Renewable Energy Generation

Dáil Éireann Debate, Thursday - 2 June 2022

Thursday, 2 June 2022

Questions (89)

Darren O'Rourke

Question:

89. Deputy Darren O'Rourke asked the Minister for the Environment, Climate and Communications the way that he plans to address the high cost of renewable energy here in view of provisional renewable energy support scheme auction results; if he intends to establish a cross-government high-level task force to work with stakeholders in industry and State agencies with the aim of bringing forward policy recommendations within six months; and if he will make a statement on the matter. [28794/22]

Oral answers (7 contributions)

Deputy Darren O'Rourke

I do not mind conceding time to Deputy Gannon if it is useful. What way does the Minister plan to address the high cost of renewable energy here in view of provisional renewable energy support scheme, RESS, 2 results? Does he intend to establish a high-level cross-government task force to work with stakeholders in industry and State agencies with the aim of bringing forward policy recommendations within six months?

Deputy Eamon Ryan

The renewable electricity support scheme, RESS, is one of the major Government policies to help deliver on the ambition in the Climate Action Plan 2021 of up to 80% renewable electricity by 2030. I recently announced the provisional results of the second RESS auction, which is expected to deliver an increase of nearly 20% in Ireland's renewable energy generation. Bid prices were higher than the first auction, owing mainly to international inflationary pressures in input costs. The International Energy Agency estimates the overall investment costs of new solar and onshore wind plants are from 15% to 25% higher than earlier in the year and last year. Some input costs to solar panels have quadrupled.

It is important to look at the total lifetime costs of technologies, rather than just auction prices which can vary across countries depending on the scheme design. Renewable energy delivered under RESS 2 will pay back to consumers when wholesale electricity prices are high through the public service obligation levy and will not increase over time with inflation. This will provide significant protection for consumers for the duration of the scheme, especially in the context of the current and unprecedented volatility in gas prices.

Through the measures set out in the national energy security framework and the Climate Action Plan 2021, my Department is working across the Government to rapidly boost the supply of renewable energy generation. Renewable energy delivered under the RESS 2 auction will shield consumers from higher prices and reduce our dependency on imported fossil fuels in the context of the phasing out of Russian energy imports across the EU. As I have said, it is the best way of keeping prices down, even while auction prices were higher than previously, as they are still significantly below the cost of the wholesale electricity market price or the gas alternatives. As we said earlier, they have gone through the roof.

Deputy Darren O'Rourke

The Minister knows as well as I do that when these figures came out, there were wide eyes and people were whispering, such was the shock about them. We want to transition to renewables and they are cheaper than the gas alternative but if the suggestion is we are going to move from, relatively speaking, super-high gas and electricity prices in Ireland to, relatively speaking, super-high renewables prices, we will have a major problem.

In the first instance the Minister must look at being aggressive at every pinch point and every factor contributing to those high costs. We support the call from the industry that a cross-government group could formulate policy recommendations. There are questions around grid costs and EirGrid's plan. There are also questions around planning and commercial rates. There are opportunities to reduce costs and the Government must heed that call, or else we will not be competitive on the international export markets that we want to create for hydrogen, etc.

Deputy Eamon Ryan

I am very supportive of that kind of approach. I agree we should work collectively and see how we can reduce costs. I agree that planning is one of the factors, involving long timelines and uncertainty in the Irish planning system. The Attorney General is working now to update and modernise the 2020 planning Act, and that will be completed by the end of this year. That is critical.

I also agree that some of the real uncertainty that may cause some of the slightly higher prices, along with the high price of steel and silicon, etc., relates to curtailment and constraints costs. We must give certainty in that with grid investment plans and the regulatory system. That will help reduce the price in further auctions. These are the first of five auctions, so it is an iterative process. I have spoken to developers and people involved with the business and the costs of steel and silicon are the primary reason the higher prices were seen. We must be careful in comparing other countries with ourselves. Some costs are included here that may not be in other auctions. I absolutely agree with the fundamental point made by the Deputy and am willing to work with other Deputies here to see what can be done to bring down prices.

Deputy Darren O'Rourke

I welcome that but we need to see action. The Minister touched on one of the points, which relates to index-linking. Is he going to reassess the position on that? It is something we do differently here than in other places. Is there an overall benefit and will that be reassessed?

In advance of budget negotiations, which I assume will get under way quite soon, there was a report from the Environmental Protection Agency yesterday and a report from the Climate Change Advisory Council at the back end of last year. They consistently point to the lack of delivery and implementation. Going into this budget cycle, will the Minister commit to additional resources for local government, as was mentioned at the climate committee this week? Will there be funding for CRU, EirGrid and An Bord Pleanála to increase capacity in these vital organisations, which facilitate the delivery of the ambition of renewables?

Deputy Eamon Ryan

"Yes" is the answer and we are providing additional resources to CRU, including staff, and EirGrid. They are less constrained.

They have an income stream that enables them to hire the resources they need and to bring in outside expertise as well. Critically, An Bord Pleanála needs additional staff resources. It is hard to get people with the planning and other skills that are needed but it is absolutely central to all of this that we do so.

The particular concern of the Environmental Protection Agency, EPA, in its report published yesterday was in regard to agriculture and transport. On the energy side, there is increasing confidence that we will meet the targets because the whole world is moving in this direction. The need for energy security, the cost-of-living aspect and the climate reason will see us delivering on our targets.

On the design of the auctions, I have always favoured not including index-linking because, in truth, the cost of wind or sun is not going to change. The upfront capital cost is set and it is covered in any auction bid. One other variation we may look at in the future design of auctions is whether we are right to go with a technology-neutral approach where solar and wind are included in the one auction bid. We may look to see whether their separation into two elements might be a further way of reducing costs. That is one of the measures we may consider collectively.

Acting Chairman (Deputy Denise Mitchell)

Before moving on, I appeal to speakers to stick to the time. There are Deputies in the Chamber hoping to get to their question. If everybody stays within the allocated time, we should get through as many questions as possible.