Engagement with Chairperson Designate of the ESB

The purpose of this part of our meeting is to have an engagement with Mr. Terence O'Rourke, chairperson designate of the ESB. On behalf of the committee, I welcome Mr. O'Rourke to the meeting and congratulate him on his appointment to the chairperson's role. Mr. O'Rourke is accompanied by Ms Marie Sinnott, the company secretary; and Mr. Peter O'Shea, head of regulation and corporate affairs.

I remind witnesses of the of the long-standing parliamentary practice that they should not criticise or make charges against any person or entity by name or in such a way as to make him, her or it identifiable, or otherwise engage in speech that might be regarded as damaging to the good name of that person or entity. Therefore, if their statements are potentially defamatory in relation to an identifiable person or entity, they will be directed to discontinue their remarks. It is imperative that they comply with any such direction.

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 Houses of the Oireachtas or an official either by name or in such a way as to make him or her identifiable.

I call Mr. O'Rourke to make his opening statement.

Mr. Terence O'Rourke

I thank the Chairman and members of the committee for the invitation to attend this meeting to discuss my nomination as chairman designate of ESB by the Minister for the Environment, Climate and Communications, Deputy Eamon Ryan.

It may be helpful to introduce myself. I was raised in Monaghan and did my undergraduate studies in history and economics at UCD. I trained as an accountant with KPMG and then transferred to its Boston office for almost two years. On returning to Ireland, I worked in a range of roles including audit, technology and risk management. I retired as managing partner of the firm in 2013. As managing partner for six years, I led a firm employing almost 3,000 people, serving our clients from offices in Belfast, Cork, Dublin and Galway.

I gained many perspectives working with our wide array of clients. I learned to always appreciate the importance of sound business judgment, ethical business behaviour, focus and the ability to work with and positively influence those with whom I engaged. Throughout my career I have learned to value the perspectives of, and to work with, all stakeholders, including staff and customers from across the island of Ireland. Having grown up in a Border county, I was especially aware of the need to be sensitive to all views. These insights will also help me as chairman of ESB given that the group also embraces Northern Ireland Electricity Networks and has significant generation and supply operations in Northern Ireland.

Since I retired from KPMG, I have served in various non-executive board roles, including Enterprise Ireland, where I have been chairman since 2013, Rethink Ireland, the Government-supported social innovation fund, the governing authority of Dublin City University and the Dublin Theatre Festival.

I have mentioned a selection of the boards on which I have sat to give a sense of the diversity of experiences that I have encountered while carrying out my governance responsibilities.

I am mindful that our stakeholders have placed their trust in me and my fellow board members to ensure the ESB operates to very high standards of corporate governance while supporting the work of its management team. As chairman designate, I will work to ensure the board's oversight responsibility for strategy, governance, internal controls and risk is resolutely executed. In this way, the board will support and challenge management, who have the operational responsibility for the ESB.

In the context of risk I have been really impressed by the way the ESB responded to the Covid-19 pandemic. The ESB had the threat of a pandemic on its risk register since the early 2000s and carried out a pandemic rehearsal in 2018. I understand the learnings from this rehearsal informed the ESB’s pandemic preparations in 2020. This ensured the company smoothly transitioned almost 4,000 office-based staff to home-working with only minor blips in activity levels.

The issue of gender diversity and inclusion will also be an important agenda item for me as chairman. I plan to work with our shareholder in drawing up specifications for board appointments that will bring a wider range of perspectives into the boardroom.

As Chairman designate of the ESB, I will work to ensure that foresight, planning, operational excellence and diversity remain core cultural imperatives.

Turning to the ESB’s purpose, it was established as a commercial State company by a fledgling State to be a key enabler of economic development in Ireland. I am fully cognisant of my responsibilities and that of the board not only to the Government, as owner, but also to all those families, farms and businesses that rely on the ESB for a safe and secure supply of electricity.

I am becoming very well acquainted with the sheer scale of the ESB's business and the Brighter Future strategy that is driving the business. That strategy at its core sees the ESB leading the transition to a low-carbon economy. The ESB has almost €13 billion in assets. We contribute approximately €2 billion every year to the Irish economy in the form of taxes, salaries, purchases and local authority rates. We paid €1.2 billion in dividends to the State over the past ten years The ESB has a presence in every townland in the country.

In addition to delivering a robust power supply to more than 2 million customers, ESB Networks has a critical role in the delivery of the Government’s climate action plan. As well as ensuring sufficient renewable generation is connected to the network, ESB Networks must also enable technologies such as electric vehicles, electric heat pumps and micro-generation to contribute to the overall decarbonisation of Ireland. ESB Networks has almost doubled the amount of renewable electricity connections on the network every three years since 2011. These major increases have helped Ireland to become a world leader in renewable electricity generation. Today, almost 40% of Ireland’s electricity is generated using low-carbon technologies. In that way, the electricity sector has reduced its share of Ireland’s carbon emissions from around 20% of the total five years ago to around 16% today, even as demand for electricity has increased. The ESB will work to continue to support Ireland’s decarbonisation journey. This means continuing to decarbonise the electricity system and using that clean electricity supply to replace fossil fuels in our heat and transport sectors. That strategy has the potential to address more than half of Ireland’s emissions.

The ESB’s generation and supply businesses also have undergone major transformations from being monopoly activities in the 1990s to operating in a modern, open and competitive marketplace. Our generation business has decommissioned older plants as we have worked to develop new forms of sustainable electricity generation.

Our supply business, Electric Ireland, competes with a wide array of companies for every customer. Even in the face of this competition, I was delighted to see Electric Ireland’s commitment to contribute €1 million to support vulnerable customers during the lockdown. This was in addition to its early commitment not to disconnect any customers during the current and previous lockdowns.

Many of the members will also be familiar with how ESB International sells Irish engineering excellence to clients all over the world.

During the past five years the ESB has invested about €1 billion a year in developing our businesses. We raise debt to finance that expenditure on the international financial markets. It is vitally important that our investors trust the ESB when they lend us money. The ESB’s current debt stands at around €5 billion, which is significant. I will always be mindful of the board’s role in maintaining a financially strong ESB for the benefit of all. With more significant investment in electricity infrastructure and renewable energy to be made, it is critical the ESB retains its financial strength and credit rating to access the funding necessary to finance the coming transformation.

Turning to culture and heritage, I confirm we are a long-term supporter of the arts, cultural and heritage sector in Ireland. In 2020, the company opened a purpose-built archive in Finglas to preserve and make available more than 90 years of the ESB’s records.

In 2017, we opened a visitor centre in Ardnacrusha to explain the role electricity will play in Ireland’s low-carbon future. We are also commissioning a visitor centre for Oweninny Wind Farm in County Mayo with our partners Bord na Móna. Those are tangible commitments to Ireland's culture and heritage.

Turning to delivering a sustainable future, this is a fascinating time for the energy industry. We are all working to decarbonise our economies and address the challenges of climate change. The ESB will work tirelessly to support the programme for Government’s target of an electricity system that is powered by 70% renewables by 2030. We are seeing every day the impact of the surge towards renewables. On windy days, Ireland's electricity system can be powered by up to 65% renewables. However, there are other days particularly in some winter periods of cold, crisp weather when there is no wind when renewable generation can fall away to almost nothing. On those days, to make sure we keep the lights on, we need power from other sources. This security of supply conundrum will be one of the great challenges over the coming decade as Ireland grows onshore and offshore renewables, builds more battery storage capacity and continues the transition to a low-carbon energy system while maintaining security of supply.

Smart technologies such as advanced digital metering are improving the efficiency and operation of the electricity networks. ESB Networks is ploughing ahead, it having installed almost 240,000 new meters by the end of 2020.

I look forward to supporting the execution of the ESB's Brighter Future strategy whose vision is to lead the transition to a reliable, affordable, low-carbon energy future. Over the next decade we will completely transform our generation portfolio. This will cut the carbon intensity of our generation mix by more than two thirds and provide flexible back-up to allow more and more renewables onto the system.

This is a great time to be nominated as chairman designate of the ESB board. I look forward to helping to ensure the ESB remains a vital enabler of the economic and social development of Ireland. I acknowledge and recognise the service of distinguished chairmen in the past, including, most recently, Ellvena Graham. I look forward to taking the members' questions.

I thank Mr. O'Rourke for his opening statement. I invite questions from members. I call Senator Dooley. He does not have a question so I will move on to Senator Boylan.

I congratulate Mr. O'Rourke on his appointment. I advise the Chairman I am in the Leinster House premises. My hand is frozen so the Chairman can take down my link after I ask my question. What is Mr. O'Rourke's view of the ESB's readiness to handle the community and microgeneration element of energy transition? We know Ireland is way behind in microgeneration compared to other EU member states. From talking to community groups, they would say part of the problem is getting access to the grid and also the cost of the connection is unknown. There is considerable enthusiasm among farmers, businesses, schools and communities to be part of this transition. Does Mr. O'Rourke think the ESB is ready for it? A public consultation process is under way. I assume the ESB will make a submission to it. Was it asked to outline the barriers to that element? Can we ensure the ESB will take a leadership role on this issue?

Mr. Terence O'Rourke

I might start by giving a personal view on this. In 1976, my father shut the small animal feed mill that was water driven in County Monaghan. He converted it into a microgeneration system. He sold electricity generated from the water turbines on the River Fane in County Monaghan to the ESB, so I understand exactly this element. I remember him being a bit frustrated at the time with all the requirements the ESB imposed. However, he stuck with it and the mill happily generated electricity for many years and he sold it to the ESB. This is a very important issue. Many people across Ireland are keen to play their part in decarbonisation; they want to be able to generate revenue for themselves and decarbonise society through microgeneration. The ESB will make a submission to that process. We are absolutely committed to making connecting microgeneration as safe and as practical as we can. There is much detail to be worked out, but the Senator can take it the board is fully committed to this. It is an issue we fully appreciate and we are committed to doing that.

I thank Mr. O'Rourke for his service. I should say I appointed him to be chair of Enterprise Ireland, where he did a fantastic job. I just wish to acknowledge that. I believe he is really well suited to the challenge we are taking on here.

I have just a few questions. We have seen our ambition for renewables on our grid go from 55% to 70% now. As we enhance our ambition, what will be the challenges of going beyond 70% renewables on our network and how do we prepare for them?

My second question concerns the ESB's wider potential role in tackling the climate challenge. It is the largest State player by a country mile in terms of its scale and reach. What does the ESB see as its role in leveraging change behaviour on a much wider basis than simply day-to-day responsibilities? I refer, for example, to encouraging companies to do audits of their carbon impact, and how they could work with the ESB as a provider to reduce that, and to using the roll-out of the ESB's smart meters to help customers and quickly get them thinking about how they can reduce their impact. It seems to me that the ESB will be a strategic player from the point of view not just of what it is doing from day to day but also of mobilising private capital, whether individual homeowners, companies or whatever else, and indeed the public sector, which is not always exemplary. I would be interested to hear how the witnesses would see that wider role being developed and whether the ESB's existing legislative remit recognises sufficiently the capacity the company may have for leading change.

Mr. Terence O'Rourke

I might, in response to the Deputy's second question, take in some of Enterprise Ireland's experience as well because Enterprise Ireland deals with companies that come to it saying they want to spend money on going low carbon and ask whether Enterprise Ireland can help them.

To go back to the Deputy's first question about moving from 55% to 70% of electricity generation being renewables and what we can do to get it above 70%, the problem, as we get to more and more renewables, is intermittency of renewables, both onshore and offshore wind. The greatest potential is probably offshore wind at this stage. Everybody is looking at that as the main source of getting towards 100% renewable energy. Offshore wind off the west coast of Ireland is the most likely source of that, but solar and other sources will be important as well as microgeneration. The intermittency is the thing that is not being tackled yet. There are solutions in play. Battery storage is one. We are now beginning to see large-scale batteries put in place. Another part of the solution will be blue hydrogen, whereby one can use renewable energy on the very windy, busy days, producing lots of energy, and convert that into green hydrogen, which can then be used on less windy days or to flow out to deal with the intermittency. There are technological and technical issues to be solved there, but I believe my colleagues are well on top of that. As we plan not just for 70% but beyond 70%, those are the kinds of things we will look at to deal with those challenges.

I agree with the Deputy on the ESB's wider role. Getting the carbon element of ESB generation or electricity generation down to a low figure is only one part of the battle. There are issues involved in transport, heating, agriculture and other sectors, including the public sector. Electric Ireland, our supply business, provides energy supply services, works with companies and can do things such as work with them to finance a conversion to low-carbon operations and then to recoup the savings over a period. That service is already available from Energy Ireland, and I can see it being ramped up. As I said, it has been the answer to the question Enterprise Ireland has been asked by companies, that is, whether we can help them on their decarbonisation journey. As Deputy Bruton will be aware, Enterprise Ireland is given the remit that it should help Irish companies to expand jobs and exports. However, these are companies that say they will not increase jobs or exports but just want to decarbonise. That is not clearly within the remit of Enterprise Ireland, so we are now trying to figure out how we can do that. We understand the companies and want to work with them, but that will probably involve Enterprise Ireland working with companies such as the ESB and involve Enterprise Ireland working probably with the SEAI as well.

Those are things ahead of us. The ESB has had a very positive impact. It is present in every townland in Ireland. Everybody recognises the yellow vans going around the place.

I agree with the Deputy's point about wider responsibility for encouraging changes in behaviour and awareness. The smart meters he mentioned are probably a very good way of doing it. People will be offered in their own homes choices as to what kind of electricity they use, when they use it and how they use it, all in such a way as to try to make us more efficient and more effective in our use of electricity and to minimise the carbon impact of energy usage. We have a broader responsibility, which I think the board fully accepts. I am not sure we need any change in our remit because our remit is to support the economic and social development of Ireland. That is part of what the ESB was set up to do. I, therefore, do not think we need a legislative change. However, I take on board the point that it is not just the technical, operational aspect of things but the behavioural change and supporting people to help people make the change. We are committed to that and the committee will see more of that in years to come.

I thank Mr. O'Rourke. I have just a couple of questions. There was news related to the ESB in the newspapers at the weekend regarding borrowing limits and the joint venture with Coillte. Could he outline the significance of this and what it facilitates the ESB to do in terms of its renewables ambition and its significance in Ireland in the future? Is it onshore or offshore? What will it look like? Is it wind or solar? There are challenges around wind development onshore. I am thinking particularly of the ongoing call for the wind farm guidelines to be updated in some way to manage the tensions between developers and communities. I ask Mr. O'Rourke to comment on that.

Mr. Terence O'Rourke

To take the issue of borrowing limits first, which was the first of the Deputy's questions, the ESB's borrowing limits, as he will be aware, are set in statute, in primary legislation, so they are rigid and have been changed only twice. I think 2007 and 2004 are the only years in which the limits have been changed. At €5 billion at the moment we are coming up close to our €6 billion limit. It is unclear whether the limit includes joint ventures and subsidiaries. We applied last year for an increase in the limits. We will spend about €7 billion over the next five years in capital expenditure. To allow ourselves to have the financial capacity to do that, we thought it would be better to get out of the €6 billion limit. We applied for €10 billion. The proposal at the moment is €12 billion. That is probably a very good cushion, but who knows what will be required in the next five, ten or 20 years? Rather than requiring changes in legislation all the time, it is sensible to put in a good headroom limit there because we may be offered opportunities to have joint ventures with other people. We may have requirements from our shareholder to invest in our business and to create even larger projects. To enable us to have the flexibility to do all that, we thought it was sensible to seek a borrowing increase at this time. Our current strategy, which the board endorsed in November, requires €7 billion in capital expenditure for the next five years. The maximum borrowing in that strategy shows, I think, approximately €7 billion, so we do not intend anywhere at the moment in our current plans to go anywhere near €10 billion or €12 billion. It is just to allow for optionality.

The joint venture with Coillte is a great project because it involves two State-owned bodies, owned by the taxpayers, working together to take the opportunity of using Coillte's land all over the country. As the land is already used for forestry, it is probably easier than many other locations to change into locations for wind farms. We are working on a number of sites with Coillte. It is great to get that joint venture approved through the Competition and Consumer Protection Commission. There are a number of conditions in there, but they are ones we think we will be able to fulfil. We look forward to working with Coillte to develop wind farms in appropriate locations around the country. I take on board the Deputy's observation on the wind farm guidelines, which need to be updated. We are very happy to work with the regulator in that regard. We understand that for the benefit of the whole community we need renewable energy. Some of that has to be onshore wind, but we understand that creates tensions with local communities. We will work very hard to make sure that people's concerns are understood and we will do as best we can to accommodate any concerns. Adhering to updated guidelines will be part of the way we will do that.

I thank Mr. O'Rourke for his presentation and for coming to the committee today. One of my questions is on something I have observed. The Global Legal Action Network has written to the committee. Will Mr. O'Rourke comment on the details of the abuses suffered by workers and others in coal mines in Columbia? Does the ESB still have contacts with that mine? Does the ESB still do business with it or has that stopped? Perhaps Mr. O'Rourke would state it here, publicly, for us please.

Mr. Terence O'Rourke

I am aware of the concerns issued regarding coal from the Cerrejón mine in Columbia, particularly over the past number of years. It is an issue we follow very carefully because of those concerns. We have historically purchased a very small percentage of the output of that mine. In the period from 2015 to 2018 we purchased some 2% of the total mine capacity. We have not used any coal from Cerrejón in the time since then and we are not currently using any of its coal.

We are conscious of the fact that when we buy coal from around the world we need to understand what the conditions are where the coal comes from. In 2014 we joined an organisation called Bettercoal. It had been established shortly before that by a number of large coal buyers. It is on the buying side and is entirely independent of the mining side. The mission of the organisation is the continuous improvement in coal mining operations through collective influence.

As a 2% purchaser we do not have much influence in the mines, so joining Bettercoal was a way for us to leverage our influence to punch above our weight. Bettercoal commenced assessment of the Cerrejón mine in 2016. The assessment included research, completion of questionnaires, visits to the site, talking to the local communities, trade unions and NGOs. The Bettercoal assessment measured the mine's operations against a large number of criteria across ten principles, which included human rights, workers' rights, ethics and community engagement. The assessment found that Cerrejón met, or substantially met, the vast majority of the Bettercoal criteria and the assessment did not record any failures. Senior managers at ESB have visited the mine on a number of occasions and were very vigilant about this matter. We understand the concerns people have. There are people there who are trying to improve the conditions anywhere there are shortfalls. We continue to keep an eye on it, but we are not buying any coal from them at the moment.

Working through the coal and human rights point, has the ESB decided to move away from importing coal from Cerrejón entirely?

Mr. Terence O'Rourke

The coal that is required to power Moneypoint is a particular type of coal that is only available in a couple of mines around the world. Cerrejón is one of them. We would not like to say "Never" or "Never again". We would certainly want to make sure that issues had been addressed before we would go there again.

Where is the ESB getting the coal from now?

Mr. Terence O'Rourke

I believe at the moment it is from Russia.

Okay. I want to move on to a more general climate question. Does Mr. O'Rourke believe that the ESB mandate as it currently exists is in line with Ireland's commitments under the Paris Agreement? How does Mr. O'Rourke see it going forward with our commitments to the new climate Bill, which I am sure ESB has had some discussion or feedback on? Given that the ESB still has a mandate for investment in gas generation and infrastructure, is this in line with our targets to adhere to the Paris Agreement?

Mr. Terence O'Rourke

I am aware of the status with regard to the Paris Agreement and the climate legislation, both enacted and pending. The ESB will be committed to playing its part in the decarbonisation of the Irish economy. We also have the commitment to make sure that we continue to have electricity available. As we decarbonise transport and heating domestically and industrially, electricity is probably the best way to do that. If electricity can be generated as safely, as securely and with as low-carbon emissions as possible, it would be the best. It is not, however, something that can be done overnight. We believe there will be a requirement for a suitable mix of generation that is increasingly sustainable. Our target is 70% by 2030, which is in line with the legislation and the Paris Agreement, as I understand it. If we can do it quicker than that, we will.

As I said to Deputy Bruton, one of the issues is the intermittence on renewables such as wind and solar. The sun does not always shine and the wind does not always blow, so one must have other technologies available. At the moment the best one of those, and the least carbon effective one, is gas.

We use Moneypoint and coal burning very infrequently now. The heavy fuel such as diesel oil is also hardly used. We got out of those. We have moved away from the high carbon fuels used to generate thermal plants. We now use gas as the last piece of the thermal plant. That will be required for a number of years going forward because of the need to continue to supply electricity for Irish social and economic activity and as we go on the journey towards full-scale renewables.

We will need to deal with some technical issues. It takes a long time to develop offshore wind, for example off the west coast of Ireland, which is a major part of that. There will be more solar, there will be microgeneration, and a number of components in the transition in line with the Paris Agreement and the climate change legislation. Gas will be an important part of making sure we have security of supply as we go on that journey over the next decade or so.

If we are to try to achieve a target of 70% renewables by 2030, that is nine years away.

Mr. Terence O'Rourke

Yes.

And Mr. O'Rourke also thinks that we are going to have to rely on a supply of gas for that period.

Mr. Terence O'Rourke

During that period.

With some 15 years left in the Corrib field, does Mr. O'Rourke think it is necessary for the State to allow the drilling for more gas off Barryroe, for example?

Mr. Terence O'Rourke

The ESB has no views on where the gas comes from. We will require gas for generation for the next ten or 15 years. There are gas interconnectors on the island so the gas comes from various places. Where the gas comes from is a matter for national policy, on which the ESB does not have a particular view.

I thank Mr. O'Rourke.

I thank Mr. O'Rourke for his presentation. My first question concerns the planning process that Coillte is currently engaging with. Since the ESB has a relationship with Coillte, I believe it is important that Mr. O'Rourke might address this issue. I am aware of one very large project in east Clare that is being processed for planning through An Bord Pleanála. From my own engagement the community I believe that there has not been the appropriate level of engagement with the community that would be expected. To some extent this is the result of the Covid crisis and the inability of people to meet in public forums. It is a fact that people are not circulating, they are not going to the pub or the church, so they are not meeting and are not even aware that the process is under way. I ask that the ESB and Coillte, because they are involved in projects, would delay the submission of applications until such time as we are out the other end of this, or that they find a more prominent way of engaging with people. I do not believe it is appropriate to move ahead as they have done on that particular project.

We have all signed up to the commitments on renewables by 2030, and rightly so. I put it to Mr. O'Rourke, however, that the ESB from its early stages was ahead of time in its thinking and was always looking to the next phase of development and the next engineering phase. With its relationship with Coillte the ESB is really just doubling down on what is now older technology. Why has the ESB not moved more aggressively towards the generation of electricity offshore? The opportunity is there. It is very clear that the future is there. Large multinationals are looking at that area and advancing it. Why is the ESB sitting back and effectively doubling down on the onshore technology? If the ESB was delivering, as Mr. O'Rourke said at the outset, on its mandate for the country, the ESB would be looking at offshore.

Mr. Terence O'Rourke

I thank Senator Dooley for his points on consultation and community engagement, and on the offshore versus onshore. I take the Senator's point that it is difficult to do community engagement at the moment. I am aware that the community engagement is an important part of any process of large infrastructure projects to make sure that people have an opportunity to express their concerns, and for making sure we can deal with any concerns as best we can. We will be working with Coillte and I will make sure to bring that issue back to management to make sure we take on board that the community is not happy with the level of consultation available at the moment, and to see what further we can do. I understand the importance of that.

A couple of years ago, I led a group in the business community looking at the best way to do community engagement. We had representatives from the ESB, EirGrid, Bord Gáis and others working out the best way to do that. I believe it is an important issue and I fully understand the point.

In terms of old versus new technology, offshore wind is technically challenging. Obviously, the best way will be floating platforms, which is completely new technology. The ESB is engaged. Before Christmas, the board approved the purchase of 50% of a wind farm off the coast of Arklow. We are also engaged in a wind farm off the coast of County Louth and have investments off the coast of Scotland. Neart na Gaoithe is a big wind farm in which we are in joint venture. The great opportunity to learn the technology is the very point made by the Senator. We are therefore absolutely committed to finding out and understanding how wind farms work.

What is needed to really advance this in Ireland is some technology proving, which is what we are doing and learning from other people, but also the legislative framework. There are a whole lot of issues about the seabed and how floating platforms work and all the rest. The legislative framework to really expand offshore wind is needed now. Advances need to be made in the connection of the grid to bring electricity from offshore back onto the ground and make sure it can be connected and transmitted through the transmission network. Therefore, a number of technical issues are to be addressed but they are all on the ESB's agenda. We will work as fast as we can to do that.

I thank the Deputy for his comment about how the ESB seemed to be ahead of its time in the past and now it does not appear to be. We are doing a lot of work the Deputy is probably not aware of. Our engineers, however, are working on some of the best projects in the world in offshore energy at the moment. We know that is part of the answer for Ireland because we are rich in offshore wind and it is something we can actually export in the future. In ten, 20 or 30 years' time, we could be a great exporter of energy and electricity from Ireland by using our offshore wind. The ESB is fully committed to being part of that for the benefit of the taxpayers of Ireland.

I thank Mr. O'Rourke. I want to follow up on a couple of issues that have already been flagged. A concern I would have is that it the ESB seems to be at a stage in its planning where it is chasing the regulations that might come in rather than anticipating them. I believe Senator Dooley was making a similar point, that we and the ESB need to be ahead of time. I am a little bit concerned, therefore, with regard to the investments. We say, "neither a borrower not a lender be", but the fact is that the ESB is borrowing heavily.

I am concerned that Mr. O'Rourke mentioned the generation portfolio. What is being promised to those investors in terms of a generation portfolio? What expectations are being giving to those investors? We have a rapidly evolving policy landscape. Are they being given an expectation, for example, that blue hydrogen will definitely be in the mix? There is a big difference between green and blue hydrogen. The ESB should anticipate that blue hydrogen will not be in the mix for very long. The move against it in Europe is strong and the scientific evidence we have heard previously in this committee against that kind of hydrogen is very strong. Therefore, is the ESB planning, and are its investors aware, that blue hydrogen might not be an aspect or an option in the mix, especially if we scale from €5 billion to €12 billion? What risk-proofing is there in terms of exposure on expectations in that regard?

Is the investment the ESB is making and perhaps anticipates making with the €12 billion in funding it hopes to draw down green investment and is it consistent with the spirit - I know it is not bound by the letter - of the Fossil Fuel Divestment Act 2018, which we passed in the Oireachtas? I believe those are really important questions.

I am concerned by the emphasis Mr. O'Rourke has placed on financial markets as a priority. They are a priority but I believe energy supply and the environment will also be key priorities for the ESB in the longer term security picture.

Could and should environmental impact assessments be used earlier and better in terms of ESB infrastructure? That is really important.

Rather than looking to alternatives in terms of hydrogen, what percentage of this new funding will go into investing in the issue of storage?

That is the crucial issue. We do not want to hear in six years' time that sometimes the wind does not blow. That issue really needs to be dealt with and prioritised as an area of innovation. We hear much more about carbon capture than we hear about renewable energy storage. The emphasis needs to shift there.

In the previous Oireachtas, the ESB appeared before this committee regarding the unfortunate issue of leaks. Have Mr. O'Rourke or his colleagues heard, or do they have information, about whether the 75 new and historic leaks have been addressed or whether the decommissioning of the fluid-filled infrastructure cables has happened?

I note a new code of ethics has been introduced. Could Mr. O'Rourke comment on that because it is a governance code of ethics? Has there been consultation with the workers, unions and all relevant stakeholders around that new code of ethics for the ESB?

Finally, I note Mr. O'Rourke has a background in history and he spoke about heritage. I am extremely concerned by the proposed change of No. 29 Fitzwilliam Street from a public museum and amenity. With great respect, the new heritage measures suggested by Mr. O'Rourke do not replace what was in a way, as I see it, a penance for demolition and ruining of a 1 km-long Georgian street by ESB building works in 1965. I know that in 2015, the obligation on the ESB to restore it fully was lifted on the understanding that anything that replaced that site would be a public amenity. Does Mr. O'Rourke not regard that public museum as a key public amenity? I urge him in his new capacity as chairman to look strongly at reconsidering the removal of one of the few publicly accessible Georgian buildings in Dublin.

I thank Senator Higgins. There are quite a few questions for Mr. O'Rourke.

Mr. Terence O'Rourke

There are quite a few questions. The Senator said that we appear to be chasing regulations rather than anticipating them. I have only been involved with the ESB for the past number of weeks but I have seen that it is well aware of the need to change. That issue of getting the legislative framework required for offshore wind in place is a matter of ongoing consultation between ourselves and the regulator and ourselves and the Department.

The ESB is absolutely involved in anticipating and shaping those regulations and trying to make sure they are the most effective way of getting to do the things we need to do. I therefore hope we would not be seen as chasing regulations but actually anticipating and helping to shape them. Our job is to be the experts on the ground and know the right way to make sure the regulations are effective, not only for the operations of the ESB but for the protection and safety of the community.

The Senator spoke about the investments and alluded to my reference to the need for the ESB to be financially strong. That is reality. The issue is that we need to make a lot of investment now. There is a big investment, which will be repayable over a long future. We have a situation where we need to make big investments now and the repayment will be over many years of supply of electricity. It is something that is entirely suited for borrowing. The Senator is correct. We must do that prudently and in such a way that the financial markets are helping it.

I should say that I have chaired another sale and investment forum in the last number of years, which is about trying to help our financial investor colleagues to understand the need for transformation in the economy, that is, the need to go to green energy. We found there was a great and growing interest from financial investors in decarbonisation because they did not want to invest in projects which are not sustainable and do not have a long-term future as we move to a zero-carbon world. Investors are well aware of this.

I am not aware of the detail of the mix. The Senator made a comment about blue hydrogen. As I understand it, that would not be a necessary part of the mix. If any blue hydrogen is involved, it is a matter of transition as we need to go to green hydrogen. Blue hydrogen is only a stepping stone as we go to green hydrogen. We will get there eventually.

I already mentioned the importance of battery storage and dealing with intermittent wind. I agree with the Senator. I do not want whoever is in my chair in ten years' time telling the committee the wind does not blow on certain days. That is the reality today as we transition, however. We need to deal with that because we need to keep the lights on, businesses powered and homes warm. That requires us to use an appropriate mix of generation but that mix is changing over the period in our plan. We plan to change it to 70% renewable energy by 2030 and earlier if we can, and as soon as possible thereafter with the technology and investment required to get towards zero carbon. Therefore, it is exactly in our lines to do that and we must do it in a way that ensures we remain financially stable. There is no point in us borrowing imprudently and not being able to make the investments and provide electricity to the people of Ireland.

We must balance the needs that the Senator, entirely appropriately, raised as a concern, but it is an issue of which we were already aware.

The Senator is correct in that, as an historian, I am aware of the importance of showcasing heritage and reminding current and future generations of its importance. That is why we have initiatives like the archives and the visitor centres in Ardnacrusha and Oweninny.

On the museum, my understanding is that there was no planning permission or anything else. It is something the ESB did voluntarily. It was not a quid pro quo, as we understand it. The museum comes in two parts, namely, the contents and the building. The contents have always been owned by the National Museum of Ireland and have always been borrowed from it. We returned them to the National Museum of Ireland when we started a redevelopment a few years ago.

I agree on what was done in the 1960s to the kilometre-long Georgian street. Nobody would want to endorse or support that now. I regret it also. We hope the redevelopment of the new building is more in keeping with the heritage and the streetscape. I hope members will see that. It involves two new office buildings to replace the 1916 buildings, one of which has been sold to help to finance the project. As part of the process, we are refurbishing up to 11 Georgian houses, three of which will be used for ESB's offices and eight of which will be returned to family and residential use. That is what we are doing.

I absolutely agree on the need to showcase the heritage. My contention is that it does not necessarily have to be in No. 29. We are going to work with colleagues in Dublin City Council, the OPW and the National Museum of Ireland to examine heritage-related initiatives that could address concerns. I recognise that point. I was a visitor to the museum myself even before I was involved in the ESB and I know it very well. My children visited and they were fascinated by it. We need to have the heritage available to people. The uses of buildings change. If we did not change buildings, the members would be sitting in a building that was the home of the Duke of Leinster or home to the Royal Dublin Society. We need to have the heritage available to people. We are going to work with all the stakeholders to make sure it is available, but it does not necessarily have to be at No. 29. As part of the project, it made sense to do significant refurbishment. When we sell these houses, we will not be a making profit. The houses were built a long time ago and need a lot of work in terms of refurbishment of floors and the fixing of windows and roofs. There is a considerable amount of work to return them to what they were built for, which was to house families. That is what all the houses are going to be returned to now. That is what we are about, but we are very conscious of the heritage point and we are going to commit to dealing with that issue.

I apologise for being delayed. I was at a meeting of the Committee of Public Accounts, which I am sure Mr. O'Rourke is glad he was not at. That will be for another day. I congratulate Mr. O'Rourke on his appointment. It is lovely to have him here. I have read his opening statement.

On the decarbonisation of the sector and the ESB's contribution to it, I commend Mr. O'Rourke. I heard a presentation from his public affairs section some weeks ago and it was very informative. What supports has the ESB given over the past year to both residential and business customers in the face of the pandemic? While that is slightly off topic, I would like an answer since Mr. O'Rourke is here.

On the ESB's Brighter Future strategy, I am aware from Dún Laoghaire–Rathdown, from which I hail, that the council has worked closely with the electricity suppliers to change sodium lights to LED lights. Is Mr. O'Rourke familiar with this? Will he enlighten the committee — excuse the pun — on how many public lanterns have been changed across the country?

Mr. O'Rourke said 240,000 new meters are being installed across the country, resulting in efficiencies. He might delve into this a little.

With regard to energy security overall, I would be interested in hearing Mr. O'Rourke's thoughts on Ireland's energy security in the face of Brexit and the impact it may have on energy efficiency in Ireland.

I join Senator Higgins in commenting on No. 29 Fitzwilliam Street. I welcome Mr. O'Rourke's comments on righting the wrongs of the 1960s and the destruction of the terrace, but there should be scope within the redeveloped complex to house a museum.

He said the ESB is working with Dublin City Council, which I welcome. There should be some museum after the works are completed. It is imperative. He also said his own children saw the museum. As a child, I went to see it. Anybody in an educational facility, particularly in the east, will have gone to see it. It was a wonderful asset and I do not want to see it lost to the city.

Mr. Terence O'Rourke

On pandemic supports, we have done a number of things. Obviously, we are aware that the pandemic has hit people in different ways. Many small businesses, in particular, have been hit. Many families have also been hit. Especially in cold times like these, people need their energy but may not have the ability to pay. We will work with anybody. We will engage with anybody. We absolutely made a commitment during the lockdowns not to make any disconnections. There were no disconnections made during any period of lockdown, and that will continue to be the case. We have a fund of €1 million with which we are able to help our vulnerable customers. With it, we are helping to contribute to costs where customers are just unable to pay and cannot see a way forward through deferment or anything like that. Additionally, we have increased our contributions to organisations such as the Society of St. Vincent de Paul and bodies working with the homeless at this time. We are aware of the stress the pandemic has caused in the community, and we are working with all our customers, both business and domestic, to try to ensure they get from us what they need. Bearing in mind the many problems people have, I understand electricity supply has not been a particular issue, but we recognise it can be a stress factor. We will work very closely with customers to alleviate their concerns as best we can.

On public lighting, I will not be able to tell the Deputy how many sodium lights have been replaced. Public lighting is a matter for local authorities, which I am sure will be able to answer. I am happy to work with him to get the information. It is not information I have and I am not sure the ESB has it. I believe it is a local authority issue.

On the installation of 240,000 new meters, and those to come, these are new digital meters. Instead of the old wheel that clicked around, the analogue device, there is now a digital meter. It is connected and will help with microgeneration. If homeowners wish to have a solar panel and put electricity back into the grid, rather than taking it from it, the new meter will allow that. It will enable people to work out costs. There will be different tariffs available at different times of the day. People may decide to run the washing machine or to engage in heavy electrical usage at certain times, and they will be able to do so much more flexibly with a digital meter. We will offer different tariffs to people at different times so it will be much more flexible. It will help customers to decide how much money they are going to spend and when they are going to spend it. It will help them to contribute towards decarbonisation and to lower energy usage. The meters are an essential part of this. They are being rolled out to houses right across the country as we speak. Almost 250,000 were installed before the end of last year. While the process was affected a little by Covid, we almost managed to meet our target for last year.

Energy supply and security comprise an important issue. We talked earlier about the need for a generation mix. The impact of Brexit is not significant at the moment. The interconnectors are still working. There is potential for more challenging issues to arise regarding the use of the interconnectors but the interim position when 1 January clicked round was that there was no change in the market. There is, however, potential for disruption. The interconnector proposed to connect us to the electricity grid in France is, therefore, an important part of the mix. We are not sure of the exact framework for how the interconnector with Great Britain will work in the future. The interconnector is an important part of the energy mix, along with renewables and some remaining gas, which is being phased out. The interconnector is important and, as I understand it, Brexit just complicates matters.

On No. 29 Fitzwilliam Street, we were very happy to work with others who were interested in preserving and showcasing Georgian heritage. We will play our part in ensuring the kinds of experiences members' children and my children have had will be available to Irish citizens in the future.

I was very happy to hear Mr. O'Rourke mention the Ardnacrusha visitor centre.

It is just a few kilometres upriver from my home. I have been to the centre, which is fantastic, and I congratulate the ESB on embracing its own industrial heritage. Indeed the ESB was born in Ardnacrusha and it is something of which people in Limerick and Clare are very proud. I know Mr. O'Rourke's father was at the microgenerator on the river in Monaghan. My family was involved in the construction of Ardnacrusha and it is something of which we are quite proud. At the time, it was a vast engineering project. One fifth of the national budget was spent on building Ardnacrusha, which was the first of its kind in the world. Indeed many large-scale hydro projects around the world emulated what was done in Ardnacrusha.

I do not think it is a project we would do now, partly because of the cost but also because of the environmental impact of it. It is true to say that it did have a huge environmental impact in Limerick and Clare and I believe it continues to do so. I know the ESB operated it with the best intentions and has all the right safeguards in place but essentially we are talking about a major man-made construction on a river whose operation impacts, in terms of its health, on the local environment. The issue of flooding, which we are very used to in Limerick, also arises. By and large, the ESB does manage that well.

Will Mr. O'Rourke comment on the balancing of the ESB's commercial imperative to generate renewable electricity, as hydro power is, and its environmental responsibility locally and globally? I would like the ESB to embrace a review of that responsibility as well, not just with respect to Ardnacrusha but more generally across the work of the ESB nationally and internationally.

Mr. Terence O'Rourke

Does the question relate to hydro power and rivers or is it broader than that?

Both. Will Mr. O'Rourke give me the local as well as the global?

Mr. Terence O'Rourke

Our remit is to supply safe, secure and affordable electricity to the people of Ireland. Obviously, some of the things we do have an environmental impact, so our objective is to carry out our main programme in a manner that is as environmentally sensitive and adaptable as possible. Regarding Ardnacrusha, the safe discharge of floodwater takes precedence over all other matters, including the generation of electricity, so if we have a choice between releasing floodwater or generating electricity, we release floodwater to try to relieve flooding pressures at various points on the Shannon. The Shannon is obviously a very complex river that is very slow moving and tends to flood along its reaches. The ESB works with other parties like the Office of Public Works, OPW, the Irish Farmers Association, IFA, Waterways Ireland and the various local authorities. We will continue to work with them to see if the operation of Ardnacrusha can help in any way to minimise the flooding impact and with regard to things like fisheries and other areas in respect of which we have a remit to make sure that is done as sensitively and effectively as possible.

I take the Chairman's point about wind farms. Offshore wind power is very challenging technically in terms of floating offshore platforms, but in a way it is probably the least environmentally impactful of the various trends we are looking at, and this is why we are very keen to develop our understanding of and plans for that as soon as we can. The Chairman can take it that we have a subcommittee of the board dealing with environmental issues and the impact of the ESB and its operations to make sure they are environmentally sensitive as well, that we are as low carbon as possible and that, where possible, our vans are fuelled in a way that does not take much fossil fuel. The environmental impact of all we do is a constant imperative for the company and our board to be cognisant of.

I, therefore, take the Chairman's comments and I will make sure that we continue to be focused on that and try to watch out for that all the time while also trying to provide safe, secure and affordable electricity to the people of Ireland.

I thank Mr. O'Rourke for his answer. We are out of time. We are up to 3 p.m. and need to be out of this room. I see Senator Higgins is indicating that Mr. O'Rourke might consider responding in writing to the questions he did not get to answer. It was a very rushed session and we would certainly be very happy to have him back.

Mr. Terence O'Rourke

One thing I did not talk about concerns the leakages from the pipes. I could not read my handwriting; I read it afterwards. It was not that I did not want to talk about it. I am very happy to come back to Senator Higgins about that issue.

We would very much appreciate that. I thank Mr. O'Rourke for attending today and engaging with the committee. I also thank the members for their engagement. It was a very good, enlightening and helpful session.

The joint committee adjourned at 3.01 p.m until 1 p.m. on Tuesday, 16 February 2021.