I thank the Chairman for the opportunity to brief the committee on what we believe is a ground-breaking piece of work, one which will enable us to move forward with confidence in terms of meeting the technical challenges and the Government's target of 40% renewables by 2020.
Most members of the committee will be aware of EirGrid. This slide summarises the responsibilities that EirGrid has in respect of the operation of the power system on the island of Ireland and also the operation of the wholesale market. As members can see, through our subsidiary company, System Operator for Northern Ireland, SONI, we operate the power system in Northern Ireland. We operate the power system in the South through EirGrid TSO and on the island of Ireland we also operate the wholesale electricity market through SEMO, the single electricity market operator. Members of the committee will also be aware that we are developing the east-west interconnector between Ireland and Wales, which is a key enabler in terms of achieving the targets that have been set for us.
To set the study in context, policy in regard to renewables in Ireland has evolved in the past ten years. A key driver in all of that is Ireland's reliance on imports of energy. A total of 95% of energy requirement is from fossil fuels and given the challenges of climate change, the depletion of fossil fuel reserves over time and also the reliance on imports, Ireland needed to develop a policy in that space to address all of those policy challenges.
In 2003 the policy was developed whereby a target was set that 15% of electricity would be generated from renewable sources by 2010. I am happy to say that already we have enough capacity to deliver that target in Ireland.
Looking to the longer term, in 2005 the target of 33% of electricity from renewable sources was set. To examine the feasibility of delivering that target the two Governments on the island caused to be undertaken an all-island grid study which examined what is technically feasible on the island of Ireland by 2020. That study, which was presented to the Oireachtas and to various committees, showed that 42% was possible but that further studies were required in terms of the technical and dynamic characteristics of the power system. That is the point we want to address today. We want to brief members on those further studies.
Based on the output of the all-island grid study which stated that a target of 42% was possible, the Government set a revised target from 33% up to 40% of electricity from renewable resources. That is the policy to which we are all working. This has been a very clear policy statement by Government and one that has galvanised all the parties in the industry towards making that happen. As a key player in that, EirGrid is very focused on delivering that 40% target in so far as we have any control over that.
In 2009, we had the renewable directive, which is a binding directive on all the countries in Europe. As members will recall, that goes back to the 20-20 by 2020 target which requires that by 2020, 20% of energy in Europe will be delivered from renewable sources. When that is translated to Ireland, the target for Ireland is 16%. That is across electricity, transport and heating. That 16% was broken down recently in NREAP, the national renewable energy action plan and for Ireland to deliver 16% by 2020, it requires that renewables in electricity must achieve about the 40% target. That aligns with the 40% target that has been set by Government. That leads me on to the work we are doing in EirGrid to facilitate the integration of what is a very challenging target for Ireland and which in turn leads to the facilitation of renewable studies. I mention this by way of setting the study in context.
On the question of targets, the slide shows the challenge we have set for ourselves in Ireland in terms of electricity produced from wind. As we have some hydro sources a very small amount of hydro energy will contribute to the 40% target, which means we will require 38% from wind, but members can see that relative to most other countries in Europe our target of 2020 is significantly higher.
This slide is based on figures published by the European Wind Energy Association in 2009. As I said, binding European targets are on energy overall and not on electricity specifically nor on any one technology. However, this is the information we have available and we believe it is accurate.
We are aware that other European countries are in the process of setting higher targets for later years. Denmark is talking about going beyond 40% for 2025 but these are the targets for 2020, and members can see that Ireland has set itself a much more challenging target for 2020.
The issue for Ireland in this is it is an island. To become somewhat technical, we are what is called a synchronous system on the island of Ireland. A synchronous system means that all of the generators on the island are held together and move together in synchronism. The frequency in the plug in this room, for example, is the same frequency as the frequency in Belfast, Derry or elsewhere. All of the machines turn in synchronism and they are held in synchronism by that synchronising power in the system.
Great Britain is another synchronous system in its own right. The totality of mainland Europe is a very big synchronous system. Members should think of this in terms of the weight of the system turning. Ireland is relatively light but because of the sheer number of nuclear and coal fired power plants all turning at the same speed in mainland Europe, the sheer physical momentum or weight turning gives a huge stability to that system. That is important when we talk about wind power because wind has a very different dynamic characteristic than the heavy machinery that goes in to generate coal fired or gas fired power or whatever. The heavier the system, the more stable it is. When we put a great deal of wind power on a light system it causes particular challenges for Ireland. In a double challenge we are faced with much higher levels of wind and also a lighter system.
I want to make one other point regarding this slide. This figure of 38% is an average figure across the year. It is average because we are all aware that some days the wind blows but some days it does not; today is a very strong wind day. I was looking in the control centre before I left and we were generating 25% of electricity from wind at lunch-time today. One only has to go outside to know that but one day last week it was effectively down at zero. If we are to get 40% on average, we have to go much higher at times when the wind is blowing to compensate for the time the wind is not blowing. The issue for us as operators of a reliable, secure power system is what we let that go to at a point in time without compromising the security and the safety of the electricity supply we all enjoy. That is the essence of what we are talking about.
In terms of the all-island grid study conducted and in which we participated and which was a ground-breaking piece of work at the time, this is the output of it. It states that the limitations may affect the technical feasibility of the dispatches, and follow on studies were required. Three different types of study were required. One was a focus on the technical issues surrounding the dynamic behaviour of the system, which is what I am talking about today, to accommodate very high levels of renewables at points in time to get to the average 40%.
There were also other actions we had to take collectively in the industry. The second one shown is around the detailed network planning studies in terms of the kind of grid we need to develop to take the power from where it is generated to the market where it is needed. We have briefed this committee previously on our Grid25 strategy which addresses that issue.
The third issue is an evaluation of the portfolios under the conditions of real markets. In other words, we need to ask does the wholesale market facilitate the integration of renewables and how does the market deal with what is effectively a zero incremental cost but a high capital cost source of power. The Commission for Energy Regulation undertook to do that work and we are working with it because we operate the market. Therefore, we have a good sense of what is happening there. Today the focus is on the technical follow up dynamic studies.