Oireachtas Joint and Select Committees
Tuesday, 13 November 2018
Joint Oireachtas Committee on Climate Action
Third Report of the Citizens' Assembly: Discussion (Resumed)
I welcome members and viewers who may be watching our proceedings on Oireachtas TV to the 11th public session of the Oireachtas Joint Committee on Climate Action. Before I introduce our witnesses, at the request of the broadcasting and recording services members and visitors in the Public Gallery are asked to ensure that for the duration of the meeting their mobile phones are turned off completely or switched to flight mode.
On behalf of the committee I extend a warm welcome to Mr. Tom Donnellan, chief executive officer of Bord na Móna. He is joined today by Mr. John Reilly, Mr. Charles Shier and Ms Anna-Marie Curry. By virtue of section 17(2)(l) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of their evidence to the committee. However, if they are directed by it to cease giving evidence on a particular matter and continue to do so, they are entitled thereafter only to qualified privilege in respect of their evidence. They are directed that only evidence connected with the subject matter of these proceedings is to be given and asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against any person or entity by name or in such a way as to make him, her or it identifiable.
Members are reminded of the long-standing ruling of the Chair to the effect that they should not comment on, criticise or make charges against a person outside the Houses or an official, either by name or in such a way as to make him or her identifiable.
I call on Mr. Donnellan to make his opening statement.
Mr. Tom Donnellan:
I thank the Cathaoirleach and the committee for the invitation to speak here today. Bord na Móna has been the focus of a large amount of public comment in recent weeks and it is timely and appropriate that we assist in the national response regarding climate action and outline our decarbonising plans.
When it was founded, Bord na Móna was given a mandate to support Ireland's energy security and employment in the midlands. The mandate to support employment is as important to us now as it was then. For Bord na Móna decarbonisation presents a serious challenge and a considerable opportunity. It means moving away from peat and into renewables, resource recovery and new businesses that all support key national policies.
We are keenly aware of the effect this transition is having on our people who are the group most affected by decarbonisation.
The company’s plan involves three parts. The first part involves consolidating and simplifying our business structures so we can decarbonise and reposition Bord na Móna. The second part involves accelerating plans and development of our renewable energy and resource recovery businesses. The third is the development of new sustainable businesses to support significant employment.
The first part of the plan is aimed at providing a new structure that takes account of the need to decarbonise the business and deliver a new Bord na Móna. The new structure safeguards the maximum number of jobs and facilitates the decarbonisation strategy. As the committee is aware, decarbonising our business has meant us confronting some extremely difficult choices. On 24 October, we announced that fewer people will be working in our peat operations and also in our managerial and administrative roles across Bord na Móna. We also announced that we would open a voluntary redundancy programme, with the expectation that these changes could directly impact approximately 380 to 430 roles and employees. It was not an easy decision to make. We have taken these steps to allow us to decarbonise and at the same time save the company so it will continue to be a vehicle for economic growth in the midlands, a role that is very important given the challenging socioeconomic profile of the region. Doing this will enable us to implement national policy, including the achievement of climate action policy.
I have met with employees and spoken at 11 town hall meetings in the past few weeks and believe the decision is supported by the vast number of our workforce. A consultation process that includes the group of unions is under way. We have recently advertised new roles internally to implement the new structure and have received a high level of interest in them. In addition, we have a range of retraining and reskilling opportunities that we will be making available to our employees who are affected by the process. Part of that is outlined in the appendix we have shared with the committee. I am confident we will meet the challenges of decarbonisation in a fair and measured way. It is all part of a managed transition out of peat and acceleration into renewable energy, resource recovery and low carbon sustainable business. This managed transition is in line with key aspects of national policy.
A managed transition is in line with the national planning framework, which outlines the Government’s high-level strategic plan for shaping the future growth and development of the country out to 2040. A managed transition is also in line with the Citizens' Assembly proposals, where 97% of the members recommended that the State should end all subsidies for peat extraction and instead spend that money on peat bog restoration. The assembly also said there should be proper provision for the protection of the rights of the workers impacted with a majority of 61% recommending the State should end all subsidies on a phased basis over five years. The PSO subsidies for peat-fired generation ended three years ago in the case of Bord na Móna’s Edenderry power station and will cease completely in the ESB stations next year. The company notes there have been many calls for similar funds to support the transition in line with this Citizens' Assembly recommendation.
As the committee is aware Bord na Móna’s Edenderry power station has been co-fired with biomass for a number of years, 70% of which is sourced in Ireland. Co-firing with biomass which is renewable, greenhouse gas neutral and sustainably sourced makes Edenderry power station one of the largest single providers of renewable energy on the island of Ireland. We expect that the future requirement for biomass will grow from over 400,000 energy tonnes this year to in excess of 1.3 million energy tonnes per annum from around 2020 to 2021. Of our current supply, 70% is sourced in Ireland and our preference at all times is to source Irish biomass materials. As supplies of Irish biomass are currently limited, we are working to develop sustainable imports and indigenous supply chains to meet this increasing demand.
A key part of the managed transition will take place during the next 12 months when we begin to reduce the supply of peat and begin supplying biomass to ESB's two midlands based power stations. This will have the immediate effect of significantly cutting the carbon emissions from these stations. This part of the transition is subject to ESB successfully progressing planning applications for their west Offaly and Lough Ree power stations which are to be submitted shortly to An Bord Pleanála and Longford County Council. The end of this transition period will occur in 2027 to 2028 where the intention is for stations to run on 100% biomass. The three stations running on biomass will then potentially provide 346 megawatts of dispatchable renewable power to the Irish grid.
The progressive replacement of peat with biomass will allow for those affected by the current plan to be treated in a fair and just manner. The transition is a relatively short period of time and will allow for a significant number of people to retire in that time or in cases allow them to avail of replacement employment opportunities within the company, where it becomes available, or retrain and reskill for alternative employment outside the company. It will also allow the company to build out the new sustainable businesses that we intend to become a new foundation stone for employment and communities in the midlands.
In terms of reductions in the amount of carbon, the results of this managed transition will be very significant. From a baseline of peat emissions of 3 million tonnes of carbon dioxide in 2015, Bord na Móna estimates it will reduce its peat product emissions to 1.8 million tonnes in 2020. That is a reduction of 40% in CO2 emissions by 2020 alone.
Bord na Móna has made considerable progress in decarbonising its electricity, with the carbon intensity falling from 1.1 tonnes of CO2 per MWh in 2007 to 0.5 tonnes today and is likely to fall to 0.16 tonnes by 2025. Bord na Móna’s renewable electricity is currently produced at Drehid landfill gas, Mountlucas wind farm, Bruckana wind farm, Sliabh Bawn joint venture wind farm and the country’s first ever wind farm Bellacorick in County Mayo and at Edenderry using biomass. The power generation business is a key driver of the group strategy to transition to a sustainable future, with well over 60% of electricity generated currently classified as renewable. As we accelerate decarbonisation we will build on this solid platform helping us to meet our objective of becoming a leading generator of renewable energy as we expand development across our land bank. Bord na Móna’s Edenderry power station performs a uniquely important role as a large-scale generator of dispatchable renewable power to the grid at a time of increased intermittency of generation on the Irish grid system. It is important for the committee to note the role that biomass will play in delivering dispatchable renewable power in the coming years. Bord na Móna is also in the process of developing the 172 MW Oweninny wind farm in north Mayo through a joint venture with ESB which will become operational in 2019. Procurement for another wind farm at Cloncreen in Offaly is also progressing. We are also developing solar farms in partnership with the ESB and have accelerated our plans for renewable energy development during the company’s transition phase. This will involve the development of up to 2 GW of generating assets by 2030. Investments in this area will support the creation of considerable numbers of long-term jobs as well as providing construction jobs during the build-out programme. Perhaps even more importantly the development of these renewable assets will help support other key parts of our transition journey, especially in areas that will generate more significant employment opportunities in the midlands. We have also invested significantly in engaging people and communities near renewable energy developments. This is consistent with our values and traditions as a company and it has had a very positive effect in how these proposals are received and perceived during the planning, development and operational stages.
Alongside the development of renewable energy supply, we are also increasingly active in the provision of virtual power plant services and demand side management. To do this Bord na Móna has acquired a 50% interest in a start-up company called Electricity Exchange, which focuses on the development of smart technology and the provision of flexible support services to the national grid. This business supports high-tech Irish jobs and recently announced ambitious plans to expand in the future.
Energy efficiency will also be at the centre of a transition to a clean, low-carbon energy system by 2050. In the context of Ireland’s EU and national commitments and wider climate change goals, Bord na Móna, as a commercial semi-State, has worked towards achieving the 33% national target.
Our resource recovery business is a key pillar in Bord na Móna’s strategy helping the company diversify away from high-carbon activities while also supporting national waste policy. Bord na Móna is also involved in the waste-to-energy sphere such as the landfill gas utilisation plant at Drehid which generates around 38,000 MWh of renewable energy per annum. We also have acquired the end-of-life tyre collection and processing service, Ireland’s only recycling operation which ensures complete destruction of car tyres and 98% recovery of material for recycling use. In addition, significant investment is being made in recovery technologies in the area of plastic recycling.
These existing resource recovery activities already support in excess of 300 jobs within Bord na Móna with an additional 50 being created at our tyre recycling facility in Donore Road in Drogheda. Investment in the recovery of higher value material and resources will help deliver on key national sustainability and waste objectives but also help support replacement employment in the midlands.
Bord na Móna is keenly conscious of how important it is for the company to go from a brown to green strategy and for it to succeed. This has been a feature of much of the public commentary of our decision to decarbonise. Bord na Móna and our employees are setting out on a very challenging journey. We are aware we will be a significant test case for public perceptions around climate action. If after we are finished our transition is perceived as a success that benefited people nationally, then the national task of decarbonisation will be made immeasurably easier. If, however, climate action is perceived as an entirely negative process, that is a burden borne only by employees of companies like Bord na Móna and by already disadvantaged midlands communities, then the national strategy would be needlessly undermined. This consideration is a key driver of our plans. As a company we know we have to accelerate plans and demonstrate the real benefits that will accrue as we move to new low carbon businesses.
These new business plans include projects that tap into our land assets and the skills of our workforce. We have identified two areas of intent for new businesses; the first involving fresh water aquaculture and the second involving the supply of herbal remedies to the pharma and cosmetics sectors. Our aquaculture project is already being piloted at a closed loop, fresh water fish farm located on one of our bogs in east Offaly that we are progressing with Bord Iascaigh Mhara. We are looking to progress this and our herbal business project to business cases in the next 12 to 18 months. Thereafter, we will hopefully be developing these as commercial ventures of scale.
Bord na Móna is also examining opportunities to develop the infrastructure and alternative fuel sources required for electric and other low emissions vehicles. While heavy goods vehicles account for only 3% of the total vehicles in Ireland they consume 20% of the energy used within this fleet. Compressed natural gas has high potential to decarbonise heavy goods vehicles due to the challenges associated with their full electrification. To do this the company is developing an anaerobic digestion and biomethane injection project in Cúil na Móna in County Laois which will contribute to the decarbonisation of the gas network. Bord na Móna has also identified potential rapid recharging sites for vehicles within its landbank and is assessing their suitability.
All of these investments in this area also support the company’s objective of developing new midlands-based employment that is sustainable and supports a low-carbon economy. We are at any early stage of the development but we estimate that these projects carry with them the potential to grow Bord na Móna’s employment base by approximately 500 people. This will be achieved in a way that supports a low carbon economy generally and that can support economic development across the communities with which we are so strongly associated. I am encouraged by all the support that has been flagged on this and if it is delivered, I believe we can help ensure that the midlands is a big winner out of decarbonisation, a winner in terms of investment, cleaner air, water, better amenities and better employment opportunities.
Potential for job creation arising out of renewable power development, resource recovery expansion and our new businesses is significant. We have conservatively estimated, and independently verified, that this plan will create and support significant direct and indirect jobs during the coming decade. Importantly, these jobs will be sustainable and will support the green economy jobs, which will be based in the midlands.
In achieving this objective we are being assisted by and are engaging with a range of bodies, including the Department of Communications, Climate Action and Environment, State agencies that include Enterprise Ireland, the IDA, Bord Iascaigh Mhara and many midlands local authorities which have been very proactive in their response to the company’s transition needs. We will also be engaging with EU-based institutions regarding potential supports that could be forthcoming there.
I wish to mention also something about how this decarbonisation plan fits with our land use strategy. Our decarbonisation plan includes a significant investment in the rehabilitation and restoration of bogs. To date more than 15% of the total land area in Bord na Móna's ownership has been rehabilitated and-or restored in line with international, EU and national targets. Bog rehabilitation and restoration provides a range of benefits, including lower land-based carbon emissions, increasing biodiversity and increasing provision of community and amenity lands.
In terms of carbon emissions, Bord na Móna is currently calculating the reduction in emissions that will accrue from the company’s bog rehabilitation and restoration work. Re-wetting raised bog means that the carbon that is in the ground stays in the ground. It also provides greater opportunities to turn these sites into carbon sinks. Final conclusions pending, at this stage the company expects that the reductions arising from this work will be significant. These savings will be counted in the EU’s third legislative pillar for greenhouse gas emissions, land use, land use change and forestry.
Other uses of rehabilitated bogs, as windfarms for example, demonstrate the compatibility of renewable energy generation with other outcomes, including improved biodiversity. The developed footprint of windfarms is typically less than 5% of the entire area of the windfarm leaving the balance of 95% of the rehabilitated bog as a resource for biodiversity.
The importance of rehabilitation from a biodiversity point of view is especially pointed following the recent World Wildlife Fund report which highlighted the catastrophic 60% loss of animal populations in the past 40 years. Restoration of raised bogs will help Ireland meet its biodiversity objectives, including commitments to conserve specific raised bog habitats under the EU habitats directive.
In parts of the Bord na Móna estate, Lough Boora Parklands for example, rehabilitated bogs provide extremely valuable tourist amenities attracting more than 100,000 visitors every year. In many other parts of Ireland rehabilitated bogs provide valuable community amenities and a range of upsides including incalculable health benefits to people in those areas.
Bord na Móna began life as the Turf Development Board in the 1930s as a new company in a new Ireland that faced immense challenges. The young State needed to demonstrate its viability by establishing its energy independence and use Irish resources to make it happen. Bord na Móna was the instrument and demonstration of the State’s ability to deliver jobs and energy independence. Ireland and Bord na Móna now face another immense challenge. We are taking action in response to climate change and decarbonising our business. It is the right thing to do. All of us in Bord na Móna are keenly aware that we must make this work.
On a point of order, before we proceed to questions, I am sure all the members are dismayed that this document only arrived at 12.20 p.m. today. We cannot sufficiently prepare with respect to our contribution, questions, interests and knowledge in terms of what Mr. Donnellan has to say to us in that short given time. It shows huge disregard for what this special committee was set up to do, which was to examine how we mitigate carbon emissions and deal with climate change in this country arising from the Citizens' Assembly. I need to make that point because it is extraordinarily frustrating.
As we are short on time, I will keep everyone, including myself, on track. I will list some questions to get the best interaction with the witnesses before we bring in our next set of witnesses. One of the central planks of Bord na Móna's strategy is replacing peat with renewables and, what Mr. Donnellan called, greenhouse gas neutral biomass energy. Can he expand on how biomass will be greenhouse gas neutral, how much biomass into the future will be sourced domestically and how much will be imported? Has the company considered the implications in terms of air quality issues when large amounts of biomass are being burned and how is the company addressing those issues? Has Bord na Móna considered the sustainability impacts of importing biomass into the future, for example, the carbon footprint of shipping and road transport and also the displacement of food production? Also, how can we encourage Irish farmers to produce biomass when they can achieve higher returns from other types of land use? How is the company working with Coillte on bioenergy given their potentially complementary roles in this area? What impact will the move to co-firing with biomass have on emissions from the three midlands power stations out to 2028? Regarding the "just transition" process, what feasibility studies has the company undertaken to take into account the skills base of its current workforce and should all that work on feasibility studies not have preceded the announcement in recent weeks regarding the workforce and the impact that would have on them?
What support structure is needed from State agencies and Departments in respect of that just transition and to ensure that said transition is robust?
What proportion of the Bord na Móna estate has been severely degraded due to drainage and peat extraction? Are there figures for this? What work has Bord na Móna undertaken to identify this or to restore the boglands for the future? Are there calculations in respect of the carbon storage potential of suitable parts of the Bord na Móna estate for restoration? What are Bord na Móna's plans for the production of peat briquettes and peat moss post 2028?
Mr. Tom Donnellan:
I will first address what we call the just transition. We must phase out peat. Bord na Móna fully agrees with that and has faced up to it. We have made a decision, which was part of our announcement, to get ahead of this and stop trying to push back the tide or keep it going for as long as possible. We are committed to getting out of peat. There is no question about that, it is just a matter of how we do that in a practical and managed way. The first part is what we announced some weeks ago whereby we must reshape the company to get our financials in order as the public service obligation subsidies have come off. The first part of the process is consolidation and simplifying.
The second part relates to a just transition. We have been on a transition in recent years. The first was Edenderry power plant, which we started to co-fire with biomass. We will also move the two ESB ones to it. We regard this as best practice in managing a transition. One can look at the situation around the globe. Our neighbours in the UK have substantially adopted biomass to provide dispatchable power. In Scandinavia, ten plants are being constructed to burn biomass and, similar to what we are doing, another five are being converted. We feel this is a good practice that will allow us time to transition away from peat.
There was a question of why we would not do it sooner. Clearly, the sustainable supply of biomass is a challenge. We are very concerned and very conscious that it must be sustainable. Mr. Shier will outline how we will manage that. Its supply is constrained so we could not go 100% biomass at this stage. We will do it over a period. We have successfully developed the indigenous biomass supply chain. When we started co-firing the Edenderry plant, there was virtually no biomass supply chain in Ireland. We have now taken that to approximately 400,000 tons. In the region of 70% of what goes into the Edenderry plant is indigenous. The biomass we burn is saw mill residue and thinnings. We do not burn the trunk of the tree, we burn the top and bottom, the branches and what is left behind. We are working to develop the indigenous supply chain further because it makes much more economic sense and there is a lower carbon footprint. That will take time, however. A lot of work is being undertaken with Coilte, our sister company, whereby we are looking at afforestation. We are in discussions with them and have done some trials to see how we can increase afforestation in the country. There is a challenge in peat based environment because of the nutrients but there are technological solutions. We are exploring opportunities to increase afforestation by 20,000 to 30,000 acres in coming years which would feed into developing that indigenous supply chain.
Mr. Shier will speak on the sustainability of biomass and then I will return to the remainder of the Chair's questions.
Mr. Charles Shier:
It is not just a simple question of sustainability, biomass must clear several other hurdles. First, there is the EU timber regulation where one must be certain that if something is coming from somewhere else, that it has been harvested legally. Second, we have very tough and vital sanitary requirements. One may not bring what one likes into this country, the Department of Agriculture, Food and the Marine will seek to inspect it and, with certain species, ensure that it has been heat treated in order to prevent the importation of pathogens. The climate and energy package that has been going through Brussels has a whole new set of sustainability criteria that are past of Recast, the renewable energy directive, that biomass will have to meet into the future.
We have been working with an organisation called NEPcon, international experts in land use and sustainability, and have developed a suite of criteria with them which we will apply. We are quite happy that most things grown in Ireland under our own forestry regulations and so on will meet all these criteria. However, when trying to establish supply chains overseas, we must ensure that they meet these criteria, mainly because under the new regulations coming in the future, all the biomass that we use will have to be verified by a third party. That is part of what will happen under the renewable energy directive.
On the carbon footprint, the rules and regulations relating to this are laid down in the renewable directive in the context of emissions along the supply chain. We have quantified those. The directive sets out thresholds where once it is below a certain threshold, biomass is deemed to be carbon-neutral. Obviously, it has emissions but if they are low enough they are deemed to be carbon-neutral. Those are the rules that we will work with.
On indigenous biomass, a great deal of forestry was planted in the 1980s and 1990s and is now coming on stream. The volume available from Irish forests will increase over the next decade particularly from the mid-2020s. Unfortunately, planting rates have dropped back considerably in the past decade or so. We are not planting anywhere near what would be the target set by the Department of Agriculture, Food and the Marine and the forest service. That is a problem. We had worked with the Department over several years to try to promote an energy crop scheme because we see them as being a shorter-term solution. Forests take a long time to grow up to first thinning whereas energy crops are quicker. However, it is very difficult to persuade Irish farmers or landowners to change land use. We have found significant barriers to changing land use. This will have to be relaunched and promoted into the future if we want to grow more indigenous biomass from the agricultural sector in addition to forestry.
On emissions and air quality, it is true that burning biomass is like a solid fuel which leads to air emissions. All three stations operate under integrated pollution control licences. There are strict requirements on sulphur and nitrogen emissions and also particulates. They all have different types of filtration systems on the back end of the flue gasses, resulting in very low levels of air emissions, either on the chemical side or particulates. Burning biomass will not be any different to burning peat, the plants have to meet the same type of emission limits.
Ms Anna-Marie Curry:
Bord na Móna is trying to ensure that this is done through a voluntary scheme. Unfortunately, we do not know who will take that up. We have done considerable work with all the relevant authorities and there is a mosaic of different supports available. However, until we launch the scheme, and have the names, we cannot identify the specific skills.
We have had experience of doing this in the case of the Littleton briquette factory, where we sat down with each of the individuals and looked at their needs. We asked if they wanted to take the package and go immediately to other employment, in which case we would have been able to provide certain types of support. We asked if they needed upskilling, reskilling or certification of the skills they had been using in Bord na Móna, and we were able to provide supports in that regard. Some people opted to start up their own businesses and we were able to provide them with supports as well. We have been in contact with the relevant authorities at national and European Commission level on this. We can prepare applications but they all require the names of the people involved and the training courses they want to go on. We cannot take it to the next stage without those bits of information but we are ready for that stage as we launch the voluntary redundancy programme.
We have been working with the Department of Education and Skills on the globalisation fund and we are dealing with the climate action fund. Some of our funding options are for staff for the purposes of the "just transition" and some are for new programmes so that we can directly provide alternative employment ourselves.
Mr. Charles Shier:
I will differentiate between two bog types. Bord na Móna acquired bogs over the decades and some were drained but never fully developed for peat production, while others were never drained at all. Where drainage of a bog has occurred without peat production, the bog can be restored by simply blocking up the drains and bringing up the water table. Such bogs can become active carbon sinks and they are easy to deal with. On the other hand, some peatlands have been harvested over two, three or four decades. When one harvests peat, layer by layer, one goes back in time. In the post-glacial landscape, there were forests and fens, reed swamps and lakes and we will get back to recreating that kind of landscape mosaic. The higher areas will stay dry and will be colonised naturally with woodlands or they could be planted with plantation forestry, while other areas will become wetlands, fens and shallow open-water lakes. Over time, some will become carbon sinks.
Mr. Charles Shier:
They have but they are quite preliminary and we are still measuring the greenhouse gas fluxes associated with the different habitat types. We have done a lot of work on individual vegetation types, and what is positive and what negative, but we will now move to measuring greenhouse gas fluxes on a wider footprint, using towers to give us an indication of what a habitat will do. That varies from year to year, depending on the climate, but if one raises water tables and makes an area wetter it will, in principle, reduce carbon emissions. We might not get all the way to creating a sink but the source is less worse, so to speak.
I thank Mr. Donnellan and his company for coming before us this afternoon. Bord na Móna is an important company in my constituency and it has always been a great source of employment. It has been tremendous for the economy in counties Offaly and Laois and the wider midlands over decades. I welcome the statement about wanting to save the company. There were two ways one could have gone. One was to close the company altogether and the other was to do something to ensure the jobs which have been targeted for voluntary redundancies will be replaced under the new direction in which the company is going.
I understand the company has engaged with the local authority in Offaly regarding a stakeholders' meeting. That is the way to go because it provides reassurance to people who are used to having Bord na Móna as an employer. I understand that the voluntary and statutory redundancy packages have been placed before the Minister and he has approved them, which will be good news for staff who have been anxiously awaiting information as they consider where they are going to be next. Mr. Donnellan said he was targeting new jobs. What kind of timeframe can we look forward to for the 500 jobs that are planned?
On the question of the land use strategy, the company has 200,000 acres but what has it done to liaise with other State agencies? Much of the land is bog land but some of it is close to the greater Dublin area. Is the company considering the potential to provide the land for other uses? Lough Boora is the jewel in the crown of Bord na Móna in County Offaly and is a fabulous facility. Is the company looking at creating other amenity spaces? It is a treasure which is appreciated locally but is now becoming a major target for people who want to enjoy the outdoors. Is the company going to look at rewetting the bogs? How important are they to the land use strategy?
Cloncreen wind farm is in operation and the company is now working on a second wind farm. The company has good community relations with the locals but has it looked at the benefits to local people from new infrastructure? There have not been any objections but people could be impacted by new developments.
The question of the retraining and reskilling of staff has been answered and I note the liaison with the Department of Education and Skills and applications to the EU Globalisation Fund. Has the company had a look at the €500 million climate action fund, which is part of Project Ireland 2040? Does Mr. Donnellan see any projects tapping into that fund? Can he elaborate on virtual power plant services and the demand-side company in which the company has invested?
Mr. Tom Donnellan:
I will deal with the first questions but Mr. Reilly, who is our renewables expert, will deal with the question on Cloncreen. On the jobs timeframe, our ambition is to provide them as soon as possible. Some are more clearly defined and 50 jobs have been created at the tyre recycling plant, which we never announced but which were put in place in the past two months. The State does not do any plastics recycling but ships almost everything to Vietnam and China. However, we believe we can provide between 70 and 80 jobs in this area in the next six to 12 months. We think we can add between 50 and 100 jobs per year for the next two years in recyclables. When we eventually get out of peat, there will be another wave of job losses and we want to be ready for that. The power plants will stop consuming it in 2027 and we will stop milling it some time earlier. We are working through pilots on aquaculture and herbs but they will be medium-term jobs that are intended to replace those that may be lost in the next wave.
I agree that Lough Boora is the jewel in the crown. We are very happy with it and it is a great example of co-operation with the local communities and councils.
We are very happy with it, and it is a great example of co-operation with the local communities and councils. We have just agreed to launch a review of it with Offaly County Council to see how we could expand it substantially. Bord na Móna and Offaly County Council are putting money into it to see how we could develop it further because it is almost a secret. We want to see how we could develop, expand and utilise it.
We are working with a number of other areas. We have Mount Lucas, which attracts approximately 20,000 to 30,000 tourists a year. People go running there. Where we exit out of the peatlands we will work and support any community that has a proposal.
In the interest of time I will hand over to Mr. John Reilly who will speak about Cloncreen and the community benefit programme.
Mr. John Reilly:
In terms of the Mount Lucas wind farm in County Offaly, it is an 84 MW wind farm. We would have put in place a community benefit package, as we always do, when we are developing some of these large infrastructural projects. That particular wind farm is putting approximately €100,000 per annum into the local community. The package is split among a number of different areas. There is support for various projects locally. For example, in the village of Daingean, there would have been support for the laying of an astro pitch at a local national school where the grass was no longer suitable for playing on. Initiatives such as playground projects, which are community based, were supported also.
We are also continuing to develop what we call a near neighbour scheme where we are trying to make sure that the neighbours closest to the wind farm benefit most from the package. There is always conflict between the package and how it is disbursed locally and trying to make sure it benefits those who live closest to the wind farm. In that regard, we are looking at supporting energy retrofits, developing community energy projects, scholarships and so on. All of those type of initiatives are considered under the particular terms of reference of the scheme.
The other development we have done at Mount Lucas, as Mr. Donnellan alluded to, is opened up the site as an amenity. To answer the question on the development of further amenity spaces, trying to commercialise something like Lough Boora parklands is a challenge but where those amenities can be developed, co-located with commercial enterprises such as renewable developments such as wind farms, we believe that is the way to go. That is a very considerable amenity. It is opened up to people in terms of walkways and cycle ways. We have installed the outdoor fitness centres and so on, working in conjunction with the local community.
The final action we have taken in Mount Lucas is created an energy hub from an educational perspective. We get tens of thousands of school visits and visits from various interest groups where we try to tell the Bord na Móna story from start to finish. The real idea behind it, however, is to promote the fact that renewable energy is here and it is good, despite the challenges faced in developing major infrastructure. That project has gone very well.
It is our intention to continue to develop those sorts of packages around any of our wind farms or solar farms. It is interesting that the footprint of a solar farm will take up much more space. Typically, the footprint of a wind farm takes up approximately 2% or 3% of the land, therefore, there is a good deal of space for other developments including biodiversity and so on.
With regard to the question on the electricity exchange project, which is a very interesting one, one of the major challenges of any electric power system is the instantaneous balancing of demand and generation. As we move into the green space, most of the generation is being provided by what we call intermittent sources, that is, wind and sun. The sun does not shine at night time and the wind does not always blow, so managing that power system is becoming a greater challenge in terms of keeping on the lights. It is infinitely doable, but one of the techniques used for that is what we call demand side management. Rather than switching on generation when demand rises, there is an opportunity to take demand off the power system, for example, refrigeration, which does not need to be kept on all the time. The men and women in the electricity exchange are working on software. It is really a start-up software development company that can effectively use technology to instantaneously help manage that power system balance. When we have a power system like the one we are headed for, which will be dominated by renewable generation, managing intermittency will be one of the biggest challenges.
In terms of the biomass element, biomass provides instantaneous thermal load to help manage that power system, while providing renewable energy. That is one of the ways of doing it. The other way is on the demand management side. Bord na Móna is playing on both sides of that, effectively, we hope, contributing towards the achievement of national greenhouse gas emissions reduction targets and renewable energy penetration targets.
In terms of sequestered carbon, have the witnesses done any research on planting some tree species? It is a large land mass, and we are hearing that we need to plant more trees. What kind of work have the witnesses done on that?
Mr. Tom Donnellan:
We have established that it is difficult to grow in any managed way up to now using current techniques so we have developed some new techniques. We have seen that birch grows on our boglands and we have between 5,000 ha and 7,000 ha of birch, which is not counted as part of the State's forestry count. That is already in place. As we come out of peatlands, some natural forestation is taking place. We are working with Coillte on the type of crop that would be the most suitable, not necessarily from a commercial point of view, but from a decarbonisation point of view. We are still working through that. Mr. Shier might want to add something to that. We are still working through the type of species that would be most suitable, but they would be native broad leaf species.
I welcome Mr. Tom Donnellan and the other panel members from Bord na Móna. It is timely that they have come before the Joint Committee on Climate Action. As Vice Chairman of this committee but also as a former employee of Bord na Móna, I have a particular interest in the area. I have been frustrated for a number of years because I felt Bord na Móna would shut up shop. That reflects what people say to me in the constituencies of Laois and Offaly who are very concerned about the future of Bord na Móna. There has been a lack of consistency in Bord na Móna in the past decade or so in terms of trying to plan. I sense from meeting the witnesses in the past month that a renewal is taking place, that they are looking at alternatives and trying to develop new businesses. That is welcome, and we want to be with them on that in terms of fulfilling Bord na Móna's mandate for jobs in the midlands and developing industry.
Biomass will be a crucial issue but in terms of importing it, and Mr. Spier touched on this briefly, there is a huge footprint if we haul it long distances, be it from Indonesia, Africa or America. I know the witnesses are trying to play catch-up because it has not been developed here. In terms of the research, the willow scheme did not work out but silver birch grows naturally on cut-away bog and on marginal land. How far advanced are we with that in terms of developing those new supply chains in the midlands?
On the Bord na Móna plant in Edenderry, 70% of the biomass going into that plant is from indigenous sources. Will Mr. Donnellan outline briefly where that is coming from because it will surprise many people that 70% is from indigenous sources. It is already burning 50% biomass. In terms of the 70% from indigenous sources, where is it coming from and where could quick gains be made on that?
I understand the breaks have been put on the plans for the American plant but I would be interested to know if the company have plans to develop plants in other countries?
In terms of the jobs, the major fear is that the midlands will become what I refer to as the rust belt. Before Bord na Móna started up, there was very little else in terms of employment in many parts of Offaly and Laois.
My father, who worked in Bord na Móna, often said that this was the case when he started in 1950. There was little employment in towns such as Edenderry. The concern is that we do not go back to that. Bord na Móna will need substantial funding to make that transition. It is a successful semi-State company but it does not carry a significant profit margin. According to its annual reports over the years, it pays valuable a dividend to the State. That is a valuable contribution in terms of tax and PRSI. What funding do the witnesses think Bord na Móna needs to make that transition? Is the climate action fund a realistic option for the company?
Has Bord na Móna been talking with Government about the current subsidy for peat burning? Has it made a bid to have some of that funding hived off to make the transition to renewables? With regard to baseload, during the past session, the witnesses referred to it briefly with wind and solar. One can use solar during the day and wind at night. However, they are intermittent sources. There is a need to develop sources upon which we can rely for a baseload, or a continuous source of power such as biogas. I would like Bord na Móna to put more focus on that. There are opportunities to do that because we have a significant agricultural sector and a significant problem with agricultural waste. We know that because the Government had to go to the EU again recently regarding pig slurry, which other countries turn into power. They use that for generating power.
How long does Bord na Móna think it will continue with the sale of peat compost and peat briquettes? I have a particular interest in peat compost. Regarding the Garryhinch project, the management before the previous management took us on a bus to Garryhinch, which is a cutaway bog. There is a lot of talk about cutaway bogs and the environment. I have heard people talk about them who have never put a foot on a bog. Anybody who has ever been out on a cutaway bog would have seen that they have a significant environmental value because they are lower and easier to wet and there is considerable vegetation and wildlife on them. There is significant potential for Garryhinch to be used as a water source, for attenuation and to solve a problem and possibly create something. The River Barrow flows within a mile of it at the other side of the Mountmellick-Portarlington road. The Barrow is on one side of it and Garryhinch is on the other. For three or four months every year for the past number of years, the land to the right of it around Clonterry has been flooded and people have been unable to get in and out of their homes. Garryhinch bog, which is lower, is on the other side of the road. I am told that there is an underground culvert there but it would be very easy to use that for attenuation. Perhaps Garryhinch could be used for Bord na Móna's aquaculture plans.
Mr. Tom Donnellan:
We have been aggressively developing indigenous biomass over the years. Private forestry, sawmills and Coillte are our three main sources. We have been aggressively trying to ramp that up. When we started co-firing biomass in Edenderry a number of years, we could only source between 40,000 and 50,000 tonnes so at that stage, the majority of it was imported. We have increased that to approximately 400,000 tonnes this year. We think we are at a limit. We have hoovered up the easy stuff, if I could use that term, and now it will be more challenging. There needs to be serious planting and land use change to do that but we have some ideas and plans for that.
Funding for the transition is an important question. It is being borne by Bord na Móna and, therefore, the restructuring cost in our plan comes out of our resources. That is manageable. We are looking for all sources of funding because if we got other sources of funding to help decarbonise, we could do so more quickly and accelerate our jobs programme more quickly. That is something we will discuss with all parties at Government and EU level to see how we could secure more assistance in-----
Mr. Tom Donnellan:
This round of restructuring costs in the region of €50 million. It is a decarbonisation plan to cut our emissions by a certain level. It will probably cost another €50 million as we flesh out to 2027 or whenever we finally exit peat so it will cost about €100 million.
We also see a significant shift with regard to peat. We have two businesses in peat production. We have the retail business, of which 80% is in the UK. We see that business going peat free and we have been shipping peat free to the UK for a number of years. All indications are that it will continue to move in that direction so some of our large customers are saying they want to go peat free by 2020. We are still in discussions with them and we have not finalised that. If that happens, that will significantly reduce the volume of peat on our retail side. The professional peat side will continue for some time as it is used by the professional sector to grow food and there are not too many commercial alternatives.
There has been a decline in the peat briquette business. We still see a need. Approximately 20% of households in Ireland use solid fuel to heat their homes exclusively. We see a demand for that. We anticipate that as this problem is addressed and that as the carbon tax comes into play, sales of briquettes will decline. We will come back to the Deputy regarding the Garryhinch bog.
Mr. Tom Donnellan:
Bord na Móna is clear in its strategy. We are basically about jobs in the midlands, not anywhere overseas. If anyone comes over to source biomass or sell peat internationally, that is it but as regards plants and operations, we are a midlands-based organisation and have no ambition to operate around the world setting up factories or plants or expanding.
I thank Mr. Donnellan and his team for their presentation. Many of the questions have been asked and addressed so I will try to avoid repetition. Mr. Donnellan finished off where I was about to start, which is the mandate under which Bord na Móna was established and, in principle, the recognition of the necessity to address a jobs crisis that existed in that region. As the company goes through its transition, there is a difficulty with the loss of employment. I am impressed by the strategy it has set out in the documentation. The company accepts that it must move on. Others have identified that it would have been all too easy to wind down the company and start concentrating on other areas such as other areas of the world and not use the company's capital base and funding but it has not done that. Based on the presentation, management has clearly identified opportunities in areas that others have not identified. Bord na Móna is examining alternative energy generation sources, which is good, and has the appropriate lands for that. This is welcome in terms of where the overall energy strategy is going but, again, Bord na Móna rightly identifies that this is not its core mandate. It is seeking to create employment. When Bord na Móna talks about new opportunities, that is welcome and I hope it gets the support of other State agencies concerned with job creation, namely, IDA Ireland or Enterprise Ireland when it comes to the kind of supports that are necessary or that would be available to an organisation other than Bord na Móna.
When Bord na Móna was established as a semi-State company the rules of the game were very different from what they are now. They are based on our commitments within Europe and supports that have the potential to cause market distortions. I expect and hope that Enterprise Ireland and the Government will recognise, through other means, the assistance that Bord na Móna needs in that regard.
The witnesses have covered many of the areas in which I am interested. Bord na Móna owns a colossal amount of land so, for that reason, any other carbon sequestration opportunities that can be found would be great. Mr. Shier has clearly identified what can be done with peatlands in terms of regeneration and the rewetting of the bogs. One must consider whatever other land cover that can be provided. I come from an area that is well familiar with bogland and being bogmen, as it were, so we fully get mixed land use as the land is not terribly arable and some of it varies in nature. I ask Bord na Móna to develop a strategy on carbon sequestration in addition to the company's main purpose, which is to find meaningful employment for the people who reside in the area and from within resources. I ask the witnesses for their thoughts on how that might progress.
I like the idea that was mentioned, which is secondary, but goes towards lifestyle and ensuring, as society evolves and develops, that younger people have a better appreciation of nature and habitats. If we can inculcate or instill such appreciation in younger persons, it will allow them to live out their lives as citizens that are more in tune with nature and the environment than the generation that has gone before. Bord na Móna has many opportunities to have a meaningful impact on climate change and the management of our environment.
Mr. Charles Shier:
On the land issue, carbon sequestration is important but there is also carbon accounting looking ahead. Up until now we have had the EU emissions trading scheme, ETS, and the burden or effort sharing agreement, with which Ireland struggles. As Mr. Donnellan mentioned in his opening statement, from 2020 onwards, there will be a third pillar called land use, land-use change and forestry, LULUCF, that will have to be reported on in five-year blocks. Bord na Móna's peatlands fall into that category - not so much the product end, because that gets counted in the energy categories, but what happens on the land itself. That is why over the past decade we have tried to quantify the emissions generated by different types of recolonised areas and different types of land use. The cessation of harvesting does not stop emissions as residual peat still generates emissions and one way to reduce those is to rewet peatland. Another way is to plant high-growth or high-yield crops on such land. If afforestation is successful and is followed by quite a high growth yield, then the carbon sequestration from the trees is higher than what one loses from the land below.
One of the difficulties with increasing our own biomass relates to the accounting rules for biomass. If willow, for example, is grown on peatlands, even though it will not grow very well, we would have to count the emissions from the soil as well. If a residue from a factory or sawmill gate is used, then one cannot. If one grows a crop, and one uses all of that crop for burning, then one must also count the emissions according to the rules. That is why growing biomass on peatlands for use either in the power or heat sector is a tricky operation.
I was thinking more in terms of any vegetation that would be useful for carbon sequestration and perhaps not a cash crop. I recognise that Bord na Móna will no longer harvest peat. I am sure that much of the company's land will never generate any income or activity in the future but there is a potential that some vegetation will grow, which will have some carbon capture over and above what is normally done.
Mr. John Reilly:
Deputies Dooley and Stanley referred to an issue. Increasingly over the past couple of years, the company has begun to turn its attention to the challenges of decarbonisation in the transport and heating sectors. Bord na Móna is looking very much at anaerobic digestion, biogas production and ways to make greater use of our large landbank. In terms of these types of operations, we are also considering a technology called power to gas, which we considered about 15 years ago. For example, windfarms can be developed. When that wind energy cannot be used because the demand on the grid is not high enough, then it is used to create hydrogen as a chemical store, which can then be used in the natural gas grid and for methanation.
As the transition begins, we are considering ways to optimise our landbank. Bord na Móna's total landbank is large at 80,000 ha but is quite small relative to the total peatlands in the country, and most of it is no longer what we would call peatlands, as Mr. Shier has described. Looking at how we best utilise the landbank for infrastructural scale that can contribute to economy-wide decarbonisation, not just in the electricity sector on which we have been focused for years, but on the transport and heating sectors. We have a new programme, which we have put a lot of time and investment into, and we hope to be able to make some contribution in those sectors going forward.
I apologise for being slightly late to this meeting as earlier I had to attend a meeting in Belfast on the environment, climate change and agriculture, which are issues pertinent to this conversation.
A managed transition is referenced a number of times in the documents presented by the company and it is critically important. We have a tendency in the agricultural sector to focus on concerns and not the opportunities whereas other industries tend to focus on opportunities and not concerns. We must deal with that.
I wish to refer to Bord na Móna's full life cycle calculations. When we consider carbon capture, carbon sequestration, which has been mentioned by other members, the rewetting of the bogs and their potential to create opportunities, and the full life cycle, are the full environmental impact and benefits of biomass importation being considered? A colleague of mine grows asparagus in the south of England. The factory that processes his produce and the supermarket that sells it are located close to him. Shockingly, the asparagus that he imports from Peru has a lower carbon footprint than that he grows in the south of England simply because the kilogrammes of dry matter that he grows in Peru is three times the volume he can grow in England. Has sufficient work been done on the full life cycle calculations in some of these areas? In other parts of the agricultural sector, in particular, we have been good at doing such calculations. Sadly, we look a pretty disreputable bunch of people when compared with other industries that do not produce life cycle calculations.
Mr. Charles Shier:
There are three criteria for biomass. First, its must be ensured the biomass has been legally harvested or harvested in compliance with national legislation or whatever.
Second, one must make sure that wherever the biomass comes from, it is accounted for in the carbon balance for that region. The new rules stipulate that one must take it from a country that is a signatory of the Paris Agreement. Not only that, the country must have rules and programmes in place where they report their carbon balance on the land side back to the UN. If a country does not have that, then one must carry out an assessment in terms of the fact that the carbon in the forest area, for example, is not being depleted by what one takes out of that land.
As I said earlier, the accounting rule for deeming biomass to be carbon neutral is very precise.
It is quite a long, detailed equation which can be seen in annex 6 of the renewable energy directive. We have to account for every bit of the harvesting procedure, including the energy use for transport and shipping if the biomass is being shipped, and landing it in port and so on. The shipping end is the easy end. People ship stuff all around the world, including oil, coal, gas, grain, and wood. Wood is not necessarily shipped for energy but the pulp and paper industry ships it. We are talking about very big vessels of 30,000 to 40,000 tonnes. There are probably only three ports in Ireland where we could land that, and only two in practice. In Dublin we could land it but there is not the storage; 40,000 tonnes of biomass is a pretty big pile on the dockside. In reality we are looking at Greenore or Foynes as the two ports where we could bring in that size of ship. With such big vessels, the carbon footprint of moving stuff across the sea is very low. The carbon footprint of moving it from port to plant is probably higher than for shipping it across the ocean. At any rate, all of that has to be accounted for in the supply chain.
It was also stated that it is pretty hard to get people engaged in planting biomass. I have always found in engagements with agriculturalists and farmers that the words "forest" and "forestry" turn them off very quickly. Has much work been done on strategic planting, that is, not taking agricultural land out of production but taking some of the more marginal land such as the riparian strips and biomass corridors? I am referring to initiatives where the planting is additional and complementary to agriculture as opposed to something other than the conventional agricultural practices?
Mr. Charles Shier:
What we have tried to do is put forward some short rotation as a crop. As the Senator said, forestry has a long-term implication and replanting obligation so effectively the land is locked up forever, whereas with a perennial crop a farmer can come back out at the end of a contract period. In general, it is necessary to have quite good land to get the type of yield that makes the economics work. We worked alongside the Department of Agriculture, Food and the Marine for a number of years to try to promote this. Invariably people wanted to plant the wet, boggy corner of the farm because it was not doing much for anything else so they thought they might put it into biomass. The reality of the type of species and the breeding that is going on is that they are high yielding clones but they need high quality ground to get that yield out to make the economics work. The riparian strip is an interesting one, though. It has other benefits in terms of run-off, nutrient capture and so on. That area is worth pursuing.
Have products like hemp been considered in the biomass discussion, or some of the newer products? They are not new, to be honest, but they afford an opportunity to utilise proteins, oils, and soil bioremediation and decontamination as part of it. There are other benefits to those type of crops than being purely a cash crop.
Mr. Charles Shier:
We have been talking to Teagasc on the research it has been doing at Oak Park in Carlow on a range of different crops that could perhaps have multiple products and markets. Part of it would come into a biomass direction. One of the problems is that woody materials are suitable for the power plants from a chemistry point of view. For example, a lot of people planted miscanthus in the past, even before the scheme got going here. We ended up burning some in the early days to help out people who were stuck because there was no market. However, miscanthus is a grass and the chemistry of grass does not suit boilers and tends to corrode them. We have to be careful how far we go from woody material in considering grass or other types of material because the chemistry is simply wrong and does not match.
My next question was pertinent at the weekend because there was a bit of discussion in the North about it. Some 100 years ago in the bogs of Ireland a huge opportunity was capitalised on with regard to sphagnum moss. It holds antiseptic properties and when the First World War was raging and there was a shortage of bandages and dressings, all of a sudden something was coming out of the bogs of Ireland that was hugely beneficial and had a value. Is much work being done with researchers and the institutes and universities to examine other opportunities, apart from the aesthetic value of a bog or rehydration or re-wetting, to capture carbon and derive a benefit and a value from bogland?
Mr. Charles Shier:
There are. There is an international group that is active in a number of countries researching growing sphagnum moss, not just harvesting it from bogs. If a bog is preserved, we cannot really go and steal the carbon from the surface of it. Growing sphagnum on a sustainable basis is a Holy Grail of the horticulture industry because if that could be cracked, it would provide a sustainable supply of sphagnum which they regard as the best material for growing plants and particularly for propagation. However, very particular and precise conditions are needed to do it. Sphagnum cannot be cultivated on cutaways because the water table has come down through the years and there is an influence of mineral material in the bottom which sphagnum does not like. It has to be done on a bog that is still very well up to profile and that has acidic water conditions. Then there is the difficulty of balancing between summer and winter. We tried it on a small, pilot scale in Kilberry near Athy. In the winter it was flooded and in the summer it was high and dry. On a small scale, I would say "Yes", but to do it on a big scale over hectares we would have to laser level areas and would need very precise water control. We would also need to stop other things coming in. There are pilot programmes going on in different countries looking at that point.
If I may come in again briefly, reference was made a number of times to anaerobic digestion, AD, which is getting particularly bad press at the moment, some of which is very unfair. The growth of AD is not being managed strategically or in an organised fashion. Could there be a role for some of the organisations and maybe Bord na Móna to manage strategic growth in that area or to look at managing smart energy across the island? At the moment it is happening in an ad hoc, sporadic way and is not controlled or managed. There is no silver bullet that will fix this energy crisis and address the renewables issue but someone needs to take this in hand.
Mr. John Reilly:
Our twin pronged approach to extending the core of our business is about our power generation business - the electricity business - but also very much about our resource recovery business, as we call it. Bord na Móna has always viewed AD in the first instance as a waste management solution. However, with Origin Green and with the ability of the land to take residual materials getting tighter and tighter, particularly from the agrifood sector, we think AD at scale is certainly likely to have its day. In terms of the economics, the main focus in the last ten or 15 years has been on what renewable energy can be produced from AD. In the scheme of things it is relatively expensive. However, the picture changes if we consider AD in the first instance as a sustainable solution to waste management, particularly at scale. There is a possibility of taking the biogas that is produced there and we are producing electricity from biogas from landfill. We have learned a lot from that. We believe directly injecting that methane back into the gas grid or potentially using it as compressed natural gas - a renewable gas as it is defined - will help the decarbonisation of the heating and transport sectors. The project we are developing in Laois is focused first and foremost on doing it at scale, using that landbank to collect the waste, and then examining the direct injection into the gas grid of the methane or biomethane produced. We have had great co-operation with Gas Networks Ireland. This is something we could not have done four or five years ago. It is the real manifestation of decarbonisation with organisations and companies working together. The technical end of it is doable. With all these things it comes down to the commercials but we are going to work very hard at trying to deliver projects at scale that can make a contribution. We believe that over time, in an increasingly carbon constrained world, these types of technologies will become increasingly commercial.
I will be as brief as I can. As a Kildare South Deputy with Newbridge, Kilberry and Drehid in my constituency, Bord na Móna's remit and role are very important to me.
I am aware that Bord na Móna's history has involved not only harvesting to provide fuel to generate energy but also the generation of a large number of jobs. This remains the case in Kildare and across the midlands. Bord na Móna faces a considerable challenge with decarbonisation and in continuing to generate fuel and energy through renewables and resource recovery. It also faces a challenge in maintaining its position as a critical employer in areas such as Kildare, where jobs are crucial. In that context, I welcome that the Minister has agreed to the redundancy package. It is much improved by comparison with that offered in 2013. I look forward to staff having the time to consider the package. It was not ideal that there was a gap between details of the package emerging and the announcement of what was being sought in terms of redundancies.
There is much concern in Newbridge, where most of the administrative and management jobs have been located. As a result of uncertainty regarding who will take packages and where the job losses will be, there is concern that Bord na Móna will consider the future of its base in the town. Are our guests in a position to provide an assurance the Bord na Móna will stay in Newbridge and that the town will remain central to everything the company does? This is really important, not only for the employees in the area but also to secondary businesses and those whose jobs have been created indirectly.
In Kilberry, there are 70 or 80 staff employed at the peat moss operation. Have existing customers signed contracts for 2019? Do our guests envisage a significant reduction in operations next year? Do they hope that the operations can continue? In the longer term, as other companies and Bord na Móna's customers move to becoming peat-free, what will be the opportunities for the site in Kilberry?
I was interested to hear about the links with the likes of Offaly County Council in certain areas. Has there been engagement with Kildare County Council? Have there been discussions with the excellent people in Kildare local enterprise office to examine the future options to ensure we can continue to provide very important jobs in the area?
I will not elaborate on the climate action funds, amounting to €500 million, into which the company will need to tap. They will be really important. I completely accept the point that the company needs financial support to do what it wants to do. Bord na Móna's greatest asset is its staff. Its second greatest asset is its landbank. I am really encouraged by many of the positive initiatives in which the company is seeking to become involved. In that context, anaerobic digestion has considerable potential.
What are the links with Departments? What strikes me most at meetings of this committee is the need for a whole-of-Government approach involving accessibility and the interlinking of all Departments. Everything Bord na Móna is seeking to do directly involves Departments. Can our guests outline whether they have a direct line of contact with the Department of Agriculture, Food and the Marine regarding land use and the Department of Education and Skills in the context of the application for the globalisation fund? How important will the latter be? The Department of Communications, Climate Action and Environment will be very important in the context of renewables. The Department Transport, Tourism and Sport will be important in respect of electric cars, developing supports in this regard and the tourism element. Biodiversity is very significant. Could the delegates outline their plans for the Drehid landfill and the movement from waste to gas?
Mr. Tom Donnellan:
I will try to be brief. Newbridge is our headquarters and remains so. People in Newbridge are saying, "Newbridge or nowhere." We are staying there. Kildare, including Newbridge, has been very good to us and very supportive of us.
The Deputy is more than familiar with the Drehid site. It is an old site we would like to develop and upgrade. We would like to spend a bit of money on it because we are not going out of business. We are reinventing ourselves and diversifying, and we are building for the future. Clearly, we see Newbridge as the place we will be based in this regard. That is critical. Some of the management and administration jobs there will be affected. As the package will be voluntary, we will try to manage the operation in a fair and just way. We will give people lots of time and work with them. Our desire is to make the process as smooth as possible.
We have been very open and transparent with the people in Kilberry. As we go through change management, our approach is to be open and transparent. We find that works best rather than coming with surprises. Our approach is to tell people what is going on. We have been upfront with Kilberry on what is going on with the customers and the peat-free agenda, especially in horticulture. We have confirmed to the staff that, for the 2019 season, customers have confirmed they will place the orders. There is a big question as to whether the large UK customers will go peat-free in 2020. As a result of the fact that we manufacture the product in Kilberry, we are trying to convince the customers not to go peat-free. We are having that discussion. We are being very upfront with the Kilberry teams on that. As soon as we have any information either way, we will be first down there. We are also examining whether there are other opportunities in the area. It is a green waste facility and has a licence. If the UK customers say they are going peat-free, there will be a significant impact on Kilberry but there is no question that we want to pull out of there or anything of that nature. I reassure the Deputy on that.
The Deputy and others made an important point regarding links with Departments. We are open to all the support, ideas and help we can get. We are not looking inwards but outwards. We are going through a significant transformation, which presents many challenges. We are working with some Departments. We know them well and are getting doors opened where we need them opened. We welcome any offers from everybody on the committee in the context of opening further doors. We are working with Enterprise Ireland, which is really helping us. We are working with the Department of Agriculture, Food and the Marine, we are working with the Department of Education and Skills on the European funds and we are working with the Department of Transport, Tourism and Sport. We must broaden our reach in terms of who we work with. Given the number of areas we are getting into, whether energy, tourism or funding, we have to work the network. I would not say we have got it sorted out but we are getting at it. We have got a concrete plan as to how to do it.
The final question was on Drehid, which is a very well-managed, successful landfill site. We have significantly reduced the amount of tonnage there. We see a future for the site. Planning permission has been sought for an extension. This is currently going through the process. We are carrying out some environmental impact studies. Subject to the extension of planning permission, we will be continuing in the area for the foreseeable future.
I will get straight to the point. On the issue of the transition, it is essential that we achieve a low-carbon or zero-carbon economy in addition to the company's objectives. Much of the presentation referred to issues that will arise in the midlands when the company stops burning peat, including the question of what the transition will involve, the impact on staff, plans for 500 new jobs and the creation of sustainable businesses. The latter is very welcome. I know well the impact of the closure of a power station because the one at Bellacorrick was closed. The region in question in north Mayo is pretty devastated and has not recovered because the plant was a major employer. I would like to believe that in all this, there can be a re-examination of these areas, which were so loyal and serviced Bord na Móna.
I am aware of the plans for the 172 MW wind farm in Oweninny. It is under construction. The community has for the most part accepted the building of the wind farm. I was at the oral hearing. There were community representatives present and they said the will accept the wind farm but want community gain and benefits because the community is crying out for some investment and support because of the closure of the peat-burning power station. This is a topic on which I have written to our guests. This project is not going well. The community has accepted the wind farm, yet there is a serious conflict over a community fund and how it is to be administered. I refer to benefits for the people most immediately affected and those whose visual amenity will be affected by virtue of the turbines, which are to be nearly twice the height of the cooling tower. I cannot figure out why, with all Bord na Móna's stated ambitions to benefit communities and have sustainability, there are people protesting near the site. They are concerned about the operation and construction of the wind farm but they are also anxious about the fund. Some €232,000 per annum is to be distributed in the community. I have heard some Bord na Móna representatives say communities sometimes do not have projects on which to spend a community fund in its fifth or sixth year, yet the community in question is asking that individual households within a certain radius be looked after.
When I raised the need for intervention, the response I received was that people are on the ground. That is not working, however, and there is a need for intervention at a more senior level.
The matter has been batted over to Mayo County Council, but Bord na Móna and ESB need to show more leadership on this. This can be a good news story and a formula can be found for individual households to benefit. The community centres and so on are good, but this is a burning issue. I would like to see the fire quenched and the issue dealt with. No more oil must be poured onto the fire. A message should be communicated that this is all fine and under control and that the money will be there. Communities deserve better and need to be engaged with more. Every community will have its issues. Those issues need to be tackled in this instance, particularly as the money is there and there is support for the wind farm. Can we not make this work?
Mr. Tom Donnellan:
Mr. Reilly has spent night and day working on this topic. We are well aware of it and we share the Senator's concerns regarding what is happening. Bord na Móna is a commercial semi-State body and we do not exist to see how much money we can make at communities' expense. Rather, we are there to provide jobs and renewable energy and to decarbonise the economy. We have form in this area. We have built wind farms and have put community gain schemes in place. We have always found a formula and a way through any difficulties. I commit today to do our utmost to find a formula and to make it work for the community because that is what we are about. We are not a big private industry that takes advantage of local communities. We know communities are important. Most of the communities in this instance include people who have worked for Bord na Móna, which is why we have been accepted throughout the country, especially in areas where we were able to develop renewable energy. We are engaging on the issue, which is on my radar every day. We have not pushed it off to the side.
Mr. John Reilly:
The Senator is right to say the total fund per annum is approximately €232,000, which represents in the region €6 million over the lifetime of the project, but the question is how that money will be allocated. The decision to involve Mayo County Council was prescribed in the planning. The crucial aspect is that Mayo was responsible for the administration of the fund, but the governance of the administration of that fund will require the establishment of a board, which will include a member from the wind farm development company, two members from the local community, two members who are local representatives and two members from Mayo County Council. We understand the locals' concerns, which are about how this money will be distributed and by which mechanisms it will distributed. At this time, we cannot prejudice the operation of that board, but we are fully agreed that we, as the developers of the wind farm, want to see a governance arrangement that will allow the bulk of that money to flow locally. As Mr. Reilly stated, we will work tirelessly with Mayo and the board to ensure that happens in the best interests of the local communities. We can assure them of that but they are looking for prescriptive guarantees. We cannot prejudice the workings of the board but we know our seat on that board will be fully aligned with the two local representatives and, we hope, with the elected representatives from the local community. That would be five out of seven who will ultimately determine exactly how the money is distributed. We will work with the local community in that regard.
Mr. John Reilly:
Not at all. To move this on, we made recommendations to the local communities because we constantly engage with them. Many of those engagements are positive. While some of the engagements are tetchy and stressful at times, we recently advised the local community that to move this on we need to engage directly with Mayo to get the mechanism up and running in order that people can have some confidence. I am aware that this week, on foot of our advice on that basis, the local community wrote to the local authority to request formally a meeting about the set-up of the fund. Bord na Móna thinks that is the best way forward because it will allow the board to be put in place. The board will ultimately decide how the money will be distributed.
I fully agree with Mr. Donnellan when he said it is critical to get this transition in Bord na Móna right. It is a proud, brilliant company with a great workforce and, therefore, we must get it right. I have a terrible fear that it is being led down a cul-de-sac in the context of an unsustainable approach in promoting the continued firing of biomass in power generation. No one I know in the environmental sector, nor anyone I know who has expertise of energy, thinks it will be sustainable. Two thirds of the energy goes up the chimney as waste heat, for example. As the Sustainable Energy Authority of Ireland states on page 13 of its most recent report in the context of renewable heat and where we need to use biomass, "Increased use of biomass for electricity generation ... reduces the national biomass resource available for business looking to use it for renewable heat". It also states, "It also increases the cost of the biomass resources for heat ... [by up to] 4-fold". The target from which we are furthest away is that relating to renewable heat. If all three stations are converted to full-scale biomass, that is, without the use of peat, how many tonnes of biomass will be needed? Is Bord na Móna still considering importing biomass from the USA? It was considering the purchase of a forest in Georgia. Is that where it might be imported from? How many tonnes of biomass will Bord na Móna need?
Mr. Tom Donnellan:
Over the next ten years, as we co-fire, we will need approximately 1.3 million tonnes, some 400,000 tonnes of which will be indigenous, that is, sourced in Ireland. We believe we can grow that over the next three or four years to approximately 600 tonnes. In the region of 50% of the biomass will need to be imported.
Mr. Tom Donnellan:
We wish to buy it from wherever is the best source of sustainable biomass. That may include America, but we are not targeting it because there are many issues with importing biomass from there due to the need to sanitise it. The programme to which the Deputy refers was to import pellets, but they will not burn in the power station. America is probably the least likely place from which we will import biomass.
From an environmental perspective, in a world where everyone will have to decarbonise and where biomass is critical for heat and combined heat and power with 90% efficiency, using it for power generation with only 30% efficiency makes no sense. There is a real risk that the company will be worked into that dead end and it will not be sustainable or continued. Another transition will then be required in five or ten years' time. How many tonnes of milled peat does Bord na Móna export, or how many does it intend to export, for that commercial horticultural product?
Has any analysis been done of the value the peat would have if it stayed in the ground, in order that the bogs were not opened up, and if it was done as a carbon store? What would the value of that be compared with the value of selling to horticultural growers in Holland or England?
Mr. Tom Donnellan:
There has not been any specific calculation in that regard. Our intention is stop using peat. We recognise that it is not good practice to be in the peat business.
That is the statement we put out in the past few weeks and we are working on this transition. We could decide not to go far with biomass, or not to export the peat for the horticulture business but we have a big landbank and all the employees working directly and indirectly for Bord na Móna, approximately 4,000 today, would be homeless. We are trying to come up with the best balance. We are not trying to turn back the tide and say this is good, it is okay to continue to be a fossil fuel provider. We are saying we want to get out of it as quickly as we can, and we want to build a renewables and recyclable business. We want to move from brown to green. It is a question of how quickly we can get there. We have come up with an aggressive balance. We have been criticised for that in some quarters because it involves more than 400 employees losing their jobs. That is a conscientious decision we have to make. I do not dispute any of Deputy Ryan's points regarding impacts on the environment or anything like that.
I would love Bord na Móna to boom. Why is it that Mr. Donnellan mentioned nothing about retrofit in his presentation? Mr. Andrew McDowell, the head of the European Investment Bank, EIB, was in Dublin last week and he said that he estimates there is a €50 billion business in this area in Ireland and the main problem is he has no counterparties who are looking to lend in that area. Professor John FitzGerald told this committee we would have to spend €5 billion on social housing alone. Irish Rural Link said at the national economic dialogue that it cannot get workers. Paul Kenny of Tipperary Energy says this business is dead in the water because there are no workers available for it. Given Bord na Móna's superb logistics abilities, mechanical and other engineering capability, why would it not switch the company, and its ability to borrow and lend, and do this on a big scale? We have to be doing 45,000 houses a year within two years, at an average cost of €30,000 or €40,000 per house. We should go to every house in the midlands and retrofit, with Bord na Móna leading the way. How come it has not considered the retrofit energy business? I know it considered it ten years ago. Why has it given up on that side of the business?
Mr. Tom Donnellan:
When we stood back and considered what Bord na Móna can do, which uses our landbank and skill set, is in line with Government policy and commercially viable, we came up with projects such as aquaculture, which provides food using a low carbon intake, a herbal product, renewable energy and recycling. The retrofit is something we could do if we want to keep people busy but, as a semi-state company, we do not think it fits with our brief. Private industry is doing that and we have to be selective about what we do. We have come to the conclusion that the areas that will get us 100% out of peat over the next ten years are the ones we have identified. That is open to debate.
Mr. Tom Donnellan:
That is a very good question. I joined the company six months ago and there were two schools of thought: one, we can stay in it forever or as long as we can and the other is that we need to get out of it. We have made a decision as a management team over the past six months to get out of it. That is the right thing to do. We are not climate change deniers, we are not trying to turn back the tide. I am not trying to give a convoluted answer. The impact of getting out of it without an alternative will be devastating to the communities and the employees, especially the communities because Bord na Móna and the communities are the one thing in the midlands.
I understand that. It is important and Bord na Móna has a bigger role because people have to live regardless. I wanted to get to the bottom of how long it has known this. Mr. Donnellan says the past six months.
Everybody has known since the early 1990s and Bord na Móna has been aware since then as well but it has been getting into a transition programme for only six months. That is not only true for Bord na Móna but the State and everything else.
Mr. John Reilly:
Bord na Móna has been involved in the transition programme, going back to when we put the first morsel of biomass into the Edenderry power station in 2008, irrespective of the rights or wrongs of it. We had begun to recognise the need to decarbonise and, thus, reduce our carbon footprint a decade ago. The transition has been going on since then. Mr. Donnellan made a relevant point. It is not just Bord na Móna and companies like it that are grappling with this. Society is grappling with this. The Deputy and I are grappling with it.
The manifestation of the reality of the challenge that faces us has only come about in recent months. We are now getting down to the nitty-gritty of doing the right thing and what we have to do. The impact on jobs will be significant. It is a matter of how we manage that. We could switch the light off in the morning and walk away, which would create lots of problems. We think we have been positioning ourselves from a diversification perspective so that today more than 50% of Bord na Móna's income and revenue stream comes from areas that are not related to our core peat activity. We had to get that piece of the jigsaw in place first. We are now at the point where we do not have to shut down and turn the lights off and we are beginning to aggressively move forward in respect of the core transition activity, which is to move away from peat production, something that has served the company and the State well for 80 years. We have realised, however, over the past decade or so that the end is coming and the question is how to manage that transition and that end. It is not going to be easy. We do not have all the answers. First and foremost, we have an obligation to our staff and the communities we serve and the plan we have put in place is to try to accelerate that programme.
It is worrying from the point of view of the State. Bord na Móna has known for only ten years and the State does not seem to know yet.
Mr. Donnellan said, after talking about renewable energy projects and so on, that investments in this area will support the creation of considerable numbers of long-term jobs. What are the long-term jobs?
Mr. Tom Donnellan:
There are some jobs in maintenance and servicing of the power plants, etc., not many, but good high-quality jobs. In the past year, we have hired 20 software engineers for the company we have just bought, which Mr. Reilly mentioned and which does 50% of electricity exchange. Our resource renewable business is employing 300 people and, as we move up the value chain on that, it will probably get up to 400 or 500. The long-term jobs which we are investing in are in the aquaculture and the herb-based business. They are low-carbon jobs in growth areas.
We have done some research on them. We will try to get them to a business case and do our damnedest to ensure they create 500 and more jobs in the medium to long term. We are committed to that because our remit is not simply to be a commercial semi-State. From day one, it has included the requirement to be a creator of jobs in the midlands. We take that very seriously. If we do not do it, we will have failed. If we do not do it, decarbonisation will be seen negatively. It will appear that the people in the midlands and Bord na Móna are carrying the brunt and that the company has not reinvented itself. Our daily prayer, to use that expression, is "How are we going to create jobs?" We have our best people on that working with Enterprise Ireland, the IDA and Bord Iascaigh Mhara on how to do it.
When will the company conclude the negotiations? If it does not have an answer to that today, it could perhaps provide a note on the process. If we are reflecting the views of the Citizens' Assembly, it had a clear majority in favour of looking after workers in this process. It is clear from the language that it is the company's intention to do so, but it would be useful to add detail. Even a note providing more detail would be welcome. This is a front-line sector in which we face job losses to mitigate the effects of climate change. As such, we are conscious of the need to ensure workers are protected. I would like a note on how the process is being managed, what the end game is, when it is hoped to conclude it and what the projected outcomes are. How many hectares will be deemed to be usable as carbon sinks at the end of the process? I listened with interest to Mr. Shier earlier on some of the challenges in that regard and it would be useful for the committee to have a more detailed note on the potential for carbon sinks. It would help us in the preparation of a final report reflecting the views of the Citizens' Assembly.
Mr. Charles Shier:
Not here, but we have a framework on future land use covering all sorts, including renewable energy, forestry potential and commercial applications. There are areas along the Shannon valley in particular which we know will be easy to rewet or reflood whereas if we reflooded other areas, we would have a lot of water meadows in the surrounding farmland which is a place we are not going to go. There are areas that will be used for woodland and forest.
Mr. John Reilly:
I remind members in circumstances in which people sometimes think Bord na Móna is responsible for the entire peatland area of the country that our total landholding is only, albeit I do not say it lightly, 80,000 ha. Even if we were, in time, to put 50% of that into something commercial from a sequestration point of view, it would still be relatively small in the context of the contribution of the State to the overall balance of land use.
I do not expect an answer today but I also ask for a note setting out what the electricity exchange DAC investment is about. While it seems self-explanatory on the face of it, a more detailed note would be useful for the committee.
I thank the witnesses for the presentation. I have a few quick questions. Mr. Donnellan was not there at the time, but Donnelly's Coal in Galway was closed last year with redundancies. This Christmas, the coal yard in Sligo is closing and Bord na Móna is involved in that. Derryfadda on the western side of the Shannon is out of peat production. Mr. Donnellan referred to 150 jobs going but he needs to be honest with the committee. Those are redundancies and the jobs are not being replaced. Wind turbines do not replace jobs. I have listened to Mr. Donnellan talk about Kildare and it is positive that Bord na Móna is going to keep its head office there. He referred to going into aquaculture, which is a seven-year project and, having spoken to his people myself, I understand it may not work. Bord na Móna is also intending to grow herbs for medicines, but that may not work either. We have no plan going into the future. What is envisaged west of the Shannon, which is an area that has been good to the company down through the years? There are 50 to 60 jobs going in Derryfadda and there will be no production west of the Shannon from next January. It is a place that provided the company with good workers and which co-operated with it down through the years.
I refer to biomass. What is the carbon footprint of a tonne of biomass brought from north Africa, Australia or parts of America? Can Mr. Shier provide the accurate carbon footprint per tonne? The witnesses referred to growing some in Ireland. I have spoken to farmers who are in Bord na Móna's biomass scheme currently. It costs €400 an acre to rent land in the dairy sector in the south of the country. In other places, it may be between €200 and €250 an acre. Biomass is not providing returns. Is the company calling on the Government to provide a proper subsidy? It is in wonderland if it thinks farmers will go down the biomass route on the basis of the figures mentioned. We have heard about fuel security and the green agenda over the past number of years. Everybody in the country is being told that if we go green, we will not need imports. The witnesses can correct me if I am wrong, but if we go down the biomass route, we will import €65 million to €120 million of extra imports between now and 2027. That money will go out of the country on foot of the decision Bord na Móna has taken in the past six months.
Mr. Tom Donnellan:
I will take the questions one by one. The decision we announced in the past few weeks was difficult. I do not want to sugarcoat this and say we have a plan to replace all the jobs in the short term. That is the harsh reality with which we are dealing. That is why we are trying in the short term to work with affected employees and to proceed on a voluntary basis. While some bogs will close, we are working with those people.
Mr. Tom Donnellan:
Yes, and we are working with those people and the group of unions. If everyone in an area does not want to take voluntary redundancy, we are determining whether we can relocate them. We are trying to do this in a fair and measured way but we do not have all the answers. I do not want to dress it up as if this is all fine and dandy because it is not. We are talking about more than 400 people losing their jobs, which is the harsh reality of decarbonisation hitting our door. As we develop these medium to long-term jobs, the Deputy is correct that they might or might not work, but we are going to give it our best shot. If they work, we can deploy them in many areas. First, we need to establish if we can get things on a commercially viable footing. We are doing our pilots and trials and if they work, we can decide where they go.
Mr. Tom Donnellan:
We decided to put a pilot in a particular area. The reason we put it in Mount Lucas was that there was a wind farm there with road and electrical infrastructure in place. It was the most cost-effective approach. There was no reason other than the presence of the infrastructure which meant we could drive in. We have made no decision about whether it will be west or east of the Shannon and we will keep that in mind as we go forward.
The Deputy is correct that growing biomass in Ireland is challenging and requires further Government support. We are working with the Department of Agriculture, Food and the Marine and it needs a step up. I share the Deputy's concern that importing biomass does not make sense. As part of the just transition, we have no other option in the short to medium term. We would love to see it developed here and have 100% indigenous supply, but we do not see it happening anytime soon. We are working hard, however. If we can get improved grant schemes to make it commercially viable for farmers, it is something we can all work on together.
We are with the Deputy on that. Does Mr. Shier have anything to hand on the carbon footprint and biomass question?
Mr. Charles Shier:
No, I do not. I can say in principle that for biomass to be sustainable, the carbon footprint of the supply chain must be a certain percentage below what the Europeans call a fossil fuel comparator, which is a figure set for everybody across Europe. Obviously, energy is spent getting biomass harvested and processed. I refer, for example to the chipping and transportation of materials. No comparison is made with the fuel being replaced, such as peat. A comparison is made with the average emission for the European grid, based on gas and coal plants in the European system. It is 183 MJ-----
I would like to make sure I understand what Mr. Shier is saying. Obviously, gas and coal have to be brought from one place to another. Is Mr. Shier telling me that when we are comparing, the comparison cannot be with the little train that is used to bring peat from the bog in the midlands to various places? Is it the case that the comparison must be with gas and coal?
Mr. Charles Shier:
The comparison is not made per tonne; it is made per megawatt hour of electricity. The fossil fuel comparator is 650 kg of carbon dioxide per megawatt hour. We have to be less than 70% of that, which is approximately 200 kg of carbon dioxide per megawatt hour. If biomass is less than that, it is deemed to be carbon-neutral, in effect. That does not mean it is carbon-neutral, but it is deemed to be carbon-neutral.
I understand. I will be as brief as I can. I do not want to repeat what has already been said. The ramifications and repercussions of decarbonisation for the region have been and are great. If Deputy Pringle were here, I would remind him about the closure of power stations in Ferbane and Rhode and the loss of the associated harvesting jobs. A decline has been evident in the region, particularly in County Offaly. There are 900 workers in the county at present, compared to 400 in County Kildare, 200 in County Longford, 50 in County Westmeath and 12 in County Laois. Those jobs are great for workers and their families and for communities. I accept that diversification has been taking place. Further diversification is planned involving existing wind, solar and waste operations. There are some exploratory measures involving fish farming, herbs and energy parks. We have seen the success at Lough Boora, where there is potential for further growth.
Notwithstanding all of that, I suggest that Bord na Móna can no longer meet the remit that was placed on its board in the 1940s when it was put in place by Éamon de Valera and Todd Andrews. That remit is now in the hands of the Government. This gets very political, to be quite honest. For reasons of policy and commitment, there is an onus on the Government to put an adequately resourced just transition forum or sustainability forum in place for this region. I appreciate that we have been given a commitment today in respect of the €40 million package. We have to learn lessons from what happened in Littleton. There were 23 meetings before an agreement was reached in that case. I do not want to see that taking place in this instance. Last week, on behalf of Offaly County Council I met representatives of State agencies, bodies and Departments that have a responsibility without being instructed at all. We hope they live up to the expectation that is on them in respect of retraining and reskilling, etc.
I would like to ask some specific questions about the commitment to the workforce that will remain, or is expected to remain, up to 2027. It is expected that the ESB will make an application for co-fuelling. Such an application is long overdue. I hope and expect that in the next week, it does what it has committed to do, at least. I would like the witnesses to square a circle for me in that context. I understand it was envisaged that under the public service obligation, the cost of fuelling the three power plants would be approximately €40 per tonne. When the public service obligation is gone next year, that figure will decrease to €20 per tonne. Given that it was difficult enough to maintain and ensure viability at €40 per tonne, can viability be guaranteed and ensured at €20 per tonne? Can we receive a cast-iron commitment to that effect? Can the workers who will be associated with providing and harvesting peat be assured and reassured that assuming permission is obtained and the application is made as envisaged, they will able to make those stations work?
Mr. Tom Donnellan:
The Deputy has asked some very important questions. As part of the restructuring we are doing, especially at management and administration levels, we are reducing our cost base in order to be able to absorb the elimination of the public service obligation. We are reducing our costs so that things which are not as popular as they were in the past can be kept going. We want to achieve a just transition while we build out other areas of opportunity. Those plans will continue to run on the basis of a number of factors, the first of which the Deputy has touched on. I refer to the question of whether planning will be obtained for the two ESB projects and, if so, how long it will run for. Will the Edenderry project get planning when it comes out of planning in 2023? The cost of carbon is another important factor which will determine future viability. We currently trade carbon as part of a European scheme. It trades at between €15 and €20 a tonne. We have to buy. A number of years ago, the price was €5 or €6 a tonne. If the cost of carbon increases substantially - for example, to €30 a tonne - the viability of the plants will be called into question.
That brings me to another point. When Mr. Donnellan was interviewed at the time of the announcement - it may have been last week - he spoke about this acceleration. It is an acceleration rather than a cliff edge. He said that the workforce and the communities get it.
Unfortunately, he is now saying he cannot commit exclusively because planning permission has not been applied for. I would have thought that there is a blueprint for permission to be repeated at the Shannonbridge and Lanesborough plants because of the process that was initially gone through for Edenderry. I hope and expect that those who cast doubt on the potential for Edenderry to meet its commitments associated with the Environmental Protection Agency and the planning conditions will be mindful of the expectation of the greater community and region with regard to these two plants when they look at the applications that are made. That is not to say that the applications should get a carte blanche. People should be respectful of the process that has begun. It should be allowed to work itself out. Communities should be allowed to adjust to that change. The point I want to make to this committee is that based on what the CEO has said, there is no cast-iron commitment that he can live up to the expectation that he has up to 2027. This means that many of the jobs I am discussing will remain in jeopardy in the short term, rather than in the medium or long terms. As I have said, Bord na Móna cannot meet the remit it was given in the 1940s, which is understandable. That is why the Government must not depend on existing sources of revenue for the region. Those revenue sources already exist from a national perspective. They can be drawn from all over the country. The Government and the EU must have a specific and targeted initiative and effort to ensure this region has a chance of getting through this transition and is stronger coming out of it than it was going into it. My party and I will not be found wanting to that end. I hope this committee makes that point to the Minister and to those who have a responsibility to this region. I am putting them on notice that this is very much political.
Mr. Tom Donnellan:
We have been working with them on being as open and transparent as possible. The Deputy mentioned three power stations. We have run Edenderry on co-firing with biomass for a number of years.
We have proved it is a success. There is no guarantee but we are optimistic the two ESB plants will get planning permission, that we will co-fire them and that we will keep them running. That is our job.
I welcome Mr. Mark Foley, chief executive officer of EirGrid. He is joined today by Mr. Robin McCormick and Ms Valerie Hedin.
By virtue of section 17(2)(l) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of their evidence to the committee. However, if they are directed by it to cease giving evidence on a particular matter and continue to do so, they are entitled thereafter only to qualified privilege in respect of their evidence. They are directed that only evidence connected with the subject matter of these proceedings is to be given and asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against any person or entity by name or in such a way as to make him, her or it identifiable.
Members are reminded of the long-standing ruling of the Chair to the effect that they should not comment on, criticise or make charges against a person outside the Houses or an official, either by name or in such a way as to make him or her identifiable.
I call on Mr. Foley to make his opening statement.
Mr. Mark Foley:
I thank the Chairman and committee members for the opportunity to come before them today to provide an overview of who we are, what we do, what we see as the challenges facing the island of Ireland in respect of climate action, and how EirGrid can play a key role in enabling Ireland’s transition to a low-carbon economy. This meeting comes after the Intergovernmental Panel on Climate Change, IPCC, issued its most stark warning to date on 8 October. According to its press release, "Limiting global warming to 1.5°C by mid-century would require rapid, far-reaching and unprecedented changes in all aspects of society". I hope we can provide some guidance on where progress can be made on the immense challenge that climate change presents to committee members as policy makers and to ourselves as a vital commercial utility.
I commending the work of the Citizen’s Assembly members who, when exposed to international experts across many disciplines relating to the science of climate change, demonstrated great understanding of the subject matter and delivered a remarkably coherent and consensus view via a set of recommendations on the necessary direction of travel for the economy and society.
As background for those less familiar with our work, in 2006, EirGrid was spun off from the ESB, as required under European directives, to manage, operate and develop the national high voltage electricity grid for Ireland. The industry term for EirGrid is the transmission system operator, TSO. EirGrid subsequently became the system operator for Northern Ireland, SONI, and, since 2009, the transmission system functions on a fully integrated, seamless, all island basis.
We operate on a 24-7 basis, 365 days of the year, from control centres in Ballsbridge, Dublin and Castlereagh, Belfast to bring conventional and renewable power from where it is generated in hundreds of different locations around Ireland to where it is needed in Ireland and Northern Ireland.
We use this grid to supply power to industry and businesses that use large amounts of electricity and here in the Republic, our grid also powers the ESB’s distribution network, which supplies the electricity people use every day in their homes, businesses, schools, hospitals, and farms.
We also manage and operate the all-island electricity market where generators, suppliers and other electricity traders buy and sell electricity in real time, a market with an annual turnover of approximately €2.5 billion. As recently as 1 October 2018, we managed the transition of the market from the old single electricity market to the new integrated single electricity market which places the Irish electricity market on a pan-European trading platform and this has created the environment for a more competitive market and opens the door for greater connectivity with Europe in the longer term.
A vitally important part of what we do is developing new electricity infrastructure which supports both a growing economy and population. In doing so we are very conscious of the impact on communities and have made great efforts over the last number of years to engage with communities and improve overall understanding and acceptance levels for energy infrastructure across the island. We support competition in energy, promote economic growth and job creation and, most important for this committee’s consideration, we enable the growth of renewable energy onto the electricity system.
As a nation, we are becoming increasingly aware of the stark reality of what is happening in the world. I believe this committee, working on the strong platform provided by the Citizens' Assembly report, is a very positive step towards placing Ireland on the right trajectory towards a low carbon future thus addressing the very real and existential threat of climate change.
I will speak to three major topics which are very relevant to Ireland’s decarbonisation challenge and then conclude with some broad-reaching comments.
I will begin with the critical matter of successfully integrating renewables on our power system. The island of Ireland is an isolated stand-alone electricity system on the western periphery of Europe with limited connectivity to the UK as an alternative source of power. This contrasts with mainland Europe where extensive cross-border interconnection creates significantly greater flexibility for European countries.
The physics of electricity which originates from renewable sources such as wind and solar is significantly different from that deriving from conventional generation which has been around for over 100 years. As a result, significant challenges to power system stability arise when attempting to integrate high levels of renewables on a conventional or synchronous power system, to use the technical term. Were I asked ten years ago what level of renewables could be accommodated on Ireland’s synchronous power system at any point in time, I might have said 10% at an absolute maximum. Ten years of pioneering work by our scientists and engineers under a programme called DS3 has delivered a world record level of 65% renewables on the power system, an achievement which will underpin an expected average delivery of over 30% renewable electricity on the Irish system in 2018. Our innovations have delivered a new industry in system services which resulted in the awarding of over 100 contracts in May of this year. These services ensure system stability when high levels of renewable are on the system.
Our achievements in this area are recognised internationally as we entertain fact finding missions from across the globe on a regular basis. I was privileged last Thursday to host EU Commission Vice President Maroš Šefovi to our national control centre to demonstrate how we have innovated to achieve this renewable energy milestone. The EU is looking to replicate Ireland’s achievements on a pan-European basis, having allocated €20 million to a project called EU Sysflex, which is being led by EirGrid.
However, we can – and I believe we will – go further in terms of integrating ever higher levels of variable renewable energy onto the grid. We have publicly committed to moving to integrating 75% variable renewable energy on the system by 2020 in order to underpin Ireland and Northern Ireland’s ambitions to deliver 40% of electricity from renewable sources by this date. The renewable electricity target is a vital component in Ireland’s 2020 overall renewables target, particularly in a context where the transport and heat targets are under severe pressure. This is challenging, but we believe it can be done and, more important, that it must be done if we are to truly move away from our dependence on fossil fuels.
Second, we are endeavouring to transition to a low carbon economy at a time when the forecast for both economic and population growth is very strong, infrastructure across many, if not most, sectors of the economy is under pressure and demand for electricity, indeed all forms of energy, is expected to be strong over the next five to ten years. Growing demand means that advance planning is now more important than ever. This is as relevant to planning the future needs of the electricity grid as much as it does for schools, hospitals and roads.
Over the last two years, we have devised a scenario planning report called “Tomorrow’s Energy Scenarios” which sets out four potential energy scenarios to the year 2030. The scenario which will be realised depends greatly on which policy levers are put in place by policy-makers such as this committee over the coming years.
If one looks at what is happening in the global economy, and we must remember we are one of the most open economies in the world, I believe it is reasonable to say that the world is on an inexorable trajectory to transitioning towards economies and societies which are free of carbon. Ireland is unlikely to diverge from this global trend and, considering our current position in the European league table, we will need to refocus and accelerate our efforts to decarbonise our own economy and society over the next decade. I can assure this committee that we in EirGrid understand the compelling case facing the country and are working to ensure that we will be to the fore in enabling this unprecedented transition.
Third, the question is repeatedly asked about where the next generation of renewable generation will come from. In terms of a managed transition from fossil fuels to renewables, we see there being a requirement for a broad spectrum of renewable sources. To date, the bulk of the renewables delivered on the system and forecasted to 2020 has been onshore wind. We should ask ourselves why onshore wind has been so successful, so that we can leverage those lessons as we look to the challenges of the next decade. I will outline those key lessons. First, in 2008 the Government set a clear and unambiguous target of 40% of electricity from renewable sources. The policy was crystal clear. Second, the Government provided the policy framework to enable the regulatory authority to administer a connections policy for renewables projects. Third, the Government designed a support mechanism, with appropriate State aid approval from Europe. Finally, industry, both private sector and commercial State sector, supported by an eco-system of planning, engineering, legal and financing expertise responded and delivered projects varying in size from a few megawatts to over 100 megawatts in scale, resulting in close to 5,000MW of onshore wind across the island of Ireland by early next year.
While onshore wind will play a vital role in the next decade, it cannot provide the totality of requirements for Ireland’s decarbonisation needs. There is a role and a need for a broader range of technologies including solar and offshore wind.
EirGrid is currently progressing connection offers for a significant quantum of solar projects across the country and we look forward to the Department’s plans to design an appropriate support system to enable solar projects to be financed, constructed and ultimately connected to the power system.
I now draw the committee’s attention to the area of greatest opportunity and positive impact for Ireland in dealing with the challenges around our carbon emissions trajectory, namely the enormous potential in Ireland for offshore wind energy developments. A very big onshore wind farm can generate 100 MW while a small offshore wind farm can generate 500 MW with the potential can exceed 1,000 MW.
Currently there is only one 25 MW offshore wind farm in operation in Ireland or Northern Ireland, with approximately 5.6 GW having applied to connect to the electricity system, predominantly off the east coast. Offshore wind is a very mature technology, prices have dropped considerably in the last decade, European auctions for offshore wind farm projects have seen highly competitive pricing and, frankly, the time has come for Ireland to embrace offshore wind at scale as a vital element in our fight to reverse the trajectory of carbon emissions from industry and society. However, our understanding is that the consenting regime for offshore wind farms is not fit for purpose and is therefore operating as a barrier to developers to committing development capital to new developments which means that a pipeline of such projects will not be ready to compete in future auction processes.
EirGrid has conducted significant studies to identify the optimum delivery model for planning and enabling the development and connection of offshore wind energy to the Irish transmission system. We have assessed a number of grid-delivery models in other jurisdictions and our view is that the most cost-effective optimum model is the centralised model which is used in countries such as Denmark and the Netherlands. The centralised model would mean EirGrid, in a co-ordinated way, would masterplan and secure planning consent for an optimum offshore grid network into which offshore wind developers would ultimately connect. Phase 1 of such a masterplan would be focused on the east coast of Ireland.
EirGrid is advancing our Celtic interconnector project with our counterpart in France, a project which is designed to provide 700 MW of interconnection between Ireland and France by 2025-26. This project is vital to supporting Ireland’s renewable energy ambition as it will provide a vital outlet for Irish wind energy at times when demand on the Irish system is low.
EirGrid has a vital role to play, and we will play that role, in enabling the transformation of our economy and our society, a change which is arguably greater than the industrial revolution or the arrival of the Internet.
I will conclude with some broad reaching comments which are not necessarily restricted to EirGrid’s remit, but where we can offer an authoritative and dispassionate view on those matters which are currently impeding progress in renewable energy.
The challenge is very significant and the urgency is manifest. Electricity has delivered the best performance to date in terms of decarbonisation and is likely to bear a heavy burden in the next decade. No single technology offers a silver bullet. By our calculations onshore wind, solar and offshore wind will all be required in significant quanta to make the necessary impact in the next decade. Explicit targets for 2030, at a policy level, for RES-E, RES-H and RES-T must be set which when combined are capable of delivering the necessary overall result for Ireland.
Wind energy guidelines for onshore wind are essential to enable the next generation of onshore projects to be consented. A robust policy on a consenting and connections regime for offshore wind needs to be put in place as a matter of urgency. Technology-specific support mechanisms, for example offshore, need to be signalled, designed and made ready for implementation in the near term.
I hope we have given members an understanding of what we have already achieved in the fight against climate change and what we believe must now happen to ensure all elements of the power system can make the necessary contribution to delivering a substantially decarbonised electricity system in the next decade. I commend the members of the committee on their efforts to date and encourage them to be ambitious in the report they will be writing for Government in the new year.
Mr. Foley spoke about the consenting regime for offshore renewable energy, a matter on which the Oireachtas needs to do work. What are the other obstacles to development of a successful offshore renewable energy industry from a grid perspective? Is it currently able to handle that additional renewable energy? I understand that our current peak demand is 5 GW. Is that correct? We hear the potential or capacity of the grid currently is up to 50 GW. I ask Mr. Foley to expand on the capability of the rural grid to handle greater levels of renewable energy, particularly in the midlands and the west. What implications would closing the three power stations in the midlands have?
What is the impact on the grid of increasing numbers of data centres? What are the projections for future growth in the area? How does it relate to renewable energy demand? Who would pay for the additional renewable energy required by data centres? Why have power-purchase agreements not been taken up here as they have in other countries? That question arose in the other committee when discussing the capacity for data centres.
Mr. Mark Foley:
I will answer the questions on policy and will then hand over to my colleague, Mr. McCormick, who will deal with the technical issues on capacity and the ability of the grid to handle both volume and renewable energy.
The Chairman asked about the obstacles to offshore energy. I mentioned the consenting regime. The second dimension is a connections policy. At the moment we do not have a connections policy allowing a developer to approach us in a regulated context and get a contract with us. Third, we do not have in place an option framework or regime specific to offshore energy generation, which recognises the specific technology used offshore. Those are the three impediments to developers putting significant capital into offshore wind generation at the moment.
Mr. McCormick will address the capacity questions the Chairman raised.
Mr. Robin McCormick:
The big issue we have is that the demand is increasing and therefore to maintain 40% from renewable sources requires an increase in renewable energy capacity on the system beyond 2020. If we want to do better than that, we need to increase the rate at which renewable capacity is connected to the system. We have been very successful in connecting onshore wind and we now have a fresh challenge of connecting offshore wind at a quantum that will match and exceed that 40% target.
The interest in offshore wind energy generation has been off the east coast, which is closer to the demand than those large generators the Chairman mentioned off the west coast. Therefore it is well placed relative to grid infrastructure. If an offshore grid were constructed, it would be connected into an area of the grid that needs and can benefit from support.
The idea of a centralised strategic plan for offshore wind energy generation has many benefits. It would allow us to set out the plan and deliver it in a co-ordinated manner in parallel with the offshore development. Traditionally we wait for someone to come along and ask to connect to our system. We then look at what the implications for the system would be. We then develop an infrastructure plan to manage that.
More recently with the data centre growth we have had a rush of connection requests for significant amounts of demand. That puts pressure on that process and we have had to look at that afresh to try to find a more strategic way of managing that. That will continue to be the case in how we match our system capability with the demand that is there. We have to match the contribution the transmission grid makes and the contribution that generation support makes. We have talked a bit about the data centres and their requirement to be supported from renewable energy. First the renewable energy sources need to be there. We have an integrated single electricity market that allows all players to construct bilateral contracts behind the scenes and the market allows us to run the system in the most efficient manner and deliver the best prices to customers.
Mr. Robin McCormick:
It is because we have a market for electricity at a wholesale level. Behind that there will be bilateral trades between supply companies and generators. They are part and parcel of how the industry has moved forward. In a sense there are power-purchasing agreements not in the old traditional sense of a power-purchasing agreement and no market.
We have a very active market that is proving to be successful in that it gives better opportunities for interconnector trades and much greater opportunities for all those who generate electricity to trade in different timeframes, from a day ahead right through to real time.
Mr. Mark Foley:
It is only a matter of time before a third party enters into a private power purchase agreement with the developer of a renewables project. I think we are a little behind. It is a very advanced market and well ahead in the United States. We have some of the same companies in Ireland. We would be conscious that this is an emerging market and it is only a matter of time before such a contract ultimately emerges. It does not solve matters, however. It is complementary to a very robust State-driven policy that is driving renewables across a range of technologies. It will provide an appropriate complement but it is not an alternative.
Mr. Robin McCormick:
When the Chairman refers to the rural grid, that suggests smaller-scale generation connecting to the ESB distribution network. We are responsible for the "motorways" of the grid network, which has the capability of transmitting large quantities of electricity. We have to take the total impact on the distribution system from ESB networks and reflect that in any infrastructure investment that is required in the context of the transmission system. We have been doing that. Let me give examples. Small-scale wind generating capacity has been connected to the distribution system.
I welcome Mr. Foley, Mr. McCormick and Ms Hedin. I have a number of questions on making changes to the grid for the future. We know there is a potential for up to 75% of intermittent power to be integrated on the grid. I understand that we went as high as more than 60% and as low as 4% on a couple of days during the summer. Obviously, we were not using much power on those days. That would tell me that solar power is not being integrated into the grid. In terms of trying to cater for micro-generation, if we had a lot of small companies, private individuals or farmers supplying small-scale generation, would the grid be able to cope with it? What are the major barriers to that happening? While we do not have all-day sunshine, we have significant periods of sunshine. However, we do not seem to have progressed as far as other countries in harnessing solar energy.
If electric vehicles were to become common, would the grid be able to cope with people plugging them into their home chargers? This relates to the first question in the context of the demand that would place on the grid. Has EirGrid done anything in respect of micro-grids. We have a national grid - and I can see the logic in that - but are there plans to develop micro-grids whereby it would make sense to generate and use the power within a particular area?
I have a number of questions on baseload and dispatchable power. Much of our sources of energy will be from intermittent generation, such as wind and solar energy. There is a real concern in terms of wind-down and start-up costs for power plants and the cost of the grid overheating or then not having enough supply. Has EirGrid plans in place to use other sources such as biogas and hydroelectric generation to meet the greater demand from a growing population? I acknowledge that hydro-generation provided all the electricity we ever needed in the 1920s. However, it is not the 1920s and Ardnacrusha no longer does what it used to do. We have a large number of small sources of hydropower that have the potential to be used and again this is a source of power that is underdeveloped in this country, which would add to the baseload to ensure a secure source of power when wind and sun are not there.
Mr. Robin McCormick:
I will take on the many questions from Deputy Stanley, who alluded to the challenge of operating a system with renewable energy. We have described the progress we have made operating on a system with a lot of onshore wind, which is intermittent. We try to forecast it as best we can and then we try to run the system on the back of that. There will be days when there is little wind and there will be some days when there are record amounts of wind. Last Friday, there was a new record in respect of wind on the system. That has been a significant technical challenge for us and the benefit of that is that the more wind we can accommodate on the system the better the prices of electricity and the more we benefit from the decarbonisation of electricity generation.
We have made great strides on our journey to integrate intermittent supply and the 40% target set for 2020 is achievable. For us the challenge is to move the instantaneous level of renewals from the 65% which is the present level to 75% in 2020. The benefit of that is that if we achieve that 75% target there is less curtailment of all the wind that is connected so there are times when we have to ask those wind generators to generate less because the system would not remain stable if we did not do that. That is the journey we are on. Deputy Stanley is correct to recognise that there is a great deal of change ahead. One of the ways we have tried to assess it is to introduce our tomorrow's energy scenarios. These involve engaging with society at large and with our stakeholders in order to try to understand how people see the future. Will it be much of what we have had or will there be a significant level of customer action?
The Deputy raised many different changes that could impact on how we manage the grid, including that relating to micro-generation. Micro-generation would impact on it effectively from our perspective because there would not be as much demand. There could be more solar energy and electric vehicles. We have tried to set out four different scenarios that start to explain what the impact on our business and on the grid would be and we expect to engage in an ongoing discussion. It is expected that policymakers will have an opportunity to understand what the future may look like and it gives us an opportunity to consider matters and ask what will be the impact on the grid of all the different scenarios. We are doing this at present and we are developing plans for those scenarios so that we understand the impact on infrastructure.
Mr. Robin McCormick:
They would then have to produce more energy than they are using. Work needs to be done in terms of how they are rewarded for bringing energy back onto the grid. The bulk of the issue relates to the distribution network and how it impacts on the lines that are already connected to houses because the distribution system is designed as a radial feed and if there is energy coming back up the pipe, work needs to be done to that network to manage that.
From our perspective, it has less impact on our system because we are used to dealing with significant amounts of generation on the system as opposed to the marginal changes that micro-generation would bring.
I refer to baseload power and dispatchable power. What plans does EirGrid have in place to bring new sources on board given the fact that much of our power will be generated by wind and sun which are intermittent sources? What plans does EirGrid have in terms of having more secure sources in place as a back up for dispatchable power that will provide power when those other sources are not readily available? The weather will not always be like it was last Friday. It is good when we have that weather for the reasons Mr. McCormick just stated but there will be days when wind will not do the business for us and we might not have too much sun and we might have high demand.
Mr. Robin McCormick:
There are three ways in which generators can get revenue in this market. Firstly, there is a capacity payment where a generator can be relied upon to be functioning when it is needed. For example, on a day when there is very little wind, large conventional generators are rewarded with a capacity payment for providing electricity. Second, they can be involved in the energy market which we describe as the integrated single electricity market, I-SEM. Third, they can also earn revenue from system services. These are the services that they can provide to help us run the system when there is much wind in the system. If the wind suddenly dies and we need to conventional generators to step up and fill the gap then we will reward the generators for being able to generate electricity more quickly that they had traditionally been able to do.
There is a range of ways of supporting the conventional generation that we need. The regulator and ourselves run a capacity auction which sets out what the forecast demand in the future is and all the generators are able to bid into that capacity auction to claim their portion of that capacity revenue.
I want to go back to micro-generation to get more clarity around it because we had the Electricity Supply Board, ESB, in here last week and if I recollect correctly it said that it would be more of an issue for EirGrid. I mention the challenges and the timelines around that. The EU renewable energy directive will introduce entitlements to generate, store and sell renewable electricity for renewable self-consumers in Ireland. It is important for us as a committee to understand the challenges of that and the timeline with a view to ensuring that the grid is ready for all of these incoming requirements under that directive. I stand to be corrected about the ESB saying that it could be a matter we could discuss with EirGrid but we need to understand while we have EirGrid here what the challenges might be so that the committee can address those challenges in regard to micro-generation because it was a key recommendation of the Citizens' Assembly.
Mr. Robin McCormick:
One of the scenarios we have included in Tomorrow's Energy Scenarios 2017 is a customer action scenario where we try to capture much of what the Chair has described about micro-generation and solar panels on individual houses, etc. We have the detail on the breakdown of that and we will look at what the impact of all those changes will be on the ground. The Tomorrow's Energy Scenarios 2017 is designed to capture the direction of travel that has been described by micro-generation, where individuals start to take more action than they have done up until now. We are all conscious of our smartphones and the apps we have that allow us to control our central heating, etc. If that is developed further and people install batteries, solar panels and heat pumps, all those actions are reflected in the Tomorrow's Energy Scenarios 2017. In the consumer action piece we have 560,000 electric vehicles, for example, and we have 1,500 MW of solar energy, much of which would consist of local, individual solar panels.
Mr. Mark Foley:
I can help with this, and I mention the context of electric vehicles. Where the house will be consuming power, we have a clear handle on that because our business is to get power down through the transmission system. Nobody has yet come up with an articulation of a technical, regulatory and pricing solution for the consumer to send power the other way. There is currently no solution on the table. Discussions have been ongoing. The ESB has a significant role to play in that and it ultimately comes back to us. That remains very unclear. There is no technical, regulatory or pricing offer yet but when it comes consumption at the consumer level, such as with electric vehicles, we have very much taken account of what the future demands scenario might be.
I am aware that there was a Citizens' Assembly recommendation. Work remains to be done jointly between ourselves, the ESB and others and we are talking to the ESB about that.
I thank the witnesses for their presentations. I would like some clarity on three points. First, there has been much reference to micro-generation. Having spoken to some of our counterparts in Europe and to businesses which are involved in micro-generation, namely, businesses with a high electricity demand and the ability to generate same, there is an appetite for an adjacent business to be able to share or trade that electricity between those businesses. Is that something that is far off in the future and could not be considered at the moment or is it something that we could deliver in the short to medium term? Could adjacent businesses use the grid to effectively shift energy and electricity between each other and trade same?
Second, when we look at the success of renewables in Europe, much of it is attributed to the fact that it is very much a community initiative. Is there a mechanism where a community initiative to generate renewable energy could be shared, utilising the grid to bring the electricity back to members of the community?
Third, I refer to investment, specifically in smart technology. As much as we can produce more renewable electricity, we probably need to look at being more efficient in how we use electricity and having a capacity to store it for use in times of need because of the variability or intermittent nature of renewables. Is enough investment taking place in that area and is there a strategic approach to it on a national level?
Mr. Robin McCormick:
The idea that the Senator described of adjacent businesses going into business with each other to trade energy requires changes to the tariff arrangements that exist at the moment. We would have to work with the regulator to straighten out the issues involved with that but I have heard the argument and there is merit in trying to solve it. In the main, that tends to be solved at a local distribution level.
As for community initiatives, the Department's renewable energy resources, RES, proposals recognise the benefit of community engagement in renewable energy and we will work with the Department on a proposal for auctions for the next tranche of renewable energy. The Department has made it clear that it will look to have community initiatives built into it. Some of the concerns the Senator has aired should be addressed in that process.
Investment in smart technology was raised and there is a lot of investment potential in the shape of customers. As a business, we have invested in quite a lot of innovation to manage the grid, with 65% at the moment and 75% by 2020. We constantly look for opportunities to innovate, particularly in the area of infrastructure. Building infrastructure for a grid company is a challenge and we have tried to engage much more with communities to explain the various options. We bring them to the table to encourage discussion but we also look for mechanisms for reducing the amount of infrastructure build that we need. There are good examples of infrastructure developments at the moment which are deferring infrastructure investment and make better use of the infrastructure that is already in place.
I have a couple of questions on micro-generation, which is key. It appears from what Mr. McCormick said that there is no technical or regulatory framework so if we were to proceed right now, micro-generation would be offline and people would not be feeding into the grid. Mr. McCormick said EirGrid tried to anticipate renewables coming online and that, if wind was forecast for a few days, the company would try to stabilise the network. If somebody was microgenerating, how would that work? Does Eirgrid tell a generator what the forecast is and that it will need to take capacity from it, and from all the other wind farms in an area?
Mr. Robin McCormick:
We have a control link to generators of some size and we can send a signal to them to tell them to pull back a little bit if they are generating too much for the prevailing conditions. We do not have the same control over the small-scale wind farms and we do not have visibility over an individual wind turbine on a person's farm. We have to manage the demand that we anticipate. We try to forecast the demand for wind and then the output. We subtract a figure from the demand and we then schedule the large conventional generators, which might require ten hours' notice as they would need to get warmed up first.
This is a serious issue relating to the micro-generation of wind. EirGrid would need to have a conversation with thousands of individuals to tell them to pull back, or whatever else. There will be a limitation to micro-generation on the grid as things stand. Is that correct?
Mr. Robin McCormick:
It depends on the scale of what they are going to do. It is unlikely that each residence will have a huge export. Unless everybody is doing it, it is likely that we will be able to manage it. We have had to do it with small-scale wind and small-scale solar power and we would have to do it with small-scale export cases too.
Mr. Mark Foley:
A large-scale wind farm can produce renewable energy very cost-effectively. The tariffs that have been developed in Europe, such as in Portugal, to stimulate micro-generation have been very high but that is part of Government policy there. Scale gives significant economies, as it does in any business, and prices that could not be achieved otherwise.
Mr. Mark Foley:
It will unquestionably come at a higher price. At this moment, in a control room in Ballsbridge, there are people literally balancing supply and demand from wind farms as small as 10 MW right up to the large-scale generators. In the near to medium term, even with a very significant number of households going to generation and even if they could export to the grid, it is unlikely, given the amount of aggregated volume with which EirGrid has to deal, that would be very significant or disruptive for our operations. Even if hundreds of thousands of households did it the consumption at domestic level, as compared with heavy industry and commercial use, is quite modest. We do not see micro-generation presenting a problem of any significance when compared with the demand we have at the moment and with what is ahead of us in the shape of population growth and economic growth, which will require that we build renewables of a very significant scale. I understand the desire to get the consumer into the energy system but we have to get thousands of renewable megawatts into the Irish system if our trajectory is not to go backwards when we need to accelerate it.
Mr. Robin McCormick:
Batteries are an interesting subject and there is a lot of interest in how they operate. We do not own any kit, such as a generator, a battery or a wind farm. We try to manage the consequences of all the technology in the system. When the support mechanisms were put in place the commercial response was onshore wind but there has not been the same response from the battery storage fraternity although it is likely that it will increase and there is evidence of much more activity in the sector. We have a 10 MW battery in one of the power stations in Northern Ireland but we do not have any scale batteries connected to the system at the moment. We expect that batteries will start to play a greater role, both at local level as part of micro-generation and at scale on the grid. A battery can provide some of the services that were mentioned, for which its provider will be remunerated and it can provide capacity. It can also play a part in managing infrastructure. The battery people need to get their revenue streams from a number of different places and trying to put the jigsaw together is probably what is delaying some of the battery activity in the system.
I want to ask about comparisons between offshore wind generation on the east and west coasts. Obviously there is a much better resource on the west coast and less cost from the point of view of building transmission to take such energy. Is offshore wind generation on the Atlantic side or on the western seaboard realisable in the short term in terms of cost? In terms of the generator, I know it bears that cost. Will the building of transmission happen in the short term? There has been general talk about considering offshore wind generation. Are we really talking about wind energy generation on the east coast, in the Irish Sea, right now?
Mr. Mark Foley:
Part of it is on the east coast because it is closer, the water is shallower, the technology is cheaper to construct and it has very good capacity factors, which refers to the level of wind that can be generated. The day for the west coast of Ireland will come and I have no doubt about that.
Mr. Mark Foley:
It will be longer term because an ocean environment is more hostile. One must get the power back on the east coast of Ireland and that is where the power is needed. Also, the east coast of Ireland is where there is relative strength in the grid. We would be quite clear about that. If one wants to make an impact on Ireland's 2030 targets, which is where the immediate and critical need is, then one needs to start mobilising offshore activity on the east coast.
The Grid West project is gone and EirGrid is considering the re-enforcement of the grid by other means. In terms of grid offers and capacity, how many megawatts have yet to be installed but are on offer, yet need to be met and have a grid offer, in the western area? What is the shortfall in transmissions right now? If they all came looking for their connection, how much is available? Is there as much as 400 MW? Does the grid have the capacity to take them? Before this they could all see their place on the grid. Is EirGrid saying that we need a re-enforcement? Is there a disparity between what is offered, what is realisable and actual transmission capacity?
Mr. Robin McCormick:
We can get the Senator the details in terms of megawatts. We had to review the Grid West project in light of some reductions in the amount of wind capacity that wanted to connect to the system. We have come forward with a north Connacht project, which we will be developing, and that matches the foreseeable demand for wind in that area at the moment.
Mr. Mark Foley:
I have some understanding of County Mayo from a previous life. Once Bord na Móna connects its Oweninny windfarm in County Mayo there is not much room for anything else there. The north Connacht transmission upgrade is very important as it will allow Mayo to unlock future capacity for the 2020 to 2030 period. This is a vital line to give Mayo an opportunity to make a contribution in the next decade.
I attended EirGrid's open day at different places in Mayo. This re-enforcement is not even a line on the map, because EirGrid is afraid to draw a line. It is a concept that will take several years to complete. Planning permission has been granted for a combined heat and power plant. By the sounds of it, when Oweninny is commissioned next year, this combined heat and power plant, which is located beside a place that has sought planning permission for a data centre, may be in difficulty. Perhaps the witnesses cannot answer my query and will forward a clarification.
Ms Valerie Hedin:
I want to comment on the north Connacht project. As part of our new process of with engaging communities around Ireland about the need to develop the grid, we have a new six step approach. We engage with communities at a much earlier stage. We have been out in Mayo. I know that Senator Mulherin has attended our events. Our mobile unit and local office there have engaged with communities on the need for the project, and revision of the capacity of the line from Grid West to the north Connacht project. Some stakeholders are obviously looking to see where the project is going. We have not reached that stage yet because we are considering the technology points and options. At the start of 2019, we will move to the next phase where we will engage on connection points and routes. That is to come but it is not there yet.
I want to ask a few questions about the Baringa report which states: "The Renewable Energy scenario assumes a linear increase in
energy market battery capacity from zero to 1.7 GW installed battery capacity from 2020 to 2030." The report did not mention pump or water storage. Ireland has a history of managing such installations. Should we explore such technology in terms of how to manage grid capacity? Should we erect a large pump storage facility or a number of facilities around the country that can deal with renewable energy? Can we keep them going as well as manage the grid and its difficulties?
I was very interested in what Mr. Foley outlined about offshore wind and the Irish Sea. He outlined a number of problems. He referred to the centralised model for offshore wind and recommended that EirGrid manage it owing to the ongoing connections. Has this been proposed to the Government? What reception has the proposal received? Where is the decision to be made? This is vital in making progress on offshore wind, particularly when one notes the amount of offshore wind being developed everywhere except here. It is down to the decision-making and planning processes. Could Mr. Foley expand on that? With regard to the west coast, how possible or feasible is it to take the power from a windfarm using direct current, converting it to alternating current and connecting it to the grid at a point where it is developed for this purpose? Rather than having to take the alternating current connectors to the west coast, one can take the direct current in to the system and convert it to alternating current at the end. How practical is that? Has it been considered?
Mr. Mark Foley:
The Deputy mentioned pump storage. Turlough Hill is one of the greatest assets we have in the system. Turlough Hill and Ardnacrusha have served the nation spectacularly well since they were built. The economics of pump storage are very difficult. Occasionally, one hears of developers considering potential projects in different parts of Ireland but, to date, we have not had a developer come to us with a viable proposition. Ultimately, it is a third party that will see it as an opportunity and consider the cost of development and how it might make money from the development.
Mr. Mark Foley:
The technology is proven for 100 years. The issue is really whether planning permission can be got, which is clearly a challenge, and whether it can be made work economically because the capital costs of large-scale pump storage are very significant. There has been talk of projects over the years but nothing has really come to light. Clearly, pump storage on the system in significant proportions would be very helpful to the system if it could be achieved and delivered economically.
However, there is nothing of substance available at this point.
On offshore wind, we have suggested a centralised model to the Department. We are trying to get the conversation about offshore wind going. There are projects in the Irish Sea with licences. Are those licences robust? They were given as much as ten years ago. We are trying to stimulate the policy debate so the Government can make a decision and provide policy direction. We thought that offering a view to stimulate that would be helpful rather than sitting back and waiting.
Mr. Mark Foley:
We have only done it recently. We feel a responsibility. Offshore wind will take many years to develop so the sooner we have the conversation, make some policy decisions and resolve regulatory and licensing issues, the sooner developers will start putting money into projects. We are not fixated on the model but we believe the conversation needs to get going.
In his last point was the Deputy referring to wind farms or offshore wind farms on DC current?
Mr. Robin McCormick:
We use high-voltage direct current applications for our interconnectors. That technology would be considered along with conventional AC technology, depending on the circumstances of an application. We do not rule it in or out. We consider it as part of the scale of the application.
Mr. Mark Foley:
If one can avoid a DC connection one will because it is much more complex and expensive. If one could build an offshore wind farm that is close to the shore and use an underground AC cable, one would do that. It would be faster, less expensive and more reliable. It is all about the unique project context and one takes each on its own merits.
There is the possibility of generation on the west coast but the demand does not exist there. We have to get it out to the demand centre, which is on the east coast. Our problem is how feasible it is to get it there.
I thank our guests for their presentation. We are way behind with the infrastructure required for electric cars, particularly when one hears what people who own such vehicles have to go through in order to charge them. If Ireland moves fast in the context of providing incentives and so forth for electric cars, it appears it will not be able to keep up with providing enough power points to facilitate that.
Our guests referred to extra wind and going to 40% or higher. My understanding is that wind comes in at variable speeds. What is the cost to the generators when wind comes in to smooth it out? I hear that the ESB would have to spend €700 million or €800 million in this regard. Is that right?
Our guests and other members spoke about micro-generation. Our guests indicated that it is a case of making a guess where it is produced in small amounts, but I cannot see it being very complicated. Either one gives a price for something - be it 13 cent per unit, 20 cent or whatever - or one does not. Our guests stated that there are no set tariffs. Can a tariff not be set quite easily?
I stand open to correction, but my understanding of what our guests are doing is that they are saying to Joe Bloggs with the wind turbine, the person with the solar panel and the individual using the fossil fuel that they will need X amount from each. If they keep getting a fair amount of wind and they tell the guy with the fossil fuel that they do not need him as much now, will he not disappear? Can they live without the fossil fuel? My understanding is that they cannot. Am I correct that this year is one of the worst in history for generating wind power - I am not referring to the number of generators or wind turbines - due to the wind speeds, and that four of the past five years have been quite bad? Is it also correct that EirGrid will need either a gas power plant or some type of what I would call a second engine on stand-by to generate electricity because it cannot rely on the other types of generation?
Reference was made to the interconnector between Ireland and France and to exporting electricity to France. France has nuclear power and that is the cheapest form of electricity. Why would it take electricity from us? We heard a few years ago that we were going to export energy to England. How much wind-generated energy are we exporting to England? Is there a danger if we get electricity from France at a cheap price? Obviously, money talks and this is a business. If the grid can get it at a lower price it would be more inclined to take it from there rather than taking it from somebody else at a higher price. Regarding the tariff on wind and what the customer pays, am I correct that the person who owns the wind turbine gets more per unit than what the customer pays the ESB for the electricity? How much electricity, in money terms, is dumped per year because EirGrid has entered agreements that it must adhere to with regard to renewables?
Mr. Mark Foley:
There are a number of questions. Mr. McCormick is suggesting that I start with electric vehicles because I drive one and I know a great deal about the experience. That might sound as if I am joking but it is true. We do not have a role to play in this, to put it simply. As a consumer, however, I notice many private companies are starting to install charging points. If one goes to Aldi or Lidl, one can charge one's electric vehicle so I believe the momentum is starting to build. I am speaking as a consumer, not as the CEO of EirGrid.
On micro-generation, I know it sounds simple but, to be clear, there must be a policy framework, a technical way in which power can go from the home to the grid and a proper regulationary tariff. We have none of that at present. We have a very limited role to play in that regard. I am not ducking the question but that is the current reality.
The Deputy talked about living without fossil fuels. Fossil fuels will be here. They are not disappearing but they will exist at a very low level on the system in the future. Renewables will be the dominant source of generation. The technology and services that have been developed by EirGrid will allow fossil fuels to operate at very low levels - low levels never previously dreamed of - to provide system stability. As long as the market provides appropriate remuneration for them to be there and to provide that service, we have nothing to fear from a security of supply perspective. We are confident we have a very good handle on that. Working with the regulator and examining supply demand as we move forward, the committee has nothing to fear from renewables going up and fossils going down because we will manage the balance through our engineering capability.
The Deputy mentioned interconnection with France. Regarding the modelling around the interconnector between Ireland and France, the latter has challenges in Brittany. It also has challenges because it is going to wind down some of its nuclear power facilities. It needs renewables.
We are an attractive source of renewables for France through that interconnector. All of our modelling suggests power will go from Ireland to France more often than France to Ireland. It will come from France to Ireland at times but the dominant electron flow will be from Ireland to France. We have both developed a model that assumes that flow. It is vital for us because if we ratchet up our renewables but then find ourselves at times during the day when there is nowhere to deploy it, the economics of those projects will be challenged and they will not be built. Developers will not build these projects if they think that they will be turned off 20% of the time and make no money. If they know it can be shipped off to France, however, it will work for all of us.
The Deputy also asked a question about the cost of wind energy and what developers are paid.
Mr. Mark Foley:
On the regulator website, what a wind farm developer is paid under the previous incentive mechanism, the renewable energy feed-in tariff, REFIT, is a matter of public knowledge. It is significantly below what a consumer pays for electricity. It is all public information.
Mr. McCormick will answer the question about ROCOF generators.
Mr. Robin McCormick:
Part of our journey to being able to cope with more and more wind in the system has been reverting to the conventional generators to ask them to change slightly the way they are run. We have gone through a process of getting them to change the setting. ROCOF is a rate of change of frequency, and the process will protect that generator from sitting in its own island where the frequency will change and damage the plant. We have worked with the generators to change their setting in order that if an event is on the system, we will not use all the generators when we do not need to. We want to keep them on the system even though there has been a change of policy.
Mr. Robin McCormick:
There is little cost in changing the ROCOF setting. I do not know specifically how much a generator must pay to have the ROCOF relay changed to the new setting, but, in doing so, it facilitates the renewable generation that we have on the system. It also helps to support the stream of system services rewards they receive for behaving in the manner they need to if our systems are to be kept stable.
Mr. Mark Foley:
If one considers the direction of travel, there was the single electricity market and there is now the integrated single electricity market. Between generators being rewarded for trading their electricity, ancillary services or capacity payments, the overall pot and cost of running the market is going down rather than up. It is becoming more competitive and there are more renewables. The marginal cost is zero due to the absence of fuel costs and that is driving the cost down. It might be moving into slightly different buckets but the price of running the market is going down overall.
The Deputy made one other comment about the UK and what is happening with the interconnector between east and west. I invite Mr. McCormick to comment on that.
Mr. Robin McCormick:
The benefit of this integrated single electricity market, which commenced on 1 October of this year, is that the flows of energy on the interconnectors are much more competitive than they were. Previously, the arrangements could not guarantee that the trades were economical. In addition, the trades across the interconnector are now done on a pan-European basis. Someone who wants to trade on interconnectors, therefore, can trade on a number of them across Europe. The evidence is that the trades on the interconnector are efficient. There are times when a great deal of wind is forecast and, as a result, a high export will be seen on the two interconnectors from the island to Great Britain.
I have a question about the gate system and how it works for connecting new projects. How does EirGrid connect them in order of strategic importance? The witnesses discussed the larger projects rather than microgeneration and reaching our 2020 targets, but are they confident it will connect all of those who are in the queue by 2020? How does it work and how will the 2020 targets be reached?
Mr. Mark Foley:
The direction of travel for 2020 looks positive. Under the old gate 3 process, most of the developers have their connection offers from us, they have signed their contracts and they have done their engineering, procurement and construction, ECP. It looks like we are travelling in the right direction for 2020.
To get us into the next world, which is 2020 to 2030, under Government policy the regulator launched a process called enduring connection policy 1, ECP-1, which allows for the next batch of projects, namely, onshore wind, solar and battery, and it asked us to process those connections. We have an intensive process going on, therefore, to process connections for onshore wind, solar and battery to allow those projects in due course to compete in the first generation of the new support scheme, which will be auctions. There is a pipeline of more than 1,000 MW which people are actively working on, and we expect many of them to compete at the first auction when it is announced in the next year or two.
Mr. Mark Foley:
Yes, in the next policy beyond ECP-1, which is a bridge between the past and the future. There may well be a case for a policy or category that is specific to offshore because it is quite different. It will come into the mindset of the policy makers and the regulators. In any consultation they have with us, we will be inclined to suggest creating a category that is efficient and fit for purpose for that grouping of technologies.
We should also try to co-ordinate a grid in planning, although there will still be difficulties with the timelines.
I was reminded that one of Mr. Donnellan's distant predecessors appeared in one of these rooms and said the maximum amount of renewable power we would ever get in the system was 800 MW, after which it would be extremely dangerous. As Mr. Donnellan said in his presentation, however, almost 5,000 MW is interconnected.
This morning, I read with interest the World Energy Outlook on where the world is going. It was interesting that it said the world needs to go in the direction in which EirGrid is going in terms of the level of capability, variables, renewables, integration, the diselectrification of everything and our prospects. It gives me great pleasure to say the men and women of EirGrid are climate heroes. They have done important and internationally significant work on this, the very centre of the clean industrial revolution. The exciting thing is that we are only starting and that EirGrid needs to proceed confident in its abilities and our abilities as a country to do it. EirGrid is one of the few examples where we can truly say we are world leaders, and it is not in a insignificant area. The World Energy Outlook said that what EirGrid is doing is the key to success in decarbonising our energy system, which is why its employees are heroes. If there was a Légion d'Honneur, for example, in our country, I would stick it on the breast of every EirGrid executive and worker, and that is from someone who always harangues people before this committee. It is a good opportunity if we proceed with that can-do spirit.
I am glad to hear the target for instantaneous interconnection is 75%. Last month, David Connolly and others from the Irish Wind Energy Association presented a paper in which they said we should aim for an average rate of renewable energy of 70% by 2030, using a mix of offshore, solar, onshore, storage and other capabilities.
Whatever about the 75% instantaneous capability, can the 70% average be done by 2030?
Mr. Mark Foley:
I could be shot by my colleagues for answering this question. I am really comforted by the fact that under Horizon 2020, the EU has put €20 million into this through its SysFlex programme. If €20 million cannot deliver the next quantum from 75% up to 85% and 90%, I will be bitterly disappointed. The money is there, the will is there and the pan-European commitment is there. We are butting up against the laws of physics here and every successive increment becomes harder and more expensive. However, SysFlex is going to throw up some further shifts in what we can achieve. There will be no lack of resolve, commitment or passion around this. We are certainly going to go for it.
We are only starting this revolution. The dance is only starting in the integration with variable demand. It is the demand side and variability on it which have overcome the system inertia and other difficulties, including the physics, that we recognise are real challenges. If we are committing to build, let us say, 5 GW of offshore wind in the Irish Sea, as we should and as we have been discussing for ten years, it is interesting to hear Mr. Foley cite TenneT and Energinet, the Dutch and Danish TSOs. What is the strategy in that 5 GW? Will it all be brought ashore in Ireland and then shipped via interconnection to the UK and France or will some of it head east initially? Have people been looking at the Isle of Man as a collection point? One might have a DC connector there. Have people been looking at the Scottish bootstrap coming down to connect into the Irish Sea? Have we finalised-----
Mr. Mark Foley:
We have not finalised. The Deputy is perhaps a little bit ahead of us. The near-term emphasis is on whether we can connect a couple of big offshore windfarms in the context of a rational, cost-effective and optional expansion which is not dissimilar to the scenario the Deputy just set out. In other words, it is about whether we can we meet Ireland's needs first. Ireland needs thousands of megawatts between now and 2030 if it is to get anywhere near achieving its targets. We must first concentrate on the Irish issues, but we must plan that in a way which gives us flexibility down the road. That is where the smart money is.
While I agree with Mr. Foley that we need to ship power to Dublin in particular, the North Sea's offshore grid initiative has been running for ten years. We did the isles project ten years ago to look at this very issue. It is not as if we have not been thinking about this. If we build that greenlink interconnector and find out five or ten years later that it has not been designed to integrate with the rest of what we are doing in the Irish Sea, we will be kicking ourselves. It makes sense to think strategically about this. We have to proceed quickly because doing it for 2030 will not be easy. I argue that the isles project work, the North Sea's offshore grid initiative, the ENTSO-E's ten year plans show that there has been thinking around this. I would prefer to proceed in a co-ordinated way, even if it takes a year or two longer, to give us time to put that co-ordination in place.
No. For example, the greenlink interconnector cannot possibly be done in the old UK merchant line way where it just comes into the Irish system without giving us flexibility to reduce curtailment and constraint. Its facility has to be under EirGrid's control if we are going to have the Danish and Dutch model to which Mr. Foley referred. We need that level of strategic thinking to indicate to that company straightaway that this is the way we are going to do it. I would look at the Danish operator, Energinet, as a very good example of how to model interconnection to show the social gains. That company can, in effect, borrow as the state. It borrows as a state facility and gets ten year money for next to nothing. EirGrid should be doing the same and owning the assets down the line. EirGrid should be building up its asset base as we undertake this task in the same way as the Danish TSO, in particular, does.
If I am thinking big, I have to turn to the west coast. We have to think about the post-2030 scenario. If we are serious about where we are going and if this revolution is going to work for north-west Europe, Ireland has a responsibility as a member of the north-west Europe energy market to put 15 GW of offshore wind into the system. One could do 5 GW in the north-west, 5 GW in the west and 5 in the south-west. Using HVDC cable technology, the energy could be shipped either through Ireland or around it to the rest of the north-west European electricity market. Part of this committee's job is to put forward ideas and I am very keen to present the idea of a 15 GW offshore facility. It is the answer to those who ask why we are not doing oil and gas exploration off the west coast. As far as I can see, the floating technology is here as is the HVDC cable technology. I do not know if EirGrid has looked at what the Chinese are doing with their belt and road on HVDC long-distance power distribution, but it is fantastic. They are way ahead of us and really thinking big in the revolution, as is California. As one of the world leaders on the very cutting edge of what is happening, why would we not go for 15 GW now? Let us say that is our intention and start to plan now the transition grid, which is the key thing to get right, and design the routing, whether it is offshore and around the island or across it underground. Has EirGrid started to look at that?
Mr. Robin McCormick:
We have been involved in the groups that have been looking at it. There are a number of issues. It is the phasing of it. It is the requirement for it not to be only an Ireland issue. It has to be a European issue and the trick in this is to collaborate with partners in Europe to be able to deliver something like that. There is no point in one party doing it. It has to be done-----
I agree fully. I have been talking to people who have been involved in this in Europe and it is starting to happen in the North Sea and elsewhere. They deal in 5 GW chunks. While what I have said might sound outlandishly brave, big or ambitious, it is not. This is the way it will be built. What I hear in Brussels and Europe is that they are dying for us to come into the game. They are waiting to fund this through the Connecting Europe facility. Andrew McDowell is here crying on a regular basis because he does not have counter-parties to lend to. He is dying to lend to this sort of project. If it started now, EirGrid would get it into the next ENTSO-E ten-year plan and obtain funding to connect its facility backed by the EIB. I know developers who would do it tomorrow and I can provide their phone numbers. Perhaps it would not quite be tomorrow, as this will take 15 to 20 years. However, if we do not start now, we will not get it in 15 or 20 years as we should. To come back to reality and much closer to home, I ask what is happening with the North-South interconnector.
Mr. Mark Foley:
We are awaiting an adjudication from the Supreme Court which we hope will come through before Christmas or early in the new year. Hopefully, that will bring an end to the judicial process in respect of this vitally-needed project. It is one of the most important pieces of infrastructure of the next decade. In Northern Ireland, the project is somewhat ensnared in the question of civil servants having the capacity to approve or consent to major projects.
There are discussions taking place in Brussels today and it seems the EU is making it clear within the Brexit negotiations that consistent application of energy, climate and environmental rules, in particular in relation to the all-island electricity market, will be a sine qua nonof any backstop arrangement or regulatory alignment in a review. Does EirGrid see that creating any obstacles? Is there any sense in its work with SONI or in the all-island electricity market that this is now threatened? Is it stopping progress in EirGrid's work? Is there anything the committee should be aware of?
Mr. Mark Foley:
Rightly or wrongly, we have taken a view and are comforted by statements by the Taoiseach, Deputy Varadkar, the Tánaiste, Arlene Foster and Theresa May. Everybody is saying the all-Ireland electricity market is compelling and should not be interfered with in a Brexit context. We remain hopeful that will be the case. As we know, the Brexit story changes every day. As such, we are trying not to react on a day-to-day basis but all our advocacy is directed towards it. We had Greg Clark, Secretary of State for Business, Energy and Industrial Strategy, in SONI on 6 August on a fact-finding mission. We had him in the control room in Castlereagh.
We explained how the market works and how integrated it is. The process to disaggregate that is a massive project in its own right. We remain hopeful that sanity will prevail and that this is not going to be messed around with.
The key to this new evolving market is the dance between variable supply and variable demand. About two years ago at some conference or other an EirGrid engineer said that there was 150 MW of industrial demand that could be switched on and off as part of that. Where is that figure now?
Mr. Robin McCormick:
It is much more than that. I do not have an exact figure to hand but I can furnish the Deputy with one. There is much more activity in the demand side unit area in the market. We have had to call that particular technology into action on occasion so it is an active player in the market.
I think Michael Liberick in the UK makes a valid point that there is still a real challenge in this renewable revolution that is taking place of how in a high pressure anticyclone environment in the middle of winter, the likes of last January, we might have a two or three week period without wind. Obviously solar is not a kicker. As we get up to these very high levels of penetration, is that interconnected to France? In those circumstances would it be French nuclear keeping us going? What is the answer to the question as to how to provide that load in an anticyclone in the coldest part of winter?
In this new dance, capacity repayments are very old school and very much shunned by people who think this is where we are going. Why would we not rely on interconnection rather than capacity payments as a way of meeting that need?
Mr. Robin McCormick:
Taking into account each of the different technologies, we would give wind a very small credit for being there when we need it. Conventional plant gets a greater credit depending on what their outage regime is, how often they are forced out, and what their planned outage rate is. For interconnectors, we give the interconnector a credit and then subtract that from the demand that must be met.