Simon Coveney
Ceist:101 Mr. Coveney asked the Minister for Communications, Marine and Natural Resources the details of his plan for a new east-west electricity interconnector between Ireland and Britain. [6056/04]
Amharc ar fhreagraTuesday, 24 February 2004
Ceisteanna (7)
Freagraí ó Béal (5 píosaí cainte)
As the Deputy will be aware, the Government has given its approval to the development of two 500 MW east-west Ireland-Wales electricity interconnectors as a priority. The benefits of such interconnection are clear, both as a competitive tool as well as an alternative capacity source. Interconnection will provide a long-term net benefit to consumers, especially in terms of enhancing security of supply, developing competition and integrating Ireland into a wider European energy market.
The next step in advancing this project is to conduct a full feasibility study, examining matters such as submarine cable routing, onshore converter stations and a range of other technical and commercial issues. This is a highly detailed and complex study, which effectively provides a project plan ready for construction. The Government decision will involve the Commission for Energy Regulation, CER, being charged with promoting and assessing the degree of interest in the development of merchant interconnectors to be constructed, managed and owned by the private sector.
In the event of no substantive interest emerging on the part of the private sector for a merchant interconnector type project, the CER will then move to host a competition for construction, management and ownership of regulated interconnectors, underpinned by a guaranteed regulated revenue stream covering costs, either in whole or in part. Any CER competition arrangements would seek to maximise risk transfer from and minimise costs to the consumer downstream.
The Deputy may wish to note that I intend to bring forward proposals shortly for consideration by Government for a Bill to, inter alia, remove a legislative constraint thereby facilitating a regulated interconnector not owned by the ESB and to underpin any competitive process for regulated interconnection hosted by the CER.
I welcome this announcement and the strong support the Minister has expressed for a 1,000 MW interconnector, effectively two 500 MW interconnectors, which will enhance security of electricity supply by an extra 20%. It will increase competition and move Ireland toward where we need to go in the energy market, namely, to link up with the British grid and, in time and if possible, to create a European electricity grid under which there can be fair and open competition to ensure the consumer gets choice in service provision at the lowest prices possible.
The Minister announced that this project will be financed constructed, managed and owned by the private sector. I have no problem with it being constructed by the private sector but I am concerned that infrastructure as crucial as this should be owned and managed by the private sector.
Eirgrid manages the Irish electricity grid and it is appropriate that the State should own this infrastructure and pay for it if necessary. A State company, possibly Eirgrid, should also manage it to ensure we can link into the Irish grid as seamlessly and efficiently as possible. I am anxious to hear the Minister's comments on this issue. In this case, the State would also have more control over the cost of interconnection to ensure it is as low as possible so that British power generators could compete as effectively as possible with the ESB and other generators in Ireland to ensure the cost of electricity is as low as possible for the consumer.
I thank the Deputy for his support for the Government decision to move to the construction of two 500 MW interconnectors. In regard to the modus operandi for the construction, and ultimately the management and ownership, the Government decided that we would test the water, through the CER, for any tenders for merchant operation of the interconnectors. It is felt by some sections of the energy industry that there will not be sufficient interest in this respect and, if this is the case, ultimately, the interconnector will be built with a regulated rate of return for the investment in it. The issue of ownership would be determined in the tendering process, which would be under consideration at that time.
Will the Minister acknowledge and give some encouragement to the potential green energy producers, particularly those involved in wind energy, that this interconnector will not only be a source of potential supply of energy coming into the country but a way of exporting green energy, in respect of which we have a competitive advantage with regard to production?
What is the timescale for all of this? The Minister's press release states that the project "may get under way by 2006". Is it not possible to fast track this and bring it forward?
This project will be a huge advantage to renewable energy and is one of the main demands of the wind energy sector. Ultimately, we could become a net exporter of energy through this interconnector. In regard to fast tracking the project, this detailed study will be carried out immediately. The estimate for one interconnector was in the region of €9 million to €10 million and I do not anticipate a huge extra cost in that respect. This is the first step. The next step is this major feasibility study which would be a plan for construction. Thereafter, we hope to complete it within the timescale.