Thank you. There is no problem in regard to the cancellation of the meeting. We fully appreciate the circumstances given the proximity to the election results. I will quickly run through a short presentation with my colleague, Mr. Peter Doyle, who is the commercial director, to give an overview of Imperative Energy and, more specifically, to talk about the job creation initiatives we have announced, and make some very specific recommendations that may be taken on board by the sub-committee when making its final report.
We appreciate two things. We have reviewed the terms of reference of the sub-committee. We will, therefore, keep our recommendations fairly precise. We also appreciate the state of the national finances so we will focus on zero cost policy initiatives. Before moving to the specific recommendations I thank the sub-committee for inviting us. I am delighted to see so many Kildare people here.
The company, Imperative Energy, was founded at the end of 2007 when it was launched in Dublin by the Minister for Communications, Energy and Natural Resources, Deputy Eamon Ryan. The shareholders include the management team, me, Mr. Peter Doyle and a couple of other individuals, and Green Belt Limited, Ireland's largest private forestry company which manages approximately 200,000 acres of forestry. The opportunity for our business, which is converting biomass to energy, comes out of the long-term State commitment to the forestry programme. We are at a stage where the private forestry sector has become productive and we are now in the business of harvesting and converting to energy. Out of that stems the job creation opportunities.
In addition, we have forged a number of strategic partnerships with some world renowned companies, principally, Schmidt & Partner Engineering AG, a Swiss-based boiler manufacturer with global representation. We are delighted to have been selected as its sole representative for the UK and Ireland.
Imperative Energy is also a founding member of the bioenergy competence centre here in Ireland. This is an initiative headed up by Enterprise Ireland and competitors of ours who have come together to collaborate on strategic research initiatives.
My background is in forestry but I also worked with the Department of Communications, Energy and Natural Resources and the Department of Agriculture, Fisheries and Food before entering the private sector to establish Imperative Energy. My colleague, Mr. Peter Doyle, has a varied background and has been involved in a number of start-up and early-stage companies in international business, IT, communications, engineering and construction. Imperative Energy is a bioenergy solutions provider for the commercial and industrial sectors, that means we take wood biomass and convert it to energy. That energy may be in the form of electricity or heat, through hot water or steam. We design purpose-built, bespoke plants at clients' sites. We take responsibility for design and the supply of equipment, we install the equipment and operate and maintain it. More importantly from the client's point of view, we fully finance the project and retain ownership of the equipment. We completely manage the supply chain and thereby allow our clients to switch to green energy at no capital cost. We make money by entering into long-term supply contracts with clients. We charge them a rate per megawatt hour for the energy we deliver over a ten or 15-year contract. Our business model can help fast track the uptake of biomass because we take the risks relating to technology, fuel supply and the raising of capital away from the clients, which allows them to switch instantly to renewable energy. We think this is an ideal business model for the public sector.
We installed the largest biomass solution in the public sectors in Ireland and the UK at a hospital in Downpatrick, Northern Ireland. It is a 1.65 MW biomass boiler that uses 1,800 tonnes of pellets, which come from a company in Enniskillen. The pellets are all sourced on the island of Ireland. The installation replaces 1.5 million litres of oil, which is not sourced on the island of Ireland, and the fuel saving to the client is in excess of £275,000 per annum. In other words, the cost of the biomass installation was paid back in less than one year. The real motivation for the client taking this action was to reduce carbon emissions and reach the targets set in this regard under the carbon reduction commitment. The client reduced carbon emissions by 2,500 tonnes per annum.
The presentation prepared for our previous scheduled meeting shows we were shortlisted for the UK renewable energy awards and we were highly commended at the ceremony in London last week. In terms of the future development of the company, we have set up a second office in the UK and have taken on new staff members. We now have offices in London and Cheshire. Most of our activity is in the UK at the moment, for a variety of reasons. We are actively recruiting people in Ireland, particularly project managers and technical sales managers. Our latest installation is a hospital project in Tunbridge Wells, close to Gatwick Airport. This is quite similar to the installation in Downpatrick. This week we are installing a system at the Youghal leisure centre in Cork.
One of our major recent announcements was the launch of BioSpark, a new project being developed in Claremorris. This is particularly relevant to the work of this committee because, when completed, the project will create 180 new jobs — 80 directly on the site and 100 indirectly through supply chain management. The BioSpark initiative is a joint venture with a local company called Sustainable Biopolymers and we are delighted to partner it. The project involves a bio-processing facility that will use natural fibres and biomass, such as wood and straw, and will produce a range of high-value products. In addition to this we will develop a biomass combined heat and power plant on the site. NUI Galway will be our exclusive research and pre-commercialisation partner on this project.
Aside from BioSpark, we are finalising a round of fund-raising and have raised €30 million from UK companies. Essentially, this is foreign direct investment in the future growth of Imperative Energy on the island of Ireland. This is quite an achievement in the current climate as it is difficult to raise any kind of finance at the moment, be it equity or debt finance. We are happy to have achieved a significant milestone that gives us the resources to execute projects like BioSpark. We have plans to replicate that in several other locations around the country. We chose Claremorris as a start because there is quite a significant biomass resource in the area. That part of the country has significant forest resource and we are locating the plant close to the resource.
However, we have plans for other areas. We are looking at Carlow because of its central location in terms of tillage activity. Straw is obviously a significant potential feed stock. We are looking at some other projects in Naas and Portlaoise as well. In addition to our Irish activity, we have identified several suitable sites in the UK, including one just to the east of London on which we are conducting a fairly intensive survey this week. In terms of Ireland, what I have said relates to Imperative Energy Limited.
In terms of the opportunity, there are a few headline points to raise in the context of biomass in Ireland. In the current financial crisis everybody seeks to determine our net natural competitive advantages and growing biomass is certainly one of those. The biomass yields in Ireland are higher than anywhere else in Europe. In addition, although many agricultural enterprises suffer because of commodity prices at present, we have a strong agricultural heritage. There is a significant knowledge base on how to grow crops, manage supply chains, and so on. The great advantage of using biomass as an output rather than foodstuffs is that it does not suffer the same price volatility as providing certain inputs into the food sector. To contradict the first two points, there is a low level of forest cover in Ireland. There is a significant opportunity to considerably increase the forest cover. While it is not absolutely essential for Imperative Energy Limited's short-term aims, we would certainly encourage the sub-committee's final report to underline the importance of maintaining the forestry programme in Ireland.
Obviously, there is a number of possible renewable energy sources. The real advantage to bioenergy in terms of contribution to try to stimulate economic activity is that bioenergy is far more employment intensive than any other form of renewable energy if used appropriately. Certainly, many other countries look to use biomass to co-fire coal-burning stations but that is an incredibly inefficient use of biomass which is, after all, a scarce resource. We would certainly encourage all policy initiatives to ensure that biomass is used as efficiently as possible, that is, in heat only installations or in combined heat and power installations.
Given that is the opportunity, how do we maximise value in terms of job creation? I stated at the start that we would only focus in on zero cost policy initiatives because we appreciate the difficulty of finding any State funding for initiatives at present. There are two on which we want to focus: first, trying to switch across all public bodies to using renewable heat; and second, switching future gas distribution networks to district heating.
On the first point, we welcome the OPW initiative. The tender documents have just appeared on e-tenders which would indicate that the OPW is considering installing a biomass system for the Dáil and the surrounding Government Buildings, and that is certainly a welcome initiative. We acknowledge the OPW's leadership in that regard.
There are several other longer-term policy initiatives. We would like to see tax breaks for green business parks and an increased incentive for producing electricity through biomass combined heat and power. We would encourage the relevant authorities dealing with renewable energy here to look at policy initiatives in the UK, specifically in terms of renewable heat incentive rather than a capital grant as it will bring about the objectives far more cost-effectively than giving capital grants towards the purchase of equipment.
The benefits of these policy initiatives would obviously be to reduce energy imports and carbon emissions and to create the market poll for biomass, that is, forestry and energy crops, which would stimulate rural employment and, obviously, strengthen Irish bioenergy companies which can then springbroad into export markets.
I will focus in a little more detail on the two specific initiatives. The first one is to try to switch the public sector across to using renewable heat. Based on our estimates, the public sector — all public buildings — uses approximately 430 million litres of oil equivalent every year just heating the buildings, that is, space heating and whatever hot-water usage, at an approximate cost of €300 million. What is certain is that all of the oil used is not generated from the island. It is all imported, with a significant flow of State funding overseas. The current heat procurement process requires the relevant public body to find a capital budget, which is difficult in the present climate. The body concerned will then appoint a consultant to inspect the system and run a tender to purchase and install the boiler. It will run a separate tender for fuel supply and an additional one for ongoing service and maintenance.
The process of procuring heat is labour intensive and it is capital intensive for the public sector. Our suggestion is for the public sector to purchase the desired input, namely, the heat, rather than buy the component parts. That would open up the market to companies such as ours. There is no monopoly in this particular sector because a number of similar companies operate in the space. It would allow us to bid to supply the public sector with renewable heat under long-term contracts. If we secured long-term contracts to supply heat we would be able to put the capital to work to design the systems, supply the equipment and look after the ongoing service, maintenance and fuel supply. It would allow the public sector to switch to renewable energy without any concern for the design or the technical specification of the equipment, and without having to worry about servicing, maintenance or where the biomass will come from.
If the entire public sector switched to renewable energy it would stimulate a market for some 1.2 million tonnes of biomass to displace the equivalent of 430 million litres of oil. That would require approximately 70,000 hectares of biomass under sustainable production. By opening up the market, without any stimulus in the form of grant aid, we would stimulate the market pull for biomass. Not only would that allow us to achieve our renewable energy targets, it would also allow the Department of Agriculture, Fisheries and Food to surpass its objectives for the establishment of forestry and energy crops. Long-term contracts of between ten and 15 years would enable us to provide absolute price stability to farmers for their products. Farmers would not have to spend all their input costs establishing a crop without any idea of what they might get for that crop in a couple of months' time.
The second initiative relates to district heating. Gas distribution involves large gas transmission lines which take gas from the interconnectors or the Kinsale field and, in the future, will take it from off the west coast into the wider network and to local transmission networks in each town. This network is currently being expanded and there are significant plans to continue the expansion despite the fact that the macro picture suggests we should try to wean ourselves off natural gas, rather than increase our reliance on it. There is a programme to spend €25 million on installing gas distribution networks to a number of towns, including Cashel, Cahir, Gort, Loughrea, Ballinrobe and Monasterevin.
There are also plans for gas distribution networks to be established in another dozen towns. This is a significant lost opportunity because it will involve putting in infrastructure which, in ten years, will be hugely reliant on imported natural gas or liquefied petroleum gas. We would like this money to be spent on a hot water system as opposed to a natural gas distribution system. In each of the towns in question, streets will be dug up, as will people's gardens. Companies will be part of the network and gas boilers will be put into individual premises to convert gas to hot water for space heating. If money is to be spent digging up roads we would like hot water pipes to be installed as part of the process. Gas transmission could still take place but there would be a large gas boiler on the edge of town generating hot water which would be pumped around the town. We could then start to integrate a certain percentage of biomass into the system. This is not a novel concept but is used in virtually every member state of the EU. Members of the sub-committee have visited Güssing in Austria so will not be surprised at that fact but it would be a novel development in Ireland. It would be a zero-cost initiative because money is already being spent digging up towns. Why not put in an infrastructure that can handle an increased amount of renewable energy rather than something that can only be supplied with a fuel source which will increasingly be imported?
In addition, there would be a significant improvement in air quality, particularly in respect of particulate emissions, because rather than installing thousands of boilers into such towns, centralised boilers would be installed on the towns' edges with an increased possibility to put in engineering solutions to scrub emissions and so on. In the context of the BioSpark development at Claremorris that I mentioned, we have undertaken a study to ascertain whether we could roll out a district heating network for Claremorris. It is a town of approximately 3,000 people and we will have a combined heat and power, CHP, plant on the edge of town that will produce electricity. Consequently, we will feed the heat into a local district heating network as opposed to the current position, in which everyone uses oils as a primary source of heat because Claremorris does not have access to gas. It would involve weaning people off oil and putting them on to an energy source derived from biomass harvested within a 30 mile radius of Claremorris, which is far more sustainable in the future. The diagram on the next slide in the presentation provides an indication of what the solution would look like. While we do not suggest high-rise development in each of the relevant towns, the graphic gives the impression that instead of having individual gas boilers in every apartment and house, there would be a centralised energy centre on the edge of town and a heating network to transport or distribute that heat to individual heat meters. End users, such as apartment or house owners, still will have meters in their homes and still will receive a bill from a utility every two months. It simply is that the energy would come from biomass, as opposed to from natural gas.
These are the two zero-cost policy initiatives we want the sub-committee to consider in its final report. As for the longer-term initiatives I mentioned, I encourage the sub-committee to guide the relevant Department and State agencies towards examining the incentive for biomass combined heat and power in more detail because the existing offering simply is not competitive relative to what is on offer throughout the rest of Europe. In addition, Imperative Energy Limited would encourage a movement away from capital grants and towards a renewable heat incentive. Essentially, as this would become a feed-in tariff for renewable heat, it would reward those who generate renewable energy, unlike grants, which simply reward people who buy equipment that they may or may not ever use. In addition, arising from our competitive advantage in growing biomass, we certainly perceive green business parks such as the BioSpark development to be a key way in which Ireland can attract inward investment by allowing companies to enter completely carbon-neutral green energy business parks, in which all their heat, process steam and electricity would be derived from local sustainable resources. The other long-term commitment would be to underline the need to commit to the forestry programme to ensure that biomass is available to us in the long term. That is all I want to say and I am happy to take any questions in this regard from members.
