Energy Charter Treaty, Energy Security, Liquefied Natural Gas and Data Centres: Discussion (resumed)

The purpose of today's meeting is an engagement regarding the Energy Charter Treaty, energy security, the use of liquefied natural gas, LNG, and the growth of data centres in Ireland. I welcome Professor Barry McMullin from Dublin City University, DCU, and thank him for coming before us to share his expertise.

I remind those present of the long-standing parliamentary practice that they should not criticise or make charges against any person or entity either by name or in such a way as to make him, her or it identifiable or otherwise engage in speech that might be regarded as damaging to the good name of the person or entity. Therefore, if their statements are potentially defamatory in respect of an identifiable person or entity, they will be directed to discontinue their remarks. It is imperative that they comply with any such direction. There are some limitations to parliamentary privilege for witnesses attending remotely outside the Leinster House campus and as such, they may not benefit from the same level of immunity from legal proceedings as a witness who is physically present.

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 outside the Houses or an official either by name or in such a way as to make him or her identifiable. I remind members that they are only allowed to participate in this meeting if they are physically located in the Leinster House complex. In this regard, I ask that prior to making their contributions to meeting, members confirm that they are on the grounds of the Leinster House campus.

I invite Professor McMullin to make his opening statement.

Professor Barry McMullin

I thank the committee for the opportunity to provide evidence on these important topics. I am a full professor in the faculty of engineering and computing at DCU with a research focus on national energy systems decarbonisation in the context of the Paris Agreement. My comments will primarily address national energy security but I will also relate this briefly to the other topics.

Ireland has suffered chronic energy insecurity virtually since the foundation of the State. This arose due to the dominant role of fossil fuels in 20th century energy systems combined with Ireland's relatively small endowment of indigenous fossil fuel resources. Our current energy system comprises three almost equal sectors - transport, heating and electricity. Transport is dominated by the use of oil-based fuels, of which we have no indigenous sources. This is mitigated to some extent by the maintenance of a substantial reserve through the National Oil Reserves Agency, NORA. Heating and electricity are both critically dependent on natural gas. This is partially supplied from the indigenous Corrib field but that is declining quite rapidly and we have virtually no domestic natural gas storage. Given the prospect of intensifying geopolitical instability, it is clear that Ireland has a compelling strategic need to address this situation of poor and deteriorating energy security.

Separate from this specific national situation, it is well understood that net global emissions of CO2 - arising primarily from the combustion of fossil fuels - must now fall to zero extremely rapidly. Accordingly, urgent disruptive transformation of our energy system is required in any case. The good news is that Ireland is exceptionally well endowed with indigenous zero-carbon energy sources in the forms of on and offshore wind and solar energy. In principle, there is the opportunity to simultaneously address decarbonisation and energy security through replacing most, if not all, of our insecure supply of imported fossil energy with these secure indigenous sources. Given the inherent variability of wind and solar, this will also require very large-scale deployment of green hydrogen production and storage. All of this is technically feasible, although it will require decisive policy measures to bring about.

The bad news is that due to prolonged procrastination and the effective denial of the climate crisis, the time now available for this transformation is extremely limited. The scale of the challenge is likely to come sharply into focus when the Climate Change Advisory Council, CCAC, publishes its proposals for the first carbon budget programme covering the period from 2021 to 2035. Without prejudice to such detailed analysis as may be provided by the council, our research at DCU strongly indicates that we will need radical action over that period on both supply and demand sides. Even with the most rapid conceivable build out of zero-carbon energy supply, it will also be essential to minimise society-wide energy demand for at least the next two decades. Of course, this must be done on a basis of equity, solidarity and the prevention of energy poverty.

To turn to the question of LNG, it has been suggested that, given the reality of our deepening exposure to disruption to natural gas supplies through our pipeline connections to the UK, the construction of LNG import terminals may represent a prudent diversification of supply routes. This argument is flawed on multiple grounds, including the risk that locking in additional natural gas supply will conflict with the speed with which we now need to exit its use; the risks associated with upstream release of methane in LNG production, especially via fracking; and the essential global need to reserve "embodied emissions space" for the building of zero carbon energy infrastructure.

In relation to data centres, I have already emphasised the need to minimise national energy use over at least the next 20 years. In that light, combining effective climate action with continued rapid expansion of a sector that relies on additional energy consumption is akin to trying to run down an up-escalator. We are constantly being pushed off track. Given the related, very near-term impact on the stability of the electricity grid, I consider that there is a strong argument for an immediate moratorium on such expansion, at least pending full and detailed assessment of the actions which will be required to meet the carbon budget constraint for 2021 to 2024, the first carbon budget period.

In relation to the energy charter treaty, I simply endorse and echo the evidence already given to the committee by Dr. Tienhaara of Queen's University, Ontario, Canada, specifically the recommendation to support a co-ordinated EU exit from the treaty. Finally, I provided a selection of documents addressing more specific aspects of the points made above. I look forward to engaging with any questions members may have.

As this part of the meeting is confined to 45 minutes, I propose that each member be given two minutes to address their questions to the witnesses to ensure that all members get an opportunity to pose their questions. Is that agreed? Agreed.

I thank Professor McMullin for appearing before the committee and for his presentation. I note that he has concerns about the way in which the data centres are placing excessive and unprecedented energy demands on the grid. Does he see this as evolving into an argument for the need for us to have LNG terminals and import liquefied natural gas because one begets the other?

I will also ask about the guiding principle that we should inform our energy policies to reduce energy demand. What are Professor McMullin's views on the Planning and Development (Climate Emergency Measures) (Amendment) Bill 2021, specifically the restriction it proposes to place on all planning authorities in relation to the building of new, or the expansion of existing, fossil fuel infrastructure and data centres during the period of the climate emergency?

Professor Barry McMullin

On whether there is a risk that the continued expansion of data centres will translate into further pressure for the introduction of liquified natural gas terminals, I think that is quite likely. It is a separate discussion. The instability in the grid that EirGrid is warning about this coming winter, and potentially for successive winters for several years, arises not from a shortfall in the supply of natural gas per se, but from a shortfall in firm generation capacity, which is capacity that can be dispatched on demand. The issue we face on the grid currently is a potential shortfall in firm generation capacity, which, if combined with poor weather conditions for wind and solar in the middle of winter when normal demand is high anyway, would risk an electricity generation shortfall. This would not be because of a shortage of natural gas, but simply because we do not have enough firm generation capacity. That could lead to unplanned or forced electricity blackouts, which would be a bad thing. Nobody would want that to happen. Obviously, therefore, the greater the peak demand is in the coming few winter seasons, the greater the risk that this sort of combination of circumstances could come about. Adding natural gas terminals does not change that per se. As I said, there is no immediate risk to supply though the UK and we have adequate pipeline connections to the UK to ensure that if we had the generation capacity, we would meet electricity demand.

Although properly speaking, this should not yield an argument for deployment of LNG, there is a tenuous connection in that the longer we continue this critical reliance on natural gas, especially as the Corrib field depletes, the more exposed we become to potential geopolitical disruption of gas supplies. It is not directly linked to the danger of blackouts per se, but it is true that the more electricity we use, the quicker we use it. That is to say, the more electricity demand outpaces the build-out of renewable supply in wind and solar, and especially the build-out of storage which allows us to dispatch or move around wind and solar energy in time, the more exposed we become to geopolitical disruption in gas supply. In turn, that might strengthen the argument for LNG. I still think that is a bad path to go down, but that is a separate discussion.

My apologies but I have forgotten the end of the Deputy's second question.

I was referring to the intent of a Bill, which has been debated on Second Stage, to place a clear restriction on all planning authorities in relation to the building of new, or expansion of existing, fossil fuel infrastructure and data centres during the period of a climate emergency.

Professor Barry McMullin

Combining all fossil fuel infrastructure with data centres may be slightly blunt. As I said, there may be arguments for deploying more gas-fired generation capacity on a temporary basis. However, in respect of data centres, large energy users and infrastructure to support the expansion of total energy use - not the migration of energy use from heating and transport into electricity because that is a different question - pending having our carbon budget programme and a climate action plan that reflects that programme, which will be next year at the earliest, it would not be prudent to continue expanding our electricity demand with further large users such as data centres.

I thank Professor McMullin for his presentation. I am trying to get a handle on the difference between Professor McMullin's advice and other advice. Am I right in saying that Professor McMullin has quoted someone arguing that energy security cannot be a defence for prolonging CO2 emissions? That seems to be leading the professor to the suggestion that we should not be putting in any new gas or fossil fuel infrastructure. The counterargument that we hear from other witnesses is that this risks blackout and that we need gas as a transition fuel as we move from a system that is predominantly fossil fuel-based to one that is predominantly renewables-based. I wish to probe Professor McMullin's view on that.

I do not quite understand Professor McMullin's argument for a moratorium on one particular source of energy demand, namely, data centres, and not on other sources of demand. How does he establish the national priorities of one versus the other? Demand management in total seems to be a most important tool but it would be a rather blunt measure to pick one source of demand and put a moratorium on it, while treating others in a different way without an apparent economic, social or any other model underpinning it.

The next issue is whether LNG offers some security for a system that is going to be gas-dependent, at least in the medium term.

As I understand it, Professor McMullin's argument is that LNG in some cases, namely, fracked sources of gas, adds methane. Nevertheless, that is surely on the inventory of other countries which, under the Paris Agreement, are obliged to take that into account and mitigate it in the commitments they make under that agreement. Is it a concern for Ireland, therefore, as to where our LNG comes from and whether some element of it comes from fracked sources? That is a matter for the countries that permit that. We do not permit it. I would like some clarity on that point.

Professor Barry McMullin

They were excellent questions. As for ruling out all new fossil fuel infrastructure, I would argue for a more nuanced view. There can be legitimate cases for some further development of fossil fuel infrastructure in the short term, particularly in respect of some potentially gas-fired electricity generation and natural gas storage. When I say "gas", for the moment I am talking about natural gas. Natural gas storage development also provides diversity in supply and some insurance hedging against disruption of natural gas supply. That is in preference, in my view, to LNG terminals, particularly because natural gas storage facilities carry with them the possibility for migration to hydrogen storage. Rather than something that is basically a road leading nowhere, investing in something we would have to abandon, namely, LNG import infrastructure, natural gas storage infrastructure can migrate to hydrogen storage in general.

I am not ruling out any investment in fossil fuel infrastructure but, at the current time, pending the review of energy security that the Deputy initiated, and most especially pending the carbon budget programme for the next 15 years, we really cannot make any informed judgment about particular fossil fuel infrastructural developments. We need to prioritise getting those matters in place and, in the meantime, not making things worse or prejudicing the sorts of actions we may need in the light of the carbon budget constraints.

As to why I am focusing specifically on not expanding energy use from data centres rather than other potential industry developments that would involve large additional energy use, in recent years they have contributed disproportionately to Ireland's overall total energy use. In the projections to 2030, this is even more stark. I fully agree with the Deputy that in an ideal world, one would not bluntly look at one particular sector of large energy use and would have something more sophisticated than that, but it is characteristic of emergency-type situations that we sometimes have to be more pragmatic than that. This large sector is clearly identifiable as a distinct sector and it is growing at a completely disproportionate rate. It is growing energy use in the national territory at a rate much greater than that of any other identifiable sector. it is amenable to targeted action, because it is identifiable and distinct, and it can be prioritised because, scale wise, it is very large. In an ideal world, there are many things we would do differently but, to be pragmatic about it, in regard to managing the growth and total energy use, targeting the data centre sector in particular is entirely defensible.

The Deputy asked about LNG and whether, if methane leakage is associated with fracked natural gas expansion and-or the processing of gas into liquid form and the processing back to gaseous form, that is, local degasification, we should simply say the upstream methane outside the national territory is someone else's problem, since it would be off the national inventory. He went on to argue our energy security trumps that. I can see where he is coming from. The existing structure of territorial emissions accounting has problems; it is not ideal. I do not think anyone working in this area would advocate an exclusive focus on territorial accounting but it forms the basis for the multilateral co-ordination under the Paris Agreement, so it is very important. That said, we all have an obligation not to make things more difficult for other parties to the Paris Agreement if we can help it. Choosing to pursue a path we know will present more difficult challenges for other parties to the agreement is not really a great way of trying to encourage multilateral co-ordination and co-operation. Ireland is a small player, globally. We are completely dependent on our ability to persuade other, much larger parties to take much stronger action, but we have to be very careful-----

I thank Professor McMullin. I do not mean to be rude by cutting across him, given that the detail and quality of his answers are perfect, but many other members wish to come in. I ask him to keep his responses short and I apologise for having to interrupt. I really want to accommodate all members in their questions. There is another session after this one, so we have to conclude in advance of that to allow time to set up.

I thank Professor McMullin for his testimony. To return to the critical reliance on fossil fuels and the potential need for them into the future, he stated that a move away is technically feasible, although it would require decisive policy measures to be brought about. He went on to say we would need almost to build a separate firm with a dispatchable, instantaneous supply. Does he foresee that future involving hydrogen battery storage? What technology does he foresee filling that gap whereby we now rely on coal, gas and other fossil fuels as a critical backup? At what stage is that technology now in its development? What can Ireland do to be a leader in grasping the opportunity to make that transition as quickly as possible?

Professor Barry McMullin

I apologise, to the Vice Chairman and members, for going on for so long. I will try to keep my responses short.

There is no need to apologise. It was just about the time constraints.

Professor Barry McMullin

I completely understand.

If we want an energy system that is delivered, as much as possible, from wind and solar resources, we need to be able to move that energy around in time. At the moment, that is not too big a problem, given that a large proportion of our electricity is still coming from other sources and the vast majority of our heating and transport energy comes from other sources. That is not too big a problem right now, but as we try to build out as fast as possible to get rid of those fuels from our system, we will reach the point where it is essential to be able to move that energy around in time at a very large scale. The biggest storage facility on the island is the Turlough Hill pumped-storage hydro station, which has a capacity - I apologise for the technical numbers - of about 2 GWh of storage. We need terawatt hour-scale storage to successfully deploy, year round, 70%, 80% or 90% of our energy from variable renewables. That is 1,000 times larger. We are not going to do that with pumped hydro. The only practical way of achieving that kind of scale of energy storage is with chemical forms of energy. The starter for all chemical forms of energy, if we are starting with electricity, is hydrogen.

Hydrogen storage would be the first preferred option. Hydrogen can be stored in very large quantities but the best option for doing that is in so-called salt-cavern geological formations, and on the island of Ireland they only exist in Northern Ireland. There is a project already under way looking at natural gas storage with a possible migration route to hydrogen storage there. On an all-island basis, that should be a high priority for moving along as quickly as possible and understanding what are the limits and what is the capacity there - whether we can reach terawatt hour scale or whether that will not hack it for terrawatt hour scale. Clarifying that would be really important.

The other technology needed is electrolyzers to convert electricity into hydrogen and generators to convert hydrogen back into electricity. One would not use all electricity back in hydrogen but would use some directly in heating and in transport.

Of those technologies, electrolyzer technology is developing very rapidly. It is certainly ready for medium-scale buildout already but it would need incentive schemes to make it work. It would need something like the renewable electricity support scheme, RESS, auction-type process to get much faster buildout of electrolyzer capacity. Similarly, gas turbines for electricity generation are already available in similar scales to natural gas for using hydrogen instead of natural gas but it would require explicit structured incentive schemes to ensure that any new construction of gas-fired generation was capable of migrating to hydrogen combustion.

Those technologies are there. We are much more exposed and reliant on them than many other countries but, conversely, that is an opportunity for us to push the technology profile. However, it would require, as I say, things like auctions.

I thank Professor McMullin. If he wishes to elaborate further on any of the questions that have been asked by members, he is free to write in to the committee.

I welcome Professor McMullin and thank him. I have a couple of quite specific questions and it will probably inform our conversation later with the CRU and EirGrid. One of those would be what kind of capacity are the LNG terminals in the UK at at present? We are quite clear. I believe the Minister is quite clear on seeking and having an end now to LNG and it is important to look at what the international situation is. Second, what kind of energy loss is there as we send energy from one side of the country to the other because the fact that we have large users around the capital and fewer on the west coast has been identified as an issue for us? Third, in relation to EirGrid and the supply of power to new industry or new service providers, my understanding is that they would alert EirGrid and EirGrid would make an offer with terms and conditions attached. What would Professor McMullin like to see in those terms and conditions when new services or, indeed, industry are seeking that connection from EirGrid?

Professor Barry McMullin

I thank Senator Pauline O'Reilly. I might have to follow up with more detail on some of these. I do not have data to hand on the UK LNG capacity. I note the UK pipeline capacity has been reduced recently due to one pipeline being out of action and that has translated into some restriction on supply all the way through to Ireland. In terms of LNG capacity in the UK, I do not have up-to-date figures but I can look those up.

In terms of transmissions losses, the system operator tries to manage the buildout of new transmission capacity to ensure losses are kept within certain limits - the exact numbers can be provided by them later on - but we need to be honest with citizens that a future that involves electrification of heat and transport, quite independently of data centres, will require more transmission infrastructure in order to keep those losses down to management levels. That means more transmission lines, more pylons, more transformer stations. Those are essential to this energy transition and I am not sure that is yet generally understood.

On terms and conditions for large energy users' new connections to the grid, I would not want to pre-empt the system operator, EirGrid, who are the experts in this, but, in terms of conditions for systems stability, these are ensuring that they have their own peak generation capability. I would prefer to see that peak generation capability being progressively required to be in the form of on-site hydrogen storage where the hydrogen is generated - it is green hydrogen - and we start scaling that up over a short number of years. We need, however, to build that in so that their backup generation, which is really system support generation at this stage if it is on-call to the system operator, would be constrained to be zero carbon which, effectively, would mean it has to be green hydrogen at the moment.

I thank Professor McMullin for his presentation. It was interesting that Professor McMullin spoke quite a bit about demand management. It is something that we are missing in our discourse when we talk about energy here. We had a lot of discussion last week about data centres. There was a motion for a moratorium on the permissions and it was notable the lack of any discussion about putting any controls or demand management systems in place for large energy users. My fear is that when there is demand management, it tends to be more towards individuals and the State will require a lot of individuals and families when it comes to demand management which will be quite costly for them. At the same time, the State appears not to want to limit the demand of large data users. I am wondering does Professor McMullin see that as a risk when it comes to undermining our efforts to meet our global targets in a way that aligns with the principles of a just transition.

In relation to data centre, is there any mechanism that Professor McMullin is aware of by which the State could retrospectively regulate or condition them? There has been huge growth over the past number of years. Is that growth something that we will have to live with forever and a day and accommodate or is there a way to retrospectively deal with it? Is there a risk that if the Government takes measures to regulate it post-permission, those companies could utilise the investor court system to seek compensation in relation to potential commercial impacts on them?

Professor Barry McMullin

I thank Deputy Whitmore. I will try to be brief. To clarify, demand management is used in two quite different senses. There is a technical sense that one will hear the system operator, EirGrid, use in terms of demand management. That is about moving energy demand around within, say, a 12-to-24 hour period. It is not reducing the total amount of energy used. It is changing somewhat, within a few hours, when exactly it is used. That is important for managing the peak demand but it is almost irrelevant to emissions. That form of demand management is not what I have been talking about. I have been talking about managing the total annual energy demand that we have quite independently of that sort of short-term shifting of demand in time by a few hours.

I agree with Deputy Whitmore. The measures to do that form of society-wide demand management are tricky and there are risks of undue burdens falling on individuals. I refer the Deputy to the other document I submitted, which was a submission to the Citizens' Assembly on the tradeable emissions quotas, TEQs, idea. I will not go into the details now but I commend it to the Deputy's attention. That is a way of trying to balance the effective rationing of emissions across individuals, corporations and wider society.

In terms of the data centres or the large energy users that have already been built out, I am not a lawyer and I will not pretend to advise on legal exposure to the State depending what measures it might adopt.

Again, the technical system I mentioned would, as the emissions cap was reduced, require that those corporate entities with large emissions footprints would have to take progressively stronger and more expensive actions to mitigate it. They would either successfully mitigate it or decide the activity was no longer worth it or profitable and would stop doing it. That might lead to reductions for that reason. That would be appropriate. That would be the economics of carbon pricing as opposed to carbon taxing doing what it says on the tin.

I thank Professor McMullin. Some of my questions have been asked. Will he elaborate on the fact that Ireland does not have a hydrogen strategy? How important is it that Ireland develops a green hydrogen strategy to take the decisive decisions he outlined in his opening statement? I noted his social media post about the Commission for Regulation of Utilities, CRU, and the security of electricity supply. Its focus is on a least cost delivery of generation and infrastructure instead of one of speed, reliability or cumulative emissions. Will he outline why he thinks this is problematic from an energy needs hierarchy perspective?

Professor Barry McMullin

I thank the Senator; it is much appreciated. Much depends on how quickly we think this decarbonisation transition has to happen. If we think it is 30, 40 or 50 years then we have many more options on the table. We are awaiting the CCAC's advice on budgets but the carbon emissions budget numbers we have looked at suggest we do not have anything like 30, 40 or 50 years. We have 15 to 20 years if we are going to do our fair part on a global basis. If we do not do our fair part on a global basis our opportunity to influence the big emitting parties will be greatly reduced. If that is the time we have then in our context, where we have large indigenous resources of variable renewables, green hydrogen looms large. I should emphasise that green hydrogen is what I am speaking about when I say "hydrogen". There is a lot of activity in Europe on hydrogen generally and some activity on green hydrogen. In Europe and the world, Ireland has an almost unique need to push green hydrogen development as fast as it can go. If we do this, we will have the opportunity to lead in the technology development and even export the expertise we gain in doing so. Rapidly developing this hydrogen strategy in the light of carbon budgets as part of the climate action plan will be important over the next year.

The CRU operates on a statutory mandate. It is doing what it has a statutory mandate to do. The statutory mandate is to manage the monopoly providers of electricity and gas infrastructure to satisfy demand at least cost. It is not its fault that this is its remit. My point of view is that as a society we need to discuss our priorities. We throw around phrases such as "climate emergency" and "climate crisis". I am not sure we have internalised them. We spent 30 years basically saying climate action is important and as long as the economy is going well, we will work on climate. I am afraid we have run out of road on this. We now have to flip it and say we have to achieve our climate targets. We will keep a strong as possible an economy within this limit but the first question every year should not be whether the economy is growing but whether our emissions are falling at the level required. As long as the answer is "Yes" then all other economic choices are open. This can only happen if there is wider societal buy-in to the idea. In my view, this deep into the climate crisis we do not have a good way forward unless we can reorient our priorities. We must remember that gross economic activity is a poor indicator of societal well-being. Prioritising other things rather than just having more and more economic activity for economic activity's sake should not automatically be threatening. I will stop there.

I am in the building. My questions have been asked but I have a concern. The Government is speaking about building a data centre in Celbridge in my constituency. Professor McMullin spoke about a moratorium. Carers in Celbridge are worried about brownouts and blackouts because they care for children who need oxygen, nebulisers, heists and other essential equipment. Does he think the political will is there to address how serious the climate crisis and the supply crisis are?

Professor Barry McMullin

I thank the Deputy. I empathise with the concerns of her constituents in those situations. I would not want to downplay or underplay the significant consequences that unreliable electricity supply would have. We do not want to go there. My concern is that if we do not restrict the expansion in our electricity demand, at least until we have a much clearer picture of how things are evolving in meeting our emissions goals, then to avoid those brownouts and blackouts we will wind up building more additional fossil fuel generation capacity and running it. If we build it, it will run. It will not run for zero times. I know people say it will only run very little but there will be more emissions than there would have been had those data centres not been built and built corresponding fossil fuel infrastructure to be able to meet peak demand. The emissions would definitely be higher in that situation. With regard to a moratorium, or at least a temporary moratorium, until we have a clear pathway whereby we can confidently believe will reduce overall emissions fast enough expanding data centres is a bad idea.

My question builds from the previous question. To what extent has the modelling we have had on emergency scenarios been focusing on emergency supply issues rather than emergency modelling on demand and demand reduction? How do we ensure we do not create hostages to fortune in terms of demand? Data centres were mentioned, which encompass one area. There is the idea of the precautionary principle and being able to model demand reduction. What Professor McMullin pointed out was strong with regard to there not being space. The space we have in embodied energy needs to be going towards either resilience or transition rather than to expansion. Will he comment on the focus we need to have on demand when we look at energy security, and perhaps the Energy Charter Treaty with regard to areas of risk in terms of our capacity to respond as we should?

He mentioned LNG and specifically the need to exit and the dangers of putting in place new infrastructure that we will then have to exit. How does this intersect with the treaty? Carbon budgets are one issue and our Paris obligations are another. These are also part of it. Wider than the carbon budget is the collective obligation on temperature. Professor McMullin specifically mentioned methane. Will he comment on how methane can serve as an accelerant that shrinks everybody's space for the transition and in terms of temperature?

Professor Barry McMullin

I thank the Senator. I do not want to go to deep into the modelling but it is important to discriminate modelling for blackout-type scenarios and grid security. It is very specialised.

EirGrid is excellent at doing this engineering and work modelling. Modelling the interaction between demand and demand constraint, not demand management in the sense of short-term demand management but managing down the overall amount of electricity demand, traditionally is not something that EirGrid or the CRU has been mandated to do, although I think that mandate could change to reflect precisely the precautionary principle. We need a lot of confidence on emissions actually going down and going down quickly.

On the Energy Charter Treaty, I completely agree with the Senator in regard to LNG terminals. Again, I am not a lawyer so I do not want to go too far down that road but, from what I understand, there is certainly a potential exposure there. We only have so much stuff that we can build and while we are still using lots of fossil fuel to build stuff, and that is our current energy system, the more stuff we build other than renewable energy or zero carbon energy infrastructure, the less emissions space we have to build that.

On budgets and the Paris Agreement, the council is required in formulating its budgets to ensure they are consistent with the Paris Agreement obligations, including the role of methane, and the budgets are designed to be inclusive of all gases for the specific purpose of testing the consistency with the Paris Agreement temperature goals. Although I am not party to this process, I assume the council will be using the most appropriate scientific tools we have available, looking at the combined impact of all gases in terms of the temperature goals. I fully expect it will do so.

The other aspect of the Paris Agreement is equity, not just national equity but global equity. It is very important to take that seriously. Ireland, as a society, is very sympathetic to the developing world-----

Thank you, Professor. I am going to have to curtail you. Deputy Danny Healy-Rae has waited patiently while committee members have asked questions. I call the Deputy to make a brief contribution.

I thank Professor McMullin for his input today. He will agree that offshore wind energy is at least ten years away. In the meantime, and especially this winter, it appears we have an energy shortage and people may be cold in their homes as they may have no option other than electricity. Does Professor McMullin agree there is an urgent need for Shannon LNG to get off the ground and import natural gas, not fracked gas?

Professor McMullin mentioned gas-fired generators for generating electricity. The Tánaiste put the terror of God in many people when he was answering questions in the Dáil less than a week ago and said we have two gas-fired generators being repaired at present and, hopefully, they will be repaired in the month of October. We are in a fairly precarious position. If Professor McMullin knows about more gas-fired generators, I would be grateful if he let the Tánaiste know at least. It seems we are down to hoping that two will be repaired in the month of October, which leaves a lot of people in a precarious position for the coming months. This winter could be very cold as we have had a lot of warm winters and we could get a very cold and different winter this year. I have many more questions but as time is scarce, I will let Professor McMullin respond.

I ask the professor to answer within a minute, if that is possible.

Professor Barry McMullin

I will take the second question first. Building the Shannon LNG terminal would take a certain period of time but the problem with electricity supply has nothing to do with natural gas supply, so it would not address the threat to electricity supply this winter or the following winter in any way, shape or form.

In terms of offshore wind, there are already many successful offshore wind projects working in Europe and in the world more generally. There is no reason it will take ten years. We already have one small offshore wind facility off the Arklow Bank but that is a very small offshore farm. It is absolutely possible, with the right incentives and schemes in place, to build out offshore wind much faster than the ten years that Deputy Healy-Rae suggests.

Thank you. I thank members for their questions. On behalf of the committee, I thank Professor McMullin for a very engaging, interesting and insightful session and engagement.

Sitting suspended at 3.55 p.m. and resumed at 4 p.m.
Deputy Brian Leddin took the Chair.

I welcome Ms Aoife MacEvilly, chairperson, Dr. Paul McGowan and Mr. Jim Gannon, Commission for Regulation of Utilities; and Mr. Mark Foley, chief executive officer; Mr. Rodney Doyle, chief operations officer; and Ms Suzanne Collins, head of public relations, EirGrid.

I remind our guests of the long-standing parliamentary practice that they should not criticise or make charges against any person or entity either by name or in such a way as to make him, her or it identifiable or otherwise engage in speech that might be regarded as damaging to the good name of the person or entity. Therefore, if their statements are potentially defamatory in relation to an identifiable person or entity, they will be directed to discontinue their remarks. It is imperative that they comply with any such direction.

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 outside the Houses or an official either by name or in such a way as to make him or her identifiable. I remind members that they are only allowed to participate in this meeting if they are physically located in the Leinster House complex. In this regard, I ask that prior to making their contributions to meeting, members confirm that they are on the grounds of the Leinster House campus.

I invite Ms MacEvilly to make her opening statement.

Ms Aoife MacEvilly

I am grateful for the opportunity to discuss these important topics. I am the chairperson of the CRU and I am joined by my fellow commissioners: Dr. Paul McGowan and Mr. Jim Gannon. The CRU is Ireland’s independent water and energy regulator. Our mission is to protect the public interest in water, energy and energy safety. A core element of our vision is ensuring a secure, low-carbon future.

We have circulated to the committee the recently published CRU information paper, which outlines security-of-supply challenges identified in the latest generation capacity statement 2021, along with the programme of work that the commission is undertaking to address these challenges.

The core element of the programme is the procurement of 2,000 MW of new enduring, flexible gas-fired generation that will facilitate the integration of further renewables and support the transition. We are also taking temporary and contingency measures in the interim. These include delivering 300 MW of temporary emergency generation, enhanced demand-side response and the retention for a short period of existing generators which were otherwise expected to retire.

These measures have been developed with EirGrid, our transmission system operator, and will be delivered with EirGrid, the Department of Environment, Climate and Communications and other key stakeholders. The measures outlined will be delivered through either competitive markets or through competitive procurement to achieve cost-effective delivery.

The CRU is fully committed to Ireland’s low-carbon transition, represented by our 2030 targets and our recently adopted Climate Action and Low Carbon Development (Amendment) Act. While we would clearly prefer not to retain some of the higher-emitting generators, we consider this necessary to ensure security of supply. Priority dispatch for renewable generation and higher carbon prices should ensure that these generators will only run when absolutely needed. Their use will also be reduced by increasing renewable capacity on the system and the delivery of the DS3 project which will increase the level of renewables that can be accommodated instantaneously from 70% to 75% and more.

Further CRU work that is under way to support the secure transition and deliver our 2030 targets includes delivering the regulatory frameworks to support the new interconnectors, Greenlink and Celtic; supporting the renewable electricity support scheme, RESS, auctions, including offshore RESS and developing a new framework for offshore grid development; developing the new competitive framework for system services to support best-in-class delivery of 95% instantaneous penetration of renewables; building on the suite of smart services, enabled by smart meters, which allow customers to participate in energy markets, while saving on their bills, including the framework for the clean export guarantee for renewable self-generators; and ensuring our electricity and gas network companies support security of supply and decarbonisation.

Regarding gas security, as Ireland progresses with an electricity system of high renewables, backed up by flexible gas-fired generation, along with the electrification of heating and transport, the security of natural gas supply is of increasing strategic national importance. Gas, and in the future decarbonised gases, will form part of the decarbonisation agenda in decades to come.

The recent closure of the Kinsale gas storage facility and the ongoing decline of Corrib gas production will leave Ireland dependent on a single supply source, via our interconnectors with the UK, for 90% of our gas supplies by 2030. This means that we will not meet the N-1 security standard. Ireland would not have the capacity to satisfy our total gas demand in the event of disruption to the single largest gas infrastructure during a day of high demand. The diversification of gas supply sources, through new types of gas as well as new supply routes, would, therefore, significantly enhance the security of supply of Ireland’s energy sector as a whole, as well as delivering cross-sectoral benefits.

On the basis that there is a ban on new indigenous exploration authorisations and in the absence of viable options for further gas interconnection, we consider it prudent that the Department of Environment, Climate and Communications review of energy security should include an examination of the future role of LNG. We look forward to the outcome of this review.

Electricity demand growth from this data centres is unlike anything Ireland has seen in the past 100 years. At present, this demand is connecting to the grid more quickly and easily than it has proven possible to deliver the supporting transmission and generation infrastructure. As independent regulator, the CRU has, therefore, consulted on a draft direction on new data centre connection policy, which seeks to mitigate some of the security-of-supply risk associated with the growth of data centre demand. We are still deliberating and we will make our decision in October. Our aim is to ensure that data centres are part of the solution to the challenge they present.

Mr. Mark Foley

I am grateful to the Chairman and members of the committee; it is an honour to be here. I am joined by Ms Suzanne Collins, our head of public relations; and Mr. Rodney Doyle, our chief operations officer.

I appreciate that we have been asked to appear before the committee to discuss some topics of current public interest relating to the power system, and I will address these matters directly in our submission. First, I wish to provide a short reminder of what EirGrid does and what we are about. We operate the power system on a 24-7 basis across two jurisdictions on the island of Ireland, thus ensuring people have safe and secure electricity at all times, supporting social and economic growth. We are also responsible for planning the power system of the future, much of which is set out in EirGrid’s strategy, which was launched in two years ago and which underpins the Government’s decarbonisation ambition for the electricity system as set out in the Climate Action Plan 2019 and the forthcoming climate action plan which is imminent.

Our strategy has five key objectives. The first is to connect to new renewables. We expect to connect approximately 10,000 MW of renewables in the next decade, predominantly onshore wind and solar power, and a new generation of offshore wind predominantly from the Irish Sea. We currently have approximately 4,500 MW of renewables on the Irish system.

Second, we must upgrade the network across the country to handle more renewables as well as greater demand for electricity. This means more wires, more pylons and substations and the deployment of new technology on the wires. Recent decisions by EirGrid to place major elements of the new network underground supported by significant public feedback on the matter will support the deliverability of these new projects.

Third, we must engineer solutions that will allow the power system to function in a stable manner at approximately 95% renewables, on an instantaneous basis, if we are to achieve the Government target of 70% of electricity from renewable sources by 2030. I note the NDP publication yesterday, which has set the target of 80% of electricity from renewables in 2030.

Last April we reported that Ireland received 43% of all electricity from renewable sources in 2020, which is an extraordinary achievement and world-leading. We look forward to pushing the boundaries in the next decade.

Fourth, we must become more interconnected with Europe, particularly, but not exclusively, in a post-Brexit world. In this regard, we must deliver the proposed 700 MW Celtic interconnector between Ireland and France by the middle of this decade. We welcome and support the private sector proposition for the Greenlink project, a 500 MW link between Ireland and Great Britain due for commissioning in 2024.

Finally, and very importantly, the market is important to delivering the full holistic solution and must be incentivised to deliver the relevant solutions, including technology, services, etc., on time and at the right price point to support the decarbonisation agenda. We remain on track to deliver these five strategic goals, notwithstanding the challenges in front of us.

I will talk about demand, which has been one of the most topical points in the recent past. I refer members to our generation capacity statement, published last week. We publish this document annually for the benefit of government, regulators and the industry at large. We endeavour to provide a coherent and transparent future-looking assessment of electricity demand in Ireland. The statement involves a detailed process, taking the best part of 12 months, and speaks to the demand that is required, renewables, conventional plant, where the demand will come from, generation and adequacy, which is the gap between generation and demand. We try to articulate what that gap is and suggest where solutions might best be delivered.

Every year since 2016, EirGrid’s generation capacity statement has flagged that, in our economy and as a function of the success of the economy, there has been growing demand for electricity. This creates challenges, particularly from the industrial sector. In 2019 and 2020, the generation capacity statements also flagged our concerns about the declining availability of the old generation fleet, which has served us well in recent decades. It is ageing and carbon-intensive and we need to think about plans to see it off the system. This information and data provide the regulator, who is responsible for security of supply, and market participants with a singular view of the demand and supply equation which is designed to inform decisions about what new generation is required and when it is required.

The key messages coming from the generation capacity statement last week are as follows. Demand for electricity will grow significantly over the next decade, driven by strong economic growth, which is good for all; significant increases in industrial demand, particularly data centres; the electrification of transport, involving electric vehicles; and the heating of homes. The demand increase is likely to be in the region of 28% over the decade with the potential for a greater increase, depending on the pace of growth in each of the areas mentioned. We believe it is prudent to plan on the basis of a 28% to 30% increase as a minimum and have appropriate contingency baked into the plan in case those limits are exceeded.

Covid has negatively impacted our capacity to deliver infrastructure and secure outages, not only for vital maintenance and upgrades on transmission lines, but also for generation plants where it was not possible to get technicians in from countries outside Ireland. Key specialised personnel could not travel and there is a backlog of work we have to factor into our planning over the coming years.

The generation capacity statement is clear in its messages and I want to be clear for members of the committee. Our power system requires approximately 2,000 MW of low-carbon, flexible, dispatchable gas generation over the next ten years to meet demand and, critically, support the transition to a low-carbon power system, which is our collective ambition, up to 2030 initially and ultimately to a zero-carbon power system. These ambitions are set out in the Climate Action and Low Carbon Development (Amendment) Act 2021, which was recently enacted. In the medium term, this 2,000 MW will be based on gas. There is no alternative reliable, conventional fuel. It is low carbon and we believe this technology is ultimately capable of migrating and transitioning to a zero-carbon proposition.

It is critical that the procurement of this 2,000 MW is executed with speed through the forthcoming auction process the regulator has designed and that we avoid a protracted period of dependency on high fossil fuel content and on old and less reliable generation plant. For the moment, we need to keep this old plant going until we have alternative capacity. The near and medium-term solution, to 2024 or 2025, includes the procurement, unfortunately, of temporary generation sets to allow us to protect security supply and, critically, do essential maintenance on transmission lines and generation plant.

To address the current situation, some of the older plants on the system have had reliability problems, not helped by the fact that Covid-19 has prevented repair works, etc. As these plants return, with appropriate repairs, their margins will improve. I reassure members that when those works are done we will have a secure and reliable system. There should be less concern than has been evinced in some of the press reports we have read recently.

We are pleased that the two plants we lost as a result of exceptional and unusual outages in Huntstown and Whitegate have secured the necessary parts and equipment. Those parts are in Ireland and we expect to have the plants back very shortly. To summarise the outlook for the coming winter, with those plants returning and with winter being a time when we expect to have high levels of wind in the system, there are limited grounds for concern. We expect to have a secure supply over the winter and, unless something exceptional occurs, people can sleep in their beds at night and be satisfied they will have electricity.

I will speak on the subject of data centres because it is incredibly topical and has been the subject of some comments that are not helpful, including one this week which referred to data centres accounting for 70% of demand on the power system by 2030. This is not a factual statement and does not help the conversation. First, we should acknowledge that data centres have made a massive contribution, as has the ICT sector in general, to the social experiment which has seen 2 million people working from home over the past 18 months. Business, industry and commerce are dependent on data. The collapse of the experience sector was not replicated across the rest of the economy, thanks to the fact we could all work from home. Data centres are, therefore, a critical part of the economic and social fabric of 21st-century living.

Second, Ireland is a world player in this space and the true value to the economy of data centres is well documented by IDA Ireland. Third, a significant amount of Ireland’s forecasted growth for electricity will come from data centres. However, the figure is more in the order of 30% than the mistaken 70% figure cited earlier in the week. EirGrid understands that such growth in demand must and can be accommodated by an appropriate policy framework which seeks to ensure that all parties collaborate on an approach that responds to the temporary constraints in the current system. These constraints can be resolved on an enduring basis over the next decade. The CRU’s current proposed policy framework is an appropriate response for the short to medium term. I hope the sector will look favourably on this proposal and work with us on delivering projects and working in collaboration with the transmission system operator.

I will summarise EirGrid’s position. Collectively, we must remain focused on the objective of decarbonising the power system as a key pillar of the Government’s climate action plan, notwithstanding the near-term challenges I have spoken to and which have been much spoken about over the summer. People need to be reassured that the near-term challenges will be dealt with. In addition, the delivery of a green power system is an imperative. It will also be a source of competitive advantage for our economy in the next decade, if delivered in a cost-effective and expeditious manner. In March 2021, EirGrid launched a wide-ranging public consultation on how to shape our electricity future.

The roadmap arising from this 14-week consultation will be published shortly. It will provide clarity and transparency on what needs to be done in terms of where demand and generation should be located to allow us achieve the 2030 objectives. In the interim, our generation capacity statement speaks to near-term issues and what needs to be done. We have a plan agreed with the Department of the Environment, Climate and Communications and the regulators. That plan will be executed and the people of Ireland can sleep in their beds comfortably at night in that regard.

The last critical point is the procurement of low-carbon dispatchable generation capacity is a matter of urgency. We have the plans in place, working with the regulator, to procure same. I thank the Chairman and members.

I thank Mr. Foley for his presentation. A number of members have indicated. I will go first and I have a question for the regulator. It has been reported the recent capacity auction did not succeed in delivering the capacity we will need. My question is straightforward. How did that come about? Was there a failure to understand the growth in demand? Were there other reasons going back to 2018, 2019 or 2020, which the CRU rightly or wrongly did not factor in or perhaps unexpected things happening? How did it come to pass that we did not get the capacity we sought?

Mr. Jim Gannon

I thank the Chairman for that question. There are two factors relating to capacity procured by the capacity remuneration mechanism that have led in the past 12 months to the capacity challenge in the coming years. The first is that a tranche of approximately 500 MW of previously secured and procured capacity will not now be delivered. That poses a challenge for us in the capacity years 2022-23, 2023-24 and ongoing. That is capacity that was procured by the mechanism but will now no longer deliver. In the same timeframe, as it happens, there will be approximately 700 MW of gas-fired capacity, which has been procured and which will be deliver. There is not as much delivery as we would like but there was a mixed experience by the developers who were successful in that specific auction. The most recent auction which targeted the capacity year 2024-2025, that is, the winter straddling the calendar years of 2024 and 2025, it cleared all the capacity that came to the auction but there was a low appetite from industry to come to that auction. What we have done during the past year, following the results of that auction and experiences of some dropout in capacity, is explored with the developers the delivery risks that have been challenging them and tried to understand some of the economic perspectives those developers have to bring those to bear on the critical forthcoming two auctions, one of which is a three-year auction, which targets that same winter of 2024-25, and the subsequent auction, which targets the winter of 2025-2026. Those are two auctions in the first quarter of next year to do that. With our colleagues on the single electricity market committee, we are taking feedback from industry to understand what those challenges might be.

For our part, as CRU in our jurisdiction, we have picked up on certain aspects and we have acted on them . Recently we issued a direction to the system operators for electricity - EirGrid and the ESB. That has prioritised grid connection for gas-fired capacity successful in those auctions. In effect, it has to expedited, prioritised and reduced risk that generators might perceive to their timeline. We have also issued a similar direction to Gas Networks Ireland. That allows it to consider advanced or anticipatory investment to make sure that should these projects come to the table and require gas, there is sufficient headroom and reinforcements in place. It allows for the commencement of some of the anticipatory work, anticipating these projects will come to the system. In many cases, this is work that is required regardless of what facility or generator specifically may win.

Separately, again with the same committee, we examined the parameters of each auction and in those we considered some quite complex economic parameters but also the fundamental parameter, which is a signal on volume. Critically, and we would have stated this at our previous appearance before the committee, the generator cohort is aware of the capacity challenge we have, which as Mr. Foley indicated, and has been stated in the recent national development plan, is approximately 2,000 MW of gas capacity to complement wind and to allow wind on to our system safely in order for us to reach our 2030 targets. There is a clear signal there. What the generation capacity statement, GCS, has done in recent weeks is to state to industry that we need to advance some of that investment earlier than we would have anticipated for some of the reasons we have outlined. These are signals that we send to the markets. In addition, in the auctions which are out for consultation, specific parameters are now being set for those two auctions in the first quarter.

I thank Mr. Gannon for his response. I hear from him that there is a flexibility in the regulator's approach, which is good to. I also hear that perhaps there are learnings from the experience of the past few years. Coming out of this meeting, everybody here and those following the proceedings want to have confidence that as we go forward we will have a stable energy supply. It is critically important for the country in the short and medium term.

I have a brief follow-on question. We are entering a period of flux as the energy space is changing rapidly. We in government are putting pressure on the regulator. Only yesterday, we pushed the renewable penetration target to 80%. We want to go there but we need to hear confidence from the witnesses that this can be done in such a way that we will have stable power throughout this decade and beyond.

Mr. Jim Gannon

For all the technologies we need to move us to 2030 and beyond, what is critical is that we see them in front of us now. There is a combination of flexible gas to be used when required. They involve storage, both battery and other longer-term storage, and, separately, system services that provide stability to the grid. Effectively, they manage power quality as we let more wind on to the system as we respond to changes in that profile of generation and demand specifically. These are well understood technologies. It is now a matter of sending the approximate economic signal to the market, thereby derisking certain processes. Part of that dialogue would be around the planning, environmental licensing and other ancillary processes relating to support infrastructure, for example, for water supply where required, and the policy signal, which is quite important to many developers whose overarching boards have environmental, social and governance, ESG, requirements. Where we are requesting that participants provide us with flexible gas supply, many now see that as aligned with our climate ambitions and our obligations under the legally binding climate Act, but also allowing us to consider a decarbonisation pathway for that gas. That is quite important. We are not just asking them to invest in a nine-year perspective that we will need gas until 2030 but that it is considered as necessary beyond that and that it becomes part of a decarbonisation pathway for that gas, involving perhaps green gas and, particularly for Ireland in terms of a long-term economic opportunity powered to gas, the use of hydrogen and those technologies as the technology becomes mature and comes down the cost curve, which would provide Ireland with the best opportunity to create national wealth from the natural resource we have blessed with given our geographic position.

I thank Mr. Gannon for that response. I call Senator Higgins.

I am sure other members will ask further about green hydrogen, which as a committee we have been trying very much to distinguish from the other gas. I want to focus on the question of demand. EirGrid's presentation was interesting in highlighting the sequencing is that demand is what is required as the first point and then the generation that will meet the demand.

In respect of data centres, Mr. Foley later stated that the growth in demand needs to be, and can be, accommodated. My concern is that the immutable piece seems to be demand whereas the policy seems to relate to supply. We have seen statements on a continued reliance on gas and a potential delay in the exit from certain other forms of fossil fuels.

Last year and before the summer we previously discussed the issue of demand reduction with EirGrid. I ask about the modelling for demand. The previous witness put it very well. It is not that we have an economy and are seeking to make that economy more environmentally sustainable. We are now working within environmental and planetary limits, and economic activity needs to take place within that constraint. However, the statement seems to be very focused on the fact that the demand must grow. There is a detailed economic discussion about data centres but not much detail on the environmental piece.

What measures are being taken in terms of modelling? Risk was mentioned as well as derisking for businesses. What other risk analysis has been done for the State? What is the risk analysis and what has been the demand modelling both in terms of energy alerts and blackouts which is one form of demand management, but also in the medium term in terms of demand management measures? What are the measures if we do not have flexibility in supply? If we are tied to the 80% or if it becomes a requirement for 90% by 2030, has that been modelled?

This issue applies to the CRU also. Under the Electricity Regulation Act 1999, the CRU is required to ensure environmentally sustainable energy supply. Under section 9(5)(a) the Electricity Regulation Act, the CRU has a duty to take account of protection of the environment and give priority to renewable and sustainable energy sources. In that context, if we assume that supply is not as negotiable and that we are looking to hard targets on the environment, how do we model demand? It was mentioned that there should be policy frameworks for data centres. Should those policy frameworks not be in place before the CRU commits us to further connections, involving further planning permissions? What risk analysis has it done in terms of the Energy Charter Treaty given the difficulty of moving away if we install from fossil fuel infrastructure? That is also a concern when we see things like the LNG being proposed.

I thank the Senator. I believe the first questions are for EirGrid.

Mr. Mark Foley

I will pick that up in part and I might defer to my colleague, Mr. Doyle. I will answer the question in three parts. First, demand is increasing; there is no question about that. That demand is a function of two things. One is a very successful economy, which is good for the whole nation, and second is a digital economy that is world class. That is a fact and we need to consider how we cater for that. There are two other parts of the equation I really want the Senator to understand.

Second, there is major emphasis, involving major measures and programmes with people in industry and elsewhere, about demand reduction and demand moderation. We talk about DSUs and others where people are incentivised to be available to switch their electricity off at times of peak demand and to be able to contribute to the sustainable growth of the electricity system. This is a second and crucial part of the three pillars which makes the power system function and ultimately allows us to have a sustainable system.

Third, and importantly, is the deployment of intelligence in the power system. This is between EirGrid and the distribution system operator, ESB Networks, with the recent and rapid deployment of smart meters. We will not see peak demand growing in proportion to total demand because we will have the widespread deployment of very smart intelligent devices on the system. As houses get heated by electricity and as cars get charged by electricity, there would be considerable activity outside peak times when prices are low and at times when the power system is operating at close to 100% renewables. It is important for the committee members to understand that this is not just about meeting unbridled demand, but is about an holistic set of measures, which include technology and engagement with market participants who are available and willing to moderate their demand while being commercially and appropriately remunerated for that. Mr. Doyle might wish to speak further about DSUs.

Mr. Rodney Doyle

There are a few things on the demand side. We have the capability to engage with our large-demand customers who are connected and during times of tightness on the system to ask them to moderate their power usage when they can then utilise on-site generation that they have. The CRU consultation on data centres and other large demand sites actually now requires that these large units be located closer to the centres of demand, that they have the availability of on-site generation and that they have the flexibility to reduce their demand during times of tightness. Therefore, we already have schemes in place to allow us to that, working with the large-demand customers.

We have a very active demand side unit participation in our electricity market. They bid into the market as if they are another generator. They offer to provide a reduction in the available power or in some instances to bring on the generation that is on site. If they can offer us this reduction in power, that is less power we need to supply.

In the modelling we do, we factor in restrictions on the run hours and the environmental requirements that any of the units will have for how they run on the system. That is factored into our estimates of what types of units the system will need. That is factored into our modelling when preparing our generation forecast statements.

With respect, that did not really answer my question, but I am happy to take a written answer on demand modelling across society in terms of risk society. If we are in situations of constrained energy supply but not on a day-by-day or peak-hour basis but on a longer-term basis, what are the measures including the risk analysis and what do we prioritise? I am concerned about having to remunerate.

Senator Higgins,-----

There would be a remuneration incentive-----

-----several members are trying to contribute.

-----rather than a regulatory restriction-----

I am going to cut across Senator Higgins.

-----in terms of-----

As she suggested, our guests might like to give a written answer to that question. We would appreciate that.

I would appreciate that, as a risk analysis society-----

Mr. Mark Foley

We would be happy to do that.

I think there was also a question for the regulator.

Mr. Jim Gannon

I will try not to cover ground that the transmission system operator has already covered. With regard to demand side units, even at the start of September we saw a significantly tight period. At that point, wind was giving us very low electricity. Demand side units were asked to become active and they did. They can respond and they can make a material difference there. On the single electricity market committee, we work together with our colleagues from the Northern Ireland utilities regulator on the wholesale market. We had a consultation run during the summer months to explore how we could bring more demand side units to the table and incentivise them such that they are made more available. This is particularly focused at those peak points in time.

That does not quite respond to the question from Deputy Higgins around the longer-term demand profiling, admittedly, but a written response from EirGrid in the first instance would be well worth considering.

On the question of our response to data centres, there has been a policy in place for a couple of years on data centre connections. In recent times we had a subsequent consultation to see if more were needed, given EirGrid's more long-term modelling. It was in the form of a proposed decision, which had a number of options. One was a blanket moratorium, which is a tool that remains open to regulators if required at any point. The preferred option was to explore with the data centre community the choices to sufficiently mitigate the challenge they pose to us through a range of different technologies, restrictions or even opportunities that could be afforded to that community. It is notable we had over 50 responses to that consultation and we expect to come to a final decision in the next four to five weeks. We would be very happy to forward that to the committee on its publication and have subsequent dialogue on it.

There is a mixed perspective in the data centre community; some of them find it more difficult to be more flexible in their demand or approach and some are quite ambitious and are seeking to look at the long term, recognising Ireland's opportunity and the foundation that a highly renewable system has already given them to support their electricity supply generation goals and differentiate themselves from their competitors. Some of these businesses are looking at the sort of long-term battery storage that could take advantage of excess wind at those points in time and use it when needed. Separately, they also want to look at on-site generation not only with regard to the use of natural gas in the short term but some are explicitly looking at the transition from that generation to hydrogen in the medium to long term. We find that some really have that long-term perspective and ambition for decarbonisation that they bring with demand. It is a mixed bag.

I am happy to take a written comment on the question of the Energy Charter Treaty as well.

Mr. Jim Gannon

I apologise as it is an important point. I neglected to mention that we also now have over 500,000 smart meters deployed, meaning people will soon have the ability to access smarter tariffs. It will help them to avoid some of the higher-priced periods during the day, which in effect is mass demand-side response. It will again help us to address that peak demand and allow consumers to reduce the impact on themselves by avoiding certain periods during the day. My colleague, Ms MacEvilly, can go into that in more detail.

We might get to that later.

I thank the witnesses, who I hope have alleviated some of the concerns of committee members. The matter that has not really been addressed is the cost. Basically, energy costs over the winter are still a concern, not just this winter but going forward. Could we have the perspective of the witnesses on the cheapest form of energy? I know the answer is probably renewables but what part will they play over the next few years? How will the regulator play a part in reducing energy bills?

It is quite clear from the Electricity Regulation Act 1999 that the key areas in which the regulator is involved include running these kinds of auctions. Going back to the last auction and even previous auctions, did the regulator have any idea there may be challenges in meeting the demand it was seeking?

With regard to EirGrid and data centres, it is good to see people are reviewing their policies. The Government has already said it is renewing its data centre policy but is it fair to say EirGrid does not just give connections without terms and conditions and really looking at the supply in a particular time, or at least a projection of supply down the road? When was the last time an offer was made to a data centre that was taken up? There is perception that these are happening on a weekly basis, so I would like to have a better understanding of when the last offer was made and accepted.

On the question of regional issues with the grid, we had before us witnesses last week that would have spoken about the fact we really do not have that kind of industry in the west of Ireland and there is, on the other hand, much energy being used close to Dublin. What are the intentions in this respect to shift that balance, given that there may be energy loss as it is moved across the country? That is certainly my lay person's interpretation.

Ms Aoife MacEvilly

Energy costs constitute an issue of major concern for families and businesses in Ireland and across the EU. We acknowledge that. If I have time, I can speak about some of the protections in place. The Senator asked the broader question relating to the costs of transition. We came before the committee in June or July and were very clear that the transition would not be costless. In order to support our decarbonisation objectives we are going to need to invest in new grid infrastructure and generation capacity, both in renewable and gas-fired flexible generation. We will also need to invest in system services that will support the additional renewables on the grid. All that investment is funded by customers. We were quite clear that over time we expect to see that investment filtering through to customer bills, using competitive auctions where we cannot minimise the cost. We will use network regulation to drive efficiency and innovation to minimise cost. To be open, however, those costs will be there.

What we have seen in recent weeks and months is significantly beyond anything we might have expected when we spoke earlier this year. It is exceptional in many ways. On the question of our role in lower bills, our first action is to give customers options. I invite all customers to check if they are on the best tariff for themselves, either by shopping around and switching or contacting their supplier to find out if they are on the best deal.

I might intervene briefly, as that is more narrowly focused than what I want. I am really asking what will be the cheapest form of energy for Ireland to invest in down the road if we are putting in place this infrastructure. Regardless of infrastructure, there is a cost attached. We know that we need that infrastructure so when the energy is being produced, which will be the cheapest type?

Ms Aoife MacEvilly

From the climate action plan our goal is around electrification. That will be investment in the electricity networks and supporting electrification in heating and transport. There will also be a reduction in the carbon intensity of electricity through investing in renewables. At a certain point we will be able to determine a solution of least cost in delivering renewable and electrification goals. There are not too many alternatives or options if we are to achieve our goals. We are investing in gas infrastructure as well but getting rid of the more carbon-intensive forms of energy in the system and looking to electrify where we can. It is very hard to say what the cheapest form of energy would be in that context. Our goal is to achieve the objectives with least cost while minimising the impact on customers.

Mr. Mark Foley

On the question of the cheapest form of energy generation, when the wind is in abundance, the price of that generation is extremely low. That is a fact and market data support it. The simple reality is we need the right balance between renewables and gas for the next ten to 15 years, until such time gas can be transitioned to hydrogen, which produces zero carbon.

Both, in combination with batteries and other services, will produce what has been proved to be the most economic and holistic proposition on the market for consumers.

Regarding the Senator's second point, we have not signed a contract with a data centre operator for over 12 months. It is important we have a policy framework for signing such contracts that imposes some degree of obligation on the data centre customer to help us in the challenge of matching supply and demand. What the regulator has been doing over the past couple of months, which it will publish in the near future, will strike the correct balance. The data centres will be able to get connections and sign contracts with us but they must bring something to the party to help us work through the next number of years and meet the challenges we face.

My final question concerned rebalancing regional supply and demand.

Mr. Mark Foley

That is a good point. EirGrid's consultation on shaping our electricity future, which concluded in June and we will publish in the next six weeks, will speak specifically and without apology about the need to bring the regional dimension into the equation in terms of where demand and generation are located. We will not be found wanting in that regard in the next number of weeks.

We look forward to that.

Regarding the failure of a supplier to deliver 500 MW that were contracted for, what happened there? Are there penalties to be applied or lessons to learned? I am delighted to hear that instead of blunt measures, there is consultation with data centres because some of the companies here are among the most innovative in the world. Ireland has certain advantages in terms of managing data centres for climate reasons. As such, we can harness their capability to help us through this period to a point where, in the long term, we can use our renewable capacity to significant advantage.

If 500,000 smart meters are deployed, why is there not much more effort to drive the electrification of vehicles and the smart use of timing personal consumption? That figure, from 1.75 million homes, is very significant. We are heading towards 25% or more of the capacity, which could encourage a change in behaviour. I recognise fully the need for the 10,000 MW of renewables, 2,000 MW of gas and 1,200 MW interconnector but regarding Mr. Foley's optimism about the speed of rolling this out, there has been significant opposition to these sorts of initiatives. Mr. Foley seems to believe EirGrid has cracked that. Could he tell us about that?

Where do storage and hydrogen stand in EirGrid's perspective on the next decade and beyond? Are we in a position to factor them in? Should we be making moves to nail down opportunities in those areas?

I think the first question was for EirGrid.

Mr. Mark Foley

As it was about the ESB and the auction, I might leave it to the regulator. I believe the next three questions were for me.

Mr. Jim Gannon

In terms of failure of certain capacity to deliver, we have engaged with industry over the past 12 months in particular. This is, again, to focus on those projects that are delivering and those that have not delivered. This is where we have considered and identified some risk factors to delivery. Some would cite statutory processes, others would cite ancillary infrastructure or economic signals, while others would cite a combination of these factors.

Technology change has been challenging for some of the developers. It is very important that we reflect on how capacity is attracted to the auction and delivered once procured in the auction. We have been engaged in this process with our colleagues in EirGrid, industry and our fellow regulators in the single electricity market over the past period. In short, penalties are levied for non-delivery in the capacity remuneration mechanism. I will hand over to Ms MacEvilly to respond to the query on smart meters and enablement of same.

Ms Aoife MacEvilly

Smart meters constitute an exciting story. We are starting to reach a critical mass of installed meters. ESB Networks is rolling out approximately 40,000 per week so we are on course to have the national roll-out complete by 2024, which is exciting. The opportunity presented by smart services for consumers to lower their bills and participate in decarbonisation is already there. All suppliers are required to offer time-of-use tariffs and many customers are switching to these. This presents the opportunity for electric vehicle owners to charge overnight at much lower rates and to keep away from peak times. It also provides an opportunity for us to measure what is being exported by micro-generation and renewable self-consumers. It opens up an opportunity for customers to really be part of the transition and save money by lowering their bills.

The CRU is proposing to promote the uptake of smart services in the coming year, now that we are getting that critical mass of smart meter stock in place. Suppliers are engaging directly with their customers offering these services. What the options are will become much clearer to customers. As Mr. Foley mentioned, there is an opportunity for ESB Networks to start purchasing services at a local level to support matters, be it meeting peak demand or facilitating wind. It really starts to gain traction at that stage.

The Deputy asked about our perspective on hydrogen. This is another area of opportunity for Ireland Inc. There is potential with large-scale offshore wind to think about what we could do as a nation - becoming not just a user of green hydrogen but potentially an exporter in the future. That is why, as we look at investment in gas generation for the next few decades, the natural gas grid to support that or import facilities, we must also keep our eye on the potential for converting that infrastructure for future hydrogen use so that we take a long-term decarbonisation perspective as we make those investments.

Mr. Mark Foley

Regarding Deputy Bruton's question about data centres, one of the reasons I can speak with such confidence about the winter outlook is that we have had extensive engagement with the data centre community. To give credit where it is due, the data centres have worked in collaboration with us so that if an emergency is declared, they will switch on their generators and be the first port of call this winter in the very unlikely event of the system being very tight. They have stepped up to the plate and worked with my team. We can call on them this winter so the general public can sleep at night.

The Deputy mentioned smart meters. I signed a new contract in June, have three tariffs and charge my modest electric Golf at night using an app for about 30% below the normal daily rate. The revolution is happening in the distribution system and all consumers will benefit.

The Deputy mentioned the 10,000 MW of renewables, the provenance of which is the Deputy's climate action plan from 2019 when he was Minister. My confidence arises from two things. On the grid side, we have made three decisions in the past 12 months that we arguably might not have made five years ago. We declared that two major pieces of grid infrastructure are going underground. The first is in the Dublin-Kildare region where we have made the call and said a critical piece of west Dublin infrastructure is going to be underground.

We have said the line to Mayo will be underground and the converter station for the Celtic Interconnector, one of Ireland's most critical projects which will link us to France, will be located not beside the substation in Knockraha, but in an industrial site in Ballyadam. This is because that is what communities asked us to do. I am much more confident on the infrastructure side. I am watching the offshore side with great interest. One of the projects is close to my home. Three projects are out to public consultation in the Irish Sea at the moment. Fingers crossed, they have been executed in an exemplary manner by the developers. At this point, we have not seen significant outrage about the proposal to put 5 GW between Dundalk and Arklow. So far, therefore, we seem to see that through the efforts of the engagement of developers, including ourselves, there was a more positive and less outraged response from the public.

The Deputy's last point was about hydrogen storage. Ms MacEvilly has spoken about hydrogen. Batteries are on the system as we speak. They are a vital part of system stability. Today, we are capable of running the system at 75% renewables. We would not be able to do that without batteries. There are more batteries in the pipeline to provide at least 500 MW, but more will come through in the next auction. They are a critical part of the overall holistic solution. I hope that I have answered the Deputy's questions.

I thank the witnesses. My questions are quite specific. There has been a lot of talk about the demand site reduction and engaging with industry. How many dispatch instructions under the DS3 programme for demand site reduction have been issued over the past two years? What was the total amount in payments made by EirGrid to each entity in respect of the demand site reduction? The transition will not be costless. However, the public has a right to know how much it is paying industry to reduce its demand side. What mechanism is in place to ensure that each entity is in compliance with their agreed kWh demand reduction? The CRU said that if demand reduction is not met there are penalties for capacity remuneration. Are there the same penalties if it is found that an entity is not reducing its demand by the kWs that it had been, I think the EirGrid speaker said, "appropriately" remunerated for? What is the cost to the Exchequer of that intervention around managing the demand? My other question is on the Electricity Regulation Act 1999 and how it contradicts section 15 of the climate action Bill. I believe that CRU and EirGrid are obliged to take climate emissions into account, but the 1999 Act obliges them to authorise a demand connection agreement, without having to provide the environmental assessment or the cumulative emissions. Are changes needed, therefore, in the regulations under the 1999 Act, so that it is not just about fiscal and technical specificities, but takes into account the environmental impact and the cumulative emissions on our energy targets?

I think these questions are for the regulator for the most part.

Mr. Jim Gannon

As it happens, and this is not passing the buck, I do not have to hand the figures on how many have been dispatched and what the cost has been. The role is executed by EirGrid in one of its functions as a single electricity market operator. Again, it may be for Mr. Foley or Mr. Doyle to include a reflection on the mechanisms in place for those that do not participate to the level that would have been anticipated.

Mr. Rodney Doyle

I am happy to come in on these questions. If an entity does not participate when asked, we have metering at all of the sites. We can, therefore, see exactly what is being provided by any particular unit. We can determine if they have provided what we have requested. We can follow through and follow up on that after the event. Regarding what each individual unit gets paid for any particular event, if we have a demand reduction and a tightness of the system, they would not get paid where we have to intervene to ask them to reduce their demand during that period. That is an intervention that we are making in the market. If they offer up their demands into the system by being part of what is called a demand side unit, DSU, which a number of them do, they are remunerated by being paid the price prevailing in the market at that point in time. This is the same as with any other generator. There are entities that aggregate a number of demand sites and then bid it into the electricity market. We would then dispatch them in the same way that we would another generator in the electricity market. They would get paid the prevailing price. It depends upon how they participate in the market itself.

In the case that somebody was not fulfilling their requirements, what is EirGrid's follow-up process?

Mr. Rodney Doyle

If someone does not fulfil their requirements, the metering will tell us that they have not provided the service to us. In terms of follow-up, there would be penalties on the payments they are due if they do not serve the function. We also follow through on whether they provided the energy that they said they would. A system and a process is there. We would not have information to hand on the individual units. Most of that information would be commercially sensitive to the units themselves. On the numbers of times that we would do it, or that we would see that entities do not provide it, we can follow up with the Senator on that on a future date, when we put that information together.

Would the regulator like to come in?

Could they please to respond to the question about the conflict between the 1999 Act and the climate Bill?

Ms Aoife MacEvilly

Again, that was a very specific question. I am more familiar, as it turns out, with the 1999 Act around demand connections. Our responsibilities under that Act are to ensure that reasonable demands are met, as well as to ensure that we have approved the terms and conditions of connection offers, and so on. I am not sure from what the Senator said that there is necessarily a conflict in respect of the climate legislation. Often, we have to read pieces of legislation together. However, it is fair to say that we have not necessarily built that into our process as yet. We will reflect on that. The Acts can be taken together, in terms of how we manage them. Many connections are for new homes and businesses. We do not want to stand in the way of these. We will try to look at it in a pragmatic way. We called out data centre demand as a specific area that drives particular challenges for the system and we are looking to deal with that demand and those connection requests in a manner that helps them mitigate the impact that they are having on the system. Hopefully, that will be done in a low-carbon manner, as Mr. Gannon mentioned. If the data centres could build some combination of green generation and battery storage on-site, then they would contribute. We are looking for those kinds of opportunities.

If we take this back to our constituents, their three biggest concerns are the fear of energy blackouts this winter, the predicted massive rising costs of utility bills, and sustainability and huge desire to move away from fossil fuels. I will focus my questions around those issues.

My first questions are to EirGrid. There may be an overlap here and I may be directing questions in the wrong way. We can try to figure that out. The first question for EirGrid was in relation to the figure of 28% versus 70% in relation to data centre usage. I think Mr. Foley said that the figure of 70% was "absolutely not accurate", and that the closer estimate is around 28%. Mr. Foley has clarified that, which I welcome. Having said that, even an estimated 28% used by data centres by the year 2030 is still a significant portion of our energy capacity. It still needs to be addressed. My first question is on the assumption that the policy of Government is to continue with some approvals for data centres.

The phrase Mr. Foley used was "bring something to the table". What kind of mitigation measures can data centres bring to the table that are realistic and will actually achieve a reduction in energy use? Is that being factored into the figure of a 28% increase in demand? Can that figure of 28% be reduced even further, perhaps through water harvesting or district heating provided in conjunction with the data centres building their own renewable energy supply? The 28% figure amounts to a large portion of our energy capacity. I would like some further detail on that.

To return to the short term and this winter, Mr. Foley spoke about the Whitegate and Huntstown plants coming back online, which is most welcome. I hope it will allay the fears of many that there will be a blackout this winter. What proportion of overall energy do the Whitegate and Huntstown plants supply? How much capacity are we expecting them to bring back online?

Ms MacEvilly stated that the data centres can be part of the solution. I thought that was an interesting comment. I would like to hear more detail on what she means by that.

I must hurry the Deputy.

The increase in utility bills is the issue that is impacting people on the ground. Obviously, these increases can be dictated by international scenarios, but does the CRU see anything that can be done in the short term to address the matter? Will the increase in wind after a significant lull reduce utility bills for the Irish consumer in any way?

Mr. Mark Foley

Briefly, the capacity of the two plants equates to 850 MW. If truth be known, the major failures of these modern plants were force majeure events. If the plants had not gone down, we may not have had all these conversations over the summer. They are coming back and people can rest assured.

Second, on the 28% increase in demand, we have to think about it as the product of a growing economy, the electrification of heat and transport and data centres. It is not all about data centres. The Deputy asked what we want data centres to do and what we want them to bring to the party. We need to go outside Dublin to the regions. I think that is part of the regulator's policy. We also need to bring in some degree of dispatchable generation so that the burden of generation is not all with the system but is part of what the demand user can bring. Lastly, we need to make use of batteries and other services that help with the flexibility and stability of the system. These are very clear, real and tangible propositions that will be forthcoming in the regulator's policy position. I believe they will be accepted by a significant proportion of the data centre community. It is about the data centre community being part of the journey and working in partnership with EirGrid, the transmission system operator, and the regulator.

I believe the Deputy's other questions are for the representatives of the regulator to answer.

Mr. Jim Gannon

Much of what I have spoken about in terms of having dialogue with the data centre industry has been covered by Mr. Foley and I do not want to repeat it. The text of our proposed decision would have described not necessarily a move to the countryside, but co-location, focusing on how we can incentivise demand and supply to co-locate, which reduces the need to invest as much in this infrastructure. It also reduces some of the transmission losses mentioned by one of the Deputy's colleagues earlier.

The second piece is around moving the demand of data centres, where required. This is commonly used by the data centre community in the US, for example, where data centres turn down processing during the daytime when they need to use lots of air conditioning, which is highly energy-intensive, and turn up processing at night. It is, therefore, a matter of getting them to adapt not to a day-night peak, but to a peak that might not just be between 4 p.m. and 7 p.m., as we generally have it in Ireland, and to also respond to times of significantly scarce wind. This year alone, we had times in March when wind was giving us over 4,000 MW and times in September when it was giving us less than 40 MW. Wind can be contrary like that. As we take advantage of it and decarbonise, we need to look for some solutions. As Mr. Foley said, the other options are also battery power, which does not just take advantage of excess wind but can also feed it back to the system in times of need, and the on-site generation to which he referred. These are some of the examples.

In relation to utility bills, are we completely at the mercy of international circumstances, or is there anything we can do domestically in the short term? For example, will the fact that it is windier at the moment cause utility bills to reduce?

Mr. Jim Gannon

Mr. Foley mentioned that when wind is on the system, it is quite inexpensive. That reduces our wholesale electricity price. It is very important to recognise that across Europe, many, if not all, of our fellow regulators are experiencing the same price increase. This is due to many different factors. This year, wind has been historically low. I think 1961 was the last time we had so little wind. That is influencing many of our colleagues, not just in northern and western Europe but also in eastern and central Europe. Separately, it has been a very poor hydrological year in terms of the hydroelectric plants that many of other countries use. That is before we get to the issue of natural gas and other commodities, such as coal and oil, becoming slightly more expensive. A number of factors have come together at a point in time. Normally, these would not come together and we are, therefore, hopeful that the particular pinch points we see now, coming into the winter, will be mitigated. It is important for us to mention some of the protections that we have in place for consumers and that members are aware of them. We do our best to ensure people know about them. My colleague, Ms MacEvilly, will go through them.

Ms Aoife MacEvilly

As Mr. Foley said, it is a shared challenge for regulators and policymakers throughout the EU as to what to do when we have these kinds of gas prices. Our focus is on protecting consumers and ensuring they can manage through the winter. We know that must be difficult for customers at the moment. It is important to remind people of the protections in place for vulnerable customers. One area of which we know there is not as much awareness as there should be is that customers can register to be a vulnerable customer if they are either critically dependent on electricity, for example, for assistive technologies for independent living, or if they are particularly vulnerable to disconnections in the winter period by reason of age or health. In those cases, a person registered as a critical services customer will not be disconnected for reasons of non-payment. For those registered as priority customers because they are particularly vulnerable, there is a moratorium in place every year. This means those customers cannot be disconnected between 1 November to 31 March. That protection is in place as part of our supplier handbook suite of protections.

Over the course of the winter, a halt is also called to disconnections for all customers, usually between 9 December and around 11 March. The other element that is really important is that all customers are protected all the time by the energy engage code, which means an engaging customer will not be disconnected. If customers are engaging with their supplier, either by entering into a payment plan or coming to some arrangement around bill payment, whether it is a prepayment meter or otherwise, they will not be disconnected. One of the important areas that we want to focus on is ensuring that customers are aware of the energy engage code and the need to engage with their supplier.

Those are the kind of protections we have in our supplier handbook. We also have significant engagement with our customer stakeholder group, which includes the Money Advice & Budgeting Service, MABS, the Society of St. Vincent de Paul and other NGOs that give us considerable support in understanding the issues facing customers in these difficult times.

We are bringing that group together with energy suppliers this week to go through what we think might be coming up this winter. If there is more that we can all collectively do to support customers at a time of high prices and, obviously, what will be difficulty in paying bills, we will do that. One of the key areas we want to help customers avoid is building up debt over this time because that can put them in real difficulty as those large bills come through in the winter.

Thank you. That is very important information and we are very glad to hear it. I am mindful of the time and we have seven members looking to come in during the 40 minutes that we have available. I call Deputy Jennifer Whitmore.

What Ms MacEvilly was talking about is very important and very welcome. This winter, many families and individuals who would not normally be in difficulty, such as working families, will be heavily affected by this. I wonder if there is an opportunity to extend the disconnection moratorium beyond the vulnerable. Ms MacEvilly said there were a few months where it applied to everyone. Is it possible to extend that for a longer timeframe? I believe there will be many people who would not normally be in these circumstances who will find themselves in huge difficulty. I ask Ms MacEvilly to consider that as it would be very welcome.

I have listened carefully and it has been a very interesting conversation. Obviously, the issue of data centres has been topical in the last while. I am looking to where we are at the moment. There is a lot of talk of what we can do in regard to demand management, smart metering and so on, which is welcome, but these are all things that will happen in the future. EirGrid's capacity document stated that it forecast capacity deficits in Ireland over the next five winters so the forecast is that we are going to have issues with our security of supply. The result of that is the potential for blackouts, which will hopefully be limited, but there is that potential. There will be higher prices. We are going to have to move to more oil and gas generation of electricity and we are going to have to rent in additional capacity, which is going to cost hundreds of millions of euro. Therefore, there is an impact over the next five winters, given the situation we are in. That demonstrates there has been a failure to manage our energy system. We have hit crisis point at the moment but it has not been managed to date to avoid that.

It would appear the largest increase is from the data centre sector. EirGrid's statement suggested that all areas of the economy pretty much flatlined and it was in the data centre area that the increase was. There has been an acknowledgement that there are things the data centres can do, and the CRU is conducting a review. Does Ms MacEvilly believe the growth of data centres should have been managed and conditioned a lot earlier than now? We are addressing an issue where we have already hit crisis point.

My other question is in regard to the planning process. EirGrid is not a prescribed body for consultation under the Planning Act. Does EirGrid believe it would be valuable to be engaged in the planning process at the start, when data centres put in their applications? The CRU is a prescribed body. Has there been any engagement? Is it a regular occurrence that it would receive applications for review and give input on it? That would be an important part of what it can do. Those are my two main questions.

Ms Aoife MacEvilly

On the first point, I welcome the Deputy’s input on the disconnections area. The one part of this that we always bear in mind is that when there is a moratorium on disconnections, suppliers do not engage with their customers, their customers are not getting those reminder letters and they are not getting that level of contact. What we found at the end of the last moratorium, which ended in May, was that although there were probably not a lot more customers in debt, the ones who were in debt had greater debt, so it had built up the problem more. It is always that balance that we are trying to manage. We will listen to the views of the Deputy, the customer stakeholder group and the suppliers, and keep the situation under active review over the course of the winter.

I want to respond on the EirGrid generation capacity statement. It is important to underscore that what it said is "if no action is taken", we would have problems over the next five winters. It is very clear that this is not a situation in which no action can be taken. It is a call to action and we are responding to that with the publication of our information paper, with the proposals and with managing through that process of delivering the interim measures, as well as the enduring measures, which were always going to require additional gas-fired generation capacity to be delivered by 2030. We are just having to front-load that now because of the outcome of the auctions.

As Mr. Gannon outlined earlier, we were disappointed with the outcome of the auctions, the non-delivery of the 500 MW and then the lack of participation by industry in the subsequent auction. However, it has given us that opportunity to engage, to understand and to address some of the real challenges that generators faced in coming forward with new projects and delivering new projects. Perhaps Mr. Gannon would like to add to that.

Mr. Jim Gannon

I do not want to cover previously covered ground. Ms MacEvilly has noted the range of causes, as did Mr. Foley, one of which is that continued increase of data centre demand growth. It is something that would have been noted in previous generation capacity statements and it is an area where a connections policy was in place two years ago. As it has continued to grow, we are now looking at further options and a range of those options are available to us. In our proposed decision, we have not proposed to put in place a moratorium but all options remain open to us as things progress, and it is important to note that. We will take action where it is needed.

It is very costly. We are talking about hundreds of millions of euro of temporary generation that we could have avoided if that growth had been controlled somewhat, or that is my understanding.

Mr. Jim Gannon

What I am trying to get at is that it is not just demand growth of data centres that has been the driver for that in particular. The 500 MW of generation that was due to come into place that is now no longer going to come into place was due to come into place in advance of next winter. That is one of the major contributors to the need for that temporary generation. Again, in looking at the solutions to the longer-term challenge, we are not ignoring the space that data centres take or the fact they are the largest homogenous grouping of demand. There is a significant challenge that is unique to them but there will also be some opportunity to mitigate it. We are not hiding from that. In terms of next winter, it would have been contributory as opposed to primary, without question.

The Deputy's final point was with regard to planning applications. Yes, we are a prescribed body and, yes, we are provided with environmental impact statements in order to provide comment on them. Along with Senator Boylan’s comments relating to the climate Bill and the fact we are now revising our strategy for the next period, we will begin to look at all of those levers that are open to us, where we can contribute and where we can continue to take into account environmental factors in our decision-making, as appropriate with regard to the legislation. I thank the Deputy for noting that.

Deputy Whitmore had a question for EirGrid. She thought it should be a prescribed body.

My question was whether EirGrid believes it would be useful to be a prescribed body. I am surprised it is not a prescribed body as Irish Water would have a similar alignment. I was wondering if it should be.

Would Mr. Foley like to comment?

Mr. Mark Foley

The honest answer is that we are not exercised one way or the other about it. Once there is a clear policy framework and the regulatory authorities which execute policy are in the loop, there is no downside to EirGrid being involved. I do not think it is absolutely essential but we would not have any objection to being a prescribed body.

I thank Deputy Whitmore. I call Deputy Darren O'Rourke.

I thank the witnesses. I have a couple of questions. Many people looking in will wonder how we have ended up in a situation in 2021 where we could not get assurances from very senior Ministers last week that we would not have blackouts. I appreciate that we have received some more information today.

I am interested in the relationship with the providers and the lessons they say they have learned in terms of the regulator. They pointed to a number of issues they say have been identified, such as ancillary infrastructure, policy signals and statutory processes. Can the witnesses give an example of what the suppliers are saying in regard to each of those that are an issue? How are they responding? Are they going to the Government?

There is a concern that fossil fuel producers might be telling the regulator they do not like the policy intention of the Government. Will the regulator give some examples of how he is responding to that?

I ask about lessons. An emergency plan initiated between the regulator and EirGrid was scrapped. Separate to that, renewable electricity support scheme, RESS, auctions were due to be annual but did not happen this year. What is the reason for that?

For EirGrid, where are the pressure points in the grid? Is it Dublin or west Dublin in particular? EirGrid indicated that other plants might come down in the weeks ahead. Where are those?

I ask for an update on the North-South interconnector, which is critical infrastructure. There is a judicial review in the North and an ongoing Government-led review in the South. I ask, as I asked last time EirGrid was here, whether the pylons have been procured. If so, are they in the country? Is EirGrid engaging with local authorities? How does EirGrid intend to access land without landowners' agreement?

Those questions are for the regulator.

Mr. Jim Gannon

I think, although EirGrid might correct me, that three of them are for EirGrid. I will respond to those directed at us first. The question on the interconnector would be for EirGrid, which has the most up-to-date information on progress on that project. The questions about where the local challenges are on the grid and perhaps the temporary generation project are also for EirGrid.

The RESS auctions are led by the Department in terms of time limits. We and EirGrid participate in the steering group for that but the setting of the rhythm is a question for the Department rather than us.

On the Deputy's request for examples, some developers noted that, despite going through the statutory processes, it might have taken more time than they anticipated. It is a common refrain regarding infrastructural delivery here. Part of helping that might be setting policy signals, such as in the national development plan, noting the place of natural gas and the fact it is vital. Some of this dialogue is required for security of supply.

On ancillary infrastructure, it is a risk that some developers perceive that the supporting gas or electricity infrastructure might not come fast enough or might be on the critical path. In the last few months, as I mentioned, we sent two directions to systems operators to say those grid connections must be prioritised for new generators coming in. That was an example of a little bit of responsiveness.

On the economic signals, the SEM committee recently finished a consultation on the parameters which set some of those signals for the T-3, which is the first auction in January, and I think will shortly go out for consultation on the T-4, which is the next auction in March. That has taken input from industry and other observers on what parameters we might set and what volumes we might ask for in these auctions and to see who we can bring to the table. They are two or three examples.

A number of the questions were for EirGrid.

Mr. Mark Foley

The first was on emergency generation for this winter, which thankfully we do not need because Huntstown and Whitegate are back. The process we initiated was in a 12-month context and was not executable in that time for reasons to do with the critical path. We decided to abandon that in favour of something more enduring for the next three or four years in the context of our generation capacity statement. The advertisements for the alternative will go out shortly and we will secure emergency generation as a back-up for three years plus.

The Deputy asked about pressure points in Dublin, etc. These were clearly articulated in our shaping our electricity future consultation programme which ran between March and June. The outcome of that consultation, the solution and how we deal with those constraints will be seen shortly as we publish the plan in the next four to six weeks. I encourage all Deputies to look at the plan and get behind it. This is the way we can achieve the Government's ambition of achieving 70%, and indeed 80%, renewables on the power system by 2030.

On the North-South interconnector, there are no pylons in the country. We have procured the design of the pylons and that work is ongoing. We await a decision from the judicial process in Northern Ireland. We are disappointed we have not got it yet. We thought it would be in September but we hope it is imminent.

The Deputy asked about engagement. We are engaging with the relevant local authorities in both jurisdictions and with landowners. I will not speak in detail about landowner engagement, in fairness to the landowners who are engaging constructively with us. There is a lot of engagement going on and I am confident there will be a positive outcome.

I have the same question as Deputy O'Rourke so I will follow up on the EirGrid point. Building out additional capacity is a top priority to avoid curtailing demand and growth. With that in mind, what progress are we making with the North-South interconnector in terms of adding capacity? Are we waiting for the imminent response from the judicial process in Northern Ireland? We hope that is soon. Once that hurdle is overcome, will we get moving or is the engagement with landowners slowing it down? Is there anything else stalling progress on that project? Mr. Foley said he is happy enough and he will not go into detail. Could he add a little to his response to Deputy O'Rourke?

The other three questions I have are for the regulator. First, I was amazed to hear that we have the lowest amount of wind since 1961. We have a clear target of 80% of our power being generated by renewables. What do we envision will provide the remaining 20%? Where will that come from if we have such a low level of wind again? What is the long-term back-up for renewable energy if it does not work?

Second, in light of developments over the past year where we have seen EirGrid amber alerts, warnings and that type of stuff, was the ban on offshore gas exploration a wise policy? Does LNG have a role to play in the absence of an indigenous supply?

The third question is on an issue I picked up in the papers this morning. It relates to the heightening of Brexit tensions we are seeing and the ramifications for energy security in the event of a breakdown in relations. The island of Ireland is at the end of the pipeline. I read in a newspaper that the French minister for Europe has raised points regarding the UK's reliance on France for energy security. We have long-standing agreements with the United Kingdom. Should we be concerned about this? It is unlikely to occur but do we have contingency plans in relation to energy security if there is a breakdown in relations between France and the United Kingdom?

Mr. Mark Foley

On the North-South interconnector, we anticipate a positive outcome in Northern Ireland. It would be wrong of me not to say that. Elements of procurement are under way and engagement is under way. The project is in execution mode and will ramp up considerably as soon as we get a positive outcome from the judicial process in Northern Ireland.

Dr. Paul McGowan

I will address the question on whether LNG has a role to play and the ban on exploration. We work within the policy context that exists in the country. The current position is that a ban on awarding new authorisations for offshore exploration is in place. It is worth acknowledging that there were authorisations in place prior to that policy's introduction. They still exist and may bring forward natural gas in Ireland. It is purely a matter for the developers as to whether that happens.

Bearing that in mind, I will repeat what we have said in the past, that is, we would neither rule in or rule out LNG. We think that the long-term security of supply study that has been undertaken by the Department should consider LNG as part of the overall equation and whether it is required for Ireland. We are looking to move to a system based on renewables and gas for the next period. On that basis, we want our gas supply to be secure. We are asking for that question to be considered in the upcoming security of supply review.

Ms Aoife MacEvilly

The Senator asked about the source of the other 20% of our energy that is not from renewables. We will have more interconnection with the UK and France. We will have more batteries on the system, system services and demand sites. We will have all of that. During the winter when it is cold, still and dark and we are not getting solar power, we will rely on gas-fired generation. That is why, as Mr. McGowan said, it is important to think about the security of gas supply. That is of greater importance now as it becomes the primary back-up fuel and as we start electrifying heating and transport.

Mr. Jim Gannon

There was also a tail of a question about diversity of supply in the international context. It is worth reflecting on the fact that as recently as two weeks ago, Great Britain lost a significant portion of its interconnection with France through a fire at one of the facilities. I think it lost 1 GW. Although that was considered important, there is sufficient diversification of supply in the UK to accommodate that, not only in terms of its interconnection portfolio. The UK already has or is exploring interconnection with Belgium, Germany and Norway. It is exploring further interconnection and that is a conscious decision to ensure diversity of interconnection. The UK is less dependent on a single primary fuel. In terms of our interconnection with the UK and our future interconnection with France, we are looking for some of that diversification of electrical power supply.

We have less than 20 minutes left and four members have indicated. I propose that between questions and answers to give five minutes to each member.

The regulator's take is that the demand from data centres is rampant and historic. It is reassuring to hear that from a regulator because there has been a lot of appeasing talk in recent years regarding the increase in demand and capacity, as if to suggest that we will be grand with a few tweaks here and there. I am interested in the data centre policy that the regulator will release later this month. From where does the regulator see the most capacity and reliability coming?

I have a couple of questions for the representatives of EirGrid, one of which has been asked twice already. Does Mr. Foley think it would be helpful to bring forward the RESS auction for onshore renewables to enable renewables to connect more swiftly? What if it was brought forward to this year?

One of the major challenges of the past few months has been the low wind speed. There are times when wind is available but the grid is not able to accommodate it. Part of the reason is that there are operational constraints, such as the system non-synchronous penetration, SNSP, limit and the fossil fuel generation requirement. Will the representatives of EirGrid outline the timelines for raising the SNSP limit and reducing the fossil fuel requirement? Will the completion of the synchronous condenser in Clare assist in reducing the minimum generation constraint?

EirGrid's submission to the committee referred to data centres and that the growth in demand is accommodated by an appropriate policy framework, which seeks to ensure that all parties collaborate on an approach that responds to the temporary constraints in the current system and that can be resolved on an enduring basis. What does that mean? Could the representatives of EirGrid tell me how all parties collaborate when data centres are guzzling so much energy? There is a data centre planned for Celbridge. I was talking last night to a mother, a carer in Celbridge, who relies on electricity for oxygen nebulisers for her kids. Where is the parity of esteem there?

I ask our guests to be as succinct as possible in their answers because we do not have much time left.

Mr. Jim Gannon

Different renewable resources have different types of capacity. For onshore wind, there is something called the capacity factor, which is how much it can be assumed the wind will blow and what it can be used for. That is usually approximately 30% in Ireland. As offshore wind comes onto the system, the capacity factor is higher and we can assume it will achieve 50% or closer to 60%. Solar photovoltaic energy, more of which will come into the system in the coming years, will address the daytime peak of demand in the summertime and will be complementary to wind. It remains a fact that in addition to the daytime peak we naturally see between 4 p.m. and 7 p.m., we have a dunkelflaute, a two-week period of cold, non-windy weather in the darkness of winter. That is where we need something else. In the short term, we are transitioning to a place where gas can help us to cover that. In the medium term, there will be even more batteries on the system than we have now. In the longer term, we would like to see longer-term storage. That may come from battery technology or decarbonised gas, such as hydrogen, which can be stored well and used well in gas turbines, with modifications, or from other types of storage, such as pump storage projects. The short-term storage at that peak must be dealt with but we must also be capable of dealing with longer-term storage. There is a range of technologies there that could complement one another in different timeframes in that regard.

I thank Mr. Gannon. The Deputy asked specific questions of EirGrid.

Mr. Mark Foley

I will be brief and concise. I do not believe it is necessary to bring forward the onshore auction. The key thing is that there is a clear signal as to when the next four or five auctions will happen between now and 2030 and that they happen on time. That is the most important thing and we would be very supportive of that type of approach.

SNSP is signed off at 70%, the highest in the world. We are trialling 75% and we are on the journey to 95%. We are world leaders in this space and that is not just about EirGrid; it is about the whole ecosystem that has collaborated on this matter. There are great constraints. To the Deputy's point about enduring bases, it is about getting the grid sorted in the next eight to ten years and shaping our electricity future. The roadmap that will be seen in the next four to six weeks is about making the grid fit for purpose for the next 20 years. That is what we are going to publish and that is what we are going to deliver. That will solve the grid's constraints issue that some wind farm operators face. It will also solve the data centre issue because there will be adequate capacity on the grid.

The Deputy also asked about synchronous condensers. They are a great idea. Bring them on, I say.

I thank our guests for their input. I would like to ask the CRU about the greater use of gas and LNGs. Even after all the discussion, how does the regulator think it is compatible with our climate goals? In its submission, the regulator stated it would be prudent for the review of our energy security to include an examination of the future role of LNG. Many people watching will find that worrying because there have been campaigns against LNGs being brought into the country, following on from the successful campaign to ban the production of fracked gas in this country. There is a concern that it will be imported. I understand that not all LNGs are fracked, but a significant number of them are. Will the regulator examine that distinction in its review of the role of LNGs?

Ms MacEvilly says the CRU did not consider a moratorium on data centres unlike, say, Singapore, where 7% of the grid was being used up by data centres. Singapore is another country that relies very much on FDI and the tech sector but it introduced a moratorium because it considered data centre energy use way too much. We are not introducing a moratorium, yet the members of the tech sector who spoke to the Business Post just over a week ago said they did not support relocation facilities outside Dublin and do not support the condition of building on-site generation to power their operations. What would happen, from the point of view of the CRU, if data centre businesses were to say to the CRU that they do not want those conditions and will not adhere to them? Dr. McGowan said it is not necessarily about moving outside Dublin but about colocation. Could he expand on that slightly?

My next question to the CRU is about water. At the outset Ms MacEvilly told us the CRU has a role to protect the interests in water. There have been startling revelations from data centre. Facts show that from 500,000 l to 5 million l a day can be used by one single data centre. Could the witnesses comment on any concerns they may have about the expansion of data centres in this country and the security of our water supply?

I turn to EirGrid. We debated earlier in our private session EirGrid's assertion that potentially 70% of the power in this country could be used by data centres. It has been said that that was misquoted at this committee. I refer Mr. Foley to a letter from EirGrid to CRU of 27 May 2021 and to the paragraph that finishes with "A data centre with a load of 60 MW would be comparable to the load usage of a large town … like Kilkenny". The figures are in that paragraph. I just did a calculation and it amounts to a load of 69.02% of the grid, which is not 70% but not far off it. That is where that calculation came from. It was not plucked out of the air and was not mischievous; it actually came from EirGrid itself. In the same letter - and this is what really baffles me - EirGrid says "Ireland's electricity system was surely not planned to be, nor designed to be planned to be, a system which seeks to serve the needs of the global citizen for increased data supported by an ever proportionately smaller non-data centre commercial, industrial and domestic load". I am really alarmed by the difference in the tone from EirGrid to the CRU from May until now. Mr. Foley talked about what the data centres have to "bring to the party", which was his phrase, or the dialogue EirGrid has had with them. Could he please tell us when that dialogue took place and if it was prompted by the stark warning EirGrid gave in May about the load that data centres were putting on the system? Could he comment also on what that dialogue entailed? I know he said EirGrid got a positive response in that some of the data centres are willing to locate and some are prepared, if there is high demand, to power down, but those are not the reports we are getting back through the media. There is a disconnect and a real change in the tone.

I will put one very last question to the witnesses. This acute crisis in energy supply is facing everybody across Europe, and the cost increases are being borne largely by the public. It is harder for the public to bear them than it is for business, but there will be considerable investment in the generation and network assets that will be required to bring data centres onto the national grid. Can the witnesses tell me who will bear the cost of that investment? Will it be the taxpayer, the ordinary people and the person paying for his or her electricity or gas bills or will it be the data centres themselves?

There are an awful lot of questions in that. We have two other members still waiting to come in to ask questions. I ask the regulator and EirGrid to be as brief as they can in their answers. I may have to cut them off in order that we can allow the other members to come in before our time is up.

Ms Aoife MacEvilly

As for gas and the greater use of it, we think this will be positive. It will enable us to close down the coal-fired and the oil-fired plants when we get new gas generators on. We think renewable gas and green sources of gas can, over time, really assist Ireland in its decarbonisation goals. That is why we are happy to support that investment.

It is simply the case that as we are becoming so reliant on gas, and then reliant on a single source of gas via the UK, it is only prudent to consider LNG as a potential option. We note the Government policy and the concerns that have been expressed. There is not always that direct link between LNG and fracked gas. One can get non-fracked gas from LNG. A lot of EU shipments come from Qatar, where there is conventional production. Equally, one can get fracked gas via pipelines. Therefore, we do not think it is so much the infrastructure, that is, the LNG facility, that is of concern. We think there may be other ways. There is a new EU proposal on methane leakage reduction which might help prevent the import of higher methane emission gas sources, wherever they come from, which we think might be another opportunity. If we think of the likes of additional gas infrastructure, whether LNG or otherwise, as an opportunity for future green hydrogen infrastructure, I think there are potentials and possibilities there that we should not close off. That is why we are asking the Government to look at that.

Does Dr. McGowan wish to comment on water and data centres?

Dr. Paul McGowan

Yes. A small number of data centres use high quantities of water on high-temperature days, when cooling demand is at its highest. Overall, however, Irish Water's view is that the data centres represent a small percentage of current and future demand. That is largely because they are beginning to use new closed loop technologies, which essentially means they recycle the water they use. They are also introducing facilities whereby they can store water in order that they do not introduce a surge in demand at the times when they need it. The more-----

I have just a quick question. Recycling would require the use of more energy, would it not?

Dr. Paul McGowan

The water is used for cooling and then reused. There will-----

But that requires more energy.

Dr. Paul McGowan

All cooling systems require electricity to run, yes.

Mr. Jim Gannon

I think I mentioned that there was a data centre connections policy already in place. We have an ongoing dialogue with EirGrid, our team and its team, about connections policy. The consultation with industry was open for a number of weeks during the summer months. It is important to note as well that in what we brought out to consult on - it was in the form of a proposed decision - we noted that one of the options open to us and which will always remain open to us is a moratorium on connections if deemed necessary. There were, however, a number of other options there, and we favoured at that point in time an option that asked the data centre industry what it could bring along with its demand that could mitigate some of the challenges we see in front of us. I said "colocation" earlier. On-site generation would be considered colocation. It literally means the same site. One of the factors we considered was bringing the demand closer to where the generation is more generally, and that would not necessarily be on the same site. When I said "colocation" earlier, that is what I meant. Generation on the same site is just that.

Mr. Mark Foley

We have a very proud track record on our generation capacity statement in predicting or forecasting demand and managing that supply-demand equation. I can tell Deputy Smith absolutely categorically that the figure of 70% has no basis. The figures in the generation capacity statement are the basis on which we suggest the power system be planned by agreement with the regulator. There are lots of speculative investments out there, many people with great ideas, etc., not just in our sector but in others. The figures the Deputy can trust and on which she should rely are those in the generation capacity statement. That is what the regulator bases its decisions on. The Deputy should ignore the media, if I may suggest.

We have talked with the data centre people this summer. We have had engagements with them about the tight winter that is in front of us as is in our statement and is on the record. We are satisfied that they have engaged in a professional and collaborative way to ensure that their resources, which include backup generation, are available to support the system over the winter. I assure the Deputy that those conversations took place. I do not care what the media says. They did happen and we are happy with the response we got.

Does the letter from EirGrid to CRU contain the wrong figures?

I thank Deputy Smith. We are going to Deputy Farrell now.

I thank the witnesses. Most of my questions have been asked and answered at this stage but I just have three outstanding questions. When EirGrid refers to on-site generation or co-located generation what do they specifically mean by this? Is it primarily battery usage or is it additional energy generation such as wind turbines or so on?

On the commissioner's comments regarding new gas generation facilities that will be needed in the coming years, how advanced are plans for such facilities to be delivered onto the grid and when would we expect to see such facilities developed?

Mr. Foley mentioned the ongoing development of wind farms in the Irish Sea, and noted they have not elicited significant objections in the initial public consultation processes that are taking place. When would he envisage the second offshore wind farm to be operational in Ireland? This goes to the points that are made an ongoing basis, including at our previous meeting earlier this afternoon, that wind energy generation projects will not be seen for a decade. What is the general turnaround time from start to finish? Will the new maritime planning legislation bring this time down and by how much, in his professional estimation?

Mr. Jim Gannon

On the question of what exists right now, besides what Mr. Foley may have been referring to, the predominance of on-site generation is diesel backup generation. That is for now. It is what many use right now and could be called upon in the wintertime should it be necessary. Our experience in having dialogue with the industry is that more of them are looking at longer-term battery storage, which may not be able to just replace backup generation; it may also be uninterruptible power supply units, UPS, that help them in cases where their electricity is shut off due to a fault, even internally within their site, and it could support them in a number of different ways. Separately, some are certainly looking at natural gas generation on the site, co-located on their campus. Some are looking at the long-term future of that and what it could be converted to, including being fired by hydrogen in the longer term. There are a number of options there.

The Deputy asked how long it may take for new larger scale generation to come into the system. It can take between three to four years or even in excess of that. By the time they come to the auction process, many would have their development significantly along that development pipeline but some would not and would be coming from a standing start. Others would have projects significantly further along the pipeline. It varies from project to project but it does take time to deliver infrastructure in this country, as we would have seen elsewhere.

Mr. Mark Foley

The question from Deputy Farrell was about the offshore wind in the Irish Sea. He correctly mentioned the maritime planning legislation. It is at an advanced stage. It is going through at the moment and needs to get approved by the Dáil. I believe that we will see the first project in the first half of this decade, and certainly by 2025. We will see a lot of the other projects coming through in the second half of the decade. These are good developers and they are spending money. As we speak, survey rigs can be seen in Dublin Bay right down to Arklow, even today. They are ready to go and we just need the legislative certainty to execute the final bit of that plan.

I have lots of other questions but we are out of time.

Unfortunately. We could go for another hour easily. Waiting in the wings there is Deputy Devlin.

I welcome the guests and to those who are returning. My question is for the CRU and its opening statement on energy security, which I have raised previously with the Department and in the Dáil. The CRU said that delivering the regulatory framework to support the new interconnectors Greenlink and the Celtic link. What does it foresee as the stumbling blocks, if any, in that process? Could the witnesses outline them from the CRU perspective?

On LNG, reference was made to the review of energy security by the Department of Environment, Climate and Communications. Will the CRU elaborate a little more on that from this standpoint?

On data centres, the CRU has said there was a consultation on a draft direction on the new data centre connection policy. I may be wrong, but I thought this was published in July. How many people engaged, took part or were consulted in that consultation?

I found the comments by the EirGrid witnesses to be positive and welcoming considering the debate in the public domain on energy security and supply over the next couple of months in particular. EirGrid highlighted that Ireland had achieved 43% of all electricity in 2020 from renewable sources, which was ahead of the target. I commend EirGrid and others on securing that, which is very welcome. Mr Foley said the market must evolve if we are to achieve our collective decarbonisation goals and he highlighted the right technologies, on time and at a fair price. We are all trying to achieve that and we want to see it come on stream. He outlined the outlook for the winter, which I touched on, and he was quite positive about that, which is reassuring, particularly people watching in. He referred to EirGrid's generation capacity statement and the need for a robust plan under direction from the regulator and the Department to deal with the issues in the short to medium term, notwithstanding the unpalatable nature of some of those contingency measures. In the time we have left, he might outline those contingency measures.

Ms Aoife MacEvilly

I will kick off on the LNG point. The Department is conducting a review of energy security, which is to look holistically at the strategic security of supply for Ireland Inc. and in the years to come. We need to look at a diversity of supply sources for gas because of the increasing importance of gas in our energy mix, because it will be that backup fuel for power generation, and because we are electrifying heating and transport. The Corrib field is in decline, the Kinsale field is closed and we will be reliant on a single source of gas. We just need to look at all of those options. This is why we are suggesting this would be considered, which it is in any case, as an integral part of the review. I will now hand over to Mr. Gannon to speak to the data centres and the interconnectors.

On that point, is that the consultation that closed in early July or am I thinking of the consultation on data centres?

Ms Aoife MacEvilly

The review that I mentioned was on the security of supply. Mr. Gannon will talk about the consultation on data centres.

I thank Ms MacEvilly.

Mr. Jim Gannon

I do not believe that the security of supply review has been consulted on yet. It is something for the Department but I certainly do not believe it has been consulted upon yet.

On the interconnectors and the Greenlink interconnector, we came out with a decision on the regulatory framework for same, which allows them to move that project forward. It has moved quite swiftly through the respective statutory processes in Ireland and Wales. The project developer is quite ambitious about the timeframe for bringing that on board. There are fewer barriers in place. On the Celtic interconnector and where it is in the process, it still has a number of statutory processes to complete but it is significantly under way. It is a project being developed by EirGrid.

EirGrid may wish to comment on that. We and our team are ready, mobilised and moving on the regulatory framework for same. For our part of the process, we are moving on that.

On the data centres, I think there were 52 responses. There were certainly approximately 50 responses. Believe it or not, that is significant for one of our consultations given some of them are quite dense and complex. It was a good mix of people who came to the table on that one.

Mr. Mark Foley

I will make two quick comments in response to Deputy Devlin. The Celtic link is going exceedingly well. We lodged planning in June. The level of observation received in September was very modest for a project of its size, so we are quietly confident and hopeful of an outcome from An Bord Pleanála in the new year. It is going very well.

I used the word "unpalatable". I thank the Deputy for acknowledging what Ireland Inc. and all of the ecosystem have achieved in delivering 43% renewables on the power system last year. None of us is happy with a situation where we will have to keep the coal plants open and have some emergency generation to see us through a difficult couple of winters. We would all prefer if new low-carbon gas had arrived and we could see off those plants. By "unpalatable", I speak to something we would all prefer was not the case. However, these are plants that have been invested in, are in operation and have served the State for many decades. It is incumbent on us to keep them going until such time as we come out the other end of this difficult interim period.

I thank Mr. Foley.

Deputy Danny Healy-Rae has joined us. I welcome him to the committee and invite him to ask any questions he may have.

I have some questions for Mr. Foley. Can he justify the reason the cost of electricity has gone up by so much this year? Will the increases continue? Is the reason for the increase that gas-fired generators are very expensive to run and maintain?

Those questions are probably more appropriately directed to the regulator.

Mr. Mark Foley

I think so.

Ms Aoife MacEvilly

I thank the Deputy. What we are seeing in electricity costs at the moment is unprecedented. The last time we saw increases of this scale was in 2008 and it is probably worse at the moment. What we are seeing across the EU are a number of factors which are leading to increasing prices of this scale for customers across the Union. It is a shared challenge and a deep concern for regulators and policymakers. I will outline the relevant factors. Gas is more expensive at the moment. That has an impact on gas bills but because we use gas-fired generation, it feeds through to electricity prices. It is not so much that the gas generators are expensive to run per se. They are efficient usually. It is that they have to buy gas on the international market as well and the price of that gas feeds through. In addition, carbon prices have increased and that feeds through to the price of electricity. We have seen a very low wind period over the summer, which means we did not have the nice mitigating impact of wind generation which can lower day-ahead market prices. There has, therefore, been a series of circumstances which is leading to this general increase in electricity and gas prices for consumers. We mentioned earlier some of the protections we are putting in place to try to help customers through a difficult period.

Would we have been better off economically and financially, especially elderly people trying to heat their homes, if we had continued using Bord na Móna plants in the midlands? Costs seem to have gone up since those places were closed.

Ms Aoife MacEvilly

The peat plants, when they were in operation, were never competitive in the market. That is why they were supported by the public service obligation, were required to be run on priority dispatch and then required additional payments over and above market prices. It does not seem to be the case that the peat plants would have made a difference. Also, the scale of what is needed, in terms of generation on the system, would never have been provided by those peat plants.

We are in a very uncertain position now. As Ms MacEvilly said, gas prices are very hefty and we are paying through the nose for gas. What Members of the Oireachtas and the Government need to keep in mind is that people will not be able to pay as we go on. There is an old saying, "You can't get blood out of a turnip." People cannot pay if they do not have it. They are being put to the pin of their collar trying to keep going with the price of everything. Costs have gone up. If we get a bad winter, I am worried about elderly people being cold in their homes. We all need to strive to ensure that does not happen.

I thank Deputy Danny Healy-Rae, who is our final contributor. I thank all our guests. The regulator joined me in the committee room, while Mr. Foley and his colleagues joined us online. As we have heard, this is a highly complex area from a technical and market mechanism point of view. I said at the start of the meeting that what the committee needed to hear from the regulator and EirGrid was confidence that we will not be in a lights-out scenario. We heard that, which will be important in the years ahead.

While this is a complex issue, it is also exciting. We are moving to a position, as announced yesterday, where we will generate 80% of our electricity from renewables in 2030. That is staggering. We are already a world leader and that will continue. The CRU and EirGrid will play a pivotal role as we move in that direction. I thank them for all their efforts to date in keeping our lights on and the energy system stable. They are in many respects the unsung heroes of climate action and I thank them for that.

I am interested in much of what I heard today about opportunities, including the job opportunities that will arise in future and exciting technologies such as pumped storage. Mr. Gannon mentioned green hydrogen. The committee has discussed this issue a number of times. Notwithstanding that, we all recognise that gas will be on the system for some time to come and we need to work hard together to ensure we decarbonise as quickly as possible.

The joint committee adjourned at 6.18 p.m until 5.30 p.m. on Thursday, 7 October 2021.