I propose to take Questions Nos. 24 to 26, inclusive, together.
On 3 December last, the Commission for Energy Regulation, CER, decided as an interim measure that the electricity network operators, ESB and ESB Networks, are not required to offer new binding connection offers for wind farms before the end of the year. There is no block on new connections where offers are in place. In this matter the CER was exercising its exclusive competence under section 34 of the Electricity Regulation Act 1999. The Minister has no statutory authority to intervene. The CER was acting in response to concerns raised on the part of the grid operator about system stability and reliability.
However, in the medium to long-term the decision could potentially impact on the Government's demanding targets to increase the contribution from renewable energy technologies in electricity production and is, therefore, being monitored by the Department and Sustainable Energy Ireland. The CER has published the relevant papers relating to the decision on its website.
The factual position set out in those documents is that the decision is only valid to the end of the year and there are new wind powered projects amounting to 619 MW with binding offers which are not affected by the decision. To put this capacity in context, if all the projects with binding offers proceed, the amount of wind powered capacity on the network will more than quadruple from the documented 166 MW currently connected. It is misleading to imply, as some questions seem to do, that the CER's decision will stop further connections to the electricity network.
Wind energy technology has an important role to play in meeting our national targets for renewable energy technologies. However, because wind is intermittent and there is no economically viable means of storing the energy as a fuel source or storing the electricity produced, it cannot be solely relied upon to deliver electricity in response to customer demand. Under the national support programme operated to date, wind powered plants have been allowed, in effect, to self dispatch. In other words, if the wind is blowing, the networks are required to accept, as a priority, the electricity generated irrespective of overall customer demand at the time. This was justified and possible because of the relatively low levels of wind powered plant connected to the networks and it allowed wind generated electricity producers to maximise revenue earnings and ensure the financial viability of such projects.
An independent study commissioned by the CER and Ofreg, its counterpart in Northern Ireland, estimates that, if self dispatch is maintained, the amount of wind powered plant which could be accepted at selected transmission system grid supply points in Ireland by 2005 is 790 MW. The published data on existing wind powered plants and binding connection offers to new wind farms is at 775 MW.
I have no basis to repudiate or challenge Garrad Hassan, the wind energy consultants of international repute who established the 790 MW threshold. As part of the decision, the CER requested ESB National Grid to conduct a public forum to give all interested parties an opportunity to submit their views on the situation before a final decision is issued by the CER. The public forum was held this morning.
The current renewable energy target as published in the Green Paper on sustainable energy is to add an additional 500 MW of new renewable energy-based electricity generating capacity to the network by 2005, to be built independently in the fully liberalised green market or with support under the AER programme. The Minister has already announced that, subject to State aid clearance for the increases proposed, it is intended to award an additional 140 MW for onshore projects, 50 MW for offshore projects; 28 MW for a biomass-fed combined heat and power plant. The allocation of an additional 140 MW is designed to better ensure the 500 MW target will be delivered at a minimum, even if some selected projects fail to proceed. It is a matter for each project developer to secure a connection offer under the rules prevailing at the time.
However, there are binding connection offers in place of 619 MW for wind farms alone at this time which is a positive indicator that the 500 MW minimum target from all technologies will be delivered or surpassed. Following the completion of the selection process in the current support programme, AER 6, it is proposed to publish before Christmas a consultation document on future targets and future support mechanisms for renewable energy technologies. It is therefore premature to speculate on future policy initiatives until all interested parties have had an opportunity to respond to the consultation document and those responses are considered.
The technical feasibility of an Ireland-Wales electricity interconnector was confirmed by an initial limited feasibility study in 2002 undertaken by ESB National Grid and National Grid UK. The cost benefit analysis published by the CER in June 2003 confirmed the benefits of such interconnection in terms of adding reserve margin, supply security and possible assistance to the operating economics of wind powered generation.
The case for progressing an east-west interconnector is strong and discussions are continuing with CER as to how its development can be advanced as a priority. However, I foresee an ongoing future programme to support renewable energy technologies at the national level continuing in parallel with that process, commencing with the consultation document to be published before Christmas.
The EU renewables directive requires Ireland to increase consumption from renewable sources to 13.2% of total electricity consumption by 2010, to provide priority grid access for renewable energy technologies and to ensure grid costs to renewable energy operators are objective. The existing large hydro facility together with the current AER support programme and activity in the liberalised green market are well capable of delivering the majority of the 13.2% target. Additional steps which will be taken in the coming year following consultations with all interested parties will ensure the overall target is delivered if not exceeded.
The Electricity Regulation Act 1999 accelerated the liberalisation of the national green electricity market and preceded the renewables directive of 2001. It established administrative procedures to licence green electricity operators and established an appeals procedure which would also be required by the renewables directive. The Act also established the legal framework for the development of administrative procedures to provide objective costs and network access for green electricity generators. The provisions in the directive on grid systems issues state, "Without prejudice to the maintenance of the reliability and safety of the grid. . . . ." The decision of the CER is therefore well within the scope of a predictable concern recognised in the directive.
In addition to these requirements, member states are also required to publish a national report and to submit a report on compliance with the requirements of the directive to the European Commission during 2003. The report to the Commission has been dispatched. It is proposed to publish the national report simultaneously with the consultation document on future programmes to support renewable energy technologies in the coming days. This arrangement will provide a better context for both documents.
Without intruding into the operational function of the network operators or the regulatory independence of the CER, I am satisfied that, if all parties proceed diligently and in good faith, the moratorium on new connection offers in place will be seen in hindsight as a valuable step in developing the stable regulatory environment necessary for new proposed wind powered plants.