Priority Questions. - Alternative Energy Projects.

Simon Coveney

Question:

52 Mr. Coveney asked the Minister for Communications, Marine and Natural Resources if he has satisfied himself that the AER VI programme will provide the necessary incentive and financial structure to produce significant levels of renewable energy development here. [11150/03]

The alternative energy requirement programme generally supports new renewable energy based electricity generating stations by allowing developers to enter into guaranteed demand contracts with the ESB for up to 15 years.

The guaranteed revenue streams are sufficient to allow developers to negotiate acceptable terms with debt and equity providers. AER VI aims to complete the current Government target to add 500 megawatts from previously supported technologies by 2005. A further 78 megawatts will be supported for the first time in offshore wind and biomass combined heat and power categories. I took account of the views of the sector in developing the terms and conditions of AER VI resulting in a more favourable approach to indexation of the contract price and an optional front-loading of part of the cash flow.

Last Thursday, I attended the annual conference of the Irish Wind Energy Association and the clear message to me regarding AER VI was that the terms and conditions are sufficient and if I am to change anything I should increase the capacity limits. This reflects significant confidence by developers in the competition. I am confident therefore that the terms and conditions which I have set for the competition are sufficient to ensure that the current target of 500 megawatts is met on time and that the offshore and biomass-CHP options can be properly evaluated.

I was at the same wind energy conference and perhaps the Minister did not stay long enough but certainly there are more problems with AER VI than he seems to recognise. Why is the Minister so confident that the target figure of 500 megawatts will be created by AER VI? When one examines the history of both AER V and AER III, for example, not a single renewable energy project has been built under AER V and less than 35% of projects that were granted contracts under AER III were built. Will the Minister agree that if he is serious about achieving 500 megawatts surely it makes sense to offer significantly more contracts? This is in anticipation that at least a reasonable percentage of the consortia that get contracts will not proceed for various reasons, whether planning permission reasons to do with the connection of power lines to the national grid or financial reasons.

Why did the Minister choose to introduce such low price cap figures under AER VI? A comparison with other European countries shows that in Scotland the price cap figure is 30% to 40% higher than in Ireland, Spain has a figure which is 20% or 30% higher and both Germany and France have significantly higher figures. Will the Minister agree that all the countries that have made significant progress have significantly higher price cap figures for the support systems for renewable energy? What makes the Minister so confident that AER VI will succeed when it seems clear that the price cap figure is too low and the number of contracts that he will allocate is also too low for the targets he has set?

I am delighted to see that the Deputy and his party have undergone a Pauline conversion to renewables. It is no harm to remind listeners, including those people involved in the renewable energy sector, that the Fine Gael manifesto which was produced not long ago did not make one suggestion for the increase of energy generation from renewables.

Will the Minister answer the question?

The Deputy made the case himself. It should be said in this Chamber—

The Minister should have been a historian.

I will deal with Deputy Broughan later. I am always very adept at checking out what the Deputy said only a few months ago, as he knows well from previous experience.

Did the Minister answer the question?

The Minister is always wrong.

It distracts from his inadequacy.

On what Deputy Coveney said about the price cap under AER VI, the message should go out from here loud and clear that Fine Gael seems to be advocating increased electricity charges. The Government cannot be castigated by commentators for increasing electricity prices and at the same time endeavouring to introduce renewable energy. There has to be a balance. The Deputy spoke about the difference between AER VI and the previous AER projects. From the many contacts I have had with the renewable energy sector and the wind energy sector in particular—

The Minister was not listening.

—it seems they are more than satisfied with the conditions and terms laid down in AER VI. The Deputy may remember that at the conference they spoke about a potential bloodbath in relation to those companies and individuals who wish to be considered under AER VI. The Deputy knows that at the conference I went further when I said that I would not wait around for a considerable time before endeavouring to put in place an alternative or a new system if that is required to follow on from AER VI. I indicated that a consultation process would be set up in the very near future. I like to think that Fine Gael might even make some representations to that consultation process. Fine Gael called for consultation but it did not make a submission on intoxicating liquor. It has been making a lot of noise in recent times.

There will be a renewable energy forum on Thursday morning and the Minister might like to attend. He might like to stay a little longer than he did at the wind energy conference when he arrived late and left within 40 minutes.

The six minutes allotted to the question is up. I ask the Minister to answer Question No. 53.