JOINT COMMITTEE ON COMMUNICATIONS, ENERGY AND NATURAL RESOURCES debate -
Wednesday, 25 Nov 2009

Micro-Generation of Heat and Electricity: Discussion with Sustainable Energy Association.

Chairman

I welcome from the Sustainable Energy Association Mr. John Hardy, Mr. Fergus Wheatley and Mr. Johnny Dunne. The joint committee has invited the representatives of the Sustainable Energy Association to discuss industry standards and support mechanisms for micro generation of heat and electricity.

Before proceedings commence, I draw attention to the fact that while members of the committee have absolute privilege, this same privilege does not apply to witnesses appearing before the committee. The committee cannot guarantee any level of privilege to witnesses. Under the salient rulings of the Chair, members should not comment on, criticise or make charges against a person outside of the Houses or an official, either by name or in such a way as to make him or her identifiable.

I invite Mr. Hardy to make his opening remarks.

Mr. John Hardy

I thank the Chairman and committee members for inviting us to address them. The Sustainable Energy Association is an industry body which represents approximately 80 businesses in the renewable energy sector across the island of Ireland. These businesses employ in the region of 3,000 people. I am the secretary of the association and am accompanied by our chairperson and manager of AlliedSolar, Mr. Fergus Wheatley, and a board member, Mr. Johnny Dunne, who is also representing Dimpco.

Mr. Fergus Wheatley

I am the current chairman of the Sustainable Energy Association and also run AlliedSolar, a small renewable energy business based in Coolock. Renewable energy technologies include small wind, heat pumps, biomass and solar power. As my own expertise is in the area of solar power, some of my presentation will deal with this area. However, the same principles can be applied to other technologies.

The association was established approximately 18 months ago to represent the renewable energy sector in Ireland. We see ourselves as a conduit for communication between Government bodies, including in Northern Ireland, and installers and suppliers. We have successfully attracted many of the largest players into the association, including Kingspan, Glen Dimplex, Balcas and Potterton Myson. We represent more than 80 companies in the sector.

I wish to speak on three topics: the benefit of green collar jobs to the economy; banana skins that exist for the industry; and ideas that will help the industry to grow. With regard to green jobs, 80% of the cost of our renewable energy solution stays in Ireland. Depending on the sector, some raw materials are imported, such as boilers, solar panels, etc. Generally, the fraction is quite low in cost terms compared with overall installation cost. The Irish costs for distribution, warehousing, wholesale sales, local sales, delivery, administration and the actual installation all come from the installation cost.

The benefit is spread throughout the economy and does not just benefit one geographical area. However, the bulk of the work is undertaken by local tradesmen and their spend benefits the local economy. Companies such as Kingspan, Thermomax, Glen Dimplex and Potterton Myson are manufacturing in Ireland for the export market. The sector is due to experience significant growth as energy prices rise.

Advantages that accrue from supporting renewables have the potential to create thousands of jobs in the short term and the technology and knowledge to generate exports, lower energy costs, improve fuel security and help reduce carbon emissions to avoid Kyoto fines. Sustainable Energy Ireland, SEI, estimates that renewable energy, energy efficiency and research and development programmes under its remit account for 4,375 direct jobs. Our experiences shows that this figure is under-representing the true number of jobs as spin-off jobs in sales, warehousing, distribution, technical support and training are also present.

The biggest threat this industry faces is poor quality installations that do not perform. When this happens, the industry gets a bad name and stays small. To give an example, both Portugal and Greece embarked on a solar water heating programme in the 1970s during the oil shock. Greece maintained and enforced installation standards but Portugal was not so strident. Today, less than 1% of homes in Portugal have solar panels installed with 30% of homes in Greece equipped with a solar panel.

The involvement of SEI and the Sustainable Energy Association, SEA, is vital in this issue. The SEI is doing an excellent job with installation standards. Without regulation, there will be pressure to undercut prices and this will lead to a race to the bottom. Early experience of the issue in the UK was very poor for this reason. To help the industry survive into 2010, it is imperative that the current level of grants are not switched off. Any reduction in grant aid should be gradual, planned and irreversible, and it should not start until oil prices begin to rise.

I will give an example of how not to do things. In March this year the SEI announced a new home insulation grant and invited suitable companies to join the register. In the mean time, these existing companies, with full order books, suddenly found their orders cancelled overnight by customers who wanted a grant. In the end it took about two months for the scheme to be rolled out. Ironically, this did immense damage to companies that the scheme was designed to help. The Northern Irish experience of stopping grants and starting them again has meant that between grant schemes, nothing happens. Companies end up with warehouses full of stock and must either find something else to do, have no cash flow or go out of business.

I can add my personal experience to that. We sell into Northern Ireland and may suddenly find that we have a glut of sales, which means the grants are rolling again. The orders will then dry up overnight, so it makes our business a little difficult to plan as well.

I will comment on some incentives that could help our industry. There should be a rebate on approved products installed by an approved installer. There should be support for carbon taxes as even low levels based on international carbon prices would give an important market signal. A building energy rating component should be built into future property taxes and commercial rates, as that will encourage further energy efficiency and renewable energy spend. The business expansion scheme rules should be changed to include renewable energy companies. There could be 0% interest schemes like the UK's carbon trust scheme, and I would also like to see some proper feed-in tariffs for wind and photovoltaic energy as levels in Ireland are very low.

Offering a 0% VAT rate on approved products installed by an approved installer has a number of advantages. It is technology-neutral and the scheme could be rolled out quickly for new technology without affecting budgets. It would be easy to implement and there is a big incentive for installers to maintain standards since being removed from the list means an installer would be at a price disadvantage.

A €20 per tonne carbon tax would put approximately 5.5 cent on a litre of home heating oil and diesel. This would give an excellent signal of the likely rise in the cost of energy. With regard to property taxes and commercial rates, these could be reduced if a good BER rating is achieved. This will encourage BER assessments and energy efficiency improvements. If a domestic property tax is introduced, there could be a sliding discount depending on the BER level achieved, which would be very helpful and give a very important signal to the market.

Currently, the business expansion scheme, BES, is focused on export-led goods and services in specific industries. As renewable energy offsets imported fossil fuels, expanding the BES definition to include companies involved in the provision and support of renewable energy technologies will help Ireland's balance of payments.

The UK carbon trust is now lending enterprises as much as £400,000 or as little as £3,000 in interest-free unsecured loans. Loans are repaid over a period of up to four years and many boroughs have found that their energy savings more than cover their repayments. Current levels of 19 cent per kW-hour for the first 3,000 kW-hours are still too low to encourage wide uptake of electricity producing technologies. In the UK, rates of 36.6p per kW-hour for small photovoltaic systems up to 4 kW and 28p per KW-hour for systems up to 10 kW are available. With these rates and a good windy site, a small wind turbine could pay for itself in fewer than five years.

The Department of Communications, Energy and Natural Resources is looking to install 6 GW of wind turbines, which will require a doubling of the national grid. Many small, local wind turbines making a profit would help to reduce local opposition to the construction of extra transmission lines. Micro-generation is also a proven means of reducing business overheads and home energy costs and providing a secure source of income.

We are in the trenches and if members of the committee have any ideas on how to support or change the industry, they should speak to us before they are announced. I have a few anecdotes on how we are getting on. My own business is down approximately 40% on last year, although we expect an improvement next year when oil prices start to creep up. Our focus is on surviving this year and getting to next year.

There is a large company in Kerry called Energy Master which went into liquidation last Friday. It was one of the first companies in the sector and it employed approximately 15 people. From a business perspective we have one fewer competitor but it is also indicative of the industry. An early leader in the industry was more or less wiped out. Are there any questions?

Chairman

I thank Mr. Wheatley for his fine presentation. I have some questions before I open discussion to members. Mr. Wheatley spoke about the installation of feed-in tariffs. There was much technical detail in that. Perhaps in his response he might let us know, in layman's terms, exactly what he is looking for and how this committee might assist him. We have had presentations from a number of organisations. They tend to be of the view that with regard to renewable generation of electricity the best expertise refers to wind and wind turbines. The technical aspects of wave and other forms of renewable energy are not as developed as one might like in order to make it commercially viable.

Mr. Wheatley spoke about the experience of insulation and laid much emphasis on the fact that the quality and standard of insulation is a high priority. He used the example of the 1970s in Greece and Portugal and the fact that Greece has retained 30% of the insulation provided while Portugal has only 1%. Perhaps he might provide some examples as to where poor workmanship occurred and how that can be policed and the problem solved in that way.

We are informed that in the upcoming budget there will be a carbon tax. How does Mr. Wheatley see that impacting on his industry as a whole? Are there standards that can be set down? Should there be a regulatory body that would police installers, if he believes this has a significant part to play in the process?

Deputy Jimmy Devins

I thank the Chairman. I take this opportunity to thank the clerk of this committee, Mr. Eoin Faherty, who is retiring shortly, for all the excellent work he has done, both from a business point of view and also from a sporting point of view, in the Houses of the Oireachtas over many years. I wish him well in his retirement.

I have one brief question on the cost of feeding into the national grid. Mr. Wheatley advocates the cost should be higher than it is at present. The difficulty many people have with that is that we are seeking to reduce the cost of energy. If more is paid to the suppliers, whether they be small or large, obviously there will be an increased cost to the user. I ask for Mr. Wheatley's thoughts on that.

Chairman

We will take all the questions first and then return to Mr. Wheatley. He may wish to call on some of his colleagues to assist him and is welcome to do so.

Deputy Liz McManus

I apologise for being late. Some of my questions may have been answered in the presentation so Mr. Wheatley must excuse me. Like Deputy Devins, I wish Mr. Faherty all the very best in the new phase in his life. I do not know if the committee will be the same without him. He has certainly done a great job and I thank him for that.

I am very glad to have Mr. Wheatley's written submission because there is much food for thought here. We are very committed to the whole idea of developing renewable energy. There seem to be issues of timing. One can be too far ahead and, as a consequence, the infrastructure is not present, whether in planning policy or other ways. That also seems to be a feature in other areas of renewable energy. Mr. Wheatley seems to have particular problems because, as he pointed out, no single body represents him. That should be addressed. Presumably his company does this itself in the industry.

The big operators such as the ESB or Bord Gáis have critical mass and can do things that simply are not possible for the small scale operator who is hugely important nonetheless. I am not clear as to the SEA's relationship with farming organisations. The IFA has critical mass because of its network. With changes in agriculture, micro-generation has great possibilities. Perhaps Mr. Wheatley might talk a little about how he sees this developing and whether we might develop co-operatives, or whatever, in the future.

We need a national strategy, a policy framework where it is clear to everybody that if feed-in tariffs need to be provided there will be certainty around that. We need to know whether there can be development of arrangements at local level that will be beneficial to enterprise and employment. Mr. Wheatley might talk about how developed that is. He said there is no proper regulation. That needs to be addressed immediately. Efforts have been made in other areas to ensure regulation and the setting down of standards so everybody can buy into those areas. That is something we should pursue, particularly with the relevant Minister.

Regarding banks, Mr. Wheatley mentioned an extension to the BER scheme and this seems to make good practical sense. What is his experience with the banks? He is in an area which is, to an extent, experimental but yet is crucial if we are to make the big shift required because of our commitments and in the interest of energy security. Regarding the feed-in tariffs, that presumably is a matter for the energy regulator, or of Government policy concerning the regulator. How does it work in practice?

Deputy Mattie McGrath

I would like to be associated with the kind remarks offered to the clerk to the committee, who is departing. I thank him for all his help to me, as convenor, since I came here. I also welcome our guests and compliment them and their associates for the pioneering role they are playing at the coal face. I appreciate and understand how difficult it is. We really have not got our act together as a nation to deal with this.

I sympathise with Mr. Wheatley regarding the stop-start nature of the schemes and for the fact there is no regulator. There must be a regulator. I hear some hairy stories from my constituents about suppliers on the ground who provide insulation, different types of cavity work or attic insulation. There are many teething problems. People get work done, or get quotations, with the expectation of receiving a certain level of grant which they then do not receive. That is unfair. People are willing to take up the challenge and try this. We need a more co-ordinated approach to it at national level. If this committee can help we should do so.

Deputy Liz McManus

Does the SEA deal solely with wind energy?

Mr. Fergus Wheatley

No, we deal with all renewable energy technologies. Wind energy is a very small part compared to solar heat pumps and biomass technology.

Deputy Peter Kelly

We welcome the delegates from SEA. I wish Mr. Faherty well in his retirement. It is hard to believe he is retiring but he is probably just moving out of here and one would not know what he might take up next. I am glad other members have paid tribute to the man because he deserves it. They may have set the trend for short and quick tributes. Under the heading "Any Other Business", I had envisaged being here for a couple of hours to pay tribute to this man for all he has done over the years. He is an intelligent, smart, good, well-read man who on all the different committees he has served has been very good to the chairpersons and, as the convenor noted, has kept everybody on the straight and narrow.

Deputy Liz McManus

Come on now, be fair.

Deputy Simon Coveney

He was not always on the straight and narrow himself.

Deputy Peter Kelly

He has been very good to committees, steering them in the right direction and giving them proper, good, sensible advice that counts. He never led anybody astray. However, he was very lucky in his early life. He got a great start, beginning his life in Longford. Anybody who starts out in Longford is destined for great things and Eoin was destined for great things from the first day and he has proved it. On behalf of the people and the State I say, "Well done, good and faithful servant". He stands for and emphasises all that is good in the public service and he has been a tremendous public servant. He is an example of what is in the public service in Ireland, that is, smart and intelligent people. The brains of Ireland are in the public service whether the public wish to believe it. Whoever visits the Oireachtas or comes to meetings and encounters such people as Mr. Faherty will be aware that these are great people. He will be a loss but I hope he enjoys his retirement and I look forward to meeting him again. No doubt someone will give him something to do or seek him out. He will probably be head-hunted to do some job or other. I wish him and his family many happy years and I hope he enjoys every minute of it. I will have more to say at a later date and he will see me at another forum, perhaps on Thursday evening at some stage I will give the full speech.

I will put some questions to the Sustainable Energy Association. I welcome the organisation and I believe it is a good idea. When we discuss solar energy and solar panels we automatically think of the sun, perhaps not knowing as much as we should. Does solar power work in Ireland? Some people have said to me it could not work here because we do not have enough sun.

Does the organisation work closely with Sustainable Energy Ireland? I realise the delegation is an association of different people but does it hold meetings or discussions with Sustainable Energy Ireland? Is there contact on a regular basis?

What is the approximate cost to turn an average house green? Is it more expensive for a new house? Can it be done cheaper? Is the message spreading that this is the way forward, that it will be of benefit, that it will not cost an arm and a leg, that people should do this in their own interest and in the interests of their home, of conserving energy and of the country? I have heard many people say everyone must get energy certificates. Many people have signs indicating they carry out BER, building energy rating, certification. People inform me they have had someone out to their house who made several recommendations and it appeared it would cost a fortune to do the work, with the result that they decided not to bother doing anything because it would be too expensive. What is the view of the delegation? I wish the businesses well and I hope they are successful.

Deputy Simon Coveney

I apologise that I was late. I have a great deal of interest in microgeneration and I will explain why. The delegation will bear with us because we are saying goodbye to our clerk today. Many of us have known him well for a long period. I wish him well on the record and I will wish him well off the record later. Eoin Faherty has been a highly efficient clerk and a great character outside his role in committee work. He is involved in a good deal of voluntary activity in and around the Houses, especially in the sporting area in which he has worked with the Chairman and me on a series of events during the past 15 years. He will be missed in and around Leinster House and certainly his unique sense of humour will be missed by me. His highly competent work will be missed at committee level as well. He will be difficult to replace and I wish him well on the record, although I will wish him well in an appropriate manner outside the room later.

I refer to microgeneration and the Sustainable Energy Association. The Opposition has an opportunity to choose the topic of debate for three hours every week. We were supposed to debate a Fine Gael motion which I put together on the issue of microgeneration and the feed-in tariff mechanisms that should be put in place to facilitate dramatic growth in an industry that, I believe, is waiting to take off, if it is given the incentive to do so.

I realise I am not putting questions to the delegation; rather I am making a statement. The way in which Irish people live, that is, in low density dwellings and with a high percentage of the population living in rural areas, is perfect for encouraging people to generate their own power where possible. We have sustainable and renewable natural resources which can facilitate this aim too, especially wind energy. There are also opportunities in solar power, bio-fuels, including wood biomass, combined heat and power, and microgeneration. This applies in most farms and in many businesses and households in urban and rural locations throughout the country.

I believe the key is not grant aid but to put in place a proper feed-in tariff mechanism that would allow people to sell excess energy to the grid at a level which would encourage them to make money back, approximately over a five to seven year period. If we facilitate this, people will invest in a proactive way in this technology and put it to work in their homes, farms and businesses.

We spend a good deal of time in this committee and in the Joint Committee on Climate Change and Energy Security discussing the challenge of rolling out grid infrastructure to facilitate the very large amount of power we seek to generate from wind farms especially, but also from tidal and wave energy. Bord na Móna is waiting to build a 400MW wind farm in north Mayo but has been informed it will be eight years before the necessary grid infrastructure is in place. However, most farms and businesses in the country are connected to the grid, which does not need to be changed to facilitate microgeneration. At issue is a small trickle of power returning to the grid from hundreds or thousands of locations. This could operate reasonably well under the existing grid infrastructure and it does not require substantial capital investment. It could have a very positive impact on our energy security in terms of producing power domestically or using such renewable fuels as wind energy. This is a no-brainer. The question is how to put in place the correct feed-in tariff price. It must balance keeping the cost of electricity down for the consumer on the one hand and a sufficient tariff to incentivise people to make the investment of scare resources on the other. That balance must be achieved.

Anyone can promote the microgeneration industry if they pay ridiculous sums of money for a feed-in tariff but, ultimately, the consumer will pay the price for that. There are examples in France, Germany and some Scandinavian countries that show if one takes an aggressive approach towards kick-starting this industry and provides a very generous feed-in tariff for a set period, it is possible to create a rapidly expanding industry that could employ thousands or tens of thousands of people in Ireland.

A good deal of work would be involved in the installation of equipment and the maintenance of boilers, generators, solar panels and tubes, wind turbines and all the other options for micro-generation which work elsewhere. We are not re-inventing the wheel. Ireland is more suited to such power generation than other countries which have grown this industry very successfully, but it has not done so because of a lack of ambition and policy in the feed-in tariff area. That must change.

I did not realise the Sustainable Energy Association existed and represented the industry in any comprehensive way. I spoke to SEI and others to try to get advice on the feed-in tariff issue. If we bring forward that motion in future I will revert, as will other Deputies, when they bring forward concepts and ideas in this area. This is a real jobs opportunity as well as an energy opportunity for Ireland. The committee should promote it.

Deputy Liz McManus

I apologise but I must leave now as I have to go into the House. I will read the delegates' answers in the Official Report.

Mr. Fergus Wheatley

Several people mentioned the level of feed-in tariffs we would seek. The UK example is 28 pence per kilowatt hour for systems up to 10 kilowatts, which is equivalent to 35 cent in the euro. At the moment we have 19 cent per kilowatt hour for the first 3,000 units. That is not quite there. If one had a site on the top of a hill in the west one would get a payback of approximately eight years based on current technologies.

Deputy Jimmy Devins

Is that based on the 19 cent tariff?

Mr. Fergus Wheatley

Yes. That is the best site one would get using one of the cheap turbines. The power in wind works on a factor related to speed. If one doubles the speed of wind one receives eight times more power because there is far more energy going in. At less suitable sites the wind speed drops somewhat and the payback periods go out to 12 years or they might be infinite because they go beyond the life of the turbine. Our gut feeling is that the UK rates are pretty much on the ball. We have done installations at that rate which are not cost-prohibitive. We would get five to seven year paybacks based on UK rates.

Spain and similar countries are going mad for photovoltaic systems but their sun regime means they get twice the energy in sunlight over the year that we would get, and therefore double the payback on a system that costs €10,000. We should concentrate on wind because that is the renewable energy resource we have.

We already add these feed-in tariffs on to the average consumer's bill because the money has to come from somewhere. The winter peak demand reduction scheme is a subsidy to large businesses whereby they are paid approximately €400 per megawatt hour for reducing their load in the very high winter peak season to help the national grid. That translates into a charge of approximately 0.4 cent per kilowatt hour on every kilowatt hour that is sold for the rest of the year. The cost of putting feed-in tariffs is much less than the winter peak demand reduction scheme. By using technology such as demand management to reduce the winter peak demand we can more than offset the feed-in tariff on top of bills.

Mr. Johnny Dunne

Deputy Kelly asked about the affordability of making a house green. He is right that many consumers are inquiring about the latest technologies but the costs are prohibitive. This market probably started in earnest approximately four years ago when 'renewable' was the buzz word. It coincided with our record house build in recent years. The rising tide lifted all boats. We started to see a take-off in solar power, new thermal heat pumps and heat recovery units for domestic use. Someone building a home would put these items on his or her shopping list. There were SEI grants of up to €4,500 for a typical heat pump which might cover approximately 30% of the total cost of going green.

Those grants were halved last year so the maximum grant is €2,500 and is restricted to retrofit. If one builds a new home one does not qualify for the grants. The problem with renewable energy sources is that the pay back takes so long. They do pay back but when oil dipped below $70 a barrel people looked at the sums and the pay back was too long. It was approximately ten years instead of the five years it was a year ago.

Mr. Wheatley instanced a company that was one of the first into this business, Energy Master in Kerry. It went into liquidation last week because the market here for building and renewable energy sources has collapsed. While the UK market has similar problems and new house builds are down significantly on last year's figure the renewable energy business is growing rapidly because the government funds it. There are two programmes driving huge demand in the United Kingdom, a carbon emissions reduction target, CERT, programme run by the utility company. It has to meet that carbon reduction target. It examines dwellings and assesses how to get emissions down. It fully funds putting cavity insulation and low energy lighting into homes. In many cases it has put in a completely new renewable heating system in homes because it can then calculate exactly the carbon reduction in that home and meet its legal requirements. If it did not do that it would pay a penalty. Doing this is self-financing for the utility company.

The other UK scheme is a low carbon building programme for public sector buildings. For example, last week we got a contract to install a totally renewable heating and ventilation system in a large school. The government is funding 50% of the total capital and installation cost. The carbon reduction in those buildings is massive. That drives the UK market and makes it very successful. Our market is in decline because we do not have those incentives. Unfortunately, if it continues at this pace with the low rate of house building there will be no demand for these products. The projection for next year is 5,000 to 10,000 versus 18,000 this year. The only market is a retrofit one and that requires incentives for the consumer. The key point is the reduction in carbon not in energy costs.

Mr. Fergus Wheatley

The likely impact of the carbon tax will be approximately €20 per carbon tonne which will work out at approximately 5.5 cent per litre of diesel or heating oil. That would have a positive impact on our business. The higher level of carbon tax or even a signal that it will rise will help to galvanise people. When we sell our renewable energy system we tell people that the pay back system is based on oil so changing a cylinder and putting solar panels on the roof will save maybe 500 litres of oil a year, which costs approximately €300 now but could cost €600 next year. We constantly refer to oil because that is what renewable energy saves. Oil prices are very volatile and it is hard to say what the saving is.

There is a signal that this carbon tax will increase progressively so we tell people that they are buying ahead. If one was Michael O'Leary and had the ability to buy oil 20 years into the future one would jump at the chance. Buying a reliable solar system or renewable energy system means buying 500 litres of oil this year and every year for 20 years. By reinforcing the idea that energy costs will increase one reinforces the hedging mechanism in people's minds. It would encourage people to buy earlier.

To address Deputy McManus's comments, the industry is regulated and I commend SEI on the excellent job it does. There are examples where it could do things better but the people in the organisation are committed and competent. The problem with cowboy installations relates to those who jumped into the industry and then jumped back out again. Renewable energy is not easy to get right first time. There are different traits that must come together and unlike an oil or gas boiler, the energy must be harvested. If the harvesting mechanism is poor or there is poor energy, it will not be easy to get much from it. It is a case of sizing the system the correctly, making sure it is well insulated and that the standard of insulation is higher than for fossil fuel systems because without that the returns would be poor. When a person turn on the oil or gas heating, the radiator gets hot so he thinks it works. With a renewable energy system the water is not hot even though the renewable energy system might be installed correctly and be well insulated because if there is no sun it will not work. An oil or gas boiler might be badly installed but it will still work, although the bills will be high at the end of the year. We cannot over-sell the products. We must point out what they will do in certain months, while reinforcing standards. If the industry gets a bad name, we are all out of business.

Someone mentioned our experience with the banks. To be honest our experience with the banks is absolutely brutal. We could expand the business if we could get a bank loan. We could expand our product range and possibly double the size of our business if we could get banking help but it is not happening this year.

Mr. John Hardy

From a customer's perspective, cash is tight.

Mr. Fergus Wheatley

We have a healthy business that has done well and we are making a profit. We keep a close eye on costs. A year and a half ago, the banks were phoning us to offer us money but now the opposite is the case.

Chairman

Is that the experience for other members of the association?

Mr. Fergus Wheatley

Absolutely. Our business would be as healthy as any business but we still have problems. From talking to others, we are in a healthier position than most.

Chairman

What are the banks saying? I listened this morning to banks advertising, claiming that they are in the business to lend money, but we are being told now it is not possible to access funding.

Mr. Fergus Wheatley

They just tell us they do not have the money to give to us.

Chairman

They claim not to have it but they are advertising that they are back in business.

Mr. Fergus Wheatley

A lot of that is window dressing, saying they are open for business when they are not. That is my personal view. They are trying to reduce their balance sheets as quickly as possible.

Chairman

The same message is coming to us. Businesses and individuals are finding it difficult to access working capital so this is a reflection of that.

Mr. Fergus Wheatley

There is a question on whether the SEA and the SEI have regular contact. I have regular contact with individuals within the SEI and our board meetings are held in the SEI offices in Dundalk. Naturally the contact could be better but as an industry body goes, it is good.

Mr. John Hardy

Deputy McManus asked about our relationship with agricultural groups, mentioning the IFA. The IFA would strongly support feed-in tariffs and wind turbines for farmers. The association has done a lot of lobbying and many presentations to committees such as this one.

Our members are involved in installing wind turbines and other technologies for farmers but the SEA has met representatives from the IFA to garner support for a feed-in tariff campaign along with other industry associations that might be interested. It goes to show that it is not just the industry calling for this. There is wider demand, especially in agriculture, which has a lot to gain because the land is available for wind turbines.

Mr. Fergus Wheatley

Deputy Coveney referred to turbines. It is a no-brainer to support a large trickle of power into a diverse grid. The SEI is doing good work on wind turbines at present but some issues must be taken into account. It is not a case of just putting up a propeller in the back yard. There is a need for care about the hook onto the grid and the turbine must be of sufficient quality that a blade does not fly off and injure someone. It is not something we can put everywhere, thereby solving all our problems. It is more complex. There must be risk assessment. We do not want to install these in schoolyards but on farms or other areas where people will not be walking underneath them on regularly.

They have an important function for local voltage support. The SEI is looking at this important work. An increased feed-in tariff would be useful for 4,000 or 5,000 turbines. The capital cost is high but we could complete the first phase and, taking the lessons learned, we could go to phase two. By having 5,000 installed throughout the country, we would reduce the cost of the turbines for the next phase. In the last two years, the cost of installing a 6 kW turbine has been halved because more people have gone into the market and we have learned.

We are better at putting up masts, installing control systems for turbines and interfacing the turbine with the grid. It can be done cheaply and better and, as the industry develops, it will continue to get better, with more efficient turbines and better grid interfaces. It is not possible to say that we will open the floodgates for a huge feed-in tariff. It must be done in a controlled fashion, allowing the reputable companies to get certification, install their turbines and learn from previous practice.

We then move on to the next phase which opens the floodgates because we have got our experience at that stage. To open the floodgates too early would be counterproductive. We still need to open the gate so that some wind turbines go up. At the moment one can count them on one hand. It is far too little to allow the industry to develop. We need to install hundreds and thousands of turbines but not hundreds of thousands. It needs to be done in a controlled fashion.

Again I will just re-emphasise the work SEI is doing on the standards which is very important work. My understanding is that work is nearing completion.

Chairman

On behalf of the committee I thank Mr. Wheatley, Mr. Hardy and Mr. Dunne for their presentation today which was stimulating. As a committee we have learned a great deal from it and, we hope we will be in a position to invite the delegation back sometime in the future when it can give us a progress report.

Sitting suspended at 10.52 a.m. and resumed at 10.53 a.m.