I am very pleased to appear before the joint committee. I will briefly introduce our strategic plan and talk about specific initiatives we believe are relevant to the committee's agenda on climate change. Ms McEvilly will speak about smart metering which I understand is of particular interest to the committee.
We have recently completed drafting our new strategic plan for the period 2019 to 2021 and initiated the formal process to lay the plan before the Houses of the Oireachtas and publish it. While keeping our mission pretty much unchanged, we have put climate change at the heart of our strategic plan and vision for the future. Specifically, we have identified our vision of a sustainable, reliable and efficient supply of energy and water and a secure low carbon future. That is a big step and change for us. It shows, following on from some of the recommendations of the Organisation for Economic Co-operation and Development, OECD, that we do intend to step forward and demonstrate leadership in this area.
We have identified four strategic priorities for the next three years: to deliver sustainable, low carbon solutions, with well regulated markets and networks; to emphasise compliance and accountability; communications, particularly to support customers as they make the transition; and to foster and maintain a high performance culture within our own organisation to deliver on our mandate.
We are in the process of delivering an enduring connection policy, following a significant period when we were operating what was called gate 3, or the previous batch processing of connections. That meant no connections were being processed for a long time. We are looking to change this and introduce regular batch processing of connections. Our first batch, enduring connection policy, ECP-1, has been initiated directly to facilitate the 2020 targets. We are also considering our second batch, ECP-2, and will work with the Department to ensure that batch facilitates the new renewable energy support scheme. In addition, we are taking an active interest in renewable gas, how it might be connected to the system, its future role and how it can be done safely.
We undertake five-year price controls for gas and electricity networks. There is nothing new in this, but it is the key enabler in the delivery of infrastructure. A low carbon future will rely very heavily on infrastructure to deliver the outcomes sought. We are also working on interconnectors, another area which is key to the integration of renewables into the system. The three interconnectors of particular note are the North-South interconnector which links Northern Ireland and the Republic; the Celtic interconnector which links Ireland with France; and the Greenlink interconnector which links Ireland with Great Britain. We are also actively engaged in considering how gas and electricity might be integrated into the transport and heating sectors. The electrification of transport relies on networks to deliver that power. To the extent that gas is being used to help to decarbonise transport such as the use of compressed natural gas, CNG, in place of diesel, it requires working with the network developers and also the CNG station developers.
Through our network price controls, we will seek to support Irish Water in making the necessary investments to ensure the water and wastewater infrastructure in Ireland is resilient, that it promotes conservation and that it is capable of adapting to climate change, the extremes of rain and drought.
There are three significant revenue streams in the electricity wholesale market - energy, capacity and ancillary services. The recent completion of the integrated single electricity market, SEM, project and the launch on 1 October of the new single electricity market support flexible units and the roll-out of renewable technology. They also support the introduction of flexible demand and storage to the electricity system. It has been demonstrated that we are now getting highly efficient use of the existing interconnectors between the island of Ireland and Great Britain - the Moyle and the east-west interconnectors. The Delivering a Secure, Sustainable Electricity System, DS3, programme which is well advanced and has groundbreaking ambitions, has been designed to accommodate higher levels of renewables in the system. We can accommodate up to 65% of renewables in the system at any point in time and maintain security. The target is to get to a figure of 75% by 2020. As recently as last Friday night, 73% of the demand on the island was being met by electricity from renewable resources. That was facilitated because we were able to export the amount of electricity above 65% through the interconnectors to Great Britain. That demonstrates the benefits being derived from DS3 and the role of interconnectors in delivering these benefits. We also welcome the significant progress being made and the political agreement that seems to have been reached on the clean energy package for all European citizens and very much look forward to working to implement the changes that will come about as a result.
Ms McEvilly will talk about retail markets and smart metering.
It is an ambition of national and EU energy policy to put customers and citizens at the heart of the transition to a low-carbon future. The Citizens' Assembly also placed an emphasis on finding ways to encourage businesses to reach out to customers to bring them with us on this journey. We believe the CRU will have a role in regulating retail markets, particularly in the context of the smart metering project. We will put customers at the heart of everything we do. Our strategy focuses on protecting and empowering customers, ensuring that they have the correct tools and information and are able to make the correct choices in order to benefit from the transition. That means enabling customers to benefit from competition and also focusing on the types of new technologies we believe will become available in the context of smart metering and smart homes. It also means supporting customers to actively engage in energy markets to ensure that they can become what we have called "prosumers" or can become involved in microgeneration. They can also switch some of their energy consumption in order to avail of cheaper tariffs at certain times or of different technologies which will help them to lower their own bills and assist in the decarbonisation agenda.
Our smart metering project is really a facilitative project which will enable much of this to happen. We believe it will have benefits for customers, the economy and the decarbonisation agenda. If we get it right it will be a rare win-win-win project. We have been working with the Department, ESB Networks - which is going to roll out the electricity meters - and with the entire supply industry in Ireland to try to ensure that we can achieve the conditions necessary to make this work to the benefit of customers. We hope to empower customers by giving them better information and choices and encouraging, enabling and incentivising them to avail of energy efficiency options, providing better price information and better information about their consumption and facilitating the use of renewable energy. We spoke about the possibility of having more sources of renewable energy on the network and about making the best use of those renewables. It is really important to us, and it would be great if customers could get the benefit of that. One of the really interesting features of the wholesale market redesign is that we can see that when there is a large amount of wind energy on the system the wholesale price goes down. It would be wonderful if we could enable domestic customers to avail of those lower prices at certain times. That will involve the provision of better information through smart meters, and smart home technology in some cases, which will help them to do this without having to constantly decide when to turn on the emersion, and enabling smart products to come through from suppliers. We see this is as the way forward. It enables ESB Networks to do things in a smarter way. We have to consider where to invest in the grid, where we can be more efficient, how we can support the electrification of transport and heating on a mass scale at least cost and how we make better investment decisions. It is an enabler of all of those options.
This is a massive project. It will cost €1.1 billion. We had to weigh up the benefits as we see them and we conducted a major smart metering trial to that end. In some ways the data is now outdated. We were looking at very simple applications for customers, but found that they could save up to 10% on their bills through simply having better information about how electricity is used in their homes. A better understanding would mean that their consumption could be reduced. A time of use tariff, which would enable a family to move some of their high energy consumption usage, for example, turning the washing machine or dishwasher on, would involve adding a low-cost time during the evening, discouraging people from using electricity at peak times. If that is taken up on a large scale we might be able to avoid having to build additional generators to meet peak demand. We looked at peak demand events over the last few weeks. It is wintertime now, and we are seeing quite high prices because we were bringing on old and often very carbon-inefficient peaking units to meet the very high peak in the wintertime. It would be great if we could avoid that and have customers pay less money by using their electricity off-peak. Those are the kinds of benefits we see.
It would offer a better service to customers. There would be no more estimated bills. The members may know that CRU has a customer care team which deals with customers who are having problems with their suppliers. Estimated bills are one of the most intractable problems we face. A customer believes he or she has been paying his or her bills and discovers that they have been estimated over a period of years, leaving him or her owing a large amount. That is a very difficult problem to resolve. However, smart meters will help us resolve it by providing more up to date information for customers. It will also help us avoid the manual costs of meter reads and network investment. We can gain from many areas of this project.
Phase 1 of the project will commence this year. ESB Networks is in the process of finalising procurement at the moment. This is a major project. We have to buy and install the meters, and then we will face a huge IT project around the availability of the data from those meters. ESB Networks has to update its central IT systems, as does every supplier active in the market. We will go from a situation where each customer is getting four meter reads a year or four items of data for all customers regarding consumption and how they will be billed, to potentially having much richer data. IT upgrades are required across the board. In our phased approach, over 2019 and 2020 we will roll out the first 250,000 ESBN meters in a replacement programme, effectively upgrading the meters from what we have at present. The IT project is ongoing and we will be able to go live with the smart services by January of 2021. Meters in homes that are capable of transmitting that richer data set will be live and suppliers can start offering different services to customers based on that. In the following two phases we will roll out more meters so that this will ultimately become a national replacement project. By 2024, we should have significant penetration by these meters. In effect, all homes and small and medium enterprises, SMEs, in Ireland should be covered at that stage, and the meters and the data will be working at full functionality. That is the plan, and it is well under way.
