JOINT COMMITTEE ON COMMUNICATIONS, NATURAL RESOURCES AND AGRICULTURE debate -
Tuesday, 20 Sep 2011

Sustainable Energy Authority of Ireland: Discussion

Chairman

I welcome the delegates from the Sustainable Energy Authority of Ireland: Professor J. Owen Lewis, chief executive officer; Mr. Brian Motherway, head of strategy and innovation, and Mr. Declan Meally, head of energy demand management. I draw their attention to the fact that witnesses are protected by absolute privilege in respect of the evidence they give to this committee. However, if they are directed by it to cease giving evidence on a particular matter and continue to do so, 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 criticise or make charges against any person or persons or entity, by name or in such as way as to make him, her or it identifiable. Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person or persons outside the Houses or an official, either by name or in such a way as to make him or her identifiable.

I ask everyone to switch off his or her mobile phone. Mobile phones cause interference with the transmission system which can be disconcerting for whoever is talking at the time of the disturbance. I invite Professor Lewis to make his opening statement.

Professor J. Owen Lewis

I thank the Chairman for the invitation to meet the joint committee to discuss the issue of sustainable energy and the work of the authority. We are pleased to have the opportunity to meet the committee to set out our views and, I hope, discuss some important issues.

The Sustainable Energy Authority of Ireland, SEAI, is Ireland's national energy authority with a mission to play a leading role in the transformation of the country into a society based on sustainable energy structures, technologies and practices. We see energy policy as being at an exciting moment where a global movement of change has begun. This encompasses the decarbonising of energy supplies, increasing the efficiency of end use and the development of new technologies, services and systems. Ireland can capitalise on the opportunities that exist and become a global leader in this area, building entirely new enterprise sectors and, in the process, reducing costs, enhancing competitiveness and improving the security of our energy supply. This informs our vision and we see Ireland becoming a global leader in sustainable energy, a society fully engaged with the sustainable energy agenda and an economy fully exploiting the global opportunities in clean, low-carbon solutions.

Our strategic plan for the period 2010 to 2015, which was published last year, highlights the opportunities open to Ireland to benefit from the huge global transformation which, as already stated, is now under way. Under this transformation, the world is moving away from inefficient consumption of carbon-intensive fossil fuels towards much greater control over and efficiency in respect of energy use and towards energy supplies based on renewable, clean resources. That this transition is already under way is now beyond doubt, with all major governments and businesses acting to implement programmes of investment and innovation. The International Energy Agency projects that total global investment on sustainable energy technology and systems will soon reach $750 billion per annum. This will deliver total fuel cost savings of more than double that figure.

SEAI's strategic plan reminds us of the cost of not acting with strength and urgency in respect of the issues to which I refer. Ireland faces significant challenges relating to energy, such as cost, security of supply and environmental impact. Ireland has one of the highest dependencies of any nation on imported energy. This raises important strategic security issues. It also makes us a taker of volatile international commodity prices that affect the costs of energy for all consumers. At the same time, we face challenging EU emissions reduction and renewable energy targets which must be met to avoid substantial penalties. We should not underestimate the scale of the challenge that all societies face in moving quickly to radically new energy systems and technologies. This challenge is made all the more daunting by the current context with regard to enterprise and investment. On the other hand, swift action not only mitigates these risks but also brings substantial economic and employment opportunities. Our successes to date prove that such opportunities exist and that there is every reason to argue for Ireland becoming a global leader in this field.

Dr. Brian Motherway

I will comment on SEAI's work and the impact thereof. I will also provide examples of the work we are doing to deliver Irish energy policy goals through analysis, advice and a range of programmes. This year 80,000 homes will receive energy upgrades through the Government's better energy programme. This is supporting almost 6,000 full-time jobs and includes a focus on the energy affordability sector through our warmer homes scheme. In total, almost €250 million will be spent in Ireland this year on energy efficiency work. This will generate lifetime savings in the region of €750 million. The work to which I refer is making homes more comfortable, energy more affordable and businesses more competitive. It is also keeping many contractors and construction workers in employment.

In the non-domestic sector, Government grants of €11.5 million will leverage a total spend on energy efficiency of €30 million across 100 exemplar projects we are supporting in the public and business sectors. Our advice programmes for business have helped more than 2,000 businesses save an average of 12% on their energy costs - through energy efficiency - within one year. The 200,000 people these businesses employ are all a little more secure in their jobs because of these savings, which, in total, are worth more than €100 million.

In the context of renewables, growth in Ireland's wind energy sector has been strong in recent years. Wind energy now accounts for more than 10% of our electricity supply. This is reducing our import dependence and our emissions at no additional cost. SEAI has supported 35,000 renewable heat installations in homes and businesses in the past five years. This has built a strong supply chain for technologies and fuels and the sector is now driven by demand and building regulations rather than by financial incentives.

In 2011, more than 150,000 people will contact us directly for advice on how to make their use of energy more efficient and sustainable. This demonstrates how much the awareness of energy has grown in recent years. The investment the Government is making in energy is supporting jobs and bringing economic benefits. A new economic analysis by SEAI - which is included in the information packs circulated to members - demonstrates that for every euro spent by the Government in supporting home energy efficiency there is a net total benefit of more than €5. This demonstrates strong value for money.

I wish to comment on the future and on growing sustainable energy opportunities for Ireland. We see sustainable energy as a very important opportunity for Ireland in terms of its ability to protect, create and support jobs. Ireland has an opportunity to be a global leader in sustainable energy and clean technology. The sector holds huge job creation and economic potential. While many countries intend to exploit this area of opportunity, Ireland has some important advantages. First among these is our resource. We have some of the greatest renewable energy resources in the world. These could meet our own energy needs and lead to the country becoming an exporter of clean energy to Europe. A second advantage is our skills base. The sustainable energy and clean technology revolution centres on information and communications technology, an area in which Ireland already possesses great skills and an international reputation.

The job creation potential from energy efficiency has been already made clear in the context of my comments on the number of jobs currently being supported by the better energy programme. I will, therefore, focus on a number of areas in which we see future job creation potential in respect of renewable energy, etc. The first of these areas relates to marine energy. Ireland has rich renewable energy resources which give it a competitive advantage and which provide an opportunity to reduce its dependency on imported carbon-intensive fuels. On-shore wind energy has been growing strongly in recent years, bringing security and environmental benefits at no additional cost to the electricity system. Great, long-term potential exists in the area of marine energy. A recent analysis carried out by SEAI shows that by 2030, many thousands could be employed in this sector and it could generate a cumulative economic benefit for Ireland of €12 billion.

Bioenergy is the most job-intensive type of renewable energy, particularly in the context of rural areas. We are of the view that it could become a major focus for Irish agriculture and forestry. Confidence in both the technologies and the supply chain has grown in recent years. However, some uncertainty remains in terms of matching fuel supply and demand in the long term.

In the context of the smart grid, Ireland can benefit from the global revolution in clean technology and decarbonisation. The latter is now firmly under way and is well aligned to our strengths in software and other areas. The challenge we face also provides us with an opportunity. Ireland must move quickly to find ways to integrate large amounts of intermittent renewable energy into its electricity grid. This is done by advanced sensing and control systems, including smart meters, remote monitoring and predictive algorithms to allow for the advanced operation of the electricity system. This is what is generally termed the "smart grid" and Ireland is already known internationally as an important early mover in that regard.

It is important to recognise that sustainable energy supports jobs, not just in direct sectors such as renewable energy deployment or building retrofit but also in many other sectors through cost reductions and enhanced sustainability. It is also important to note that many aspects of job potential are interrelated. For example, deploying renewable energy equipment supports jobs directly but it also makes it more possible for Ireland to attract renewable energy research jobs. This is because investment and enterprise decisions rely heavily on signals as to which markets are supportive and active internationally. A healthy deployment sector shows a willingness to do business and this can lead to further investment. Another important point is that a shift from conventional to clean energy supports job creation in itself because such a shift implies higher labour intensity and more money being spent in local communities rather than on fuels imported from other parts of the world.

SEAI has been working to quantify the opportunities that exist with regard to the number of jobs that could be created in and around the area of sustainable energy. We categorise those job opportunities in the following order: energy efficiency; renewable energy; and general enterprise competitiveness. These elements relate to supporting jobs in all types of businesses and attracting new inward investment. We estimate that, in total, more than 30,000 people could be employed in the sustainable energy sector by the end of the current decade. In the information packs provided, we have illustrated the various areas in which we believe those jobs can be created.

Professor J. Owen Lewis

We hope we have shown the committee the value of the authority's contribution to Ireland's needs in terms of jobs, economic savings and energy sustainability. Our work demonstrates the rich opportunity sustainable energy represents for Ireland. We face considerable challenges and many are not easily addressed. However, if we can work to find solutions to these challenges Ireland can become a global leader in this field and the economic, employment and social benefits will be substantial.

Chairman

I thank Professor Owen Lewis and Dr. Motherway for their presentation. I call Deputy Éamon Ó Cuiv to put any questions or comments he may have.

Deputy Éamon Ó Cuív

There has been a considerable debate on energy. Have the witnesses any estimate of the total oil equivalent that could be saved if every house in the country was made energy efficient?

I had been working on the issue of rented accommodation as evidence seems to show that it is in rented accommodation that people suffer the most from a lack of fuel efficiency. What would be the view of the SEAI if the Government was to make it mandatory that all rented properties registered with the PRTB had to initially have a BER rating and that landlords had until 2015 to ensure their properties were brought up to the required energy efficiency or otherwise they could not be put on the market to let?

Chairman

I propose to bank three questions. I call Deputy Harrington next.

Deputy Noel Harrington

I thank the representatives of the authority for attending the committee to outline what it proposes to do under its strategic plans. They paint an attractive picture of the progress that will be made in the sustainable and renewable energy sector by the end of the decade and of how sustainably competitive it can be. One of the representatives said that global investment in this sector is increasing from €750 billion to double that figure of €1.5 trillion per annum. That represents huge opportunities not only in terms of energy efficiency and sustainable energy but for making money. It is a hugely attractive proposition for large global companies, and those operating at the microgeneration level, to get involved in.

I do not attribute blame to the authority for this but pose the point that if we are such an attractive business and sustainable model, it is difficult to square that with the fact that every electricity consumer here has to pay a PSO levy to kick-start it. I have a major problem with that. It is not mentioned anywhere and very few consumers even know that they are paying to kick-start an industry where technologies are still not sufficiently attractive for operators to get involved in it. It is an anomaly we do not often hear about. The industry is portrayed as being very attractive and that operators will get involved in it as it progresses but it still needs that kick-start. That is not fair. Consumers pay enough for power, and more than consumers in most European countries.

Such levying of consumers must be examined. As the technologies become cheaper and more attractive for businesses to invest in, it is they who should promote it but they should do it to the benefit of the consumer. We have heard in recent debates how such benefits do not always filter down to the customer and we should take cognisance of that.

We supported the better energy homes scheme under which applicants could get grant aid to install solar panels to heat water at a time when hot water was least needed. We should support households, townlands or communities in the microgeneration process. That is the area we should be examining - as opposed to initiatives to facilitate the heating of water - to enable people to transmit power into the grid to make it attractive for themselves, their neighbours and communities to have cheaper, easier and more efficient access to power.

I take this opportunity to raise an minor issue that has come to my attention, for which I do not lay the blame with the authority. It is an issue I raised in this committee when the Minister concerned was present. Does the authority have figures in respect of the warmer homes scheme? I have a concern that contractors involved in it are picking and choosing who they wish and do not wish to support. I would like figures on the proliferation of successful urban applicants under the scheme compared to rural ones. A contractor refused to support an applicant from Bear Island; he gave every excuse as to why the work could not be done.

While this is a minor issue in the scheme of things, it is something the authority should be aware of. I would like to see figures of the take-up under the scheme and an overview of the rural and urban applications. There would have been more of a take-up in urban areas because there would have been more urban applications. There should not be an anomaly where there is an extraordinary take-up in urban areas and a comparatively poor take-up in rural areas. I would not like to think that contractors are cherrypicking jobs.

Senator Pat O’Neill

I thank the members of the SEAI for appearing before the committee. I note page 22 of the authority's strategic plan sets out efficiencies that can be gained and figures for CO2 abatement and savings. Is it possible for the authority to provide for the committee the terms of reference of this survey and how it was carried out? Are these figures reached on follow-up surveys or are they reached by a set-down formula? I would be like the survey to show efficiencies achieved in terms of the energy rating of a house - where it can be rated on a scale from A1 down - as opposed to the monetary gains. Would it be possible for the authority to carry out a follow-up survey? Dr. Motherway said that 80,000 houses will participate in the scheme. Could a follow-up survey of even 100 or 200 houses be carried out and could it be shown to this committee or nationally that if a house had a D rating, to what rating it had it increased by the carrying out of various measures, whether the rating had increased by two points up to a B rating, by one point or only to just above the D rating?

This would be a random survey but it would be an interesting one to perform. People would understand this rating more rather than, say, money efficiencies if they could see the energy efficiency in a house increasing from an E rating to a B rating by the carrying out of certain measures. Could the authority carry out such a survey and put it before the committee at some stage? Could it also provide to the committee the terms of reference in regard to how these figures were reached in terms of the money and emissions saved?

Professor J. Owen Lewis

I will call on the assistance of colleagues in responding to some of the questions. On Deputy Ó Cúiv's question on the importance of the rental sector and his proposal that mandatory standards, whether it be a C1 energy rating or whatever, be set for rental properties, some work has been done on that. Would Dr. Brian Motherway like to address that point?

Dr. Brian Motherway

Without anticipating policy per se, we support the principle of using those kinds of opportunities to set standards and we see there are benefits in setting minimum standards. The Deputy is right in that from the point of view of getting action to happen voluntarily, the rental sector is the toughest to address because the landlord is responsible for the property but it is the tenant who pays the energy bills. Internationally, that remains a challenge in our sector. The Deputy’s suggestion is one that has merit and we understand that the Department of Communications, Energy and Natural Resources is currently examining it.

I might also address the Deputy's first question on the amount oil equivalent that would be saved if houses were energy efficient. If all homes were brought to a reasonable standard of BER rating of C or thereabouts in approximate terms, that could save up to 1 million tonnes of oil equivalent annually in terms of energy efficiency savings. We consider that there is a very considerable efficiency opportunity available from retrofitting homes in the State, particularly older homes that were built to lower standards of efficiency at the time.

Professor J. Owen Lewis

I will respond to Deputy Harrington's question on the scale of the opportunity that is before us. He also inquired about the PSO levy appearing to subsidise wind energy. In parentheses, I would make the point that the subsidies for conventional energy globally are something like ten times greater than for renewables. The point about wind here is quite specific. We have carried out detailed studies this year looking at the operation of the Irish electricity market with EirGrid. We have published the results of that which demonstrate that in fact wind energy in the Irish system is acting to depress the wholesale price of electricity to an extent that it effectively balances the amount of the PSO going to wind energy. In other words, all the security and environmental benefits that wind energy is delivering to his country in 2011 are without net cost to the consumer.

In passing, Deputy Harrington might have suggested that Irish energy prices were relatively high by European standards. Our detailed studies on the area using EUROSTAT data show that we are about average. We are not low but we are certainly not higher than the average. Dr. Motherway led the studies with EirGrid on the PSO levy. He can clarify whether I have misled the Deputy.

Dr. Brian Motherway

We face a challenge on our side in that the PSO levy is visible on a bill so people can say they have spent X amount of euro in a given month towards supporting wind energy. What is less visible, however, because of the complexities of the market which is difficult to explain is that when bidders make bids every half hour for the wholesale price of electricity, wind is lowering the wholesale price. Our analysis shows that, by coincidence, it almost exactly compensates for the cost of the PSO. In fact, when one looks on it as a whole in detail, wind energy is not adding to the consumers' price. That is an important point because at a large scale onshore, wind is now fully competitive with all types of conventional electricity generation. Those benefits are important in terms of security of supply and carbon reduction.

Professor J. Owen Lewis

On solar water heating and why we would support that, let me first put water heating in context. I know we are not building many new buildings now but in recent buildings built to modern standards, space heating used to be dominant in terms of the dwelling's energy balance but as that has been reduced substantially with the improved standards of insulation, water heating has remained static. It is more important than it used to be. Given that we have a technology that can deliver 50% or 60% of the annual demand, the thrust in the Government's commitment to this technology in the early days was to develop markets and competence in order that consumers could get reliable, professional service and products that delivered performance reliably and competently, and to regulate that market. That has been achieved. There are possibilities. In a way I would suggest that they are not alternatives, the choice between solar water heating and microgeneration. We probably need everything we can get where economics permit.

On the warmer homes issue, until fairly recently we did not have national coverage so that we could deliver a service to those facing challenges of fuel affordability in terms of upgrading their dwellings, but now we do have national coverage and we also have national waiting lists. That is only within recent months. We can see where people are on the waiting list and we require our contractors or the community-based organisations to undertake the work wherever they are located. We are confident that contractors cannot cherry-pick and are required to undertake the work up to the numbers for which they are contracted according to the waiting list.

Dr. Motherway might take the question by Senator O'Neill on the surveys of change and the ex-post studies.

Dr. Brian Motherway

First, the document we gave to members with our note today contains the answer to part of Senator O'Neill's question. It details the methodologies and assumptions we make on how we calculated those figures in our strategy. I hope that will answer most of the Senator's questions. If not, we would be happy to discuss it further. It explains the method that we used which was official Department of Finance cost-benefit analysis methods in calculating both the financial and environmental gains.

On the question of building energy ratings, BERs, the Senator's point is well made that it is a more tangible measure. We are just completing a detailed analysis of 600 homes where we got permission from the home owners after they got grants from us to track their energy bills and BER over a long period to see not only what happened directly after the work was done but how their behaviour changed over time. We will publish the analysis shortly and we will make sure the committee receives a copy of it.

Senator Pat O’Neill

If a person applies for a grant and is approved, could we carry out a survey before the work commences and then continue it afterwards so that one can see what the home was like before it became more efficient?

Dr. Brian Motherway

To get a grant from us under the better energy programme, all homes must complete a before and after BER form. We track the rating which, for example, can go from a D to a C, but we also want to know more about that because what happens is that when someone gets a more efficient home, sometimes they turn up the temperature or leave the heating on for longer, so one loses some of the efficiency through a change in behaviour. We know for every single grant we give the official before and after rating, but in some cases we are studying in more detail what happens over a longer period as people's behaviour changes.

Professor J. Owen Lewis

Dr. Motherway is referring to what technically is called a rebound effect so that not all the improvement is seen as straight energy savings. Nevertheless, if people have more comfortable and healthier homes, that is also a benefit. Although our focus primarily is on the energy dimension, we would recognise that there is value in the other benefits of the Government's expenditure in this area.

Senator Pat O’Neill

I look forward to seeing the survey.

Senator Paschal Mooney

Fáilte roimh na daoine seo anseo. Does the Sustainable Energy Authority of Ireland, SEAI, have any input into exploration methods? Reference was made to technologies which I will touch on in a moment. There is no reference to oil and gas, particularly gas exploration. Could someone clarify for me whether it is a low carbon energy resource?

How proactive is the SEAI in terms of the basics, its mandate to improve energy efficiency in the home? I rarely see any advertisement or media focus on simple things. One specific example of which most people are not aware is that turning off their television by remote control and leaving the red light on effectively means they are still consuming up to 50% of the energy output of a television set that is turned on. There is an increasing number of wide-screen LCD televisions. I understand they generate a large amount of electricity in the home along with computers. That is an example at a basic level apart from the good work the SEAI is doing on BERs.

The presentation referred to strategic security issues that face us as a country. It was said that, at the same time, we face challenging EU emissions reductions and renewable energy targets that must be met to avoid substantial penalties and that we should not underestimate the scale of the challenge all societies face in moving quickly to radically new energy systems and technologies. Do the witnesses have an opinion on the current controversy around hydraulic fracturing, a debate which will come into the public domain even more and which practice affects my part of the country? As my colleague, Deputy Ó Cuív, will know from various visits there, the north-west coniferous basin spreads across four or five counties. The issue has been raised previously by the committee with the Minister for Communications, Energy and Natural Resources. The people who are about to explore the commercial viability of extracting gas from the basin are suggesting the fuel, if extracted, will address 20% of our energy needs. Do the witnesses have any opinion on this? Will SEAI have any input into what will be a quite lengthy process before extraction occurs?

Reference was made to our resources. We have some of the greatest renewable energy resources in the world, particularly off our coasts where there are wave and wind energy resources that could meet our energy needs many times over, thus raising the prospect of Ireland becoming an exporter of clean energy to Europe. Will Professor Lewis expand on the current position in this regard? There are mixed signals as to the huge investment costs involved, particularly regarding wave energy. I understand Ireland is unique, with the possible exception of somewhere in south-east Asia, in terms of its great potential to harness wave energy off its coasts. With the professor expand on our position on this?

Deputy Robert Dowds

I will take up where Senator Mooney left off because he has touched on one of the questions I wanted to ask. I am also very interested in the question of wave energy and estuarine energy from tides. It is an area in which we could become a world leader, for the reasons Senator Mooney has touched on. Can the delegation indicate when this is likely to be a real runner? Is there any way in which the SEAI or some other Government body can encourage investigation in this area, perhaps through an award for somebody who comes up with a good idea on how we might extract energy effectively from waves?

With regard to the specific goals of the authority, 40% of our electricity is supposed to derive from renewables by 2020. Are we on target? If not, how can we reach the target?

I am sure the witnesses are aware there is a possibility to extract geothermal energy from the fault-line that extends from Blackrock to Newcastle in Dublin. Is there any way in which this can be done? I have seen an experiment in this regard in a town near Munich. I was very impressed by the total lack of noise or pollutants although I gather it takes time before such a project pays for itself. It seemed to be a great way in which to obtain energy for housing.

Everybody seems to be of the view that we have one of the best wind resources in the world. There is plenty of evidence of this, even in Dublin. To what extent can wind energy production be increased? Can the delegates comment on the British interest in trying to develop wind energy in Ireland? Is it likely to get off the ground? Are there problems associated with delays in obtaining planning permission for wind installations? If so, how do the delegates suggest we can best get around them?

Is it a good idea to go down the route of bioenergy given that there is likely to be increasing demand for food, with the consequence that land would be best used for food production?

Deputy Tom Barry

I thank the delegates for attending. I have availed of renewable energy schemes and I installed a wood gasification boiler last year. Last winter testified to the fact that it works. It is a great feeling to be running a household on renewable energy. Dr. Motherway is correct that we probably turn the heat up a little too much at times. It is a habit when the resource is cheap. Having said that, there is a good feeling when one is paying someone to cut the timber locally as opposed to sending money out to the Arab states. It feels right.

When I was installing a wood gasification boiler under the relevant scheme, I got a number of quotes. One amounted to €7,000 and another to €3,200. There are considerable differences. When I delved further into the matter, I found out I could have got a boiler for €2,800 in the Czech Republic, where the boilers are manufactured. There will always be some inadequacies when a scheme starts. There is certainly room to reintroduce schemes in such a way that would allow for the proper pricing of equipment.

How long will all this take? There is some frustration over the delay in meeting our targets. Based on the presentation today, we should be generating 3,000 jobs per year if we are to reach the target of creating 30,000 jobs in ten years. Must we wait until the ninth year before 30,000 people are employed all at once? I do not mean to be facetious.

I run a business and find it is very difficult to listen to all the aspirations when I have to pay €25,000 for electricity in August and God knows how much for diesel for the drying of grain. I would very much like to see subsidies in this regard because we could have generate savings.

There is a huge problem with anaerobic digesters in Ireland. People find it difficult to move from the planning stage to delivery. Germany is considering building 1,400 new digesters fuelled by both sugar beet, or fodder beet, and corn. Since beet breaks down faster, it gives a longer cycle time to each run and alleviates the problems raised in the food debate, as referred to by Deputy Dowds.

There are problems associated with wind energy. Microgeneration is non-competitive. I did my best to determine whether I could engage in it personally but could not. Can the SEAI play a role in identifying the bottlenecks that exist? We will never reach our targets unless we point out clearly where the system is not working.

I brought a group of people to Denmark some years ago to see a town's energy being derived in full from straw. The town has been fuelled on straw for 20 years through a district heating system. It only broke down for one day in that period, which is terrific. Ireland has fields upon fields of straw and probably produces 3 million tonnes annually. Even if domestic demand is 1.5 million tonnes, a huge amount of biomass in the fields is being wasted. I store a lot of oilseed rape and a lot more will be grown year on year in Ireland, but it is all being exported to Germany.

The witnesses mentioned something about which I feel passionate. The real business here concerns innovation worth $750 billion. This is what we need to strive towards. While I commend energy efficiency in the Houses and believe it is terrific - it is import substitution - we need to get ourselves into the game of innovation. I am afraid we will end up doing what we all like doing, namely, expending a lot of wind energy discussing the matter. If the authority could find a way of pinpointing why we are not making progress, it would be most useful. We were discussing renewable energy ten years ago and are still discussing it today. How dear must fuel become before we finally become serious about the matter? Perhaps the authority has a role to play in this regard; I hope it has. Most members present agree renewable energy is the way forward. We need a coherent path.

Professor J. Owen Lewis

On Senator Mooney's point, we do not work in the area of exploring for oil and gas. Conventional fossil fuels are the responsibility of our Department, but we do not work in that area. We have a role in domestic energy efficiency, of course, and we run public information programmes. I am not sure if they have recently highlighted the important area of stand-by losses in electricity referred to by the Senator. We have recently had a residential efficiency programme that was focused on insulation.

Dr. Brian Motherway

The Senator is correct that we need to keep a focus on that area. Our awareness focus in the past has been on encouraging people to take up retrofits and deeper measures, but the point is well made. All that information is available on our website for those interested, but we take the point that we need to disseminate it.

Professor J. Owen Lewis

Mr. Declan Meally has reminded me of an important point. A lot of work is done in the schools programme. Our observation is that schools are important levers of change when children come home, and we have seen some very good results from schools.

Senator Paschal Mooney

Are the witnesses aware that newly produced televisions now require people to turn off at source, rather than on the TV set itself? There is no "On" or "Off" switch on the new generation of television sets, which obliges consumers to turn them off at the wall socket. I suggest that is another element of this whole stand-by loss.

Professor J. Owen Lewis

It underlines the importance of developing standards in this whole area. In that area we may be standard takers, but in industrial energy efficiency for instance we are standard givers. We have helped to generate global standards in industrial efficiency because of the experience over 15 years in this country of pioneering work in that area.

Unconventional gas is an area of some controversy internationally. The United States has had some experience of extracting shale gas over quite a long period but there is not a European experience as yet. There have been a lot of European studies, quite a few of which pointed to serious environmental issues which need to be addressed. They have drawn some contrasts between population densities in places where this gas has been extracted in the United States. This is not an area in which we have undertaken work but we have done, and are doing, work on exporting clean energy.

Deputy Dowds also raised the issue of ocean or marine energy technologies. Our wind resource is among the best in Europe, while our ocean or wave energy resource is among the best in the world. There are no better sites, but the technologies are at very different stages of development. Wind energy onshore is mature, while offshore it is increasingly close to maturity. Extensive offshore wind-farms are deployed in the Baltic Sea, while the British have a major commitment to the construction of such farms. Wave energy is not mature, it is a developing technology. This country would be among the leaders in that area. We have a good national strategy which includes national test facilities in UCC.

Deputy Barry mentioned supporting ideas and there are something like 5,000 patents for wave energy devices. We need to get experience of wave energy devices in the sea, as distinct to coming up with more new ideas. Our test facilities in UCC's hydraulics and maritime research centre are very good. The university, together with the Cork Institute of Technology and the Maritime College at Ringaskiddy, is proposing to build a new centre in Ringaskiddy which would do even better and greater things. This is coupled with a test site which we operate with the Marine Institute in Galway Bay for quarter scale devices. Some of the devices that have been deployed in Galway Bay would be among the longest surviving wave energy devices yet developed in the world. This is leading technology.

The Sustainable Energy Authority of Ireland is currently supporting something like 18 different companies, most of which are start-ups at the early stages of development. We are proposing the construction of a full-scale test site off Belmullet, which in many ways would be the global reference site. It would provide the most testing and harshest conditions of the fantastic wave resource off our west coast. We anticipate that pretty well any device proposed for commercial deployment would need to be tested there. This is at an earlier stage of technology.

There is a marine technology which is more advanced. About two weeks ago, I was in Brest where a company called OpenHydro - which is based in Greenore, County Louth - was launching the first 16-metre diameter turbine made in Greenore. It is mounted on a base made in France, but designed by OpenHydro, which allows it to be mounted on the ocean floor, so it is out of sight. This turbine generates electricity in a way which is very different from wind. Although it is still a turbine, it is perfectly predictable. One can predict the tides as far ahead as one likes. This technology is being bought by the largest utility in Europe, Électricité de France, which will be deploying four such devices next year off Brittany. That is an interesting story, which is further advanced than wave energy. Nonetheless, there is a lot of interest in wave energy because it is a bigger resource overall.

When we talk about exporting clean energy we are in many ways talking more about an enterprise strategy than an energy strategy. We believe that we can meet our mandatory targets for 2020 primarily by onshore wind, which will provide us with a more economical route. Some of the other EU member states, however, do not have access to that sort of resource. That is where the reference to the British interest is important because the British-Irish Council has confirmed an interest, at a political level, in the idea of Irish sites contributing to meeting the British clean energy requirement. Energy systems think in terms of decades rather than quarters, which is why economists sometimes have difficulty in dealing with these kind of timescales.

I believe I have addressed most of Deputy Dowds' questions. He also asked whether or not our 2020 renewable energy target is on time. We have been doing very well on that. There has been some slippage in the last year. As the committee knows, there is some review of refits and a refit tariff, while the European Commission is looking at state aids. The refit is not subsidising this but it is providing stability to investors in terms of being able to anticipate what income there may be.

I will now ask Mr. Meally to touch on the geothermal issue.

Mr. Declan Meally

Deputy Dowds asked about geothermal technology and he saw an example of it in Germany. That technology is quite simple in terms of extracting heat from the ground and using it. The idea with the technology is that it is beside a heat source. We subsidised part of the research into the source at Newcastle and provided some grant aid. It is also being looked at in terms of whether the local authority could be used but the challenge is transporting the heat that distance from Newcastle to the heat requirement, say, in Tallaght centre through pipe work. It is something that can be looked at in terms of using the heat source closer to the extraction area to potentially convert some of the heat to electricity. That is the way some of the developers are looking. It is a new technology and we have supported research in that area.

Professor J. Owen Lewis

On the question of jobs and whether they will all arrive in 2030, we are able to point to 6,000 this year, mainly in the retrofit area but, again, Dr. Brian Motherway has done some work in that area and I will ask him to touch on that.

The Deputy said we have been talking about renewable energy for ten years. Some of us have been talking about it for nearly 40 years. Things are happening. Ireland has, by international standards, high penetration of new renewables. I distinguish between hydro and biomass which are different in their characteristics for the grid. EirGrid has excellent experience, which pretty well every other grid operator in the world will need down the line, which is important.

Dr. Brian Motherway

On the question of jobs, the point is well made that sometimes they can look quite far in the future. Last year, a study we were involved in with Forfás on skills and jobs in the sector estimated there are between 10,000 and 15,000 jobs in clean technology in Ireland and that includes the 6,000 jobs this year in Government programmes run by us, in particular, Better Energy and the retrofit schemes. We see that as the base from which to grow towards 30,000 in the next eight or nine years. In our view, much of the activity is in retrofit. It is very here and now. It is not as advanced technology as in some areas.

The next phase will be what we generally call smart grid. We meet many entrepreneurs and international companies such as IBM that are investing here in smart metering, advance control systems and so on. The next phase beyond that will be about Ireland exploiting its significant offshore resources which my colleague has touched on. We are some years away from major job creation but, in the coming decade, jobs will emerge.

I will address two questions on bioenergy asked by Deputy Dowds: The first was about food production. There is an international debate about not pushing food prices up or displacing land use. Our view is that it is a case of looking at the different types of bioenergy and understanding where the opportunity lies for Ireland. If one thinks in terms of liquid bio-fuels going into petrol and diesel in cars versus gasification of logs, to which Deputy Barry referred, or wood chip from forest thinning, certain areas present opportunities for Irish farmers and foresters where there is no demand for products, and this will help drive demand. Other areas are not for Ireland in term of economies of scale and it is about being better at understanding where the opportunities lie for Ireland. Deputy Barry's point about anaerobic digestion is important because not only is it a resource when coming off farms, it is a waste in some cases that needs to be dealt with. There is, therefore, a double win in terms of making that waste benign but also exploiting its energy content. We see that as promising. There is some frustration in the sector about permissions and we are working with our colleagues in other Departments to try to address that. We are starting to see some movement.

It is often the way with new technologies that they stretch both the private sector in having confidence and us in understanding which Department it falls under and so on. We all need to work together and we very much work with our colleagues in other Departments to address those issues.

Chairman

Deputy Barry referred to the SEAI identifying bottlenecks and informing policy to address them.

Deputy Robert Dowds

I also asked whether there is a problem securing planning permission for wind farms, whether the process goes on too long and how to get around that. This is related to bottlenecks.

Deputy Éamon Ó Cuív

Onshore wind energy is being harnessed. It is predictable and the cost is known. It is the most economic and it produces the most energy. Biomass and so on are relatively small players compared with what can be produced by onshore wind farms. I acknowledge the limitations of onshore wind in the context of the grid but my understanding is one can get to a target of 40% and still operate it. There are questions about the retrofit scheme but if there is a good scheme, what are the barriers? When reference is made to planning, what is the subset of the planning? My understanding is it is a conflict between natural heritage and hen harrier versus wind. How would the SEAI remove the barriers to getting to the 40% target?

Dr. Brian Motherway

The Deputy's point is well made. To meet renewable energy goals in the next decade, onshore wind will be the main act. We have had some success. Onshore wind has increased over the past five or six years by about 20% year on year and it is a little known fact that we have the fourth highest level of use of wind in electricity in the world. We have been quite successful in that regard but that brings us less than halfway to our target and there is plenty of work to be done over the rest of this decade. There is frustration in the sector. It is a question of aligning permissions and issues as much as any individual one because, ultimately, to build a wind farm in Ireland one needs planning permission, access to the grid, finance and the acceptance of the local community.

We are about to publish a new analysis of planning permissions over recent years county by county in a database that shows how things are going in terms of planning, where there are bottlenecks and where everything is running smoothly. Inconsistency is a major point to address. There seem to be cases where local planners are interpreting regulations regarding habitats and so on differently. We are working with our colleagues in government on this and later this week we have a conference on wind and environmental issues in the sense of nature and ecology issues. We are bringing the different stakeholders together to thrash out some of that.

The second component is grid permissions. We are a victim of our success because so many people want to build wind farms that the queue to get permission for access to the grid is long. We could have more turbines on the grid than we need. Not all of these will be built and there is frustration in the system around that.

Those two factors inform the third, which is investment. Plenty of people are almost ready to build wind farms but until they have all the permissions lined up, it is difficult for them to close the deal in terms of banking and so on. While it is a new sector, only taking off in substantial amounts over the past five or six years in Ireland, the complexity of bringing together various components is causing frustration. We are working on this. We do not want to belittle the extent of frustration, except to acknowledge that it is happening because there is so much activity in the sector. There is a rush to do a lot and that is causing problems. We feel that with our colleagues in the Department of the Environment, Community and Local Government, the National Parks and Wildlife Service and other parts of government, we can work together to address those questions.

Deputy John O’Mahony

My questions are related to Dr. Motherway's comments. The submission states, "Ireland must move quickly to find ways to integrate large amounts of intermittent renewable energy into its electricity grid." Ireland has the biggest opportunity in that regard and Mayo, from where I come, is one of the counties in Ireland with the biggest resource. I have dealt with many ordinary citizens who are trying to develop their own wind farms. One example is of someone who applied in 2003 for planning permission for a connection but to get a connection in 2020 his planning permission would have run out twice or three times in the lead-up to it. Twenty years after the first wind farm operated in Mayo there is no more grid availability now than there was at that time. That is just one example.

In that context, and it relates to Deputy Ó Cuív's question, in terms of integrating large amounts of intermittent renewable energy into the electricity grid, we must take advantage of the opportunity that exists in that regard. It is crazy that those concerned are being asked for huge deposits in advance of 2020. The one way we will develop our wind potential is to allow the ordinary citizens have a say. They see the large companies being granted permissions and so on. The one way we will reduce the number of objections, etc., is to allow the people have a say and be part of the action.

Deputy Éamon Ó Cuív

On the planning aspect, I have read the document with interest because it seems to me that for wind farms of any size - each county has its own - even the Bord Pleanála planning permissions do not always appear to be consistent. That is a big problem. Planning is linked to finance. Nobody will finance somebody to pay for the gate or whatever it is they are being offered now if there is a high risk of the planning not being approved at the end of the process because of objectors. The issue of local acceptance must also be tackled.

On the planning issue, it seems there is an inconsistent approach by MPWOS, the local authorities, the Department of Communications, Energy and Natural Resources, the Department of the Environment, Community and Local Affairs, the Department of Arts, Heritage and the Gaeltacht, and the non-governmental organisations. What we need is a coherent approach in terms of saying whether areas are either in or out. There must be much more certainty in that regard. Otherwise, I cannot see how the finance will follow because my understanding is that one must first pay for the grid connection and put in a good deal of investment before one gets the final planning permission. The grid connections were not conditional on having planning first and therefore one is asked for cash up-front.

The second issue is one that has become topical in the past week. I take it the witnesses would agree that the wind is in the west. It is on the side of mountains and in many cases is in relatively depopulated areas that do not have massive grid connections. If the target is to be 40% there has to be a great deal of new cable across the country, not only in terms of the local connection but one must work back through the system. If the witnesses do what they want to do in Bellacorick, in Deputy O'Mahony's constituency, their organisation must build massive new lines all the way down into the grid, way beyond what the person who is looking for the connection would have to pay for.

In terms of national interest, the 40% is a big national target but if commercial interest was the grid owner's only concern, would there be a conflict between the national interest and the grid owner's short-term financial interest? Would the grid owner say that he or she has a commercial duty to his or her shareholder and it is not economic to invest in this even though it is very much in the national interest in terms of carbon replacement? In other words, the shareholder would say he or she spent so much on the grid and he or she gets so much return from selling the product whereas currently the grid policy is determined by a national interest and not by a shareholder interest.

Professor J. Owen Lewis

Both Deputy O'Mahony's and Deputy Ó Cuív's questions are closely related, and the grid is central to each. Eirgrid's plans published as Grid 25 is a substantial investment programme to deliver reinforcement and modernisation of the grid. It is not only to deliver renewable energy but also to ensure that if an industry emerges in Mayo it has a stable and good quality power supply. I gather that investment programme is proceeding on plan and even somewhat below the original planned budget. That is a crucial part of enabling the delivery of the targets imposed upon us to which there seems to be a general commitment.

The planning issue is relevant not only to the wind farm but also to the grid. There has been public debate about interconnectors and whether they should be north-south or east-west. All of us involved in physical development face something which arguably the Deputies and Senators have a better understanding of than we have in terms of how to gather public support and commitment for the necessary development that is needed.

The wind resource is emphatically but not exclusively in the west. It would be fair to note that there are very big opportunities in the midlands and elsewhere, including the south west and so on.

Dr. Motherway had some important points to make about the grid and so on. We participate in some international work. In the area of wind action the International Energy Agency has a particular activity called the social acceptability of wind. It is not only in Ireland that this issue arises.

Deputy O'Mahony made a key point that where local people are involved in developing a project there tends to be local support. When something does not appear to offer anything to the people who feel it is being imposed on them it is not surprising that there is less support.

Dr. Brian Motherway

Professor Lewis has covered it well. We share the Deputies' frustrations, although it is gratifying for us to hear there is a great deal of support in the committee for these targets. We are working with our colleagues in Government and with all stakeholders, including local communities, on issues that are, as Professor Lewis said, posing challenges in most countries in the world and not just here. When Deputy Ó Cuív listed the number of Departments and agencies involved in the issue it was a reminder of one of the reasons for that because this is something that cuts across many conventional departmental boundaries and many different interests in terms of local environment versus climate change, global environment and different economic interests and therefore it makes these issues challenging.

We acknowledge the frustrations in the sector but there has been fast growth in the wind energy sector. We would like to see it continue. Undoubtedly, there is work to be done in terms of issues such as aligning permissions on which we believe there is more to be done. It is something we discuss regularly with the energy regulator among other parties in terms of how we can all work together to try to remove some of those bottlenecks.

Deputy Éamon Ó Cuív

Deputy O'Mahony put his finger on a good point. When a small operator takes into account the cost of getting from zero point to planning, there is a huge investment with a huge risk. A big operator is probably in a better position to, first, figure out the risks and, second, to take the hit if he or she hits the wall on a planning application. The uncertainty on the planning side seems to be a big reason for smaller operators not getting involved. I am talking about those producing 10 MW or whatever.

I return to the grid. To put it simply, Grid 25 has been funded by the ESB and not by EirGrid. The ESB has this big plan to upgrade the grid because it believes it is in the national interest to do so. The ESB is owned by the people, so the wider interest takes precedence over the narrow fiduciary interest of the company. It was interesting to read the McCarthy report over the summer, in which he recommends that we do not implement Grid 25 because it is not necessary any more. If the national grid was owned by a private company with shareholders, would they invest in Grid 25 or would the shareholder interest of maximising profits take precedence over the need to improve the grid, cut carbon emissions and take all the wider aspects into account? They might say not to proceed as they comprise a company seeking to make a profit and this is not going to give a return on capital, never mind that there are a range of other benefits to the nation. Would they be likely to slow down investment in basic infrastructure?

Professor J. Owen Lewis

I am not sure I can answer that.

Chairman

I thought that would be your answer.

I have a question that relates to what Deputy Ó Cuív said about generation of less than 25 kW, which is probably what we would describe as microgeneration, and the ability of smaller applicants to secure both planning and the resources to develop sites. Does the SEAI help to form policy or opinion on refit and whether it should be divided between micro and larger energy providers, particularly with regard to wind? It seems that, without that security, finance will not be available to anyone, let alone to microgenerators.

Professor J. Owen Lewis

The Department makes policy, of course.

Chairman

Do you help to inform it?

Professor J. Owen Lewis

We do studies and modelling work that can contribute to the formation of policy, and we can certainly carry out analyses of the implications. To the best of my knowledge, the Government is considering microgeneration policy.

Dr. Brian Motherway

We are supporting some trials of a range of microgeneration technologies, including smaller wind turbines but also micro combined heat and power and other technologies that are available at the size the Chairman mentioned. To return to Deputy O'Mahony's point, these have important local community value as well as being significant to the wider energy policy question. We believe they merit support and we are discussing them with our partners in the Department of Communications, Energy and Natural Resources. The point to bear in mind is that the smaller a wind turbine is, the more expensive it is in terms of its energy return. Big wind turbines are more efficient than small ones, so one has to balance the cost of bringing smaller ones into the system with the wider social benefits that undoubtedly accrue. We believe there is a place for microgeneration. We are completing some detailed technical trials of the performance of devices and that will help to inform policy because it will clarify how well they perform and how much energy they generate.

Chairman

As I understand it, there are three or four microenergy turbine operatives in Ireland, including one in my constituency that is making blades from timber, which improves the net carbon contribution of the turbine. They do not have a huge voice because there are so few of them, but they would say that the British system is not sustainable in the long term. In Britain there is no cap on feed-in and operators are paid 42p, which is nowhere near the level that will be required here. With the development of smart meters in the domestic setting, the roll-out of microgeneration in volume could do a considerable amount to help us to meet our targets and mitigate carbon. I am glad that trials are taking place but the witnesses and the committee need to be aware of the issues.

Professor J. Owen Lewis

Chairman, it goes back to the point Senator Mooney made earlier about the importance of measurement, of understanding performance and of having figures. I should have remembered the tests, and I thank Dr. Motherway for reminding me of them. They also involved instrumenting the things so we have data on the performance of the different types of microgeneration that have been trialled. That is an important input to policy formation as well.

Regarding information for the committee and the Oireachtas in general, we are hoping to offer a half-day briefing session in the middle of October for any Deputies or Senators who are interested. We will cover the range of programmes in a systematic way and we will be happy to answer any questions that members wish to ask. We will send you notice of that, Chairman.

Chairman

I thank Professor Lewis, Dr. Motherway and Mr. Meally for attending and for their informative contributions.

I will make a final comment. In the witnesses' presentations, there was an emphasis on job potential and job creation. Dr Motherway acted as a facilitator at the conference in Dundalk, where there were two polarised views on energy efficiency. On the one hand it was not seen as a job creation strategy, but on the other hand it was seen as a huge one. The view of Mr O'Driscoll from Glen Dimplex, whom I mentioned earlier, falls somewhere in the middle, and he gave a practical and pragmatic overview of the value of energy efficiency. He stated that, by cutting overhead costs for business in particular - that is what he concentrated on - we use scant resources more efficiently, which can first of all protect jobs and then create jobs. We should probably focus on that. We should not see this as a policy for the creation of jobs, but it will create them if it is rolled out sensibly.

I thank the witnesses and members for their contributions, which have helped us enormously.

The joint committee adjourned at 4.10 p.m. until 2.30 p.m. on Tuesday, 27 September 2011.