Ms Aoife MacEvilly:

We have prepared a presentation, copies of which have been provided for members. We are speaking primarily from the point of view of the electricity sector as we regulate in that area. We believe the electricity sector is making good progress towards meeting our 40% target although there are obviously some risks to delivery. It should be underlined that significant effort has gone into the successful progress towards the 40% target. Electricity markets and networks as well as the individual generators have worked hard to deliver this new capacity. That work is backed by the public service obligation, PSO, levy. Electricity customers bear the costs of supporting our renewable electricity. They do this through the aforementioned PSO levy, through additional network charges and the cost of systems services to support increasing penetration of renewables.

It is incumbent on us all to deliver decarbonisation at least cost for electricity consumers. To that end, we believe strongly in delivering competitive, technology neutral options to determine the least cost option in terms of the next renewable support schemes. We have supported this approach in our contribution to the Department's renewable energy support scheme and believe it is the best approach. We also think it is important not only to focus on renewable electricity. Decarbonisation is about heating and transport. It is also about reducing the carbon intensity of fuels, not only about renewables. If we think about how we might make the next gains in heating and transport, it is possible that electrification and gasification can play a role. However, we need to do this in a smart way in order to ensure that we are not adding costs to energy consumers and that we are doing it at least cost.

To underline the point about the costs for electricity consumers, I have included a slide on the PSO levy calculation. We published this last summer. Committee members can see on the graph the increase in the cost of the overall PSO levy. The renewable element of the PSO levy is what is driving the overall increase, in the main. That is likely to increase further as we reach our 40% target. It is really important that we keep in mind the costs for energy consumers. Households are currently paying €92.25 per annum through the PSO levy, which could be 9% or 10% of their overall annual bill. Customers also pay additional network charges and for the cost of system services, although they may see some benefits in terms of micro-price reductions when we have higher renewables on the system. When we think about the next renewable electricity targets or if we are thinking about supporting higher cost renewables, we must keep in mind the impact on the PSO levy for customers.

While we are looking at higher costs for renewable electricity support, we are not doing a bad job overall. As we can see from the comparison of European energy regulator support schemes, Ireland has done a reasonably good job of bringing on relatively low cost renewables up to now. The wind energy support scheme renewable energy feed-in tariff, REFIT, has been successful and has delivered the right outcomes for the energy system at a relatively low cost. Germany, by contrast, has supported much more expensive renewables.