System Operator signals generation investment opportunity over next decade

Northern Ireland’s Transmission System Operator, SONI (System Operator for Northern Ireland), has published the All-Island Resource Adequacy Assessment (AIRAA) which sets out the investment opportunities in conventional electricity generation over the next ten years.

As the System Operator, SONI does not generate or sell electricity. Rather, SONI’s role is to operate the high-voltage electricity grid (transmission system) in real-time to balance demand for electricity with the generation made available by the private companies who secure contracts through the all-island Single Electricity Market.

As part of this role, the System Operator also undertakes detailed assessments to understand how much generation is required to meet consumer demand in the future.

The purpose of the All-Island Resource Adequacy Assessment is to provide investment signals to the all-island markets on how much generation Northern Ireland requires to meet demand over a ten-year period. The study, which replaces the previous Generation Capacity Statement, enables industry, government, regulators and other stakeholders to facilitate the transition to renewable energy, supporting social and economic growth in the future, whilst ensuring the secure and resilient operation of the electricity system. 

The study deploys two scenarios measured against several possible demand growth assessments. The Base Scenario considers how much generation Northern Ireland requires in normal operating conditions. The Secure Scenario considers this in the context of more challenging conditions such as low levels of imports via interconnectors.

Under the Base Scenario, the study shows that Northern Ireland will have sufficient generation to meet demand over most of the study period, with an investment opportunity for 30-50 MW from 2032 onwards. Under the Secure Scenario, the study shows additional investment requirements of up to 100MW between 2026-2031, rising to 200 MW by 2034. 

In the report, SONI confirms its assessment that the Secure Scenario is most prudent and should be adopted for decisions relating to securing capacity for the continued secure and reliable operation of the power system.

There will be several Capacity Market Auctions in the coming years where private companies will have the opportunity to secure contracts to provide additional electricity generation to meet the growth in demand.

SONI Chief Executive, Alan Campbell, said:

“As the System Operator, our role, in addition to operating the grid in real time with the generation made available to us, is to forecast future demand and the generation Northern Ireland will require to meet it. As our economy grows, and we seek to decarbonise our heating and transport sectors, demand for electricity will also grow which creates an investment opportunity for those companies seeking to secure contracts through the all-island Single Electricity Market.

“Our studies show that Northern Ireland should have sufficient generation to meet demand in normal operating conditions in the coming years, with a small amount of additional generation required in the early part of the next decade. To operate in a more secure context, accounting for potential challenges such as unforeseen generator outages, there is a need for further investment in new generation.

“Our assessments do point to some short-term challenges in the next few years, and we will continue to work closely with the Utility Regulator, the Department for the Economy and the energy industry to ensure Northern Ireland continues to have a safe, secure and reliable supply of electricity.”

SONI’s Director of Networks and Innovation, Gerard Carlin, said:

“Operating any power system is inherently complex, especially in the context of the transition to an energy system based on more renewable, intermittent generation. As the System Operator, we have to consider a wide range of variable, and sometimes competing, factors when developing the forecasts to determine Northern Ireland’s future energy needs. 

“Importantly, we need to signal to the market the need for sufficient generation to ensure a safe, reliable and secure supply for electricity to homes, businesses, farms and public services across Northern Ireland while balancing the importance of keeping costs as low as possible for consumers, who ultimately pay for this generation through their bills. We will continue to engage with the Utility Regulator and the energy industry to ensure the market is aware of the need for future investment.”

The Assessment also models future growth in demand for electricity based on available evidence and projections in areas such as economic growth, new technology loads and the electrification of sectors such as heat and transport. 

The studies show that total demand is expected to grow more slowly than previously anticipated in the next few years, with an acceleration in growth towards the end of the study period.

The adequacy position, the balance of demand and supply, is measured against a standard set by the Department for the Economy known as the Loss of Load Expectation (LOLE). The LOLE standard for Northern Ireland is set at 4.9 hours. 

The study suggests that Northern Ireland could experience an increased risk to security of supply in the event of unforeseen generator or interconnector outages, especially during periods of low renewables. The System Operator continues to work closely with the Department for the Economy and the Utility Regulator on a range of mitigation measures.

The freeze dates for the studies were 30 April 2024 and 8 May 2024.

You can read the All-Island Resource Adequacy Assessment and Plain English Summary here.