EirGrid: Chairman Designate

The purpose of this part of the meeting is to have an engagement with Mr. Brendan Tuohy, chairperson designate, EirGrid. On behalf of the committee, I welcome him to this session. The format of the meeting is a brief opening statement and it will be followed by questions from members.

By virtue of section 17(2)(l) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of the evidence they give to the committee. However, if they are directed by the Chairman to cease giving evidence on a particular matter and continue to so do, they are entitled thereafter only to qualified privilege in respect of their evidence. They are directed that only evidence connected with the subject matter of these proceedings is to be given and asked to respect the parliamentary practice to the effect that, where possible, they should not comment on, criticise or make charges against any or entity by name or in such a way as to make him, her or it identifiable. I also advise them that any submission and opening statement made by them to the committee will be published on its website after the meeting.

I remind members 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 or an official, either by name or in such a way as to make him or her identifiable.

I remind everyone to turn off their mobile phones or switch them on to flight mode. I invite Mr. Tuohy to make his opening statement.

Mr. Brendan Tuohy

A Chathaoirligh agus baill den Choiste, ba mhaith liom mo bhuíochas a ghabháil libh as ucht an deis a thabhairt dom bualadh libh anseo inniu i mo ról mar cathaoirleach ainmnithe ar EirGrid.

By way of my background, I have over 30 years of experience of working in government, initially in local government and then in national Government. I worked in a number of Departments, including over 15 years in the Department responsible for the energy sector. My last role working in government was as Secretary General in the then Department of Communications, Marine and Natural Resources. In that role, I oversaw the establishment of EirGrid and the creation of the all-island single energy market.

Since completing my role as Secretary General, I have been an independent non-executive director of a number of commercial companies. I have also been involved in a number of non-profit bodies, including chairman of the National Longitudinal Study of Ageing, TILDA, and the Science Foundation Ireland MaREI Centre, which is responsible for marine, climate action and energy transition.

My appointment as chairman designate of EirGrid comes at a critical time for the group. Last September, EirGrid unveiled its response to the Government's climate action plan with the launch of a new five-year strategy that will see it invest €2 billion in helping to decarbonise Ireland's electricity system. The strategy is a clear demonstration of the fact that EirGrid has a major role to play in making the climate action plan happen.

EirGrid is preparing the electricity system for a future based almost entirely on renewable energy. The climate action plan states that 70% of electricity will be generated from renewable sources by 2030, mainly onshore and offshore wind energy plus solar power. EirGrid currently operates the grid with approximately one third of generation coming from renewable sources. This target will require EirGrid to break new ground in how it manages the electricity system. In real terms, EirGrid will need to connect up to 10,000 MW of additional renewable generation to the electricity system. To put that in perspective, the all-island demand for electricity this day last week peaked at just over 6,000 MW.

Integrating renewable energy on to an electricity system is technically challenging. This is because renewable energy is intermittent, which causes challenges for maintaining the frequency of the electricity system, something that is absolutely critical for the system. This will require EirGrid to operate the system in a more dynamic and responsive way. In turn, this will require improvements to infrastructure to make the grid stronger and more flexible. In tandem with these developments, much of heating and transport will switch from carbon-based fuels to electricity, which will increase demand for power. We have also anticipated growth in demand due to the expansion of some key industries such as data centres which, of course, support not only the significant ICT sector in Ireland but most businesses as well as companies as they move their data storage to the cloud.

EirGrid forecasts that the demand for electricity in Ireland will increase by between 23% and 47% over the next ten years. The expectation is that the electricity system will carry more power and that most of it will be generated from renewable sources. This is a once-in-a-generation change that cannot happen unless the power system is transformed. It is a daunting challenge but I am encouraged by the fact that there is growing support across the country for this transformation.

The report from the Citizens’ Assembly last year was striking. The members voted by 80% or more in favour of the 13 recommendations on climate change put to them. These included proposals to ensure climate change is at the centre of policy making through new governance architecture, as well as the potentially contentious questions of increasing carbon tax and taxing greenhouse gas emissions from agriculture.

Last week, we had our first ever Youth Assembly on Climate Change here in Dáil Éireann and the assembly's ten recommendations are laudable.

We discussed the recommendations at our board meeting last week and in the new year we hope to outline some ideas on how we will respond to them.

I am also very encouraged by the growing consensus here in the Oireachtas. This was demonstrated in March with the publication of the committee's groundbreaking report on climate change. It is fair to say it is the envy of many countries that we have such a consensus across the Oireachtas. It demonstrated that not only are members listening to our citizens but this committee is providing cross-party leadership in addressing what is one of the most significant challenges of our generation. The Government’s climate action plan, which is based on the committee's report, is again a very challenging plan. I am confident that EirGrid can successfully meet its commitments in the plan but it cannot do so on its own. There is a range of stakeholders whose support will underpin its success. These include neighbouring transmission system operators with which it either has or will have interconnectors, as well as customers that generate or use large amounts of power. The company needs partners to deal with the major changes caused by the switch to electric vehicles and electric heating in the home. Perhaps most important, EirGrid also recognises that development of new grid infrastructure requires partnership with landowners and communities. EirGrid alone cannot deliver the necessary infrastructure. We can only do it working effectively with communities across the country.

Although advances in technology are increasingly helping us to find less intrusive ways to move large amounts of power, all electricity grids in any country, depend on a backbone of large-scale infrastructure. This means we will continue to rely on pylons, substations and overhead wires. Asking landowners and local communities to accept new infrastructure has never been an easy task. EirGrid never takes these decisions lightly or without first investigating all alternative solutions but where new infrastructure is essential, we will work with the people and communities affected to endeavour to provide the necessary infrastructure to deliver our collective aspirations. We hope to work with people and communities so that we all not only commit to the vision outlined in the climate action plan but we get a consensus on how this is to be delivered on the ground.

I ask the Members of the Oireachtas to support the critical work EirGrid will carry out over the coming years in addressing the significant energy transition that is required for the future. For EirGrid, the next five years are critical. If it is successful, we will have taken a significant step towards delivering on our long-term climate change goals. We can only do it with the support of the Oireachtas.

I thank Mr. Tuohy for outlining the challenges that lie ahead for us. One of the challenges is the building out of the grid system and the large potential for offshore energy from wind, particularly off the west coast. What is the timeline for that? I know there is a focus on the east coast but what is EirGrid's vision in rolling out connectivity from the west and tapping into that fantastic resource of offshore wind potential there?

Mr. Brendan Tuohy

If we go 100 km off the coast, we are talking about of the order of 72 GW of potential. We and the Government have committed to a number of approximately 3.2 GW minimum over the next number of years as we look to the next ten years. My feeling is that it will be more. We are not going to meet the targets for 2030 unless we embrace offshore energy. The power is still needed most around the east coast and Dublin and the challenges there are not as bad as they are off the west coast. I am talking specifically about depth and the geology of the area. The Chairman knows I also chair MaREI, and we have been working on the marine renewable side for a number of years. The offshore energy production on the west coast will be much more challenging. Tidal and wave is in the second phase and offshore floating wind energy production is likely to start on the east coast and come around.

We can take this up a level from Ireland and look across Europe. In the future we may be able to connect grids across Europe and although I do not want to jump ahead, we are starting this with our interconnector of approximately 700 MW to France. Over the next number of years we really would be looking at the idea of a grid to which we could connect. In other words, we would not have to bring everything back to the country and we would be part of the European grid.

It would be a super-grid.

Mr. Brendan Tuohy

I do not have the economics worked out but the Chairman asked about the west coast. I have already flagged a second challenge somewhat. Many of the new renewables will be offshore and bringing them to land is one thing, while getting them to where is energy demand is another. We would have to traverse different communities, and that is why I put such a strong emphasis on the importance of infrastructure. It is challenging for communities when they see infrastructure passing over them to somewhere else and it is very important to address the issues of the more peripheral and rural areas in the country. They have to benefit as well from this.

I welcome Mr. Tuohy and thank him for his presentation. He set out a good understanding of the challenges facing EirGrid and he is familiar with the fact that parts of the grid are creaking, particularly in a large urban area like Dublin. He is aware that electricity is generated from gas on mobile generators in certain parts of the city in order to meet the demand of the growing population bases. There are a few challenges ahead. Perhaps he will relay a few thoughts on how this can be addressed.

Following the Chairman's point about the potential for wind energy collected at sea, when it is brought ashore it poses a significant challenge to get it to a point of usage. Mr. Tuohy spoke about the immediate potential in shallower waters in the Irish Sea and there is quite a level of advancement there. When we bring it ashore and especially when it is done over the ground with pylons, particular concern might be expressed. The same applies on the west coast and how energy might be traversed across the country. Does Mr. Tuohy have any views on underground versus overground? We have had some of this debate at the committee before.

Mr. Tuohy correctly emphasised the engagement with community and the necessity community buy-in. Over time communities have demonstrated a resilience if accepting something is necessary for the community but when they are part of a transit point, they have not demonstrated the same resilience in accepting what they might consider visual disruption in their community. We speak about protecting the environment, which is very important, and that is why there is such a significant projected growth in the generation of electricity. It will be needed to protect the environment by moving away from fossil fuel use in society. How would Mr. Tuohy speak to the people concerned about the visual amenity of their environment with the potential for a greater number of pylons? The same challenge is there with wind farms as with pylons. Does Mr. Tuohy have any thoughts on how EirGrid might be able to lead in a different strategic direction in that respect?

Mr. Brendan Tuohy

The Deputy mentioned gas use in Dublin for electricity. We all recognise that it is a problem of success in some ways. We have been very successful, as the Deputy knows, and I outlined-----

It is the success of the economy rather than EirGrid.

Mr. Brendan Tuohy

Yes. I use "we" to refer to Ireland. I will distinguish between them. As a country we have grown and part of the challenge is to keep up the infrastructure. Over the years one of our great selling points internationally was that we never lost a project because of a failure to deliver electricity. It was a real selling point when in India and other places projects were lost because they could not deliver a secure and reliable system. Gas power is approximately 50% of our generation network.

For the foreseeable future, it will be of that order. It is simply the way that one needs stability on the network. As I stated earlier, the renewables come in but one can never guarantee them. They are so-called "non-dispatchable". As for the meaning of "dispatchable", a gas or coal generator will turn on immediately whereas, if I am waiting for the wind, no matter how predictable it is,-----

I refer to the use of mobile generators powered by gas within industrial units. I am not talking about EirGrid's generation of electricity.

Mr. Brendan Tuohy

Sorry.

Because of the state of the grid at present, in plenty of industrial estates around this city there are mobile generators powered by, in some cases, oil but principally gas in order to generate electricity for the demand of that particular industrial zone. That does not seem like a good overall plan. It is something that needs to be addressed in the future.

Mr. Brendan Tuohy

In the longer term, and medium term, the idea of having independent generators everywhere does not work. As one must, we are responding. The time lag from agreeing on infrastructure to delivering it can be quite horrendous for various reasons, including the judicial process and the planning process. The demand is growing fairly quickly. We can see the demand there. What Deputy Dooley is talking about is a short-term solution. Obviously, it is not the long-term solution.

More generally, technology is having a big impact. One will see, although not today, on the system part of what we are trying to do. One will see the impact that technology has and see the demand-side management as well. Then one will see the challenges we must face, even for some of the new data centres or extensions to existing data centres where they will move from a so-called "firm connection" to a much weaker connection so that they will not be guaranteed the power at a certain time and will have to make their own arrangements.

The gas generator the Deputy talks about is not an ideal situation. We want the grid to provide in the normal way but then we also, as I started out by saying, want to transfer up to 70% of that to renewables. That will be challenging.

Had the Deputy other questions?

Mr. Brendan Tuohy

I will quickly go through the other ones.

On the transmission lines on the shore, the last report done that was commissioned by the Government was approximately a year and a half ago; it was an independent report on the North-South interconnector that members would be familiar with. In summary, it stated that the overhead lines were still the most suitable approach. I am not an expert in this area but I read the report; it was the top experts who said that. On the underground versus overground, that is the latest one. More generally, on the underground versus overground issue, overground is easier. First, it is cheaper. Second, it is easier to maintain. Third, when one goes underground, if one has faults, one must dig them up, etc. The advice from the experts refers not only to cost. It is very much about its operation. All we can do on this is bring in the best experts and see what they say.

Community engagement is a big element to which I am committed. I have been involved in the Dingle Peninsula project for the past two years where we have tried to imagine what the Dingle Peninsula would look like in the future. We have been working closely with ESB Networks, with the local community and with the local development agency, North, East and West Kerry Development, NEWKD. What is interesting is the importance of community engagement. For instance, ESB Networks is involved with five ambassadors, including individual houses. Also, we have a project just starting with six ambassador farms to look at what farming needs to do to change - that is 35% of the problem. On that, the idea of involving and engaging the community is not about visiting and telling them what we will do. It is about visiting, listening and engaging. There are 20 batteries installed in Ballyferriter. With that, three have solar PV and others are purchasing their own solar PV. What is happening there is changing the way we deal with energy. When we talk about activating the energy citizen, people are basically smart if one gives them the opportunity. On community engagement, I suppose my message is that we all must engage in a much more collective way. I deal with some of the academics in Marine and Renewable Energy Ireland, MaREI, and they would totally support the assertion that it is about community engagement. I am an engineer by background. Engineers have certain solutions but these are not always the best solutions.

On the visual amenity issue, when one is putting in any type of infrastructure there is a visual impact but we have the planning process to deal with these issues. The original design of the national system with which the Deputy will be familiar was, out of Moneypoint, two big 400 kV lines coming up through the country serving north and south of Dublin, and then the ring around it. These are the backbone of the network. Now we are seeing the changes happening. For example, Moneypoint will close, we are told, by 2025. We saw the changes in the midlands recently as well. This is really happening. The challenge we have is whether we do something to the network. However, we will still need poles and some sort of infrastructure but that must be done in as neat a way as possible with community engagement.

Finally, on providing people with an incentive, the Deputy talked about the transition. I have an empathy with communities where the infrastructure is passing through to service something else. That is different from where people embrace it and use it themselves. Collectively, we must look at how we can make sure that we can support these communities so that they benefit from it, not in a one-off but in a long-term way. In my experience, most communities want to be living communities. They want people to come and live there. I spoke of the Dingle Peninsula. In 1840, there were 40,000 people on the Dingle Peninsula. In 1850, there were 30,000 people. Ten years ago, there were 16,000. Today, there are 12,500. It may be a bit more stark, but that is a reflection of the movement from the rural to the urban areas. We will not stop that but what we need, what parents tell me they want for their children, and what the young people say, is that children will at least have the ability to come back and live there if they so choose. They know all the children will not come back and live there, but they want the choice.

I will move on to Deputy Cullinane.

I welcome Mr. Tuohy and wish him the best of luck in his role when he is officially appointed to his position. I wish him well.

In his opening statement, Mr. Tuohy referenced the climate action plan and the target of 70% of electricity being generated from renewables by 2030. My first question is, will we reach that target by 2030?

Mr. Brendan Tuohy

Yes. To put the conditions on it, we must go offshore and we must be successful in the offshore. I noted last week the publication of the new structure for marine offshore planning that will be critical for this to happen. Certain targets were put in the climate action plan and so far they seem to have been met. I refer to the delivery by the system of the various documents, regulations, etc. However, we will not do it if we do not meet the offshore targets.

Is Mr. Tuohy saying offshore is the one area where we need to do more?

Mr. Brendan Tuohy

No. I am saying we are on target but the big game-changer is offshore.

Many of the environmental groups that we meet would have more ambitious targets - some 80% and others 90% - by 2030. Would it be possible to exceed the 70% target? Could we be more ambitious in this area?

Mr. Brendan Tuohy

I suppose one could be ambitious but let us-----

What is Mr. Tuohy's view about where we potentially could go? What is the closest to 100% that could we get to?

Mr. Brendan Tuohy

One is balancing two things here - what happens on the adequacy of supply and security of supply. The one thing one does not want when doing this is for the system to collapse. Nobody wants that.

We are out on what is called the system non-synchronous penetration rate in Ireland. We are world leaders at 65%. That is the instantaneous amount of non-synchronous, non-traditional wind, etc., on the system. We are up, with Australia, at No. 1 on that. There is no question that we will move that but one must distinguish between the instantaneous and the long term. When one is building out a system like this one will have renewables on top of it but at present I cannot see a situation where one will have all renewables because one will not have the level of certainty in the system.

I understand. That was my question. Mr. Tuohy is confident that we will reach the 70% target comfortably. If environmental groups are saying that we can be more ambitious, in Mr. Tuohy's experience, given the caveats put on it, what would be the closest to 100% that we could achieve?

Mr. Brendan Tuohy

I would change the timeline slightly, if I could. By 2050, we are talking about decarbonising the networks. Then what one is talking about doing, as one puts on gas or one moves towards an unfossilled gas, in the sense that it could be other generation type; one could even have hydrogen or one could have a mixture of things such as carbon capture sequestration where even though one is producing fossil fuels one is treating them again.

The aspiration must be to have a decarbonised network by 2050. That is what Britain and others have announced. To get to the first stage of that, our challenges will be in the mid-2020s, as we see some of the traditional coal and other plants coming off stream and making sure that the new systems are in place to deal with that. That is challenging.

One of the challenges which we just discussed as part of the climate action strategy is to have more electricity generated from renewables. We talked about the targets. It is not as simple as that because there are other issues. For example, we also want more electric cars on the road. We want to decarbonise public transport and have electric buses and trains. We also want people to retrofit their homes, which would mean more electric fuel pumps. That would mean more people would be dependent on the grid. What has been factored in, in terms of targets that are also being set for electric cars, fewer people heating their homes with oil and gas and more from electric, and public transport switching from carbon also? What demand will that have on the grid and is it factored into EirGrid's view in terms of us not just reaching our targets but being in a position to exceed them?

Mr. Brendan Tuohy

I am sure Deputy Cullinane is familiar with the all-Ireland generation capacity statement that is published every year and updated. It provides a ten-year look ahead. This is a really good document and the people who have done it have put a lot of effort into it. They are at the forefront of it.

To go back to the issues Deputy Cullinane raises, at the moment, if one takes the bigger issue of emissions, agriculture is at 33% to 34%, transport is about 22% and electricity is about 20%. We are seeing a move towards heat pumps and the like and there will be a movement towards electric vehicles. The numbers from the Government are factored into the documents, for obvious reasons. That is the way it should be. We will probably move up to 30% at that stage, but 70% of the 30% then will be renewables in terms of overall energy, which would mean we would be up at around 20%. Any way one looks at them, these are really challenging targets. That does not mean we should not have them. I agree that we should have them, but the only way we will deliver on this is that as we move to electrification we must have, first, the infrastructure that I talked about. The second thing is we need to have a public that understands what heat pumps are, what solar photovoltaics, PVs, are, and for that we need a big educational initiative, which the committee recommended. I would not underestimate the importance of that because this is difficult stuff. We are asking people to switch their cars and to put in heat pumps and other such infrastructure. We can provide some grants but this is expensive for families and the just transition issue becomes really important in that regard. What we do not want is that it is an elitist thing that one has solar PV. I will build on the experience I have seen in Dingle. I can see the interest from the local community and among all the different groupings such as schoolchildren and farmers. They all want to change.

I thank Mr. Tuohy for his very comprehensive replies. I genuinely wish him well in his role.

I should declare that I worked with Mr. Tuohy when he was Secretary General when I became Minister. I hope he will not mind me reminding him that on my first day in office he handed me a box set of "Yes Minister" and recommended I watch it, which was very good advice. I feel like giving him a box set of "The Sopranos" or "Game of Thrones". I am not too sure which, because he is going into a critical and important job.

Almost ten years ago we started thinking about the French interconnector and it has taken ten years to get the contract. I am really pleased it is going ahead. I guess it will be another five years before it is built. I will return to the question raised by the Chairman and by Deputy Dooley. I think we need to start working now on our method of being part of the bigger, wider European grid network to ship power from the west of Ireland, not just within the country but to the rest of Europe. That will require EirGrid to commission, build and own several new interconnectors with our nearest neighbours. Does EirGrid have the resources to be able to take on that project now so that we are ready in ten, 12 or 15 years' time to turn it into reality, having developed the Irish Sea and learned from that experience?

Mr. Brendan Tuohy

Before I answer that, I should tell the committee that the day Deputy Eamon Ryan first came into the Department as Minister, he came on a bike and I had a phone call from the Taoiseach's office to ask if we could get him to take a car because there was no way of handling the files.

It was lashing rain as well.

Mr. Brendan Tuohy

Yes, it was lashing rain. On the wider grid, I have been hugely impressed by the calibre of people I have met in recent weeks since I came into EirGrid. It is a very specific skill set or series of skill sets. We have only one company of its type in the country and it has an all-island remit. We have EirGrid and we have SONI in Northern Ireland, and we have the Single Market, with which Deputy Ryan is very familiar. The skills base there is really interesting. To be honest, such skills are very hard to get. The other side of that is there is a tangible commitment to delivering the type of targets we are talking about. The CEO, Mark Foley, who has been in before the committee, has presented to the staff and the board has fully bought into it. There are certain skills we will need. One never has them all in-house. The Minister recently asked us to look at the future security of supply and other such issues. A letter was sent to all the chairs of the ESB, ourselves, Ervia and others. We are responding. The Minister has commissioned a review. On the wider grid issue, I will go back to the statement I made earlier, there is no way that we can stop at just the 3.5 GW that we are talking about, which is in the current plan. I think the opportunities on the offshore are huge but it can only be done in conjunction with Europe. In fairness, we have got fantastic support from Europe on the interconnector from France. We recently got more than 50% support from Brussels of €530 million to be signed off next week. There are two issues at play: one is that we are connecting into Europe and if Brexit does happen it gives us direct access, but on the other side, Europe realises that the wind off the west coast of Ireland in particular is part of its resource as well. The land mass of Ireland is 80,000 sq. km, but the Irish water that we own is about 840,000 sq. km. That makes us the third largest country in Europe, if one looks at it that way. In that sense, we have a fantastic opportunity in the long term but we must bring our colleagues in Brussels with us on this.

I think EirGrid should do that, and that it should go for it now. I worked in this area when I was not a Deputy and I know that Brussels is ready and waiting to do further funding, and it is our big project to add to a European climate response. We have to work on the UK Government on it as well because it is critical. We must work east-west as much as North-South. When does Mr. Tuohy expect the North-South interconnector to proceed? What is his assessment of the legal or other difficulties in Northern Ireland that are holding us back?

Mr. Brendan Tuohy

I was in Northern Ireland last week and I had a board meeting in Belfast with SONI. A public consultation has concluded. There was one objection and 11 comments and submissions, some from local authorities are very positive. SONI must now decide whether to make a decision on that before 17 January when the broader decision has to be made about the future of the North in the sense of whether the power is taken back or if there is an election. The feeling is that it is going very positively but when one is in a process like that, all one can do is hope for the best and respond to the things that should be done. We are waiting for that to happen. The backstop would be January. The Secretary of State gave the power in order that the officials in the North could make decisions. Previously, there was a planning permission issue and the application was withdrawn simply because of another court case. We are very positive about the impact of the interconnector. It connects the two networks, North and South, so that we would have a seamless North-South interconnector. It is a 400 kV line. It has a power capability of 1,500 MW, which is significant. The benefit of having a single electricity market is the stability I talked about. Everyone does not have to carry extra capacity. We can do that on a national basis. As we discovered, what interconnectors do is allow the electricity to flow depending on the prices, so that one gets reductions in prices. We have seen that and the regulator has seen that.

If we do not build that quickly, I believe they will end up building another interconnector to Scotland and we may see the break-up of the all-Ireland market, which would be a tragedy. My presumption is that EirGrid would own the interconnector and I presume it would own a half share with the French transmission operator of the interconnector with France.

Given those circumstances, where EirGrid's asset base is increasing, including ownership of the existing east-west interconnector, does Mr. Tuohy think it is time for the Government to again consider whether EirGrid should own all of the transmission assets, rather than the ESB, thus giving EirGrid greater flexibility, control and financing capability to expand the network?

Mr. Brendan Tuohy

That is a policy issue ultimately.

Mr. Tuohy is the chair designate and is no longer a civil servant.

Mr. Brendan Tuohy

There are pros and cons for everything. By not owning the assets, the regulator or anybody cannot say that we are trying to enrich ourselves by doing whatever investments we are doing. It is a complex system. There is an infrastructural agreement. Originally, when EirGrid was set up the asset ownership stayed with the ESB as a company. EirGrid oversees the maintenance and specifies it but ESB Networks does a lot of the work. The system is quite complex, as the Deputy has said. From EirGrid's point of view, we own the east-west interconnector. When one takes on board all of the borrowings and everything it is about €400 million. For the Celtic interconnector we have a 65% to a 35% arrangement and, again, that is going to be about €1 billion and then one takes out about €530 million so we are getting a very good deal.

As members will see when EirGrid's accounts are published, it is challenging when one has a very small asset base. As for a lot of what EirGrid does, it is a regulated utility so we cannot pick a price and decide to charge it because everything is governed by the regulator. Should a discussion take place? A discussion should always take place on these issues in the sense that one must keep them under review. Is it critical at the moment? Are we in a position that we need more money? I am only in my post a week and I have not done that analysis. Will I keep an eye on the matter? Absolutely.

I wish Mr. Tuohy the best of luck and commend the Government on making a very good appointment.

I remind members that we have two other sessions and urge Deputy Jack Chambers and others to keep their questions as brief as possible.

I am sorry for being late and thank Mr. Tuohy for his presentation.

We have had a lot of discussion about the energy requirements of data centres, how the cost of them may hamper the decarbonisation process, and that the cost could fall on the consumer. We have had investments in wind energy but data centres will still rely on the national grid that predominantly relies on fossil fuels. Has EirGrid examined the risks posed by data centres in the context of the cost, the decarbonisation process and where the cost should fall?

Mr. Brendan Tuohy

Yes. A lot of work has been done on this matter. The Government issued a statement last year and IDA Ireland has done a lot of work. Let me put this in context. While the energy requirements of data centres are dramatic, I note that as a country, we have a phenomenal ICT sector comprised of 130,000 people and exports worth €65 billion per year, which makes it a huge sector. What now happens when one puts data centres in, and I agree with the IDA on this, is that they bring a stickiness to the market so that the companies invest significant amounts of money here. To date, €7 billion or €8 billion has gone into the data centres, which then spurs on other things. Many of the data centres will in time become computational centres. In other words, the running of algorithms and stuff like that will take place in the centres. Will that be more energy intensive? Yes.

There is another side to this issue. Recently a significant company did a corporate purchase power agreement, which meant it was not relying on the grid, the network or the public service obligation, PSO. In fairness, many of the data centre companies care about the environment, ask for the centres to be powered by green energy and many of the companies are prepared to put their hand in their own pocket to pay for such energy. As I said before the Deputy arrived, using our median predictions for the future we predict that about 29% of energy usage by 2028 could be due to data centres, so by far and away the single biggest user. One must then ask oneself the following. If one takes that in the broader context of not just the ICT sector but everybody moving to the cloud, we must position ourselves, as a country, in that space.

We know the role played by IDA Ireland. How will EirGrid plan for and manage the risk?

Mr. Brendan Tuohy

EirGrid is working with IDA Ireland but it is a challenge. We have a very close relationship in the sense that these people come in and talk to us. I said the following earlier but I am not sure that the Deputy was present. For some of the new ones, and we will have a different arrangement with them in that they will not be guaranteed the type of power that they are guaranteed at the moment, if they decide to expand, which we want to see, there will be a different contractual arrangement with them.

The challenge we have is that most of these centres are around the M50 in Dublin. The new Celtic interconnector is coming into Cork and will be accompanied by a fibre cable of 24 or 48 fibre pairs. From day one, Deputy Eamon Ryan was very involved in specifying that this innovation should accompany the Celtic interconnector and EirGrid wants to build on the opportunity it presents. For me, the ideal situation would be to see a greater regional distribution of data centres so one does not put all of the pressure on Dublin. I believe one will see a lot of research happening over the next number of years on how best to handle data centres. The positive side of data centres is that one has a static or flat prediction. I mean one can predict when data centres will come on and how much energy they will use. Their energy usage is not like normal daily domestic usage that fluctuates. Can we handle it? Yes. Are we looking to the future? We have been very open with what the numbers are into the future but for that, we will need to have an adequate infrastructure and generating capacity in place before that happens.

I will now discuss the north-south interconnector. My colleague, Deputy Cassells, has made me aware of procurement by a Turkish company despite the fact that planning permission has not been received in Northern Ireland, which I think Mr. Tuohy mentioned to Deputy Ryan. Can Mr. Tuohy give a further update on the matter? What discussions has EirGrid had on the requirement for planning permission for 35% access in three of the local authorities? Has EirGrid improved its engagement with communities? Local communities still have concerns. What has EirGrid done to address their concerns?

Mr. Brendan Tuohy

The Deputy has mentioned two issues. First, I spoke about the Northern element earlier.

Yes, I was here for that. I would like to hear further details on the procurement process because Mr. Tuohy has not given a specific answer.

Mr. Brendan Tuohy

The procurement process is handled by ESB Networks. As I explained earlier, ESB Networks has done a framework procurement but it has not purchased anything. The Deputy knows how long public procurement takes. So, one does a framework and then one draws down from the framework in time. ESB Networks has not purchased anything but it has done the various frameworks, which is where we are at. Nothing will happen until the relevant planning permission come through.

I compliment Mr. Tuohy on his comprehensive responses here this afternoon. It has been a pleasure to listen to him.

I was going to ask about the interconnector but other members have already done so. The Celtic interconnector is a major part of our infrastructure and the scheme will affect Ireland. One wonders, particularly in my part of the world, where the interconnector will land but I shall not ask Mr. Tuohy about the location.

Mr. Tuohy spoke about going forward and how we will decarbonise the network from now until 2050. I ask him to elaborate on the carbon capture proposals and on whether there are live proposals. Has EirGrid a role to play, taking into consideration the Kinsale gas field? I am from Kinsale and I note that the gas field will close in the middle of next year. The platform has been taken down but the infrastructure has been kept. Perhaps carbon capture could be considered for the depleted gas field in Kinsale. Where does EirGrid fit into that model? Is carbon capture part of EirGrid's remit?

Mr. Brendan Tuohy

I am from Cork and my father is from Ringaskiddy. Therefore, I know exactly what the Senator is talking about. The Kinsale gas field is more a matter for Ervia because we do not get involved in that side of things.

As I said earlier, as we move to decarbonisation and if one has gas, particularly fossil fuel gas but one can also have other biofuels and so on coming in, what will happen is that another sequence of things will happen.

That means it would be decarbonised. I gather that discussions are taking place, but cannot give any details. It is more about pumping the gas back out to Kinsale, where there are huge caverns and storage. That was the idea behind the carbon sequestration. The International Energy Agency is also doing some work on this and published a report over the summer on the future of hydrogen. The Japanese and others are also moving in that direction. Consequently, one is looking at other things such as electrolysis and so on. When the wind is blowing at night and there is no draw on the electricity, hydrogen is being produced, which can be stored and used for something else, such as transport. This is a huge space of which we certainly will be part. Some of the issues the Senator raised are more under Ervia's remit.

I wish Mr. Tuohy well. We look forward to working with him and this has been a very positive engagement. I wish him every success. We will suspend briefly to allow our next witnesses to take their seats.

Sitting suspended at 3.01 p.m. and resumed at 3.03 p.m.