BGE answers these two questions, 5 and 6, together.

BGE believes that there is considerable merit in determining a Flexible Network Strategy but that the focus of the proposed approach is too narrow. A “living” coherent overarching strategy for addressing flexibility challenges is required. In the past ~6 months or so EirGrid has issued several documents that have the common goal of addressing issues with the grid and flexibility. For example, over the course of November-December 2021 numerous documents (e.g. Shaping Our Electricity Future; 2030 Volumes Indicative Portfolio Capability Analysis; Potential Solutions for Mitigating Technical Challenges Arising from High RES-E Penetration on the Island of Ireland; TSO PR5 incentives consultations covering DSO joint incentive/ investment planning and development/ imperfections incentive/ RES-E incentive / strategic objectives) were published all of which outline the challenges we face with growing renewables and achievement of decarbonisation targets as well as how some of those challenges can be mitigated. It is clear from these documents that a range of challenges exist and that they can be mitigated in an array of ways such as via market solutions (system service providers), infrastructure (wires) solutions and technical solutions such as those proposed in the current consultation. It is not clear however which solutions are best for which challenges or how the TSO is determining which solutions (or combination of solutions across system services/ grid/ non-wires) are best to use to address which challenges and over what timelines.

The TSO has a considerable number of workstreams ongoing in the area of flexibility, but we wish to better understand the extent to which and how the various workstreams being worked on today are contributing to alleviation of short, medium- and long-term challenges that have been determined by the TSO. Effectively what we believe is necessary is a coherent view from the TSO as to what solutions or combination of solutions are best to address which challenges over the short, medium and long term. Where the TSO is still determining the optimum solutions to certain challenges over these timelines, we need to better understand the process the TSO is undertaking to determine the optimum solution/ combination of solutions from the perspectives of cost / efficiency / effectiveness / enduring nature of the solution.

BGE therefore believes that it is critical that the Flexible Network Strategy if approved by the CRU includes a coherent central overarching plan that outlines:

The flexibility challenges we face today, will face by 2030 and will face for 2040 and possibly beyond in a net-zero system.
How the TSO is planning to address these short/ medium/ long term challenges via which grid/ system services/ technology solutions or combination of the above. The plan should cover existing grid constraints.
For challenges for which optimal solutions have not yet been determined, how the TSO is assessing different grid/ system services / technology solutions. These challenges include the existing grid bottlenecks we have on the system today.

All solutions chosen for implementation need to be informed and justified by a CBA that appropriately assesses all options ranging from system services, infrastructure (grid) and non-wires (technology) solutions. The possibility too of a combination of system services, grid and non-wires solutions providing the optimal outcome for addressing a challenge should be included. Once the optimum solution(s) for identified challenges are determined a timeline for how they will subsequently be implemented should be adopted.

The plan should be a “living” document such that as optimum solutions are identified via CBAs (discussed further below), the plan is updated so that all interested parties have transparency around how short/ medium/ term challenges are going to be addressed and mitigated in the short/ medium/ long term. We ask that this coherent plan - a holistic living document- is a key tenet of this Flexible Network Strategy.

The proposed approach in this consultation has a role to play in this overarching strategy that should exist via the above proposed “living” document. However without our proposed “living” strategy for flexibility roadmap covering the short (immediate), medium (to 2030) and longer-term timelines, the proposed strategy in this consultation risks pursuing technology options to the detriment of other wires-based and/ or system service provider options that may go unassessed or unimplemented on time to enable achievement of 2030 targets. Other technology options like optimal switching algorithms as well as wires-based (infrastructure) and market-based options to problems identified must be included in this strategy and CBAs to ensure the most cost-efficient and effective enduring solutions are adopted. Given that sufficient insights on the 2030 decarbonisation transition were well-understood at the time of the PR5 decision and given that Eirgrid was already considering technical grid solutions at the time of the December 2020 PR5 decision (e.g. for the technical-led option to grid development that appeared in the Shaping Our Electricity Future April 2021 consultation), requests for ex-ante revenues for such a project should have been included in PR5 by the TSO. BGE does however support progression of this project now provided its scope is broadened as outlined above and below and provided the approval request for cost-recovery to CRU is well-articulated, scoped and transparent to all stakeholders including customers and consumers. We do not believe a material change in circumstances relative to when the Capex allowance was originally set exists to justify activating the ‘capex adjustment mechanism’. Instead we believe the project needs to progress via the ‘TSO Monitoring Committee’ uncertainty mechanism as provided for in PR5.

Against the above context, while we do believe the proposed project in the consultation has merits it cannot in our view be progressed in the silo suggested. BGE supports flexible networks given the role they can play in alleviating constraints, facilitating renewables and enhancing grid reliability. We do not however support pursuing an assessment of non-wires technical solutions (like Dynamic Line Ratings (DLR) and Distributed Power Flow Controllers (DPFC)) in silo without also at least considering in parallel whether a wires solution and/ or system services solution to problems identified are more optimal to address the relevant short/ medium/ long term issue at hand.

As 2030 is less than 8 years away we ask that the the entire range of infrastructure upgrades (e.g., replacing conductor materials, up-rating lines, building new circuits…) required in Ireland before 2030 is considered as part of this strategy. We believe that while EirGrid’s SOEF publication detailed grid developments needed for 2030, grid developments needed between now and 2030 to ensure 2030 targets are achieved are relatively unknown. How to optimise the current grid thus merits immediate investigation as well as an assessment of non-wires solutions and system services options or combination of these options, and the impact of their implementation. To ensure that the right wires/ non-wires/ market solution is pursued for enduring benefits, the Cost Benefit Analyses proposed as part of the Flexible Network strategy need to clearly articulate the decision-making criteria for a flexible technology-based solution(s) for the wider grid versus an infrastructure solution versus a system services solution versus combination(s) of these. Otherwise there is high risk in our view that solutions to address issues like constraints and facilitating renewables, that might on the face of it appear to be more palatable than building new or reinforcing lines, are pursued despite the final benefit of those alternative non-wire solutions being much more uncertain.

The focus of this proposed Flexible Network Strategy centres on the technology solutions of DLR and DPFC. No system globally is known to have implemented vast amounts of these technology solutions. They have mainly been seen in specific circumstances, notably in systems that need power to transit across the system, as opposed to Ireland’s main need to address local grid bottlenecks. The prospect therefore of both of these technologies being implemented on time to meet 2030 targets is highly uncertain. The need for wire solutions and system service market solutions to be assessed and progressed with comparable expediency is therefore justifiable as part of this strategy.

To further rationalise the concern we have with the narrow focus of the proposed strategy here, and to support the ask that all Strategy related CBAs must consider whether wires solutions and/ or system services solutions have comparable or better enduring benefits to non-wire solutions, we outline below our view on the risk assessment for the project as outlined by EirGrid for this Flexible Network Strategy proposal:

BGE believes that the “risk of control centre integration and not realising the potential benefits of investments in flexible devices” materialising has both a “high” probability and impact level, not “low” and “medium” respectively. Our view is premised on the fact that with DLR and DPFC additional hardware that needs to be added at various points in the network not only need to be tested but the signals must go back to the control centre and be integrated with the existing control centre tools (CCT). The CCT systems are already highly complex by design and they are increasingly becoming tightly coupled with one another. We believe the project, particularly if the narrow focus is maintained, risks favouring technology solutions over wires solutions without even having properly assessed whether there is a more enduring benefit to infrastructure or system services solution(s).
A risk of “increasing grid constraint costs by not carrying out the Flexible Network Strategy” is outlined. We do not believe however that “doing nothing” is an option. This risk should be discounted, and the project scope widened to ensure a holistic range of wires and non-wires and market solutions are rightly assessed.
In terms of the risk that “EirGrid and SONI cannot secure the appropriate expertise to manage the delivery of this initiative”, we believe the probability of the risk materialising is high (not low). This type of project requires deep knowledge of several different systems and external parties cannot fill the gaps on this knowledge on an enduring basis which can lead to delays and possible missing of 2030 targets. Mitigation of this risk merits further consideration.
The risk that the “costs of implementation of the strategy are more significant than expected” has a high (not low) probability of materialising with medium (not low) impacts, in our view. Given the lack of precedence of the roll out of DLR and DPFC on a smaller system like Ireland, it will be challenging to place a reasonable final cost estimate at the start of this project. Furthermore, the project as discussed above needs to be widened to consider infrastructure and system service (market) alternatives and their potential enduring benefit possibly over non-wire options in some circumstances as determined by CBAs. The control room integration of these tools before purchasing of the power flow controllers or relevant DLR sensors is likely going to be >€10m. From a consumer perspective, it is critical therefore that robust CBAs are adopted across this project lifetime and that solutions are not assessed and compared in silo. As robust as possible estimates of the range of costs of this project needs to occur and we believe the TSO Monitoring Committee will have a key role to play here.
The risk that the “procurement exercise takes longer than expected leading to delays and added costs” is also highly probable (not low) in our view as it is not a bolt on additional tool but requires the support of existing vendors. The perspective of existing vendors as to the time required and possible costs should be obtained.
The risk that “the expected benefits from the changes are not achieved leading to wasted investment” has a more medium rather than low probability with high impacts. While these technologies will be needed in the longer term there is a very high risk that due to the DLR and DPFC focus of this Flexible Network asks, it will distract from the necessary line construction/ uprates and you may end up with delivery of neither type of solution. Hence we need a broader holistic approach to this proposed project. The terms of reference outlined by the TSO Monitoring Committee and approved by the CRU and applicable CBAs should account for this. We ask that industry gets sight of the terms of reference before its final approval.

With regard to reopening the Price Review, PR5 (CRU/20/154) was decided on in December 2020 and provided for two uncertainty mechanisms under the newly adopted “agile investment framework”. The two mechanisms and their objectives are:

Capex adjustment mechanism- for use when there is a “material change in circumstances relative to when the Capex allowance was original set” such that overspends of >10% or underspends of >20% are likely.
TSO monitoring committee- the committee’s role is to progress system operator projects which remain uncertain at the start of PR5 such that they could not be included in the PR5 ex ante allowances. Projects deemed important to the achievement of 2030 targets are to be progressed this way.

It is clear to BGE that the only option open to the TSO is the TSO Monitoring Committee approach option outlined above. We do not believe that a material changes in circumstances occurred since 2020 when the PR5 decision was made that would warrant the TSO using the capex adjustment mechanism.

Part of the role of the TSO Monitoring Committee is to ensure that that a credible range of options have been explored and considered by the TSO and that projects are re-evaluated at each stage-gate. This process will ensure a robust process for ex-post review, by requiring that additional projects are thoroughly considered and reviewed within the period. The Committee’s remit should also minimise the risk to the consumer that EirGrid will incur inefficient expenditure. While strategically important projects should be pursued in a timely manner it is equally important in our view that if wires solutions and/ or system services solutions are the more efficient choice then those option(s) are not overlooked such that we end up in a situation where neither a technical or infrastructure or market or combination solution(s) of strategic importance is delivered on time for 2030.

We support, subject to our comments around scope including a coherent overarching ‘living’ flexibility strategy and holistic CBAs as outlined above, progression of this proposed project via Option 4 (Detailed scoping and development of a readiness plan for widescale deployment of Flexible Network Strategy). We ask that the TSO Monitoring Committee is heavily involved in the terms of reference and accurate determination of the cost of progressing this project before going to CRU for approval. As part of that terms of reference approval by CRU we ask that in line with the PR5 decision’s vision that the level of PR5 funding being sought, the exact outputs of the study(ies) and milestones to achieve the outputs are clearly set out and an agreement to publicly report on progress is made. Reference in the proposal is made to the CBA assessing savings in transmission constraints – while this is a critical measure and indeed driver of projects, we emphasise that the time is now to use these CBAs to determine whether these non-wires solutions are always more optimal than wires solutions or system services solutions or indeed a combination of these, in some or all scenarios. The impact on the control room tools is another factor we would ask is included in CBAs also.

Draft: EirGrid 2021 Annual Innovation Report - Submissions

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