Malcolm Noonan (Carlow-Kilkenny, Green Party) | Oireachtas source

I thank the Chairman and the committee for this opportunity to present details of the Supplementary Estimate for Vote 29. Our purpose in being here is to seek the approval of the select committee for the Supplementary Estimate, which will allocate €200 million to a new subhead B13 - emergency generation capacity in the energy transformation programme. The Supplementary Estimate includes €110 million in additional Exchequer funding, along with a reallocation of €90 million in forecast underspending within the Department.

On 7 June 2022, the Commission for Regulation of Utilities, CRU, directed EirGrid, the transmission system operator, to procure circa 450 MW of additional generation capacity for the period covering winter 2023-24 through to winter of 2025-26 to offset a potential capacity shortfall of electricity supply. In order for EirGrid to be able to comply with this direction, it requires financial support from the Department. Legislation to ensure that EirGrid can carry out this direction, including the legal basis for the Department providing the necessary financial support, passed all Stages in the Oireachtas and was signed into law by the President last Thursday. For the avoidance of doubt, the public service obligation levy provisions in the legislation, which provide for a rebate to customers, will be dealt with through electricity bills.

The level of financial support required from the Exchequer in 2022 to allow EirGrid place orders on the electricity generation units and ensure that they are delivered and installed in time for winter 2023-24 is estimated to be in the region of €350 million. However, as the final level of financial support required from the Exchequer this year will not be fully known until later in the summer when all of the contractual arrangements are in place, it has been agreed that approval for the allocation of funding will be requested in two tranches, namely, the current allocation under this Supplementary Estimate of €200 million and a subsequent request later in the year for the balance of funding required. The second Supplementary Estimate will take account of the final agreed figures for the purchase and installation of the equipment, Transmission Use of System cost recovery and any further savings arising in the Department based on projected year-end expenditure.

As I have mentioned, the overall purpose of this Supplementary Estimate is to allocate €200 million to a new subhead B13 in the energy transformation programme area to fund the purchase by EirGrid of additional emergency generation capacity. The €200 million being allocated comprises: €110 million in additional funding from the Exchequer; the reallocation of €40 million from subhead B4 – residential-community retrofit programmes; €20 million in savings under subhead B11 – electricity credit; and €30 million from subhead D.3 – national broadband plan. The transfer of €30 million from the national broadband plan subhead was considered by the Selection Committee on Transport and Communications on Wednesday of last week.

Following the announcement by the Government earlier this year of an enhanced package of measures to support the uptake of home energy upgrades, demand for the Sustainable Energy Authority of Ireland, SEAI, residential energy efficiency schemes has been very strong, with the number of applications received double the level seen in 2021. It is expected that the pipeline of applications will result in high levels of delivery for the remainder of the year. However, indicative mid-year results from the SEAI show a forecasted underspend at year end on the one-stop-shop and community energy schemes. While the targeted number of houses will be started in 2022, it is anticipated that not all of these will be completed and certified for payment in 2022 due to supply chain constraints. It is expected that the pipeline of applications in 2022 will result in strong levels of delivery in 2023.

The €400 million allocated to the electricity credit included a contingency to cover the possible cost arising from a growth in the number of domestic household accounts in excess of the original 2.15 million forecast. The final cost of the electricity credit was just under €380 million. This left savings of €20 million available to be reallocated to the emergency generation capacity subhead. I am happy to take questions from the committee.