Renewable Energy Zones
The ESB submitted its final recommendations for an interim framework for Renewable Energy Zones (REZs) to Energy Ministers on 1 June 2021. The recommendations take the form of a set of principles that can be applied to a range of REZ delivery models. The interim framework will assist parties wishing to develop a REZ by providing guidance for resolving key market design issues that have presented a barrier to coordination in the past. It does not attempt to prescribe a particular model of REZ development.
Energy Ministers have asked ESB to develop arrangements to support the development of REZ as an interim measure ahead of longer-term access reforms. The ESB is conducting this project in accordance with a two-stage process:
- Rule changes that require the jurisdictional planner to develop a detailed and staged development plan for each priority REZ identified in the ISP. These changes would build on the actionable ISP Rule changes; and
- the development of a policy framework for the staged development of REZs within a REZ development plan.
The ESB’s final recommendations for the REZ Planning Rules were accepted by Energy Ministers in May 2021. The relevant documents are available here. The Stage 1 consultation paper, draft REZ Planning Rules, and submissions to the consultation paper are available here.
The ESB has subsequently consulted on and recommended a set of principles for the implementation of REZs as part of Stage 2 of the process.
Overview of issues
Stage 1 of Interim REZ framework – REZ Planning Rules
The ESB’s recommendations with respect to the REZ Planning Rules have been accepted by Energy Ministers and came into effect on 13 May 2021. These Rules establish a framework for the preparation of REZ design reports.
REZ design reports set out a cohesive, long term plan for the development of the REZ that leverages and contributes to the broader development of the power system. They also include a community impact assessment.
A key objective of the Rules is to get transmission planners to engage with local communities so that social licence issues are understood at an earlier stage in the transmission planning process. This will increase the quality of the inputs to the Integrated System Plan.
The Stage 1 Rules are an enhancement to the actionable ISP framework that can be implemented independently of Stage 2. They are focussed on planning and do not affect the funding arrangements or investment test that applies to REZs.
The ESB fast tracked this work due to the long lead times associated with the transmission planning process and the fact that it was a simpler, stand-alone piece of work.
Stage 2 of Interim REZ framework – REZ implementation
The ESB’s Stage 2 REZ recommendations provide a set of overarching principles for the development of REZs that is compatible with the efficient development of the power system as a whole, together with practical guidance on how to implement these principles. The recommendations address:
• REZ planning,
• Connecting to a REZ,
• REZ funding and economic regulation
• Access within a REZ.
The document builds on the Stage 1 REZ planning process and takes into account views expressed in submissions to the REZ Stage 2 consultation paper published in January 2021. The recommendations are designed to support jurisdictions looking to resolve urgent issues in the short term, while providing a pathway to the post 2025 market design.
Interactions between REZs and transmission access reform
The ESB is consulting on REZs in conjunction with the Post 2025 market design review due to the close interaction between REZs and transmission access reform.
REZs provide a localised solution that applies to specific geographic locations within the power system. They are only a partial solution because outside the REZs, the problems associated with the current access regime would remain. As the power system evolves and electrical flows vary, issues outside the REZ will be felt inside the REZ.
The ESB is developing a set of reforms that could build on the REZ model to provide a long-term, whole of system access solution. These reforms will be designed to mitigate the concerns raised by stakeholders in relation to transmission access reform.
The ESB’s Stage 2 REZ recommendations are under consideration by Energy Ministers. Longer term options for transmission access and congestion management are being further considered through the post 2025 market design initiative.