I welcome our next contributor, Mr. Rick McGrath of Arcogen Limited, to discuss know-how transfer in renewable energy. I am happy to welcome a Kilkenny man from my constituency and thank him for his attendance. We apologise for keeping him a little late but all of the presentations have been most interesting for our work on the sub-committee.
Know-How Transfer: Discussion with Arcogen Limited.
Mr. Rick McGrath
I will talk about know-how transfer in renewable energy, which is a bottom-up approach. There is a skills shortage in renewable energy, as highlighted in the recent Irish Wind Energy Association report on the subject of large wind. For future smart technologies, however, there is a particularly severe skill shortage. We cannot develop jobs in this field unless we address the skills issue and most of my focus will be on electricity, rather than biomass.
The solution lies in an effective transfer model for renewable energy skills, which I call the transfer of renewable energy skills, or TRE-Skilling. The objective is to refocus existing, valuable but underutilised human and material resources from the construction sector onto the renewable energy sector. Ireland has unique advantages and is the best test location worldwide for new smart renewable energy technologies because of a particular set of circumstances such as the island grid, partially linked by interconnectors, and a brand new 20 kV system which has been installed at great expense. We also have the best range of wind and water of any European country. We have huge variability of conditions and can test and pilot things much faster than anywhere else in Europe. This has to be an attraction for the major utilities and other companies.
We also have an available, educated workforce for TRE-Skilling but we need to move fast. My general expertise is in a couple of areas. One is large wind and I am a commercial agent for one of the world's top three wind turbine manufacturers with 7,500 direct employees in manufacturing and many sub-contractors. It is widely acknowledged to be one of the success models in the renewable energy industry and comes from the north of Spain.
l wish to address the neglected area of embedded generation, microgeneration and smart grids. A long time ago I had an interest in, developed, demonstrated, tested and transferred technology in microhydro. I have with me a renewable energy best practice case study DVD which gives all the details of how the model was created and which I will present to the committee shortly. I have also been designing and transferring renewable technology for Irish companies in the fields of hydro, hybrid communications, wind, anaerobic digestion and combined heat and power. I am also involved in ocean energy research.
The Irish smart economy strategy, as presented on the website of the Department of Enterprise, Trade and Employment, focuses on how we can create jobs. In Ireland there is a top-down approach to renewable electricity. To achieve the 40% renewable electricity target by 2020 we have adopted a group processing approach. Large wind developments were grouped based on a gate closing date and by region, in order to deliver a total of approximately 6,500 MW of large wind at the rate of approximately 450 MW per annum. As an employment report has been produced by the Irish Wind Energy Association in recent weeks, this has been well documented.
This presents some challenges. For example, because the model is ad hoc and open access in nature, there is no possibility of Irish manufacturing of the main wind turbines, which represent 65% of the investment cost. However, there may be an opportunity to exploit our unique testing ability within this jurisdiction to design and manufacture services, etc., which can be exported to the manufacturers. As the generation to be connected is remote from load, new transmission grids must be created and EirGrid has its Grid 2025 proposal. As that will take time, it will roll it out between now and 2025. However, we already have constructed a 20 kV system costing billions of euro, which is the envy of the world. Although it is practically unused or very badly underutilised for embedded generation, this could be addressed by implementing simple smart grid innovations.
As for large wind energy developments, the gates were closed in 2008, which potentially has locked in the technology. Had we locked in the Internet technology in 1992, where would we be now? In addition to large wind energy developments, the future equally lies with embedded generators, smart grid solutions, storage, hybrids, combined heat and power, CHP, and auto production, all of which must be considered. They have the potential to at least equal the contribution from large wind energy developments. As the Commission for Energy Regulation has decided to consider how it will process generators outside this group processing arrangement, it appears there is an acceptance that there will be some moves in this regard. I note that a recent CER consultation makes clear that the CER cannot consider employment in its business because it does not form part of its legislative duties. This constitutes a barrier to employment in any aspect of this field. The CER which is responsible for the regulation of the industry cannot consider employment which should be of interest to the sub-committee to which I have forwarded four separate extracts from the renewable energy directive. As they make it clear the directive specifies that employment and social cohesion must be considered and taken into account, our thinking in this regard must be joined up.
In summary, the group processing arrangement top-down approach is slow and will have a limited role in resolving the current employment needs. In parallel, there also is a definite need for a bottom-up approach when creating a smart enterprise economy that requires a high degree of research and development, pilot demonstration and, most of all, effective transfer of these new and evolving skills. Both EirGrid and the CER are busily engaged in rolling out their grid programmes, etc., but this is not really their specialisation. Consequently, they probably require some policy directions in this regard.
I mentioned the network upgrade which constitutes an opportunity created. While we have great building and development skills, to date we have taken an overly regulated and restrictive approach to our future green economy and ignored the potential for smart technology exports. There are many opportunities in respect of the smart grid. Although Europe has created a European SmartGrids technology platform, Ireland is not represented on its advisory board. As the key to the nation's success is innovation, manufacturing and exports, we must address the misalignment between parties such as the regulator and those engaged in policy implementation to get this thing going. One solution would be a power innovation centre which would combine the thinking of industry, academia, etc., and use field pilot projects. Ofgem in the UK already has a system whereby it can impose a levy on utilities, which is then fed back in to assist innovations within the network. It is, therefore, a zero-cost proposal.
There are many other small sites — hydros, anaerobic digesters, embedded wind facilities — which could be used for skilling, reskilling, piloting, testing and training. These sites are an existing resource. I propose the establishment of an innovation centre — an example of which can be found in Manchester — which could link with industry in the form of various different pilot schemes.
In the context of our grid position, we have a unique advantage in terms of being able to test and bring products to market very quickly. That latter point must be of interest to our European partners. At present, there appears to be a requirement to readjust the policy in order to allow the CER to facilitate this within our networks.
I thank the committee for the opportunity to address it. There was a great deal of ground to cover in such a short time. I would be happy to answer any questions members may wish to pose.
I thank Mr. McGrath for his presentation. We will now take questions from members.
I welcome Mr. McGrath and thank him for his presentation. The document circulated to members is extremely detailed and technical and I accept that he could not do it justice in the short time available to him. We will be obliged to read it in detail and come back to it in the future.
Mr. McGrath referred to the need to take a bottom-up approach. Is he of the view that the current top-down approach is wrong and that there is a skills shortage in the field of renewable technology? Mr. McGrath questioned our ability to manufacture large wind turbines for use in this country and stated that our role really lies in the areas of innovation, manufacture and export. As matters stand, what position does Ireland currently occupy with regard to the areas to which he refers?
The sub-committee should give serious consideration to the information Mr. McGrath provided in respect of the statement from the CER stating that it cannot consider employment in its business. I thank Mr. McGrath for bringing this matter to our attention because I was not fully aware of it.
I thank Mr. McGrath for his presentation. I am firmly of the view that microgrids might offer a better option than the massive national grid with which we seem to be obsessed. Perhaps we might move forward with a combination of the two. The document presented to us is extremely interesting and is worthy of detailed consideration. We should factor it into our deliberations.
On employment and training, one of the major issues parents and young people raised during the recent election campaign related to what the future holds. We were asked about the areas in which people should seek to train in the future. We are of the view that the area under discussion has massive job creation potential. However, people must be given proper training in order that they might avail of the opportunities that arise. We are not in a good position and we have failed to prepare for the era of green energy. Mr. McGrath has, in my opinion, touched upon many important matters.
We must raise with the relevant Minister and Department the fact that we are not represented on SmartGrids, the European technology platform. The idea of establishing an innovation centre is great. Perhaps Mr. McGrath is familiar with the concept of Solitaire schools. Ireland is the only country in the EU which does not have such a school. The sub-committee is trying to identify a location for such a school, perhaps in Carlow or Kilkenny, where plumbers and electricians could be upskilled and where dynamic innovation and training could be provided in one location. A Solitaire school could perhaps be linked to a university or institute of technology. It must be quite frustrating for the witnesses to be ahead of the curve, when Governments are moving slowly. With a Green Party component, I hope this Government is moving quicker although I do not want to criticise previous Governments. When one has the experience and the background one sees how painfully slow it is to implement change. I assure the witnesses that this sub-committee is deeply involved in creating jobs through renewable energy. We are exploring all facets of it, whether short rotation coppice, geothermal energy, solar or solar voltaic, through the detailed expertise of the witnesses. I am well aware of the expertise of Mr. McGrath on the River Nore, particularly on small hydro schemes. This is ahead of the curve and it would be marvellous to implement some of these recommendations into our final report. Perhaps Mr. McGrath can address some of the questions posed.
Mr. Rick McGrath
I am happy to do so. I refer to the bottom-up approach and whether we are going in the right direction. The bottom-up approach has a far higher ability to create jobs and employment. Jobs and employment from the top-down approach are good quality jobs and very desirable but, in themselves, they have nowhere near the impact of the bottom-up approach. We must use the existing facilities to train people immediately. FÁS can put people into existing schemes, train and remodel them, replicate those schemes and we will end up with a usable product at the end of the training, rather than training for training's sake. They can build schemes and produce things of value in the community.
Regarding our ability to manufacture, speed to market is the key for manufacturers. The European smart grid committee is trying to create tools they can rapidly use in grids in Europe. They need a wide range of conditions to test and validate the tools. These conditions are unique to Ireland. We have a market edge in attracting the big guys to test these. We cannot have an overly regulated system that does not allow that. We have spent many billions on a network upgrade and have fantastic resources but we are not using them to the maximum. If these products are piloted, that creates a knowledge-based economy because this is the place they are being tested and modelled. We can manufacture and export the products and skills throughout Europe and the world. We have a unique advantage. I hope that addresses the first question.
The next was a comment on the CER, which is governed by legislation such as the Electricity Regulation Act 1999. This is not a criticism of the CER. When it considered the legislative background, it checked the rule book. It has not taken employment into account because nobody has asked it to take employment into account. That may have to be addressed.
Is the future in micro-grids? We cannot adopt the simplistic attitude of the top-down approach. We have 40% renewables and could consider large wind, draw a line under technology in the knowledge that this will deliver our obligations until 2020, and declare the game over to the exclusion of all other technologies that are emerging. We do not have to remodel the rule book because people must make decisions and plans. However, there must be flexibility in the rule book for other technologies to emerge. At the moment, that flexibility is not there and this must be addressed.
The power innovation centre links to universities, which have resources such as laboratories and so on but the real laboratory is the grid and the embedded generators in existence. There are approximately 50 or 60 hydro schemes and some anaerobic digesters and these are effectively significant resources. There are some embedded wind turbines such as the one in Dundalk IT. People can integrate their smart technologies with communications and we can learn and reskill from there. These are a significant resource and while I agree with the need for an innovation centre, this must link into the field laboratories already there. Some mechanism must exist to make these field laboratories viable; perhaps a rent or the services could be paid for. These are already out there and we do not have to build them or spend millions of euro getting them up and running. We should use existing resources in terms of manpower, grid and field laboratories. That covers it all.
If members are happy with that, I thank the witness very much for helping us in our deliberations. I look forward to studying this in detail, although I am well aware of the work. The beauty of what is being suggested to this sub-committee is that this work is not based in cities. There are many rural opportunities for jobs and we must look at that as well. There are jobs on rivers and in manufacturing biomass depots or biogas to help the farming sector. They can be placed all over Ireland, which is what we want. We are looking to create those long-term jobs with the vision presented to us today.
I am grateful for the witness coming before the sub-committee and we look forward to the input being added to our final report, which will be sent to him in due course.
The sub-committee adjourned at 1.50 p.m. until noon on Tuesday, 21 July 2009.