Tuesday, 11 March 2014

Questions (19)

Michael Colreavy

Question:

19. Deputy Michael Colreavy asked the Minister for Communications, Energy and Natural Resources if he has had any discussions with the British Government regarding the amount it would pay for Irish renewable energy sources; and if he will make a statement on the matter. [11495/14]

View answer

Written answers (Question to Communications)

In January of 2013 the UK Secretary of State for Energy and Climate Change Mr. Edward Davey M.P. and I signed a Memorandum of Understanding on energy cooperation. That Memorandum sent a strong signal of our shared interest in exploring the opportunity to export green electricity from Ireland to Britain and resulted in consideration over the last fifteen months of how Irish renewable energy resources, onshore and offshore, might be developed to the mutual benefit of both countries.

From the outset, it was our shared understanding that both States would enter into an Inter-Governmental Agreement to facilitate renewable energy trading only if it was mutually beneficial to do so. Significant work has been undertaken on various workstreams including policy, spatial development, regulatory approaches and economic analysis. A full cost benefit analysis (CBA), assessing if it is mutually beneficial for Ireland and the United Kingdom to enter an Inter-Governmental Agreement is substantially complete. From an Irish perspective the potential benefits would include jobs created, community gain, interconnection benefits, corporation tax receipts, rates paid to local authorities and a dividend of trade. This analysis also includes examination of issues such as the amount of energy to be procured by the UK and the mechanisms for sharing the resultant dividend of trade, including an appropriate return to the Irish Exchequer.

Based on the CBA, it is clear that under certain sets of arrangements renewable energy trading between Ireland and the UK could deliver significant benefits for both States while also being attractive for renewable energy generators. However, any IGA would have to be designed in a manner that would be workable for both Ireland and the UK. In this regard, both Ireland and the UK recognise that there are a number of very complex issues that have yet to be resolved in order to deliver renewable energy trading projects, particularly projects focused on delivery for 2020. Key policy and regulatory design decisions remain to be taken by the UK on matters which are central to the design of any energy trading scheme and to the conclusion of an IGA including (i) the maximum quantity of electricity to be procured; (ii) the structure of the payment mechanism, the basis for allocating payments, and the resultant financial flows to electricity generators and tranmission asset owners; (iii) the regulatory approach to the transmission wire; and (iv) the arrangements for sharing the dividend of trading. Certainty on these matters would also be essential for renewable generators if they are to deliver for 2020, given the long lead in time on projects of this nature.

As I have explained many times in the House and outside, there can only be an Intergovernmental Agreement if there is considerable value to Ireland in employment and economic terms. Against that standard and given the issues still unresolved, I made public my judgement after meeting with Minister Ed Davey last week that it is doubtful that the project can be delivered as envisaged.