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Seanad Éireann debate -
Tuesday, 5 Jul 2022

Vol. 287 No. 1

EirGrid, Electricity and Turf (Amendment) Bill 2022: Second Stage

Question proposed: "That the Bill be now read a Second Time."

I am very glad to be here to introduce this Bill. It is an important part of the

Government's response to increasing concerns with regard to security of electricity supply, with particular regard to the identified generation capacity gap over the coming winters. It is in this regard that we produced the Bill. I am glad to be opening the debate today and to be able to set the context for the actions to be taken on foot of this Bill. I will describe the sections of the Bill and, having regard to its main provisions, set out some background as to why they are urgently needed. My overarching message is that while the provisions outlined in this Bill are part of a broader package of measures, it is critical to put the Bill and its measures into place before summer recess. I seek permission to achieve that.

I will discuss the generation capacity gap that the provisions in this Bill seek to address, along with outlining how the measures in it will support our security of supply as we transition to up to 80% renewable electricity by 2030. I will reaffirm the urgency of the Bill to maintain a secure electricity supply for customers. I will also outline its necessity in helping to protect customers against increasing electricity costs through the establishment of a process to allow for the public service obligation, PSO, to be credited as a benefit to electricity customers when the Commission for Regulation of Utilities, CRU, calculates a negative PSO.

On the factors affecting security of electricity supply, Senators will appreciate that we in Ireland face additional pressures due to our geographical location, low levels of interconnection with other countries, fossil fuel dependency and the smaller scale of the Irish market compared to many other European countries. However, the most immediate factor affecting security of electricity supply in Ireland over the coming years is a potential generation capacity shortfall that was identified in EirGrid's all-island generation capacity statement published in September 2021. This potential capacity shortfall arises in periods of peak demand when there are low levels of wind generation and interconnection available to the system. The shortfall has arisen largely due to non-delivery of previously contracted capacity, increasing electricity demand and the increasing unreliability of existing plant. The CRU has statutory responsibility to monitor and take measures necessary to ensure the security of electricity supply. It is assisted in this role by EirGrid, Ireland's electricity transmission system operator.

On 7 June 2022, the CRU directed EirGrid to procure, using the most expeditious means available, approximately 450 MW of additional generation capacity from the winter of 2023-24 to the winter of 2025-26 to ensure a secure electricity supply for that period. This temporary generation capacity will be in place until more enduring capacity can be delivered through regular market auctions. The specific nature of this CRU direction requires the legislation before the House to ensure EirGrid can fulfil the direction as required. This legislation includes supporting provisions for EirGrid in its role of securing the temporary generation units with equipment manufacturers and contracting for its deployment and operation by electricity generators and ensures the necessary financial support can be given to EirGrid to achieve the objective. In this regard, I will bring a Supplementary Estimate next week to provide for the capital funding for EirGrid to place orders on the generation units required.

While this legislation facilitates security of supply through the provision of temporary generation, which ensures there is sufficient reserve capacity on the system to enable security of supply in peak periods when there is low wind generation and interconnection available, it is important to note that this will not impede any of our plans for renewables, interconnection, batteries, demand side response or energy efficiency. Having this reserve capacity available allows EirGrid to have more confidence in scheduling network outages for new connections to the grid such as new wind and solar farms from the recently announced renewable electricity support scheme 2, RESS 2, list of projects, without jeopardising security of electricity supply. This is very much in keeping with Government policy of delivering up to 80% renewable electricity by 2030.

Further to this, the Bill also provides for an increased borrowing limit for both EirGrid and Bord na Móna. This will enable EirGrid to invest in the Celtic interconnector with France and other necessary investments to ensure our grid can accommodate up to 80% renewables by 2030. The Bill also enables Bord na Móna to further develop its brown to green strategy and deliver new

investments to former peat harvesting regions.

To ensure the security of our electricity supply over the coming years, it is vital that the legislation be passed prior to the Dåil rising in order to make sure certain measures can be initiated in time, in particular that EirGrid from July 2022 can acquire electricity generation, sell and transfer the electricity generation plant to electricity generators and enter into agreements with electricity generators for the operation of the electricity generation plant. I emphasise the urgent nature of this situation and reiterate that it is of paramount importance that the legislation be passed immediately.

Crucially, as well as providing for the provision of temporary generation capacity for the coming years, the Bill establishes a process to allow for the PSO to be credited as a benefit to electricity customers when the CRU calculates a negative PSO. This provision will enable the delivery of savings to electricity customers. Under current legislation, the PSO levy is charged to all final electricity customers to fund renewable electricity generation schemes in support of national policy objectives. The RESS has introduced a two-way floating premium, which means if the wholesale market price is higher than their bid price the supplier pays moneys back to the customers through the PSO mechanism.

The existing legislation, however, does not provide for crediting a negative PSO levy.

In recognition of the rising cost of living and of the impact on households and businesses of increasing energy bills, the Government approved, on 14 June 2022, legislative amendments to enable PSO payments to be credited as a benefit to electricity customers when the Commission for the Regulation of Utilities, CRU, calculates a negative PSO. This legislation is required in order for the CRU to be able to direct that the PSO can be credited to customers over the period from quarter 4 of 2022 to quarter 3 of 2023. This credit has been provisionally calculated by the CRU to be in the order of €75 for the average domestic customer. The CRU is expected to make its final decision on the credit amounts later in July. It is vitally important in these times of rapidly rising energy costs that we allow passage of this Bill to deliver this saving to households and businesses and, in particular, financially vulnerable residential consumers.

I will devote my remaining remarks to the subject matter of the Bill. It is designed to enable EirGrid to take certain emergency measures, including acquiring electricity generation plant and entering into agreements with electricity generators regarding electricity generation plant, for the purpose of ensuring and protecting security of supply, pursuant to a direction of the CRU. For that purpose, the Bill provides for the Minister for the Environment, Climate and Communications to give financial support to enable EirGrid to take certain measures. The Bill also increases the borrowing limit of EirGrid through an amendment of the Electricity Regulation (Amendment) (EirGrid) Act 2008. The Bill includes an amendment of the Electricity Regulation Act 1999 to provide for payments to final customers of certain benefits relating to compliance with a public service obligation. The Bill also increases the borrowing limit of Bord na Móna, through an amendment of the Turf Development Act 1998.

I will provide a section-by-section summary of the Bill. There are 14 sections. Section 1 is a standard provision which provides for definitions. Section 2 sets out that expenses incurred by the Minister in the administration of the Act are to be paid out of moneys provided by the Oireachtas, to the extent sanctioned by the Minister for Public Expenditure and Reform.

Section 3 provides that EirGrid shall take urgent measures, as required, under a direction from the CRU to ensure security of electricity supply, including acquiring electricity generation plants, selling and transferring such plant to an electricity generator, and entering into an agreement with an electricity generator to operate the electricity generator plant. It provides for the operation of generation plant in line with the CRU direction and for operations to cease upon the fulfilment of the direction or 31 March 2027, whichever is earlier.

Section 4 prevents EirGrid from operating a generation plant acquired by it pursuant to a direction from the CRU and provides for it to enter an agreement with an electricity generator to sell the emergency generation plant and undertake its operation. This section also ensures that the electricity generator may only receive reimbursement of reasonable costs and a reasonable return as may be approved by the CRU for undertaking this activity, and that upon termination of the agreement, the electricity generator shall dispose of the electricity generation plant in an arm's length transaction in accordance with any direction of the commission. This section includes a provision that in all circumstances EirGrid shall be paid the full price of the electricity generating plant and any profit received on a sale of the plant by the electricity generator.

Section 5 provides for obligations on EirGrid to take measures, as required, under a direction from the CRU to ensure security of electricity supply and ensures that EirGrid obtains no benefit other than reimbursement of reasonable costs and a reasonable return as may be approved by the CRU.

Section 6 ensures that all functions performed under this Act shall be in compliance with laws and treaties of Ireland and the European Union.

Section 7 provides for the Minister to provide financial support to EirGrid in an agreed form and manner, with the consent of the Minister for Public Expenditure and Reform. It obliges EirGrid to use financial support for the purposes of complying with a direction of the CRU only, and that the use of any income or revenue received in connection with the agreement with electricity generators shall only be used for the purpose provided or the purpose of making distributions to its shareholders as determined by the directors of EirGrid.

Section 8 provides for a quarterly report by EirGrid to the CRU.

Section 9 provides for the CRU to make further directions to EirGrid, the public electricity supplier or an electricity generator to address the temporary electricity emergency, and where such a direction is not complied with, to apply to the High Court to make such order as it thinks fit.

Section 10 provides for the CRU to report upon progress to the Minister no later than 31 October 2026 and for the Minister to make an order to extend the period for which the emergency generation can be operated by one year, upon approval by both Houses of the Oireachtas.

Section 11 provides for an increased borrowing limit for EirGrid of up to €3 billion.

Section 12 provides for the amendment of the Electricity Regulation Act 1999 to allow for PSO payments to be credited as a benefit to electricity customers. Calculation of the annual PSO levy is a matter for the CRU. On 14 June, the CRU issued a draft determination that gives the potential for a refund of about €75 for the average domestic customer with the passage of this enabling amendment.

Section 13 provides for the amendment of the Turf Development Act 1998 to increase Bord na Móna's borrowing limit to €650 million.

Section 14 provides for the Short Title and commencement of the Act.

I have outlined the main provisions of this emergency measures Bill and provided additional detail on the sections. I hope this will be of assistance to Senators. I look forward to an informed and meaningful debate and to working constructively with Senators on all sides of the House.

I thank the Minister of State. He could nearly take up full-time residence in the House. This is the third or fourth time I have met him in the House today. Fianna Fáil welcomes this legislation, which will help protect the security of Ireland's electricity supply. As the Minister of State outlined, the purpose of the Bill is to provide for emergency measures to ensure and protect the security of the supply of electricity, and for the giving of financial support by the Minister for the Environment, Climate and Communications to EirGrid to enable it to take certain measures. The Minister of State may have outlined some of those. They include acquiring electricity generation plant, to provide for EirGrid entering into agreements with electricity generators regarding electricity generation plant, and to increase the amount of money EirGrid and Bord na Móna may borrow, which, as the Minister of State mentioned, is €3 billion and €650 million, respectively. That is very important.

We have had the closure of Shannonbridge and Lanesborough power stations in my part of the country. We have accepted the change and know it has to happen. We want the pace of that change to increase in our area. I do not know what the intention is with regard to those power stations but I believe they will be dismantled. We need to put some other structure in place there. It might not provide as much employment. We are going from a brown to green economy there. That is acceptable. Whatever structure is put in place, it must take account of the needs of the local communities.

This legislation provides for payments to customers of certain benefits relating to the public service obligation levy and other related matters, including a requirement that EirGrid shall provide a report to the CRU every quarter, or more frequently as the CRU may require. The measures in the Bill were announced in mid-June as part of a wider package of measures to help mitigate rising household electricity bills.

It is appropriate we are discussing this Bill at this time. In recent years the public and industry have been looking over their shoulders in terms of having enough electricity supply to bring us over the winter period. That concern still exists although, in fairness to the Government and the Minister, that has calmed down a bit. It is a concern for people in that, unless we rectify the position and get the situation under control, we could be in trouble. Nobody wants to see lights or power having to be switched off. We must avoid that at all costs.

There is great opportunity for wind and solar energy development if we handle this properly. I meet farmers every week at my constituency clinic and they all want to get involved in solar panel development. They are willing to do that. That is good for climate change. It is one sector where farmers will play their part. Farmers are becoming involved in it. In some cases there might be more controversy about wind turbines. When they were first put up in my part of the country, there was all hell to pay, but that seems to have calmed down because of the community involvement, which involved Coillte at the time. It is now Bord na Móna and the ESB, and that system is working out well. There are many farmers in rural areas who would like to get involved in solar panel development and that has to be good.

Section 3 provides that EirGrid shall take urgent measures, as required, under direction from the CRU, to ensure security of electricity supply, including acquiring electricity generation plants, selling and transferring such plants to an electricity generator, and entering into an agreement with an electricity generator to operate the electricity generator plant. It provides for the operation of the generation plant in line with CRU direction and for operation to cease upon the fulfilment of the direction or 31 March 2027, whichever is the earlier.

Section 4 prevents EirGrid from operating generation plants acquired by it pursuant to a direction from the CRU, and provides for it to enter into an agreement with an electricity generator to sell the emergency generation plant and undertake its operation.

Fianna Fáil welcomes this legislation. We will support it. What we do with decommissioned power stations, from an economic perspective, has been a major issue in my part of the country. We all know we have to change, however. Security of supply will be the issue we need to sort out. Rather than have people worry about whether they will have electricity supply in the months ahead, the Government, which is in control, must ensure this is properly done.

The Minister of State is very welcome to the debate on this very important legislation. As my colleague, Senator Murphy, has said, the issue of energy security and supply is one that will be critical. The backdrop to this debate is the words and comments of the European Commissioner, Ms Mairéad McGuinness, who raised the prospect and possibility of fuel rationing in the winter. Regardless of whether she is right, there is an obligation and need to have that discussion to assure people in Ireland of our energy security.

Senator Murphy correctly said there is a balance to be achieved in terms of the move from dependency on fossil fuels to a new type of energy security and supply. We have to be conscious that the majority of our gas supply is coming via a pipeline from the UK and mindful that we do not, as far as I know, have any gas storage facilities or a LNG terminal in this country. This potentiality raises all sorts of outcomes of which we must be cognisant. The publication date of the report on energy security supply is imminent or may be due. CEPA was commissioned to do that report and to be fair to the Minister of State, the Minister, Deputy Ryan, and other Ministers, it is a priority for Government. I accept and appreciate that.

I will raise the issue of the Barryroe field, which was raised at the annual general meeting of Providence Resources last week. The company may submit an application to drill a new well off the Cork coast. Providence is telling us this could assist with our energy security. I hope the Department will engage with Providence on the Barryroe field. I have no vested interest in this matter, other than wanting to ensure a continuity of supply. We benefited greatly in Cork, during what I accept was a different time, from the Kinsale field. Natural gas from Kinsale benefited the modernisation of our country in the context of energy supply and security.

It would be remiss of me not to refer to the decision of Electric Ireland to raise prices for the fourth time in a year. The ESB has increased the price of electricity by 11% and the price of gas by 29%. This is the second time the company has raised prices in 2022. There is a question mark around whether the ESB will increase prices again. What is its rationale beyond what the company has already done? Why are price increases being countenanced given that we are in an energy crisis? I ask Electric Ireland and the ESB to explain the reasoning for these increases to the people of Ireland. I say that in the context of the measures taken by the Government to mitigate the higher costs of energy being incurred by people.

The retrofitting scheme is not necessarily part of this debate but it is important that we look at how it is working. We also need to look at public transport fares. I listened to the discussion on "The Late Debate" the other night when the eminent commentator, Mr. Gerard Howlin, spoke about the Green Party in Government having a clear focus and clear policy objectives.

All of us, in the context of the modal shift in the car which has been assisted, unfortunately, by the war in Ukraine and the energy crisis, are looking to public transport. We all accept that public fare reductions should be extended. We all welcome the commitment of the Government to the BusConnects programme, whether it is Dublin or Cork.

There are contentious issues around that which we accept and we can park that for a moment, but it is important that every effort be made to have public transport fares as low as possible. I know the Minister of State, Deputy Smyth, is very committed to that. In Cork, we now have a new 24-hour bus service which is changing behaviour more than one could ever imagine. I am fortunate to be on a 24-hour bus route which is absolutely brilliant. I have spoken to people in the last week or so, when I have been out doing leaflet drops and meeting people, who are making decisions about what journeys they will take, how they will take them and where they will go. That has a potential knock-on effect in a social aspect as well.

We are coming to the end of the leaving certificate and heading into the issue of school holidays and third level holidays. I hope that as part of the budgetary process and academic term, we try to make the fare reduction in terms of Dublin Bus, Bus Éireann, Luas, Go-Ahead Ireland, Iarnród Éireann, Commuter and DART journeys as great as possible or to make fares free.

We spoke about university education being monumental in terms of the Niamh Bhreathnach-John Bruton Government or Donogh O'Malley with free education at second level. The potential legacy this Government will leave is in terms of assisting passengers, not just with the cost burden in the short to immediate term of the energy crisis and inflation, but in that modal shift. If we want to be serious about incentivising people to move from the car to public transport, Government must be proactive and encourage and assist people, be it with the Leap card or the issue of scheduling and availability of buses or light rail. I am very optimistic about the future of public transport from a Cork perspective with BusConnects, notwithstanding some of the potential issues we will have in the future in terms of land and bus lanes and so on. It is about ensuring that we give people the opportunity to make that conscious decision to move away from dependency on fossil fuels.

The issue of energy security and supply is concerning people. When one hears someone such as Commissioner McGuinness making that comment, it forces people to sit up and think. I commend the Minister of State for the work he is doing in his Department, along with other Ministers. Measures are being taken by the Government which are helping and we should continue to take them. I look forward to and hope that we can have a debate before the summer recess on the budgetary process, because it is critical. The Government has differing views on a myriad of issues but, in particular, on our own energy security.

Cuirim fáilte roimh an Aire Stáit. It would be remiss of me not to point out the rushed manner in which this Bill is being brought before us. The Department sought for the pre-legislative scrutiny to be waived. No general scheme of the Bill was published. There was no regulatory impact assessment. It was rushed through the Dáil in two sittings and today it will be rushed through this House in one sitting. We are being asked to grant a waiver to the constitutional provisions against rushed legislation, to allow for an earlier signature by the President. On top of all of that, we had the issue last week where the Government used a procedural loophole to pass related legislation by amending the Circular Economy, Waste Management (Amendment) and Minerals Development (Amendment) Bill 2022. I must register my concern that this is not the way in which we should be passing legislation.

I listened with interest to Senator Buttimer talk about the need for a LNG terminal.

We have to be honest about why we are passing this legislation. It is an emergency measure. No one wants the lights to go off in the winter. However, the main aim of the Bill is to allow EirGrid to procure 450 MW of backup electricity generation capacity to ensure we have enough electricity to meet demand over the coming years. This mismatch in electricity supply and demand is a direct result of the failed, incoherent policies of Governments, of which Fine Gael has been a part, for the past ten years. It is staggering that we are in a situation where emergency legislation is being passed in 2022 because we are at risk of the lights going out. We all know the elephant in the room is that rising demand for electricity continues to outstrip the pace of generation and the extra demand is coming from data centres, whose demand increased by 144% between 2015 and 2020. The insatiable demand is, of course, the natural outworking of Fine Gael policy. For years, Fine Gael was open about encouraging data centres to set up in Ireland and rolled out the red carpet for them. That is why it is disappointing that, having followed the debate in the Dáil, it seems the Green Party is refusing to accept that fact. It is not the Green Party's legacy. It is a Fine Gael Legacy that the Green Party has unfortunately inherited. We have to accept that the reason we have to pass emergency legislation is that demand from data centres is outstripping the pace of generation.

The other factor that has led to this legislation is the failure of the CRU to procure generation capacity. The commission has serious questions to answer in that regard. Every time Members table parliamentary questions to the Minister about the CRU, they are reminded that the CRU is an independent regulator. The CRU must be held accountable and to that end, I welcome that the Joint Committee on Environment and Climate Action has agreed to my recommendation that the CRU be brought before the committee on a quarterly basis. The CRU is accountable to the committee and has serious questions to answer in regard to the procurement of 200 MW of generation capacity.

The Bill prioritises the CRU in directing EirGrid to facilitate gas-powered generation. Where is the priority for a demand-side strategy? According to the response to a Commencement matter, we will see it by the end of this year, which means it will not come into effect until 2023. A demand-side strategy would allow households to be rewarded for reducing their electricity demand.

Where is the biomethane strategy whereby we could use waste to generate gas fuels instead of bringing in fossil fuel gas? Where is the EirGrid software update that would recognise battery storage? Across the water, multi-hour and multi-day battery storage is displacing gas-powered generators, whereas our grid does not even recognise battery storage. Prioritising gas-powered generation to meet the demand of the energy shortfall skews our priorities.

Major questions need to be answered about the impact on households. We are halfway through 2022 and there is still no energy poverty strategy. I encourage everyone to come to the briefing in the audiovisual room at 10 a.m. tomorrow to hear about the impact of energy poverty across the whole of society. The last energy poverty strategy lapsed in 2019. The Bill shifts more costs on to households, although by how much is unclear. The Minister outlined in the Dáil how the full cost for households will not be known until the contracts are finally worked out. A figure of €40 per household, per annum was put to him. Will that figure be confirmed today? We were told it would be less than €40 but can that be guaranteed, so that we are not adding to people's household bills? With this legislation, is the Minister asking households to write a blank cheque? What protections are in place to prevent costs being borne by the most vulnerable consumers?

The Minister also outlined in the Dáil that €350 million is to be transferred to EirGrid from Vote 29 - Environment, Climate and Communications, by means of a Supplementary Estimate. Will the Minister of State outline the exact budget lines he proposes to take from to fund this transfer to EirGrid?

The last time we had such a situation with a Vote was regarding the underspend on retrofits. Is the underspend in the Department coming from broadband, cybersecurity or An Post?

The Bill will amend the Turf Development Act 1998 to increase Bord na Móna’s borrowing capacity to €650 million, which we are told will help it fund its expansion into renewable energy. This is welcome given the urgent climate crisis. We want to see the State, particularly through semi-State bodies, lead the way on investment in renewable energy to ensure the State retains as much ownership as possible of our energy production capacity. I have concerns about this section and will return to them on Committee Stage. I also express my concerns about how Bord na Móna is treating the communities of the area in which the mid-Shannon wilderness park is proposed to go ahead. The company gave a commitment to those communities that it would create a wilderness park when it had stopped harvesting the turf. It now seems to be going back on that commitment, which does not bode well for a just transition.

I raise once again my concerns about the sort of risk assessment that has been done in terms of procuring gas-fired generators, the Energy Charter Treaty and the possible exposure of the State if it decides to fast-track the running down of these gas generators. If we get renewables on stream quick enough, and with demand reduction and battery storage, we may not need gas-fired generators as much as we think we will. Will we be liable to foot the bill of what the companies think their future profits will be?

I thank the Minister of State for coming to the House. I echo previous speakers' statements that it is frustrating that, as per usual ever summer, there is a rushing through of all Stages of Bills. I do not know why that seems to be necessary. The debate on the Bill could have been done over two separate sessions. To hear all Stages in one or two hours is poor practice, especially when no pre-legislative scrutiny is provided for this legislation.

The main purpose of the Bill is to ensure we have sufficient electricity generation in place from winter 2022 through to 2026. We understand EirGrid will then sell and transfer that capacity to an electricity generator and enter into an operating agreement. This emergency legislation is supposed to last for only three years, but we are investing an enormous sum of money in the building and preparation of something that is for three years. Is it reasonable to think that after three years we will say that is enough of that and we will have figured the whole situation out, or is it a Trojan horse in that we will have to rely on these beyond the three-year agreement?

It certainly raises questions as to how we have found ourselves so exposed to supply shortages and why this legislation has only been brought forward now. My colleague, Deputy Bacik, raised this and other such matters during the Order of Business in the other House. She raised the fact it is not good legislative practice to see legislation being rushed through.

It is often said the current crisis is because of the war in Ukraine, but we cannot wholly blame Ukraine or the rapid increase of gas prices. Clearly the war has exacerbated energy security and supply issues internationally, but the current crises in this country is as a result of a failure to plan long term for the transition to renewable energy sources. Throughout last summer and autumn, the pressure on the electricity supply grew due to the growing demands from data centres, which the Houses have debated, as well as the transition from dirtier fuels such as coal, and balancing the needs to support the generation of wind power. All of this happened before the war in Ukraine, so it is not feasible to say it is the only reason this is happening.

The CRU stated in its announcement that these emergency measures were needed due to the increased risk of older generators becoming unavailable and ageing out.

Obviously, the older generators are not as efficient as the newer ones and have higher carbon emissions. We in the Labour Party, however, are concerned that the measures will lock in new fossil fuel generation capacity. I know this is an emergency but gas is a fossil fuel and when we are supposed to be transitioning away from fossil fuels, I am concerned, and my colleagues in the Lower House have expressed this concern, about this potentially locking us into new fossil fuel generation capacity. Once we go down the route of getting the transitional system operating to source emergency extra capacity, there is the potential it will become the default option if the electricity generation market does not operate properly.

The central question about these generators is what fuel they will run on. As I said, there is a concern about enhancing our fossil fuel dependency. Will EirGrid be told what it has to procure?

Another question is what the cost to the State of developing and running such generators will be. I know others have stated, and reports have indicated, that the costs will be recouped from customers over a three-year period, but is the State putting up the capital spend in the first place? The Minister of State might clarify where the €350 million in capital funding for these generators is coming from. A figure of €400 million has been thrown around as being what is left in the annual budget. If the €350 million is coming from that, it is a fairly sizeable amount.

It is prudent to point out that this is happening at a time when energy companies are making extraordinary and unexpected profits due to the soaring prices of fossil fuels. The Labour Party has called for a windfall tax on excessive profits as a measure that could and should be included in budget 2023. We think the revenue raised could be used to fund additional climate mitigation and energy efficiency measures that would reduce our reliance on energy imports at a time when we see unprecedented insecurity of supply. I recognise that is largely due to the war in Ukraine.

While we rush through this law in order that these new gas generators can be put in place this summer, it has not been adequately explained why the ESB, a publicly owned company, has previously pulled out of contracts to build a number of gas power plants. There was extensive coverage of this in the Business Post, and the matter was raised in the Dáil as well. I do not know if the Minister of State has any comment to make as to why the ESB did that. Now we find ourselves in an emergency, whereas the ESB potentially could have acted earlier. The question remains as to whether that contributed to the supply crisis that underpins this legislation. It is one of the reasons for the legislation and an expectation that we would have additional capacity for power generation but we can no longer rely on it. Is it likely that the ESB will be one of the electricity generators contracted to operate this emergency supply?

Data centres were mentioned. Is this new extra capacity really to allow for the development and operation of data centres? There is no question about the gobbling up of our energy supplies that they are doing and will do into the future. Many questions have been asked about data centres and their feasibility at a time when we are under enormous pressure not only on the grid but also to meet crucial emissions reduction targets. Friends of the Earth has asked a number of important questions about what alternative measures have been considered such as demand-side management.

Another provision in the Bill is to increase the borrowing capacity of Bord na Móna to €650 million to support its brown-to-green transition. That is a really important programme. As a previous speaker noted, the reference to turf in the Bill is unfortunate. It puts the Bill into a different frame. When I first saw the Title I was surprised to see the word "turf". We might all agree, especially considering that the aim of Bord na Móna is to move away from peat extraction, a move that is very much welcomed, that it would be useful if the Minister of State could outline what projects or investments this borrowing will support and if he could give a commitment that a strategy for Bord na Móna will be presented, maybe to the relevant Oireachtas committee. My colleague, Deputy Bacik, has also made that request. We have had an opportunity in Bord na Móna to build out a national wind energy and retrofitting company. It is to be hoped that this will be State-led and could secure an energy transition to underpin a just transition.

We need to accelerate our delivery of onshore wind and solar energy.

Offshore wind energy will be the cornerstone of our future zero carbon electricity system. I do not know if the Minister of State has any thoughts on how these two sources will align. We need to accelerate the move to reduce our reliance on fossil fuels.

I welcome the Minister of State to the House. I am grateful for the opportunity to say a few words on this important Bill.

I, too, would like to voice my opinion on the rushing of this legislation. It happens every summer and at Christmas time and I often wonder why.

In relation to data centres, the biggest companies in the world are employing thousands of people in this country and the vast majority of them are producing data. Why should we not have our fair share of the data centres producing data? There is an onus on us in that regard. Do we want all the Third World countries to have all the data centres?

We are a complete outlier.

We may well be but we have an obligation to have data centres here, particularly given the employment being generated in this country.

Senator Burke does not need points of information.

It is unbelievable that the Derrybrien wind farm is being dismantled. The Minister should seek a derogation from the European Union in relation to the current fines until we reach maximum energy production in this country. At a time when we are not self-sufficient in energy, it is daft that we are about to dismantle a wind farm at great cost and replace it with gas generation. The Minister should, therefore, seek a derogation from the European Commission in relation to the fines.

The Bill does not provide for joint ventures. The Minister of State might be able to enlighten us on that. There could be joint ventures between electricity generation companies all over Europe and the ESB is probably one of the best in the world. These companies have a great deal of expertise. Financial houses may also be interested in joint ventures at this point. We have fallen behind, particularly along the west coast. The opportunities that exist along the west coast are very slow to take hold. There is something wrong when we only have one offshore wind energy plant in the country, which is on the east coast. There is something wrong in the Department with responsibility for energy that we have not made more ground, especially given the connections to the grid along the Shannon Estuary. We do not have wave or wind energy installations along the west coast. While it is probably difficult to do this work along the west coast because of wind speeds and the depth of the Atlantic, drastic measures are needed. I would like to see emergency legislation introduced in this area. Most people would back emergency legislation to get that into production because it could be our oil for the future. Similar to the Saudis who produce and export oil, given the assets we have along the west coast and on the mainland, we could generate electricity through wind and Atlantic waves. That potential should be looked at in the shortest possible time.

Much has been said about solar energy production for domestic purposes. It has been championed by many people but there is an enormous difference between a fine sunny day and a cloudy day. On a bad day, solar could generate only 20% of requirements. Solar panel production should be supplemented with small wind turbines. This area should be looked for domestic use. The wind blows at night as well as during the day. People have to switch on their lights at 4.30 p.m. in the wintertime here. We could get into the manufacturing of small wind turbines. In recent years, we have excelled in engineering. We have McHale Farm Machinery and Malone Engineering in Mayo and a whole host of other engineering companies the length and breadth of the country. If the Government sent a signal on energy-generating products, they would take off and be used.

I will respond to some of the interesting, insightful and valuable comments of Senators, for which I thank them.

Senator Murphy referred to Shannonbridge and Lanesborough and stressed the importance of taking local communities into account. One aspect of those locations is that they have very valuable grid connections, which could be used for renewable energy connections, storage or other energy infrastructure. There has been a history of jobs in energy, whether in Bord na Móna or the ESB, in the midlands. I hope the just transition funding will help.

I am happy to hear that farmers are showing enthusiasm for solar energy. It can be deployed quickly and helps with our energy resilience. We do not have all our eggs in one basket when it comes to electricity. The price of one fuel, whether gas or oil, can go up or there could be a day with no wind or sun, so we want a combination of energy sources. We are heavily tilted towards wind and gas and we need more sources. The more solar we can generate, the better. Senator Burke referred to domestic solar energy, which is something we may be able to rapidly deploy.

Senator Burke asked whether we can delay the dismantling of the Derrybrien wind farm or get it turned on again. As the Senator will be aware, the matter was the subject of a legal decision which makes it difficult to do anything with it. There is a fundamental problem with building wind farms on active bogs, as was done early on. If there is any way we could do something with Derrybrien, I would be delighted rather than having to take the wind farm apart.

The Senator also asked about the possibility of having small wind turbines along with domestic solar energy. The orthodox view, certainly a few years ago, is that small wind turbines were too inefficient and it is always better to have larger wind turbines. I am happy to look at this again to see if there has been any improvement in the technology. It is another example of the need to have both sources, so that if one of them is not working, the other can be used.

Senator Buttimer asked that every effort be made to ensure that public transport fares are as low as possible. Our cuts to public transport fares were a cost-of-living measure. They are also a positive measure. Often, when trying to bring in climate action measures, they can be seen as negative if they are taxes or levies or ban certain things. Having positive strong attractive measures helps people to get on board and can be the difference between deciding to use a bus or not. I certainly see that with young people. People under 24 are seeing that their public transport fares dropped dramatically and they are now making many journeys they otherwise would not have taken. We need to look at that in the budget. As the Senator said, there will be many voices seeking to have the public transport fare cuts, which were a temporary cost-of-living measure, maintained.

Senator Boylan asked about a demand-side study. I will find out if there are demand-side studies under way. Anything that reduces demand is even better than something that generates renewable energy.

It is the demand-side strategy.

Yes, it is the demand-side strategy. We have smart meters being rolled out around the country and that is part of demand-side strategy but I will see if there is a specific document on that.

The Department of Agriculture, Food and the Marine is working with my Department and the Department of the Environment, Climate and Communications on a biomethane strategy at the moment and the green hydrogen strategy is due to be published very soon.

Senator Boylan asked about the source of funds for voted expenditure additions this year to pay for the generators. Approximately €200 million is planned to be voted through, of which €90 million comes from savings in the Department of the Environment, Climate and Communications and the other €110 million is from Exchequer funds, given we have buoyant tax returns this year.

The PSO, levy was designed to subsidise wind farms and renewable energy. The idea was that this renewable energy would impose an extra cost on the grid and this cost could be paid for by applying a small charge on everybody’s bill. Last year it was approximately €50. What was not envisaged was that renewable energy might save a person money in the future. One of the problems sometimes when people are framing climate action or changes relating to the environment is that it is assumed that they are going to have a cost and that they are going to be negative. As it turns out it is saving us money because oil and gas are so expensive. There was no mechanism within the law and it had never been foreseen that the PSO levy could be negative. It will be a negative amount of €75 this year. Everybody is going to be credited with €75 on their bill. One of the reasons to put this through as emergency legislation is so that money can be applied to people’s bills as soon as possible.

The Senator also asked whether the Energy Charter Treaty could prevent us from shutting down gas power and whether a risk analysis had been done on that. I will have to come back to her with an answer to that question but it is a good one.

Senator Hoey asked what happens to these generators after they are decommissioned. The Bill provides that they will be sold after they are decommissioned. I was also asked if this new capacity will lock in our dependence on these generators and what other fuel these generators use. There will either be using natural gas or liquid distillate. They are there to be used in emergencies; they are peaking power plants and are not to be used all of the time. The idea is that if a number of other generators fail on the grid at the same time, we have that backup and do not have a blackout. The entire purpose of this Bill is to prevent blackouts in the winter, particularly in the winter of 2023-24.

I was also asked whether the ESB could win the contracts to be the generator and whether it is likely to win it. I do not know if it is likely but it can certainly apply like any other generator.

There was a question about what way the Bill relates to turf. It increases the borrowing capacity for Bord na Móna to get away from turf. I take the point on that. The fact is that it amends the Turf Development Act 1998 and that is the reason turf is in the Title.

I was also asked whether this was being done for data centres. Part of the reason for having to bring the Bill forward is increased demand from large electricity users, many of which are data centres, but many generators have also been failing and much of our generating capacity has had unexpected outages in the past. With that, as they have become more unreliable, we need to cover for them.

We have many of data centres but they are generating approximately 2% of our emissions and we have to take this in context. It would not be a smart idea to double our data centre capacity or to throw in huge quantities of them when we are trying to do everything to ensure that we have good security of supply. That is why the CRU issued its new guidance on data centres and said they should not be connected to the grid if there is any chance that they are going to impair our security of supply. That applies, in particular, to Dublin. EirGrid and ESB Networks are the bodies that grant access for a new data centre. The centre must have planning permission first but it also needs a grid connection. Those grid connections will not come about if there is any chance that they are going to impair the security of supply.

As was pointed out by Senator Burke, this is a large area of the economy. I believe there are 200,000 people employed in the pharma and tech sector. Part of the infrastructure of those companies is data centres. There is a significant number of people working in that area, which generated €15 billion in corporate taxes last year. This paid for a large portion of Government expenditure and it generated less than 2% of emissions. While we need to ensure they do not expand quickly and put our grid at risk, because none of these companies would like it if there were blackouts and would like that even less than if we were not to give them data centres, we have to be realistic about this. It is not the case that we can just say that all of our problems are about data centres and that if we get rid of data centres we would not have to engage in any climate action. It is something that we need to watch carefully and to constrain.

Question put and agreed to.

When is it proposed to take Committee Stage?

Is that agreed? Agreed.

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