Energy in the green recovery
16th June 2010
Regulating energy
16th June 2010

Power for prosperity

Dermot Byrne No electricity, no economy. Dermot Byrne, Chief Executive of EirGrid, reflects on the power grid’s central relevance to how Ireland works and lives as he takes stock of the island’s energy market with Owen McQuade.

The fact that electricity is essential for any modern industry or for meeting most of a household’s basic needs is so self-evident that it is hardly worth stating. Hence the strategic importance of EirGrid and its work in supplying power across Ireland, North and South.

Dermot Byrne has been in energy through his whole working life, having joined the ESB in 1973, and now heads up EirGrid, which is now effectively a group company with system and market operations responsibilities in Ireland and Northern Ireland.

Byrne explains that the TSO provides a “level playing field” for generators and suppliers.

“We control the flow of power around the grid through our control centre, which is a 24/7 operation – highly sophisticated computer equipment taking data in from right around the country, presenting that in real time to our engineers in the control centre who are making decisions about the control of the power system to make sure that they supply reliable energy to every industry, every farmer, every house in the country.”

The central challenge is to dispatch generation to meet demand. Electricity cannot be stored so engineers must manage that balance carefully and constantly.

Forward planning

Operating the system second by second is vital, but planning – often decades ahead – is also critical to the company’s role. System security is a key priority to the company.

Each December, it publishes a generation adequacy report (GAR), which forecasts and analyses how demand will grow over the next seven years; a factor based, in turn, on how the economy is expected to perform. This summer, for the first time, it brought out an interim GAR due to the economic changes over 2009 so far.

“We said: ‘It’s too late to wait to the next one. Developers want to know what the forecast is. They want to know what they should be planning for.’”

In addition, the report must factor in the current plans that generation owners have for their plant, which may include either developing or decommissioning generators. The availability and performance of plant is also assessed.

EirGrid’s current assessment is that Ireland’s electricity supply is secure until 2015-2016.

Byrne observes that there has been a major transformation towards renewable energy, with wind a leading source in Ireland. The Government wants to generate 40 per cent of Irish electricity from renewables by 2020 and the North is expected to set a similar target in its forthcoming revised energy policy.

As Moneypoint – the last coal-fired station – approaches the end of its working life around 2025, security of supply will then take on a new importance.

Byrne has initiated a review of this issue to be published later this year and he favours a strategic open-minded approach to this issue.

“We will then have – under the business as usual scenario – 40 per cent renewables,” he states. “And unless some decision is taken, we will be reliant for 60 per cent on gas. The question then is instead of three legs of the stool, in terms of diversity, you’re down to two legs of the stool. And there will be times when the wind is not blowing so you’ll be very reliant on gas for significant periods of the year.

“Given the problems in the gas market that we have seen over the past number of years – with gas coming from further and further afield – both in terms of physical security and price volatility, is that where Ireland wants to be?”

InterconnectionDermot Byrne

All of Ireland has been part of the Single Electricity Market (SEM) since 2007.

North and South are currently linked by one major power-line, between counties Louth and Armagh, and the Moyle Interconnector also joins County Antrim to Scotland and therefore the British market. A parallel North/South line between Cavan and Tyrone, and a second east-west link, between Dublin and Wales, are also planned.

Both new projects are viewed as strategic national infrastructure and will bring interconnection up to 1,000 MW in capacity, acting as an extra source of power for a market around 5,000MW in size.

At present, the existing North/South interconnector is a “bottle-neck” in the SEM, for operational reasons, a problem which he hopes will be alleviated by the second link. With costs reduced, cheaper electricity should be delivered.

“Interconnection has a number of benefits,” he outlines, namely security, competitiveness and growing renewables. “The new lines will deliver benefits to customers in the Republic of Ireland and Northern Ireland, but will also deliver reliable high quality supplies in the north east region, ensuring that the area is able to attract and retain industry into the future and to service domestic, SME and household consumers.”

“Certainly it does provide additional security of supply. It also brings additional competition into the market. If a generator is dominant in a smaller market and you put in interconnection, it is less dominant because there is now a bigger market.”

Byrne adds: “It is a key enabler to facilitate achieving the 40 per cent renewables target. There’s no silver bullet here. This is one of the key measures so that at times of light load on the island and if wind’s blowing and there’s high wind generation, rather than turn those megawatts off or spill those megawatts and lose them, we can export them. And vice versa, at times of low wind generation, we’ll be able to import from Great Britain.”

As a result of the SEM, EirGrid is now very much an all-island operation. It developed the market by working closely with SONI – the System Operator in Northern Ireland – which was part of Viridian, Northern Ireland’s largest energy utility. They jointly formed the Single Electricity Market Operator (SEMO), a joint venture split 75 per cent to 25 per cent between EirGrid and SONI respectively.

Viridian’s ownership of SONI caused a conflict of interest so SONI was divested and since March 2009 has been part of the EirGrid group. The two organisations, Byrne comments, were previously “effectively joined at the hip” and it made “enormous business sense” for each company and for customers and stakeholders in both jurisdictions.

Grid future

Also on a strategic note, EirGrid has looked at the shape of the grid over the next 20 to 25 years. The Grid 25 document, published last October, envisions the changes that must be made.

“What we needed was a sense of where the generation portfolio was going,” he notes. “Once clarity emerged around the targets for renewables that enabled us then to confidently go ahead and take a strategic look at the development of the grid.”

Much of that renewable power comes from the west, north west and south west of the island, where the grid is currently less developed.

“It makes the case as to why the grid is so important as the backbone of the power system; it’s so critical,” Byrne reflects on Grid 25.

“We don’t have a ‘plug-and-play’ grid. We have to continue to develop the grid to meet the future needs. It is to deliver balanced regional development. It is to deliver a reliable power supply into every county and every region in the country. And it is to deliver on the 40 per cent renewables target.”

Asked whether it was frustrating that not everyone supports the development, he replies that a balance must be struck and he appeals for support from industry, public representatives, regional organisations, state development companies and sectoral representative groups.

“We have to be aware that the grid itself and infrastructure does have an impact on communities it passes through; this is true for any infrastructure. We have to be cognisant of the need to consult and we do that very extensively, and we’re doing it on all our projects,” he points out.

“Inevitably, there will be people who will not be in agreement with our proposals but our job is to consult, identify the issues, and to try and get the best balance between the needs of the country, the impact on communities, the costs and the need for a reliable power supply for industry. Of course, ultimately any project that we propose will have to be approved by the planning authorities. ”

Highlighting grid’s vital economic importance, he affirms: “At the end of the day if we don’t have a grid, we don’t have jobs. It’s as simple as that.”

EirGrid is in constant contact with the IDA, to help its clients work out the best place to site factories and other operations. Byrne recalls how Intel’s Managing Director, Craig Barrett, once said that a reliable power supply was a key element in its decision-making.

“And if they don’t have a reliable power supply, they or similar companies will not be investing in Ireland or a particular region of Ireland. The need for a grid is well understood by anybody involved in the development of industry and jobs in Ireland.”

Changes

His 36 years in energy have seen many changes but he has “no regrets” in joining a “dynamic, challenging, interesting” industry.

Energy’s place on the policy agenda has always been very significant, although its profile has not always been as high as it is now.

“Previously a lot of the policy was set within ESB,” he recalls. “That has been the major change in the last 20 years. In the 90s, the whole move was towards deregulation and recognition that there is a value chain and that different parts of that value chain which can be managed can be competitive.”

As Chief Executive, he has seen delivering and operating the SEM as a major achievement for EirGrid and the industry. And his staff are clearly a source of personal pride.

“To me, just developing EirGrid and the capability and abilities and the people in EirGrid and seeing them develop, and seeing them grow has been perhaps the most rewarding one for me,” he says in conclusion. We have another wave of that now to build up and deliver Grid 25. Again, I have every confidence that we will do that given the quality of the people we have here.”

Dermot ByrneProfile: Dermot Byrne

From Dublin – and a Dub football supporter “to my cost this year” – Dermot was appointed EirGrid Chief Executive in July 2005. After studying electrical engineering to masters level, he also graduated with an MBA. From 1993 to 1997, he managed the power system operations in ESB National Grid. The late ESB Director Ted Dalton – “a fantastic, charismatic leader” – was among his mentors.

As Head of ESB Networks at the beginning of this decade, Dermot oversaw a major ramp-up of investment in transmission and distribution infrastructure.

In 2005, he was appointed Chief Executive of EirGrid.

Married to Máire with five children. In addition to spending time with his family, Dermot is interested in golf but with a “high” handicap. He also enjoys reading and music.

Article from eolas magazine issue 1 Sep/Oct 2009