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Dáil Éireann debate -
Thursday, 29 Nov 2012

Vol. 784 No. 4

Other Questions

Telecommunications Services Provision

Dara Calleary


6. Deputy Dara Calleary asked the Minister for Communications, Energy and Natural Resources if he is satisfied that service providers for the new 4G network will deliver sufficient coverage for rural Ireland; and if he will make a statement on the matter. [53247/12]

Micheál Martin


8. Deputy Micheál Martin asked the Minister for Communications, Energy and Natural Resources his views on whether adequate nationwide coverage will be delivered under the new 4G spectrum; and if he will make a statement on the matter. [53259/12]

Brian Stanley


19. Deputy Brian Stanley asked the Minister for Communications, Energy and Natural Resources if he will provide a percentage figure of 4G coverage the geographic are west of the Shannon will receive following the 4G auction; and if he will make a statement on the matter. [53340/12]

Brian Stanley


32. Deputy Brian Stanley asked the Minister for Communications, Energy and Natural Resources if he will provide a breakdown by county of the projected 4G coverage in each county in the State by the end of 2015; and if he will make a statement on the matter. [53341/12]

I propose to take Questions Nos. 6, 8, 19 and 32 together.

In accordance with its statutory functions the Commission for Energy Regulation, ComReg, recently concluded an intensive process for the release, through an auction, of spectrum rights of use in the 800, 900 and 1800 Mhz frequency bands. The outcome of the auction for this spectrum was announced by ComReg on Thursday, 15 November. The auction raised some €855 million, of which at least €400 million is expected to accrue to the Exchequer in 2012. Apart from this outstanding financial outcome, the new spectrum will enable the widespread availability of much faster mobile broadband through 4G services. This is extremely important from a broadband policy viewpoint. In the national broadband plan which I published in August the Government committed to the provision of high-speed broadband, including a commitment of the availability of 30 Mbps to all premises in the State within the lifetime of the Government. Mobile broadband via 4G services is expected to play a key role in meeting this commitment, especially in rural areas. It is, therefore, of crucial importance that 4G services should have broad countrywide coverage.

It was a condition stipulated by ComReg that in respect of population coverage on services offered by the winning operators, all licence holders would have to attain and maintain a minimum coverage of 70% of the population and would have to do so within three years. In fact, ComReg considers that actual coverage levels are expected to exceed the obligation in this regard by a considerable margin, particularly in the light of the competitive nature of the market and the limited risk of roll-back of coverage from the existing levels. It should also be noted that coverage continues to be an important differentiator in the mobile telecommunications market such that any material deterioration in coverage by any one network would undermine its attractiveness to its existing and potential customers. Furthermore, the coverage proposals set were designed to ensure cherry-picking of high density urban areas would not occur.

In terms of the experience to date, it should be noted that the four existing mobile operators have achieved coverage levels exceeding those set out in their current respective licences. For example, for 3G services, Vodafone's coverage covers 90% of the population or 5% more than its obligation. Hutchison 3G, better known as 3, covers 96% of the population or 11% more than its obligation. O2 also covers over 90% of the population, which is more than its obligation. Comments by the service providers in the wake of the recent auction have confirmed their commitment to investment to leverage the spectrum allocation to maximum effect. This also indicates that the maximum coverage requirements will be exceeded.

The precise geographic breakdown of 4G services will, of course, be a matter for each service provider. I am, however, confident, based on the 70% requirement figure, previous experience and the statements already made by the winning bidders, that 4G services will be widely available throughout the country.

More often than not, this Chamber hears about issues which have not been dealt with rather than those which have been resolved. The issue relating to the 4G network is again one which relates to the urban-rural divide. The obligation in this regard is that providers must reach 70% of the population with their services. One could argue that the most densely populated areas of the country are in the east and that it would be quite easy to meet the obligation in these areas. I understand the authorities in the United Kingdom, when carrying out their auction, stipulated that operators should seek to reach 98% of the public in towns and villages, not just in large urban areas. I am concerned that we will again end up with an urban-rural divide in this matter or that there will be no coverage at extremely remote locations. There have been massive improvements in technology in recent years, but there are still vast areas of this country in which operators have not been able to provide coverage. Will the Minister comment on the fact that the service obligation figure in this country is only 70%, whereas in the United Kingdom it is 98%?

The United Kingdom made a great investment in this area. Unfortunately, we are not in a position to do likewise. I must admit that as a result of the discussions I have had with ComReg, both recently and when the prospectus for the bidders was being formulated prior to the commencement of the auction process, I am reassured in this matter. As the Deputy might expect, we dealt with it in some detail. I do not believe I am misrepresenting ComReg which made this decision when I say that ideally it would be of the view that in a competitive marketplace there would be no requirement to stipulate a figure. The 70% population obligation figure is a stratagem which was deliberately designed to avoid cherry-picking. It will prevent a new entrant from outside from cherry-picking the most populous parts of urban areas and providing services therein. The requirement to cover 70% of the population means such behaviour will be ruled out.

The Government is delighted not only by the fact that €855 million was raised from the auction - in current circumstances this money is obviously very welcome - but also that four major bidders are competing in the market. There were real concerns about the auction as to whether in a small country such as Ireland that level of competition would emerge. In my initial reply I drew the Deputy's attention to the experience with 3G services and the fact that all of the operators significantly exceeded the obligation placed on them in the provision of such services. In the context of what I have just said and in conjunction with the commitments contained in the national broadband plan, we are determined to ensure the Deputy's fears which I fully understand will not be realised.

When will it be possible to obtain a county by county breakdown of the figures for 4G coverage?

Will provision be made for counties where there are unacceptably large gaps in 4G coverage?

That will depend on the plans put in place by the four successful companies. They have made significant investment. Obviously it is their intention to be remunerated on that investment. I am aware that their planning is already far advanced. I should not promote one company over another but I am aware of one company that already has its plans on exhibition. It will take them some time to build out the system. There may be an additional 2,000 installations necessary. Deputy Colreavy can be assured that any group of companies putting €855 million into delivering these services will be intent on delivering them as quickly and as speedily as possible.

The Exchequer will benefit to the tune of €450 million in 2012 and something over €370 million between now and 2030. Has the Minister any plans to ring-fence this money for use on broadband provision or for use in primary and post-primary schools?

That is a good question and one that has preoccupied me for some time. The national accounts had pencilled in a figure of €178 million which goes directly into the maw of the Exchequer. It is a very valuable national resource, after all. However, when I was progressing the national broadband plan I took care to get commitments that the €350 million investment envisaged will be available, with the Government providing one half and the other half from the private sector. The money goes directly to the Exchequer but we have to engage in this mapping exercise to which I referred earlier. The State is intervening where the private telecommunications providers are unable or unwilling to provide a service. In order to pass muster with the state aids obligations at Brussels, we must undertake a detailed mapping of the country to highlight the areas where the private sector will not do the business. Unfortunately, this exercise takes time. The state aids procedure which we must undergo is painfully slow. I hope I have answered the Deputy's main question.

Alternative Energy Projects

Pearse Doherty


7. Deputy Pearse Doherty asked the Minister for Communications, Energy and Natural Resources if he will confirm that the significant inefficiencies induced on the existing fossil fuel power plants by the highly variable wind input has been assessed by public authorities when calculating the emission savings and financial savings attributed to this wind energy programme; and if he will make a statement on the matter. [53337/12]

A joint modelling study entitled, Impact of Wind Generation on Wholesale Electricity Costs in 2011, was undertaken by the Sustainable Energy Authority of Ireland and EirGrid. The study looked at the impact of wind on the electricity market, including the impact on the operational requirements of the thermal generation. It shows that wind did not add any additional cost to the price of electricity. While constraint costs increased slightly in the scenario with more wind power, this was more than offset by the reduction in overall production costs. Constraints were estimated to add about 1% to total costs in the wind scenario but the fossil fuel offset by wind generation reduced total costs by around 12% in the same scenario.

When the cost of the public service obligation supports for wind energy is accounted for, there was no material cost difference between the scenarios with and without wind. The analysis showed that wind generation lowers wholesale prices by €74 million which almost exactly offsets the costs of the PSO levy and other costs associated with the generation of wind energy. The study clearly demonstrates that wind energy did not contribute to higher wholesale electricity prices on the Irish electricity system in 2011.

In any given year, the relative effect of renewable electricity on final prices depends to a considerable degree on the cost of alternatives. This is particularly the case with gas prices because gas is the single biggest fuel used for electricity generation in Ireland. Wind power shows the greatest relative economic advantage when gas prices are high. When gas prices are in the medium to high range, wind power tends to lower electricity prices. Thus, wind can be seen as a hedge against high gas prices. Natural gas prices in Ireland have increased by over 60% since 2009. Projections for future gas prices by the International Energy Agency and the EU Commission show that further growth in gas prices of up to 30% is likely in the next decade.

Additional information not given on the floor of the House

Wind energy lowers wholesale electricity prices because of its near zero short-term running costs, displacing the most expensive form of generation that would otherwise be used in the wholesale market. It adds to retail prices through market payments associated with wind power, principally the PSO levy that funds the REFIT, renewable energy feed in tariff, payments. The balance of these two determines the final impact of electricity prices.

The independent electricity transmission system operators, TSOs, in Ireland and Northern Ireland, EirGrid and SONI, have carried out technical studies and analysis of the all-island system over the past number of years. The results of these studies can be found in the reports entitled respectively, Facilitation of Renewables and Ensuring a Secure, Reliable and Efficient Power System in a Changing Environment. These reports are published on the EirGrid website. However, the key messages from these studies are that the 40% 2020 renewable targets set by Governments in Ireland and Northern Ireland are achievable, notwithstanding that significant challenges to the operation of the system will have to be overcome.

To manage the achievement of these targets over the coming years, EirGrid and SONI have established a programme of work entitled Delivering a Secure Sustainable Electricity System, DS3. This work programme includes enhancing generation portfolio performance, developing new operational policies and system tools to use the generation portfolio efficiently to the best of its capabilities, and regularly reviewing the needs of the system as the portfolio capability evolves.

I am aware of the Minister's very keen interest in renewable energy and he will have our full support in this regard, always provided that any developments are done with full public consultation. It is certainly the way to go and we will support the Minister.

Our concerns are related to security of supply as this is a requirement in any environment where electricity is produced. Also, certainty on future price is essential. Homes and businesses have been very badly hit by the increasing price of energy over several years, taking into account the value of the euro against the dollar. Can more certainty be provided to customers about future pricing if renewable energy were to be used? It would appear that this should be possible. The inputs are not as variable in terms of costs as the input costs in fossil fuels.

I welcome the content of the Deputy's remarks and his broad support for the build out of greater renewable capacity in this economy. He is correct that it is an issue of security of supply. It would be sensible to use a valuable indigenous resource capable of contributing to energy generation. We are moving towards our 2020 targets which is 40% electricity generated from renewables. It is an ambitious target but we think we can achieve it.

An ability to guarantee future pricing is more complex. No one knows where price volatility will take us in the future. This is one of the most volatile commodities in the world market. It is dependent on geopolitical events, on the climate in the Middle East and dependent, as the Deputy said, on the strength of the euro purchasing power against the dollar. If one had nothing else to say for renewables, one could say it is a prudent insurance policy that we should utilise our indigenous renewable resources to optimum effect.

Question No. 8 answered with Question No. 6.

Bord Gáis

Brendan Smith


9. Deputy Brendan Smith asked the Minister for Communications, Energy and Natural Resources the action he is taking to secure a viable future for Bórd na Mona and its workforce; and if he will make a statement on the matter. [53269/12]

My Department and I have actively engaged with Bord na Móna on the challenges the company faces and its future strategy. I am strongly supportive of the company, which provides valuable employment in the midlands and is an important producer of energy and other services. The challenges include environmental constraints on the use of peat in power generation and horticultural products and the expiry of the public service obligation for peat-fired power generation in the coming years. These will contribute to the already declining market for peat.

Against this background, Bord na Móna has recognised the need to diversify its activities to secure a sustainable future and transition from dependence on its traditional peat business. In order to meet this challenge, the company has scoped out a new vision for its future sustainable development. This is published in "A New Contract with Nature". This strategy leverages Bord na Móna's landbank and the strength of its workforce to develop new businesses that will secure long-term employment. I fully support this diversification strategy.

This year has been a particularly challenging one for the company. The unparalleled weather conditions during the summer of 2012 resulted in just under 40% of Bord na Móna's expected peat harvest being secured. Bord na Móna management is taking decisive steps to manage these unprecedented circumstances to ensure the long-term viability of the company. It nevertheless highlights the importance of the company's ongoing diversification and growth strategy.

Bord na Móna and its employees, through the diversification strategy, have positioned the company to become a leading provider of sustainable solutions with particular potential in renewable power generation. I am pleased to announce that, earlier this week, I approved Bord na Móna's development of two very significant wind farms, in Mount Lucas and Bruckana. Once complete, these wind farms will contribute strongly to Bord na Móna's revenue and meeting Ireland's renewable energy targets. I am satisfied that Bord na Móna continues to focus on managing the current challenges and ensuring the long-term future of the company.

The issues that arise for Bord na Móna concern the traditional industries. Some claim the company's diversification, including into waste management and renewable energy generation, has put a considerable strain and its resources and profit-making ability, nothwithstanding that this was a disastrous year. Internal issues arise also. Anecdotally, we hear problems arise over morale and confidence in the management style. Ultimately, the workforce, particularly that in the midlands where the company has had a considerable positive economic influence over the years, is asking whether Bord na Móna is one of the State assets to be sold by the Minister. Will the Minister comment on the company's workforce?

I do not believe Bord na Móna is lined up in the State assets disposal programme, nor should it be. It is true, however, that the company is running out of turf and that diversification is, therefore, the way forward. In this regard, the company has been very successful in some of its operations. The Deputy put his finger on an aspect that was not successful thus far, namely, the waste management initiative. However, if he researches the matter, he will find particular reasons the waste sector in Ireland generally, and not just in Bord na Móna, has got itself into some difficulties. Without making a political point, I contend that if the Deputy has time to study the matter, he will find that the previous Government's procrastination on the future strategy for waste management did not help the company. This needs to be said in defence of the company.

The Deputy asked me about anecdotal remarks on morale in the company and confidence in the management. I have heard these anecdotal remarks but I am bound to say that, as recently as a couple or three weeks ago, I met the board, senior management and worker directors for more than two hours to discuss the future strategy for the company and interrogate proposals it has for the future. I support the diversification strategy and do not believe there is any other card that the company can play. It is true that morale has been affected by the fact that we had this year the worst summer, and consequently the worst peat harvest, since the company was founded. Morale is not helped by the resulting lay-offs and what are euphemistically called the mitigation measures that had to be put in place. It is most unfortunate that we had the kind of summer we had. As Deputy Moynihan knows, it also had an impact on the farming community. It was difficult generally.

Alternative Energy Projects

John McGuinness


10. Deputy John McGuinness asked the Minister for Communications, Energy and Natural Resources with regard to the introduction of Refit 3, and its importance to the biomass supply chain here, the reason there has there been such a the lack of interest in it being shown by relevant State companies; and if he will make a statement on the matter. [53264/12]

Alan Farrell


13. Deputy Alan Farrell asked the Minister for Communications, Energy and Natural Resources his proposals to accelerate an increase in renewable energy resources through wind, wave and sustainable biomass as an alternative to importing fuels; the groups that are responsible for reporting this matter; and if he will make a statement on the matter. [53156/12]

Bernard Durkan


16. Deputy Bernard J. Durkan asked the Minister for Communications, Energy and Natural Resources if he is satisfied with regard to the extent to which the development of alternative energy generated electricity has taken place to date; if he has identified any particular obstacles which might impede the achievement of national and European targets in this regard; if he will indicate the main sources of alternative energy currently used for this purpose; if other sources deemed to be commercially viable have been identified; and the extent to which each segment of the alternative energy sector is likely to meet its targets in electricity generation over the next four years; and if he will make a statement on the matter. [53274/12]

I propose to take Questions Nos. 10, 13 and 16 together.

In order to meet our 2020 binding targets, the Government is committed to increasing renewable energy to 40% in the electricity sector, 10% in the transport sector and 12% in the heating sector, which together amount to 16% overall, in line with our target under the EU renewable energy directive. A number of organisations are providing details on progress in this regard. This week, the Sustainable Energy Authority of Ireland, SEAI, published its 2012 report Energy in Ireland. The total use of renewables in Ireland almost trebled between 2003 and 2011. The report showed that, in 2011, Ireland had 17.6% renewable electricity, 2.6% renewable transport and 4.8% renewable heating, meaning that, in total, 6% of all energy consumed was from renewable sources. Other bodies, such as EirGrid and ESB Networks, report on matters such as daily wind energy penetration and grid connection issues.

To meet our current energy demands, we are importing around 90% of our required fuel. This is at a cost of approximately €6 billion per annum. Developing renewable sources of energy will help Ireland to meet our 2020 targets and to reduce our dependence on these fuel imports by replacing them with indigenous resources. Ireland has renewable energy infrastructure generating approximately 2000 MW connected to the electricity grid. To meet our renewable electricity targets for 2020, it is estimated that a further 2000 MW of renewables will be required.

In addition to achieving this ambitious target, a significant challenge will be to ensure we are able to build the necessary supporting grid infrastructure to accept new renewable generation, which is typically in more remote areas that have weak grid systems. Our ability to get this infrastructure built is critical to achieving our renewable energy ambitions. In this regard, EirGrid’s GRID25 strategy and implementation plans are designed to deliver the necessary grid developments and reinforcements to underpin the new renewable generating capacity, in addition to regional economic development.

To incentivise the development of renewable electricity, a feed-in tariff scheme is in place. Renewable energy feed-in tariff, REFIT, which was introduced in 2006 for wind-sourced generation, small hydro, landfill gas and biomass-generated electricity, operates by guaranteeing a minimum floor price for renewable energy generation over a 15-year period. In order to accelerate the uptake of renewables, two new REFIT schemes were introduced in 2012. The first, REFIT 3, is to encourage biomass-sourced generation, and the second is to encourage further wind-sourced generation into addition to generation from small hydro and landfill gas. The REFIT schemes are funded through the PSO levy that is funded by all electricity consumers.

REFIT 3 is designed to incentivise the addition of 310 MW of renewable electricity capacity to the Irish electricity grid. The technologies supported include anaerobic digestion and combined heat and power, which will also contribute to our renewable heat targets. It also contains incentives for cofiring of biomass in peat powered generation plants with a premium for the use of energy crops. REFIT 3 will, over time, create further demand for biomass, which will provide new opportunities in the biomass sector and encourage the establishment of new rural enterprises.

The electricity market is fully liberalised and decisions to participate in the scheme are commercial for the individual electricity generating companies involved. I am informed by my Department that there has been significant interest in the REFIT 3 scheme and letters of offer have been given for approximately 44 MW of generation with a similar amount under consideration. Other developers are at earlier stages of development with their projects.

A number of people have invested in miscanthus or elephant grass, as it is most commonly known. When they invested, it was indicated that State companies would be purchasers down the line but some of them, in particular Bord na Móna, have made no attempt to do so under REFIT 3. There is an issue with the supply chain in the biomass industry for primary producers of elephant grass. The State must reach its target for renewables, as the Minister said, and many people are getting involved in the sector but notwithstanding the commercial issues, State companies should step up to the mark and embrace these alternative energy sources.

I thank the Minister for his response. I have a slight concern about our ability to reach the targets outlined by him. He said the target by 2020 is to provide 40% of our energy needs through renewables but, according to his figures, we are currently at 6% while 44 MW of generation have been approved under REFIT 3 with another 44 MW in the pipeline. This is less than 100 MW of energy and we have a much higher target to reach by 2020. I read an article recently, which stated Scotland is aiming to reduce its fossil fuel energy use by 12% by 2020. The resources available around our coastline, particularly off our west coast, include the potential for wave energy generation and further incentivisation of companies other than EirGrid and smaller operators to enter the market through PPPs or licensing arrangements is necessary. The volume of non-fossil fuel energy generation could be increased.

Clearly, we have significant work to do in this area. What proposals has the Minister?

I hear what Deputy Moynihan says about the exhortation he would offer to State companies in terms of an expectation that they could play a more significant role than they are playing. I had representations earlier this week from my party colleague, Senator Heffernan, and Deputies Neville and O'Donovan about a company in west Limerick, which may well have prompted the Deputy's question. It is similar terrain in any event. I did not have an opportunity because of the week that was in it to meet them but I will meet them next week and examine the points Deputy Moynihan is making. It goes back to our earlier discussion about Bord na Móna in the sense that the company is not in a position to make a bigger contribution in present financial circumstances on the elephant grass issue.

Deputy Farrell misunderstands the figures I gave. The 40% renewable energy target relates to electricity generation while the 6% target relates to the electricity, heat and transport sectors combined. At the beginning of the year, 17.6% of our electricity was being generated from renewables and we are relatively sanguine that we will meet the 40% renewables target by 2020 in the electricity generation area.

I will not make pledges in respect of heat or transport because there are complex issues, one of which relates to agriculture and the fact that following the end of the milk quota regime, there may be greater capacity in that sector in the future. The 44 MW to which the Deputy referred relates to biomass; it is not the overall total. We have 2,000 MW of generation in place and the further 2,000 MW necessary to meet the 40% electricity generation target will be doable. The industry has raised issues about how we might make better use of biomass and so on to contribute in the heat sector and particular issues have to be dealt with in the transport sector.

The figure of 6% refers to all energy consumed from renewable sources in the three sectors but in terms of electricity generation, we maintain we have a good prospect of meeting our target.

Written Answers follow Adjournment.
The Dáil adjourned at 5.50 p.m. until 2 p.m. on Tuesday, 4 December 2012.