The renewable energy feed in tariff scheme known as REFIT was introduced in 2006 for certain categories of renewable energy, including onshore wind. Since then, the tariffs have been increased, where applicable, by the annual consumer price index. Adjustments to the rate are by way of indexation annually and by the annual increase, if any, in the consumer price index in Ireland.
REFIT is based around 15-year power purchase agreements between generators and suppliers which provide wind energy developers with the necessary certainty required to finance their projects. The scheme is funded through a public service obligation, PSO, levy, paid for by all electricity consumers. With the support of REFIT, the sector has continued to grow strongly and there is now approximately 1,800 MW of renewable generation capacity connected to the electricity grid. In addition, there is a further 1,100 MW of renewable generation capacity with signed connection offers. This capacity will build out over the next few years.
The next batch of generation capacity is referred to as the Gate 3 process and consists of approximately 4,000 MW of renewable generation capacity. The projects in this category are scheduled to be connected to the grid between 2012 and 2020. EirGrid currently forecast that approximately 4,500 MW of renewable generation capacity is required to be connected by 2020 to achieve our national renewable electricity target of 40% of all generation from renewable technologies.
The original REFIT scheme was designed with a view to delivering our 2010 renewable electricity target of 13.2% of electricity consumption from renewable technologies. It was successful in achieving that target and Ireland was one of only six member states to achieve its 2010 target level. Officials from my Department are currently finalising State aid clearance with DG Competition in Brussels to continue to offer REFIT for the next batch of renewable energy projects that are in the Gate 3 process. It is proposed to offer the same rates of tariff as in the original scheme.
Additional Information not given on the floor of the House.
There are two State aid clearance processes under way, one in respect of onshore wind, landfill gas and hydro technologies and a second in respect of various biomass categories. The Commission is currently finalising its assessments on both applications and I am confident that we will have a positive outcome shortly in both cases. As this is a Commission decision process, it is not possible to give an exact conclusion date. Once these clearances have been received from Brussels the final proposed schemes will be brought, as soon as is practicable, to Government for sign-off before being opened for applications.
Any additional REFIT rates beyond these technologies will have to be considered carefully by the Government given the cost implications to the electricity consumer. The public service obligation levy is imposed against all consumers' electricity bills, domestic and commercial. The objective is to balance the imperative of increasing the penetration of renewable energy with the retention of competitive affordable energy supply.