Other Questions.
6 Mr. Stanton asked the Minister for Communications, Marine and Natural Resources his further plans to support the development of the renewable energy sector; the details of the most recent developments in this regard; and if he will make a statement on the matter. [25751/04]
Amharc ar fhreagra13 Mr. McCormack asked the Minister for Communications, Marine and Natural Resources his plans to provide alternative energy at a competitive price; and if he will make a statement on the matter. [25821/04]
Amharc ar fhreagraI propose to take Questions Nos. 6 and 13 together.
The promotion of renewable energy technologies is a key priority of this Government. The Green Paper on Sustainable Energy, published in 1999, established a target to add 500 MW of new renewable energy based electricity generating plant to the electricity network by 2005. Further proposals in the course of the most recent support programme, AER VI, are being implemented to support the construction of a further 140 MW generally, an additional 50 MW in an offshore wind category and an additional 28 MW specific to biomass powered combined heat and power, CHP, plants. This represents an increase of more than 40% on the original target and is evidence of the growing importance the Government places on renewable energy technologies.
AER VI brings to a close an initial programme to add renewable energy technologies to the electricity network at a level which does not raise serious technical issues. However, planning for future programmes at increased penetration levels raises significant technical issues which must be addressed to maintain system security for electricity customers. This plan may in turn require a revision of the current support programme to embrace changes required to allow higher levels of wind energy penetration in particular.
At the end of last year a consultation document, Options for Future Renewable Energy Policy, Targets and Programmes, was published. The document and its supporting annexes, which examine in detail support mechanisms and renewable energy policies in Ireland as well as in other European countries, were published on my Department's website and examined key challenges in the future, including policy, future green energy markets, how to overcome barriers to the deployment of renewable energy, and future options for market support mechanisms.
In May of this year, a renewable energy development group, chaired by my Department, was established. The group comprises relevant experts from the administrative and scientific sector and it will advise on future options on policies, targets, programmes and support measures to develop the increased use of renewable energy in the electricity market to 2010 and beyond. The group's report, which is due before the end of this year, will form the basis of my future policy proposals to Government.
The AER VI programme is primarily about supporting renewable energy in the electricity market. Biofuels are also renewable fuels which can be used as alternatives for fossil fuels in vehicles. Earlier this year, my Department secured an amendment to the Finance Act 1999 which allows the Minister for Finance to apply a relief from mineral oil tax for biofuels essential to a pilot project to produce biofuel or to research aspects of biofuel production and usage as a motor fuel. My Department is in discussions with the Department of Finance about the final design of a proposed scheme under the measure and expects to be in a position to announce details of a scheme under the Finance Act provision shortly.
In tandem with these programmes, Sustainable Energy Ireland, the independent non-commercial State body focused exclusively on sustainable use of energy, including deployment of renewable energy sources, has commenced a challenging work programme to increase energy efficiency and to promote renewable energy technologies. In the renewable energy field specifically, SEI has opened a research, development and demonstration programme for renewable energy technologies. This programme is open to a wide range of proposals, including policy studies, field research, feasibility studies and technology research and development.
I wish the Minister well with his new brief and thank him for his interesting and comprehensive reply. He stated that 500 MW are due to be in place by the end of 2005. What will be the position at the end of this year and will the target be met by the end of 2005? What percentage of our overall energy needs will be met by renewable energy sources by that date? I welcome that he is involved in discussions with the Department of Finance but has he had discussions with the Department of Agriculture and Food or people in the agriculture sector who are interested in growing crops for bio-energy use? He stated that, at present, this represents 40% of the target. What will be the position at the end of the year? Has he considered other sources such as tidal and wave energy and what progress is being made in that area?
I hope that the programme we have put in place with Sustainable Energy Ireland will lead to an increase in research in the various types of alternatives, such as tidal and wave energy, biofuels etc.
I have not yet had discussions with the Department of Agriculture and Food or anyone in the sector in respect of biofuels. In the current context, however, there is a great opportunity for us to engage in joined-up thinking with the Department of Agriculture and Food in respect of this matter. I will certainly take action in this area.
The Deputy inquired as to what will be the figure for the end of 2005. I do not have that in my possession. He will be aware that the target for the use of alternative energy sources to be reached by 2012 is 13.2%. The indications are that we will achieve this. In the context of some of the research being carried out, I would favour looking at ways of trying to increase that figure in the coming years. We have made great progress but there are technical difficulties with almost all these alternative sources, especially wind energy. However, I am of the opinion that these can be overcome. We should aim to use much higher levels of sustainable alternatives.
I wish the Minister well with his new brief which I am sure he will find interesting. Unfortunately, I will not be present to offer my tuppence worth. I will, however, try to do so from time to time.
Is the Minister in a position to indicate, if he has the figures in his possession, the number of megawatts being produced into the national electricity grid from contracts awarded under AER VI? The major criticism of AER schemes up to now is that contracts have been awarded but that nothing has been delivered. Is it possible to provide a figure regarding the number of megawatts being produced by those who have already been awarded contracts? In some instances, nothing has been done about those contracts since they were handed out under AER VI. There is a long list of substitutes who are waiting to obtain contracts and who believe that they could produce electricity in a short period if they were awarded those contracts.
The Minister stated that he is anxious to see research being carried out in the area of biomass technology. We will not be obliged to reinvent the wheel in this regard. Most European countries, specifically those located on the north of the Continent, have active biomass programmes — especially those involving the use of wood biomass — in operation as part of their renewable energy plans. I appeal to the Minister to get things moving in Ireland in that regard. We have the best weather conditions in Europe to produce fast-growing plantations.
Supplementary questions are limited to one minute.
I urge the Minister to work with the Department of Agriculture and Food to move quickly in terms of replacing peat, which is a very dirty fuel source, with wood biomass, which is carbon neutral and which will make a significant impact in respect of reducing carbon emissions, over a phased period.
The Deputy asked about the number of megawatts produced under contracts awarded under AER VI — and even AER V — but I do not have that information in my possession. I am aware, from meetings with officials in my Department, of the problem the Deputy highlighted.
Zero megawatts have been produced.
I do not know if that is true but I will accept the Deputy's word.
There has been a problem with the megawatts produced under contracts awarded under AER V and VI and their transfer into the system. Approvals and planning permissions have been issued to certain contractors but operations have not commenced. Some who received approvals——
They have contracts and are ready to proceed.
A problem exists but there is not a great deal I can do about it at present because of the terms of the contracts that are available. However, I will take current difficulties into consideration if there is an AER VII programme and I will ensure that start-up dates are included.
To date, a total of 43 non-wind renewable energy projects have been supported covering biomass, hydro, ocean energy, heat punts and geothermal technologies. This is all done through SEI. I accept the Deputy's point that biomass is well developed in some countries. While I do not intend to reinvent the wheel, we must try to establish a regime which will encourage the use of alternative energies. The Department will not do this on its own but must work with the Departments of Agriculture and Food and Finance to encourage the process.
Deputy Coveney already asked a question I intended to put to the Minister regarding the volume of renewable energy. What is the position regarding those whose applications to provide wind energy failed? Many farm-related, small groups were aggrieved that they were not able to obtain a licence during the previous round of the licensing process. I understand they received a promise that the matter would be reviewed. The Minister partially addressed the matter. Will he provide a timeframe for dealing with the people in question?
We have gone to enormous cost to export meat and bonemeal which is used as a major energy source on the Continent. Have alternatives to exporting this product been considered? Is it possible to use it as an energy source rather than incurring considerable cost?
That is a matter for private industry or other interested parties. I am aware that the idea was floated on several occasions, even in the Deputy's constituency, although it related to waste from poultry. The use of meat and bonemeal or similar products for these purposes does not generally meet with favour in local communities. It is a logical course of action, however, given that it costs approximately €60 million per annum to deal with it, including for export. A number of facilities could burn it and generate energy but we have not yet proceeded to that stage.
Deputy Crawford's first question referred to the AER VI programme and the additional 110 MW made available under my predecessor. I hope to make decisions in this regard soon. The reason bids were not accepted was not that they were inadequate. I understand the system entailed ranking the applications on the basis of how good they were. The 500 MW was then distributed from the top of the list. The additional 110 MW will be allocated in a similar manner and I hope the decision on the matter will be made soon.
Is the Minister considering the possibility of issuing policy directives to the Commission on Energy Regulation, CER, on market support and market trading mechanisms as they do not appear to have worked to date?
Why did the Minister state wind energy creates problems when it creates solutions? The technical issues to which he referred arise at the point at which around 3,000 MW of renewable energy is being generated, rather than 200 MW as is currently the case. What are the problems the Minister has indicated?
Why has the reduction in mineral tax for biofuels approved a year ago not been finalised? Does the Minister agree that in the context of cost implications of billions of euro arising from the near doubling of oil prices in the past three years, a budget of €7 million to investigate alternatives such as tidal power and biomass is on the small side?
I have not formed any view on whether I will issue further directions to the energy regulator on this area, as it would be premature to do so. Nevertheless, that mechanism is open to me.
Discussions with the Department of Finance on biofuels have been ongoing since the budget and I understand they are nearing completion.
When does the Minister expect the reduction in mineral tax to be finalised?
I hope it will be finalised in the next few weeks.
Is he satisfied with the length of time required to reach agreement with the Department of Finance on such a minor issue?
Having been described as an impatient Minister, I would never be satisfied if it took so long to reach a solution.
I also asked a question on the €7 million research budget.
The size of that budget is a matter for the Estimates. The figure in question was procured last year and the Department will have to work within that budget. Other research is also being done in this area.
7 Mr. Durkan asked the Minister for Communications, Marine and Natural Resources the extent to which he can ensure the availability of adequate electricity and other energy sources; and if he will make a statement on the matter. [25748/04]
Amharc ar fhreagra99 Mr. Kenny asked the Minister for Communications, Marine and Natural Resources the degree to which electricity, gas, oil or other energy reserves are sufficient to meet industrial and domestic requirements; and if he will make a statement on the matter. [25817/04]
Amharc ar fhreagraI propose to take Questions Nos. 7 and 99 together.
The Commission for Energy Regulation, CER, monitors the security of electricity supply. Demand for electricity is forecast to grow at an annual rate of between 2.9% and 4.3% over the period 2004 to 2010, necessitating additional generating capacity. The CER has initiated positive actions to redress postulated generation capacity shortfalls as forecast in the generation adequacy report by ESB National Grid. Short-term measures put in place for this winter include the implementation by ESB National Grid of a demand side management programme, increased imports of 167 MW of electricity from Northern Ireland contracted on a priority basis and 208 MW of additional peaking capacity. In response to the medium to long-term capacity deficit, two new independent plants successful in the CER's Capacity 2005 competition which will generate up to 500 MW are due to be commissioned by December 2005 and February 2006, and two new peat plants with a combined capacity of 250 MW are due to be commissioned by December 2004 and February 2005.
An ESB plant productivity programme is in place to enhance its availability from 76% in 2003 to a target of 82% during 2004. To ensure that the programme delivers, the CER will impose penalties for failure to deliver on a progressive basis. ESB is also undertaking a significant networks investment programme of some €4 billion up to 2007. This is aimed at bringing the transmission and distribution systems up to required international standards and to meet projected capacity demand requirements. The programme is being delivered within the planned timeframe and budget.
Further increments of capacity will be required by 2007. In this connection, Viridian Group plc has recently announced its plans to construct a second 400 MW gas fired power plant at Huntstown, County Dublin. In addition, the Government has given approval to proceed with the development of two 500 MW interconnectors between Ireland and Wales which, when operational, will further enhance security of supply. The feasibility of increased interconnection between North and South is being investigated.
On the gas sector, under section 19 of the Gas (Interim) (Regulation) Act 2002, the Commission for Energy Regulation, CER, is required to prepare and publish an annual forecast of capacity, flows and customer demand on Ireland's natural gas system over a seven-year period. The 2004 capacity statement will be published within the next week. It outlines a range of possible scenarios that are designed to test the adequacy of the current natural gas infrastructure. The scenarios incorporate various levels of demand, based on forecasts for the domestic, industrial, commercial and power generation sectors, while also considering potential timeframes for new indigenous supply.
The indication from the draft gas capacity statement is that our infrastructure is sufficiently robust to cater for the majority of scenarios modelled. Only in the case of the highest demand forecast, in tandem with delays to the coming on stream of indigenous supply sources, would reinforcements to the infrastructure be envisaged. The CER is working with Bord Gáis, as the transmission system operator, to investigate the requirements for reinforcing the onshore Scotland system, should the need arise.
This reflects the investments Ireland has made in recent years to develop a high standard of security of gas supply through robust interconnection with the UK, to ensure sufficient importation capacity from external sources. We now have two gas interconnectors, bringing Ireland's security of supply status on a par with countries such as France, Italy, Sweden and Denmark, all of whom have duplicated sub-sea pipelines to ensure the availability of alternative routes of natural gas supply.
The Kinsale field continues to provide Ireland with an indigenous supply of gas and with potential supplies coming from the Corrib and Seven Heads fields, Ireland's import demands may be reduced in the coming years.
Additional information not given on the floor of the House.
Ireland continues to monitor developments in the UK market closely and this will inform the further development of security of supply policy.
I wish to address the issue of oil. Over the years oil markets have been severely tested by geopolitical developments in oil producing regions of the world. This is particularly true of recent times with geopolitical tensions in the Middle East, the ongoing conflict in Iraq and tensions in Venezuela and Nigeria. Notwithstanding these scenarios, however, there has been no disruption to oil supplies since late 1990 and early 1991, during the Iraqi invasion of Kuwait, and global production continues to keep ahead of demand. Indeed, in response to concerns in the oil markets, OPEC ministers have made a number of decisions in recent months to increase production, the most recent being a commitment on 15 September 2004 to further increase production to a volume of 27 million barrels a day of crude oil with effect from 1 November 2004.
Ireland, as a member of both the European Union and the International Energy Agency, is required to hold levels of strategic oil stocks. Currently, the EU requires the holding of 90 days' stocks based on previous year consumption, while the IEA requires 90 days stocks based on previous year's net imports of oil. On 1 August 2004, Ireland held 2,171,000 tonnes of oil, which is equivalent to 109 days of net imports using the IEA methodology.
There is no question of Ireland or any other oil consuming country attempting to deal on its own with a major interruption in world oil supplies. If such a crisis were to occur, the response, including the release of emergency stocks and the identification of alternative sources of supply, would take place at international level, primarily within the framework of the formal emergency regime developed and maintained by the International Energy Agency.
That was a lengthy response. However, it was a lengthy question.
I only got two thirds of the way through it.
Yes. I wish to focus on something which the former Minister, Deputy Dermot Ahern, launched with great fanfare, that is, his approval of an interconnector between Wexford and Wales. It was to consist of two 500 MW interconnectors between Ireland and Britain. This is one way of ensuring security of supply in the future. The Minister insisted at the time that the State would not pay for it and that he would invite tenders from private companies to build the interconnector. What is the current position with this? Have tenders been received and, if so, from whom? What is the likely time scale for this interconnector project? Were the comments of the then Minister, Deputy Dermot Ahern, last year purely fiction?
I do not have a note on this so I am open to correction but I understand that expressions of interest from the private sector were sought at the time. There was a less than enthusiastic response. If memory serves, I believe the CER is in the process of preparing tender documentation for the provision of the interconnectors, which will probably be built by the State rather than the private sector. I beg the Deputy's indulgence on this but I am speaking from memory. I believe that is the situation but if I am wrong, I will correct it.
Does the Minister accept that the issue of energy security is strongly linked to the market failure in energy in this country, particularly in gas and electricity? The Minister referred to a number of deadlines for different things to happen. I assume the ESB is going through the usual process of hiring standby generators and so forth, which it has gone through in recent times, because the new energy has not come forward. Given that this is the case, is the Minister concerned about the savage increases of over 30% in electricity prices for consumers and the recent swingeing increases of 9% and 16% in gas prices?
Is it the case that the Government was named and shamed the other day by the European Commission with 17 other countries for failing to implement the gas and electricity deregulation directives? Is the Minister being taken to the European Court of Justice with regard to these directives? It was expected that there would be full market liberalisation by next February and that there would be serious competition and, consequently, a decline in prices for consumers. The opposite is the case. We find that the Government is not prepared to implement the two major directives from Europe on this issue. I understand that the Minister has three months to reply to the Commission or it will take legal action against him and the Government.
Although I am only two weeks in the job, this comes as a bit of a surprise to me.
The previous Minister did not tell the Minister.
The briefing I have received so far indicates——
There is trouble everywhere.
There is. That is part of the joys and challenges of being a Minister. It is great. I would sooner be here than on the Opposition benches trying to tackle somebody else about this. I am not being smart in saying that this is a surprise. The briefings I have been given indicate that Ireland will have deregulated the market prior to the deadline of 2007.
The Minister has been badly briefed.
Perhaps the memory is not as good as it should be. The ESB is the dominant player in the market. What appears to be a desire among the unions, and possibly management, to keep the ESB as a vertically integrated unit to be sold and privatised at a later stage certainly is not helping matters.
Who wants to privatise it?
The Deputy should talk to some of his friends in the unions, some of whom appear to be keen to get their hands on 15% of a privatised ESB, although some are not. Despite my brief stint so far in the Department, I can confirm that it will not be privatised as a vertically integrated unit. In the next two or three years I hope we will be able to generate a great deal more competition. The EirGrid needs to be operational in a real sense so people can see it is a separate entity.
The price increases mentioned by the Deputy are a matter for the CER. We appoint these people to do certain jobs for us. The information available to me is that the 9% increase is due exclusively to the oil price increases we have experienced. That again points to the need for diversification and refers back to the earlier discussion we had about alternatives and so forth. It demonstrates the need to go as far and as fast as possible in moving away from our overall dependence on fossil fuels.
I thank the Minister for his extensive reply. I have been tabling questions about the adequacy of energy sources to meet requirements for many years but I was only given information on the situation in recent times. Will the Minister confirm that on foot of the links with interconnectors and the plans in place there will be adequate supplies for the foreseeable future, particularly for peak demand, and that we will not experience power failures over the next 12 months?
I am due to meet the ESB tomorrow or early next week. The information I and the previous Minister received is that there will certainly be sufficient capacity for 2004 and 2005. Some of the measures to which I referred are designed to make sure there is even more capacity in 2006 to 2007.
What is the surplus at peak times?
It is approximately 500 MW at peak times so there is some leverage. However, mechanisms exist, some mentioned by Deputy Broughan, in regard to generators etc. Arrangements are in place to generate more capacity and for some people to come off the system if necessary or in the event of a particular crisis. I will inform the Deputy if this information changes when I meet the ESB. However, there is sufficient capacity to meet all normal peak demand, although we cannot predict what might happen.
I appreciate the Minister's position in that it has taken me two and a half years to come to grips with this issue. While he will have the best advice, it will take him some time to settle into the brief.
Is the Minister aware of the comments of Mr. Kieran O'Brien, the outgoing head of ESB National Grid, who stated publicly on several occasions, including at Oireachtas committees, that the management of electricity generation is an inefficient oligopoly which is the halfway house of deregulation and not fully deregulated? I stated that the Minister was badly briefed because I presume Mr. O'Brien, as head of the grid company, knows what is happening. He stated that we were in a limbo land and that nothing was happening in this regard. In those circumstances, he has expressed fears that we will not have sufficient power. Is the Minister aware of Mr. O'Brien's comments?
One of reasons I was disappointed with the previous Minister was that he did not tackle this issue. For fear of the upcoming reshuffle and because of political sensitivities, he decided it was best to leave well alone, although he was told by Mr. O'Brien and others that the situation was inefficient and improper. Will the Minister be able to address this issue if he remains two and half years in office? Will he set out a policy for the ESB? While I asked a parliamentary question on this issue and look forward to the response, I have no idea, despite spending two and a half years trying to find out, what Government policy is with regard to the ESB. Will the Minister enlighten the House and the public within the next two years?
I guarantee the Deputy I will be able to tell him and the public the exact Government position within the next two and a half years. The Deputy will appreciate that there are industrial relations difficulties and sensitivities in regard to the ESB which have caused further difficulties. They need to be moved out of the way. We need more than just a policy statement in regard to the ESB, a number of which have already been made. Instead, we need to review and publish a full-scale general energy policy. However, the first step in this process is to deal with the current situation at the ESB before moving to a broader picture of the energy situation. Over the next two to two and a half years, I hope we will be able to do that.
Written Answers follow Adjournment Debate.
