💡 EAI Responds to EirGrid’s Long Duration Energy Storage Procurement Consultation
The Electricity Association of Ireland (EAI) welcomes EirGrid’s consultation on the Long Duration Energy Storage (LDES) Procurement Mechanism, recognising it as a vital step towards meeting Ireland’s 2030 decarbonisation targets. We firmly agree with the core assessment that a dedicated mechanism is urgently needed to address the ‘missing money’ issue and incentivise LDES deployment, which is critical for managing the increasing variability of wind and solar generation and minimising costly ‘dispatch down’ events.
However, our response highlights several key concerns and areas we believe the proposed framework falls short, particularly as a blueprint for an enduring solution.
Key Concerns on Scope and Ambition
The EAI is disappointed with the proposed minimum procurement volume of 201MW, which is a significant reduction from the 500MW outlined in the government’s Electricity Storage Policy Framework (ESPF). We contend that the ‘learning exercise’ rationale is unclear, as the current timeline does not allow for lessons learned to be applied effectively before the 2030 target. We urge EirGrid to commit to procuring the full 500MW in line with the ESPF’s ambition.
Furthermore, while we support the procurement of LDES, we note that this procurement mechanism is not technology neutral, with the specific eligibility criteria excluding several technology classes that could otherwise reduce dispatch down and offer other system benefits. We advocate for alignment with the CRU’s established, broader definition of hybrid assets and a more holistic view that includes co-location with all forms of generation.
Reservations on the Operational and Financial Models
The proposed Operational Envelope Model allows EirGrid to issue dynamic import and export limits to contracted LDES assets at D-1 (the day before real-time trading) to minimise re-dispatch. While we acknowledge the rationale, we question the necessity of this approach. The introduction of ex-ante operational envelopes risks influencing wholesale market prices and creates uncertainty that is difficult for investors to model.
From a financial perspective, the EAI has concerns about the proposed revenue floor and sharing mechanism. Investors require the floor be based on net revenues (accounting for operational costs) rather gross revenues. Crucially, the proposal to cap the revenue floor below the Levelized Cost of Storage (LCOS) is insufficient to solve the missing money problem and forces assets to hold exposure to unbounded market risk. We also assert that an investment rate threshold is essential to ensure that financial support is targeted towards new projects, avoiding the over-subsidisation of existing assets that have already recovered capital costs.
Procurement Design and Scoring
The EAI supports the proposed 10-year contract length as it offers a stable and predictable revenue stream necessary to underpin investment confidence. Regarding the procurement process, the EAI raises concerns about the heavy 50% weighting given to Non-Price Criteria (NPC), which we believe lacks precedent for a financially supported scheme at the EU level. Furthermore, we question why the Grid Connection category (30% weighting) is valued higher than Location (20% weighting), given that the purpose is to solve locational dispatch down issues. We believe a zonal approach would be more effective than the proposed nodal scoring mechanism for capturing the broader system value of assets and promoting competition across high-constraint regions.
Conclusion
The EAI remains committed to constructive engagement with EirGrid to refine this framework. We urge the TSO to address these concerns to ensure the LDES mechanism is efficient, investable, and capable of delivering the transformative flexibility required for Ireland’s decarbonised future.