I thank the Chairman and members of the committee for the invitation to attend this meeting to discuss my nomination as chairman designate of ESB by the Minister for the Environment, Climate and Communications, Deputy Eamon Ryan.
It may be helpful to introduce myself. I was raised in Monaghan and did my undergraduate studies in history and economics at UCD. I trained as an accountant with KPMG and then transferred to its Boston office for almost two years. On returning to Ireland, I worked in a range of roles including audit, technology and risk management. I retired as managing partner of the firm in 2013. As managing partner for six years, I led a firm employing almost 3,000 people, serving our clients from offices in Belfast, Cork, Dublin and Galway.
I gained many perspectives working with our wide array of clients. I learned to always appreciate the importance of sound business judgment, ethical business behaviour, focus and the ability to work with and positively influence those with whom I engaged. Throughout my career I have learned to value the perspectives of, and to work with, all stakeholders, including staff and customers from across the island of Ireland. Having grown up in a Border county, I was especially aware of the need to be sensitive to all views. These insights will also help me as chairman of ESB given that the group also embraces Northern Ireland Electricity Networks and has significant generation and supply operations in Northern Ireland.
Since I retired from KPMG, I have served in various non-executive board roles, including Enterprise Ireland, where I have been chairman since 2013, Rethink Ireland, the Government-supported social innovation fund, the governing authority of Dublin City University and the Dublin Theatre Festival.
I have mentioned a selection of the boards on which I have sat to give a sense of the diversity of experiences that I have encountered while carrying out my governance responsibilities.
I am mindful that our stakeholders have placed their trust in me and my fellow board members to ensure the ESB operates to very high standards of corporate governance while supporting the work of its management team. As chairman designate, I will work to ensure the board's oversight responsibility for strategy, governance, internal controls and risk is resolutely executed. In this way, the board will support and challenge management, who have the operational responsibility for the ESB.
In the context of risk I have been really impressed by the way the ESB responded to the Covid-19 pandemic. The ESB had the threat of a pandemic on its risk register since the early 2000s and carried out a pandemic rehearsal in 2018. I understand the learnings from this rehearsal informed the ESB’s pandemic preparations in 2020. This ensured the company smoothly transitioned almost 4,000 office-based staff to home-working with only minor blips in activity levels.
The issue of gender diversity and inclusion will also be an important agenda item for me as chairman. I plan to work with our shareholder in drawing up specifications for board appointments that will bring a wider range of perspectives into the boardroom.
As Chairman designate of the ESB, I will work to ensure that foresight, planning, operational excellence and diversity remain core cultural imperatives.
Turning to the ESB’s purpose, it was established as a commercial State company by a fledgling State to be a key enabler of economic development in Ireland. I am fully cognisant of my responsibilities and that of the board not only to the Government, as owner, but also to all those families, farms and businesses that rely on the ESB for a safe and secure supply of electricity.
I am becoming very well acquainted with the sheer scale of the ESB's business and the Brighter Future strategy that is driving the business. That strategy at its core sees the ESB leading the transition to a low-carbon economy. The ESB has almost €13 billion in assets. We contribute approximately €2 billion every year to the Irish economy in the form of taxes, salaries, purchases and local authority rates. We paid €1.2 billion in dividends to the State over the past ten years The ESB has a presence in every townland in the country.
In addition to delivering a robust power supply to more than 2 million customers, ESB Networks has a critical role in the delivery of the Government’s climate action plan. As well as ensuring sufficient renewable generation is connected to the network, ESB Networks must also enable technologies such as electric vehicles, electric heat pumps and micro-generation to contribute to the overall decarbonisation of Ireland. ESB Networks has almost doubled the amount of renewable electricity connections on the network every three years since 2011. These major increases have helped Ireland to become a world leader in renewable electricity generation. Today, almost 40% of Ireland’s electricity is generated using low-carbon technologies. In that way, the electricity sector has reduced its share of Ireland’s carbon emissions from around 20% of the total five years ago to around 16% today, even as demand for electricity has increased. The ESB will work to continue to support Ireland’s decarbonisation journey. This means continuing to decarbonise the electricity system and using that clean electricity supply to replace fossil fuels in our heat and transport sectors. That strategy has the potential to address more than half of Ireland’s emissions.
The ESB’s generation and supply businesses also have undergone major transformations from being monopoly activities in the 1990s to operating in a modern, open and competitive marketplace. Our generation business has decommissioned older plants as we have worked to develop new forms of sustainable electricity generation.
Our supply business, Electric Ireland, competes with a wide array of companies for every customer. Even in the face of this competition, I was delighted to see Electric Ireland’s commitment to contribute €1 million to support vulnerable customers during the lockdown. This was in addition to its early commitment not to disconnect any customers during the current and previous lockdowns.
Many of the members will also be familiar with how ESB International sells Irish engineering excellence to clients all over the world.
During the past five years the ESB has invested about €1 billion a year in developing our businesses. We raise debt to finance that expenditure on the international financial markets. It is vitally important that our investors trust the ESB when they lend us money. The ESB’s current debt stands at around €5 billion, which is significant. I will always be mindful of the board’s role in maintaining a financially strong ESB for the benefit of all. With more significant investment in electricity infrastructure and renewable energy to be made, it is critical the ESB retains its financial strength and credit rating to access the funding necessary to finance the coming transformation.
Turning to culture and heritage, I confirm we are a long-term supporter of the arts, cultural and heritage sector in Ireland. In 2020, the company opened a purpose-built archive in Finglas to preserve and make available more than 90 years of the ESB’s records.
In 2017, we opened a visitor centre in Ardnacrusha to explain the role electricity will play in Ireland’s low-carbon future. We are also commissioning a visitor centre for Oweninny Wind Farm in County Mayo with our partners Bord na Móna. Those are tangible commitments to Ireland's culture and heritage.
Turning to delivering a sustainable future, this is a fascinating time for the energy industry. We are all working to decarbonise our economies and address the challenges of climate change. The ESB will work tirelessly to support the programme for Government’s target of an electricity system that is powered by 70% renewables by 2030. We are seeing every day the impact of the surge towards renewables. On windy days, Ireland's electricity system can be powered by up to 65% renewables. However, there are other days particularly in some winter periods of cold, crisp weather when there is no wind when renewable generation can fall away to almost nothing. On those days, to make sure we keep the lights on, we need power from other sources. This security of supply conundrum will be one of the great challenges over the coming decade as Ireland grows onshore and offshore renewables, builds more battery storage capacity and continues the transition to a low-carbon energy system while maintaining security of supply.
Smart technologies such as advanced digital metering are improving the efficiency and operation of the electricity networks. ESB Networks is ploughing ahead, it having installed almost 240,000 new meters by the end of 2020.
I look forward to supporting the execution of the ESB's Brighter Future strategy whose vision is to lead the transition to a reliable, affordable, low-carbon energy future. Over the next decade we will completely transform our generation portfolio. This will cut the carbon intensity of our generation mix by more than two thirds and provide flexible back-up to allow more and more renewables onto the system.
This is a great time to be nominated as chairman designate of the ESB board. I look forward to helping to ensure the ESB remains a vital enabler of the economic and social development of Ireland. I acknowledge and recognise the service of distinguished chairmen in the past, including, most recently, Ellvena Graham. I look forward to taking the members' questions.