Oireachtas Joint and Select Committees

Tuesday, 30 August 2022

Joint Oireachtas Committee on Climate Action

Energy Supply and Security: Discussion

Photo of Eamon RyanEamon Ryan (Dublin Bay South, Green Party) | Oireachtas source

The Commission for the Regulation of Utilities has set out some of the timelines on this, but I will go further. Going right back, our first energy policy was set with the White Paper I was involved in back in 2007. That was followed in 2015 with a further White Paper on energy policy. In that period, we always had capacity payments for new generation. The European Commission was uncomfortable with that or had various questions around it which led, as Ms MacEvilly said, to revised rules for capacity auction, capacity systems and how energy generation can be delivered in this way. That led to the new policy for capacity auctions in 2017 and 2018, as she said, with, as I recall, the capacity auctions being completed in early 2019.

I agree with Mr. Foley that one of our fundamental problems is that what we expected to get from those auctions was not delivered for a variety of reasons. The report by Mr. Dermot McCarthy will review that. As I understand, the equipment provider in the North Wall was not able to meet the emission standards for the equipment. In Poolbeg, Ringsend and Corduff there were difficulties getting projects through the planning system in a timely manner to deliver on it. There were ESB plants. Statkraft and Energia have much smaller plants which did not proceed through the auction process.

In early 2021 we became aware that the first of the North Wall auctions would not be delivered. Later in 2021 it became clear that some of the other ESB plants would not be delivered. It started in early 2021 when we had knowledge of that. Our Department immediately convened a meeting with EirGrid and the CRU to assess what was clearly going to be a capacity shortfall. We issued a warning note to Government early in April 2021 to raise concern about the problem. It is a real concern if we do not have sufficient capacity for both our economy and the public.

In June 2021, we started the procurement process for what is now 250 MW of emergency generation to try to close that gap. Recognising that we had an emergency, we did not go through the ordinary capacity system. We were going to intervene directly to ensure we closed the gap for this winter. The 2018 and 2019 auctions were designed to provide power for the coming 2022-23 winter. The first of the projects was subject to legal challenge which delayed it. That is one of the reasons it will not be available for this winter, unfortunately, as Mr. Foley said. We reissued it in the autumn of that year.

At the early stages of this year, we agreed we would need to do a further emergency purchase - purchase rather than procurement because procurement timelines would not deliver it quickly enough. We brought the legislative proposal to the Oireachtas as directed by the CRU recognising that we had this gap. It recognised that gap and said we needed that additional 450 MW that would be done on an emergency purchase basis, paid for through the network charges. The final mechanism was agreed in the Dáil on 7 July.

Early this year, in January and March, there were two further auctions to deliver the additional power everyone here agrees we need. We need 2,000 MW of backup flexible gas plant, which will use less gas but is there when the wind does not blow. We must have a laser focus and attention on delivering that and the emergency procurement and purchase power generation, as Mr. Foley said. That is a key issue, that we must ensure we get the emergency procurement. We will have further auctions. We will respond if any of those projects do not go through. We must make sure we deliver.

Separately, and they are separate, on the arrival of the war in February, we immediately we immediately established an emergency energy security planning group. It involved the CRU, EirGrid, the ESB, the Department of Enterprise, Trade and Employment, Gas Networks Ireland and all the range of organisations needed to address what is a much bigger and more impactful crisis. That is not to say the other issue is not critical but the energy price crisis as a result of the war overshadows everything. It is absolutely dominant. We are engaged in a variety of mechanisms through that emergency planning system, with our Department leading it, to bring us through that. It includes issues around energy poverty and Government supports. Even in the past three weeks, things have changed dramatically. What was an initial high spike in gas prices then stabilised somewhat at a very high level, which was a historically unprecedented level, but in the past three to four weeks, Russia has continued to threaten to switch off the Nord Stream gas pipeline and other pipeline routes, and that is why gas prices have gone up and why there is an emergency meeting of the European Council. They are separate issues but both are being managed through our Department, the CRU and EirGrid, which are involved in strategic planning teams which meet every month, and every week we have subcommittee meetings to address both challenges at once.

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