Spinning Into the Future: How Phase 2 of Ireland's Inertia Services is Rewriting the Rules of Grid Stability

Ireland’s Single Electricity Market Committee published its Low Carbon Inertia Services (LCIS) Procurement Phase 2 Decision Paper (SEM-26-011) (the Decision Paper).

The Decision Paper targets the procurement of 14,000 Megavolt-Amperes (MVA.s) of synchronous inertia and associated capabilities. The design of the Phase 2 aims to strengthen delivery discipline, tighten planning and connection requirements, and refresh price caps to balance investment and consumer protection with the ultimate goal of running the all island system at up to 95% System Non Synchronous Penetration (SNSP) with three or fewer conventional units online by 2030, and 100% SNSP with zero minimum units online by 2035.

Background to the LCIS Procurement Process and Phase 1

The System Services Future Arrangements (SEM-21-021) decision in 2021 identified the need for adopting a structured mechanism to procure system stability services in support of greater renewable generation through LCIS technologies such as synchronous condenser technology(ies), which can absorb or produce reactive power on the electricity grid to provide grid stability. Following this, EirGrid and SONI (the TSOs) were tasked to develop a fixed term LCIS procurement to decarbonise grid stability while enabling higher SNSP and it was decided that LCIS would be procured through a phased approach, with a targeted volume of 10,000 MVA.s, in Phase 1, to meet LCIS requirements for 2026 (SEM-23-002).

Phase 1 ran through 2023–2024 and contracted six projects totalling 10,963 MVA.s (with 6,963 MVA.s in Ireland and 4,000 in Northern Ireland) which equals roughly 45% of the current inertia floor. The Phase 1 experience validated the model and informed practical refinements for Phase 2, especially on planning certainty, grid connection sequencing, and delivery risk.

Phase 2

Phase 2 scales ambition and tightens execution. The target volume rises to 14,000 MVA.s, split as 10,000 MVA.s for EirGrid (maximum 12,000) and 4,000 MVA.s for SONI (maximum 6,000). The maximum contracted capability per connection point increases to 4,000 MVA.s at 220 kV and above, and remains 2,000 MVA.s at 110 kV. Contracts extend to eight years from the target go live, with up to 12 years possible if a unit is live at contract execution. The target go live is 48 months after the effective date, with a 12 month longstop.

Delivery risk is addressed head on, with final planning permission and site rights required at tender. The performance bond increases to €2,500/£2,100 per MVA.s. EirGrid will run a Qualification System and a two step tender. Shortlisted bidders receive a Grid Connection Assessment that sets a Target Energisation Date, and then submit a Best and Final Offer that cannot exceed their initial price. Successful Irish bidders can receive a grid connection offer outside the usual ECP. To broaden competition but keep delivery realistic, Phase 2 removes zonal scalars and excludes specified substations as well as applying per station inertia caps and transformer rating limits.

LCIS stays technology specific to synchronous assets in Phase 2. Reactive power and short circuit capability remain incentivised via product scalars. The TSOs will progress grid forming inverter integration through a separate Grid Forming Strategy for potential future phases. Consumer protection is reinforced through approved price caps of €1.81/MVA.s/h in Ireland and £1.54/MVA.s/h in Northern Ireland, and through benchmark electricity prices (€119.90/MWh and £101.60/MWh) used to value expected energy consumption in bid evaluation. Payments are based on availability, with a 97% target, and the consumption performance scalar’s first tolerance band is widened to allow for metering realities.

A summary table showing the main changes between Phase 1 and Phase 2 is set out below.

Phase 1 v Phase 2 Scheme

Topic	Phase 1	Phase 2
Target procurement volume	10,000 MVA.s targeted	14,000 MVA.s targeted (EirGrid 10,000; SONI 4,000)
Maximum unit size at 220 kV+	2,000 MVA.s	4,000 MVA.s
Contract duration from Target Go Live	6 years	8 years (up to c.12 years if live at execution)
Target Go Live after execution	42 months	48 months
Performance security	€500/MVA.s (ROI); £420–£442/MVA.s (NI)	€2,500/MVA.s (ROI); £2,100/MVA.s (NI)
Zonal incentives	Locational scalars applied	No zonal requirements; locational scalar removed; substation exclusions apply
Inertia constant requirement	Up to 20 seconds	No minimum or maximum requirement
Consumption Performance Scalar tolerance	<5%	<20%
EirGrid process design	Standard single step tender; informal pre tender engagement	Qualification System; written pre tender feedback; two step tender with BAFO and Grid Connection Assessment
SONI eligibility gates	Planning permission required; no accepted offer requirement	Full planning plus accepted grid offer with final energisation ≤48 months post tender

Next Steps

Following publication of the Decision Paper, the TSOs will now commence the qualification process for LCIS, as well as the Request for Proposal stage of the procurement process, with the aim of awarding LCIS contracts in January 2027 by EirGrid and May 2027 by SONI.

Conclusion

Eversheds Sutherland has been involved in working with 5 of the 6 projects that were awarded contracts under Phase 1. From our first hand market experience, we are cognizant of the market and technology evolution required to maintain pace with the current grid requirements as well as the contractual risk considerations for developers and investors in this area.

Phase 1 proved the concept and delivered savings against the cap and now Phase 2 goes further, with more volume, longer contracts, stricter planning and connection rules, and stronger delivery security which will ultimately allow us to move towards the higher level of SNSP envisaged over the next decade.

This article has been contributed to by Seán Scally (Partner), Pranav Nanda (Of Counsel) and Cal Lynn (Associate) in Dublin.