I thank the Chairman for his introductory remarks and for inviting the Department to come before the committee to discuss with it the findings of the report. We appreciate the committee's interest in this important issue.
The Chairman has done the introductions and therefore I do not have to repeat them other than to clarify that I am responsible for energy policy in the Department in addition to being deputy Secretary General. Mr. Bob Hanna is the chief technical adviser to the Department and Ms Úna Nic Giolla Choille has responsibility for security of energy supply, economic and gas regulation. Mr. Martin Finucane, as the Chairman noted, is responsible for renewable and sustainable energy policy.
We followed with great interest last week's session of the committee which provided a useful forum for scrutinising the various aspects of the commission's report. I have no doubt the conversations last week will help the members in their consideration of the issues.
Before we begin, the committee members will appreciate that I and my colleagues are precluded from expressing an opinion on the merits of the policy of the Minister and the Government. However, we are here to deal as comprehensively as possible with any issues the committee may wish to raise with us.
In order to place the report of the commission in context, the Minister has drawn attention on a number of occasions to the strategic imperative for this economy and for our citizens of cost effective investment in electricity networks. The Government is committed to ensuring that the investment programmes of EirGrid and ESB Networks, as the State owned entities responsible, are delivered across the country. The significant level of grid investment required over the next decade is critical for safe and secure electricity supply. The development and upgrading of our grid infrastructure, including planned interconnection with neighbouring electricity systems, will underpin regional economic growth and job creation and enable delivery of the Government's renewable energy ambitions in line with Ireland's legally binding European Union targets.
The North-South project, as members are aware, has been under development since 2005 and is recognised by the European Union as a strategically vital cross-Border project. It is firmly set in the European context and the current discussions on the EU energy infrastructure package will include additional support in due course for the development of cross-Border projects for interconnection and a legal underpinning for co-operation between jurisdictions and the European grid.
The North-South project will further consolidate the all-island electricity market, which has been in place since 2007, providing for the seamless transfer of electricity across the island, delivering greater competition in wholesale powergen, reducing the need for further investment in generation and ensuring the availability of low cost generation to the market. It will assist the island of Ireland in the integration of renewable electricity, providing security of supply, new business opportunities North and South, and will help ensure that Ireland meets its challenging European Union climate change targets. It will enhance competitiveness and create opportunities for inward investment by ensuring that electricity supplies are consistent and reliable to meet current and future demand.
A point we cannot emphasise enough is that the security of energy supply is fundamental for the Irish economy, indigenous enterprise and inward investment of secure and competitive energy supplies, in addition to the well being of all members of society. Ireland is a peripheral island energy market which is very vulnerable to the effects of international disruptions to oil and gas supply and we must be alert to the importance of having in place measures to manage the risk of such disruption. The Minister has previously advised the Oireachtas that he intends to bring a memorandum to Government on security of energy supplies in the coming weeks. The security of supply forms the backdrop to consideration of the commission's report and of the need to diversify electricity and gas supply on the island through, among other things, completion of the east-west interconnector later this year but also the North-South electricity transmission line and other key transmission and energy infrastructure around the country.
The lack of sufficient interconnection between the North and South is preventing the full benefits of that all-island energy market being realised for all consumers. The continued absence of the line is costing the economies and consumers, North and South, up to €30 million a year since without it, the electricity system is more inefficient on the island from an operational perspective. Approximately 60 km of the project lies in Northern Ireland where it is being progressed as a project by Northern Ireland Electricity, the network owner in Northern Ireland, and as members are aware that project is entering the planning process, with formal hearings by the Northern Ireland planning authority scheduled to start next week.
Ireland's security of supply and network development are set firmly in the context of European Union energy policy where enhanced connectivity in energy terms, security of energy supply and sustainability and competitiveness in the interest of all EU citizens is a key European priority reflected, as I have noted, in the proposals for the European energy infrastructure package.
A resilient and well connected energy infrastructure is vital for Europe's economic well-being, and that has been resoundingly endorsed by European leaders last year and this year, and will assist in creating the conditions for the market to respond to the needs of EU energy consumers, particularly those in peripheral energy markets such as the market on this island. European leaders have also stressed, and will stress in the coming weeks, that energy infrastructure and progressing energy policy objectives for Europe is key to economic renewal and growth.
In terms of regulation and protection of the interests of consumers, members are probably aware that the Commission for Energy Regulation, CER, is primarily responsible in law for overseeing the expenditure on networks and, in that regard, ensuring cost effectiveness and efficiency. The CER is responsible for regulating the level of revenue which ESB Networks can recover from its customers to cover the cost of this investment.
Every five years the CER publishes a transmission and distribution network price review. Those reviews provide the framework for ESB Networks and EirGrid revenues for the forthcoming period and are designed to provide strong incentives for delivering efficiencies as well as allowing for significant new infrastructure investments on a cost effective basis. In common with all such transmission line projects around Europe – this was touched on at the committee meeting last week – the plans for the North-South line have been marked by controversy. As members are aware, the programme for Government committed to the appointment of an international commission to review and report on the case for and cost of undergrounding the Meath-Tyrone power lines. The Minister appointed the international expert commission last July. The members, Mr. Bo Normark from Sweden, Mr. Hoelsaeter from Norway and Professor Ronnie Belmans from Belgium, have long-standing professional and academic credentials and experience in transmission and power systems. The committee benefited from a discussion with two members of the commission last week.
The commission held a variety of meetings with all the stakeholders, including the North-East Pylon Pressure Group and Oireachtas representatives from counties Cavan, Monaghan and Meath. I will not elaborate on these. The Minister received the commission's report on 9 January and, having advised the Government, published the report on the Department's website on 17 January. At that time, he also forwarded the report to the Chairman of this committee in order to allow for a period of reflection for some weeks and for a committee debate. The reflection period envisaged by the Minister when he published the report was approximately six weeks.
The report of the commission is succinct, thorough and easily accessed. The Department sees it as a further independent input into the debate on transmission lines. It is clear that the commission recognises the importance of the Meath-Tyrone transmission line for consumers and security of supply, North and South. The report notes that there is no single "right" solution and that technical solutions must be project specific. As was confirmed at the committee meeting last week, the report does not recommend any particular technical option, while recommending against wholly undergrounding using AC cable. It provides its own expert views on the feasible technology options available for consideration for the Meath-Tyrone project, including HVDC technology, given the changes in technology, suppliers and costs in recent years. In that context, the commission estimates that the cost of implementing the project as an HVDC underground cable option would be three times the cost of the traditional overhead line option, while noting that cost estimates are always uncertain.
The committee will appreciate that certain specific technical questions may well be better directed at EirGrid, the ESB or the commission. There was a thorough debate last week at which many of these technical issues and fundamental points were aired thoroughly by all concerned. However, we will be glad to clarify any issues and answer any questions within our remit to assist the committee in its work.
