Mr. Dermot Nolan:

The debate on renewables is taking place all over Europe. There have been a significant number of renewable developments in Germany, partially wind but also solar, and some people are now asking whether they were worth it. The Nordic countries are broadly supportive of renewables. I hope I am not characterising people unreasonably when I note that many of the eastern European countries are sceptical about renewables.

The vast majority of our renewables are envisaged to involve wind. Hydroelectric power generation is not suitable for the Irish system. Our target is to achieve 40% wind energy by 2020. On the Deputy's question about whether it will be cheaper, much will depend on the price of fossil fuels. I will try to explain the factors behind that answer. If the price of gas in 2020 is the same as its current price, it is likely that we will have more expensive electricity overall as a result of taking on 40% wind. However, if the price of gas increases, we may have cheaper electricity. It is a complex task to model the factors that will determine the outcome. We have done some modelling ourselves and the Sustainable Energy Authority of Ireland and Eirgrid are also conducting a study of various scenarios. Subsidies for wind generation relate to the public service obligation. My estimate, which I think is reasonably accurate, is that wind's contribution to the overall price of electricity in terms of subsidy is between 2% and 2.5%. It is likely that the figure will rise over time but the subsidies are set for a fixed period and will eventually go away. The other perceived cost to renewables is the fact that some element of capital expenditure on the grid is required for renewables. Some of this investment is simply aimed at keeping the grid safe and secure and keeping the lights turned on, but a portion is required to support renewables. The most obvious of the three projects in this regard is Grid West because much of the wind is in the west. As opposed to what might be perceived as the cost of renewables, when the wind blows it is free. It does not always blow but there is no question that the new entrants into the market are driving down the wholesale price and the average cost of generating electricity. In terms of the overall balance, that is what the studies are trying to achieve. Ultimately, they will come to some sort of view - I am not sure that I would say gamble - as to whether gas prices will be high or low in five, 15 or 20 years' time. I apologise that I cannot give a precise answer but they are the factors affecting the matter.