Grid 25 emerged from the Government's White Paper in March 2007. We indicated that we wanted to strategically examine the development of the grid so that we can put in place the grid that is required to deliver Government policy by 2025. This is the first time we took such a strategic view of the grid rather than the five-year planning time frame we had pursued until now. We have worked at this since the White Paper and published the report in October 2008.
Members have already seen the diagram showing the existing transmission system. It is a dynamic system. An analogy is the road network in Ireland with the 110 kV lines, covering 4,000 km, akin to the national roads; the higher capacity 220 kV network, covering 1,800 km, akin to dual carriageways and the 400 kV the lines are akin to motorways. It is different to a motorway because this is a dynamic system that pulls the whole power system together, from the generators feeding into the system to the 50 Hertz, 50 cycles per second supply that everyone has in a house.
We are developing the grid because as every member of the committee understands, electricity is vital for economic growth. The economy is going through a downturn and history tells us that economies rebound from downturns. We must ensure that we have the platform to support growth when it kicks in again. We must make sure that each region and each county can share in that economic development, in such a way that the grid does not become a barrier to any region or country participating in that and that individual industries, farms and households can be assured of a reliable power supply irrespective of where they are located.
We have a fantastic renewable resource in wind and wave. We are beginning to seriously access and harness this for the benefit of the people. As the Chairman said, we have more than 1,000 MW of wind generation capacity now connected to the network and we are rapidly rising towards the target of 15% energy in 2010 and in 2020. One of the key enablers of this is the grid. We do not have anything if we do not have the grid to take energy from where it is generated to where it is used.
IBEC said:
Reliable and cost-effective electricity transmission infrastructure underpins inward investment, regional economic development and allows us to harness indigenous sources of renewable energy, such as wind and wave. EirGrid strategy clearly illustrates the need to put in place the infrastructure needed to meet these ambitions.
I refer to the drivers of grid development. The grid ties generation to demand. On the generation side, we are undergoing a transformation of the generation portfolio here since 2000 and we have connected 3,000 MW on the system. This figure includes a significant amount of wind generation and some conventional gas turbine combined cycle type plants. The total now generated is 7,430 MW, of which 1,000 MW is wind. We have a further 3,000 MW in various stages of development. Agreements are in place with EirGrid for connection. This will include an additional 1,600 MW of wind generation. The projects are being developed and turbines are being erected. We are about to embark on the next stage of the offer process. There is a group offer process for wind and renewable energy sources. We have completed gates 1 and 2, which are being developed, and we are about to embark on gate 3. The regulator issued a direction on gate 3 before Christmas. There will be a total of 4,000 MW of wind energy in this gate. There will be an unspecified number of conventional power plants to complement the wind energy. There is another direction on the number of conventional plants but we will make offers over the next 18 months to two years until we reach 7,000 MW. That is a major undertaking and we will work with the ESB networks on that. Some of these will connect to the distribution level. The offers we make in the next two years will amount to the same number of megawatts connected in this country since the beginning of the State. It is a staggering project that we are about to undertake.
The other drivers for grid development include the single electricity market, of which members are aware. Generators in Northern Ireland and in the South are competing with each other hour by hour and day by day to deliver the most economic power at any point. To do this, power must flow freely north and south of the Border.
The bottleneck we face in the existing North-South interconnector costs consumers in the order of €20 million per annum because of our inability to tap into the most economical sources. We are working to alleviate that bottleneck but we also have to ensure that we have sufficient strength in our backbone network to alleviate to the maximum extent possible other potential bottlenecks and to optimise the generation system. That will also encourage competition by offering choice and competitive prices for consumers.
Looking ahead to 2025, everybody understands that Ireland and the world face major challenges in terms of climate change and energy security. Our awareness of the latter has increased due to the issues that have arisen over several weeks involving Russia and Ukraine and the impact of these on gas deliveries across Europe. Demand levels in Ireland will increase. History shows that demand rebounds from economic downturns and, while are seeing a softening of demand at present, when we look towards 2025 we have to plan for demand increases. As the electricity supply system becomes de-carbonised through increased dependence on renewable energy we will see opportunities for de-carbonising the transport sector through, for example, electric vehicles. Considerable policy interest and research and development has focused on that area. By 2025 we will see transport being de-carbonised through increasing use of electric vehicles, which in turn puts further demands on the electricity supply system.
Renewable generation will contribute 40% of Ireland's electricity needs by 2020 and that trend will continue in subsequent years. Wind will be pivotal to achieving that target. The technology is commercially available at present and work is ongoing on offshore wave and wind generation. These will play a part in the overall generation portfolio by 2025 and biomass will also make a significant contribution. We will also have to further develop conventional generation and imports through interconnectors to complement renewable energy. I refer to the more flexible generation methods which can help us to manage the intermittent nature of wind and, to a certain extent, wave power. We will put additional interconnectors in place to increase our integration with European networks and this will be a key enabler in facilitating the 40% target. As significant amounts of wind energy will at times be generated during periods of reduced demand, we will have to find an outlet for that energy if we are not to lose it. The interconnectors give us the means to sell electricity to other markets.
Renewable power is being developed in non-traditional generation locations, such as along the west coast. This puts demands on the grid in terms of large west to east flows. Our analysis shows, therefore, that the backbone network capacity, that is, the bulk transmission grid needs to be doubled. The slide now before members outlines some of the primary corridors for reinforcement investigation. The Mayo area, which generates a significant amount of renewable energy, has the opportunity to develop a strong industry in renewable energy but we will need to strongly reinforce the west to east power flows if we are to bring that energy to the grid. A similar case could be made for the south west. These are the main corridors in respect of which we will bring forward proposals in the near future. We are starting to examine solution options for these clear-cut needs.
Considerations in developing the grid include safety, reliability and ensuring it is fit for purpose. To a certain extent, it also has to be future proofed. The grid strategy, as opposed to incremental development, is important in this regard. I would use the analogy of building a third lane on the M50 now rather than causing further disruption by building it retrospectively in several years time. Clearly, the strategy has to be affordable. All members will be aware that our electricity is costly and a recent competitiveness report put us at 14th out of 15 in this regard.
We have a smart grid, as anyone who has visited the national control centre will understand. At any given time, we have 170 computers in various locations sending a total of 37,000 pieces of information per second to the control centre, which arranges the data into meaningful information for the two trained engineers who run the power system. At times, some of that information passes through our computer without manual intervention to, for example, Turlough Hill. The system is pretty smart and getting smarter. The amount of information handled has doubled over the past four years. However, when people speak about smart grids they actually mean smart power systems. The grid is one part of this system but its optimisation also requires the integration of generators as actors. The consumer is increasingly being included as an actor through smart metres so that he or she can make decisions in real time which help us to optimise the power system.
In terms of strategic technical options for developing the grid, some of the decisions that have to be made include whether to build circuits at 400kV or 220kV, to upgrade existing lines or build new ones and to go underground or overhead. We also face decisions on where the new technology, high voltage direct current, has application within the grid. We are using that technology for developing the east-west interconnector and are about to award a major contract on that project but we are not sure yet whether it has application within the grid as opposed to linking two separate grids. Other new technologies are available and significant research and development is ongoing. New overhead conductors have much higher capacity and would enable us to upgrade existing lines without necessarily having to alter the structures on which the conductors hang. We will also examine the potential benefits to us of new pylon designs. We have a toolbox of options but we must ensure that we pick the tools that deliver the requirements I outlined.
We will be investing €4 billion in Ireland's electricity infrastructure in the next 17 years to 2025. We will be minimising new line construction and building new high capacity lines at 400 kV rather than 220 kV. A 400 kV line has three times the capacity of 220 kV line, although they both look the same and are of pylon construction. To put it another way, instead of building one 400 kV line, we would have to build three 220 kV lines. The current is lower on the 400 kV line because the voltage is higher. Therefore there is not as much loss. There are very sound reasons to go to 400 kV in order to minimise the losses.
The strategic long-term view is more cost effective and has less environmental impact than if we were to develop the grid on an incremental basis. A third lane can be built now rather than having to retrofit it later.
With regard to doubling the capacity of the bulk transmission system, our analysis points to the optimum way to proceed being to upgrade 2,300 km of the existing network, which is just over 6,000 km in total, using some of the technologies mentioned earlier. We will also construct over 1,000 km of new circuits. In all of this we will be using best practice and new technology. Critical to the considerations of the committee, we must ensure we get the balance right between the reliability of the power supply, the cost and affordability of it and the impact on the environment and communities which we will pass through with the building of the infrastructure.
In terms of a split on the €4 billion, we have considered the regional impact of the investment right across country. One can see the spread of the investment in each region from the slides. Over the period, we are talking of in the order of 800 to 1,000 high quality jobs in the development of the grid. This is a much needed and necessary investment in our future.
We are communicating the Grid 25 strategy, although the strategy itself is not a detailed plan. Behind this strategy we are working to develop the proposed solutions that will implement Grid 25 and address the issues on the grid. The work has started and our teams of engineers are working on bringing forward the proposed solutions. As these crystallise into projects we will bring them into the consultation process, through the strategic infrastructure board and into project development. That is the process we will follow in the next number of years.
The challenge is to get the balance right between security and reliability in the power system as everyone understands that forward direct investment and high-tech industry require a highly reliable and secure power supply. An example is the Intel plant, which is very sensitive to issues on the network. We have a very close working relationship with the Intel people. If there is a blip on that network, they see it immediately and it costs them much money because of down time and having to get the plant back up again. We are very conscious of that and work very closely with Intel and other large consumers like Aughinish Alumina or any of the large industrial customers.
I have addressed costs efficiencies already. We are a higher cost than most of our competitors and we must address this to ensure we do not put ourselves at a competitive disadvantage in what we do. With regard to the environment, we must get the balance right between these issues, communities and the environment.
Some issues have surfaced with regard to our consultation process on the north-east projects. These include undergrounding versus overhead lines, which has surfaced very strongly in that debate and the debate within the committee. There has been a series of technical reports dealing with HVDC, underground cables, new conductor types and new tower types. We are doing much work in this area to ensure we have the right toolkit going into this Grid 25. We have commissioned studies on HVDC, underground cables, new conductor types, and we are looking at new tower types as well. We will have the full toolkit available to us going into this process.
There is ongoing consultation with a wide range of stakeholders and this will continue to be the way forward for other projects as they crystallise. We are of course looking at international experience and are very plugged into this. Some of our engineers are working very closely on working groups, such as Seagrave, the international high voltage committee.
As I mentioned, some of the technical issues have come up very strongly in the consultation process that we have currently. Undergrounding versus overhead is one of the key factors and the committee will be aware of this. Undergrounding is not common practice at the 400 kV level anywhere in the world, except where it is appropriate in urban or built-up areas and it is not possible to build overhead lines. There are very significant technical difficulties with the undergrounding of strategic lines over long distances. The longest underground cable at this high voltage level anywhere in the world is the 40 km cable in Tokyo, which is a very spread out city. It is laid in a tunnel, so it is very expensive technology. We have engaged the people who undertook this work, TEPCO, the Tokyo Electric Power Company. They are world experts in this because they have dealt with the longest project. We are looking to tap into their expertise on what might be possible on an Irish network.
The committee will also be very familiar with the Ecofys report, which was commissioned by the Department and the Minister earlier last year. This was a generic study not looking at any particular location but rather considering the policy perspective. The committee will be very familiar with the findings of the report, which is that cables are severely limited in terms of transmission adequacy. There is significant reliability issue. The capital cost of underground cables as determined by Ecofys was five times greater than that of overhead lines and three times the life cycle costs when losses are taken into account. They also confirmed there is no international experience of laying cables at this voltage over long distances. They stated that any of the advantages of underground cables identified in the study cannot compensate for the negative impact on transmission adequacy. The committee is familiar with that particular study and had a presentation on it.
I will deal with some of the other international experience. Denmark has a very strong transmission grid, with a very strong 400 kV backbone network. It is strongly interconnected with Germany, Sweden and Norway, and they have made a decision that in the longer term there will be a move towards an undergrounding policy. Over the next decade they will continue with 400 kV overhead lines and they will obviously be monitoring development of underground technology and perhaps even doing some research in the area. They will not underground long lengths of 400 kV circuits until studies establish the feasibility of doing so.
The Netherlands recently announced a new 85 km 380 kV transmission circuit. Of this, 75% is to be constructed as an overhead line. There will be an element of cabling of up to 20 km, which is deemed the maximum feasible distance in that country. In laying that 20 km of cable, they will be undertaking an eight-year study of its performance in the network in order to examine its feasibility. This will feed into policy.
With regard to the north-east projects, as members know, we are in a consultation process. In our strategic road map, which we published last April, we set out a process which will bring us to the point of submitting a planning application. Committee members will be familiar with that. I will talk about where we are at in this process in a moment. With regard to placing the lines underground, we made available to the committee at our last meeting last year a preliminary report from our consultants, PB Power, on the generic issue of placing lines underground versus overhead, which was based on UK experience. We indicated to the committee that we were also developing a site-specific study which will form part of the application to the strategic infrastructure board. I am happy to say that the PB Power report, which is jointly commissioned by us and by NIE in the North — as members know, a section of the project crosses the Border, so it is a joint project — is being signed off by us and will be ready for publication in the next number of days. We will be publishing it as soon as it is available. One of the key findings of this site-specific study, which was undertaken for the full length of the line, is that the capital cost of overhead lines is €78 million, compared to €567 million for the underground option. Thus, the latter is more expensive by a factor of seven. We will be publishing this and it will be available to the public and the committee early next week. In addition, the reliability issues associated with the underground option are very much to the fore.
I will return to the indicative strategic road map which we published. This was broken up into a number of different phases. Phase 1 involved public consultation. Phase 2 then moved us into constraints and a route selection report, and phase 3 was to look at the preferred route option and evaluate it before going to the strategic infrastructure board. Then, during the statutory phase, we would scope the environmental impact assessment and proceed towards submitting a planning application. As there is an urgency about the development of this infrastructure, we had hoped to move more quickly on this, but we are in a consultation phase and we respond to everything in that consultation process.
I will summarise where we are now in the process. Phase 1 is complete; we have carried out our initial public consultation. We are in phase 2 which deals with constraints and route selection. The reason we have not moved forward more rapidly on this is that there have been a number of reports on the option of underground versus overhead cabling. The Ecofys report had a major input into this debate. One of the interest groups, North East Pylon Pressure, produced the ASKON report. We have had a number of meetings with that interest group and we hope to continue to be in discussion with it. We recently met the Minister and NEPP and we have a way forward in terms of intensifying that engagement. We will be issuing our PB Power report and we will allow time for comments on this, but then we will be in a position to move towards phase 3, which is the announcement and evaluation of the preferred route. That leads us towards the statutory phase, which is to do with the strategic infrastructure board established by the Oireachtas to adjudicate on all planning matters pertaining to strategic infrastructure. By definition in the relevant Act, transmission is strategic infrastructure. That is where we are right now.
Standing back from that particular project but looking at the overall Grid 25 strategy, it is essential that we do all the things involved. The opposite is also true: if we do not develop the grid, we are not in a position to support regional development or to provide reliability and security of supply, and that has significant implications for industry — both indigenous industries and foreign companies which are thinking of Ireland as a location. They have to be sure that Ireland can provide a reliable and secure supply. In addition, if we do not develop the grid, we will not be in a position to increase Ireland's connectivity to the European grid. We will not be in a position to meet our carbon emissions targets and to tap into the fantastic renewable resource we have in this country and, of course, we are not in a position to underpin the competitive electricity market and the additional costs associated with not having the proper grid in place.
That is a quick run-through of the strategy. We are happy to take any questions at this stage.
