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The EU’s Clean Energy Package
The Commission for the Regulation of Utilities’ roadmap for the delivery of the EU’s Clean Energy Package’s energy and renewable directives outlines how the CRU plans to deliver Ireland’s renewable and energy goals in 2021.
The deliverables for the year 2021 that the CRU lays out in its roadmap, published in February 2021, can be broken down into three subgroups: updates to the retail market; new market activities and the role of the distribution system operator (DSO).
Updates to the retail market
In terms of updates to the retail market, the CRU began conducting an internal review in 2020 to assess what updates were needed to the Supplier Handbook to comply with new requirements in the EU’s Electricity Directive; this review will continue into 2021. The CRU will “explore the options on how to introduce these few updated requirements around billing information, contracts, switching, smart meters and terms and conditions”, with the handbook update process following similar procedure to the last update, meaning a consultation will be published to “allow for market participant input, which will be followed by a subsequent decision”.
The rollout of smart metres will continue to be monitored by the CRU, and engagement with the Department of the Environment, Climate and Communications on the transposition of the Electricity Directive will also continue, “with focus on the smart metering articles”.
CRU is also in the process of developing the Smart Meter Data Access Code, which will “define rules of access, and processing of, personal data from smart meters”. The code will “ensure there is a clear set of criteria outlined for data access to ensure consumer protections are in place for data being accessed through smart meters”.
New market activities
A consultation will be published that will address the feedback received from calls for evidence on active consumers and energy communities put out in 2020, “as well as some follow-up discussions which were held with industry stakeholders and market
participants”, with the content of the consultation “expected to cover a variety of topics that need to be addressed to progress development of an enabling regulatory framework to incorporate market actors engaged in the new energy activities outlined in both Directives into the electricity market”.
Subsequent consultations on active consumers and energy communities are envisioned, with the topic of participation in demand response aggregation to be discussed as well. As part of its review in 2020, the CRU “also understood that the provisions in the Directives encourage participation by third-party service providers to offer their assistance to active consumers and energy communities”.
These service providers are considered to be market actors as they will provide services “which enable participation in the new energy activities provided” for in the European directives. Anticipation within the CRU is that there “may need to be further consideration on how to ensure a level-playing field for these market participants, but also ensure fair treatment of the final customers they conduct business with”. The work laid out in this area in the roadmap is expected to run into 2022.
Role of the DSO
The CRU says that it “gained better understanding throughout 2020 on what the Clean Energy Package envisages the role of the DSO to be in the electricity markets”, specifically, “that they should aim to procure flexibility services from distributed generation and demand response, they should act as a neutral market facilitator and that they should aid energy communities in facilitating the transfer of energy between participants”.
The CRU states that it aims to explore these ideas further in 2021 and aims to ensure that requirements in Article 32 are upheld and ESB Networks is incentivised to fulfil the expectations of the DSO as prescribed in the Clean Energy Package. A consultation or a call for evidence to collect views from industry and stakeholders are two options mentioned as the CRU looks to advance this workstream.
What this means for Ireland
The Clean Energy Package consists of eight separate legislative acts, most of which entered into force in January 2020, and represents “a major step towards completing the energy union”. The remaining reforms needed in order for Ireland to comply with the package’s regulation will change the face of energy regulation and provision in the country.
Under the current regulations in Ireland, only generators with a maximum export capacity over 10MW are required to participate in the Balancing Market, but under the Clean Energy Package, all participants, with certain limited exemptions only, will be responsible for any imbalances that they cause in the market. There are numerous projects under 10MW in Ireland, mainly onshore wind, and the ending of their exemption is expected to result in higher costs for these projects.
The Clean Energy Package also prohibits capacity payments for generation facilities emitting certain levels of CO2, which change depending on the time period. This are set out as follows:
• Currently, and since 4 July 2019, any new generation facility which emits more than 550g of CO2 of fossil fuel origin per kWh of electricity; and
• From 1 July 2025, all generation facilities which emit more than 550g of CO2 of fossil fuel origin per kWh of electricity and more than 350kg
CO2 of fossil fuel origin on average per year per installed kWe.
To contextualise this in the Irish sense, the ESB’s 2017 report Ireland’s Low Carbon Future – Dimensions of a Solution noted that combined cycle gas turbines typically produce between 350 and 380g of CO2 per kWh. Ireland’s current capacity remuneration mechanism is still new, having been only recently redesigned to accompany the ISEM market change. Any enforced reduction in the scope of the programme will certainly be of concern to current participants, and it is unlikely that these participants will be satisfied by the cross-border participation initiatives that are also part of the Clean Energy Package.
Having just adjusted to relatively new I-SEM regulations in the recent past, Irish market participants will now have to adjust to European legislation such as the above. Participants will be required to monitor the CEP-related actions of the SEM Committee in order to track whether further adjustments will be necessary.
The Irish electricity sector has changed significantly over the past 10 years and is totally unrecognisable from 20 years ago. At the turn of the century, a stateowned incumbent operated a fleet of gas, coal, and oil plant, with large scale non-fossil fuel generation just a flicker in a futurologist’s eye. The decarbonisation agenda was simply not on the agenda.
Today, onshore wind generation is the growth story of the electricity market while fossil fuel-based technologies are in retreat. Change is also happening in another essential service to society which is supporting baseload power generation: the waste industry. While there is a slogan that everyone knows, reduce, reuse, recycle, another R-word, recovery needs to be added to the lexicon. Dublin Waste to Energy is the largest facility of its kind in Ireland, treating 600,000 tonnes of residual municipal solid waste (‘MSW’) every year, some 35 per cent of the country’s MSW. Its waste treatment operation recovers valuable energy from nonrecyclable waste and puts it back into the circular economy as sustainable fuel for baseload power generation. Now in its fifth year of operation the facility has become a critical part of Ireland’s waste management infrastructure. technologies. There is no option but to rapidly accelerate toward sustainable energy and Waste to Energy is currently the best practical environmental option available for MSW. It is not just part of the EU Energy Union, but is at the heart of the circular economy, utilising waste and reducing greenhouse gas emissions by not simply disposing of waste into landfill.
doesn’t generate methane in its combustion process. While carbon generates the headlines, one of the fastest, most cost-effective strategies to rapidly reduce the rate of warming is to target methane. All greenhouse gases are bad since they trap heat in the atmosphere, but methane is especially nasty. If released without being burned, it has over 80 times the warming impact of CO2 over the first 20 years after it reaches the atmosphere. Acting now to reduce methane has immediate benefits to the climate that reductions in carbon dioxide cannot provide on their own.
If society is serious about using practical solutions in the fight against climate change, then Waste to Energy is a vital part of the decarbonisation toolbox.
Demand for electricity is continuing to rise, and with the advance of electric vehicles and data centres will continue to do so. For transport, for heating and for data, electricity is key to driving positive change in our society. But the growth in the energy sector brings about conflicting challenges, and advancing decarbonisation, digitalisation and decentralisation requires us to recall the golden rules of a healthy energy system.
The simple objectives of a healthy energy system, namely that of energy security, energy sustainability and energy ‘equity’ (accessibility and affordability) make up the energy ‘trilemma’. The World Energy Council puts Ireland 17th on its international league table to gauge performance against the trilemma, granting us grade ‘A’ for both equity and sustainability, but only a ‘C’ grade on energy security.
2021 has been a remarkable year for electricity security in Ireland. The year began with a backdrop of poor thermal reliability of an ageing fleet and amber alerts as the system’s ability to meet rising electricity demand was stretched.
European commodity prices, buoyed by increasing demand and poor gas availability, saw markets rising to multiyear highs, and as a result the bar for the record daily electricity price in Ireland was pushed higher, time and time again. Gas prices and coal prices have now hit ten-year highs, and carbon prices have never been higher.
The limited interconnection to Great Britain (a market that faces the same issues of tight generation supplies and a high level of wind penetration similarly correlated to the conditions here) can sometimes alleviate the pressure on the system here, but this is not guaranteed and can occasionally drive further system shortages. Wind generation, while usefully overperforming at times of system stress earlier in the year, was often absent during the recent summer months. All this has led to a strange and unusual combination of record power prices during the summer months of low electricity demand. Waste to Energy is filling the gap providing a source of baseload power generation.
Waste to Energy is therefore vital, in that it offers a dispatchable, reliable and local source of power generation from a predominantly renewable fuel. It offers greenhouse gas savings not just from landfill diversion but also as a substitute for fossil fuels. It is a technology designed to operate baseload on a 24/7 basis to facilitate the seamless integration of two essential services, processing non-recyclable waste from communities across Ireland as a valuable resource rather than something to be discarded. In other words, Waste to Energy is an example of joined-up thinking which is precisely what the EU Circular Economy Action Plan is designed to promote.
To ensure practical implementation of the Circular Action Plan, it is therefore contingent upon the regulatory bodies in Ireland to ensure good, progressive initiatives are not undermined. Rulemaking in a vacuum will lead to suboptimal outcomes. For example, requiring Waste to Energy plants to dispatch down may offer a slither of additional flexibility in the electricity market, but impacts significantly on an essential sanitary service, bringing large levels of disruption to waste processing capacity for the nation more generally.
Waste to Energy, in addition to its primary objective to treat residual nonrecyclable waste in a safe and secure manner, plays a pivotal role in moving toward a resource-efficient, low-carbon circular economy. Considering the Government’s 2030 emissions objectives and the aspirations beyond, Dublin Waste to Energy will continue to support these ambitious targets.
Dublin Waste to Energy provides practical proven solutions to waste disposal through recovery. It is part of the wider national effort powering the transition to a decarbonised economy whilst maintaining a secure supply of baseload electricity 24 hours a day, seven days a week.
Inger Andersen, Executive Director of UN Environment Programme
Dublin Waste to Energy Ltd. Pigeon House Road, Dublin 4
T: 01 6032 100 E: dublininfo@covanta.com
