaged that these “regulatory uncertainty” issues will be addressed by

the all-island SEM scheduling and dispatch project which is being progressed
jointly by CER and NIAUR and for which a policy decision is scheduled to be
made late in 2010.

The following table presents a listing of some of the connection policy issues
which either have been tackled or are being tackled by the system operators
and by the CER to facilitate the transition to the 40% renewable target.

Issue Solution Reference

Group processing approach: Gates CER/04/381

Interacting offers CER/07/028
1,2,& 3
CER/08/260
Charging
Standard charges and timelines put CER/09/077
uncertainty and lack
in place CER/08/154
of transparency

 Contestability introduced for

Lack of control over
transmission connections in 2007 EirGrid 2007
construction costs
and for distribution in 2010 CER/10/056
or timelines
 Standard charging introduced.

Grid code was

Wind section added to grid code in
designed for EirGrid 2004
2004
conventional plant

Conventional plants
Policy introduced in 2009 for
to complement CER/09/191
connection of conventional
renewables

Plans to reinforce  EirGrid‟s Grid25 strategy in place.

the network to  ITC identifies when grid can [Grid25 2009]
accommodate 40% accommodate projects‟ CER/10/017
renewables capacities.

Cumbersome New Application Procedures for

licensing and Authorisations and Licences for CER/10/098
authorisations Generators up to 40MW

Committment to
EirGrid‟s capital expenditure
fund the planned CER/10/102
programme for 2010 – 2015.
grid development
Table 7.2:Operating connection related policies and measures to
facilitate RES-E penetration

73
In tandem with the above connection measures the system operators and the
CER are continuously examining and developing and refining the connection,
operating and planning policies and rules so as to ensure that the
unprecedented growth in renewable does not compromise the safety, security,
reliability or performance of the power system and does not impose a financial
burden on the general public.

These connection measures must also align with new enabling measures on
the electricity market front and especially the impact on the rules for the
scheduling and dispatch of generation.

7.9 Permits and Licences for Generation

Generation projects also need other permits and consents in order to proceed
to construct and operate the plant, including planning permission from the
planning authority. In addition the “Authorisation to Construct” and “Licence to
Generate Electricity” are needed by the developers of the projects. These are
granted by CER if the necessary conditions are met.

CER has introduced [CER/10/098] a revised and streamlined application

procedure for authorisations and licences for generating stations with an
installed capacity of 40MW or less. This new higher threshold will help to
reduce the administrative burden on applicants.

Generating stations above 40MW will continue to be licensed and authorised

individually.

7.10 Plans to develop the netw ork

In 2008 the CER, published in December its Gate 3 decision paper
[CER/08/260] which directed the system operators to issue by mid-2011
connection offers to 3,900 MW of renewable generation in order to meet the
revised national target of 40%. In the same context, EirGrid published [Grid25
2009] their long-term development strategy for the grid up to 2025. It is
designed to address the challenges posed for the transmission of electricity in
Ireland in order to meet the renewables targets.

To allow for the connection of these new wind farms, new grid lines are
needed to transport the wind, primarily from the western half of the country,
where most of the wind farms will be located, to the eastern half which has
most of the demand for electricity. The strategy [Grid25 2009] for identifying
and delivering these and other big upgrades to the grid up to the year 2025
are contained in EirGrid‟s “Grid25” strategy.

7.11 Dynamic ratings of transmission lines

Transmission lines are currently accorded a fixed current carrying rating. In
practice a transmission line has a greater capacity in cold or windy weather as
the conductor has more capacity to dissipate the build up of heat to the
ambient air.

74
A project jointly funded by NIE and wind developers is currently studying the
possibility of a correlation between high wind speeds and wind cooling on
overhead distribution power lines to explore dynamic rating for power-lines to
allow more power to be transported.

According to the California Energy Commission [CEC 1999] the real-time

transmission line rating system has many benefits including:

 indicates the actual rating when line ratings are reduced;

 eliminates the possibility of overheated transmission lines and sagging
conductors coming in contact with trees or vehicles or creating a
danger to the public;
 provides advanced warning to the system operator of potential sag
limitations;
 can increase usage of existing transmission lines and reduce the need
for new transmission line facilities;
 real-time line ratings have 40 to 80 percent more power transfer
capacity than the static transmission line ratings presently applied.

According to Seppa [Seppa 2007] systems which are highly loaded,

characterised by a transmission network with little capacity headroom, will
result in more frequent dispatch of out-of-merit generators. This, in turn, will
increase congestion costs. Seppa [Seppa 2007] also found that real time
ratings exceed static ratings by at least 10-15% for 95% of time and by 20-
25% for 85% of time.

According to the California Energy Commission‟s research [CEC 1999] real-

time monitoring systems offer several benefits, including:

 Because real-time line rating systems potentially allow use of existing

transmission lines to their full capability, the need for new transmission
lines would be reduced. Fewer new lines mean less land use34 and
decreased environmental impacts.
 Real-time transmission line ratings could reduce capital expenditures for
new transmission facilities and generating resources, while at the same
time allowing more efficient operation of the power grid. This could result
in lower utility/tariff rates.
 Real-time transmission line ratings provide more information to the system
operators on the amount of transmission capacity available. This would
allow not only more efficient use of transmission facilities but would help
prevent system-wide outages, improving system reliability and safety.

EirGrid is currently developing the use of real time dynamic line ratings which
make allowance for the actual weather conditions in assessing the thermal
capacity of lines. This capability will in most cases allow for an increased use
of certain transmission lines which will reduce the curtailment of generation for
security reasons

34In California a typical 500 kV transmission line uses a 200-ft. wide right of way which
correlates to 24 acres per mile of line.

75
7.12 Interconnection – benefits, polic y and outlook
It is widely held that investing in a lot of wind generation is economic only if
there is also parallel investment in interconnection. This allows wind to
generate when it is available instead of being curtailed at times of low
demand. Interconnection also helps to maintain the supply-demand balance
of the power system. The current levels of interconnection and the plans for
further interconnection are described together with some details of the
benefits of interconnection in the context of high wind penetration.

7.12.1 Current interconnection

Currently, the only point of interconnection between the all-island SEM

electricity market and the electricity market in Great Britain is the Moyle
interconnector. This interconnector, which interconnects the grid in Northern
Ireland with the grid in South West Scotland, has been in place since 2001.
The capacity is limited to 400MW in summer and 450 MW in winter. The
export from Ireland to Great Britain is contractually limited to 80MW. The
possibility of extending this export capacity is being considered at the
moment.

Although the two jurisdictions fundamentally operate as a single market there

remains significant constraints in respect of existing transmission
infrastructure. In particular, the existence of a single electricity connection
between the two jurisdictions means that electricity cannot be traded in the
most cost-effective and competitive way to facilitate all the benefits that the
SEM could bring to customers.

7.12.2 Interconnection under Development

The planned North-South, Meath-Tyrone, Interconnection Development is a

strategic infrastructure project, which will involve the construction of some 140
km of 400 kV High Voltage Alternating Current (HVAC) single-circuit overhead
transmission line (OHL) between the Republic and Northern Ireland, providing
a very significant addition to the linkage of the electricity supply systems of the
two jurisdictions. In addition, it will complement the operation of the existing
Moyle Interconnector between Northern Ireland and Scotland, as well as the
planned EirGrid East-West Interconnector between the Republic of Ireland
and Wales. Construction work on the Meath-Tyrone line is planned to
commence in 2011 subject to planning approval. The development is needed
to improve electricity competition and to reduce the level of constraints to the
all island electricity market, to support renewable power generation, to
improve the security of supply and to maintain the reliability of the network in
the north east. This second interconnector is also needed in case of an
unplanned outage at the existing interconnector from Louth to Armagh. This
outage would be the cause of widespread disconnection of customers in one
part of the system and system instability or even collapse in the other.

76
An oral hearing, lasting six weeks, into the planning application for the project
was initiated by An Bord Pleanála in May 2010 and was scheduled to
complete by the end of June. Over 900 submissions were made to An Bord
Pleanála. EirGrid submitted an Environmental Impact Statement (EIS) as part
of the application, as is required. The EIS addresses the overall nature and
extent, and the direct, indirect, secondary and cumulative impacts of the
proposed development. The purpose of the EIS is to provide a comprehensive
examination of the proposed development and to identify any likely significant
and adverse effects on the existing environment.
The oral hearing was halted in June due to incorrect planning application
details. It is uncertain as to when the hearing will recommence. Following the
resumption and completion of the oral hearing it will be several additional
months before the inspector's report and recommendations are finalised..The
decision on whether to grant the project planning permission or not will then
rest with An Bord Pleanála. The outcome of this oral hearing is of crucial
importance to the future of grid development on the island of Ireland.

7.12.3 Benefits of Interconnection

Studies from the ESRI [ESRI 2008] and EirGrid [EirGrid 2009b] have
referenced the strategic and welfare benefits of interconnection in Ireland
where there is high wind penetration. According to Diffney at al. [ESRI 2009]
investing in a lot of wind generation is economic only if there is also parallel
investment in interconnection thereby allowing wind to generate whenever it is
available instead of being curtailed at times of low demand.

A study by Pöyry [Pöyry 2009] concluded that interconnection between Britain

and the SEM becomes of critical importance as the volume of installed wind
generation increases. The study also suggests that interconnectors cannot be
the “golden bullet” to solve the challenges of intermittency, although are
extremely important in helping it work.

In the context of facilitating the penetration of wind powered generation some

key advantages of interconnection are:

 Larger Market: Interconnection increases the size of the electricity market.

Larger markets enhance security of supply and reduce the operating
reserves needed to maintain an acceptable level of system performance.
Interconnectors can act as a source (generator) or sink (load) for
electricity. Security of supply improves since energy shortfalls on one grid
may be alleviated by importing energy from the other. Additional
interconnector capacity tends to reduce the level of reserves needed as
the outage of one plant will have a relatively smaller impact on a larger
system. These beneficial factors are important in a high wind penetration
context where, in the absence of other measures, security of supply may
be impaired;
 Curtailment reduction: Additional interconnector capacity reduces the level
of curtailment of wind powered generation and therefore increases the
system-wide yield of wind farms;

77
 Flexibility: Interconnectors have the potential to provide flexibility because
(potentially) it can react quickly to load balancing shortfalls. (Refer to
Section 8.2). This assumes that the TSOs have intra-day use of capacity
on the interconnector;
 Production Costs: The least cost generation in both systems can be used
up to the capacity of the interconnectors, thus reducing energy costs;
 Generation Capacity: An interconnected power system needs less
capacity than the sum of two separate systems. This is particularly
favourable to Ireland, because it is a small system connecting to a large
system.
 Provides black start capability.

Other benefits of efficient use of interconnection which do not directly facilitate

the penetration of wind powered electricity generation are:

 Arbitrage: trade in electricity across borders is driven by price differentials

between countries (or TSO control areas). Interconnection allows the
TSOs to cover imbalances at a less volatile cost. This will tend to exert
downward pressure on the system marginal price to the benefit of
consumers.
 Promotes competition: increased interconnection will create a more
competitive market and help reduce the price of electricity for consumers;
 Market power reduction: integration of markets reduces market power of
dominant players.

The most recent White Paper on energy [DCENR 2007] declared that an
additional interconnector with Great Britain will be implemented. This is in line
with European Union recommendations. The new 500 MW DC interconnector
project will connect the power system in Wales with the power system in
Ireland. It is at an advanced stage and is on target for delivery in the latter half
of 2012.

The question arises as to who should pay for additional interconnection.

Valeri [ESRI 2008] put forward the proposition that, as Ireland has been
identified as a exporter of green power and if this benefits the wind farm
owners, then it is reasonable that they should pay for a proportionate share of
the cost of the interconnection. This could be realised by auctioning the
capacity on the interconnector and users will bid in the price at which they
value the use of the interconnector. However, Valeri also acknowledges that
the consumer might benefit.

During low wind, on the basis of arbitrage, and assuming efficient electricity
market and efficient allocation of interconnector capacity, it seems likely that
Ireland will be substantially a net importer of cheaper wholesale electricity
from the UK market for the foreseeable future until the price differential is
eroded by carbon costs. This may be of substantial benefit to the consumers
on the island of Ireland. Assuming high wind energy penetration in Ireland and
UK by 2020 and assuming that the UK‟s Irish Sea offshore wind powered
generation materialises, the interconnector flows are less certain.

78
From EirGrid‟s Interconnection Economic Feasability Report [EirGrid 2009b] it
can be observed35 in Figure 7.3 below that doubling the interconnector
capacity from 500 MW to 1000 MW results in a reduction in wind powered
generation curtailment from 6% to about 4.5%. However, 1.5% of 18 TWh
(refer to Section 5.3) is significant!

It is also notable that the level of curtailment more than doubles when
renewable penetration increases from 40% base case (green) to 53% “high
renewables” (blue).

(Source: EirGrid)
Figure 7.3: Wind curtailment with increasing interconnection

8. STABILITY AND FLEXIBILITY OF THE POWER

SYSTEM

8.1 Operating Reserve and S ystem Flexibility Options for

Increasing Wind Power
Operating reserve is the additional generating capacity carried on the
electricity system over short periods of time to ensure that differences
between forecast and actual volumes of generation and demand can be met.
Differences between forecast and actual volumes can arise for a number of
reasons. These include:

35 This observation applies to the “Base Case” scenario which assumes 40% RoI renewables penetration and that
all new conventional generator additions post-2015 are a mix of Gas CCGTs and Gas OCGTs.

79
 unplanned outages on the transmission or distribution networks
 unplanned outages of generating plant
 unpredicted changes in wind speeds
 unpredicted surges in consumer demand levels due to unexpected severe
weather events or national television broadcast events

Operating reserve requirements range from small short-term frequency

variations to load-following over longer time frames, and further include the
need to respond to sudden large imbalances following the loss of a major
generating unit. Operating reserve is activated automatically or is called-on by
the System Operator to activate quickly during the short interval before an
unscheduled generating station can be brought onto the system to meet any
unexpected shortfall in generation. It occurs for short intervals; from seconds
through to a few hours.

Dynamic reserve (also called regulation) is characterised by a continuous

response to frequency deviations. Units that are synchronised and on-line
typically provide this type of operating reserve. Primary reserve is the most
critical form of reserve for system security, as this acts in the very short
timescales of a few seconds to stop the fall in frequency following an incident.
There are two forms of primary response:

 Inertial response – the inherent response of synchronised generators to

changes in the system frequency; and
 Fast response – the automated action to increase generation from
scheduled plant – for example, in the case of steam cycle plant, by
releasing the potential energy stored as steam pressure within the boilers.

Static reserves are called on at different frequency levels during a

contingency. Therefore this type of reserve is not contributing towards
regulation/load following. Static reserve has temporal characteristics, as its
sources are not always available.

A rapid growth in wind generation is planned in Ireland over the period to

2020. This growth in wind generation will increase the requirement for
operating reserve – due to uncertainty as to the level of wind output in any
period – and reduce the number of available providers of operating reserve as
wind generation displaces some conventional generation capacity on the
system.

Unlike an equivalent thermal generator, the inertia of a wind generator may, or

may not, contribute to the system inertia, depending on the particular
technology involved A reduction in system inertia in periods of high wind
generation may require more fast acting reserve to be deployed to maintain
reliability standards.

As wind power, and hence the power output from wind generators, may be
difficult to predict, system operators need to maintain additional operating
reserves in the event that generation levels are lower than anticipated. In the
opposite scenario where more wind generation is available than expected,

80
and under the assumption that wind power should always be used if possible,
then the ability to reduce generation is required. This raises the possibility of
wind being “turned down” or prevented from generating as thermal power
plant can only reduce their output to a minimum level, assuming that for
system security reasons it is desirable to maintain a certain level of
conventional plant on the system.

Traditionally, conventional generating plant is used for providing operating

reserve. In order for synchronised plant to provide operating reserve (and
response), it must run part-loaded. Thermal units operate less efficiently when
part-loaded, with an efficiency loss of between 10% and 20%, although losses
in efficiency could be even higher, particularly for new gas plant. Since the
flexible generating units will be part-loaded to provide the operating reserve,
other units will need to be brought on the system to supply energy that was
originally allocated to these flexible plant. This usually means that plant with
higher marginal cost will need to run, and this is another source of cost
associated with the provision of operating reserve.

8.2 The need for flexibility

Most renewable energy technologies such as hydro, wind, solar, tidal and
wave depend on different natural cycles and therefore vary on different time
scales. At high levels of grid penetration by Renewable Energy Technologies
the consequences of unmatched demand and supply can pose challenges for
grid management. This characteristic may affect how, and the degree to
which Renewable Energy Technologies can displace fossil fuels and nuclear
capacities in power generation. The additional needs and costs for grid back-
up and/or electricity storage and spinning reserve have to be taken into
account. Flexible measures to absorb the fluctuations in wind power
production are required as the grid penetration of wind power increases.
Large penetration of a single variable resource, such as wind energy,
introduces new or more stringent requirements on the mechanisms which
must be put in place to balance electricity supply with the load. According to
GWEC [GWEC 2006] existing control methods together with back-up capacity
available can deal with the ever-changing power demand at penetration levels
up to around 20%. Western Denmark already successfully integrates a 20%
share of wind energy into the electricity system, but this ability relies on good
inter-connection to the German and Nordic grids for back-up, power system
control and export of excess generation. Above this level, some changes may
be needed in power systems and their method of operation to ensure system
reliability. In Ireland‟s case, considering the plans for high penetration levels of
wind power but few “flexible” power stations, limited interconnection capacity
and little hydropower storage for back-up, the question of sufficient
operational reserve is critical.

The availability of flexible balancing solutions (generation capabilities, load

management and energy storage) in power systems is an important
facilitating factor for the integration of wind power. Even though power system
balancing is well established and understood, wind power provides new
challenges at high penetration levels, since its variable nature requires

81
additional flexibility in the power system – the capability to adequately
respond to fast and significant net system load variations. By increasing the
flexibility of the power system, its ability to integrate variable output generation
can be enhanced. In a more flexible system (for example systems with large
amounts of hydro- or gas-powered peaking plants or interconnection), the
levels of difficulty and cost to reach a desired wind energy penetration level
can be lower than in a less flexible system (for example systems with a high
share of baseload generation plants). The differences in the size of power
systems, dispatching principles and system flexibility, including
interconnection explain the differences in integration costs in different
countries. For example, Denmark has a high level of flexibility as it is well
interconnected, thus enabling a high penetration level without significant
additional costs. Portugal is another example of a flexible power system
enabling easy and low cost wind power integration, due to the large amount of
fast responding, reversible hydropower plants in the system.

A serious consideration in the planning to integrate substantial amounts of

wind power is the provision for additional flexibility in balancing the system,
compared to a situation without wind power. In the assessment of the required
additional flexibility, a distinction has to be made in the different market
timescales (hour/day ahead). The main economically viable sources of flexible
balancing power to address the intermittent and variable nature of wind
powered generation and accommodate high penetration levels of wind are
listed in Table 8.1 below.

82
 Contributes Contributes
to Within- to Day
Source of Flexibility Hour Ahead Plans to address in Ireland
balancing forecasted
needs imbalances

markets with short

gate closure times
combined with Yes Yes No
improved wind
prediction
flexible conventional Yes, but not on the basis of
generation (e.g. gas Yes No identification of the evolving
fuelled peaking quantity, location and type of plant
plants) needed
Modern/Flexible Existing hydro is not continuously
Yes No
hydro stations variable

Existing hydro No No
stations
Yes, but possibly haphazard:
existing plans are not based on
mid-merit power No Yes identification and connection and
plants
consenting of the evolving quantity,
location and type of plant needed
No incentives, support
energy storage36 Yes No mechanisms or priority access in
place
Yes; Ireland committed to Smart
demand-side Yes No Metering and demand side
management (DSM) reduction on all-island basis is
being studied
Yes; 500 MW East-west
interconnector to UK is scheduled
to complete in the latter half of
2012. However interconnection is
Interconnection ? Yes regarded [SEI 2004] as static
reserve, as it is not guaranteed to
be available. Therefore, it may not
contribute significantly to the critical
flexibility requirements

Table 8.1: Sources and contribution of sources of flexibility in balancing

the power system in Ireland

36 Includes technologies such as pumped hydro, compressed air, flywheel, etc.

83
8.3 Storage Options for S ystem Flexibility
There is increasing interest in both large-scale storage implemented at
transmission level and smaller-scale dedicated storage embedded in
distribution networks. For “small-scale” embedded, decentralised storage the
options include:

 flywheels;
 batteries (lead-acid and advanced), possibly in combination with
electric vehicles;
 fuel cells (including regenerative fuel cells, „redox systems‟);
 electrolysis (for example hydrogen for powering engine-generators or
fuel cells); and,
 super-capacitors.

For large-scale storage, pumped hydro accumulation storage (PAC) is the

most common and best-known technology. Other large-scale technology
option is compressed air energy storage (CAES).

Energy storage makes it possible to buy cheap electricity during low-load

hours and to sell it when demand and prices are higher. It also helps to
mitigates the level of curtailment of wind powered generation in periods when
the level of wind power generated exceeds demand (e.g. when high wind
generation coincides with the summer night valley electricity demand
scenario).

If a country does not have favourable geographical conditions for hydro

reservoirs, storage is not the first solution to look at due to the poor
economics at moderate wind power penetration levels (up to 20 per cent
energy lost). In certain cases, it can even have an adverse effect on system
operation with respect to CO2 emissions (Ummels et al., 2008).

In Ireland there are some plans for storage systems; a connection agreement
has been signed for a 70 MW pumped hydro facility in Co. Cork and there is
another 70 MW of pumped hydro storage in the queue under the Gate 2 offer
process.

The ambitious Spirit of Ireland project, which is still at the concept stage of
development, envisages large scale pumped-hydro electric projects using the
ocean as the lower reservoir and pumping salt water to an elevated inland
man-made lake. The only existing plant of this type is a 30 MW plant in Japan
which is far smaller than the vast systems envisaged for Ireland.

CAES opportunities are also being explored in Ireland. In Larne, Co. Antrim
there is potential for a CAES plant as large salt deposits in the rock could be
leeched out to create caverns into which air could be pumped and released.
Gas fields, such as those at Kinsale, could also have potential as CAES sites
once their gas reserves have been fully exhausted.

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8.4 DSM as source of flexibili ty
With demand-side management (DSM), loads are controlled to respond to
power imbalances by reducing or increasing power demand. DSM combined
with smart metering will provide services such as load balancing, active load
management, implementation of “smart” homes and commercial premises,
provision of timely data on energy prices and usage. Part of the demand can
be time-shifted (for example heating or cooling) or simply switched off or on
according to price signals. Load management might involve, for instance,
turning off interruptible appliances such as refrigerators and space heaters for
limited periods at peak demand times. This could be done through local
switching units triggered by smart meters, or by using teleswitching from a
central control complex. Dynamic demand systems could automatically react
to falls in supply frequency caused by high demand. This enables a new
balance between generation and consumption, without the need to adjust
generation levels. Today, the adjustment of generation levels is more
common than DSM. The availability of this solution depends on load
management possibilities (for example in industrial processes such as steel
treatment) and the financial benefits offered by flexible load contracts (cost of
power cuts and power increases versus lower bills). Attractive demand-side
solutions in combination with decentralised storage are:

 heat pumps combined with heat boilers (at domestic or district level);
 cooling machines combined with cold storage; and
 plug-in electric vehicles.

Each of these solutions permits the separation of the time of consumption of

electricity from the use of the appliance, by means of storage and provides
additional capacity for wind powered electricity, especially when system-wide
generation exceeds demand and curtailment is being considered.

DSM can reduce both peak loads and reserve costs. According to UK‟s
National Grid DSM could be an effective tool, reducing extra costs in the UK
at the 20% wind penetration level by upwards of 10%.

EirGrid‟s Grid25 strategy foresees the use of new „Smart Grid‟ technology in
the form of smart metering, which will establish a two-way flow of information
between supplier and user and help end-users control their consumption
levels and overall energy efficiency. These measures may also help to
increase the provision of greater demand side flexibility.

8.5 Hydropow er
Hydropower is potentially a flexible technology from the perspective of power
grid operation as the fast response time of hydro reservoirs can help to meet
sudden fluctuations in electricity demand. However, most of Ireland‟s hydro
technology is old stock. One of the limitations of this old stock is that the
output level is not continuously variable. The generated output of most units
has quite a narrow band of operating range between minimum and maximum
output.

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Hydro powered generators provide the main source of black-start capability in
Ireland. They also provide a source of operating reserve by compensating for
sudden loss of power generation.

Hydro reservoirs provide built-in energy storage which assists in the stability
of electricity production across the entire power grid. In the case of run-of-river
systems with limited storage, hydropower may show strong seasonal
variability; prolonged periods of low rainfall in regions where insufficient
reservoir capacity exists can have significant effects on power supply
predictability.

8.6 Conventional Thermal Flexible Plants

The power system in Ireland is dominated by large combined cycle gas
turbines (CCGTs). Following a sudden outage of a unit on the system the
frequency falls. If a CCGT is operating at base load (i.e. at maximum rated
output) the unit is not capable of producing and maintaining any increase in
power output. In fact, if the frequency falls, the temperature controller will
actually reduce fuel demand and the power output of the gas turbine will drop.
Consequently, the output of the unit remains at a value less than its rated
output until the frequency of the system returns to normal.

Apart from contributing to the system inertia OCGTs do not respond

favourably to system disturbances. The response of OCGTs is negligible up to
20 seconds [SEI 2004] following a frequency event and hence do not have the
potential for providing primary reserve or flexibility which will become a critical
system requirement as wind penetration increases.

Open cycle gas turbines (OCGTs) tend to have a less adverse effect on the
system frequency following a disturbance. OCGTs generally operate as
peaking plant. Their design allows them to respond quite rapidly to frequency
deviations, and are therefore often used as a source of spinning reserve
rather than baseload. In this mode their energy output is minimal but they are
available to ramp up on demand.

The recent Facilitation of Renewables Study [Ecofys 2010] suggested a

power system operational constraint37 whereby a minimum number of
synchronous generators must be online at all times (“must run units”) to
provide inertia and voltage and transient stability. The study also stated that
these units should, ideally, be conventional units with a minimum active power
limit of close to zero. Optimal operation of the power system would exclude
the current portfolio of CCGTs

Conventional thermal generation plants currently provide some level of

flexibility which is commensurate with the current level of wind penetration.
With increasing levels of wind penetration, the running regime, and dispatch
pattern and increase in repetition and rate of on-off and ramp-up ramp-down
cycles will lead to higher stresses and fatigue and down-time of existing plants
which have not been designed for such operating conditions.

37 Referred to in the Ecofys study as the “minimum system inertial constraint”.

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Source: [Pöyry 2009]
Figure 8.1: Plant load factors in Ireland reduce as wind penetration
increases

Given that wind varies from year to year as well as hour to hour, there may be
some years when thermal plants record unusually low running times. Indeed,
Poyry‟s study [Pöyry 2009], based on 6GW of (all-island) wind in 2020 and
8GW in 2030, indicates (Figure 8.1 above) that the load factor of conventional
generators, especially coal-fired and CCGT plants, will reduce significantly as
wind penetration increases.

8.7 System Flexibility in Ireland - Discussion

Based on the material studied there may be a need to consider assessment of
and identification of the evolving quantity, location and type of plant (i.e. the
portfolio mix) needed to complement the progressively increasing penetration
of wind-powered generation. Considering that the lead-time for the
construction of high tension (220kV) power lines is seven years or more and
that the grid capacity to accommodate each and every power plant must be
systematically planned38 and the grid upgrades, reinforcements and upratings
need to be planned, financed, resourced, approved and built-out it may not be
possible to retrospectively put in place a quick fix for any oversights or
omissions in relation to the identification, quantification and location of
“flexible” generation such as storage (pumped, etc.), interconnection or fast-
response conventional thermal plant. The current policy and
operational/market arrangements do not specifically or proactively provide for
the incentivisation of flexibility except to the extent that generators are
rewarded for the provision of operating reserve via the existing Ancillary
Services payments. There may be a need to determine holistically the ideal
characteristics of a power system in Ireland which is necessary to support
very high wind penetration levels and to study what competitive market
mechanisms, support mechanisms or contracted services can provide a
secure system in the most effective and economic manner.
38 Refer to the Incremental Transfer Capability program and the Grid25 strategy.

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8.8 Operational Constraint for Stability Reasons
Investigations [Divya 2008] have shown that replacing conventional plants by
wind power plants would increase the magnitude of maximum/minimum dip in
system frequency to a large extent. The Facilitation of Renewables Study
[Ecofys 2010] found that frequency excursions trigger corrective actions such
as load shedding or immediate curtailment of wind power.

In the rotating equipment of wind power plants much rotational energy is

stored, even more than in an equivalent capacity of conventional generation.
The All Island Facilitation of Renewables (FoR) study [Ecofys 2010] refers to
the possibility that inertia might be „emulated‟ by adapting the contol
programmes of the power converters. In case of a power system frequency
drop the units, by design, inject a boost of additional power into the network
by forced controlled deceleration. The available boost depends on the
instantaneous rotational speed and the actual generation level of the wind
power plant.

In a system with emulated inertia it may therefore be possible to reduce the

minimum amount of dispatchable generation which is needed to provide
inertia and system stability, compared to a system with no inertia from wind
turbines. This improves the overall level of wind energy which can be
supported on a system and reduces the level of curtailment.

The Ecofys study suggested a power system operational constraint39 whereby

a minimum number of synchronous generators must be online at all times
(“must run units”) to provide inertia and voltage and transient stability. The
study also stated that these units should, ideally, be conventional units with a
minimum active power limit of close to zero. This would exclude the current
portfolio of CCGTs and would lead to a situation where:

 During low wind a portfolio mix similar to today‟s low-wind merit order
scenario.
 During high wind a portfolio mix comprising high-price “must-run” units,
combined with the full operation of storage and interconnectors to
complement the wind powered generation with the balance made up of
some mid-merit units.
 During transitions from high to low (or vice-versa) wind scenarios
flexible, load following or wind-compensating plant will be needed.
 It would appear that there will be limited scope for the running of (low
price) inflexible, baseload plants.

All things considered the above scenarios appear to drive additional system
costs in order to complement wind penetration and appear to indicate that a
conventional portfolio dominated by CCGTs and inflexible baseload plants is
inappropriate in a system with very high wind powered generation. .

39 Referred to in the Ecofys study as the “minimum system inertial constraint”.

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The Ecofys study concluded that instantaneous power from wind and import
will have to be limited to 60%...80% of load+export in 2020. The study finds
that it will still allow achieving the 2020 renewable electricity targets in Ireland.

8.9 Conclusions re Flexibility and Stability

The Ecofys study has indicated that there are system stability issues which
will need to be addressed in the migration to a high penetration of wind
energy. It is also likely that wind generation will have to be curtailed for
system stability and operational reasons. Whilst this may have previously
been suspected the study goes some way towards identifying the potential
problems and in quantifying possible maximum capacity limitations of wind
energy.

In addition to the Ecofys study, further investigation may be needed to identify

more explicitly the system characteristics (or plant type and quantity) which
are needed to provide the system operational support identified in the Ecofys
study. System services or some other market mechanism will need to be put
in place to procure the system operational support needed.

It may be the case that some locational signal will be required, possibly
through connection policy or some competitive tendering and contractual
process (e.g. new ancillary service) to procure the right plant type or
operational service in the optimum locations.
In conclusion, Ireland does not have any specific plans to incentivise or
reward flexible system features and will need to investigate and avail of all
economically viable opportunities to maximise pumped storage,
interconnection and demand side management opportunities if high wind
penetration is to become a reality.

The operators of conventional plants will be faced with variable and uncertain
revenues. Investors may need extra inducement to implement the required
reserve and flexibility. This may require a reappraisal of the capacity
payments and the ancillary services payments which generators avail of in
Ireland.

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9. DESIGN OF THE WHOLESALE MARKET FOR
ELECTRICITY

9.1 Electricity Market Arrangements

On the island of Ireland since 2007 there is a single, unified, cross-
jurisdictional centralised market for the wholesale trading of electricity. It is
called the Single Electricity Market (SEM). Despite spanning two separate
jurisdictions the new all-island market is relatively small with an installed
generating capacity in 2009 of about 9 GW, about a tenth the size of that of
Great Britain. SEMO is the market operator responsible for the administration
of the Single Electricity Market. SEMO is managed as a contractual joint
venture between EirGrid, the transmission system operator for the Republic of
Ireland, and SONI the System Operator for Northern Ireland. The all-island
wholesale electricity market has the following key characteristics:

 gross mandatory pool physical market; electricity is bought and sold

through the pool under a market clearing mechanism;
 the market operates in both Sterling and Euros.
 operating in two jurisdictions
 capacity and energy payments

Generators of 10MW or above must participate in the pool and cannot engage
in bilateral physical power transactions outside the pool. Generators under
10MW can opt to trade bilaterally or through the pool. The SEM is operated by
a Single Electricity Market Operator (SEMO)40. The above characteristics
make the SEM a unique market in the worldwide arena of electricity trading.

The formation of the all-island Single Electricity Market required harmonised

legislation to be passed by both the parliament in Westminster and the
Oireachtas in Dublin, providing for a single market jointly controlled by the two
regulators. Because the legislation required the joint approval of two
sovereign governments, any changes in legislation in the future would be very
difficult. This solidity helps boost the credibility of the new market – it is less
likely to be prone to regulatory “surprises”. Regulatory certainty [ESRI 2007] is
vital in a system where entry involves significant fixed costs. Uncertainty has
a direct effect on the cost of capital available to firms. This is a factor which
impacts on the bankability of wind farms which are capital intensive.

The role of the SEMO is to:

 Administer daily generator bids and offers

 Schedule41 the market and determine the System Marginal Price

40 SEMO is managed as a contractual joint venture between EirGrid, the transmission system
operator for the Republic of Ireland, and the System Operator for Northern Ireland (SONI).
41 The market schedule is the schedule which gives indicative MW outputs for each generator

for the Trading Day, including Interconnector flows and Pumped Storage Unit operation. It is
determined day-ahead by the System Operators taking system constraints and reserve
requirements into account.

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  Produce daily, weekly and monthly settlement and invoicing statements
for market participants in relation to electricity, constraints, capacity
payments and SMO charges
 Execute weekly and monthly clearing services for these charges
 Manage currency risk and market participants‟ credit requirements

SEMO also has a role to play in the resolution of queries and disputes the
administration of market changes and the provision of market information

When the SEM was being conceived, it was considered likely to be beneficial
to consumers since it would allow for a lower level of installed capacity for a
given level of security of supply [FitzGerald, 2004]. It would also allow for
more efficient dispatch. The SEM also facilitates the participation of
renewable and CHP generators since all energy can be sold directly to the
pool and off-take contracts are not a prerequisite to market entry.

9.2 Market Payments and Price

In the SEM the bids and hence the energy payments to generators are
designed to account only for the short run marginal costs of generators. Long
run capital costs are covered by capacity payments, which are assigned to
generators depending on their availability and on the tightness of the system
in each period. When the margin between generation and demand of
electricity is narrow, generators will receive larger payments to make their
plants available. Generators receive the following market42 payments:

 System Marginal Price (SMP) for their scheduled dispatch energy

quantities
 Capacity Payments for their actual capacity availability
 Constraint Payments for changes in the market schedule due to system
constraints such that the actual dispatch of a generator differs from the
unconstrained market schedule.

In the context of a wholesale electricity market pool, a price making generator

submits a number of bids indicating how much electricity they are prepared to
dispatch for a specific interval and at a given price. The system operator
stacks the generators in order of cost (merit order) to determine which plants
to dispatch.

The merit order is the order in which the electricity market operator, SEMO,
queues generators for dispatch based on the costs to deliver a certain
quantity of generated electricity, as declared or bid43 by the generator into the
market. Those generators that, in aggregate, allow the forecast demand to be
met at the lowest costs (subject to system constraints) are described as being
in the merit order and are scheduled for dispatch. In the context of the

42 Generators also receive payments on a contractual basis for ancillary services provided.
43 The SEM bidding principles dictate that generators must submit “commercial offer data”
which reflects their short-run marginal cost (SRMC). The SRMC for wind powered generation
is zero as the short-run marginal cost is based on the generator-specific cost of fuel. In the
case of wind powered generation the “fuel” is wind.

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wholesale electricity market pool, a price taking generator does not submit a
bid or submits a bid at a price of zero. This means that wind powered
generation is on top of the merit order and is therefore scheduled for dispatch
by the SEMO and receives the pool system marginal price (SMP).

The increasing trend in the share of electricity supplied from renewable plant
means that revenues from electricity markets for some conventional
generation technologies tend to decrease. Nevertheless, availability of these
generation capacities is essential for maintaining generation adequacy and for
“keeping the lights on”. Mechanisms such as capacity payments and/or
ancillary service payments will be required to supplement the energy market
income of all generators and ensure that they can earn sufficient revenue to
remain in business.

9.3 Constraint Payments

Constraint payments (refer to Glossary) to generators are made for network
constraints: Generators are scheduled for dispatch on a day-ahead basis
based on their availability. If available, but constrained (up or down) from the
level scheduled by the market operator - SEMO - the generators receive
constraint payments. Although constraint payments are only made against the
firm portion, capacity payments are based on the full available capacity.

Where deep reinforcements are not completed, the generator‟s access shall
have an amount of capacity which is deemed physically firm and an amount
deemed physically non-firm. The generator will then receive Firm Physical
Access and constraint payments for the portion of their plant with Firm
Physical Access.

They will receive non-firm physical access for the remainder of the capacity
and no constraint payments until deep reinforcements are complete [10].
When deep reinforcements are completed the plant has firm physical access.
This entitles the plant to receive constraint payments against any of its
capacity that is constrained. For wind, the level of constraint payments is set
at the level that they could have produced at the time (i.e. based on
availability to generate) rather than being set at the level of actual capacity.
Similarly, capacity payments are set at the level of energy that they actually
produce or, if constrained, that they could have produced.

9.4 Existing efforts to achi eve high w ind penetration

Transmission system operators (TSOs) are tasked with delivering an invisible
product (electricity), which cannot be stored, to every single customer, each of
whom expects to receive the exact quantity needed at each and every instant
it is needed. Grid operation is just-in-time management in its most extreme.
The challenge is to simultaneously and at every instant:

 To generate, from a multitude of different technologies and locations, the

exact quantity of electricity needed at an economic price;

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 To transport the electricity thus generated and to distribute it to each and
every point of consumption whilst taking into account losses on the system
and the capacity of each connecting circuit.

This task is made more difficult by the prospect of high penetration of

intermittent and variable wind powered generation over the coming decade.
Part of the solution to this challenge is the installation of appropriate
wholesale market arrangements to facilitate high wind penetration. Wholesale
market design refers to how generation is offered to the market and traded
within it. Some of the key wholesale market issues that relate to wind powered
generation are:

 wind forecasting and gate-closure times;

 the allocation44 of generation capacity across the island of Ireland on the
basis of merit;
 the options for flexible operation and the cost of balancing;
 the generation portfolio mix and the rules for dispatch;
 the financial viability of existing or new conventional (thermal) generation
plant;
o impact on the wholesale electricity prices paid to generators;
o impact on payments per kWh of electricity produced (energy
payments)
o impact on payments per MW of capacity available (capacity payments)

These arrangements are important to all new and existing generators, both
renewable and conventional, as there are a variety of arrangements
worldwide. These factors also impact on the price of electricity the security of
supply of electricity and the balancing (supply versus demand) of the system
and hence are of prime importance to the system operators and the energy
regulators on the island of Ireland.

Various studies have been conducted to examine the impact of high levels of
wind penetration. In the context of the Single Electricity Market (i.e. all-island)
an important detailed study was the All Island Grid Study [AIGS 2008] which
was conducted by DCENR and DETI. This study entailed a wide-ranging
assessment of the ability of the electrical power system, including the
transmission network to absorb large amounts of electricity produced from
renewable energy sources in the year 2020. The study assesses the technical
feasibility and relative costs and benefits associated with various scenarios for
increased shares of electricity sourced from renewable energy in the all island
power system. The methodology for the study entailed the selection and
assessment of six generation portfolios comprising a range of different mixes
of renewable and conventional technologies. The assessment considers the
costs and benefits of each of the portfolios for the year 2020. “Portfolio 5”
included 6000MW of renewable energy, 360MW of base renewable and
286MW of additional variable renewable.

44The terms of the trading and settlement arrangements for the sale and purchase of
wholesale electricity is set out in the Trading & Settlement code which is updated from
time to time and published by SEMO.

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It was separately estimated (refer to section 5.2.4 of this paper) that 5,800
MW of renewable generation would fulfil the target of 40% penetration of
renewable energy by electricity demand in the Republic of Ireland by 2020.
When Northern Ireland‟s share of renewable energy is also taken into
account, Portfolio 5, which incorporates 6,645MW of renewable generation,
comes close to the current plans for renewable penetration in Ireland to 2020
and hence is of particular interest.

The AIGS report, or indeed any other report studied for this paper, do not
attempt to envisage the characteristics of an ideal system to support high
wind energy penetration. This approach might be somewhat esoteric as it may
have so many assumptions and ranges of operation and unknowns such that
it might be futile.

Instead the current methodology taken by all stakeholders, including

government departments, government agencies, regulators, system
operators, generators, market operators, consultants and academics is to
examine independently the impacts of high wind penetration levels on their
own area of particular interest or sectoral area. Examples of this are:

 The system operators seek to determine what network developments will

be needed into the future and put in place plans to meet the vast majority
of credible future scenarios

 The system operators seek to determine what operational rules and

restrictions are needed to ensure that the security of the system is
preserved and that the system remains stable

 The regulator puts in place rules to facilitate wind power. This includes
rules which provide certainty as to grid access, rules which confer priority
on wind generators to be dispatched, rules for when and how generators
get remunerated (for providing capacity, delivering energy or keeping the
power system stable) and for the funding of the system operators‟ capital
network plans for unprecedented levels of network reinforcements and
interconnection.

 The government puts in place support schemes (e.g. REFIT) to encourage

and provide backing for developmental or emerging renewable projects or
technologies which have demonstrated a need for funding to be
economically viable, such as offshore-wind.

 The wind energy associations, representing wind farm developers and

generators, seek primarily to secure the most advantageous policies and
terms and arrangements for their members without necessarily having
concern for the stability of the system, the security of supply or the
financial viability of the conventional plants whose running regimes and
income streams are being hugely impacted. However, a quantity and mix
of various conventional plants will be needed to provide power system
stability and to deliver economically the 60% of energy (in 2020) which is

94
 not delivered by wind power. Despite the attractive prospect of 40% of our
electricity coming from a “fuel” source which is free the other 60% may, in
contrast and as a consequence of wind penetration be delivered at much
higher prices to the market as a result of the higher prevalence of specific
“must-run” units, the increase in the share of less efficient flexible plants
and the lower running regime of the most efficient and economical (CCGT)
conventional plants. The lower-running regimes and shorter lifetimes of
conventional plants and the higher maintenance costs associated with
more frequent cycling will exert upward pressure on the wholesale price of
electricity as the bids into the market by generators must be cost reflective.
The quantity and mix of conventionals to complement wind will be
significantly different to today‟s portfolio mix.

9.5 Wind Forecasting

9.5.1 Variability Versus Predictability of Wind Power Production

Despite the fact that wind energy is somewhat intermittent it does not start
and stop uncontrollably at irregular intervals. Even in extreme conditions, such
as storms, wind turbines in a system area are systematically and gradually
shut down over a period of hours. Also, periods with zero wind power
production are quite predictable and the transition to zero power is gradual.

An advantage of windpower is that it has been shown to provide high

availability in the order of 98% which compares favourably with other forms of
generation technologies. Another advantage of wind power in that the
generation is distributed throughout the power system so that the breakdown
of a single unit has a minimal effect on overall availability or the security of
supply.

9.5.2 Output forecast error due to weather patterns

There may be times when the output from wind generators will differ
significantly from the forecast output because of sudden unpredicted changes
in weather patterns. The following are examples of this:

 Figure 9.1 below is for Global Wind Day 2010. Apart from the fact that
there was little wind on the day what is also notable is that the forecast
error is significant.

 Figure 9.2 below is a sample of a recent (windy day. It is notable that

the forecast error is 250MW or more for 8 hours or more. This error is
significant.

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Figure 9.1: Forecast Vs. Actual on Global Wind Day 2010

Figure 9.2: Wind forecast and Actual on a “windy day”

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At these times it may be necessary to curtail wind generation (and possibly
conventional plant) in order to manage the power system, as the operational
characteristics of conventional plants may not allow them to fully respond in a
timely manner to these unexpected changes in system demand. It will be very
difficult to predict these events.

Wind curtailments may [Milligan 2009] be necessary due to environmental

reasons, such as for reducing or preventing bird and bat mortality. Wind
projects in California are subject to periodic curtailments to minimize bird
mortality.

Also, some system events may lead to the need to curtail wind generation; for
example, the simultaneous unexpected outage of a number of transmission
lines. Typically, this will be a localised effect and will only require curtailment
of output for a number of wind farms rather than a system wide effect. It will
be very difficult to predict when this is likely to occur – it could happen during
thunderstorms for example.

9.5.3 Variations within the Hour

From a power system balancing perspective the variations in power

generation within an hour are much more significant for the system than
variations in wind power over shorter periods; i.e. variations within minutes or
seconds. However, they should always be considered in relation to demand
fluctuations.

According to the EWEA [Windfacts Part3] local variations are mainly as a

result of geographical diversity, and will generally remain inside ±5 per cent of
installed wind power capacity at the regional level. The most significant
variations arise from the passage of storm fronts, when wind turbines reach
their storm limit (cut-out wind speed) and shut down rapidly from full to zero
power. This effect is seen at its most extreme when a period of high wind is
followed by low-wind, as when a vigorous depression follows a prolonged
anticyclone. This effect is only significant in relatively small geographical
areas, since in larger areas it takes hours for the wind power capacity to
cease during a storm. For example, in Denmark – a small geographical area –
on 8 January 2005, during one of the biggest storms for decades, it took six
hours for the installed wind power in the West Denmark area to drop from
2000 to 200 MW (5 MW/minute). The passage of a storm front can be
predicted and technical solutions are available to mitigate the effects. These
intra-hour variations are an issue for power system reserves used for power
system balancing. The lower the intra-hour variations, especially on a system-
wide basis, the less generation is needed in reserve and less additional costs
are imposed on the overall system.

9.5.4 Prediction and Scheduling

The variations between forecast and actual wind energy production affect the
scheduling of the power system by the transmission system operator. For
transmission system operation, the variation in itself is not a problem; it is the

97
uncertainty of how accurately the variation can be predicted that is significant.
The uncertainty of wind power predictions should always be considered in
relation to the errors in demand forecasts. There is much work being
conducted in this area and significant improvements are being made.

The analysis of data available from operating wind farms and meteorological
measurements at typical wind farm locations allows us to quantify the
variations in net wind power output that can be expected for a given time
period (within the minute or hour, or during the course of several hours). The
distinction between these specific timescales is made since this type of
information corresponds to the various types of power plants for balancing.
The results from analyses show that the power system can handle this short-
term variability well. System operators only need to deal with the net output of
large groups of wind farms, and the wind power variability is viewed in relation
to the level and variation in power demand.

Accurate forecasts of the likely wind power output, in the time intervals
relevant for generation and transmission capacity scheduling, allow system
operators and dispatch personnel to manage the balancing of variability of
wind power in the system.

Predictability is key to managing wind power‟s variability and improved

accuracy of wind power prediction has a beneficial effect on the amount of
balancing reserves needed, so the accurate forecasting of wind power is
important for its economic integration into the power system. Today, wind
energy forecasting uses sophisticated numerical weather forecast models,
wind power plant generation models and statistical methods to predict
generation at 5-minute to 1-hour intervals, over periods of up to 48 to 72
hours in advance and for seasonal and annual periods. Forecasting wind
power production differs from forecasting other generation forms or
forecasting the load.

According to EWEA [Windfacts Part 2] wind power prediction can be quite

accurate for aggregated wind power, as the variations are levelled out; the
larger the area, the better the overall prediction. The extent to which
prediction error decreases with the size of the region 45 considered is shown in
Figure 9.3. It should be noted that the forecast accuracy is reduced for longer
prediction periods.

45 The error reduction in the graph is defined as the ratio between the RMSE (root-mean-square-error) of regional
prediction and the RMSE of a single site, based on the results of measured power production at 40 wind farms
in Germany.

98
Source: Energy and Meteo Systems
Figure 9.3: Decrease of the forecast frror of prediction for aggregated
wind power production, due to spatial smoothing effect

Valeri [ESRI 2009] observed that the larger the geographic area that installed
wind is spread over, the more constant and less intermittent the wind
generation becomes, owing to the decline in correlation between wind speeds
the larger the distance between points. Valeri also stated that it is expected
that a sizable portion of future wind in Britain will be located in places such as
the Dogger Bank, located off the east coast of England and with little
correlation with Irish wind.

However, examination of Pöyry‟s “Impact of Intermittency” study [Pöyry 2009]

indicates that, in addition to large concentrations of offshore wind off the east
coast of England that there are also plans for significant capacity of offshore
wind powered genertaion in the Irish Sea. Indeed, a National Grid UK study
[NG 2009] indicatives a potential circa 5,000 MW 46 of offshore wind powered
genertaion located in the Irish Sea connecting into or via the UK grid at
Deeside. This coincides with the point of connection into Wales of the East-
West interconnector. Therefore, there is likely to be quite a high correlation
between the wind power generated at both ends of the interconnector.

This is consistent with Pöyry„s study [Pöyry 2009] which found that there is a
high level of correlation in the weather between the SEM market and the UK
market.

The quality of the short-term forecast should be considered in relation to the

gate closure times in the power market. Reducing the time needed between
scheduling supply to the market and actual delivery (gate closure time) would

46 The National Grid study indicates a set of optimum offshore and onshore
electricity transmission network reinforcements required for the connection of up to
25GW of offshore wind generation as part of the Round 3 leasing process in the UK.

99
allow shorter-term forecasts to be used, which could dramatically reduce
unpredicted variability and lead to more efficient system operation without
compromising system security. Changing from day-ahead to intraday
commitments (refer to Gate Closure Times below) has a dramatic impact on
accuracy and the cost of balancing the system. It is important to understand
that for system operation, it is not just wind forecasting accuracy that is
relevant for balancing the system, but also the sum of all demand and supply
forecast errors relevant for system operation.

Pöyry‟s intermittency study [Pöyry 2009] also found that future markets with
large amounts of wind will become completely dominated by the vagaries of
the weather.

9.5.5 Conclusion

As wind penetration increases it will become increasingly important to improve

the accuracy of within-day wind power forecasting. This would help to reduce
the level of fast (and expensive) operating reserve needed. A techno-
economic study into the cost benefits of a wind prediction system which
allows the prediction and regular (from day ahead down to minutes ahead)
updating of the wind power at each wind farm on the system. should be
carried out.

The system could collate real time data from existing wind farms and from a
multitude of weather stations.

Various levels of granularity and accuracy should be studied.

9.6 Gate Closure Times

The Gate Closure Time refers to the final moment in which market players47
are able to trade electricity or inform the Transmission System Operator48 of
their position before real-time delivery. It represents the closure of market
actions, either in the forward, day-ahead or intra-day timeframe (whichever
one of these timeframes is closest to the real-time). The gate closure times
vary considerably from market to market as illustrated in Figure 9.4 below.

Due to its nature, it may be difficult to forecast the proportion of wind

generation that will be available the following day (day-ahead) and further out.
According to Giebel [Giebel 2003] and [Giebel 2007] errors of about 11-18%
of the installed wind power capacity apply for a 36 hour horizon. The
prediction error decreases significantly as the time of bidding of the final
commercial offer approaches real-time.

47 The “market players” are the entities trade, buy or sell electricity via the wholesale
market for electricity. They are also referred to as the “market participants” and
include all generators of electricity.
48 EirGrid, licensed as the Transmission System Operator in Ireland, is the entity

responsible for balancing the generation and load demands on the network.

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It is preferable to have a gate-closure in the intra-day time-frame and as close
as possible to real-time. By decreasing the gate closure times it will be
possible to accommodate a higher level of penetration of “variable-output”
wind energy and to reduce the amount of high-carbon, more-expensive,
unnecessary flexible, load-following thermal generating plants.

Source: CEER
Figure 9.4: Time between closure of forward market and real-time
delivery

According to the CEER (CEER 2009) the advancement of functioning intra-

day markets is crucial for the efficient integration of large amounts of wind
energy and for cost-efficient system operation in general. Allowing for intra-
day rescheduling of cross-border exchange will lead to EU savings in systems
costs in the range of €1-2 billion per year as compared to a situation where
cross-border exchange must be scheduled a day ahead.

A recent study (Milligan 2007) based on the situation in the state of Minnesota
in the USA, calculates the savings in balance power that could be achieved
assuming the presence of an energy market with a five-minute re-dispatch. In
the hourly timescale, balance area consolidation reduces ramp requirements
of balancing plants by 10 per cent, while in the five-minute timescale this
reduction is double – more than 20 per cent. This has considerable effects on
the balancing costs, and thus on the integration of wind power.

The Gate Closure Time49 for the electricity wholesale market on the island of
Ireland is currently 20 hours. For a country such as Ireland with a very
ambitious renewable energy penetration target a significant reduction of the
gate closure time needs to be considered.

49Refer to the SEM trading & Settlement Code, Ver 6.1, January 2010. Available at:
http://www.allislandmarket.com/MarketRules/. Accessed 28 March 2010. Note
that the Gate Closure Time of 20 hours can be determined from the definitions in
the Glossary of “Trading Day” and the definition of “Gate Closure” in the Code.

101
 NRMSE 50 1 control zone

[%] ~ 350 km

Day-ahead 6.8
4h ahead 4.7
2h ahead 3.5

Table 9.1: Level of accuracy of wind power predictions in Germany

Source: Giebel 2007

The levels of prediction accuracy indicated in Table 9.1 above apply to

Germany. However, these figures are for one of the four balancing regions in
Germany and hence is approximately of the same geographical area as
Ireland‟s balancing area. These data indicate that an improvement of circa
3% in the level of accuracy of wind power prediction could be expected by
adopting a 2 hour-ahead gate closure rather than day-ahead. The
improvement in accuracy would most likely be greater as the wind is more
variable, extreme and less predictable in Ireland due to its proximity to the
Atlantic Ocean.

9.7 Curtailment
A number of definitions have been suggested for “curtailment”. The usage of
the term in the context of the electricity market in Ireland [SEM-09-073] is that
the term applies to situations whereby generation is dispatched down from a
level at which it would otherwise wish to run51 typically for a reason other than
a transmission constraint, and generally without compensation.

Both curtailment and constraint signify where a generator‟s output may be

dispatched at a level which is different to the instantaneous level at which it is
available to generate.

9.7.1 Constraints

A generator‟s output may be dispatched at a level which is different to the

instantaneous level at which it is available to generate. This difference is
called constraint (in Ireland) where this difference generally arises as a result
of:

c) design limitations or restrictions in the grid infrastructure to accommodate

generation capacity; or,
d) system operational and system stability issues, such as:
 Ensuring there is sufficient plant on the system to meet operating
reserve requirements.
 Compensate for transmission forced outages

50 (NRMSE = normalised root mean square error, % of installed wind capacity).

51 In the market generators are allocated to an unconstrained schedule on the basis
of availability.

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  Compensate for transmission scheduled outages
 Compensate for wind power forecast errors
 Retain ability to regulate system frequency;

i.e. when the dispatch schedule of the Transmission System Operator differs
from the unconstrained market schedule generated by the Market Operator‟s
(SEMO‟s) “market engine”.

Constraint occurs when the amount of output available to be exported to the

grid from a particular generator or group of generators exceeds the rated
maximum capacity of the transmission line which connects it to the rest of the
transmission network. It is sometimes the case that the grid operator deems it
to be uneconomic to upgrade the particular constraining transmission line in
question, as they do not deem it to be cost effective to invest in significant
infrastructural improvement in order cope with the infrequent occurrence of
maximum or near to maximum wind output.

9.7.2 Curtailment :

A generator‟s output may be dispatched at a level which is different to the

instantaneous level at which it is available to generate.

When the instantaneous energy available for generation exceeds the energy -
in aggregate - needed to meet the instantaneous total of system wide demand
plus interconnector exports the excess is the level of curtailment. i.e. the
difference between generation availability and the actual generated output
(proxy for dispatch). This is likely to occur when system-wide wind is high and
demand is low.

The severity of curtailment will tend to increase in Ireland with increasing wind
penetration due to Ireland‟s particular circumstances of future high levels of
wind penetration in an electricity market with insufficient interconnector
capacity or storage.

Some suggestions have been made that curtailment without compensation

could be used as a mechanism to include higher levels of wind generation in
the future. It is possible this could be done on a “last on, first off” basis 52, but
is not clear if this will mean reduced transmission charging for the affected
developments

As more wind generation is added to the system, it will replace conventional

generation. Therefore, at certain times we will see wind generation forming a
substantial source of generation on the system.

As wind penetration levels increase and as the capability of wind powered

generation to meet and exceed the total system demand, instances will arise
where wind turbine generators will be required to curtail their generated

52 a “last on, first off” means that the last wind farm which connected to the network is the first
to be curtailed at any given time. i.e. the wind powered generators who connected first have
priority access to network.

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output. i.e. the wind turbine will be required by the System Operator to reduce,
for a period of time, the output to a level which is less than the technical
capability of the turbine.

The amount of curtailment and frequency of curtailment will increase as the

penetration of wind increases on the system. The greater the penetration level
of wind, the greater the levels of curtailment which will be experienced,
potentially across the entire system.

Firstly, there may be times when wind generation levels (plus energy imported
via interconnectors) are greater than system demand (plus exports). At these
times it will be necessary to curtail output from wind generation whilst
retaining the necessary amount of conventional “must-run” generation online
to provide all the system services required to operate a safe and secure
power system. This includes:

 Frequency Control
 Reserve Provision
 Voltage Control
 Dispatchability/Load Following
 Ability to withstand disturbances

This scenario is most likely to arise at times of low system demand i.e. during
night time and summer time. In the context of power system scenarios this
combination is referred to as Summer Night Valley. However, as wind
penetration levels increase to the levels targettted in Ireland curtailment will
be more likely to occur at any time of the day or year

9.7.3 High curtailment scenario

In order to understand the concept of curtailment it is useful to examine

credible and likely scenarios which may give rise to instances of curtailment in
Ireland. By 2020 it is expected that the total wind energy installed in Ireland
could be as much as 5,800 MW (5,800 MW is the estimated capacity needed
to meet the 40% target). For security of supply reasons some of the 1,800
MW demand during summer nights will be provided by “must-run”
synchronous conventional generation plant. Even with some wind generators
being unavailable (or generating at less than maximum export capacity) a
significant portion of the excess (5,800 – 1,800) would have to be curtailed53
on a very windy summers night. Therefore, it is inevitable that in certain
circumstances a very large proportion of wind generation will be curtailed as a
consequence of the availability of excessive wind generation and power
system operational restrictions.

53 If smart-metering coupled with time-of-day tariffs is introduced it is likely that, in future, a

significant amount of the daily peak in electricity demand at about 6p.m. each evening will be
shifted to the “night valley” period. If the Government’s target of 10% of all vehicles in Ireland
to be electric by 2020 is reached then this may also increase the overnight demand for
electricity. This assumes that time-of-day tariffs and smart metering are introduced and that
this results in users charging their electric vehicle batteries predominantly overnight.

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Figure 9.5 illustrates a credible curtailment scenario54 for 2020. This example
assumes high wind availability of 4,000 MW maximum55 at 5 a.m. combined
with an assumed 1,500 MW of “must-run” conventional generation and
assuming an ambitious 1,000 MW of exported generation over
interconnectors the system operator must curtail 2,500 MW of available wind
generation. Whilst increasing demand, electric vehicle charging, smart
metering and energy storage measures will all contribute in some (relatively)
small way in reducing the curtailed energy it is inevitable that curtailment will
become a significant issue. Intuitively, and without the benefit of access to the
complex modelling systems or data which the system operators use, the area
in the diagram of each of the source and sink categories represents the
energy for the day which applies to that category. As is evident, the quantity
of curtailed energy over the sample day is greater (in area) than the total
control area consumption (i.e. power system electricity demand, net of
exports) of electricity.

Figure 9.5: 2020 curtailment scenario – low summer night valley

54 The Facilitation of Renewables Study recommends a different operational strategy

554,000 MW instantaneously available wind-power generation capacity is credible and not
extreme. If all Gate 3 projects complete there is the real prospect of circa 6,700 MW of total
installed capacity (refer to Table 5.3).

105
The issue of curtailment and the compensation mechanism (if any) has not
been given the serious consideration that it deserves and needs by regulators
or industry yet. If curtailment was to be compensated at the system marginal
price in the above example then the contribution of curtailment to the end-user
price would be greater than the cost of the actual energy generated.

In practice, the energy exported over the interconnector(s) may be

significantly less than assumed in the example above leading to a greater
level of curtailment than indicated. The nature and level of must-run
synchronous generation needed in the future is still an unknown quantity. A
conclusion of EirGrid‟s Facilitation of Renewables Study [EirGrid 2010] is that:

Imports via interconnectors should be limited to clearly less than the

considered maximum value of 1350 MW;

The study also recommends:

That the maximum “inertialess penetration56” in system operation is 60

– 80%

The 60%-80% “maximum” is a massive range and indicates that there is still a
great level of uncertainty as to what are the system operational needs in high
wind penetration scenarios and that this area of study is “work in progress”.

The Facilitation of Renewables Study states that further investigations are

needed “to optimise the magnitude of additional reactive power sources and –
most importantly – the location of their placement”.

Further studies are needed. What would be informative is a study and a

recommendation on the minimum capacity of must-run plants and wind-
complementary plants (and/or the characteristics or mix of plants which would
meet pre-defined system needs) necessary to maintain system stability,
including any locational voltage stability requirements to keep system-wide
voltages within the required limits.

9.7.4 Conclusions:

The level of curtailment impacts the energy related income and impacts on
the financial viability and renders projects less bankable

There is an imperative to improve the prediction of wind power generation by

improving wind forecasting systems at a local control area level and through
greater international cooperation in sharing of real-time actual wind power
data and analysis of weather data.

56 Considering that Gate 3 comprises 100% wind and that in 2020 there is a real
prospect that the vast share of the 40% renewable target will be met by wind, the
“inertialess penetration” referred to in the Facilitation of Renewables Study is
essentially a proxy for “wind generation”.

106
The issue of whether generators should or not be compensated for
curtailment is a topical one which is currently being addressed in the SEM
workstream [SEM-09-073] on Scheduling and Dispatch.

9.8 Investment in the grid

Investment in Ireland‟s‟s electric network is unlikely to keep pace with the
sharp rise in installed wind capacity which is expected to develop over the
next 15 years or so.

Lack of transmission is currently one of the principal barriers towards the

expansion of wind capacity, in no small part because high-quality wind
resources are typically located in areas far from the main load centres. In
addition, wind development can generally proceed much more quickly than
new transmission projects, leading to a timing mismatch between the fast-
paced development of wind farms and the longer lead-time to develop new
transmission infrastructure. Due to these factors, the incidence and extent of
wind curtailment appear to be on an upward path.

During this period of development it is possible that high levels of constraint

will be experienced by some of those wind farms who elect to complete
construction of their projects prior to the completion of the associated network
reinforcements as identified through the system operator‟s system studies.

9.9 Firm access to the netw ork

According to the current connection policy and electricity market design
generators get compensated for network constraints once they have “firm
access”. Firm access comes into play on the date when the network
reinforcements, which were identified by the system operator through system
studies, have been completed such that the network has the capacity to safely
accommodate the full output of the generator. This date is referred to as the
scheduled-firm-date and the capacity which becomes available to a generator
is referred to as the “firm access quantity”.

Generator projects which have received a connection offer and which elect to
build and connect prior to the scheduled-firm-date do not receive constraint
payments for any curtailment of their available capacity as a consequence of
this form of network constraint. These generators get paid the system
marginal price only for the energy which the network can safely
accommodate. They are allocated a “non-firm” access quantity which allows
the generator to be dispatched only up to the non-firm level.

These potential non-compensated constraints may be magnified whilst the

Grid25 network development strategy [Grid25 2009] is being implemented if
wind farm developers choose to develop projects rapidly in order to avail of
supports, finance, available resources and to meet planning permission
deadlines.

However, the level of constraints to all generators on the network will also be
increased by the disruption to the network as sections of the network are

107
made unavailable by means of planned outages to allow a multitude of wind
farm projects to be connected-up and commissioned following the completion
of the construction phase of each project. In addition these wind farms will
experience outages due to periodic operational testing at the behest of the
system operator and due to periodic maintenance requirements according to
turbine manufacturers‟ recommended timelines.

Wind curtailment may occur for various reasons, including:

 lack of available transmission network capacity during a particular time
to incorporate some or all of the wind generation;
 high wind generation at times of minimum or low load, and excess
generation cannot be exported to other balancing areas due to
transmission constraints. In these instances, wind generation may be
curtailed after other generation is running at minimum and imports
reduced or curtailed as well; and,
 periodic wind curtailments may also be imposed due to environmental
reasons, such as for reducing or preventing bird mortality.

Wind curtailment initiatives are at an early stage of discussion or

implementation in Ireland.

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10. SOCIAL ACCEPTANCE AND ENVIRONMENTAL
CONSIDERATIONS
10.1 Noise & Sound
An in-depth review in 2009 [Colby 2009] studied the possible adverse health
effects on those living close to wind turbines due to noise. The report findings
concluded that wind turbines do not 'directly' make people ill. The study did
allow that some people could be annoyed or stressed by the swishing sounds
wind turbines produce. The study group pointed out that similar irritations are
produced by the collective sound energy emanating from road traffic as well
as from industrial operations and aircraft. The wind-industry report found,
amongst other things, that:

 "Wind Turbine Syndrome" symptoms are the same as those seen in the
general population due to stresses of daily life. They include headaches,
insomnia, anxiety, dizziness, etc.;
 low frequency and very low-frequency "infrasound" produced by wind
turbines are the same as those produced by vehicular traffic and home
appliances. Such 'infrasounds' are not special and convey no risk factors;

Colby remarked that perceived “wind-turbine sickness” might have triggered

"anticipatory fear" in those close to turbine installations. Nevertheless, it must
be borne in mind that this study was commissioned and funded by the
American and Canadian Wind Energy Associations whose members would
generally have a vested interest in a benign outcome.

Following review, analysis, and discussion of current knowledge, the panel

Concluded that:

 There is no evidence that the audible or sub-audible sounds emitted by

wind turbines have any direct adverse physiological effects.
 The ground-borne vibrations from wind turbines are too weak to be
detected by, or to affect, humans.
 The sounds emitted by wind turbines are not unique. There is no reason to
believe, based on the levels and frequencies of the sounds and the panel‟s
experience with sound exposures in occupational settings, that the sounds
from wind turbines could plausibly have direct adverse health
consequences.

According to Colby [Colby 2009] the sound from a wind turbine at distances
between 1,000 and 2,000 feet is generally within 40 to 50 dBA. The Irish Wind
Energy Planning Guidelines [DoE WEPG] guides that, in low noise
environments, the noise from wind powered generators should be limited to
35-40 dBA. This is significantly lower (more stringent) than Colby‟s
recommendation considering that dBA is a logarithmic scale. The guidelines
further state that the noise is unlikely to be a significant problem where the
distance from the nearest turbine is more than 1500 feet.

109
10.2 Conservation of Birds and Habitats
Conservation of birds and other species and habitats is required by legislation
primarily through the “Birds Directive” and the “Habitats Directive”, namely:

 Special Protection Areas (SPAs): are sites designated under the European
Communities Directive 79/409/EEC [Birds Directive 1979], known as the
‘Birds Directive’, which are selected for the conservation of certain
migratory or rare birds and their habitats.

 Special Areas of Conservation (SACs): are sites designated under

European Communities Directive 92/43/EEC [Habitats Directive 1992]
known as the ‘Habitats Directive’. This requires the conservation of
important, rare or threatened habitats and species (excluding birds) across
Europe.

 Natura 2000: are sites designated under the European Communities

Directive 92/43/EEC [Natura 2000],which identifies a Europe-wide network
of sites of highest biodiversity importance for rare and threatened habitats
and species across the EU. In Ireland, the Natura 2000 network comprises
Special Areas of Conservation and Special Protection Areas.

The Birds and Habitats Directives set out various procedures and obligations
in relation to nature conservation management in EU Member States in
general and of the Natura 2000 sites and their habitats and species in
particular. A key protection mechanism is the requirement to consider the
possible nature conservation implications of any plan or project on the Natura
2000 site network before any decision is made to allow that plan or project to
proceed. Not only is every new plan or project captured by this requirement
but each plan or project, when being considered for approval at any stage,
must take into consideration the possible effects it may have in combination
with other plans and projects when going through the process known as
“appropriate assessment” [AA 2009].

Table 10.1 below shows the number of Natura 2000 sites in some of the
counties with the greatest wind power generation potential.

County Number of Natura 2000 sites

Kerry 28
Cork 29
Galway 63
Mayo 49
Donegal 48

Table 10.1: Number of Natura 2000 sites by county in Ireland

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As shown in Table 10.1 above and as illustrated in Figure 10,1 below there
are a very large number of Natura 2000 sites in Ireland. Many of these are
located close to the western seaboard in regions with the best wind resource.
This correlation increases the complexity and the duration of the planning
consent process for many wind farm developers and increases the risk of not
being able to secure planning permission. As a result some projects which
are due grid connection offers may find that planning permission is not
forthcoming.

Some developers may seek to relocate their projects. The CER and the
System Operators are considering the issue of capacity relocation of projects
which may facilitate (inter alia) projects which cannot get planning permission.

Sources: from the European Wind Atlas [Risø Atlas IE] and [Natura 2000]
Figure 10.1: Comparison of the Irish wind atlas57 with Natura 2000
Candidate Sites

10.3 Planning Considerations

A key enabler of the penetration of renewable and wind powered generation is
a well defined and sensible consents process which facilitates the penetration
of renewables without compromising planning principles.

The National Renewable Energy Action Plan [NREAP 2010] provides a useful
listing and summary of the national and regional legislation covering

57 Navy shaded area indicates wind resources of >8.5 m/s at sea coast (50 metres above ground level)

111
authorisations, certification, licensing procedures and spatial planning applied
to electricity generating plants and associated transmission and distribution
network infrastructure.

It also provides a summary of the duties and legislative and licensing powers
of the main enterprises which are instrumental in the oversight of the
measures for achieving the renewable targets. The list of enterprises
included, together with a summary of their roles, is:

 An Bord Pleanala
 Commission for Energy Regulation
 Department of Communications, Energy and Natural Resources
 Department of Environment
 EirGrid (the TSO)
 Environmental Protection Agency
 ESB Networks
 Inland Waterways
 National Parks and Wildlife Services
 Planning Authorities / County Councils
 Renewable Energy Information office (REIO)
 SEM Committee
 Sustainable Energy Authority of Ireland (SEAI)

Also included in NREAP is a summary of the relevant legislative and policy

measures introduced or amended to promote the use of energy from
renewable resources, including wind. The plan outlines the enabling
measures which either have been put in place or which are under
development across all government departments and state enterprises. This
includes fiscal, financial, regulatory and infrastructural measures and the
provision of various schemes and information and administrative services.

NREAP acknowledges that there is a need to review how information is

provided to ensure there is a system in place whereby state bodies and
relevant ministries are in constant communication and co-ordination with each
other and that the most up-to-date information is continuously being shared
and disseminated.

10.3.1 National planning policy and implementation

Figure 10.2 below illustrates the planning framework which currently exists in
Ireland. The Department of the Environment, Heritage and Local Government
have published planning guidelines for wind farm developments [DoE WEPG].
These guidelines require local authorities and An Bord Pleanala to have
regard to them when considering planning permission for wind energy. The
guidelines suggest that developers consider the potential impacts on the
environment under various headings, including:

 The natural heritage; the habitats and species of flora and fauna
(including birds);

112
  The underlying geology including any potential impact on bogs and
whether the development could create a bog burst, land slippage or
landslide hazard;
 Archeology, including impacts on the integrity and visual amenity of
monuments or “protected structures”;
 Aerodynamic “swish” noise from the blades and mechanical noise from
the mechanics of the nacelle.

Planning & Development Act 2000

National Spatial Strategy

Government
Regional Planning Guidelines
policy

County development Plan

Planning Permission

Figure 10.2: The planning process

10.3.2 Expiration and Extension of Planning Permissions

Section 42 of the Planning and Development Acts 2000-2009 [Planning 2000-

2009] currently prescribes the circumstances in which the duration of a
planning permission, normally 5 years, may be extended. Currently, under
section 42, a planning permission may only be extended where substantial
works were carried out within the original duration of the permission.

10.3.3 Alignment of Planning and Grid Access

One of IWEA‟s key concerns at the moment is the incompatibility of the

timelines which apply to planning regulations and grid connection. Currently,
the standard planning permission granted to a wind farm development expires
after 5 years. However it can take much longer to process a grid connection
application and to develop the grid reinforcement infrastructure associated
with the development. Gate 3 will result in grid connection offers issuing to
3,900 MW of wind powered generation by mid-2011. However, the grid
infrastructure for some of the projects will not complete for another decade or
more. As a result, under existing planning arrangements, the original planning
permission for many projects will have expired. There are risks to developers
when planning permission expires, the risks include:

113
 Extensions to planning permission are generally only awarded to
developers who have completed substantial works on their sites.
However, there is no tight legal definition of what substantial works means.
 The interpretation and application of planning “guidelines” is becoming
more stringent.
 The impact on planning (and planning extensions) of the nature
conservation requirements which pertain to Natura 2000 sites may not yet
be fully accounted for or quantified. It is possible that many developers or
planning authorities did not fully appreciate the requirements or restrictions
of Natura 2000 sites and that the more stringent application of the EU
directives may result in the refusal of planning for many projects.

Developers are unable to commence works until they receive a connection

offer and authorisation to construct from the CER. Also, it may not be
financially prudent to commence or complete a project whose (potential)
generated output will not be accepted onto the electricity network for many
years to come. This anomaly can result in a development being left in a legal
limbo which has the potential to jeopardise the entire project. The uncertainty
associated with this anomaly increases the project risk and decreases a
project‟s bankability. This risk is widely acknowledged as it poses a major risk
to many wind farm projects.

To mitigate this acknowledged risk, a new Planning and Development

(Amendment) Bill 2009 is going through the legislative process and one of the
aims of this Bill also is to ensure a closer alignment between the National
Spatial Strategy, Regional Planning Guidelines, Development plans and local
area plans and to address the problem identified above whereby planning
permission for generation plants, including wind farms, can expire after 5
years whereas it may take much longer to develop parts of the network as
planned to complement the expected growth in generation capacity. In
summary, the bill aims to support sustainable economic development by:

 ensuring that the planning system supports target investment on

infrastructure under the National Development Plan;
 ensuring that land zoned for development is aligned with national
infrastructure programmes;
 ensuring that more consideration is given to developers where substantial
works have not been completed;
 providing more certainty to developers that their existing permission will
generally be extended if the planning fundamentals have not materially
changed, and,
 proposing a reduction in thresholds for wind-energy development and for
certain other categories of projects to be dealt with under the Strategic
Infrastructure process (details follow).

10.3.4 Strategic Infrastructure Process

For major developments, the Strategic Infrastructure consent process which

has been in operation since 31 January 2007 provides An Bord Pleanála with
the power to make planning decisions in respect of projects of strategic

114
national interest which may span the planning area of several planning
authorities. The process applies to projects which:

 would be of strategic, economic or social importance to the State or the

region in which it would be situate.
 would have a significant effect on the area of more than one planning
Authority.
 would contribute substantially to the fulfilment of any of the objectives in
the National Spatial Strategy or in any regional planning guidelines in force
in respect of the area or areas in which it would be situated.

The Strategic Infrastructure consents process obviates the requirement for the
planning decisions relating to projects of a national strategic nature to be dealt
with by several planning authorities which might have different and conflicting
local or regional planning requirements or processes which may not be in
keeping with the wider national interest. It is designed to provide a
streamlined planning process for strategic projects of national benefit by
ensuring co-ordination between local, regional and national planning
approaches. The majority of the grid infrastructure projects and wind farms
greater than 100 MW or with more than 50 turbines fall under the provisions of
this Act. The policies and zoning objectives that affect a specific project
remain the responsibility of the local planning authority.

10.3.5 Discussion and Conclusions

The new Planning and Development (Amendment) Bill 2009 is currently going
through the legislative process. This primary legislation will integrate current
consents and planning procedures with a view to delivering an integrated,
fast-track, transparent and participative consent process for both onshore and
offshore projects.

10.4 Social aw areness and acceptance

The best wind resources are generally located far from the main load centres and in
elevated areas which are generally visually prominent and in areas of natural beauty
or coincident with areas of conservation (refer to section on Conservation of Bird and
Habitats).

The massive growth in wind generation needed to attain the 40% renewable target
will result in a proliferation of wind turbines which are visually obtrusive and which are
located near conservation areas or scenic areas. It will also lead to the development
of additional high voltage lines and pylons traversing areas of natural heritage in
scenic areas in order to link to the existing grid.

The increase in wind powered generation also drives a large increase in the uprating
and reinforcement of the existing network. A network development strategy [Grid 25]
is in place to identify and provide the grid infrastructure needed to support the
additional 3,900 MW of wind power and complementary conventional generation.

The public‟s perception of the undesirable visual impact and of the noise “pollution”
and the perceived or anticipated illnesses associated with electricity transmission
over high tension power lines are issues that need to be kept in check.

115
Examples of the type of measures which can be put in place to prevent
sensationalism and exaggeration and perceived, unfounded adverse health effects
are:

 Bring constructive, credible technical resources into the transmission planning

arena that can partner with renewable energy advocacy efforts
 Active participation in regulatory cases to support new transmission lines
 Educating colleague organizations on why transmission is needed to achieve
environmental/climate change/policy goals
 Find and support unlikely champions
 Early and often involvement with communities and other stakeholders

The European Renewable Energy Council [EREC RES-E] suggest that greater focus
at the European, national and regional level should be placed on raising public
awareness of the benefits of renewable energy technologies.

Information on renewable energy is provided across a wide range of bodies and

organisations.

There is also a need for all of the involved state enterprises58, political parties and
industry stakeholders to play their part in continuously and assertively getting the
message59 across to the public that:

“If you love wind, you have to at least like transmission”

58
Refer to listing of state enterprises in section entitled “Planning Considerations”.
59
Source of quotation: [Soholt 2009]

116
11. BRIEF OVERVIEW OF OFFSHORE
CHALLENGES
Offshore wind currently accounts for a small amount of the total installed wind
power capacity in the world – approximately 1%. The development of offshore
wind has mainly been in northern European counties, around the North Sea
and the Baltic Sea, where about 20 projects have been implemented. At the
end of 2008 the total capacity of installed offshore wind farms worldwide was
1,471 MW.

Poyry‟s 2020 report to EirGrid entitled “Low Carbon Generatoion options for
the All-Island Market” [Poyry 2010] attributes a levelised cost (lifetime
generation costs) of about €70/MWh to onshore and about €130/MWh to
offshore. i.e. Over the lifetime of the project the cost of each unit of electricity
generated from an offshore wind farm will be approximately twice that from an
onshore wind farm. (refer to Section 6.1 ).

However, due to the expected benefits of higher wind speeds, lower visual
impact, saturation of on-shore locations and the greater social acceptance of
the offshore turbines, several countries – predominantly in European Union
Member States - have set ambitious targets for offshore wind.

Although the investment costs are considerably higher for offshore than for
onshore wind farms, they are partly offset by a higher electricity production
from the turbines, due to higher persistence, higher wind-speed and lower
variability of offshore wind. For an onshore installation utilisation, the energy
production indicator (yield) is typically around 2,600 full load hours per year
(i.e. capacity factor of circa 0.3), while for a typical offshore installation this
Figure is more typically around 4,000 full load hours per year (i.e. capacity
factor of 0.45) depending on the particular site.

Whilst not currently as economically attractive as onshore wind powered

generation, off-shore wind has a part to play in attaining Europe‟s and
Ireland‟s targets for renewable energy.

Existing off-shore wind farms are already located off the shores of numerous
countries including Denmark, the United Kingdom and off the east coast of
Ireland. Despite the heralding of visions for massive, world beating, offshore
wind farms around the coasts of Ireland the realisation of the dreams has yet
to materialise. To-date only 25 MW of off-shore is in operation60.

60 Phase 1 of the Arklow bank project, which connected in 2003, is a 25 MW partnership venture between
Airtricity/SSE and GE Energy.

117
11.1 Offshore Wind Farm Characteristics

Off-shore wind has considerably different characteristics when compared with

on-shore wind powered generation. On the positive side, wind speeds at sea
tend to be considerably higher and steadier and more predictable than those
over land providing greater returns. (refer to roughness in Appendix). Offshore
wind farming has a considerable advantage over onshore development with
regard to physically getting turbines to the site. Offshore turbines are also
predominantly towards the large end of the scale in terms of tower height and
rotor diameter. Offshore wind does not suffer from terrain “roughness” so that
the wind speed is not so dependent on height and hence higher (and more
expensive) towers are not required. Offshore wind turbines are subjected to
less turbulent wind. Consequently, they are subject to less stress and fatigue
than on-shore turbines and have lower operation and maintenance (O&M)
costs. However, the O&M costs can be pushed higher if access to turbines is
restricted due to tidal or severe weather conditions. Additionally, in the main,
such projects are less likely to suffer with risks and delays that would be
normally experienced on land e.g. planning objections or restrictions for both
the farm and the grid connection and site access.

While off-shore development has some advantages over its on-shore

equivalent, higher capital costs and significantly higher installation and grid
connection costs and the greater distance to the main centres of electricity
consumption (i.e. primarily cities) make it less economically attractive at
present.

11.2 Availability of Wind Farms

A wind farm is considered unavailable when it is not capable of generating
electricity during periods when the wind conditions are favourable, due to
maintenance, fault conditions, etc. The availability of onshore wind farms is in
the order of 97% – 98%. However, in the offshore environment, due to the
challenges of vessel availability and weather and tidal windows, it is realistic
to expect availability to be lower. For example, the availability [NG 2009] of
GB‟s North Hoyle offshore wind farm is reported at 84.7%.

11.3 Offshore Wind in Ireland

The Arklow Bank project off the coast of Wexford is currently in operation with
a capacity of 25MW. In addition, the Arklow Bank Wind Farm has planning
consents to construct 193 wind turbines with a capacity of up to 1 GW but has
not secured a grid connection under the current Gate 3 group processing
approach. Likewise, the Codling Wind Park61 has planning consent to
construct 220 Turbines with a capacity of up to 1.1 GW. However, it has not

61 Planned location is approximately 13 kilometres off Greystones on the east coast of Ireland

118
secured a grid connection under Gate 3 either. Without the real prospect of
grid connections the future of these offshore wind farms is uncertain.

As shown in Table 11.1 below, there are currently 785 MW of offshore wind
powered generation capacity included in Gate 3. Connection offers will be
issued in 2010/2011 for these projects.

Offshore Wind farms in

MEC (MW)
Gate 3

Kish 364
Doolick 100.8
Oriel 320
Total Offshore (MW) 784.8
Table 11.1: Offshore wind farms in Gate 3

In November 2009, in addition to all previous Gates, there were more than
11,000 MW of additional wind powered generation capacity in lodged
applications to the System Operators (refer to Table 11.2 below). It is
reasonable to expect that a significant share of the applications are for
offshore wind.

Offshore Wind Capacity (MW)

Operational 25
Offered Grid Connection 0
In Gate 362 785
Onshore + Offshore in queue
>11,000
for connection offer
Table 11.2: Offshore Wind in Ireland

According to the Global World Energy Council [GWEC 2009] large scale
offshore wind developments will in the coming years account for an increasing
share of new wind capacity added in Europe, and by 2014, 2.7 GW (about
18%) of the annual market is expected to come from offshore installations.

62 All projects in the Gate 3 list are designated to be issued a connection offer by mid-2011.

119
12. STORAGE
Economical energy storage would greatly facilitate the penetration of variable
RES-E and especially wind powered generation. With increased storage the
capability of the power system to absorb the “free” electricity generated in
excess of system-wide demand+export would reduce curtailment. Also, most
storage technologies provide a source of flexible and fast response
generation to complement the variable and somewhat unpredictable nature of
wind powered generation

For large-scale energy storage, pumped hydro accumulation storage (PAC) is

the most common and best-known technology. Other large-scale technology
option is compressed air energy storage (CAES).

As illustrated in Figure 12.1 below, storage flattens out the electricity demand
profile, permitting base-load power stations to continue operating at capacity,
while reducing the need to run less efficient peaker plants. Since electricity
generated by base-load plant is cheaper that that generated by peaker plants,
storage has the potential to reduce the price of electricity. There is a limit to
how much energy a storage unit can store, and this dictates the duration of its
pump-generate cycle.

Figure 12.1: The effect a large amount of storage could have on a typical
daily electricity demand profile (source: EirGrid)

For example, if a unit has a power capacity of 100 MW and an energy storage
capacity of 300 MWh, it can generate at maximum output for up to 3 hours
before it needs to store energy again. Most storage generators operate on a
daily cycle; energy is stored at night and released to generate electricity
during peak demand hours during the day. This has the effect of reducing the
daily peak and increasing the night time trough. Figure 12.1 below shows the

120
effect a very large volume of pumped storage unit could have on a typical
daily demand profile.

Energy storage has been often suggested as a logical partner for wind
energy. A study [Ummels 2008] of the integration of large-scale wind power
and the use of energy storage in the Netherlands‟ electricity supply concluded
that energy storage is not the most efficient solution for the integration of
large-scale wind power. The cost–benefit analysis performed shows that
pumped hydro accumulation storage (PAC) is unlikely to have a positive
balance, even at very high wind power penetrations. This is mainly due to the
very large investment costs associated with pumped hydro accumulation
storage technology. Compressed air energy storage (CAES) has limited
synergies with wind power because of its small energy storage capabilities.

121
13. IMPACT OF HIGH WIND PENETRATION ON
CONVENTIONAL PLANTS
13.1 Societal Costs of High Levels of Renew ables
The All-Island Grid Study defined the additional cost to society as the sum of
the operating costs of the power system and varies with the generation
portfolios. These costs are illustrated in Figure 13.1 below. The costs are
additional to the investment costs of existing conventional generators and
existing and base case transmission asset costs. These costs include:

 the operational costs of generation consisting of the fuel costs and the cost
of CO2;
 the charges for the net imports over the interconnector;
 the total annual investment costs for all renewable generation, existing and
new;
 the annual investment in network reinforcements; and,
 investment in new conventional generation. Under market rules these
costs would typically be covered by revenues from energy markets (infra
marginal rents) as well as by those from ancillary services and capacity
payments where in place.

Source: [AIGS 2008]

Figure 13.1: Societal cost for different levels of RES-E penetration

This study was subsequently supplemented with additional studies which

included: Impact of High Levels of Wind Penetration in 2020 on the Single
Electricity Market which was conducted by the Regulatory Authorities and

122
published [SEM-09-002] in September 2008. This study examined the impact
on the ability of the wholesale electricity market in Ireland (i.e. the SEM) to
operate efficiently and effectively with increasing penetrations of wind
generation.

The results of this study by the Regulatory Authorities concluded that:

 High wind penetration tends to reduce the overall System Market Price
(SMP) and hence the costs to consumers.
 It also tends to significantly reduce the revenue in the energy market.
This stands to reason as fossil fuelled electricity is displaced by zero-
cost (of fuel) wind energy.
 Total operating costs (for all generators in aggregate) are substantially
reduced.
 High wind penetration leads to a reduction in the reliance on imported
fossil fuels, thereby improving security of supply and less impact from
volatile and unpredictable prices;
 Reduces carbon emissions;
 The volatility of wholesale electricity prices in the SEM tends to reduce
with increased capacities of wind;
 Overall, a reduction in system revenues, wholesale electricity price,
total power system costs and carbon emissions levels can be seen with
increasing wind penetration.

The impacts of high levels of wind penetration on the entire system needs to
be examined and the impacts need to be dealt with in order to achieve high
wind penetration.

The financial viability of conventional plant may be compromised in a market

where wind penetration is high and where wind is treated more favourably.
The security of supply of the entire power system is put at risk if the most
suitable and efficient portfolio mix of generation is not in place to meet the
instantaneous demand for electricity at all times.

Optimal portfolio mixes can be designed to minimise expected generating cost

and risk – while simultaneously enhancing energy security. A key finding of
the analysis of Awerbuch and Yang [Awerbuch 2007] is that compared to the
projected 2020 EU business-as-usual electricity generating portfolio, there
exist optimal and efficient portfolios that are less risky, less expensive, and
that substantially reduce CO2 emissions and energy import dependency.
Awerbuch and Yang stress the importance of policy making-approaches
grounded in portfolio concepts (via energy planning portfolio optimisation
approach) as opposed to stand-alone engineering based concepts.

With higher levels of wind penetration the optimal mix of generation plant (in
say 2020) to complement wind is significantly different to that which exists
today. Both the All-Island Grid Study and the study from the Regulatory
Authorities which present a snapshot of the electricity market and the
generation portfolio in 2020 finds that high wind penetration will result in less

123
dispatch of baseload plant. The studies find that as the level of wind
penetration increases:

a) Capacity factors for thermal plant is generally reduced significantly and

especially for existing63 gas-fired baseload and mid-merit plants;
b) The capacity factor of new64 gas-fired CCGT will reduce significantly as
the level of wind penetration increases;
c) As observed by Denny and O‟Malley [Denny 2009] the number of plant
start-ups will increase dramatically as the level of wind penetration
increases. This will significantly increase operation and maintenance
costs and reduce the operating lifetime of thermal plants, especially of
existing thermal plants which have not been designed to withstand the
fatigue resulting from repetitive cycling.
d) Peat and coal capacity remain static and capacity factors reduce
somewhat;
e) The total generation annual pool revenue will decrease by €1,108
million (from 7,498 to 6,390 million) (i.e. by 15%). As €1,702 million out
of a pool of €6,390 million will accrue to wind powered generation the
remainder must (essentially) be shared by conventional generators
which have higher operating costs, shorter lifetimes and lower capacity
factors.

According to Divya et al. [Divya 2008] the total installed generation capacity
will not increase significantly in line with the increase in capacity of wind
power. Rather about 40% of the conventional power plants in operation today
will most likely be replaced by wind power plants. Accordingly, conventional
generators will need some support mechanisms to preserve their financial
viability so as to maintain the security of supply of electricity on the island of
Ireland.

The study concludes that the market will provide the majority of new
conventional generating plants comprising the portfolios with sufficient
revenue to recover their total costs (both fixed and variable) and provide a
return on capital employed.

13.2 Discussion regarding the future viability of conventional

plants
The overwhelming message from academics and industry experts is that the
financial viability of most conventional plants will be heavily impacted by high
wind penetration. A power system incorporating high wind penetration leads
to: repetitive cycling; lower running regimes; reduced capacity factors;
increased fatigue; and, higher maintenance costs.

Wind powered generation will account for 40% of the energy market. This
represents a huge reduction in the energy related income stream to
conventional generators. As the majority of new conventional plants are

63“existing” refers to the existing plant portfolio in operation in 2008

64“new” refers to additional generating plants which is assumed to be added to the
existing 2008 generation portfolio between 2008 and 2020

124
CCGT, which are ill equipped to provide the generation flexibility needed to
complement wind powered generation, it is likely that their viability will be
threatened unless other revenue streams supplement the reduced energy
stream.

14. DISCUSSION OF ADEQUACY OF EXISTING

MEASURES
14.1 General challenges
In recent years there has been a steady increase in Ireland in the share of
total electricity consumption which is generated from wind energy. At the end
of 2009 this amounted65 to 10.5%. However, the Irish Government has set an
ambitious RES-E target of 40% of total electricity consumption to be
generated from renewable sources by 2020.

 connection to an electricity grid which currently has very little additional

spare capacity, evolution of the grid from a network, which was
designed to predominantly distribute electricity in one direction from a
central core to the various loads, to a network with distributed
generation where the network needs to cater for greater fluctuations in
the amount and the direction of flows,
 the generation (from wind) is less predictable, and generators are
located in remote areas, far from the core demand and where network
is currently weak.
 the current economic situation has increased the cost of borrowing
and made potential developers of wind powered generation more risk
averse for and has decreased the availability of funds.
 There is also an increase in the resistance to wind farm development
from a number of areas. This includes: the reluctance of landowners
and farmers to issue consents to developers to proceed with wind
farms until appropriate compensation measures are in place; increase
in the resistance to the development of crucial infrastructure required to
enable key energy-related projects to proceed efficiently such as the
protest groups acting against the Corrib gas project and the North-
South electricity tie-line.

A system with such high levels of wind penetration will require a significantly
different generation portfolio mix and an operating regime which is alien to the
regime or conditions for which the majority of the current mix of generators in
Ireland was designed for. High wind penetration will, in the main, require
conventional thermal generating plant to have a different set of design and

65 Recent SEAI publication [SEAI 2010] provides a provisional figure of 10.5% of

gross electricity consumption generated from Wind. The overall 2009 contribution
from renewable was 14.4% which also included 3.2% from Hydro and 0.6% from
Biomass.

125
running patterns, such as the requirement to be able to cope with highly
irregular running patterns and to be able to ramp up and down quickly. These
irregular running patterns will [Grimsud 1995] increase the effects of creep
and fatigue in the metal components of conventional power plant leading to
shorter lifespan or require the use of more expensive designs or
components/materials in new plant. They will also lead to more intermittent
and unpredictable revenue streams generated from many mid-merit and
baseload plants. During Summer it is questionable as to whether current
baseload plant, in a high wind penetration scenario, would be dispatched
sufficiently and for sufficient durations to be financially viable. However, it
may be the case that they should be given priority dispatch in order to
maintain the security of the supply of electricity.

According to Milligan [Milligan 2009] when thermal generating units cycle

more often as a result of adding wind to the generating portfolio, there is
typically a decrease in unit efficiency that arises as a result of the more
frequent ramping, and because units may be operated at less efficient points
on their heat rate curve.

14.2 Challenges identified by CEER

According to the CEER [CEER 2009] certain characteristics of wind
generation results in challenges for regulators, investors and policy-makers in
developing the appropriate grid and market arrangements, as follows:

1. Wind has a number of technical characteristics which differ from those of

conventional generation – wind generation projects are typically smaller,
but more numerous, than conventional generating stations;
2. Wind generation is intermittent66, with a degree of unpredictability. Hence it
presents additional challenges to the System Operator to include the
dispatch of wind to balance generation with demand;
3. The “fuel” for the generation of electricity is free and therefore has low67
short-run marginal costs compared with conventional generation. As a
result conventional generation may increasingly be utilised in a reserve
wind compensation capacity in systems with substantial wind penetration.
Hence, the mix of existing and new conventional plant must evolve in
tandem with the increasing penetration of wind generation.
4. Wind is generally less effective than conventional generation in its ability to
provide the system support services which are critically required to ensure
the security and stability of the electricity network. These system support
services are called ancillary services and include reactive power, black
start and system reserve.
5. A high penetration of wind may lead to a system which is not as tolerant to
system faults unless measures are taken by the Transmission System
Operator to ensure that the system security is continuously monitored and
reviewed and that remedial measures are taken to maintain system

66 “intermittent”, means that the capacity of a wind turbine to generate electricity

varies with the incidence and strength of ambient wind.
67 Or negative short-run costs if/when the financial support provided through a

scheme (e.g. REFIT) is included.

126
 security. At the levels of penetration planned in Ireland this poses
unprecedented challenges for a region which has limited interconnection
to other systems and very limited capacity for electricity storage.

The scale of entry of renewable generation in some EU Member States is

potentially very significant. For example, from its base, in 2009, of having 14%
of electricity consumption produced from renewable sources, the Irish
Government has set an ambitious target of 40% by 2020.

Furthermore, implications of wind generation for the power systems and its
treatment vary widely across EU Member States, according to different
system characteristics such as generation mix, the penetration of renewables,
the location of energy sources and demand and the market and grid
arrangements. This represents a further consideration for investors and
regulators.

14.3 Challenges and actions identified by IE A

The key actions, identified in the International Energy Agency‟s Wind Energy
Technology Roadmap [IEA 2009], are set out in Table 14.1 below..
The seven main areas of structural change identified in 2007 by the IEA [IEA
2007] which directly benefit renewable energy are listed in the subsequent
Table; Table 14.2.
When combined, these two lists encompass the key generic structural
changes and actions needed to achieve high wind energy penetration.

Based on the information collected during this study an opinion is presented

by the author on the adequacy of the measures and actions that are currently
in place to meet the IEA‟s best-practice roadmap.

Note that the assessment is limited to commentary in the context of onshore

wind powered generation only.

127
Table 14.1: Adequacy of Ireland’s measures against key actions identified by the IEA in the Wind Energy Technology Roadmap
[IEA 2009]
Key actions in the next ten
years as identified by IEA
1. Set long-term targets,
supported by predictable
market-based mechanisms to
drive investment, while
pursuing cost reductions
2. Set mechanisms for
appropriate carbon pricing
3. Advance planning of new
plants to attract investment,
taking account of other power
system needs and competing
land/sea-usage.
4. Appoint lead agencies to
coordinate advance planning
of transmission
infrastructure to harvest
resource-rich areas and
interconnect power systems;
Positive aspects of Ireland’s actions on
wind
Ireland ranks near the top in world wide
targets for penetration of renewables.
Limited capacity feed in tariffs are in place
to support wind energy.
Regulatory market mechanisms for
dispatch and scheduling in the context of
high wind penetration are being
progressed.
EU has put measures in place via the
European Emissions Trading Scheme.
Ireland’s energy regulatory authority has
set out a non-discriminating policy for the
connection of conventional plants to dove-
tail with the initial penetration of
wind/renewables.
The East-West interconnector will provide
some “liquidity” in the direction of a single
UK-IE electricity market.
Ireland energy regulatory authority and
the system operators have initiated and
are implementing specific plans to
reinforce or uprate the grid to
accommodate the evolving portfolio mix of
new generation in order to achieve 40%
128
Opinion on possible areas for improvement to facilitate
WIND energy
The subsidies should seek to encourage the reduction in costs
towards being fully competitive in the market
Market mechanisms need to be expedited so as to reduce
market risk and stimulate deployment
Certainty is needed in relation to feed-in-tariffs for Gate 3
projects.
The cost of GHG emissions needs to be internalised in the price
of electricity including consideration of the societal costs of
health and environmental damage
The explicit incentivisation or reward of flexible fast-response
plants and stability enhancing services and interconnection to
coalesce with increasing wind powered generation levels could
be studied. There are several options for effecting this, such as:
 via market mechanisms such as an energy payment;
 via ancillary services payments;
 via a capacity payments mechanism; and possibly,
via the connection policy so as to facilitate these types of plants.
The need for additional future interconnector capacity should be
quantified as soon as possible and plans made to reserve and
ring-fence the connection point and grid capacity.
The System Operators face an enormous logistical challenge to
identify, plan, finance, design and roll-out the grid
reinforcements and uprates without having the proven track
record of doing so on this scale.
The absence of the strength and depth of the technical
knowledge, skills and experience to deliver the required
 Key actions in the next ten
years as identified by IEA
5. set incentives to build
transmission;
6. assess power system
flexibility.
7. Increase social acceptance
by raising public awareness
of the benefits of wind power
(including strategic CO2
emissions reductions, security
of supply and economic
growth), and of the
accompanying need for
additional transmission.
8. Exchange best practice with
developing countries; target
development finance at wind
power deployment bottlenecks;
further develop carbon finance
options in developing regions.
Positive aspects of Ireland’s actions on
wind
penetration.
The strategy for the development of
Ireland’s Electricity Grid is set out in
GRID25. This represents a total
investment of €4 billion by EirGrid
between now and 2025.
In a move away from tradition, EirGrid are
now embarking on a public awareness
campaign to make the public more aware
of EirGrid and of the strategic national
need for wind powered generation and the
grid infrastructure to support it.
Ireland is unique in that there is no other
country with the particular unique energy
characteristics and targets similar to
Ireland’s. Ireland can only look to the
others for particular similarities.
There is little evidence of efforts to share
problems, knowledge, experiences or
lessons learnt with other regions or states
with equally ambitious renewable targets.
129
Opinion on possible areas for improvement to facilitate
WIND energy
infrastructural quantum leap advancement in the grid capacity
and also in the provision of the “shallow connections” to the grid
is a significant risk.
A detailed study of the power system characteristics needed in
Ireland to accommodate increasing renewables and the year-to-
year adequacy of a) the generation portfolio and b) the system
support services as the system evolves would be informative.
This could be informed by further studies ensuing from the
Facilitation of Renewables Study [Ecofys 2010] including more
elaboration on flexibility.
A nationwide campaign targeted at the public and supported by
many agencies at every opportunity would help to overcome the
seemingly growing resistance to pylon and overhead line
installations which may expand to wind turbine installations
also as the penetration increases to a level where the visual
impact of turbines cease being an item of curiosity to a blight on
the landscape.
A positive and expeditious outcome of the stalled An Bord
Pleanala oral hearing on the Tyrone-Meath interconnector would
be helpful.
Ireland could possibly seek more financial support from the EU
to assist in pushing the frontier for the penetration of
renewables. The finance could assist Ireland in doing
groundbreaking research and development work which will
benefit and inform the rest of the EU community and the world.
The public sector recruitment embargo in Ireland may prove to
be a significant impediment to the development of evolving
policies and the early identification and tackling of potential
risks or impediments to the realisation of the national plan to
reach the 40% target.
Table 14.2: The seven main areas of structural change identified in 2007 by the IEA [IEA 2007] which directly benefit renewable
energy are listed in the following table:
Key actions in the next ten
years as identified by IEA
1. Increased grid capacity and
cross-border connections
2. Balancing/regulating markets
that are cost-reflective,
transparent and interconnected
with gate closure times
reflecting the technical and
economic needs of the system;
3. Enhanced uptake of efficient
demand-side response
mechanisms;
4. Installation of more flexible
generating capacity, including
hydro-power and biomass, as
capacity reserves.
5. Increased efforts to reduce the
costs of novel storage solutions
to widen the number of
strategic options;
Positive aspects of Ireland’s actions
EirGrid have published their Grid 25
strategy; refer to 4,5,6, of Table 14.1 above.
The Single Electricity Market is in operation
since 2007 providing a transparent cost-
reflective mechanism for the generation of
electricity on the island of Ireland.
Initiatives to introduce smart metering in
Ireland are well under way. This includes a
pilot project which is in progress. This will
facilitate time-of-day tariffs and will help to
shift or reduce the daily peak demand
which has a major influence on the
wholesale price of electricity.
Some provision has been made to provide
for the grid connection of pumped hydro
storage plants.
No significant cost-reduction measures
known although CAES and PHES options
and opportunities being looked at by
developers.
130
Opinion on possible “structural” areas for improvement to
facilitate electricity from RENEWABLES
Possibly give more serious consideration to an interconnector to
France.
This may be desirable for security of supply and power system stability
reasons. It may also have a beneficial impact on the wholesale market
price of electricity.
The identification of the technical needs of the evolving system is a
very significant challenge. The current long gate-closure time of the
SEM does not facilitate the economic balancing of the system; refer to
the section “Market arrangements and wind power”.
The continued progress of the smart-metering initiative and a steady
progressive shift to electric vehicles will facilitate improvements in the
shaping of the daily demand curve.
A study of energy storage and flexible power system characteristics
and a more inclusive year-to-year generation adequacy forecast as the
system evolves is needed as well as a mechanism to induce or
incentivise flexibility and storage solutions.
 Key actions in the next ten
years as identified by IEA
6. A mix of different renewable
energy technologies, taking
advantage of different natural
cycles and thus reducing
volatility and uncertainty; and,
7. Improved forecasting and
modelling of natural
fluctuations and increased
utilisation of communication
technologies to disseminate
this information between grid
operators and markets.
Positive aspects of Ireland’s actions
The necessary targets, plans, support
mechanisms and arrangements are largely
in place to provide for high levels of wind
penetration.
With regard to wind power, this is being
addressed by the TSO and through
progressive research at universities.
131
Opinion on possible “structural” areas for improvement to
facilitate electricity from RENEWABLES
The huge potential for ocean energy (wave and tidal) is largely
untapped. These forms of renewable energy have different
characteristics in terms of variability and predictability and may
complement high levels of wind energy penetration. However, they will
also compete for funding, subsidies, grid connection and capacity. A
diversified portfolio is beneficial. Ocean energy should be positively
promoted, with provision made for grid connection and appropriate
support mechanisms.
Being at the leading edge, both in terms of high wind energy
penetration and in terms of being the first port of call (to land) of the
prevailing westerly winds, there is not huge scope for Ireland to receive
information from more westerly grid operators. However, there is scope
for Ireland to be the provider of valuable instantaneous wind data to
other west European countries.
15. CONCLUSIONS AND SUGGESTIONS FOR
FURTHER RESEARCH

The conclusions of this study are as follows:

i. The current plans which provide for the connection of up to 6,440 MW

of wind powered generation are more than adequate to fulfil the
national RES-E target of 40% electricity from renewable sources by
2020.

ii. In order to meet the EU‟s 16% RES target by 2020 Ireland has opted
for a mix of measures which includes a RES-E target of 40%. The
scope for significant contributions from the transport (RES-T) or heat
sectors (RES-H) in addition to their existing contribution is very limited.
Therefore there is a strong imperative to deliver the 40% target.

iii. The uptake and execution by wind farm developers of more than 4,000
MW of (already issued or pending) connection offers is heavily
dependent on regulatory decisions and government support schemes
such as REFIT. This includes the scheduling and dispatch of electricity
in the market, the availability and cost of finance, the design of the
electricity market, the level of saturation of wind powered generation
over and above demand+export and the compensation mechanisms for
curtailed wind power.

iv. There is much uncertainty with regard to the power system stability
with 6,000 MW or more of wind powered generation capacity
connected. Further details are needed of the necessity and impact of
the “must run” synchronous generators and the system operational
constraints identified in the recently published Facilitation of
Renewables Study [Ecofys 2010]. Knowledge of the dynamics and
system security impacts of the portfolio mix of a large share of wind
power combined with conventional plant are evolving.

v. It can be deduced from the Ecofys study that a conventional portfolio

dominated by CCGTs and inflexible baseload plants is inappropriate in
a system with very high wind powered generation. Critically,
conventional “must run units” with a minimum active power limit of
close to zero will be needed to provide inertia and voltage and transient
stability.

vi. All economically viable opportunities to maximise “flexibility” will need

to be identified and availed-of if high wind penetration is to become a
reality. This will require an understanding and a study-of the adequacy
of the expected capacity of pumped-storage, interconnection and fast-
response conventional plant as well as the quantum and
responsiveness of demand-side reduction mechanisms.

132
vii. To-date insufficient consideration has been given or allowance made
for the integration of other forms of emerging renewable generation
such as tidal and wave power. Will there be the resources (including
grid capacity) or the appetite to progress and accommodate these so
as to have a more diverse portfolio mix and a more secure supply of
electricity?

viii. It is questionable as to whether the first-come first-served connection

access queuing mechanism or the current SEM design are appropriate
in providing (via access and incentivises and rewards) a balanced and
appropriate mix of system support services or to ensure the stability of
the system and guarantee uninterrupted “quality” electricity into the
future. Perhaps a clear distinction should be made between
conventional energy generation capacity and stability reinforcing
capacity. Unfortunately, this is not so easy as all generators can
provide some measure of both energy and stability.

ix. The allocation of grid capacity in Gate 3 was calculated prior to the
economic collapse. The ensuing decline in electricity consumption in
2008 and the reduced projections for the demand of electricity to 2020
means that there is potential to far exceed the 40% target. Whilst this is
good news it may pose ancillary problems in that the pool of money in
the energy market has to fund a greater capacity of conventional
generation which does not provide the required system services.
Unless curtailment is paid-for through some scheme or an “outlet” is
put in place (i.e. Great Britain) for the available energy the financial
viability of wind powered generators may be jeopardised.

x. It is not unreasonable to expect, based on the projections for 2020

(refer to Section 5.2), that wind powered generation will provide 18
TWh out of total consumption of 30 TWh; i.e. RES-E = 60%. In fact,
this does not take account of any additional generation from other
renewable sources such as tidal, wave, biomass, etc. Without
additional interconnection on top of the planned 500MW East-West
interconnector, Ireland will experience significant curtailment of wind
power; especially if the upper limit of 6,450 MW of wind capacity is
reached. Efforts should be renewed to look at the market mechanisms
and interconnection options which could enhance the export of
“surplus” electricity from the SEM into the British electricity market.
Some notable market impediments towards a unified market exist such
as the chasm between the gate closure time in Ireland and GB.

xi. The public acceptance of wind energy and electricity infrastructure

needs to be boosted. Increased but measured efforts should be made
by all involved state enterprises to actively promote the benefits of wind
(and renewable) energy and to dispel myths which abound in relation
to the exaggerated adverse impacts of noise and radiation to peoples‟
health and the environment. There is an inadequacy in the proactive
generation and availability of detailed studies and analyses and public
education in Ireland on these issues.

133
xii. The task of installing the 4,000 (or so) MW of wind generation capacity
to achieve 40% RES-E is only half the battle. The other big challenge,
and less obvious perhaps, is the knock-on impact on the running
regime and viability of other conventional plants and the detrimental
impact on the stability of the power system. Security of supply can
effectively be bought. The grid can, at a price, be designed, reinforced
and operated with lots of headroom and minimal risk. Any excess
imposes unnecessary costs onto the electricity domain which in-turn
translates into higher tariffs for the end-customer.

xiii. In order to deliver the elective national 40% RES-E target, and indeed
the binding 16% overall RES target there is a need to ensure there is
an oversight body empowered and tasked with co-ordinating and
directing all state bodies and relevant ministries so that they are
aligned and focused to ensure that progress towards the RES targets
stay on track and that barriers are proactively identified and tackled. It
is incumbent on the government to provide adequate resources to
facilitate this and to execute the plans and actions.

15.1 Further Studies

Many studies and reports, such as EirGrid‟s Generation Adequacy Report
[GAR 10-16], Transmission Development Plan [TDP 08-12] or Forecast
Statement [Forecast 10-16] have heretofore assessed the near-term
adequacy of the network or the generation portfolio to meet the needs of the
system in order to provide a safe, secure and reliable system. These reports
assess adequacy for the forthcoming five to seven year period. However,
there is no report which systematically and periodically (perhaps updated
every few years) assesses the longer term needs of the system or of the
adequacy of the market design, the system stability or energy policies. In
addition, the adequacy of the generation portfolio could be assessed with
regard to not only the generation of energy but to also the preservation of the
stability of the system.
The energy regulator‟s decision [CER08260] to issue nearly 4,000 MW of grid
connection offers to wind powered generators and the associated plans to
reinforce the grid to accommodate these wind farms was made in 2008 prior
to the economic downturn. This downturn has put a dampener on the
projected increase in electricity consumption to 2020. Accordingly, the wind
powered generation capacity on the system in 2020 may far exceed the 40%
RES-E target. This could have a detrimental effect as: a) the profitability of all
wind farms on the system is reduced as excess wind increases the level of
curtailment b) the capacity payments to all generators is diluted, c)
conventional plants have even less runtime; and, d) the grid reinforcements
as currently envisaged may be excessive. This scenario, if not mitigated, is
likely to lead to inefficiencies and higher electricity costs for end-users.
Therefore, it may be prudent to carry out a study to model and assess what
the optimal wind powered generation level is.
Further investigation may be needed to identify more explicitly the plant type
or characteristics which are needed to provide the system operational support

134
identified in the Facilitation of Renewables Study [Ecofys 2009]. It can be
deduced from the study that a conventional portfolio dominated by CCGTs
and inflexible baseload plants is inappropriate in a system with very high wind
powered generation. .Critically, conventional “must run units” with a minimum
active power limit of close to zero will be needed to provide inertia and voltage
and transient stability. System services or some other market mechanism will
need to be put in place to procure the system operational support needed.
This area will provide plenty of scope for further study for many years.

There is little doubt that the migration of the power system towards a portfolio
with substantial renewable generation meets sustainability criteria. However, it
is less clear as to whether it will lead to competitive prices of electricity for the
end-customer once all of the system security and stability issues have been
identified and factored into the cost in a truly cost-reflective manner.

In addition to the mention of further studies above the following are areas
which could also be considered:

 The adequacy of arrangement for optimal offshore wind energy

harvesting in Ireland.
 Study into the power system benefits of more accurate forecasting of
location-specific wind speeds.

The biggest challenge is to identify and strike the right balance between
security of supply and competitiveness as Ireland moves from 95% fossil fuel
dependency towards sustainability.

135
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139
APPENDIX – POWER OF THE WIND
The power of the wind is a very important factor in determining the economics
of wind generated power. The electricity produced by a wind farm is a
function of:

 The average (annualised) wind speed and hence:

o the geographical location of the wind farm:
 coastal, inland, offshore, ridge, etc.
 coastal Western Europe versus inland Europe, etc.
o the roughness of the terrain
o the height of the hub above ground
o the power curve of the turbine
 The size of the wind turbine: both the hub-height and the swept area (a
good proxy for the relationship between power generated and wind-turbine
size is the swept area of the blades);
 The layout of the wind-farm; optimal arrangement of the individual wind
turbines so that theimpact of the turbulence of upstream turbines is
minimised;
 The transmission losses incurred in transporting the electricity to the point
of consumption/demand (these losses may be considered to be system
losses). Each generator on the system is assigned individual loss factors68
to account for the electrical losses in transferring the electricity from the
source (at the point of generation) to the points of consumption. These
factors impact on the quantity of electricity which is deemed to be
delivered “to the market”. This adjusted quantity (= Generated Quantity x
Loss Factor) of electricity is the quantity for which the generator is paid in
settlement in the market.

All of these factors impact on the electricity generated by a wind farm and
hence impact on the financial viability.

Pow er of the Wind Formula 69

Albert Betz was a German physicist who calculated that no wind turbine could
convert more than 59.3% of the kinetic energy of the wind into mechanical
energy turning a rotor. This is known as the Betz Limit, and is the theoretical
maximum coefficient of power (Cp) for any wind turbine.

68 Each generator connected to the transmission system is assigned an individual

Transmission Loss Adjustment Factor (TLAF) by the Transmission System Operator.
This factor is recalculated annually and is, in principle, a proxy for the actual losses
which are incurred in transferring the contribution of electricity from the specific
generator to each of the ever changing points of consumption on the power network.
In addition, generators connected to the distribution network are also assigned a
Distribution Loss Adjustment Factor (DLAF).
69 © Copyright 1997-2003 Danish Wind Industry Association, June 2003

http://www.windpower.org/en/tour/wres/enrspeed.htm

140
The power of the wind passing perpendicularly through a circular area is:

P = Cp * 1/2 Av3

Where:

P= the power generated by the wind turbine measured in W (Watt).

= (rho) = the density of dry air = 1.225 measured in kg/m 3
(kilogrammes per cubic metre, at average atmospheric pressure
at sea level at 15° C).
v= the velocity of the wind measured in m/s (metres per second).
A= Swept area of the rotor
Cp = Coefficient of power

It is important to note that the power in the wind is proportional to the cube of
the wind speed.

16.1 Wind properties – Height, Turbulence and Roughness

The wind is movement of air masses with different speeds in all the regions of
the atmosphere. These movements are very difficult to characterize due to the
highly variable behaviour both geographically and in time.

The variability may occur over short intervals of minutes or hours due to:

 On a medium-term scale the wind will vary somewhat from site to site
mostly dependent on the general climate and the physical geography of
the region;
 In coastal regions the wind will tend to increase during the day as the main
mass of land further inland warms up during the day and draws air in from
the sea. As the sun falls and the earth cools more quickly than the
surrounding sea the “chimney” effect reduces;
 Over the period of a year the wind will vary on a seasonal basis.
 Locally, the short-time behaviour of the wind is affected by the surface
conditions at the ground, such as trees, buildings, areas of water, etc.
Then fluctuations in the flow, i.e. turbulence, are introduced as well. The
effect of the ground roughness will then decrease as a function of height
over the ground.
 Changes in wind direction and hence possibly in “roughness” depending
on the varianbility of the terrain in different directions e.g. there may be
open ground to the west of the wind farm and forestry to the east.
 The roughness decreases as the elevation increases. The wind speed
increases with increasing height.

141
 Roughness
Type of terrain hr(m) a
class
Water areas 0 0.001 0.01
Open country, few surface
1 0.12 0.12
features
Farmland with buildings and
2 0.05 0.16
hedges
Farmland with many trees,
3 0.3 0.28
forest and villages
Table A1: Calculation of wind speed based on roughness

16.2 Relationship of Wind Speed w ith Turbine Height

Wind turbines are affected by wind gradient. Vertical wind-speed profiles

result in different wind speeds at the blades nearest to the ground level
compared to those at the top of blade travel, and this in turn affects the
turbine operation. The wind gradient can create a large bending moment in
the shaft of a two bladed turbine when the blades are vertical.

The reduced wind gradient over water means shorter and less expensive wind
turbine towers can be used in shallow seas.

For wind turbine engineering, an exponential variation in wind speed with

height can be defined relative to wind measured at a reference height of 10
meters as:

where:

= velocity of the wind at height, h [m/s]

= velocity of the wind at height, h10 = 10 meters [m/s]
= Hellman exponent

The Hellman exponent depends upon the coastal location and the shape of
the terrain on the ground, and the stability of the air. Examples of values of
the Hellman exponent are given in Table A.1above.

Accordingly, as the size of wind turbines gets larger, the hub height increases.
Accordingly, the wind speed and the power output also increase as shown in
Table A.2 below.

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 Power in wind relative to 50m and 120m
hub height
Hellman 0.01 0.12 0.16 0.28
100/50 2.1% 28.3% 39.5% 79.0%
150/120 0.7% 8.4% 11.3% 20.6%
Table A.2: Increase in power output with hub height.

This table demonstrates that an increase in energy produced can be achieved

by raising the hub height. Raising the hub-height from 120m to 150m in “open
country, few surface features” (Hellman Exponent = 0.12) such as a coastal
location could result in an increase in energy production from an identical
turbine of approximately 8%.

Therefore, the general trend in increases in the size of wind turbines should
increase the energy produced on account of two factors:

1) The increase in the swept area of the blades

2) The increase in the hub height

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17. GLOSSARY

Capacity Credit: a wind turbine can only produce energy when the wind
blows. It is therefore not directly comparable to a conventional power plant.
The capacity credit is the percentage of conventional generation capacity that
a given wind turbine can replace. A typical value of the capacity credit is 20%
for current levels of wind penetration in Ireland but the credit decreases as the
wind penetration increases.

Capactiy Factor: (also referred to as Load Factor): The ratio of the actual
energy output of a power plant over a period of time and its energy output if it
had operated at full capacity for that time period. For example, an onshore
wind farm with a load factor of 35% generates on average 35% of its
maximum rated capacity, although at any given time it may be generating
anywhere between 0% and 100% of its total (nameplate) capacity.

Gate Closure Time refers to the final moment in which market players have
to submit their commercial offers to the electricity market operator for central
commitment and scheduling ahead of real-time operation.

Intermittency; subject to interruption or periodic stopping. According to “US

Energy Information Administration (EIA)” An intermittent electric generator or
intermittent resource is an electric generating plant with output controlled by
the natural variability of the energy resource rather than dispatched based on
system requirements. Intermittent output usually results from the direct, non-
stored conversion of naturally occurring energy fluxes such as solar energy,
wind energy, or the energy of free-flowing rivers (i.e., run-of-river
hydroelectricity).

Wind Penetration; the terms “penetration” and “wind penetration” are used
interchangeably in this paper to denote the annual total electricity generated
from wind energy as a percentage of gross national electricity consumption.

Shallow Connection: Under the "shallow" cost connection approach, which

is in operation in Ireland, the costs of the connecting a project‟s capacity to
the grid are borne by project developers. Shallow connection assets means
the dedicated connection assets (cables, lines, switchgear, transformers,
enclosures, site, etc.) required to connect a customer to the transmission
system and which are for the specific benefit of that particular customer or
group of customers.

Deep Reinforcement: refers to the network reinforcement additional to the

shallow connection that is required to allow new generation or demand to
operate at maximum capacity such that the network planning criteria are not
violated. e.g. the transmission lines and switching equipment are operated
within their rated values.

Transmission line thermal rating is the highest current that a power line can
be operated at without violating safety codes, integrity of the line materials, or
reliability of operation. In almost all cases, ratings are limited by line

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clearances. When the line current increases the conductor heats, elongates,
and causes the spans of the power line to sag more. Because the minimum
clearances are fixed any event which results in the power line sagging below
its limiting clearance is a code violation.

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