On behalf of the committee, I welcome Mr. Dudley Stewart, Mr. Oisín McCann, Mr. Paul Carberry and Mr. Roderick Brennan, who are here today to make a presentation on renewable energy to the committee. I draw to their attention the fact that members of the committee have absolute privilege but the same privilege does not apply to witnesses appearing before the committee. Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the House or an official by name or in such a way as to make him or her identifiable. I now call on Mr. Dudley Stewart to make his opening statement.
Renewable Energy: Discussion with Micro Electricity Generation Association.
Mr. Dudley Stewart
I thank the committee for allowing us to make our presentation. When we first approached the committee, we were asked why were not appearing before the subcommittee on climate change and energy security. We wanted to address this committee because we think the topic is of tremendous importance. I will use a shortened version of the presentation we gave earlier to committee members.
The title for our original report was "Rural Enterprise and Natural Energy are Historically Intertwined". In Ireland we have the finest wind regimes, tremendous rainfall and ideal conditions for biomass, wind energy and water power. The problem is that over the last few decades there have not been any real advances in these areas from the point of view of electricity generation. Millions of euro have been wasted as delays continue in this area.
The main actors in this area are the Departments of Agriculture, Fisheries and Food, Community, Rural and Gaeltacht Affairs and Enterprise, Trade and Employment. Farmers are naturally the main beneficiaries but job creation is a side effect of this industry. There is an issue that energy is a matter for the Department of Communications, Energy and Natural Resources but that Department however has not been strong in dealing with rural projects. It is not empowered to deal with job creation and is not in the business of promoting innovation. Its job is to produce energy reliably for Ireland and, consequently, if we rely on that Department to provide energy solutions, we will be faced with competing lists of priorities.
The Department faces challenging international targets for 2020 and 2050, with emissions from ageing fossil fuel stations to be addressed, along with rising costs of imported fuel and security of supply issues, increasing reliance on natural gas for electricity production, large-scale wind farm capacity escalation with growing intermittency problems and the massive emphasis on long-range ocean power projects of an enormous scale. There are decisions to make about interconnectors and the Department has an underlying vision of Ireland being a net electricity exporter. Its plate is full.
We have looked at the Irish energy mix and how we have become dependent on natural gas, with a small contribution from renewables to date. The contribution is growing but to get to the 2050 zero carbon emissions target set for Ireland, all possible assistance will be needed. The Micro Electricity Generation Association is arguing for the production of electricity on a micro-level alongside conventional power stations powered by renewables. We would go up to 1000 MW per producer and as low as 2 kW with microgeneration. We are in the mixed area, which is not advancing at the pace it should be and we are here to see if we can make a better start.
The main area of energy growth in Ireland is natural gas and electricity from wind farms. Wind farms are causing a major problem of intermittency in the system and we have discovered that that intermittency problem is mitigating against other electricity forms. We have a planned installation of 6,000 MW, which is equivalent to the entire capacity of the grid today. In fact, if we installed that wind power system without doing anything else we would have massive intermittency problems here.
While the wind power plans into 2020 are ongoing there is virtually nothing happening in the area of micro-electricity generation other than in the area of autoproducers, to which I will refer later. There are no structures in place for people to get started in the micro-electricity generation area. The Micro Electricity Generation Association, MEGA, has grown to plug that gap and provide structures. It is not just a lobbying organisation. We do not exist to represent industry bodies. We exist because there are difficulties holding back the advancement of this industry and we intend to take action to try to remove those difficulties. MEGA is prepared to go as far as removing the tariff cloud issue, which is causing a delay in this area, but MEGA will be unable to succeed without a proper linkage with the Government in terms of its planning. We are here to put forward the case for an interdepartmental advisory committee and we would like that area to start here.
I will now highlight the area of autoproducers. In the past year the Commission for Energy Regulation has opened up the area of autoproducers. Autoproducer simply means to install an energy producing device for one's own use only and, consequently, there is no tariff involved. That has become a suitably Irish solution to an Irish problem. I am delighted to report that there is major growth in the area of autoproducer machines going into farms and use by dairy producers. These are large machines ranging from 200 kW to 800 kW. They have the advantage of scale and the electricity produced from them is cheap and accessible. However, that is clouding a more complex issue.
These autoproducers cause intermittency problems of their own. It is a fact that the wind blows sometimes and sometimes it does not blow. This September we had many days without wind. MEGA is introducing the concept of autoproducing clusters for which we have got support. Autoproducing clusters are clusters of people from producers of electricity from a wide range of different renewables to users of electricity, all within a local area network, a local area network being the 20 kV system. Within that system we can use smart technology and new innovations to make it possible for a producer to trade with a user and create a stable and reliable electricity system with non-intermittencies within a cluster area.
Our objective is to produce 30 of those at 5 MW a shot; that is 150 MW of mixed renewables, "mixed" being wind, water, solar, biomass, biofuels but also electricity recycling, which is battery power and other types of storage. I have a chart showing the way we look at that. We look at the electricity intermittency problem in a different way. We look at the surplus of electricity as a source of cheap electricity to be used and recycled. The recycling of electricity fills the gaps where production is not available within our clusters.
What we are offering to the ESB, and we have got good feedback from the ESB on this issue, is that whatever we put in in an autocluster in a local area we will take it out in a local area at the same time and if we cannot take it out, we shall dump it temporarily until we can do so. If we are short of electricity, we will use conventionals to back up the system. In other words, we are presenting a solution which is grid neutral and it cannot be refused. Naturally, we will not be able to do that on our own.
In terms of what a local area network might look like, the members have the chart supplied in front of them. The red lines are no longer power lines; they are Internet connections. At the centre is a square red box. That is a small digital hub which operates a local area network. That is basically servers and computers. Connected to that is a range from small wind farms to small hydro to biofuel combined heat and power to electricity recycling, which could be battery or otherwise, and even electric cars, along with users who are factories, hospitals, households who possibly have a multi-tariffing system depending on their usage. Differential tariffing is the secret. For every extra advantage given to a renewable energy source, one should be able to earn an extra award. With the current tariffing systems in Ireland one can only earn the one tariff so why bother making things better? We argue that the future in our area will be about differential tariffing.
Crude electricity will be intermittent. It will be cheap so that it can go to somebody else. It can be bought by somebody else to be recycled and turned into a more refined product. Semi-refined would be a basic mix. Refined would be a smart mix — highly reliable and compatible with a power station. Highly refined would be recycled electricity on call, that is, storage, and super refined would be long storage and spinning reserve.
A smart auto cluster could replace a fossil fuel power station with a total mix of renewables, making the best use of all of our natural energy resources including biomass, wind, water and solar. Underpinning that will be the need for some form of control system, buy and sell system and a renewable obligation system, that is, a type of payment for renewables.
Recently, the Commission for Energy Regulation commented on our proposals. The CER has backed all our proposals, and we appear to have the ESB completely on our side. The CER recently stated:
Taking account of the views expressed by MEGA the Commission accepts that the potential exists for projects to be clustered together in a complementary manner.... [These products] are pre-approved for processing outside the GPA system.
That is a major possibility.
The door appears to be open to move forward but the structures are not in place. We need those structures to be put in place.
In the meantime I want to make the following factual statement. The picture on the slide of a letter is the usual problem entrepreneurs must face. It is a letter from the Revenue Commissioners stating that a farmer who produces electricity is in a different business from farming and consequently cannot reclaim VAT on the equipment he or she installs. Ireland is saying, therefore, that electricity is not a legitimate product of a farm. We intend to take on that issue but how can we move forward if an issue as simple as that arises? The Revenue Commissioners do not understand that if one produces electricity on a farm it is a farm product. This is the modern world.
A range of wind generators continue to be stuck on the grid delivering electricity to the grid. They get no tariff. Everyone is confused about who should pay a tariff. To the outsider it appears as if we have got the worst possible regime for micro-electricity generation in all of Europe, and billions of euro in rewards are going down the drain. EU Directive 2009/28/EC states that we should not be doing this and we must stop. Committees we participate in spend all their time working out plans to ensure we can minimise what we have to do and avail of the opportunity we have of using our resources to build our economy, create jobs and exploit all our abundant natural energy resources.
We want an interdepartmental committee. We have been through this previously with Pádraig Ó hUigín and Paddy Teahon formerly of the Department of the Taoiseach.
I ask Mr. Stewart to refrain from mentioning any names.
Mr. Dudley Stewart
I apologise. In the years of high emigration and when projects such as the International Financial Services Centre, Temple Bar and so forth were being considered, interdepartmental committees that were enthusiastic about such projects became the way forward. We suggest that this is the place to start building an interdepartmental committee. We have spent months trying to get to this table. We targeted this committee specifically because we believe it is the committee that will understand us best. However, apart from that, we are calling on senior civil servants who believe in what we are saying to step forward, help us move this important agenda forward and find some way of creating the interdepartmental culture to do that. The Departments involved are those with responsibility for agriculture, rural enterprise, enterprise, employment, trade, transport, environment and energy.
I thank the members of the committee for their attention.
Thank you, Mr. Stewart. I will now take questions.
I thank Mr. Stewart. I am also a member of the climate change committee, along with Deputy Aylward. Has Mr. Stewart spoken to the climate change committee?
Mr. Dudley Stewart
Not yet.
I am glad to clarify that as I could not recall having heard this submission previously.
Mr. Dudley Stewart
We are a renewable energy development group but we specifically sought a meeting with this committee because of the huge link between rural enterprise and agriculture. Unless we work with people who understand that area, we do not believe we can advance. The advantages are huge for rural areas.
I do not disagree with anything Mr. Stewart has said, and I welcome the fact that he has come to inform the agriculture committee today. There is an issue about land use and the Revenue Commissioners. They have not moved with the times to understand that there must be a clearer definition of land use instead of strictly defining it as agricultural production. There is land use production. The Commission for Energy Regulation has an important role. If the comments attributed to the commission indicate its genuine belief, it should be the body making the submission to the Revenue Commissioners with regard to how small energy production units such as the ones described are considered for tax purposes.
With regard to the point Mr. Stewart made about committees, there is a Cabinet sub-committee on climate change and the Minister for Agriculture, Fisheries and Food is a member of it, along with the Minister for the Environment, Heritage and Local Government and the Minister for Communications, Energy and Natural Resources. There is at least a template there for establishing a working group and the MEGA submission should feed into that.
There is huge potential. Does Mr. Stewart envisage the cluster production units replacing some of the existing peat burning stations, which are getting old? Could they be replaced by such a system? They seem to have the network in place whereby they could feed into the national network. Or does he envisage the cluster units becoming more like the combined heat and power plants one sees in Scandinavia and other places, which supply populations of 10,000 or 20,000? Is it a case of developing new systems or tapping into the existing network and replacing old energy production systems?
When we met Commissioner Boel she spoke about the areas that must be addressed in the CAP health check. One of them is forestry as a carbon sink. She said that agricultural production and renewable energy must be examined together. People are talking about it at that level, so there is recognition that the roles of agriculture, rural development and energy production can be combined. Mr. Stewart is probably a little ahead of his time but it seems to be the way forward. However, the issue is how the logistics of the systems will work when they are put into place. Will new networks have to be established? Most people would worry about fluctuations in the supply of power and when there is no power available in the cluster. Mr. Stewart spoke about stability of production. The main issue is how to make that work smartly.
I know somebody who is involved in this and he told me the ESB is choking this industry. Can Mr. Stewart confirm or clarify this? He referred to the tariff. Let us say somebody generates a certain number of kilowatts and has a surplus that he wishes to supply to the national grid. There is no way to do that and I am led to believe the ESB is not being co-operative. The person explained that the ESB is blocking the development of these micro electricity generators. I know several farmers who made inquiries about having one of the generators on their farms but due to the red tape and bureaucracy involved, they turned their backs on it. Many other sites have been identified as suitable; for example, a number of the links golf courses throughout the country would be suitable sites as well. However, there appears to be a blockage. I believe everything should be done to support this initiative and drive it forward but the blockage appears to be caused by the Department and the ESB. That is my understanding. Can Mr. Stewart confirm or deny that?
Does Mr. Stewart wish to reply?
Mr. Dudley Stewart
Yes. I will deal with the first questions because they relate to the second one. With regard to smart autoproducer clusters, there are two phases involved. One phase involves getting the other stakeholders to understand the reliability of the solutions we are putting forward as an autoproducing cluster. Autoproducing clusters already exist between farms in Germany. The technology is already there. We suggest capping the autoproducing clusters at the CER's cap of 5 MW. That is not equivalent to a peat powered power station. However, building an autoproducing cluster around a peat fired power station would eventually provide a solution to replace the station over time. Our argument is that time is running out. A long time will be required to prepare for 2050, therefore, we need to learn now how to do the smart clustering.
Second, once we start smart clustering, we will go into the lead in Europe. Europe is obsessed with developing smart grids. We say the short cut to smart grids is through smart clusters because everything in terms of the communications elements involved in smart grids is involved in smart clusters. The only difference is that we do everything behind the meter. We do not interfere with the ESB network system. Whatever stabilisation we need to do, we do it behind the consumer meter. It is light-footed and means that it does not require ESB networks to get into a big knot over it. It is a bit of both in that it involves a bit of new and a bit of replacing.
It is not about self-sufficient communities. Our members are entrepreneurs and their motivation is business. An autoproducing cluster is between consenting adults who entered into agreement because, first, they wanted cheaper electricity and, second, they want to make electricity because they have the resources to do it and they are prepared to go into differential tariffing systems. They are linked immediately to a customer and they have a future they can build together with those customers. They are replacing power station capacity in that area because their build-up is reliable. In discussions with the ESB, we said that if we prove to it by doing 150 MW over five years that we can get the stability of supply it needs, including the spinning reserve, then it will be able to look at a situation where one of these things could be seen as a power station. We are beginning to look at something that can expand and multiply rapidly. That would also put us ahead of the game. In fact, it would put us more ahead of the game than Ocean Park because we would be right in the middle of the game. We would have a field of play that would allow our young engineers and physicists to develop the necessary competitive skills. Without overemphasising the word "smart", there is a huge amount of computer and networking skills involved.
Moving on to the issue of ESB choking, the whole ESB thing is terribly frustrating for everyone. On the other hand, however, we have to look beyond our frustrations to see what is at the source of this problem. We must remind ourselves that the Competition Authority went into the ESB in 2004 and tore it apart. Many of the things the ESB was able to do then, it cannot do in the same way now. There are vacuums all over the place and it is hugely frustrating to fill those vacuums. That is why the MEGA organisation came together and said it would fill these vacuums, creating a framework, a buyer and seller structure, and putting in those smart things. We are looking towards a situation whereby we can solve the problem for the ESB so that it is taking less flak
A typical letter from the ESB said that one can get connected but one cannot get a tariff. We should be able to respond to that person and say that we will give them a tariff, find a use for their little bit of electricity and will use smart technology for it. That is what we are proposing.
Go raibh maith agat. I thank Mr. Stewart for the presentation, which is encouraging from the point of view of rural Ireland. The movement towards self-sufficiency and security is to be applauded. I have no doubt that if this gets up and running it will reduce energy costs substantially, which can be beneficial particularly as we have seen so many jobs lost in rural Ireland as a result of current energy costs. As Mr. Stewart said, it is down to having a structure with all the various Departments working together in harmony towards the ultimate objective of certainty.
Would I be correct in saying that the problem with wind energy is intermittent production? Mr. Stewart referred to autoproducer clusters whereby various methodologies of energy production are tied in. I am well aware of that because I live in an area where there is quite a lot of wind energy development. I can look out my door and see that on some days the turbines are not turning. I take it that production is dependent on conventional methods at that point. Will Mr. Stewart elaborate on the situation concerning autoproducer clusters? He mentioned wave energy, but not tidal energy. Is that not factored into this? Experiments are currently taking place on parts of the Shannon estuary with strong tidal currents, which offer huge potential using reversible turbines. Perhaps such a scheme could contribute in its own way.
Mr. Stewart also referred to recycling, as well as wind, wave and solar energy, but he did not mention tidal energy. Is there a reason for that omission?
I thank the delegation for its excellent presentation, which was most interesting. May I ask a question about international best practice in this field? While I would not say the presentation is futuristic, it is a bit aspirational, even though we would love to see that aspiration being fulfilled. As a small country we often find it difficult to be pioneers — we follow rather than lead. It would be great if we could become a world leader in this field. What are the examples of international best practice along the lines Mr. Stewart is suggesting, including his vision or dream? Where is it currently closest to being realised in other countries with perhaps the same attributes as Ireland's? Are there some countries to which we can refer as examples of how things could, should or, more important, are being done? It would be helpful to us if we could share ideas, as well as political and economic approaches, along the lines of countries where this system is effectively up and running.
I am sorry for being late, but I am a member of the Committee of Public Accounts, which has clashed with this meeting this morning. I welcome the delegation. I am a great believer in alternative energy sources. The directive is the right way to go and we have to get more support from the Government and public institutions in this regard. Economics come into everything, which is the way forward. I come from an intensive farming area with huge dairy herds and pig farms. The monthly electricity bill for a dairy farm of 200 cows is roughly €1,000. It could be as high as €10,000 for a large-scale pig farm where there is milling and mixing. What can such farmers, of whom there are a number in my area, do to reduce their electricity costs by using alternative energy sources? How viable is a wind turbine and what is the capital cost involved? We can talk all day about ideas, policies and structures but we have to apply practical economics. There is a difficult agricultural environment at present with many farmers under pressure in every area. Can Mr. Stewart identify those two areas and tell me how I can help out farmers in my area of north Cork by reducing energy costs substantially in both dairy and pig farming?
Mr. Dudley Stewart
There are three basic issues here. As regards tidal energy, an autoproducer cluster would maximise whatever renewable assets are there for people who wish to develop them. Tidal energy is useful. I was involved in some tidal feasibility studies back in the 1980s, which were good in Ireland. There are no major complexities, apart from EPA issues. It is really about being able to use the whole mix in a smart way, whereby the intermittency of one source is taken up by another so one can balance things out.
The next issue raised was international best practice. The Irish conditions are unique in that there is no other country in Europe where wind generators are connected to the grid but do not get any money, or where one rings up electricity supply companies who cannot say whether there is a tariff. The existing autoproducing clusters are friendly ones, such as in farming areas in Germany. They are also in complexes, estates and domains where they are using the technology to share off from different generation sources. Nobody has ever had to link it to an end-user consumer. This innovation is Irish because of the Irish problem whereby nobody wants to pay tariffs. I have been in this industry since 1976 and nobody has ever wanted to pay tariffs for these things. Even when the big wind farms got a tariff it was always too low. In order to get the renewables going we must get into a situation where consenting adults can decide what they are willing to pay for electricity. We have to create our own market. The innovation here is not in technology; it is in the introduction of differential tariffing in an autoproducer cluster so that one can incentivise such things as the storage of electricity for reuse later, one can penalise intermittency and one can afford to dump if necessary.
On the question of economics, I would like to say that the autoproducer route will solve the entire problem but it will not because the economics do not always work out. If the autoproducer cannot use all of the power from the wind generator, the water turbine or biomass, and if the autoproducer must shut off, the autoproducer is at a massive disadvantage because he or she may be working at half its capacity and, consequently, will not achieve the returns. This is a stumbling block.
The issue is, how to get that excess electricity that pig farmer does not want to another place where it is needed. One such place would be a refrigeration plant — refrigeration plants have built-in storage — or some other kind of business. The autoproducing cluster, which we cannot roll out without a proper framework structure to do it reliably because certain undertakings would have to be given to the CER and to the ESB about reliability, is not there yet but it does give one the economics needed.
There is one other matter I must mention. Under the EU directives it is considered that people who are moving in to replace fossil fuels with renewables should be compensated under a renewable obligation system. We do not have such a system rolled out properly in Ireland. We only have it for certain small sectors. The economics of this requires a renewable obligation system to be included.
We might have it on Monday after the Green Party agreement.
Allow Mr. Stewart to continue.
I am sure Deputy Creed would be in agreement.
Mr. Dudley Stewart
At present, we do not have it and we are fighting hard to get it. Even our autoproducer clusters are depending on having it. It is an anomaly in Europe. Ireland is the only country in Europe that has no such thing. The public services obligation, PSO, legislation was put in place specifically to do this and it is not used for this purpose. In the recent decision, the CER stated that he thought it should be but that he needs to be instructed by the Minister to move in that direction. There is a quagmire in that regard that needs to be resolved in order to resolve it for the pig farmer. We are very close.
I thank Mr. Stewart. What would be the capital requirement of setting up such a development?
Deputy Doyle has another question.
Fifteen or 16 years ago I visited a famous cheesemaker with his own dairy herd in Wexford who was harvesting the slurry gas through his own large digester system. As I understood, he was able to feed surplus electricity into the grid and draw out of it in the summer time when he needed it. Maybe it was in its infancy then and the ESB was accommodating an odd person, but there seemed to be some sort of an arrangement where he could do it at the time. It is possible. Definitely, my impression was that was happening.
Mr. Dudley Stewart
There is a renewable energy feed-in tariff, REFIT, system in place. There are many gaps in it where it is not certain who should be paying for the electricity. In one case, for instance, the Minister has involved ESB Networks in making a payment which, in European terms, would be illegal. A network distributor should not be paying for electricity.
However, there is a REFIT; the tariff is approximately 7 cent, which is far below its value. The current cost of production of electricity from a coal-fired station at wholesale prices is 10 cent. If one has a wind generator providing renewable electricity and reducing emissions, and one is buying from it at 7 cent only, the renewable is being penalised. It can be convenient to get that income flow if one has an excess, and many water-power generations are operating on 7 cent, but it is not a situation that can mushroom. It is accidental that this works out for this particular entrepreneur and it does not work out for everybody else because it is not economic.
What would be the capital requirement for the kind of project I mentioned where the monthly ESB bills are €10,000 or €12,000? If there is surplus electricity on the wind farm with one wind generator, can one supply a neighbour through the existing ESB network? Will the ESB buy that and transfer it? Under the deregulation programme of the European Union, there is a regulation under which the ESB must transmit, as in the case of the telephone system. That is the law of Europe and of Ireland, is it not?
Mr. Dudley Stewart
There are new rules in Europe about the obligation to connect to the grid. There are existing arrangements such as those Airtricity uses in which there is a licence and larger scale dislocation of power from one source to the various different customers, but there is nothing that can be used in the micro electricity generation area because none of the companies wants to play that game because it is a little more complex than the game they themselves are playing and it means engineering, in other words, it is not just buy and sell.
The capital cost depends on how much of one's other costs a person is trying to displace. They could range from as low as €60,000 to as high as €2 million.
How many megawatts would one get from wind development?
Mr. Dudley Stewart
Some 1,000 MW. One is displacing €60,000 at that.
Could Ireland produce all of its electricity from wind?
(Interruptions).
Mr. Dudley Stewart
Should I answer this?
Let Mr. Stewart answer the question.
Mr. Dudley Stewart
Ireland can probably export wind energy. It just needs the grid system to do it, but it also needs both local stability and local production in the electricity system so that the grid system will not be taken up totally transporting intermittent electricity. In terms of supplying all of its energy needs, Ireland could probably do it by exporting, and, certainly, using offshore, but that is a long way off. What it requires, however, is all of the other mixes to grow and to work in some sort of intelligent way.
What "other mixes" has Mr. Stewart in mind?
Mr. Dudley Stewart
There is water — hydro is under-utilised and we must take on courageous measures in that area; biomass; solar, for which there is a role; tidal; wave, when it comes on stream; and food and animal wastes, all of which are sources of energy.
Is wave an expensive way of doing it?
Mr. Dudley Stewart
Wave is probably negligible.
Mr. Paul Carberry
On trying to put a business case together for a number of farms, we have been working with the poultry industry recently and looking at the bills in that sector. While one can get very near to a business case, there are a couple of matters that will knock it off. For instance, I have seen the business case of Quest Foods in Lusk which put in an 1,800 kW machine. Given the investment, they should pay back the capital cost within six years. The company has 100 jobs created in that. That has certainly given the company a cheap supply of electricity and it is sustaining a number of jobs.
When we go to a smaller micro level than that such as, typically, the dairy farmer mentioned whose annual bills are in the region of €7,000 to €8,000, one is probably looking at using a 15 kW to 20 kW machine. Given their efficiencies and the wind speeds in the area concerned, that type of equipment is what one would need. The difficulty with that is the VAT issue. The VAT will make up at least 21% of the overall cost of the project. It immediately throws the business case out the window as the payback is over too long a period, for instance, if one wanted to look for bankability on it. I am aware of a case where a dairy farmer in a good area which enjoys high wind speeds could have a wind turbine that would meet his needs. However, the business case has been overturned because the Revenue has wrongly defined the energy relating thereto, which was actually going into the business. A letter was actually sent to a dairy farmer who purchased a generator. Obviously, he is furious.
The business cases are there to be made. I am mindful of what happened with REPS in recent years and the payments that were made. If there was a scheme in place which, through the use of microgrids or whatever, might encourage farmers to take this up, it would be welcome. As stated earlier, we considered the area of poultry last week and we had a very good case for a 50 kW machine. That business case came unstuck in respect of two issues, namely, VAT and the fact that for 20% of the time the poultry plant is closed down because of the need to change the batches. For 12 weeks of the year — approximately 20% — we are exporting with a turbine that has zero or very little tariff. The tariff definition is extremely difficult. If, as we have done with some of these, one goes through the normal channels, one must approach the utilities in order to negotiate one's own tariffs. However, a definition of what constitutes a tariff is not provided. It could be 7 cent but there is no one to provide guidance. A tariff of 7 cent would not be good enough.
We are nearly there. We have the best energy resource in Europe if not the world. We have these rural plants which could create jobs and at which electricity could be produced on site. As Mr. Stewart stated, the anomalies that exist in our system have already been removed in Germany and other countries where the authorities possessed greater foresight.
Is that from wind generation?
Mr. Paul Carberry
Yes, from wind.
We must bring this part of our deliberations to a close. As members are aware, we have a meeting with Members of the Northern Ireland Assembly at 1 p.m. and we want to conclude this meeting at 12.50 p.m. In such circumstances, I ask members to be brief.
I thank our guests for attending and I compliment MEGA on its work. What has been the level of take-up in respect of these cluster developments? Are community groups and organisations interested in becoming involved?
Mr. Dudley Stewart
There is huge interest. Even the EPA has approached us in respect of its desire to be at the centre of a cluster. A number of county councils have inquired with regard to whether they might establish municipal power companies within autoproducer clusters. We will be visiting the Aran Islands next week, where the ESB and SEI are involved. However, we have been asked to intervene in respect of the autoproducer clusters because they think they can move ahead faster with this system, which is easier to implement.
We are of the view that it should be limited to 30 autoproducing clusters — producing 5 MW each, 150 MW in total — in the first five years. This would go a long way towards meeting our obligations on renewables. We need districts to compete. The sensible thing to do in operating autoproducer clusters is to proceed with the easiest projects first and leave the most difficult until last. We must, therefore, accept areas on the basis that those who live in such areas are in favour of and excited about autoproducer cluster, that the relevant renewable assets are available and that the type of consumers who would want to obtain this type of differential tariff and enjoy energy savings are present. Initially, it would not be an ideal roll-out. It would have to be a roll-out based on candidacies from different areas. However, everywhere we go there is major interest.
What is our guests' opinion on the combination of hydro and wind generation? I refer to installations where water is pumped while the wind blows.
Mr. Dudley Stewart
That happens to be my area of speciality. Once upon a time, the scale involved was an extremely important issue in the economics of pump storage. Curiously, with the cost of opposition and various other costs coming into play on major projects, micro-pump storage systems are becoming much more viable and easier to put in place. There is an engineering company in Wexford which is commencing its first prototype micro-electricity storage plants. These will come in black-box units that will be easy to install and there will be very little engineering required. Consequently, there will be a growth in very small-scale micro-pump storage. There must, however, be a market for this. A person who owns a micro-pump storage unit must be able to buy cheap electricity and sell it at a profit.
Is there potential for large-scale development in the area of combined hydro and wind generation? Ireland is probably very suitable for such generation, particularly as there are large valleys which might be dammed.
Mr. Dudley Stewart
Apart from biomass, that is the most exciting area of all. It is just an accident of history that the harnessing of water power in Ireland did not really happen. There are countless rivers in this country and these represent a major resource. We are going to be obliged to deal with some of the cultural and ecological issues in respect of this matter. People must understand that the putting in place of dams can actually benefit rivers. In my opinion, development in this area is going to be 50% of the solution.
On behalf of the committee, I thank Mr. Stewart and his colleagues for their presentation and for answering members' questions. Is it agreed to suspend proceedings for a couple of minutes in order to facilitate their departure and the arrival of the next group? Agreed.
Sitting suspended at 12.05 p.m. and resumed at 12.10 p.m.