Every five years, the CRU undertakes a review of ESB Networks’ and EirGrid’s capex and opex over the preceding period to (i) forecast expenditure (ii) set revenues recoverable from customers and (iii) outline the regulatory framework for adjusting revenue allowances for the forthcoming 5 years.

The PR6 investment envelope for 2026-2030 provides for €13.8 billion in baseline funding and has the potential to reach up to €18.9 billion. It has been hailed by the Minister for the Climate, Energy and Environment Darragh O’Brien as a “historic step” towards securing Ireland’s energy future in funding “the most significant period of energy infrastructure development since rural electrification” and delivering the Government’s Accelerating Infrastructure Action Plan (which we reviewed here). By way of comparison, the previous price review for 2020-2025 (PR5) set an ex-ante investment allowance of €7.6 billion, representing an over 80% baseline commitment to investment.

The PR6 Final Determination follows consultation on the PR6 Draft Determination (which we reviewed here) published by the CRU in July of this year.

Investment Package

• Baseline investment of €13.8 billion has been approved, consisting of:
  • €11.4 billion for ESB Networks (€8.9 billion capex and €2.5 billion opex); and
  • €2.4 billion for EirGrid (€1.1 billion capex and €1.3 billion opex).
• A high case envelope of €18.9 billion is available through the Agile Investment and Monitoring Framework (AIMF), which allows additional funding to be unlocked during PR6. The PR6 Executive Summary breaks out this figure as follows:
• €15.8 billion for ESB Networks (€13.2 billion capex and €2.6 billion opex); and
• €3 billion for EirGrid (€1.6 billion capex and €1.4 billion opex).

Though marginally below the €14.1 billion baseline proposed by the PR6 Draft Determination, this represents an 80% increase on PR5 outturn expenditure, while remaining approximately 15% below the network companies’ original baseline requests. The PR6 figures are set by reference to 2024 prices.

Baseline vs High Case

The €13.8 billion baseline reflects projects and programmes in which the CRU has high confidence in respect of scope, cost, and deliverability.

The €18.9 billion high case can be accessed via AIMF mechanisms which allow ESB Networks and EirGrid to request additional funding, subject to CRU approval, and this figure contemplates the asset transfer of the offshore grid for one of the Phase 1 offshore projects from the relevant developer to EirGrid within the time period (i.e. by 31 December 2030).

Strategic Focus Areas

The PR6 programme will fund over 500 capital projects, including:

• 29 priority transmission projects, that will unlock over 22,000 MVA of additional capacity;
• widespread electricity infrastructure upgrades, including 50,000 pole replacements, 181km of new overhead lines, 319km of new underground cables, and 55km of replacement underground cable;
• establishment of EirGrid’s Offshore Asset Owner function, including readiness programmes and O&M capabilities to support over 5 GW of offshore wind capacity over the next decade;
• a new control centre to facilitate a smarter, more flexible electricity system;
• enhanced storm resilience capabilities; and
• infrastructure to connect up to 1 million electric vehicles and 680,000 heat pumps.

Cost of Capital & Customer Impact

The CRU has set a slightly higher Weighted Average Cost of Capital (a metric used to determine the permitted return on investment) to that proposed in the Draft Determination,

• 00% for ESB Networks as Distribution System Operator (DSO) and onshore Transmission Asset Owner (TAO).
• 41% for EirGrid as Transmission System Operator (TSO)
• 51% & 5.12% for EirGrid as Offshore Asset Owner (OAO), across Phase 1 (where offshore grid infrastructure will be developed by the wind farm developer) and Phase 2 (where EirGrid will develop the offshore grid infrastructure) respectively.

The CRU estimates the average annual increase for a typical domestic customer’s network tariff to be €12, increasing to €21 if the high investment case occurs.

Key Regulatory Developments

Agile Investment and Monitoring Framework

The AIMF is an enhanced regulatory framework, developed to facilitate flexibility of funding over the next 5 years, the core components of which include:

• ex-ante setting of allowances and deliverables, including the ex-ante ring fencing of the most critical deliverables;
• delivery obligations and incentivised delivery of same via enhanced performance incentives; and

• adjustment mechanisms, such as reopeners and volume drivers to enable network companies access additional revenues.

Offshore Regulatory Framework & Tonn Nua

A distinct price control for EirGrid as OAO will be implemented and a RAB-revenue based model adopted to facilitate an economic rate of return on its offshore assets.

To support the initial financing of EirGrid’s new OAO role, the CRU has included cost of debt true-up and liquidity building blocks in its offshore price review determination and has adopted separate rates of return for EirGrid’s Phase 1 and Phase 2 investments. A hybrid real and nominal returns framework will also be set to further support EirGrid’s cash flow.

An investment gateway monitoring process has been established in respect of offshore asset delivery, with gateway approvals by the CRU providing forward looking expenditure commitments. The CRU has accepted EirGrid’s proposed project cost and uncertainty provision of 40% for Tonn Nua, setting the Tonn Nua capex envelope at €2.21 billion. Tonn Nua will be the first plan-led offshore wind farm in the State and EirGrid will be responsible for delivering the offshore grid to facilitate the 900MW project.

The CRU has advocated for greater separation of EirGrid’s role as OAO from its TSO functions, noting that any legal separation would require Ministerial action.

Performance Incentives

Incentives have been streamlined with clear outcome-based targets set for the full price review period.

The incentive package for ESB Networks in its role as DSO has been broadly retained from PR5, while incentives for its role as TAO have been slightly enhanced, equivalent to an annual upside and downside of +/- €15.54 million.

The incentive package for EirGrid as TSO has been similarly enhanced, with an annual downside of €6.25 million and upside of €14.08 million.

Next Steps

PR6 will commence on 1 January 2026, with the CRU set to publish a PR6 User Guide in early 2026 to assist stakeholders in the navigation of this new framework.

PR6 is available to view in full here.

Contributed by Matthew Smith, Tiarnán Leen