SFA Energy Update

This week we provide members with information on State supports for energy users and on the proposed changes to Electricity Network Tariffs from 1 October.

It is now becoming increasingly clear that Ireland is entering a major energy crisis with rapidly escalating concerns in the business community in relation to rising prices and security of supply issues. SFA is engaging extensively across industry and with both Government and Ireland’s energy regulator (the CRU) to help address these growing risks.

1. Planned State supports for energy users

• To support enterprise, ease the impact of rising energy prices the Department of Enterprise, Trade and Employment have put together a list of advice for companies, showcasing the different grants, allowances, and schemes available to support businesses and increase energy efficiency.
• To further support the Irish business community three schemes aligned with the European Commission’s Temporary Crisis State Aid Framework are in the late stages of development. The draft supports are:
  • A new scheme for manufacturers and internationally trades services -based on the Sustaining Enterprise Fund- providing a mix of repayable and non-repayable support up to 500k per undertaking. Eligibility requirements known to date: Business must show a projected 15% reduction in EBITDA (earnings before interest, taxes, depreciation, and amortization) for 2022, evidence of a sustainability/energy efficiency plan;
  • A new scheme for energy intensive manufacturers and internationally trades services- providing direct grant aid up to 2m per undertaking. Eligibility requirements known to date: Business must show evidence of a 200% increase in electricity and/or natural gas costs on 2021 levels, a projected 15% reduction in EBITDA (earnings before interest, taxes, depreciation, and amortization) for 2022, evidence that energy costs comprise at least 3% of turnover/production value based on 2021 levels or most recent accounts, evidence of a sustainability/energy efficiency plan; and
  • A new medium term loan schemes to help businesses with increases input/energy costs caused by the war in Ukraine (expected in late 2022).

2. Proposed changes to Electricity Network Tariffs from 1 October

Ireland’s energy regulator (the CRU) has launched a two week consultation – seeking industry views on proposed structural changes to Irish electricity network tariffs. The proposals primarily impact large energy users and are considered necessary by the CRU to address an expected capacity shortfall this winter and in the coming years. The proposals aim to change consumer behaviour, reduce usage during the evening peak between 5-7pm, reduce usage during periods of system stress and during periods of low wind but high demand. The proposals are summarised below:

• Peak or Time of Use Tariffs to apply from 17:00-19:00 each day for both Transmission and Distribution, with the aim to reduce demand at this critical peak period;Increasing Block Tariffs targeted at Extra-Large Energy Users (XLEUs) who significantly increase their demand relative to the previous twelve months. This is aimed at curbing such significant increases in demand;
• A System Alert Tariff to apply to XLEUs when the TSO issues a System Alert. This is aimed at reducing demand at times of system stress
• A Decarbonisation Tariff to apply to XLEUs when SNSP is below a proposed level of 25%. This is aimed at reducing demand at times of low renewable penetration when tighter system margins tend to be more common;
• An accelerated roll out of ESBN led demand reduction schemes for both domestic and non-domestic customers through its National Network, Local Connections Project;
• A request to Suppliers to proactively develop products/initiatives for domestic and commercial customers to encourage them to reduce their demand and/or improve their energy efficiency.

The SFA is very concerned by some of these proposals and the short notice to their possible introduction. Many businesses will be unable to respond to these new signals and amend their energy usage in sufficient time to avoid these increased costs. This will be of particular concern for the many businesses already struggling with exceptional energy costs. Interested parties are invited to respond by email to NetworkTariffs@cru.ie.  Together with our colleagues in Ibec, the SFA will also be preparing a response to the consultation.

SFA will continue to track and update members on this issue and make representations on behalf of the small business community.

If you have any queries on this issue, please contact elizabeth.bowen@sfa.ie.