THE ELECTRICITY MARKET IN THE REPUBLIC OF IRELAND HAS BEEN FULLY OPENED, which means that all of the 1.9 million customers can now choose their supplier. There are a number of independent suppliers in operation that are mainly involved with the medium- to large-end customers, and the public-supply arm of the Electricity Supply Board (ESB) continues to supply customers on published tariffs.

On the generation side, there is full competition with many independent generators up and running, and most new generation capacity is being provided outside of ESB. There also are interconnections with limited capacity with the North of Ireland, which has an interconnection with Scotland. However, ESB Networks is still primarily an island network.

On the network side, ESB continues to operate as a natural monopoly, but it is very much regulated. ESB Networks builds, operates and maintains the distribution network under license from the Commission for Energy Regulation. It also owns, builds and carries out maintenance on the transmission network. Operation of the transmission system is licensed to a separate company, Eirgrid, as transmission system operator.

INVESTMENT PROGRAM

Over the last few years, ESB Networks has successfully risen to the challenge of delivering the largest investment program in the history of the company. Costing more than 3 billion euros (US$3.62 billion) by the end of 2006, the investment program will have resulted in an additional 370,000 customers connected to the networks, rebuilding of most of the medium-voltage (MV) network (10 kV and 20 kV) and many new transmission and distribution lines and substations.

Needless to say, this construction program was not achieved without a massive mobilization of resources — financial and otherwise — which presented quite a challenge for ESB Networks. The challenge was made all the more demanding by the fact that it was occurring at a time of continued high growth in the customer base. In addition, the dispersed nature of the rural distribution networks and the distinctive predominant wood-pole construction differentiated this reconstruction program from similar projects by other utilities.

A defining characteristic of the ESB distribution network is its low customer density of some 12 customers per km (19 customers per mile) on the overhead line network, which is 182,000 km (114,000 miles) in length, 131,000 km (82,000 miles) of MV lines, 51,000 km (32,000 miles) of low-voltage (LV) lines (excluding service drops), supplying 197,000 pole-mounted transformers.

In 1999, the peak demand was 3436 MW and the customer base was 1.5 million with a load growth of 6% per annum. New customers were being connected at a rate of 50,000 per annum, which was rapidly placing the distribution networks under pressure. By 2004, the peak demand had grown to 4500 MW and new connections were some 90,000 per annum.

The key drivers for undertaking such a major investment program were as follows:

• There is a significant and widely dispersed rural population in Ireland and most of the networks serving these customers were built during the rural electrification program in the 1940s, 1950s and 1960s; therefore, most of these networks were in excess of 50 years old.

• There was considerable underinvestment in the networks during the 1980s and 1990s, at a time when ESB's own internal resources were limited and fully occupied with essential maintenance programs and new customer connections.

• The number of these new connections and general load growth has continued in an upward spiral, in line with the growth in the Irish economy.

• Customer needs and expectations also have increased considerably due to the extent of technology deployed in the average house, rural or otherwise. Hence, any customer tolerance to occasional interruptions in supply or substandard quality of supply has long since disappeared.

• The government and industrial development authorities also have looked to ESB for reassurance that it could keep pace with the national development plan and provide the necessary infrastructure to support this development particularly in the high-tech and IT end of the business, which is also widely dispersed in business parks throughout the country.

All of these factors combined to create an urgent need for a major investment program in the networks at the end of the 1990s. The table shows the key 2004 system statistics for ESB. The overall level of investment in the distribution system alone was substantial and covered a wide variety of work.

STRATEGIC INTENT

In order to best position itself to cope with these work programs and keep pace with the transformation of the electricity industry structure in Ireland, ESB adopted a strategic approach to its reorganization.

A business process re-engineering (BPR) approach was adopted and the “as is” and the “to be” structures were modeled at a high level using process flow charts to ensure that the organization structure proposed would match the requirements of the business. This resulted from recognition of the importance of ESB's networks being fundamental to the success of the business and a key recommendation to adopt an asset-management approach to the business.

The BPR opportunity assessment indicated there were significant benefits in making the changes proposed, including splitting up the company's Networks and Customer Sales departments into autonomous business units, with Shared Services as a separate unit.

The next task was to design the detailed functions and structures of the new organization. A project team of more than 100 staff was involved from virtually all areas of the company. The reasons for the large number of staff being transferred from their area of work to this project was threefold:

• It was a large task and needed to be resourced adequately

• There was a greater sense of ownership as those working within the new structure contributed to the design

• The impact of this number of staff leaving their jobs required the structure that remained to be reshaped, giving visible signs to all staff that a real culture change was on the way.

The structure introduced by the transformation program replaced the geographical-based organization with a functional organization, namely ESB Networks, in which Asset Management would manage risk and allocate investments to individual projects selected on a national basis; Network Projects would carry out all large-scale project work with the assistance of contractors; and Network Services would deal with customers and carry out customer connections and metering.

SOURCING CONTRACTORS

With such a huge upsurge in work, it was necessary for ESB to look internationally to ensure there would be a sufficient number of suitable contractors available. The approach adopted initially to address this challenge was to:

• Develop a contract management capability within the networks business

• Prequalify contractors based on experienced resources and skills, including project and safety management.

• Use pilot projects initially with the possibility of gaining long-term contracts based on the experience and performance in the pilots. This was a requirement in particular for the MV overhead refurbishment program.

• Adopt a materials “free issue” policy initially, employing turnkey contracts where appropriate. (Free issue refers to material that is bought by the utility for the contractor's use, rather than the contractor buying the material and charging the utility.)

• Ramp up to 1500 work years per year over five years to achieve the network completion target.

The contracts put in place initially consisted primarily of local U.K. and Northern Ireland contractors that had the necessary experience. European contracting companies initially showed little interest in the market, as it was difficult to convince them of the scale of the proposed work program. Because of the fairly standard nature of high-voltage (HV) lines and substations, it was relatively easy to get competitive bids for HV work (38 kV, 110 kV, 220 kV and 400 kV). Contracts were awarded for individual lines and substations and also for framework contracts involving multiple jobs.

On the other hand, it soon became apparent that sourcing contractors capable of carrying out the MV (10-kV and 20-kV) overhead refurbishment work to the ESB Network Renewal Program (NRP) was going to be more difficult because the MV network tends to be specific to the particular country, whereas HV lines and substations are reasonably similar internationally. NRP relates to ESB's MV wood-pole overhead line network, which is almost unique in Europe in terms of its predominance.

In early 2002, the acceleration of network renewal called for a revised strategy as the program was very large in the context of Irish and U.K. contracting resources. Therefore, ESB decided to target contracting companies of suitable scale in Europe and beyond. Specific companies were briefed on the market opportunities available to them in Ireland and views were obtained on the program scope. Most of these companies accepted an invitation to visit ESB for follow-up discussions and site visits and, subsequently, submitted bids for a number of pilot projects.

A measure of the success of the development of the contractor market is the number of HV contractors that have worked for ESB over the last three years. In general, between 5 and 10 bids were received for each of the HV projects, which ensured that a competitive market was maintained for this work. As far as the MV network refurbishment goes, a viable and competitive contracting market was developed through the awarding of multiple pilot contracts in 2002 and 2003. This involved contractors from mainland Europe and beyond, as well as Ireland and the United Kingdom. A number of framework contracts are now in place that will bring the MV NRP to completion.

At the height of the refurbishment program, ESB Networks had contracts with up to 20 different companies involving approximately 1800 staff.

PLANNING THE WORK

There are 78,000 km (49,000 miles) of MV overhead line and 197,000 pole-mounted transformers in ESB Networks made up of 2200 separate feeders from around 450 38-kV/MV substations. Some of these feeders needed upgrading from 10 kV to 20 kV because of poor continuity, a lack of capacity or excessive voltage drop, whereas the more lightly loaded feeders only needed refurbishment where continued operation at 10 kV would be sufficient.

The design of the MV network is radial with normally open points between different MV lines that are able to provide a backfeed in the event of a fault or during maintenance outages. However, if one feeder is at 10 kV and the other is at 20 kV, then an interface transformer (IFT) such as an auto-transformer is required to be positioned at the normal open point.

Similarly, an existing 38-kV/10-kV substation may be required to feed some circuits that operate at 10 kV and others at 20 kV. This requirement can be achieved by:

• Converting the substation to 20 kV and installing stepdown IFTs on each 10-kV line

• Converting half the busbar to 20 kV with an IFT between the bus section

• Leaving the substation secondary voltage at 10 kV and installing IFTs on each 20-kV line.

The decision of which option to employ was dependent on the overall refurbishment requirements of the substation. Hence, the selection of which option to adopt and feeders to refurbish required individual consideration of the 2200 feeders before selecting the means of reinforcement. Criteria for conversion was broadly established on the basis of the 2008 load forecasts (for example, if the voltage drop when used as a backfeed with three voltage regulators in circuit was more than 10% or if the thermal capacity of the line was exceeded in the backfeed mode, the feeder should be upgraded for 20-kV operation).

Each circuit was examined and those feeders identified for upgrading were recorded on a geographic diagram of the total network. This indicated the areas that had pockets of 10-kV network surrounded by 20 kV, a situation that demanded an excessive investment in IFTs, and difficulties with providing backup supplies in the event of an outage. In these situations, the decision was made to upgrade all the feeders to 20 kV. Similarly, decisions were made on how the conversion to 20 kV would be implemented and what configurations would be required in each 38-kV substation.

This work was done using a network modelling program called SynerGee and an in-house asset management system called the TA Database.

WORK PACKAGE PREPARATION

The overall plan for the MV Network Conversion/Refurbishment Project was then converted by the ESB Network Projects organization into work packages, whereby contractors were given work in contiguous areas so that mobilization costs were minimized and a steady stream of work was available. In practical terms, it was also necessary that the sequence followed minimized customer outages wherever possible through the use of live-line techniques, generators and backfeeding arrangements.

Each line had the broad parameters of the work required, set by the Asset Management Unit (such as conversion to 20 kV/refurbishment at 10 kV, length of single- to three-phase line conversion, cross-sectional area of replacement conductor and the position of IFTs) and the anticipated budget cost. However, in order to determine contractor costs accurately, a greater degree of detail was required, so Network Projects had each line patrolled by ESB personnel who recorded in detail the work that was required such as pole replacements and the length of sections involving conductor and transformer changes. Obviously, a ground patrol is not able to specify all the work required — for example, the rotting of a pole top — but it provides a baseline cost against which requests for variation from the contractor can be assessed.

For the 10-kV renewal, ESB monitored the replacement of rotten poles, wooden cross arms, corroded conductor and steel earth wire, and ensured that there were 6 m (20 ft) of ground clearance. The conversion of 20 kV involved changing transformers, insulator lightning arresters and fuse isolators. One of the critical aspects of the contractor's performance was in the area of safety, and in order to monitor this discipline, ESB staff regularly conducted safety audits on contractor sites.

RESULTS

By the end of 2005, ESB Networks had:

• Invested more than 3 billion euros on the T&D systems

• Carried out the renewal of 55,000 km (34,000 miles) of MV Network

• Built new or uprated 38 HV substations and refurbished/replaced an additional 60 substations, including many Siemens substations that were built in 1927.

The principal benefits of this investment program were:

• Provision of the necessary capacity to catch up with high growth levels in the last 10 years, supporting the national development plan

• Industry facilitated to locate new or expand existing operations in most parts of Ireland

• Refurbished MV networks have improved public safety performance, with a greatly reduced number of dangerous occurrences being reported

• The Network Renewal Program has resulted in much-improved storm-resilience performance

• Improvements in quality and continuity of supply to customers

• Distribution energy losses were reduced through the conversion to 20 kV.

FUTURE INVESTMENT

ESB will continue with a large capital investment program to satisfy the load growth that includes new development in Dublin of 750 MVA to supply some 80,000 new connections each year and further reinforce the 50,000-km (31,000-mile) LV (380-V/230-V) overhead line network. The impact of wind generation in Ireland continues with 233 MW connected to the system, and applications are in progress for schemes involving a further 2500-MVA capacity. These renewable energy projects will have a marked impact on ESB's future system development investment plans.

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Anthony Walsh is an engineer with ESB Networks, currently working in ESB Procurement. Walsh was a member of the Business Process Re-engineering team, and continued onto the Transform Project, where he was responsible for development of the Asset Management business case. Subsequently, on the 2001 Price Review, he later became networks investment manager (north), and his responsibilities included the selection and justification of all network investments in the northern half of the country including Dublin. Since 2005, he has worked as specifications manager, procurement to help achieve greater effectiveness and economy in network design through innovations in areas such as HV station design and HV lines. Walsh holds the BE, MIE and MBA degrees from University College, Dublin. anthony.walsh@mail.esb.ie

IRELAND AND THE ESB

The Republic of Ireland is located on an island with an area of some 70,000 sq km (27,000 sq miles), situated off the west coast of Europe. The population is approximately 4 million, 1 million of whom reside in the capital of Dublin.

The Electricity Supply Board (ESB) is a semi-state utility, established in 1927 as a traditional vertically integrated utility, providing generation, transmission, distribution and customer supply services within Ireland. In line with the opening up of the electricity market in Europe in recent years, the electricity industry structure in Ireland has undergone rapid transformation.

ESB system statistics.

Geographical Area	70,000 sq km (27,000 sq miles)
Number of customers	1.9 million
New connections in 2004	90,000
Annual load growth	5% (average)
System peak demand in 2004	4500 MW
Number of HV distribution substations	86 - 110/38 kV 21 - 110 kV/MV 453 - 38 kV/MV
Total length of MV overhead line network Length of single-phase MV overhead line network	78,000 km (49,000 miles) 53,000 km (33,000 miles)
Total length of LV overhead line network (excluding services)	51,000 km (32,000 miles)
Length of single-phase LV overhead line network (excluding services)	47,000 km (29,000 miles)
Pole-mounted transformers	197,000
Total underground cable (400 kV to MV, excluding LV)	6600 km (4100 miles)
Customer density per network	12 km (19 miles)