Micro Generation Association of Ireland (MEGA)

Submission to Commission for Energy Regulation by invitation issued in Consultation Paper CER/09/044 on the matter of the Treatment of Small, Renewable and Low Carbon Generators outside The Group Processing Approach

Submission, as requested by CER, Submitted by email to [email protected]

Addressed To The Commission for Energy Regulation Paul Hogan Electricity Distribution & Interconnection The Exchange Belgard Square North Tallaght Dublin 24

Email: [email protected]

Submission Date: April 30, 2009 Contact: Dudley Stewart C.Eng. General Secretary, Micro Association of Ireland, Charleville Castle, Tullamore, Co. Offaly, Ireland

Email: [email protected] Phone: 057 93 23040 Url: http://www.mega-micro.org

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Part 1 - Executive Summary

The Micro Electricity Generation Association of Ireland (MEGA) now represents the majority of stakeholders and entrepreneurs in the emerging Micro Electricity Generation Industry (MEG Industry).

The industry is on one hand poised to stake out an important niche in one of the fastest growing technology markets at a global level. On the other, it’s facing into a Power Sector which is out of date and aging, with a deficit of Comment [DB1]: with relevant experience and attitude, and a surplus of engineers with a deficit in practical power engineering skills.

There is great openness towards green energy, but a severe deficit in understanding the “nuts and bolts” involved. Green energy is about the safe and reliable deployment of clean power engineering innovations. At the heart of this movement is a new emphasis on smart electricity as the central energy system displacing the traditional liquid fuels. This means we must expect an unprecedented growth in demand for electricity. Transport and other less traditional users will become big electricity consumers.

The energy sector in Europe is stretching itself to reach goals and standards set for achievement, under law, by 2020; and then again even more far reaching and challenging standards for 2050 – ZERO CARBON ELECTRICITY.

In place is a Gate Processing Approach which has effectively stacked up, for implementation, a massive amount of Windfarm growth. is being put forward as the ultimate machine to replace aging power stations and the is being put in place to import and export electricity from the jurisdiction.

In CER 09/044, we recognize that the CER is tackling the tricky issue of removing impediments to the advancement of new electricity production capacity from less intermittent sources and to increase diversity of supply. In so doing the CER is seeking out consensus on a transparent logic on the basis of which certain innovations and changes can take place to improve the electricity supply outlook, having regard to the likely environmental impact and security of supply issues that might arise. But also in mind undoubtedly is the increasing likelihood that the current energy strategy is deeply flawed and in urgent need of repair. In all of this, MEGA wants to be constructive and helpful. The proposed new ruling is to be generally welcomed. There are positions taken in it that MEGA cannot agree with because they go counter to the combined wisdom and experience of our members – we might even go as far as calling it “Ivory Tower” thinking. Perhaps this is because our members are taking financial risks to build a new clean energy production system within the parameters which we hold in common. In so doing, we are “getting our hands dirty” and are very aware of many of the practicalities that lie ahead. Ireland is going through a time of great change. Apart from achieving economic recovery, Ireland has serious environmental and electricity production targets to achieve. Ireland is not alone in facing these challenges but we do have some unique assets and some difficult liabilities to face. We recognize that the CER is trying to address some of these in the proposed new ruling but we see new impediments to progress in the

Micro Electricity Generation Association, Charleville Castle, Tullamore, Ireland 3 current document. In its current form it would serve to enshrined past mistakes into new law.

In our response, MEGA has set out reasonable answers to some of the “options” presented. But we are concerned that some of the fundamentals in the document are flawed and will lead to serious problems in the future unless these are corrected now. Our issues are essentially with the definition of public interest, also the definition of a micro generator along with the bunching together of all renewables as one energy category. Changes need to be made – not complex changes – just a few simple changes. We have worked diligently to understand the issues and to present our case coherently in the limited time available to us. We are stating that CER has to apply better thinking to this area or a serious opportunity be lost for Irish electricity customers and the public in general. This is a very special moment in time. There is a serious opportunity there to put Ireland into a good position energy-wise – but it has to be grasped or it will be lost.

It is accepted internationally that there are internal and external costs and benefits associated with each and every different form of power generation. The external costs and benefits typically take in the public interest aspects of any given type of technology or power generation form, including associated employment, enterprise, education and socio-economic gains. There may be work to be done to classify and categorise different technologies. It is also clear that many hybrid solutions will be involved in the future mix (Wind, Water and Hybrids etc.). These may need to be presented better and more coherently. MEGA is ready and willing to assist in this process. But MEGA is not ready to stand aside and will resist the CER claim that socio-economic issues are not valid public interest parameters in the definition of security of supply and such. The CER would also have it that Ireland alone adopt a policy of classifying all micro generation to be “domestic” in nature and “below 6 kW, 1 phase or 11 kW, 3 Phase” in size. Why put such impediments in front of enterprise, renewal and competitive energy generation?

Micro Electricity Generation Association, Charleville Castle, Tullamore, Ireland 4

Part 2 - Background

Smart decisions in Ireland are taken in the light of international trends, opportunities and events. As a member state of the EU, we rely on the wisdom of the greater community of members to guide our decisions long into the future. As a nation competing on the international stage, our planning and direction is also formed out of the changes taking place in the United States of America and other advanced nations.

In setting out the response of the Micro Electricity Generation Association of Ireland (MEGA), we feel that it is important that we give some indication of our commitment to those two separate but ultimately merging regulatory and market environments – the EU and the USA. As an industry we are guided and influenced by the common effort in the EU and the standards and regulations that go with this commitment. In looking to the future and in structuring our businesses and energy projects, we know that much innovation will be US influenced.

In opening our response to the CER, we would like to restate the EU position below -

“EU DIRECTIVE 2001/77/EC OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL

(1) The potential for the exploitation of sources is underused in the Community at present. The Community recognises the need to promote renewable energy sources as a priority measure given that their exploitation contributes to environmental protection and sustainable development. In addition this can also create local employment, have a positive impact on social cohesion, contribute to security of supply and make it possible to meet Kyoto targets more quickly. It is therefore necessary to ensure that this potential is better exploited within the framework of the internal electricity market.

(2) The promotion of electricity produced from renewable energy sources is a high Community priority as outlined in the White Paper on Renewable Energy Sources (hereinafter referred to as ‘the White Paper’) for reasons of security and diversification of energy supply, of environmental protection and of social and economic cohesion. That was endorsed by the Council in its resolution of 8 June 1998 on renewable sources of energy (5), and by the European Parliament in its resolution on the White Paper. (6) (3) The increased use of electricity produced from renewable energy sources constitutes an important part of the package of measures needed to comply with the Kyoto Protocol to the United Nations Framework Convention.”

But also some of our members have asked us to quote some of the visionaries in the United States who are describing the new platform on which sustainable energy solutions must be built.

“Unprecedented Challenges and the Forces of Change

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The industry faces challenges that rival those of any period in its history. Among these challenges, and the many debates about how to move forward, a vision is emerging that will transform the utility industry. Utility “” and advanced metering infrastructure (AMI) initiatives are introducing advanced digital technologies into the power delivery system and end-user interface, driven by numerous industry factors.

Consensus is growing that real-time pricing and , as well as integration of behind-the-meter and other services, are essential to economic growth and environmental well-being.

The major drivers of this trend are well known: rising fuel prices and security concerns, aging delivery infrastructure and human assets, rapidly increasing deployment of renewable resources, especially solar and wind, and introduction of new technologies such as LED lighting and high-tech electricity storage. With carbon mitigation regulation and legislation already occurring at the state level, and likely to occur at the national level with a new administration, the power industry will likely face fundamental shifts in the economics of power supply and delivery. Other shifts in the overall energy environment will add to increased power demand and delivery complexity. One of these shifts is the

By Ralph Masiello, PhD., Hugo van Nispen, Robert Wilhite, Will McNamara”

This U.S. statement above mirrors the position taken by the European Commission and the emerging Europe-wide Smart Power Engineering Industry. This is where we are going. Our members will play a part in getting there and, therefore, our answers to the CER 09/044 Call For submission, though controversial and perhaps critical, is constructed around the movement of our industry on to this new competitive ground of operation.

MEGA is fully aware of the unprecedented economic challenges of these times. We could all wish for massive structural changes to drive away old institutions and to build anew in search of a better future. To wish and to have are two different things. Pragmatically our goal therefore is to influence powerful structures to change and evolve, to let new things happen, and to work together in search of excellence in the new energy economy which is now unfolding.

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Contents:

Article Title Page No. 4 1 Background 5 2 Executive Summary 7 3 Mega Responses 9

The MEG Association (MEGA) has consulted widely and openly in drawing up our “response” for submission to the CER. The draft response, a collaborative effort, was approved at a meeting on April 29th 2009. The responses of a number of the existing representative bodies (not microgen focused - but having a microgen remit) have also been considered, and the support of these organisations has been enlisted. The MEG Association and the Irish Farmers Association have found common cause and have found a policy solution that will now enable joint action in pursuit of common and jointly agreed goals.

Part 3 - THE MEGA RESPONSES

Quote CER 09 044 Draft: “2.3 Issues with Current Process In the operation of the current process, a number of parties have raised some issues. These issues can be summarised thus;

There is no clear definition of the criteria by which renewable generators are assessed once requested to be processed outside the GPA including the definition of public interest;

There is no transparent or streamlined process whereby renewable generators or classes of renewable generators can be assessed for connection; and

As more and more generation is applying to be connected to both the transmission and distribution networks there is a higher likelihood of incidence of interactions due to the connection of applicants in the GPA queue.

Question 1. Are there other issues or comments with the current process that parties wish to bring to the Commissions attention?”

MEGA Response to CER 09044 2.3.: Yes - there are fundamental issues which have not been raised here. It is important to develope a cogent and transparent policy on Environmental Impact; but it is equally important that the issue of Security of Supply be adequately described and discussed. The legislative structure which underpins the CER authority/obligation to take action states that “In the exercise of its functions the Commission is required,

Micro Electricity Generation Association, Charleville Castle, Tullamore, Ireland 7 under Section 9(3)(c) of the Act, to protect the interests of final customers of electricity.” The “interests of the final customer” are not limited to the knowledge and trust that the CER is doing a good job for them when it comes to the issue of Security of Supply – it is not a question of trust it is a question of accessible published information, transparency and traceability. Right now, the plan for the accomplishment of the challenging objectives set out by the EU for 2020, is dependent on a construction, in the future, of a massive raft of wind farm capacity – future electricity production capacity which is not only intermittent in nature but is also locked into the Gate Processing Approach (GPA). Much of this future capacity may not be realised in full or on time. One question of public interest is “what is the back-up plan?” There is a legitimate concern that the existing plan, within the GPA, is not in fact realisable. The security of supply issue is indeed a public interest issue but it would seem that the public is unaware of the narrow and archaic methodology that is being applied within the GPA to supposedly assure security of supply. There are quite naturally concerns that major power generation, transmission and smart grid management projects might not happen on time – delays and failures which could lead to serious, and lengthy, power interruptions.

Regarding the definition of the customer; under the various EU and Irish Government Directives and Legislation on sustainable development, the definition of the “final customer” extends to future customers or more specifically decisions made today that might impact on final customers who are not yet born – the future generations. In this context, security of supply is not just a matter of technology and Gate Processing systems, there are also issues relating to International Agreements which might, if not adhered to strictly, impact abruptly on the future on the supply issue.

As well as this the Gate Processing System is overburdened with valid applications, some, if not many, of which: 1) might never get implemented. 2) others might be so speculative or outdated in design characteristics as to be unworthy of retaining prior rights over new applicants with solutions fit for the new times. Of particular note would be the potential for the deployment of a whole new breed of hybrid technologies with lesser intermittency issues (by inclusion of storage or CHP with Wind or Hydro upstream of connection or through an Electricity Micro Grid (local) funded by on call electricity exports (a whole raft of new solutions not included in the Gate system but potentially blocked by it). Whereas, such systems might come under the term “experimental” none of the elements involved might in fact be experimental. In any case the size and number of such projects might place them in head on collision with less commendable GPA arrangements.

The “interests of the final customer” in the question of security of supply go far beyond the notion of trusting in the good judgement of the CER. The crisis in regulation in the banking system has demonstrated clearly that systems and processes operating within the CER must respect major contractual arrangements (such as are involved in the GPA) but must also be capable of moving beyond these arrangements in pursuit of good value, balance and security of supply while ensuring the adherence of the electricity supply system to International Climate Change Agreements and Targets. Many consumers are not convinced that the large number of windfarms projected for 2020 can be, in fact, rolled out. There is evidence that

Micro Electricity Generation Association, Charleville Castle, Tullamore, Ireland 8 increasing numbers of consumers are unwilling to give credence to such large-scale windfarm roll-outs. If targets fall short by 50% - what then?

The current illogical interpretation of the upper limit of Micro Generation (i.e. 6 KW Single Phase – Small Scale Embedded Generation SSIG EN50438) puts into question the CER’s credibility in terms of visible concern for the realisation of serious changes and new growth in our electricity supply system. Growing numbers of people are concerned that the CER is over optimistic on the current plans for security of supply Issue – there are concerns that the CER might be ill-informed. While other more advanced economies, with more complex and much larger electricity supply systems, are seeking to expand the definition and promote the growth of Micro Generation – the CER, having first erred in disallowing any reward for the export of electricity from such generators (CER 07/208), now continues to classify micro generators as limited to domestic supply and an upper limit of 6KW (the equivalent of a plug ‘n play system elsewhere in Europe) – why?

This is a time to rebuild confidence in regulatory systems in Ireland, in this case the CER- every one knows that we are facing into a time of great change. People are legitimately concerned that our regulatory systems can help us through these times and not trample on real new solutions. Obligations existing under the GPA system must be recognised but not to the detriment of the public interest, particularly with regard to security and dependability of supply and adherence to International Climate Change Targets. Much of the planned new generation capacity under the GPA may be late in coming on-line, much might be displaced by innovation – are we conscious of this and exploring every avenue and tapping every resource?. It is in the public interest to know more about the security of supply issue. It should be under constant review within the CER, with regular public consultation and it should be openly used as a factor for preferring applicants seeking to process schemes outside the Gate Processing System. We cannot afford to have good solutions held back by prior obligations to the GPA and the definition of “goodness” should not be such that it could be granted to one project over another in any manner which could be construed to be spurious or ultimately corrupt.

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Quote CER 09 044 Draft: “3.0 Proposed Criteria for Assessing Public Interest

3.1. Under Section 9(4)(a) the Commission is required to have regard for the need to promote competition in the generation and supply of electricity to final customers.

The above legislation gives the framework for the Commission to operate within which may be summaries as follows: the Commission may give directions to the System Operators regarding the terms and condition under which connection offers are issued; the Commission must act in the interest of the final customer and not unfairly discriminate between the holders (or potential holders) of licences or authorisations; in carrying out its functions and duties the Commission must promote security of supply and competition and take into account the need to protect the environment. For the avoidance of doubt, the socio-economic affects, e.g. employment, that the development of particular types of generation may drive is not covered by the relevant legislation and therefore cannot be used by the Commission in formulating its decisions as it does not form part of its legislative duties.

3.2 Public Interest Definition At this point the Commission considers it appropriate that public interest be defined and that certain criteria be used in assessing a generators, or class of generators, public interest benefits. This would give potential applicants transparency on the criteria and process used to evaluate whether an applicant can be processed outside the GPA.

While there are benefits to a clear definition of the public interest it has to be borne in mind that the energy market is evolving rapidly and consequently the public interest does change over time. Also the criteria proposed here are based on the Commissions experience to date. What will emerge in the future is unknown and therefore the Commission, while proposing the criteria outlined below, highlights that it would be subject to review from time to time.

The legislation outlined above gives some guidance as to what constitutes public interest. In particular Sections 9(4) and 9(5) specifies a number of considerations that the Commission takes into considering in the exercise of its functions and duties. These can be summarised as:

. Promote competition; . Ensure security of supply; and . Protect the environment/promote renewable and sustainable energy use.

Each of these will be explored in further detail below.

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3.2.1 Competition At a commercial level electricity generating from various renewable sources would be indistinguishable. Assuming a market segment for renewable energy does exist, then the Commission does not believe that the market segment would be further segmented into renewable electricity generated from or renewable electricity generated from biomass. The Commission, therefore, believes that it would be inappropriate to use competition as a criterion for selecting projects for processing outside the GPA given the homogeneity of the product, i.e. renewable electricity. “ CER 09044

MEGA Response to CER 09044 3.2.1 It is nonsense to say that all renewables can be bunched together, as stated above by the CER. MEGA forecasts that in a number of year’s different renewable technologies or innovations will be categorised, rated and prioritised into clusters with different utility value and demand. Make the wrong choices and the consumer will pay. It is not in the public interest to ignore the differing characteristics of different competing renewables – value is at the centre of choice and this does include socio- economic stability.

Quote CER 09 044 Draft: “3.2.2 Security of Supply Diversity of Fuel Mix In determining security of electricity supply key elements are fuel diversity and security of power fuel supplies. The more diverse the fuel-mix in the generation system, the more secure the generation system is to a supply shock of one fuel. In the coming years it is expected that natural gas and wind will be the most significant sources of fuel.

In terms of fuel diversity and security of power fuel supplies, the Commission is conscious of increasing the mix of all types of renewable generation. Therefore any renewable technology that contributes to diversifying the fuel mix contributes to increasing the security of supply of the system.”

Mega Response to CER 09044 3.2.3: Agreed

Quote CER 09 044 Draft: “3.2.3 Security of Supply Predictably and Power System Support Since natural variations of renewable energy availability do not necessarily correspond with the also varying needs of the consumers, balancing supply and demand is a critical issue. This will become more of an issue in the coming years as the penetration of wind power increases. Utilising a variety of technologies that draw on a range of renewable resources will reduce the risk of any one technology having a critical impact on the power system balance. A diverse portfolio of renewable technologies would move the power system toward a more secure and stable green energy operation. The addition of less intermittent renewable technologies, ones that provide operating reserve and potentially capabilities, would be supportive of the existing grid and provide better generation demand balance capability for the power system.

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It is proposed that any renewable generation technology that can provide primary or secondary operating reserves be considered to be processed outside the GPA which could offset a reduction in output by wind generation. Such facilities would need to exceed a certain minimum export size, and it is proposed that 2 MW export capacity and above would meet the requirement. Where such a plant can also provide black start facilities to the system operator this will also be considered as contributing to the public interest. “

Mega Response to CER 09044 3.2.3: Incremental improvements to the technology (embedded automatic voltage regulators, batteries and other elements) will improve the overall grid-friendliness of different renewable types; but it is thro’ hybridisation that real stability and better security of supply can be achieved. The use of tens of thousands of hybrid-electric cars as back up supplies “on call” for use by the grid in conjunction with intermittent renewables, has been mooted by the British Energy Regulator, for instance. Alternatively CHP Windpower Hybrids could run rural factories. But we can’t agree to the CER logic as repressing “renewable technology that provides primary and secondary reserves” by stating it is proposed that “2 MW export capacity” be the minimum capacity of such reserves. This would seem totally incorrect in an emerging system which is capable of using broadband communications to bunch together (and be virtually inside) many different producers with such capability. The CER authority should be used now to require that the system operator’s start learning such practices and developing such capacities immediately. MEGA members are combining to convert their intermittent energy technologies into embedded grid- friendly capacity and, even, “on call” reserve – we need to get behind and incentivise such a move immediately. The CER could bring such reform into place through a series of challenging steps – say starting with a minimum of 500 kW’s and moving downwards to 50kW– the operator should be able to group these digitally, in time.

Quote CER 09 044 Draft: “3.2.4 Environmental Benefits Environmental benefits in this context primarily relate to the reduction of greenhouse gas emissions and/or the reduction of energy consumption. There are a number of renewable technologies that produce electricity with very low net production of greenhouse gases, such as wind power and biomass. The additional benefit that renewable technology such as biomass may bring is its predictability. Predictable renewable generation is most likely to displace conventional generation thus maximising the positive environmental impact.

Electricity generation which is collocated with demand, termed autoproduction, will tend to reduce losses on the system and thereby reduce the energy consumption on the system. Also, it is assumed final customers with on site generation are more likely to be concerned with demand side management and efficiency measures thereby having an overall positive effect.

3.2.5 Environment - Experimental/Research It is in the public interest that new forms of electricity production are facilitated where the new technology would be beneficial to the public interest in terms of security of supply, environmental impact and/or cost.

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3.3 Conclusion The Commission proposes to use the above criteria in the assessment of applications for processing outside the GPA. The Commission believes that the above criteria are consistent with the Commissions duties under the relevant legislation given in section 3.1 above. In the next section the various types of technology are reviewed and assessed as to how they meet the above criteria“

MEGA Response CER 09044 3.3: There are major issues that the CER has failed to recognise under the public interest definition. Under previous rulings and regulations very substantial reliance has been placed on the tranquil complacency of the public, in particular the rural public, to the placement of massive windfarms, transmission lines and substations in rural areas with little contribution to these rural areas by way of employment, education, training and wealth creation. Farmers throughout the country are expressing there views to MEGA and beyond, that energy is being transported across their lands to bring power to the cities and wealth to the big power companies. All this while every fiscal and regulatory obstacle is being put in place to prevent the rural community producing and selling electricity. Indeed the CER in this document has once again sent out a loud and clear signal to rural dwellers that the CER will use it’s power under the act to completely confuse and disturb any movement in the market that might attract any rural dweller, be it on a part-time or fulltime basis, into the energy production business. The Regulator (CER) has in this document stated hereinbelow “no change in micro generation arrangements is proposed” – This is in spite of numerous robust representations and the outright and public contradiction by Sustainable Energy Ireland (SEI). The CER in defence says that SEI is studying this and other matters on behalf of the CER. This doesn’t impress farmers and rural dwellers who know that the advice provided by SEI to the CER in drafting the now infamous CER 07/208 was completely ignored. Has something happened now to change the behaviour of the CER? Change is needed, if we want to avoid the risk of turbulent opposition by rural dwellers to essential new electricity plans we need to let people into the business on a much more generous scale – but also Ireland needs more people to take financial risks in producing clean energy. We need people to start thinking “white oil”.

Quote CER 09 044 Draft:

“6.0 Other Issues 6.1 Impacts on Micro Generation 6.1.1 Current arrangements: Up to and including 11kW (3 phase – 6kW single) The Commissions Decision paper Arrangements for Micro Generation (CER/07/208) defined micro generation as generation that is rated at or below 11kW (or 0.011MW). For the purpose of this consultation the class of micro generation, as defined previously, will continue to be treated separately to any arrangements that are introduced for the treatment of generators outside the GPA. Therefore no change in micro generation arrangements is proposed.

“6.1.2 Current arrangements: Greater than 11kW but less than 30kW

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Currently generators that are larger than 11kW but not greater than 30kW are not subject to interaction studies by the system operators but are treated on the same basis as any generator seeking connection to the network.

6.1.3 Proposed change: Extension of limit to 50kW As part of this consultation it is proposed to change this upper limit to 50kW so that generators up to this level would be exempt from the requirement to undertake interaction studies to determine whether it could be processed outside the GPA. Instead such small generation would be automatically eligible for issuing offers outside the GPA. “ CER09044

MEGA COMMENT/COMPLAINT: It is a fact that people applying for connections above 6 kW, 1phase experience a totally secretive and primitive process, and that it has taken extraordinary measures to get small numbers of these devices connected. The International Energy Agency has asked the Irish Government to put an end to this ambiguity and take on board all the clean energy contributors it can get. It has set the basic parameters as: 1) Rewards [for the environmental (and other) benefits/savings and electricity supplied] 2) Bankability [A decent rate of return and insurance regime to pass the bankability test], 3) Access to the Grid [transparent and efficient access to the grid – access to the grid to be treated as a very desireable outcome rather than a competitive source to be repressed] 4) A reasonable Planning Regime.

If rural dwellers have not been conscious of these factors it is inevitable that they will soon. Repression of this sector will lead to blockages of major infrastructural projects and eventual supply failures. This is a matter of Public Interest. Shell Glenamoy is a good example of what can happen if the current position prevails.

The European Commission is paving the way in describing the emerging grid system as analogous to the Internet. There is scope for a whole raft of new players and major opportunities for rural dwellers if the right regime is put in place. The alternative, outlined in this CER document; is narrow, repressive and potentially explosive – and certainly not in the public interest.

Outside Ireland governments are clambering to get green enterprise up and running – here, every millimetre of progress could be likened to the operation of pulling teeth – why? The answer is simple - electricity production is currently about big business, ESB offsprings and the Regulator. If people see it like that, why should they be tolerant of power lines crossing their fields? Why would people be supportive of giant windfarms that don’t even create jobs? The danger is that we are nearing the UK disease called DKDC (Don’t Know Don’t Care). We need to avoid also the increasingly militant opposition tactics which arise out of public frustration such as the “Shell to Sea” debacle. The CER must be well aware of the fact that we are approaching a time when we will need to construct major dams to store water to provide for more electricity on demand – we need people to be involved, and to understand, the electricity production business. We don’t need a situation arising

Micro Electricity Generation Association, Charleville Castle, Tullamore, Ireland 14 which involves people looking with prejudice to stop major electricity initiatives. MEGA says that the CER is totally incorrect in pursuing the following policy –

Policy - Quote CER 09 044 Draft: “For the avoidance of doubt, the socio-economic affects, e.g. employment, that the development of particular types of generation may drive is not covered by the relevant legislation and therefore cannot be used by the Commission in formulating its decisions as it does not form part of its legislative duties.” CER 09044

MEGA RESPONSE continued: This policy statement above is tantamount to saying that the CER does not have a duty “to protect the interests of final customers of electricity”. If the regulator fails to define public interest to the point where a substantial number of the public becomes angry and motivated to oppose infrastructure required to provide for our electricity needs, without infringing on international law, then the regulator (CER) is setting up a situation which is not in line with the duty of protecting “the interests of final customers of electricity”. Socio-economic factors and employment are issues of public interest with regard to Security of Supply. This does not mean that the public would be supportive of employment initiatives that don’t bring value to the electricity supply system. But it does mean that where the CER can exercise authority to open up income generation opportunities for people, especially rural dwellers, through smart initiatives then this would be in the public interest and consequently socio- economics needs should be included in public interest decisions regarding security of supply.

Training and Education is another Public Interest Issue. It is well know that engineers and technicians are required to deliver on Security of Supply. It is also well known that certain technologies, or sizes of technology are conducive to the training and development of engineers and technicians – others are so bad that they actually put young people off the idea of engineering careers. Now with the challenges that lie ahead we find ourselves with a severe shortage of practical engineers and technicians. MEGA insists that if the micro electricity generation industry had not been repressed that it would have already attracted thousands of young people into the intriguing and exciting business of generating electricity and making innovation work – practical engineering.

We are stating categorically that the CER is incorrect in suggesting that these matters do not lie in the CER remit - we will not relent in pursuing this issue. If the consumer ends up paying an excessive price for electricity because all of the relevant issues were not taken into account (some of absolute importance), then the CER is consciously operating in disregard for the laws governing the obligations and duties of the Energy Regulator. The issue of the External Costs and External Benefits of certain types of energy production is not new to Power Engineering Economics. Socio-economic factors along with education and training have always been taken into account in such economic evaluation; it is not “different thinking”, it is standard thinking. The avoidance of this issue may relate to Ireland’s record of peat burning for heat and power. A history of employment protectionism and the environmental consequences of large scale peat harvesting should not be used as factors to distract

Micro Electricity Generation Association, Charleville Castle, Tullamore, Ireland 15 from the current issues which are of real concern to consumers looking forward. This is the second time that MEGA has had to invest serious and valuable energy in the matter of reminding the CER of the importance of comparing the Internal and External Costs and Benefits of various energy systems. In this case large-scale wind power and hydro requires the Irish people to call on each other to make special allowances to allow serious new projects to move forward; to exclude the socio- economic implications of electricity production strategy, plans, priorities and economics is to condemn all such projects in the future to years of opposition from disenfranchised rural and urban dwellers who have real socio economic needs. Finally to drop the “employment question” from all future prioritisation of electricity production is similar in some ways to deciding that electricity can be purchased by people who have no income or that an electricity industry can survive and not suffer closures or black-outs in an economic depression. Could this be true!

[Rural Reward for Rural Location – Employment - Training & Education – Social Mobilisation]

Quote CER 09 044 Draft: “!4.1 Renewable, Low Carbon Technologies and Autoproduction The following lists the various types of technologies and considers whether they meet the public interest criteria outlined in Section 3.0 above.

4.1.1 Biomass Fuel Biomass fuels are very diverse and usage of these in electricity generation can improve waste management which gives a positive impact on the environment contributing to the overall public interest. As detailed in the accompanying report, CH4 is a much stronger greenhouse gas than CO2. Therefore, shifting CH4 emissions to CO2 by converting biomass to energy significantly reduces the greenhouse warming potential of the recycled carbon associated with other means of disposal of the biomass residues.

Biomass fuelled electricity generation technologies, whether from biomass or biogas combustion, are typically embedded in the lower voltage distribution networks supplying local sites and areas. From the system security and stability perspective it can be stated that electricity generation from biomass is reliable and can be considered as . Intermittency of biomass as a fuel depends on natural cycles which are changeable on seasonal and yearly time horizons. Therefore, with good fuel collection and transportation, electricity generation from biomass is predictable.

Biomass has low net carbon emissions and hence would meet the public interest criteria in terms of environmental benefit. Also the electricity produced would be predictable in the short term and controllable. Therefore biomass generation also meets the security of supply criterion. “

MEGA RESPONSE to CER 09044 4.1.1: The combination of co-located wind and water power with biomass could lead to a very exciting opportunity for grid-friendly electricity and on-call reserve in the future. MEGA members are switching to grid-friendly thinking. REFIT Tariffs must develope appropriately under special orders or amendments to the Public Services Obligations

Micro Electricity Generation Association, Charleville Castle, Tullamore, Ireland 16

(PSO) legislation to support the deployment of such technologies on time for the consumer.

Quote CER 09 044 Draft: “4.1.2 Combined Heat and Power (CHP) CHP schemes are able to achieve fuel conversion efficiencies of around 90% and there are also energy and environmental benefits to be realised. The earlier schemes favoured natural gas but this is changing and biomass fuels are now being used. The CHP plant is normally sized to the base heat load demand for the industrial or commercial facility it serves. Such an approach should result in the optimum level of heat utilisation and potentially therefore the greatest environmental benefits.

Even where the fuel is natural gas high efficiency CHP would be expected to deliver environmental benefits in terms of the reduction of greenhouse gas emissions as it would be expect to replace less efficient boilers, usually fired on oil. Also it is likely that the main heat customer of a CHP plant would also have a significant electricity demand.

The collocation of electricity production and consumption has the benefit of reducing system losses.

CHP can also be considered a base load plant which can be predictable and controllable by the System Operator. While the provision of operating reserve by a CHP plant would not be its normal operating mode, the technology is generally capable of providing it.

Therefore, in terms of the environmental and security of supply benefits the Commission concludes that high efficiency CHP (even where the fuel source is not renewable) would be in the public interest. “

MEGA RESPONSE to CER 09044 4.1.2: The co-location of CHP alongside wind or water power will be complimentary to the grid and, therefore, the consumer. This being said, it is to be expected that some fuels should become too expensive over time. Biomass and will provide interesting CHP options long into the future. REFIT Tariffs must develop appropriately under special orders or amendments to the Public Services Obligations (PSO) legislation to support the deployment of such technologies on time for the consumer.

Quote CER 09 044 Draft:

“4.1.3 Hydro Power Hydro storage facilities, whether in the form of pumped-hydro or hydro reservoirs, can play a key role in providing grid operational reserve in emergency cases as well as in cases of intermittent regime of wind power. Their advantages are the potential for large scale electricity storage, fast response times and relatively low operating costs. A hydro facility can replace a conventional power station or wind farm for several hours if needed, thereby reducing the need to carry thermal generating plant or brown energy gas fired plant as spinning reserve to support green energy plant such as wind.

Micro Electricity Generation Association, Charleville Castle, Tullamore, Ireland 17

Therefore, in terms of the environmental and security of supply benefits the Commission concludes that hydro power would be in the public interest.”

MEGA RESPONSE to CER 09044 4.1.3: MEGA agrees with the position but stresses the need for positive discrimination for such projects as opposed to Conventional Generation and other renewables. MEGA again is emphasising the level of social interaction and mobilisation involved in the creation of such projects. In the construction of dams or power transmission systems, public pathways, grazing rights, environment and other losses are involved for individuals and the public. This is why we continuously argue for the need to factor “people’s needs” and “people involvement” into the emerging electricity production economy. With appropriate strategies we can mobilise hundreds of thousands of people to be involved in the sector and to support high end results. To do this we need to start opening up the sector and not constantly seek ways to shut it down or shut people out. REFIT Tariffs must develop appropriately under special orders or amendments to the Public Services Obligations (PSO) legislation to support the deployment of such technologies on time for the consumer.

Quote CER 09 044 Draft: “4.1.6 Autoproducers An autoproducer is defined as a person who has entered into a connection agreement with the DSO or TSO and generates and consumes electricity in a single premises, or on whose behalf another person generates electricity in the single premises, essentially for the first persons own consumption in that single premises10. The benefits of this type of electricity generation are that production is collocated with demand thereby reducing transmission and distribution losses and may avoid the need to add shallow network infrastructure that would otherwise be required. Also, consumers with on site generation are more likely to be concerned with demand side management and efficiency measures thereby having an overall positive effect. Where the electricity is generated from renewable or low carbon technologies the benefits are further increased.

The Commission believes that the benefit of collocating production and demand on its own would not bring sufficient public interest benefits to warrant priority treatment. The addition of renewable (including wind) or low carbon technologies would merit the processing of the connection applicant outside the GPA. Therefore the Commission concludes that autoproduction, from renewable or low carbon technologies, meets the public interest criteria. “ CER 09044

MEGA RESPONSE to CER 09044 4.1.6: MEGA welcomes the CER position relating to the public interest factor of autoproduction using renewables. However, concerns are arising that the definition of co-location has been extended to the concept of transferring electricity production on a corporation’s rural campus via the grid to the corporation’s urban headquarters with high losses in transmission, high intermittency, clogging up the grid and preventing more transparent electricity generators from gaining access to grid for essential supply of consumer requirements and in the interest of serving genuine public

Micro Electricity Generation Association, Charleville Castle, Tullamore, Ireland 18 interest. MEGA is essentially serving a significant proportion of autoproduction community. It will be watching this area to ensure fairness. MEGA is calling on the CER to require that the system operators report openly on the Megawatt hours - Distance Transported of electricity produced by autoproducers to provide the public with a means of tracking the evolution of this sector or its abuse. It may not occur – but if it does it could cause chaos in this constructive section of the new economy.

Quote CER 09 044 Draft: “4.1.7 Solar energy is a well established renewable technology. While it is intermittent, it is predictable. The energy density of the suns rays at Ireland’s latitude and the conversion efficiency of photovoltaic technology mean that large areas of solar panels would be required to generate significant electrical power. Therefore, it is likely that solar power would be pursued in areas with on site demand and would not require the capability to export on the grid. However for completeness the technology would be meet the public interest criteria from a diversity of fuel mix and environmental perspective. “

MEGA RESPONSE to CER 09044 4.1.7: The External Benefits of Solar might be more than currently estimated. Here again is a case where positive discrimination is required between renewable technologies. REFIT Tariffs must develop appropriately under special orders or amendments to the Public Services Obligations (PSO) legislation to support the deployment of such technologies on time for the consumer. Solar is a case in point worthy of special support and higher REFIT funded by a reformed PSO.

Quote CER 09 044 Draft: “4.1.8 Experimental / Emerging Technologies The Commission is conscious that whatever method is implemented to treat classes of renewable generators outside the GPA it should encompass any new experimental or emerging technology. Currently wave and tidal, as discussed above, could be considered to be part of this category. This category could potentially include new types of renewable generation, improved types of conventional generation or technology that adds incremental benefits to current technology.

The Commission believes that it is beneficial to the public interest that experimental and emerging technology, where it can be demonstrated to bring positive environmental impacts and increase the security of supply, are supported and that this in the public interest. “

MEGA RESPONSE to CER 09044 4.1.8: To achieve the 2050 Zero Carbon Electricity requirements, serious innovation will be required. We will see the advancement of single point of export conglomerates providing highly useful electricity to the grid. Such island-type local community electricity systems, with strong black start and export capability, will form the early movement towards the EU micro grid and smart grid vision. This is too important an

Micro Electricity Generation Association, Charleville Castle, Tullamore, Ireland 19 area of interest to be advanced by traditional regulation. In our opinion the CER needs to be proactive on this subject. We believe that the regulator should be looking to make such projects happen by creating instruments which provide for the nurturing of such systems through the difficult road to success. Again MEGA is stressing that this could involve the development of community-based micro-grids which operate as islands, safe for exports of pre-agreed amounts of electricity at special times of the day or year with also the possibility of on call reserves. Such early micro grids might involve elements of all of the generating types listed above (in fact possibly hundreds of micro-generators balanced by more conventional CHP units, possibly biofuels, battery and pumped storage). Such examples of rural enterprise could hold the answer to the question of mobilising people behind essential new electricity production strategies on a larger scale. Positive discrimination, again, may be required to distinguish between this and other types of renewable projects. REFIT Tariffs must develop appropriately under special orders or amendments to the Public Services Obligations (PSO) legislation to support the deployment of such technologies on time for the consumer.

Quote CER 09 044 Draft: “4.2 Conclusion In the preceding sections the Commission has outlined a number of technologies that would meet the public interest criteria defined in Section 3.0. The Commission acknowledges that certain technologies such as may not be practical due to geological reasons in Ireland. Also many of the other technologies may have other binding constraints on their development rather than access to the electrical network, e.g. suitable head of water for hydro power, or sufficient heat load for CHP.

Therefore the further penetration levels of these technologies may be small and consequential the benefits may be equally small. The corollary, that any negative impact of process applications for connection to the network outside of the GPA would be small, is equally true.

The Commission proposes that the above list is pre-selected for processing outside the GPA. Any other technologies not listed here would be assessed against the public interest criteria given in Section 3.0 above. “

MEGA RESPONSE to CER 09044 4.2: MEGA does not agree that all of the renewables listed above can be dealt with in one bunch; Therefore our comments are listed under each of the technologies. This being said, REFIT Tariffs must develop appropriately under special orders or amendment to the Public Services Obligations (PSO) legislation to support the deployment of such technologies on time for the consumer.

Quote CER 09 044 Draft: “5.0 Connection Options 5.1 Balancing the public interest and individuals interest In the exercise of its functions the Commission is required, under Section 9(3)(a) of the Act, to not discriminate unfairly between holders of licences, authorisations or

Micro Electricity Generation Association, Charleville Castle, Tullamore, Ireland 20 between applicants for authorisations or licences. Also in the exercise of its functions the Commission has a duty, under Section 9(3)(c) of the Act, to act in a manner that it considers protects the interests of final customers of electricity.

The objective of the Commission is to balance the public interest with the interest of individual connection applicants. The Commission believes that there is a public interest in connecting certain renewable and low carbon generators outside the GPA as outlined above. However, there is potential for adverse impacts on generators that would be processed within the GPA in terms of increased connection costs and timelines. It is impossible to calculate the level or likelihood of this impact as it will vary from connection to connection. The following sections outline a number of options for processing connections. The options are designed to take into account the public interest benefits, limit the adverse impacts to other connection applicants, be practical to implement and be administratively light for the connecting party and System Operators. “

MEGA Response to CER 09044: MEGA agrees with the CER in principal but it is incorrect to bunch all renewables together when considering connection. Certain renewable combinations (hybrid biomass/wind/water etc.) can provide better utility to the grid (consumer + public interest). In the first place there is a need to assure transparency and access to accurate information. In the second place there should be different classes of usefulness (value) levels (clearly defined – if not available immediately priority should be given to the development of such a classification system) to the grid (reduced intermittency, storage etc). Better solution (merit) should prevail in decision-making – outdated rights (GPA) are not in the public interest. Adverse impacts on GPA generators would not occur as the public interest would be served by the better solution. The test should be primarily on merit.

Quote CER 09 044 Draft: “5.2 Connection Options The following options assume that an application to be processed outside the queue fulfils the public interest criteria as set out above. The issue of a connection offer to this qualifying generator would be based on one of the following proposed options.

5.2.1 Options Shallow connection

5.2.1.3 Option 3 This option is a hybrid of Options 1 and 2 using a threshold.

Generators with MEC less than or equal to 1 MW:

The proposal here is that generators with a Maximum Exporting Capacity (MEC) of less than or equal to 1 MW would be processed outside the GPA; interactions between the applicant and any other applicant or in the queue are not investigated or considered.

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The order in the GPA queue is determined on date order. Please refer to the Group Processing Approach papers for details. The applicant would need to be processed according to Gate 3 or subsequent gate rules. Generators with MEC greater than 1 MW:

The proposal here is that interaction studies would be performed for those generators wishing to be processed outside the queue for those with an MEC of greater than 1MW. The Commission is proposing that if the result of the interaction study shows that the applicant wishing to be processed outside of the GPA does not have an interaction with any other applicant who is in the GPA queue ahead of it, then the applicant should be allowed to connect. Should the result of the study show an interaction, that is, the applicant does have an interaction, with another applicant who is ahead in the GPA, the Commission is proposing that the applicant have the option of effectively buying out that interaction. . “

MEGA RESPONSE to CER 09044 5.2.1: Having weighed the balance of interests from the MEGA perspective, 5.2.1.3 Option 3 appears to represent the more sustainable solution over time.

Quote CER 09 044 Draft: “5.2.2 Deep Transmission Reinforcements Considerations

MEGA RESPONSE to CER 09044 5.2.2: Out of current scope for MEGA

Quote CER 09 044 Draft: “5.2.3 Market Impacts …………………………

MEGA RESPONSE to CER 09044 5.2.3: Out of current scope for MEGA

Quote CER 09 044 Draft: 5.3 Public Interest and Impacts on Other Applicants The Commission has proposed allowing classes of renewable generators to be…

MEGA RESPONSE to CER 09044 5.2.1: Having weighed the balance of interests from the MEGA perspective, 5.2.1.4 Option 4 appears to present the more sustainable solution.

Quote CER 09 044 Draft: “6.0 Other Issues 6.1 Impacts on Micro Generation 6.1.1 Current arrangements: Up to and including 11kW The Commissions Decision paper Arrangements for Micro Generation (CER/07/208) defined micro generation as generation that is rated at or below 11kW (or 0.011MW). For the purpose of this consultation the class of micro generation, as defined

Micro Electricity Generation Association, Charleville Castle, Tullamore, Ireland 22 previously, will continue to be treated separately to any arrangements that are introduced for the treatment of generators outside the GPA. Therefore no change in micro generation arrangements is proposed. “

MEGA RESPONSE to CER 09044 6.1.1: MEGA is calling for an immediate review of CER 07/208. The Cenelec defined category addressed in this ruling relates to a segment of micro-generation considered to be of a “sporadic” installation type, Small Scale Embedded Generation (SSEG) or the “Plug and Play” type micro-generator. The document is correct from a safety point of view but only covers a small segment of . This has been misleading and has caused a near collapse in the Micro Electricity Generation Industry. Micro Electricity Generation had been limited to 50 kWe internationally but some jurisdictions are classifying micro electricity generation by the nature of the operator just as much as the generator. This is now under review in MEGA. It is likely that MEGA will be seeking recognition for the Micro Electricity Generation Industry as “people or corporations who produce electricity which is exported to the grid from renewable energy sources, or mixes of sources, the electricity export aspect not being the primary interest of the individual or the corporation and the technology being limited to a reasonable natural size limitation such as the original Gate limitation of 500kW or the CER’s new natural limitation of 1MW (in line with upgrade to the 20kV Distribution System) – the individuals or corporations are effectively micro in comparison to mainstream power generation companies and technologies”. This new amalgamation of individuals, and corporations, involved in the common activity of Micro Electricity Generation, under the new MEGA definition, might prove to be the single most important institutional innovation that might move Ireland to a leadership niche in the Global Energy Business. At least this is the MEGA thinking on the issue and it is our goal to see this recognised in the interest of developing a new competitive strength in the energy industry.

Quote CER 09 044 Draft: “6.1.2 Current arrangements: Greater than 11kW but less than 30kW Currently generators that are larger than 11kW but not greater than 30kW are not subject to interaction studies by the system operators but are treated on the same basis as any generator seeking connection to the network.

MEGA RESPONSE to CER 09044 6.1.2: This category might have been relevant under the 10kV Distribution System – it no longer is.

Quote CER 09 044 Draft: “6.1.3 Proposed change: Extension of limit to 50kW As part of this consultation it is proposed to change this upper limit to 50kW so that generators up to this level would be exempt from the requirement to undertake interaction studies to determine whether it could be processed outside the GPA. Instead such small generation would be automatically eligible for issuing offers outside the GPA. “

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MEGA RESPONSE to CER 09044 6.1.3: MEGA welcomes this change but is calling for transparent, traceable, and timelined processes to be put in place immediately. These are required to assist in rebuilding public confidence following the recent “dark ages” for micro generation in Ireland. MEGA is calling for a complete rethink of Micro Electricity Generation in Ireland. There is scope to build Micro Electricity Generators (MEG) as sophisticated hybrid systems with “always on” capability, embedded controls and , anti- flicker, dump loads, battery storage and remote System Operator On/Off Safety Controllers and Over-rides. The MEG Industry is confident that this will be the Third Force in Ireland’s Energy Future – White Oil.

Quote CER 09 044 Draft: “6.2 Proposed Process 6.2.1 DSO Proposal for Interactions The DSO has brought forward proposals for assessing whether interactions occur if an applicant is processed outside the queue. These new proposals follow a two stage approach;

1. A screening interaction study is first carried out. If no interactions are found then no further studies are carried out and the application is deemed not to interact with any other applicant in the queue ahead of the applicant.

2. If interactions are found a more detailed interaction study is carried out. The DSOs current approach is primarily Stage 2 above. Therefore these proposals represent an addition to the existing process.

The screening interaction study in the first step is based upon MEC bands and that interactions would only be looked for within these bands. The rational for these bands is that they are based around the most likely form of connection to the network. Assessing whether an application interacts with another application is performed by looking at their respective MEC bands and if they belong to different bands then no interaction is deemed to exist. “

MEGA RESPONSE to CER 09044 6.2.1: The two stage approach represents an improvement – transparency is the main concern.

Quote CER 09 044 Draft: “6.3 Connection Method Once an applicant qualifies to be processed outside the GPA the method of its connection needs to be determined ……….

6.3.1 Group Approach or Sequential Approach Two options are proposed, either a sequential or group approach. These options are expanded below.

6.3.1.1 Group Approach Under this option the group processing approach rules would be adopted. Interacting non-GPA applicants would be studied within a subgroup and offers issued based on the least cost technically acceptable solution (LCTA) for the whole subgroup with

Micro Electricity Generation Association, Charleville Castle, Tullamore, Ireland 24 shared costs on a per MW basis. This is analogous to the current group processing approach.”

MEGA RESPONSE to CER 09 044 6.3.1: Group approach is preferred over sequential but this is subject to there being set timelines for decision making and full transparency on the comparative merits and progress of all applicants. Failing this, the sequential approach would allow individual applicants to press for early and timely decision making. Either way the issue is about getting the processing work done, and done fairly in the public interest. In this regard there is an urgent need for the CER to list all derogations which have been obtained by the Systems Operators with a view to eliminating the current stop-start problems which are currently hampering connections. It is time to eliminate these System Operator surprises by penalising System Operators who fail to fully publish all such derogations and non-standard practises so that Power Engineers can better plan new installations for smooth and timely connection. Issues arising can be solved by standard modular installations – in particular we are emphasising the VARs issue which should not be creating the kind of mayhem that it is. We have good engineers in Ireland – let us stop arresting the advance of this important electricity supply system and industry – let us mobilise our good engineers, when and where problems arise.

Micro Electricity Generation Association, Charleville Castle, Tullamore, Ireland