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

I am pleased to join the committee today to discuss the pressing matters of energy security, energy prices and protecting our vulnerable consumers and businesses. The National Energy Security Framework, which was approved by the Government and published in April this year, sets out Ireland’s response to our energy security needs in the context of the invasion of Ukraine and our specific national circumstances. At the outset, I would like to emphasise the impact that the war in Ukraine is having on gas market prices and in turn on both gas and electricity bills, particularly over the coming winter and beyond. This is by far the greatest challenge we all face as we go into the winter and the following months.

With regard to the security of supply of oil, the short-to medium-term outlook has stabilised somewhat, with petroleum products availability having improved recently. We have seen a slow softening of international oil prices, although this varies. The National Oil Reserves Agency, NORA, holds approximately 85 days of oil stocks, the overwhelming majority of which is in the form of physical product, with approximately 85% stored on the island of Ireland.

With regard to the security of supply of gas, supplies from Russia to Europe have been severely reduced over the past year and continue to be a cause of concern for Europe's energy security. This has resulted in natural gas prices that are at least ten times the levels seen just two years ago. The continued supply of natural gas to Ireland has not to date been reduced or interrupted as a result of the war in Ukraine. The UK, from where 75% of our gas comes, is at a strategic advantage compared to other European countries with a diverse source of gas supplies. The European Council recently agreed a regulation on reducing gas demand by 15% this winter. This regulation requires all member states to put in place a demand reduction plan. As Ireland is not directly interconnected to another member state, it is not required to meet the mandatory reduction target in this regulation. However, preparations are under way to put the voluntary demand reduction plan in place.

With regard to the security of supply of electricity, separate to the war in Ukraine there are challenges to the security of electricity supplies in Ireland. Concerns over such risks have arisen largely due to the non-delivery of previously contracted capacity, increasing electricity demand and the increasing unreliability of some existing plants. The tight margins are evidenced through an increase in the level of system alerts on the electricity system over the past year. As stated in the Climate Action Plan 2021, the level of dispatchable electricity generation capacity needs to increase significantly over the coming years to enable us to meet reliably the expected demand for electricity. The Commission for Regulation of Utilities is managing a programme of work that was initiated in April 2021 and finalised in September 2021 to address this challenge, with the support of EirGrid and my Department.

In June, the Government enacted legislation and approved capital funding to support EirGrid's role in expediting the delivery of temporary generation capacity. I also informed the Oireachtas in June that the Government had approved my recommendation to consider the factors that have led to the current situation. To this end, Mr. Dermot McCarthy, former Secretary General to the Government and the Department of the Taoiseach, has been engaged to conduct an independent review as to how the present situation has arisen. Further, I welcome that the CRU is reviewing the capacity remuneration mechanism to make sure it is fit for purpose. In carrying out this review, it is vital that we support the projects that have been awarded contracts under the existing mechanism and that planned capacity auctions proceed.

With regard to medium- to long-term energy security, the Department is carrying out a review of the energy security of Ireland's gas and electricity systems in the period out to 2030, in the context of reaching net-zero emissions no later than 2050. This review considers potential risks to our natural gas and electricity supplies and examines a range of measures to mitigate these risks. The Department has received the final technical analysis to inform the review and I expect a consultation to launch in the coming weeks.

With regard to prices, vulnerable customers and energy poverty, the committee will be acutely aware that the exceptionally high wholesale gas prices seen since Russia invaded Ukraine have led to unprecedented increases in the electricity and retail gas prices faced by consumers. This, in turn, has resulted in a significant increase in the number of people at risk of fuel poverty. Recent estimates from the Economic and Social Research Institute, ESRI, indicate that up to 29.4% of households now spend more than 10% of their income on their home energy needs. The Government is keenly aware of the pressures on households facing these bills and has already implemented a €2 billion package of policies and measures to support energy customers. These supports included an electricity costs credit which was applied to more than 2.1 million domestic electricity accounts, a reduction in VAT on electricity and gas bills from 13.5% to 9% and increases to the fuel allowance.

The Government also greatly enhanced the home retrofit supports available to households. For example, the number of free energy upgrades for households at risk of energy poverty delivered each month is more than double that seen last year and a new 80% grant support for cavity wall and attic insulation was also introduced as a response to the exceptionally high energy prices. These supports will help to protect homeowners from energy price increases in the short and long term. However, the Government recognises that more needs to be done as prices continue to increase, and additional measures to support households are being examined in the context of the forthcoming budget. I very much welcome the announcement by the CRU last week of a range of additional consumer protections under the national energy security framework.

My Department recently published a review of the strategy to combat energy poverty, alongside a public consultation that will help to inform the development of a new action plan to combat energy poverty. The new action plan will set out a range of measures to be implemented ahead of the coming winter, as well as key longer-term measures to ensure that those least able to afford increased energy costs are supported and protected. It is intended that the new plan will be published shortly after the budget. The development and implementation of the new action plan is being overseen by a cross-departmental steering group, chaired by my Department.

The biggest energy challenge facing Ireland and Europe at this moment is the massively escalating price of natural gas and its effect on gas and electricity bills as we head into the winter. We are not alone in facing this challenge and we will continue to work very closely with the European Commission and the European Council, which will sit in emergency session next week, in order that we can frame our response in that European way.