Connecting Jobs and Prosperity EirGrid plc Annual Report 2015 EIRGRID PLC ANNUAL REPORT & ACCOUNTS 2015 Contents 1 Who We Are 4 Chairperson’s Report 6 Chief Executive’s Review 8 The Transmission System 10 Financial Review 14 Focus On: Business Connections 16 Operations, Planning and Innovation 20 Consultation, Outreach and Engagement 22 Focus On: 12 Commitments 24 Developing the Grid 26 Focus On: Innovation 28 Market Operations 30 Focus On: Our Energy Performance 32 Our People 36 Focus On: Corporate Social Responsibility 38 The Board 46 Our Executive Team 51 Financial Statements EIRGRID PLC ANNUAL REPORT & ACCOUNTS 2015 Who We Are EirGrid Group is responsible for a safe, secure and reliable supply of electricity now; and in the future. We develop, manage and operate the electricity transmission grid. EirGrid Group is the independent Transmission System Operator (TSO) in Ireland and Northern Ireland, through EirGrid and SONI, respectively. We use the grid to connect industry and businesses that use large amounts of electricity. The grid also powers the distribution network - this supplies the electricity you use every day in your homes, businesses, schools, hospitals and farms. We support competition in energy, promote economic growth, facilitate more renewable energy and provide essential services. We develop new electricity infrastructure only when required. The Single Electricity Market Operator (SEMO) is part of the EirGrid Group, and operates the Single Electricity Market (SEM) across the two jurisdictions. EirGrid Group also owns and operates the East West Interconnector (EWIC), a high-voltage electricity link between Ireland and Great Britain. EirGrid plc is a commercial state-owned company. We abide by strict laws and safety standards. 1 EIRGRID PLC ANNUAL REPORT & ACCOUNTS 2015 Highlights REVENUEREVENUE GREW FROMGREW FROM €668.4€668.4 million million to to Safe,Safe, N N PlanningPlanning application application SECURESECURE made formade the for the €706.2€706.2 POWERPOWER SYSTEM SYSTEM MILLIONMILLION maintainedmaintained deliverydelivery of12 of12 throughoutthroughout NorthNorth commitmentscommitments SouthSouthS S on publicon public consultation consultation 20152015 INTERCONNECTORINTERCONNECTOR PROJECTPROJECT ProProfitfit SONSONI I before beforetax was tax was progressedprogressed its first its first We haveWe have €40.7€40.7 NI transmissionNI transmission workedworked with with StudiesStudies progressed progressed on an on an MILLIONMILLION reinforcementreinforcement to to APPLE,APPLE, ELECTRICITYELECTRICITY pre-constructionpre-construction FACEBOOKFACEBOOK INTERCONNECTORINTERCONNECTOR phasephase & MICROS& MICROSOFTOFT WITHWITH to connectto connect new Irish new data Irish centres data centres FRANCEFRANCE a dividenda dividend of of €3€.53.5 PublicationPublication of our draft of our draft grid developmentgrid development DevelopmentsDevelopments millionmillion € € on an integratedon an integrated delivereddelivered€ € strategystrategy increaseincrease SINGLESINGLE to theto the ‘YOUR‘YOUR GRID, GRID, in thein electricity the electricity electricityelectricity SHAREHOLDERSHAREHOLDER YOURYOUR VIEWS, VIEWS, DEMANDDEMAND marketmarket(I-SEM) (I-SEM) YOURYOUR TOMORROW’ TOMORROW’ as the asrecovery the recovery gathers gathers pace pace WITHWITH EUROPE EUROPE 2 EIRGRID PLC ANNUAL REPORT & ACCOUNTS 2015 REVENUEREVENUEREVENUE GREW GREW FROMGREW FROM FROM €668.4€668.4€668.4 million million million to to to Safe,Safe,Safe, N NN PlanningPlanningPlanning application application application SECURESECURESECURE mademade formade the for for the the €706.2€€706.2706.2 POWERPOWERPOWER SYSTEM SYSTEM SYSTEM MILLIONMILLIONMILLION maintainedmaintainedmaintained deliverydeliverydelivery of12 of 12of12 throughoutthroughoutthroughout NorthNorthNorth commitmentscommitmentscommitments SouthSouthSouthS SS on publiconon public public consultation consultation consultation 201522015015 INTERCONNECTORINTERCONNECTORINTERCONNECTOR PROJECTPROJECTPROJECT ProProProfitffitit SONSONSONI II beforebeforebefore tax wastax tax was was progressedprogressedprogressed its itsfirst its first first We WehaveWe have have €40.7€€40.740.7 NI NItransmissionNI transmission transmission workedworkedworked with with with StudiesStudiesStudies progressed progressed progressed on an on on an an MILLIONMILLIONMILLION reinforcementreinforcementreinforcement to to to APPLE,APPLE,APPLE, ELECTRICITYELECTRICITYELECTRICITY pre-constructionpre-constructionpre-construction FACEBOOKFACEBOOKFACEBOOK INTERCONNECTORINTERCONNECTORINTERCONNECTOR phasephasephase & MICROS&& MICROS MICROSOFOTOFFTT WITHWITHWITH to connectto toconnect connect new Irishnew new Irishdata Irish datacentres data centres centres FRANCEFRANCEFRANCE a dividenda adividend dividend of of of €€3€3.53.5.5 PublicationPublicationPublication of our of draft ofour our draft draft gridgrid developmentgrid development development DevelopmentsDevelopmentsDevelopments millionmillionmillion € € € on anon integratedon an anintegrated integrated delivereddelivereddelivered€ € € strategystrategystrategy increaseincreaseincrease SINGLESINGLESINGLE to totheto the the ‘YOUR‘YOUR‘YOUR GRID, GRID, GRID, in theinin theelectricity the electricity electricity electricityelectricityelectricity SHAREHOLDERSHAREHOLDERSHAREHOLDER YOURYOURYOUR VIEWS, VIEWS, VIEWS, DEMANDDEMANDDEMAND marketmarketmarket(I-SEM()I-SEM(I-SEM) ) YOURYOURYOUR TOMORROW’ TOMORROW’ TOMORROW’ as theasas recoverythe the recovery recovery gathers gathers gathers pace pace pace WITHWITHWITH EUROPE EUROPE EUROPE 3 EIRGRID PLC ANNUAL REPORT & ACCOUNTS 2015 Chairperson’s Report Delivering an innovative grid for business and community is what guides us in EirGrid Group John O’Connor CHAIRPERSON I am pleased to present the 2015 Annual Report of perhaps more importantly, in embedding throughout EirGrid plc under the theme of “Connecting Jobs and the organisation the values and culture that should Prosperity”. imbue any company responsible for such a vital public service. Delivering the right electricity grid and operating it securely and efficiently for the entire island of Ireland, In December 2014, we set about transforming how we north and south, is what guides us in EirGrid Group. engage with communities and the public. Reviewing From this flows improvements to the lives of all and Improving our Public Consultation Process set citizens, businesses and communities, underpinning out the 12 commitments by which we would do this. job creation, prosperity and investment. We are now delivering on these commitments and we are putting in place a whole new framework for Electricity is set to supply a bigger and the development of grid projects from conception to bigger share of our energy needs in the completion. Full information and local presence will future. be critical features of this approach. In the previous Annual Report, I said that the EirGrid A similar process is also underway in Northern Ireland. Group of Companies was on a constant mission to improve how we do things and that this requires A further milestone in 2015 was the us to embrace change. A year on, I can truthfully publication for comment of our draft grid say that this commitment can be seen across all development strategy, ‘Your Grid, Your Views, aspects of our business. It is evident in the way we Your Tomorrow’. are planning for the future needs of the electricity transmission grid. It is evident in the way we are This sets out our plans for ensuring that we have a reaching out to and consulting with communities modern efficient grid into the future, taking account and individuals who are affected by or have an of the latest advances in technology. After considering interest in our projects. It is evident in the way we the public’s reaction and the Government’s white are breaking new ground in accommodating an ever Paper on energy policy, we will publish a new grid higher share of renewable generation on the grid. It development strategy in 2016. Having taken over is evident in the large investment in new wholesale responsibility for the planning of grid development electricity market systems to ensure we have the most in Northern Ireland, we are also preparing a grid competitive prices possible. We are also engaged development strategy there. in organisational change within the group and, 4 EIRGRID PLC ANNUAL REPORT & ACCOUNTS 2015 Your Grid, Your Views, Your Tomorrow sets out our In 2015 significant investigative work was carried out new approach to upgrading the transmission grid and jointly with our French counterparts, RTE. 2016 will clearly demonstrates our commitment to considering see us assessing the business case for the next phase all available technology options – including upgrades of the project. to the existing network, overhead lines and We continued to make good progress in implementing underground cables – when developing the grid. the DS3 programme, which aims to develop and install For example, the new strategy includes an innovative the systems necessary to safely accommodate up solution for the South East region, which is capable to three quarters wind-generated electricity on the of meeting the need for the Grid Link project. The new grid in real time. This is in order to meet the public ‘Regional Option’ involves no new overhead pylons. policy objective of generating 40% of electricity from Instead the advanced use of technology will reinforce renewable resources by 2020. EirGrid is recognised the network in the region. as being at the forefront of technology in this area. We have