I welcome Mr. O'Donnell and the Spirit of Ireland group. I believe he has met most of us.
Energy Policy: Discussion with Spirit of Ireland.
Mr. Graham O’Donnell
I have met most of the members at some stage.
I thank Mr. O'Donnell for attending and for his submission. I invite him to make a short contribution following which we will allow questions.
Mr. Graham O’Donnell
I thank the Chairman, Deputies and Senators for the opportunity to speak to them. I would like to introduce Professor Igor Shvets of Trinity College and Dr. Pat O'Donoghue, formerly of the ESB. I am Graham O'Donnell, the leader of the project. We will swiftly run through the presentation.
There has been a good deal of information about this project in the public domain and I am sure the members of the committee may have questions for us. We thank the committee for the opportunity to present. It is time for this project to be out in the open and for engagement with Government and members of all parties in a proper and formal way. We will make some comments on climate change and fuel security. We are not experts. The academy is even better equipped than our organisation but we wish to make some observations on it. We will speak about energy as an opportunity for Ireland because we see an extraordinary opportunity being presented to the country, and how we might achieve that. I know some people would like to take some questions. My colleague, Dr. Pat O'Donoghue, will speak on the climate change and fuel security issues. Professor Shvets will speak on some of the technical aspects of this particular project, and I will conclude on some of the commercial and country considerations.
We take the academy's point. It is essential that this project, which has sometimes been controversial or whatever and perhaps has been adduced in a rather high profile way — that is because I am somewhat flamboyant at times, stands the test professionally. It must be technically, commercially, financially and politically acceptable. If we pass all those tests and get it right, and the burden of proof is on this project to show that is possible, there is a considerable opportunity for Ireland. While not specifically mentioning ocean energy, we believe ocean energy is also a tremendous opportunity for Ireland. We will mention wind energy in this presentation but we wish to make it clear we are not excluding ocean energy in any way. We believe it, too, has wonderful potential for Ireland. I will hand over to Dr. O'Donoghue who will outline some observations on Ireland's energy and fuel security position as we see it.
Dr. Pat O’Donoghue
There has been much talk of climate change in the media and therefore I will not dwell too much on it. We will address it briefly. I would like to concentrate more on our energy and fuel security position in terms of where we are, where we can go and how we get there.
I will begin by examining Ireland's energy since independence. It started with Ardnacrusha, which was a controversial project in its day but if it had not been developed, Ireland would have been in a blackout position throughout the Second World War. In the 1970s when the oil crisis hit us, the ESB was 73% dependent on oil and Moneypoint had to be developed to diversify to coal. Kinsale gas has been very useful but is now depleted. It was used a great deal for electricity generation but we are now 62% dependent on imported gas and up to 90% dependent on all imported fuels, including coal and oil, for electricity generation. That is a vulnerable position for the country to be in. Corrib oil will be of great benefit to the country but that project has been delayed. The question of whether it should be used for electricity generation or other important uses, including heating and industry, must be examined.
On climate change, global warming is the central issue. Climate change is a chain reaction in that increased human population leads to increased animal population which leads to increased methane levels, which is CH4 for non-chemists, and both of those result in increased energy consumption, which is producing carbon dioxide and nitrogen oxides from electricity generation, which are also harmful for global warming reasons. These are increasing greenhouse gas emissions. Sea temperatures are increasing and that is reducing marine CO2 absorption and oxygen production. Global warming is reducing ice coverage in the appropriate areas. That is reflecting less solar radiation and is effectively a feedback mechanism to increase the problem of global warming. With increased land use, desertification and deforestation we are reducing the opportunity for afforestation to absorb CO2 and oxygen production, and it is changing the rainfall patterns also.
If we examine the sources of emissions in Ireland, which depend on the different fuels we use, and electricity generation is one of the biggest users of fuel, members will see that of the individual fuels we have listed, gas is the cleanest. The inherent carbon dioxide content is lowest in gas. It is higher in oil and higher still in coal. I am sad to say it is even worse again in the case of peat. The type of plant that is used for electricity generation is another factor that has to be taken into consideration when looking at Ireland's emissions. It is obvious that different plants have different efficiencies. The efficiency of a coal-fired steam plant is quite low. The efficiency of a gas-fired open-cycle plant that operates with a gas turbine, like a jet engine in an aircraft, is also quite low. A combined-cycle gas plant, which uses a gas turbine and a steam turbine, achieves the best conventional thermal fuel efficiency we can get. It is clear that such a plant produces the lowest emissions per kilowatt hour of electricity generated.
Gas usage is increasing significantly in almost all European countries. The three main indigenous gas producers within Europe are about to reach peak gas production. The UK's North Sea fields are already in decline. The production levels of the two biggest producers, the Netherlands and Norway, are expected to start falling severely over the next couple of years. We are looking at a fall in Europe's indigenous gas production, its pipeline imports and its imports of liquid natural gas. Liquid natural gas is probably the only area in which it will be possible to increase imports. Such gas may come from rather unstable regions, such as Nigeria and elsewhere in west Africa. The other issue in relation to gas, which is our most highly used fuel at the moment, is the volatility in prices. The price of gas peaked in 2005 and again in 2008. Last August, the price of gas fell to $3.50 per million BTUs. Members can see how low it was. It had doubled by January of this year, however. It peaked at $12 in 2008 and was almost as high as $16 in 2005. It is a very volatile market. Who knows what will happen in the future? I am afraid there has to be an element of star-gazing.
I wish to speak about the international perspective on fuel security. The EU emissions trading scheme will put a great deal of pressure on the increased use of clean fuels. The capture and storage of carbon is in its early stages of being considered. The cost-efficiency of such an approach is uncertain. The UK has many problems in this regard. Its nuclear programme has been delayed. Its coal stations are ageing. It is likely that the UK's increased carbon charges will lead to the closure of many such stations. The UK is starting to import significant amounts of liquid natural gas from Qatar and other parts of the Middle East. It is building three large terminals to that end. Germany is in a very bad position because it is heavily dependent on lignite and bituminous coal. It is moving towards the increased use of gas. As a major user of liquid natural gas, Japan is putting further pressure on that commodity. As I pointed out earlier, the traditional European gas supplies are declining. China is the other giant that is coming into this sector. PetroChina is involved in 75 oil and gas projects in 29 countries. Ireland will face serious competition for fuels. This will have an impact on the economy. More positively, Ireland is enormously rich in natural energy. It has 6% of the natural energy of the 27 EU member states, but just 1% of the population. If one sits down and works the figures out, one will find that Ireland has the same potential per capita wealth as Saudi Arabia. It is extremely important for us to take action to solve our economic, emissions and fuel security problems.
I wish to outline the main factors that affect conventional generation and renewable generation. In the case of conventional generation, we are uncertain about the availability of gas. The price of gas is very volatile. We do not know what will happen to coal prices. There has been a surge in the price of coal in recent times. Carbon costs are expected to increase significantly under the EU emissions trading scheme. On a positive note, conventional generation is very dispatchable and easily controllable. In the case of renewable generation, the fuel is free. We have security of supply because we have huge amounts of renewable energy. Renewable generation is emissions-free. The difficulty is that it is intermittent and not easily dispatchable. We want to work out what the best of both worlds is. We need a good compromise for Ireland.
A graph in the documentation supplied to the committee shows how intermittent and volatile wind can be. It is based on one of our models for a proposed 1,800 MW wind farm in the Mayo area. The closest Met Éireann wind station is in Belmullet. The graph shows that over a couple of hours, the level of generation at the site in question, which has the potential to reach 1,800 MW, can drop by up to 1,600 MW. In one case, the level stayed at approximately 200 MW for a few hours before returning to the previous level of 1,800 MW. That is nearly impossible to manage. It is proposed that by 2020, 40% of electricity will come from renewable sources. On the scale I mentioned in the Belmullet example, approximately 3,500 MW of conventional plant would be needed to meet the variation in wind. I ask my colleague, Professor Shvets, to demonstrate how Ireland can deal with this problem.
Professor Igor Shvets
The committee will appreciate that wind is a resource that is freely available to us. The problem is that the supply of wind is volatile and unstable. The solution is to tame the wind. We need to store wind energy at times of high supply and to use it wisely at times of high demand but little wind. The most cost-effective means of storing vast quantities of energy is to pump water between two reservoirs. We have a beautiful example of such a system at Turlough Hill in County Wicklow. The facility in question was built between 1968 and 1974. It was a modern technology 30 years ago, but times have moved on. There are well over 100 pumped storage facilities all over the world. Japan has 41 such facilities, built in geologically challenging locations with high seismic activity, etc. Germany has four such facilities. Many European countries, like the US, have plenty of them. It is a very mature technology. It has been used for almost 100 years. I think the first facility was built between 80 and 100 years ago.
Conventional pumped storage facilities are used to mitigate the demand and consumption curve throughout the day. Some countries have realised that one can use pumped storage facilities in conjunction with wind farms. We have learned that if one uses the wind — this is crucial — in a symbiotic arrangement with a pumped storage facility, one can create a large pumped storage plant, or natural power energy plant, that can produce energy on demand. It is crucial that these wind farms operate in tandem with pumped storage facilities. It is challenging to combine a sprinkling of wind farms at various locations throughout the country with a single pumped storage plant elsewhere. In this way, one can smoothen the wind curve and produce whatever kind of curve is appropriate. The technical solution involves commercial-scale energy storage, commercial-scale wind farms, the connection network and the transmission network. In this way, one can develop a natural energy power station that would generate over 5 million MW hours of fully controllable and dispatchable power, or approximately a quarter of Ireland's total energy requirement. When engineering considerations are taken into account, it is suggested that such a plant could be built in approximately five years.
Mr. Graham O’Donnell
The original idea for the proposed project came from Professor Shvets. A newspaper advertisement that he placed in November 2008 attracted significant interest from volunteers, interested parties, professional engineers, etc. The Spirit of Ireland organisation was established on a voluntary basis by people who were keen to do something for the country. Many professional engineers, accountants, surveyors and others, who felt bad because Ireland was facing an economic crisis, wondered whether they could do something to help. Over the past year and a half, this has morphed into what we now hope will be a natural energy company for Ireland. It is not a competitor for the ESB but an integrator of many of our excellent energy provision companies, including our semi-State bodies, whereby we could come together under a single technical, commercial and financial envelope to develop large-scale natural energy power stations in Ireland. This would not only be in the national interest, but also an economic stimulus as a vehicle for inward investment. It would put Ireland in a unique global situation because these would be the world's first natural energy power stations.
I re-emphasise what Professor Shvets said. When we started the project, we just looked at storage. We thought this was just about the intermittency of the wind. As the project progressed and we did the technical, financial and commercial models, we realised that getting the wind farms into this close, completely committed relationship with storage was the key. It massively reduces capital costs, which has been a criticism of this project. We accept that criticism because if one does not see it in this way, it is a justified criticism. However, if one puts them together, one reduces the costs of the wind farms, the stored energy one is using to balance the wind, the transmission lines, collection network and, ultimately, the cost of the energy that is produced from a natural energy power station.
We have life cycle models, which are being tested in London, which show that one of these natural energy power stations would produce power less expensively than a nuclear, oil, gas or coal station. That means Ireland would have a world leading position as a producer of the first natural energy power stations. There is no need to point out to the committee how significant that could be from a global perspective. We had to become an incorporated company, an entity that could conduct official business with the Government. I am pleased to report that on Monday we hope to brief the Minister for Communications, Energy and Natural Resources, Deputy Eamon Ryan, on the details of that and on who will potentially comprise the advisory boards and so forth. We are very encouraged by the feedback and assistance we have received from a number of Departments and all political parties to date.
We could not have gone this far with the project without the assistance of EirGrid. Its assistance has been exceptional and the organisation is to be commended. It has fed our technical people with information, technical models and wind and generational information that was essential to carry out these studies. We have also had excellent co-operation from organisations such as Coillte and Bord Gáis and we have had good discussions with the ESB and others. We see this as an all-encompassing project which people can get behind socially, politically and commercially.
We are enormously concerned about the problems EirGrid is facing with development of the grid. It is our intention to submit a supporting report to An Bord Pleanála later this week or early next week. This country will have a huge problem if it cannot develop the national grid. The grid is extremely thin by European standards and it is really important that all political parties work together to put in place a means of developing the grid so Ireland can move forward with energy. I cannot stress that enough.
Ireland has exceptional potential for natural energy production. We use the term "natural energy" because we mean wind, wave and all forms of natural energy. We can use it domestically and we can export it. An enormous power crisis is looming in the UK. It must build ten nuclear power plants and has not even started one. The only new generation nuclear power plant being built at present is in Finland and it can only be described as a technological and financial disaster. The UK has additional security issues relating to the vulnerability of these new stations to terrorist attack. The Prime Minister went on record a few weeks ago when he said the UK would have to spend between £100 billion and £200 billion to replace the generation capacity it requires. This is an enormous opportunity for Ireland. We have an interconnector which we can use for domestic use but we can also send a great deal of energy to the UK for export earnings.
When we went to London there was no enormous appetite for investment in this project purely for Irish domestic reasons. Ireland was seen as having enough generation at this time. However, there was extreme interest if this project would lead a new form of generation, and it is actually based on very simple technology but an innovative arrangement, which could also supply or partially supply the UK market. That has generated considerable interest which we will explain to the Minister, Deputy Ryan, next week. Capital is hard to attract but it is undoubtedly available for the right project. Investors require certainty of execution and commercial results. We have the commercial models to show that this works. The execution relates back to our comments about the power lines, which is a vital issue. If we can move ahead with this project, we could create a considerable number of jobs. I will not blow the figure to tens of thousands but there will certainly be thousands of jobs in the short term.
We have had discussions with the IDA and visited all the major foreign direct investment, FDI, companies in Ireland that are major power users, including Intel, Microsoft, Google, Yahoo and so forth. In fact, this was precipitated by a company contacting us to say that if we can provide a minimum of 15 years "carbon free, price stable, secure power" — the term came from the company — it would be prepared to set up a large scale business in Ireland. The company is in Ireland but not on a huge scale. That was an amazing opportunity so we sent our commercial team to visit all the major FDI companies. The result was universal; if Ireland can offer existing foreign direct investment carbon free, price stable, secure power, then that is an enormous positive switch from their perspective. In discussions with Mr. Barry O'Leary and the people in the IDA there was also no question about it. One IDA director told us that if we can go forward with carbon free, price stable power, the IDA would be able to re-open many FDI files. That gave us great heart for this country. It is exactly what we all need to hear.
The scale of stimulus is significant. The first natural energy power station would cost a number of billions but we prefer to go through the process with the Government to explain the detail of it. Obviously, it would be mainly external investment and would result in a stimulus to the economy with income and tax as a result. We believe the project and the work Natural Hydro Energy is doing fit into the Government's framework for sustainable economic renewal and the smart economy. We believe we are in step with the political objectives of all parties, both in Government and in the Opposition. We believe in having a natural energy industry, as distinct from piecemeal implementation of particular projects. We went to the wind turbine manufacturers and asked them for a deal if we bought 500 turbines of their best technology in a one-off order. My goodness, how the prices came in. That meant the price of building a wind farm in Ireland fell by a significant fraction, 30% to 35% lower than the current cost. By approaching it as a natural energy industry, in which both private and semi-State organisations are involved, we can give the country a significant commercial advantage in building the equipment to reach our renewable targets.
Our objective is to achieve a high level of social and political consensus to ensure that large scale investment can come into Ireland to kick start this energy industry, and that it will be of sufficient scale to be regarded as a national industry.
As Mr. O'Donnell and Professor Shvets will be aware, we have met to discuss this issue a number of times. This is a useful update. Ardnacrusha was mentioned at the start of the presentation. Ardnacrusha is a good example of something that probably would not be supported by the Irish Academy of Engineering if it had existed in the 1920s because it would have been considered too high risk and expensive. It turned out to be a hugely rewarding, inspired investment by the Government of the day. That is not meant as a smart comment. The point is that sometimes thinking big for a small country generates huge excitement, as well as making sense. We need both of those things in Ireland now because the country is on the floor. That is why I like the thinking behind Spirit of Ireland. It is ambitious, new and bold in terms of what it proposes. The thought process is outstanding. The problem is whether it stands up to scrutiny.
I agree the major problem with wind is its intermittent nature. One of the great failings of policy makers is that we have not challenged the wind industry to solve the problem of intermittency itself. We have not asked people to come up with a comprehensive solution. Instead, we have been so anxious to build wind turbines and willing to facilitate them all over the country in a totally unco-ordinated way that the State has to pick up the tab for solving the actual of facilitating that policy by building a grid all over the country and facilitating wind farms in less than ideal sites.
The reality is that we are already committed to the gate 3 process, whereby we will facilitate 3,000 MW or 4,000 MW more of grid connection from wind farms spotted all over the country in a totally unco-ordinated fashion which will be a headache for EirGrid to manage in terms of power because of the problems with intermittent nature of wind which have been referred to in the graphs. I have no doubt it is possible to get to 40% of renewables. We have seen this in the grid 25 study. Having said that, it is an extremely expensive process because it relies on peaking plants, interconnection, demand side management and some element of storage in electric transport, if the Government's targets are met.
If the thinking of the Spirit of Ireland works, it will entirely change the agenda. I am very interested in hearing its views on the practical problems which I have with its thinking. How does one reverse the gate 3 process when legal commitments are in place to developers all over the country who, in some cases, have spent millions of euro preparing for and developing wind farms? How do we change direction from the path we are currently on to a different path? That is a very practical question to which I have not received an answer from Spirit of Ireland. I presume it has spent a lot of time speaking to the Government over the past year because Opposition parties have not heard very much, which is understandable. In its discussions with Government, how is it discussing facilitating that transition, if Spirit of Ireland can make what it says can happen actually happen?
I have some other questions. Is it not sensible to connect the turbine to the grid as well as to a pump storage power station, in order that when the wind is blowing one can get power directly from the alternator in the turbine on to the grid, and not get the losses which are incurred by pumping water up a hill to let it flow down to drive a turbine the following day? Has Spirit of Ireland's modelling changed to try to connect to the grid and storage directly? It does not seem to come across in its presentation.
The examples of sea water pump storage which are working in Japan are driven by nuclear stations. When there is excess supply they are pumping water in order that when there is peak demand the water can add to the power coming from nuclear stations. It is important to note it is a different structure. The report of Irish Academy of Engineers is useful to test a project like this. The techno-economic energy studies to which it refers need to be applied to this situation in a comprehensive way. I have seen the numbers produced by the delegation on what it costs to build the plant and the impact it can have on the grid. I have not seen the numbers which would result in a new grid 25 study which would need to be constructed if what the delegation proposed were to happen. I refer to the implications for other energy generators, the interconnector, electric transport and the peaking plants which are already being built in certain parts of Ireland.
There is a knock-on impact across a range of sectors which I have not seen the delegation factor in when it outlined its project. It discusses Spirit of Ireland almost in isolation, which needs to change. The delegation refers to pump water stations being largely salt water reservoirs at the top of mountains in coastal areas such as Mayo and Kerry, in the sites it has already chosen. We do not need to discuss planning problems; let us discuss the technical problems. Is there an issue regarding salt water leaking into freshwater supplies? It is has been repeatedly raised by Spirit of Ireland and I would like to get an answer on the record.
I can understand if this was to be located on the Skellig islands offshore, where there is no fresh water underneath the rock. Spirit of Ireland plans to build lakes on non-porous rock. Are the lakes so non-porous that there is no risk of salt water leaking into fresh water supplies? It could be a potentially dangerous issue. If one had to line the lakes the capital cost would be enormous. That is a question which I would like answered.
In solving the problem of the intermittent nature of wind , how can we be sure that this technology, and not compressed air or managing a growing electric transport fleet which can grow to be an energy storage mechanism and which can give power back to the grid at night time through batteries, will provide the silver bullet? If there are a million cars on the system, there is a powerful battery which can take and give power at different times. One would also solve the problem of emissions in the transport sector.
There are many different models which are pretenders to solving the problem of the intermittent nature of wind. That proposed by Spirit of Ireland is the slickest, in terms of the public relations and excitement it has generated, which is a huge credit to how it has sold its model. We need to crunch the numbers and get independent people who are not interested in public relations or emotion to develop the best solutions. Has the delegation done any of the dour work to demonstrate its technology, rather than any of the others on the market, is the silver bullet?
We are under a lot of pressure regarding time so I will not cover ground which has been covered already. I represent County Wicklow and Turlough Hill is in the constituency. I remember when it was constructed. Ever since then, the argument has put forward that it is too costly to replicate, whatever about the opposition which would arise nowadays about developing such a major project. That has been the gospel. The delegation's project challenges that view and extends it into a very ambitious project.
I have difficulty understanding the hype and how far the delegation has proceeded since it first announced the project. It was striking that the delegation made the point at the beginning of its contribution that it had to stand up on technical, regulatory, planning, environmental and social grounds, and all of the criteria had to be met. I ask the delegation to explain how it is working on that. It said it went to London and the IDA, but the roadmap is not yet in place, or if it is I have not grasped it. It would be helpful if Mr. O'Donnell were to talk about that.
As I see it, the delegates see Spirit of Ireland as a private commercial company that has a radical and ambitious idea which they are developing to see how far they can take it. I am not clear about how much work they have done on comparative costs and benefits, or on job displacement. Perhaps they might talk about the road map and how they see this proceeding. How much practical work has been done in assessing all those areas Mr. O'Donnell defined at the beginning of his presentation?
I am glad to meet him for the first time.
Mr. Graham O’Donnell
If Deputy Coveney does not mind, it might illustrate things a little better if I addressed the points made by Deputy McManus. It would put our responses in more of a context. The project changed a great deal along the way. As I said, we started to look at storage only. There were various criticisms from people such as Richard Tol of the ESRI for example, on the lines of, if I may use the phrase, "You guys are smoking dope". Some of those criticisms were valid in the sense of comment on the sheer scale involved but there was an attempt to generate a bit of excitement in the community. I shall take the fire for that.
What has happened since is that an enormous number of Irish companies, such as SIAC and Sisk and consultants from abroad such as Tobin Engineering, Siemens, Mitsubishi — the list is endless — have all contributed their technical input to ABB Ireland for the technical development of the project. Over the past year and a half an incredible amount of technical costing and financial work has been done which is extremely detailed. We have not shown all of that to Government yet because we were not in a position to do so. It was only at the end of last year that we got all the capital costs together. To be fair to the Department of Communications, Energy and Natural Resources and other Departments, they have not been fully exposed to it yet. On Monday we propose to present the outcome to the Minister, Deputy Ryan, and will then go through it in some detail with his and other Departments. If the Government is agreeable we will be happy to sit down with Deputies McManus and Coveney and go through the same process.
We do not see ourselves as a private company. It must be a commercial entity because one cannot raise large amounts of capital abroad without having a vehicle to do this. We feel very strongly that the company should be significantly owned by the Irish people and should be open for subscription to Irish people at large who would like to invest in a natural energy company. Therefore, our first line of call will be to the Irish people who wish to invest in such an entity. After that investment will come from funds abroad.
There is a clear road map. We have detailed——
When Mr. Graham O'Donnell says "the Irish people" is he talking about Irish people with money who want to invest, the broad mass of people or the State?
Mr. Graham O’Donnell
When the project came out we heard from an enormous number of people, from individual grandmothers to whomsoever, who suggested they would love to invest in the project. There is a clear appetite on the part of ordinary people who would like to be part of a new Ardnacrusha. The Minister for Finance, Deputy Brian Lenihan, called it "the Ardnacrusha of our time", which is a great quote. It caused a great deal of excitement.
Let me be clear about this. We are not looking for any money from the Government. If anything, we hope to lighten the Government's involvement in some of the planned infrastructure. There are elements we may be able to relieve the Government of in respect of grid development which could be privately funded. We have a very detailed road map and very detailed departmental interactions now defined in terms of the Departments of Communications, Energy and Natural Resources, Environment, Heritage and Local Government, Enterprise, Trade and Employment, the Taoiseach's Department and the Department of Finance. We will be able to take each Department through the micro details of the entire project and all the capital economic costs, etc. With the Government's agreement we would be very happy to do that also with the other parties. There is a high degree of commercial sensitivity now if we expect to raise large sums of money on the international market to fund the project.
We would like to give Deputies a briefing in some detail beyond the committee at a later stage. I hope we can do so.
Deputy Coveney asked whether the project stands up. I repeat it must stand the test, technically and commercially. It must be commercially and financially viable because most of the money will have to come from outside Ireland. The Deputy asked whether we had done the numbers. I am afraid these numbers are haunting me because people are always contacting me from London asking where I got such and such a figure. The money men are as dour as they come. We are going through that mill at present. We are putting the project through the financial mill in London and will be in a position to explain its current position to the Minister next week.
With respect to the wind industry and gate 3 being dotted all over the country we believe that point is correct. We believe the idea of distributing wind farms——
I apologise but I must go to the Dáil Chamber.
I am in the same position. There is some legislation at stake.
Mr. Graham O’Donnell
That is no problem, we understand. Perhaps we might meet at a later stage and I could give a private briefing on these elements.
In respect to dotting wind farms all over the country, the problem about doing that is not merely technical but also commercial. Wind farms are very expensive when developed in that way. Therefore, with respect to reaching our renewable energy targets small wind farms that are developed singly become more expensive. We do not suggest that the gate 3 process should stop or be altered. That is a Government policy and decision.
With respect to grid 25, we believe that is a question for Government policy and for review by EirGrid. We believe Senator Coveney is correct. Connecting the windfarms to the grid as well as for storage is exactly what we intend to do. It does not make any sense to waste wind pumping water up a hill. We do not pump unless we have to.
Deputy Coveney was correct regarding the matter of nuclear and pump water storage. Water storage in Japan is predominantly done to allow for adjustment of levels in nuclear power stations.
Concerning the volumes of water and salt water leaching into fresh water supplies, we believe we have a solution and I call on Professor Shvets to outline it.
Professor Igor Shvets
We took the matter very seriously. We appreciate we are talking about putting sea water onshore. We priced and considered in micro detail the modern state-of-the-art technology that was available. Essentially it can be put into two categories, the first being the lining of large areas, the second the grouting of those areas. Both technologies are mature and developed and there is a range of different options for each.
Lining is a common technology. It is used for containment of poisonous material from chemical production and mines and so on. Very large areas are lined in different parts of the world. We also have large areas lined in this country, for example, Lisheen mine and Aughinish Alumina. I stress that sea water is not a poisonous substance or a toxic material and is not considered as such under any regulation but we applied the most stringent technologies that are used to contain toxic materials.
Grouting is also used and is a mature technology. We trust our lives to grouting. I speak of tunnels such as metro tunnels, the BART system in San Francisco and so on. These are tunnels in seismically dangerous areas where people travel long distances under the sea. Millions of people trust their lives to grouting. The technology is well developed.
We costed both grouting and lining as options.
Mr. Graham O’Donnell
Everyone will be aware that when the Dublin Port tunnel opened there was the odd little problem with sea water getting in. It was grouted.
With respect to other storage options, I ask Dr. O'Donoghue to answer Deputy Coveney's question on compressed air cars. These are all possible options but must stand economic and financial tests.
Dr. Pat O’Donoghue
Compressed air is a new study but internationally there is no large scale deployment of it as there is for pump storage. For example, in Japan and the United States there are huge volumes of pump storage which have been running for many years. Compressed air is a new technology. One of its big disadvantages is the turnaround efficiency, namely, the loss of energy in storing energy and then retrieving it and converting it back to electricity. For this technology the loss is much higher, in the order of 65% to 70% for the energy reconstituted, if I may put it that way. In other words, 25% to 35% of the energy is lost. Much less energy is lost in the pump storage system, where it is down to approximately 15% to 20%. We hope the Spirit of Ireland plant will be around 80% to 83% efficient. That is one big difference.
With regard to some of the other technologies, I accept that batteries in vehicles can act as a form of storage but if the batteries in the vehicles are being used for a considerable time for the storage of electricity rather than for the propulsion of the vehicles, this will put wear and tear on the batteries, which will have to be replaced at a cost to the customer. We are many years from having very sizeable quantities of vehicle batteries. Any of the research that has been carried out on some of the newer battery technologies, such as the redox batteries, which are flow batteries where the electrolyte is held in big tanks and is replaced in the battery, suggests these are much more expensive than pump storage and not as efficient.
Mr. Graham O’Donnell
To deal with the question asked by Deputy McManus as to whether Turlough Hill was simply too expensive, the answer is "Yes". It would cost a fortune to build Turlough Hill now, primarily because it involves underground tunnelling, which is a very expensive operation. I am afraid we are proposing very large-scale storage of energy on the very cheap. Professor Shvets identified that we have glacial valleys, built by nature, which form three sides of an enormous energy store. Simply by building a simple rock barrier, which is the equivalent of, say, 10 million cubic metres of rock——
Professor Igor Shvets
Yes, it about 10 million or 15 million cubic metres.
Mr. Graham O’Donnell
It is about the same as building 10 km of motorway. For that cost, we get a dam and, of course, the sea provides the other part. Deputy McManus is correct. The country could not afford to build a facility 100 times the size of Turlough Hill but nature has blessed us with a very inexpensive way of doing it.
As Mr. O'Donnell said, Spirit of Ireland will meet the Minister next week. One point I would suggest to the witnesses, which is along the lines of what I suggested to them when I met them privately, is that if the Government is to pursue this issue, which I hope it does, somebody should outline clearly to it what exactly are the requirements to get this up and running, in other words, what Departments are involved and what type of EU directives will have to be overcome in terms of flora, fauna and so on.
With regard to the Corrib gas plant, it will be 15 years from the time it started to the time the gas starts flowing, whereas the normal period it would take in any other country for a plant of that size is five years. We spoke here about planning and the whole area of regulation. In the Bill the committee produced on offshore renewable energy, what we were trying to do was introduce a new way of thinking in regard to these types of developments. We need modern laws to deal with this area.
On the point Spirit of Ireland makes about having wind farms all over the place, one of the issues for offshore development is to have a zoning process so we can identify the areas that are suitable, where it is economic to bring energy ashore and all of that type of information. A suitable body is needed to achieve that. A local authority is not suitable to deal with this type of issue as it does not have the expertise or skills, will add massively to the cost and cause long time delays.
The presentation refers to a construction period of five years. That may be the actual construction period but there is also the lead-in time and the need to deal with applications and appeals. To be fair to the Spirit of Ireland representatives, it is important that somebody sets out clearly for them, as the promoters, what exactly are the requirements of the project and what exactly they have to do.
Given the time constraints, when they have had their meeting with the Minister and are in a position to bring forward an update on the proposal, they might favour us by coming back to outline the progress. We are anxious to see what, if anything, we can do to assist in bringing this to a point where at least a decision can be made as to whether to proceed. We do not want this being strung out for years. For that reason, the witnesses are more than welcome to use a committee like this to present the difficulties, if any — hopefully there will not be any — and perhaps we could assist by highlighting the need for change.
I thank Spirit of Ireland for its contribution. If Deputy Cuffe does not mind, it is almost 4.30 p.m. and we have another deputation——
I have been here for the past two hours with a five minute break.
So have I, but——
There should be a facility for asking questions.
We have people sitting here and I have to be fair to everyone.
I indicated the moment——
Fine. The Deputy should proceed.
This is an ambitious, exciting and challenging project. I have met the group several times and I am very supportive of the general principles. I wish to ask two questions. The first is in regard to the balance that has to be struck between Spirit of Ireland's interest in community involvement and the need to bring in venture capital. The witnesses have stressed the need to have communities involved and they are already working with communities in Clare, yet, at the same time, Spirit of Ireland is looking to raise venture capital abroad. There will be a tension in that regard and I am curious as to how it will resolve it.
The second question concerns the issue of changes Spirit of Ireland might be seeking in the area of compulsory purchase and planning legislation. Perhaps the witnesses could deal briefly with that.
Mr. Graham O’Donnell
In terms of communities and capital, we propose to run two organisations in parallel. One is the Spirit of Ireland, which has been very community focused because the participation by the communities in the organisation, particularly western communities, is vital. It is like a huge pre-consultation process on a large infrastructure project. We have found this a very positive experience and the communities have been very positively involved.
The reality is that capital markets do not invest in community projects, they invest in entities. I have to be candid and admit that while we can see that people want the community orientation in Spirit of Ireland to stay alive and want that sense of community synergy, at the same time, the money men want crystal clarity. It is something that will have to be very carefully balanced, and being as open as we can about it is the only way to deal with this.
In respect of compulsory purchase, we are considering a number of locations simultaneously. They are all in private ownership and are not on State lands. Our approach has been a commercial one, namely, that we would pay landowners properly if they want their land to be used. If the project became of such national importance that it was necessary to proceed, it might be a matter for Government to decide that we would use Government powers, given the importance of foreign direct investment in our energy policy. At present, we are trying to avoid any suggestion of that because we believe a community and voluntary approach is much more successful.
Spirit of Ireland has an excellent case study in another construction project of how not to do things.
Mr. Graham O’Donnell
We are trying to learn from that.
I am sure of that.