Brian Stanley
Question:2. Deputy Brian Stanley asked the Minister for Communications, Energy and Natural Resources to provide similar subsidies for solar power as are currently available for wind energy developments. [21699/16]
View answerThursday, 14 July 2016
Questions (2)
Oral answers (9 contributions)
I congratulate the Minister, Deputy Naughten, on his elevation to the position of Minister for Communications, Energy and Natural Resources. I also congratulate the Minister of State, Deputy Kyne, as it is the first opportunity I have had to address him as Minister of State. I wish both Ministers well in their jobs.
My question is very straightforward. I ask that the solar power and energy industry gets a level playing field. The industry is only in its infancy and I believe we need to accelerate it.
I thank Deputy Stanley for the question. The programme for Government contains a specific commitment to facilitate the development of solar energy projects. The White Paper on energy policy published in December 2015 also includes a commitment to introduce a new renewable electricity support scheme designed to encourage the development of Ireland's abundant, diverse and indigenous renewable energy resources, including solar photovoltaic technology.
It is widely recognised that solar photovoltaic, PV, technology has become more cost effective for electricity generation over the past few years not only compared to other renewables such as wind energy but also compared with conventional forms of generation. With these significant changes in the cost of the technology, the deployment of solar PV technology in Ireland has only recently become a potential cost-effective option to increase energy security, contribute to our renewable energy targets and support economic growth and jobs. It is also recognised, however, that while the cost competitiveness of solar PV technology has improved, it would still require a subsidy in order to be developed on a commercial basis.
The REFIT, Renewable Energy Feed In Tariff, electricity support schemes are the principal means of supporting renewable electricity generators for renewable energy exported to the grid. These schemes support electricity generated from a range of renewable sources, including small scale hydro, biomass and wind. Small scale renewable micro-generation is eligible to apply for support under the REFIT schemes. My Department is currently undertaking in-depth economic analysis to inform the cost of a new renewable electricity support scheme. While no decision has yet been taken on the precise renewable technologies to be supported, and the appropriate level of tariffs are still under consideration, the cost and technical viability of a range of renewable technologies, including solar PV technology, is being assessed.
Designing and implementing a new scheme is a complex task and it is expected that the broad details of the new scheme will be available early next year. Before these details are announced, my Department will run a second public consultation, which will give all interested parties an opportunity to input into the design of the new scheme. Ultimately, the introduction of any new scheme will be subject to Government approval and state aid clearance by the European Commission.
I thank the Minister for his reply. Under the public service obligation, PSO, the current projection is that nearly 3,000 MW of renewable energy will receive €335 million in support in 2016-2017 while only 250 MW of fossil fuel will receive €140 million. The fossil fuel industry benefitted from €386 million in subsidies in 2015. That includes the PSO and the fuel allowance scheme. We support the fuel allowance scheme but we need to transfer that and move it on to renewables. When one considers these figures, it is €11,000 per megawatt for renewable power and €56,000 per megawatt for fossil fuel which is five times as much per megawatt. There is no support or subsidy in the State currently, of which I am aware, for solar energy. Wind, biomass, anaerobic digestion, hydro and biogas all receive feed tariffs but solar does not. Solar is the only established renewable technology to not benefit. It is a technology that is most suited to community and local participation with small ownership by local individual farmers or co-operatives. As a result, the solar energy industry is practically non-existent. Compare the situation to that which exists in Germany where 1.5 million German people generate solar energy from their own properties. I ask the Minister to take this consideration on board.
I understand the point being made by Deputy Stanley. As he is aware, a large part of the fossil fuel PSO is close to my heart, namely, peat fired energy generation in our three midland power stations. In fairness, I believe it is only because a predecessor of mine, Mary O'Rourke, happened to be in this job, we would not have those three peat fired power stations in the State. The intention is to convert those stations over to biomass and I am working quite closely with Coillte, Bord na Móna and the ESB in that regard and we hope to make progress. Bord na Móna has already given the commitment to be out of electricity generation with peat as a feed stock by the end of the next decade.
The issue is the PSO and at the last Question Time, Deputy Stanley's colleagues, as well as Members on the opposition benches, gave me a lot of grief over the cost of the PSO to consumers. In regard to the last analysis done in 2015 by KPMG on the cost of solar PV in Ireland, while the costs of solar have come down significantly, it is now costing in nearly €150 per megawatt. Wind costs €69.72 per megawatt for a large wind farm while it costs €72.16 for a small wind farm. Hydro costs €88 per megawatt. Under REFIT 3 biomass combustion costs €89 per megawatt and small biomass, in a combined heat and power system, costs €147 per megawatt. That is probably more congenial to communities getting involved in energy generation.
The problem has been that solar was far too expensive to produce up to now. However, the costs are coming down and I had a meeting last month with some manufacturers in China which are driving down the costs even further. Solar will definitely be part of the new scheme but exactly how that will be structured will have to be weighed up against meeting the targets which must be achieved and in finding a balance so that consumers are not paying an excessive PSO.
That is a fine line which must be drawn and I am being rightly criticised that there is no support for the solar energy industry because the Commission for Energy Regulation is increasing the price of the PSO to consumers. In this regard I see exactly where Deputy Stanley is coming from. The challenge is about trying to strike the right balance.
One minute remains for a supplementary. I call Deputy Stanley.
In regard to the PSO for the power stations, I recognise that reality. Until such time as we can supply them with biomass we have what we have. On the issue of the cost of solar, some people in the industry would question it. Other countries have more sunshine than Ireland and do not need sophisticated systems to get the benefit. We do have substantial sunshine and we have substantial potential. That area has not received enough attention from Government and the Department in the past.
The Minister of State is a fresh pair of hands in the job. He will receive the reports from his civil servants and the wind industry. I ask him to be his own person in regard to this issue. There are good examples of its success in London. London does not have that much more sunshine than Ireland. I lived in Edinburgh which is not the sunniest place in the world and it is much colder than here in winter. We should look at the examples from those areas to see how they do it. At the Select Committee on Communications, Climate Change and Natural Resources this morning the Minister of State mentioned the example of Scotland. That is one of the issues he might discuss with them. We need to keep this issue to the fore and to broaden it out. There will not be one or two large sources, there will be thousands of generation plants, small, medium and large, in ten to 20 years' time.
I do not disagree with the Deputy. I am glad to note that Sinn Féin is now using examples in London. He is right in saying there are good examples from elsewhere.
It is a good idea.
The difficulty with the UK model is that the level of subsidy involved has been significant. As a result the UK has dramatically reduced the level of subsidy for renewable energy so it is not actually a good model. I think there are good models abroad and we need to be open to those. I am open-minded to all of the technologies.
The Deputy is correct when he says there will be a range of solutions. I do not think we should put all our eggs in one basket. If the industry can come forward with better figures than those I will be open to them. Recently, the industry has been engaging with my officials in the Department who are working on the new support scheme. Given that we are talking about the issue of peat and the semi-State company that is close to both our hearts, Bord na Móna is exploring the co-locating of wind farms with solar farms to take account of the counter cyclical nature of these technologies. Wind is very strong during the short winter days and solar prevails during the longer summer days. Given that Ireland is so far north in relation to the hemisphere we have a significant amount of daylight. Daylight is what is important rather than sun. Perhaps the cost-benefit analysis needs to be tweaked to take account of that. I am open to the idea. I want to see different technologies being developed but I need to ensure I am not placing an unnecessary burden on consumers.