Key Contacts: Niall Donnelly – Partner |
The Commission for Regulation of Utilities (“CRU”) has approved Gas Networks Ireland’s (“GNI”) interim solution for reverse grid compression (“Interim Solution”), removing a material infrastructure constraint limits biomethane injection capacity across Ireland’s regional networks. This pragmatic measure aims to accelerate Ireland’s progress toward the national biomethane target of 5.7 TWh by 2030 while a permanent regulatory framework is developed.
The PC5 Flexibility Pot (“Flexibility Pot”), has been increased from €10 million to €22.85 million to fund additional reverse compression units. GNI estimates the Interim Solution could unlock 437 GWh of additional biomethane injection, representing approximately 7.5% of Ireland’s 2030 national target.
Eligible projects must demonstrate a minimum annual network constraint of 4 GWh per annum and satisfy readiness criteria, including receipt of planning permission with no ongoing judicial review proceedings. A developer contribution of €370,000 is payable alongside the 30% grid connection contribution.
Applications are assessed on a first-come, first-served basis. Developers, investors and financiers with advanced-stage projects should act promptly to secure priority allocation. The CRU is developing a permanent regulatory framework for reverse compression, with public consultation expected. The Interim Solution provides a pragmatic approach for projects as the long-term framework is developed.
Ireland’s National Biomethane Strategy (“Strategy”) established an ambitious target of 5.7 TWh/year of biomethane production by 2030. Delivering that target requires an industry transformation of considerable scale. In 2024, less than 0.1 TWh was being injected annually from just two operational production facilities, meaning the number of anaerobic digestion (“AD”) plants in operation needs to increase to between 140 and 200 to meet the 2030 target.
The Strategy identified reverse compression as a critical enabler of the biomethane industry. The majority of AD plants are expected to connect to Ireland’s low-pressure regional distribution networks. When local biomethane production exceeds local gas demand, the volume of gas that can be injected must be curtailed, with excess gas potentially requiring flaring. GNI’s analysis indicates that such constraints could affect almost all regional (non-city) distribution networks.
Reverse compression technology addresses this constraint by compressing gas from the lower-pressure distribution network to enable injection into the higher-pressure transmission system, where it can be transported to areas of higher demand. Without reverse compression, GNI has assessed there would be significant curtailment, which would impact revenues leading many AD plants not to receive a final investment decision.
GNI submitted a detailed report on reverse compression to the CRU in October 2025. The CRU is currently reviewing that report. However, GNI considered that short-term arrangements would be required as a number of projects had already secured planning permission, had financing arrangements in place and were ready to contract. These projects require near-term certainty regarding injection capacity to proceed. On 3 December 2025, GNI submitted a proposal for an interim solution, which the CRU has approved. The Interim Solution draws on the Flexibility Pot, a regulatory mechanism established to fund innovative measures that balance demand and supply on the network.
Eligibility Criteria
To be eligible for the Interim Solution, a project must have:
- submitted a completed grid connection application form and paid the €10,000 application fee to GNI;
- shown a minimum annual constraint volume of gas of 4 GWh’s per annum (equivalent to a minimum constraint of 10% on a 40GWh AD plant) in the network analysis report issued to them by GNI under the connection application process; and
- not already contracted to connect (save for existing AD plants seeking a new connection to add capacity).
A project seeking to apply for investment in reverse compression must fill out a formal interim Reverse Grid Compression request form. GNI will then decide whether the applicant will be offered reverse compression, by determining whether:
- implementing reverse grid compression in that locality would avoid more expensive grid reinforcement on that network;
- the project supports the objectives of the Strategy; and
- sufficient monies remain in the Flexibility Pot to meet the requirements of the project.
Financial and Readiness Requirements
A developer contribution of €370,000, which represents approximately 10% of the estimated cost of a standard smaller reverse compressor unit, is payable to GNI concurrently with the 30% customer contribution for the overall grid connection. In addition, to proceed with a reverse grid compression investment, the connecting party must first satisfy all readiness conditions. These include securing full planning permission, ensuring there are no active judicial review proceedings and confirming that the statutory time limit for leave to appeal has expired. The connection agreement must be signed within four months of the date of offer issuance. These conditions are designed to concentrate the available funding on projects capable of delivering injection capacity in the near term.
Funding is allocated on a strictly first-come, first-served basis, determined by the date on which a completed connection application form (and €10,000 fee) was received by GNI. Where an allocated project fails to satisfy the required conditions or does not proceed for any reason, GNI will maintain a waitlist and reallocate the funds to the next eligible project.
The first-come, first-served allocation mechanism places a premium on speed. Priority access is determined by the date on which a completed connection application form and €10,000 fee were received by GNI i.e. not by project readiness alone. Developers with advanced-stage projects should submit their grid connection applications promptly.
The Interim Solution is structured to reward shovel-ready projects. Planning permission must be in place and free of any ongoing judicial review before a reverse grid compression investment proceeds. Developers should advance planning applications to final approval, resolve any outstanding approvals, and ensure financing and contractual arrangements are sufficiently progressed to allow a connection agreement to be signed within the four month offer validity window. The €370,000 contribution must also be budgeted as part of project financing. The contribution falls due concurrently with the 30% grid connection contribution, meaning it will form part of the capital requirements assessed by lenders and equity investors at the connection agreement stage.
The CRU’s approval of GNI’s interim reverse compression solution seeks to address a material infrastructure bottleneck that has been one of the key factors limiting the commercial viability of biomethane projects across Ireland’s regional distribution networks.
The funding is allocated on a first-come, first-served basis, and the window for priority access is open now.
