Oireachtas Joint and Select Committees
Tuesday, 16 April 2019
Joint Oireachtas Committee on Communications, Climate Action and Environment
Microgeneration Support Scheme Bill 2017: Discussion (Resumed)
I welcome our witnesses. From Eirgrid we have Dr. Liam Ryan, executive director of grid development, and Mr. Arthur Moynihan who works in operations, planning and innovation. From the ESB, we have Mr. Peter O'Shea, head of corporate and regulatory affairs, and Dr. Fergal McNamara, manager of regulation and policy. From the Micro Electricity Generation Association we have Mr. Dudley Stewart, director, and Mr. Gene Hourihane, managing director of Sunstream Energy Solutions. From the Dublin Technological University we have Dr. Keith Sunderland, head of electrical services engineering and energy management.
Before we begin, I draw the attention of witnesses to the fact that by virtue of section 17(2)(l) of the Defamation Act 2009, they are protected by absolute privilege in respect of their evidence to this committee. However, if they are directed by the Chairman to cease giving evidence on a particular matter and continue to so do, 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, persons or entity by name or in such a way as to make him, her or it identifiable. I also advise that submissions or opening statements furnished to the committee will be published on the committee website after this meeting.
Members are reminded of the long-standing parliamentary practice 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 remind members and witnesses to turn off their mobile phones or switch them to flight mode as they affect our sound system.
The format of the meeting will be that witnesses will be invited to make an opening statement of not longer than five minutes. I will indicate after four minutes so that witnesses know they have one minute remaining. The opening statements will be followed by questions from members.
Dr. Liam Ryan:
I thank the committee for inviting us to today's meeting. I will discuss the key area of how we can better integrate increased levels of renewables into the electricity system. I thank Deputy Stanley and other committee members for focusing on this key area in the move towards decarbonisation. I am joined by my colleague, Mr. Arthur Moynihan, who leads our work on developing energy scenarios out to 2040. These scenarios include those that envisage a significant increase in microgeneration over the coming years. This will be along with existing conventional and onshore renewable generation as well as an expected significant growth in areas such as offshore generation in the coming decade.
As background for those who may be less familiar with our work, since 2006 EirGrid has operated and developed the national high-voltage electricity system in Ireland. We develop, manage and operate the electricity transmission grid through EirGrid in Ireland and SONI in Northern Ireland. Our transmission grid brings power from where it is generated to where it is needed throughout Ireland and Northern Ireland. We use this grid to supply power to industries and businesses that use large amounts of electricity. Here in the Republic, our grid also powers the ESB’s distribution system, which supplies the electricity people use every day in their homes, businesses, schools, hospitals and farms.
In more recent years, our grid has formed the pathway to harness the significant growth in renewable energy projects which are required to bring about the energy transition. These projects that connect into our transmission system usually generate approximately 40 MW or more.
A significant development over the past decade has been Ireland’s ability to deliver renewables onto our system. Today, we are capable of accommodating a record level of 65% variable renewables of electricity generated at any one time. This achievement was recognised in the recent report by the Oireachtas Joint Committee on Climate Action, and we thank that committee's members who are present for that recognition. We all know, however, that we need to do more and that additional renewables will need to be brought onto the system.
EirGrid, as the transmission grid operator, agrees that microgeneration can, and will, be a central component of the next phase of renewables. Moreover, we believe that the legislation being considered by the committee has significant merit in making microgeneration a reality in communities throughout rural and urban Ireland. As part of our role to identify those growing Irish energy trends, EirGrid has placed a strong emphasis on developing scenario planning to help us consider the range of ways that energy usage may change in the future. Speaking to a wide range of stakeholders and industry bodies, we gather and use this information to ensure we plan and develop the electricity transmission grid to meet the future needs of our society and economy.
We published the first edition of Tomorrow’s Energy Scenarios in 2017, which entailed developing a set of scenarios that outlined four possible futures for the supply and consumption of electricity until 2040. The EirGrid scenarios were each based on different storylines. Our scenarios assume different levels of microgeneration capacities, depending on the scenario and its associated storyline. An example is our consumer action scenario, which assumes the highest levels of microgeneration connected to the distribution grid. It is fair to say rooftop solar PV is assumed to be the primary microgeneration technology in the future, as a result of falling manufacturing and installation costs, financial incentives and ongoing changes to building regulations. The EirGrid consumer action scenario assumes that 30% of the overall solar generation fleet will be rooftop solar PV, which equates to 450 MW of rooftop solar PV and represents a significant and positive step change from where we are today. Taking into account the capacity factor and the stated requirement in the Bill for electricity suppliers to supply 5% of their electricity from microgeneration, this would translate into a need to install approximately 2 GW of solar PV at microgeneration level. If we consider this against a peak electricity demand of approximately 3.5 GW on a summer's day, it is clear that microgeneration will comprise a large proportion of the overall electricity generation on a sunny day.
If this ambition is realised, it will bring challenges in balancing electricity supply and demand on a minute-by-minute basis that we would need to find innovative solutions to address. We are, however, actively considering these challenges in the recognition that renewables levels will only increase, while recognising that, at a consumer level, we expect a considerable shift in consumer patterns in respect of demand response and an increase in the use of electric vehicles and heat pumps. Our scenarios also suggest that battery energy storage technologies will play a significant role in the future of microgeneration in Ireland, which was also reflected in the document recently published by the climate action committee. From our perspective, we have assumed that battery storage systems are likely to accompany rooftop solar PV to provide the capability to store electricity for times later in the day when it is needed in the home, or to supply it to the electricity grid when needed.
There is also a potential impact on aspects relating to the electricity market through the increased use of microgeneration. Our understanding is that the payment for the energy produced will be managed by the suppliers through the proposed minimum price tariff. This will require further discussion with other important organisations such as the ESB, Commission for Regulation of Utilities and Department of Communications, Climate Action and Environment.
Mr. Peter O'Shea:
I am joined by Dr. Fergal McNamara, who has broad experience of energy policy in Ireland, Great Britain and wider Europe. I am delighted to appear before the committee again and to share with it our perspectives on the Bill. Specifically, I will outline the ESB's record in facilitating and supporting microgeneration to date; draw attention to the EU’s clean energy package, which is expected to be Irish law by June 2021 and sets out the future regulatory framework for microgeneration; give our observations on the Bill; and make some concluding comments.
The ESB has played a important role in facilitating microgeneration to date and launched a pilot programme in 2009 to kick-start the sector. We have two business units that play distinct roles, namely, ESB Networks, which is responsible for the wires, and Electric Ireland, which is responsible for retail sales. ESB Networks constructs and operates the distribution network to serve all 2.3 million customers in Ireland, regardless of their supplier. It determines the appropriate technical standards for equipment and puts in place the necessary commercial and safety procedures to enable the connection and operation of microgenerators. ESB Networks plays two roles, the first of which is connecting microgenerators to the networks. The connection is free of charge, including of incremental charge for the export component. The other role is providing and installing the import and export metering capability required to measure the exported generation, as well as collecting and processing those data. As part of the pilot to kick-start the microgeneration sector, ESB Networks had a special microgeneration export tariff in place for five years, paying 10 cent for each kilowatt hour of exported electricity.
On the other side of our business, Electric Ireland is responsible for retailing electricity to end-use customers and, to that end, purchases wholesale electricity from a variety of sources, including microgenerators. As part of a pilot, Electric Ireland also pays a tariff of 9 cent per kilowatt hour for exported microgeneration. I believe that Electric Ireland is the only supplier in the marketplace to have offered such a tariff for microgenerators. Approximately 700 microgenerators now avail of this microgeneration scheme tariff.
I turn to the EU's clean energy package, which sets out the regulatory framework for microgenerators, although it uses the broader headline of renewable self-consumers. It is required to be law in Ireland by June 2021. It establishes a right for all renewable self-consumers to sell excess production of renewable electricity. The law provides that member states shall ensure that renewable self-consumers, individually or through aggregators, are entitled to generate renewable energy, including for their own consumption, and store and sell their excess production of renewable electricity, including through renewable power purchase agreements, electricity suppliers and peer-to-peer trading arrangements. The package goes on to give these renewable self-consumers the right to the market value of their electricity sold into the grid, which is a positive development. We believe that the framework set out in the clean energy package is sensible as it sets out the rights of customers to self-generate and have market access to sell any excess. The latter concept is well known to electricity markets and is often referred to as "spill".
We welcome the Bill insofar as it provides a supportive environment for microgeneration, thereby engaging customers and citizens in the energy transition, the importance of which we recognise. The ESB supports putting in place all the measures required to provide market access to microgeneration, as contemplated by the clean energy package, and we will address these measures presently. We note, however, a proposal in the Bill to place a target on electricity suppliers to source not less than 5% of their requirements from microgeneration. We do not support an arbitrary target and we believe it should be reconsidered.
Microgeneration has a role to play and, in ESB’s view, it is primarily to offset the import and purchases by householders of electricity from the grid. The appropriate amount of microgeneration will be established naturally over time if proper wholesale market access is arranged. That level could be 5%, or higher or lower, depending on supply and demand. It is important to bear in mind that there are many other sources of renewable electricity and technologies and that microgeneration is one of the highest priced sources, according to data from the Sustainable Energy Authority of Ireland.
I will clarify the comments in our written submission. The data set indicates that microgeneration in the form of domestic rooftop solar is two and a half times, or 150%, more expensive than large onshore, not offshore, as mentioned in the paper. It is actually 70% more expensive than offshore and 25% more expensive than small-scale onshore. The unintended consequences of intervention to set targets are well read and must be paid by someone - in this case, potentially other electricity customers, which would be a transfer. Subsidising microgenerated electricity exports above the wholesale market rate by establishing a volume obligation could lead to homeowners installing oversize rooftop photovoltaic panels to simply harvest the subsidy, something that has happened in other jurisdictions.
In terms of measures that need to be taken in order to arrange market access and to prepare for the regulatory framework set out in the clean energy package, CEP, the following points need to be addressed. The first is about definition, namely, what a microgenerator is. It is important that we consider and agree an appropriate definition of the term "microgeneration" and our written submission expands on the technical issues around this. The CEP uses the broader term "renewable self-consumption" rather than microgeneration and it also includes other categorisations. With regard to the Bill, we, therefore, observe that the term "microgeneration" needs to be defined specifying the technologies and the electrical power parameters and taking note of the language and new categories in the CEP. Second, in terms of metering, we need to measure the electricity exported. ESB Networks will provide import-export metering at a regulated cost in the ordinary course. In this context, it is interesting to note that smart meters will provide such import and export capability and that a national roll-out of smart meters is planned to commence in the third quarter of 2019. Third, we need a mechanism to pay market value to microgeneration. The most practical means by which microgenerators, who, for the most part, will be domestic customers, can access the market would be for a supplier to provide a "flow-through" tariff, which transmits the market price directly. Of course, variations on this are possible, for example, average prices by time of day etc., and can be a matter between suppliers and customers. In this context, it is noteworthy that the CEP also requires member states to ensure that such tariffs are made available. Finally, settlement processes are required. The microgenerator sells electricity to the supplier, who purchases that electricity. The meters installed measure the quantity in each market time period, which is currently a half-hour period. This takes place across the entire country for every period of the year for every installation. There are advanced systems in place already in the electricity market but processes to cater for all this domestic microgeneration will be required to be integrated into the wholesale market.
The ESB is working to lead the change to a low-carbon future. Decarbonisation of the electricity system and the electrification of heat and transport are the keys to achieving a zero-carbon society and economy by 2050. We welcome the Microgeneration Support Scheme Bill 2017 insofar as it will enable and engage citizens directly in the energy transition in an appropriate, sustainable and cost-effective manner. We agree that microgeneration has an important role to play in terms of this transition to a low-carbon society but we are not in favour of the volume obligation being placed on suppliers contemplated in the current Bill. We believe this would likely result in an inappropriate subsidy for exported microgeneration. Instead, we believe the focus should be on providing market access for microgeneration and we have outlined some of the issues that need to be addressed.
Mr. Dudley Stewart:
Gabhaim míle buíochas leis an gcoiste as ucht an glaoch seo chun cur i láthair a dhéanamh os a chomhair. The Micro Electricity Generation Association, MEGA, supports the proposal that microgenerators producing surplus power receive a fair payment for energy exported to the grid. We believe that community microgeneration or bottom-up microgeneration at a local level is what is needed and should be supported at every level in order for Ireland to transition to the inevitable decentralised zero-carbon energy future. We believe citizens and energy groups are the gatekeepers to Ireland's energy transition and, therefore, should be central to decision making and treated fairly with regard to payment for surplus energy but also with regard to their full participation in this energy transition. We support the legislation as proposed when citizens and communities are also central to this. The proposed Microgeneration Support Scheme Bill 2017 must be mindful of the grid connection problem. The Bill thus far does not take account of this as the main barrier to community and microgeneration in Ireland.
MEGA is a not-for-profit research, development and incubation organisation involving active energy citizens, communities, local authorities, research institutes and local and international energy tech companies. MEGA was formed during the consultation process on the 2007 White Paper on energy. Effectively, we are an independent Irish energy research compact. More than a decade after MEGA was established, we are still seeing growing public opposition to and unrest about what is seen by many citizens as Government inaction regarding climate change. MEGA arose out of rising anti-renewables and anti-infrastructure opposition, protest and civil disorder. It recognised early that discontent arose out of decades of utility dominance and rising barriers to microgeneration, with citizens feeling cut off from critical energy solutions and future proofing.
There is growing frustration and anger among citizens globally and in Ireland due to the reality of climate change science and the impacts being felt by those who have done the least to cause the problem. This frustration has led people to take to the streets, as they did over a decade ago and in recent climate action protests, including in schools across the country in the recent climate action strike on 15 March 2019.
For this proposed legislation to have lasting impact and support citizens and all stakeholders in a bottom-up energy transition, there first needs to be clarity on what microgeneration is and the positive socioeconomic impacts it has. The current outdated Government definition of microgeneration virtually excludes all cost-efficient microgeneration solutions. In 2013, the European Parliament defined microgeneration as the small-scale generation by individuals and SMEs in order to meet their own needs and generation for communities for their own use and small groupings such as co-operatives. This means it is not limited to the 25 A or 11 kW considered to be microgeneration. These are the least cost-effective areas that are least amenable to local collaboration.
MEGA unreservedly views microgeneration, in particular community microgeneration, as necessary for Ireland to meet its climate change targets and our commitments to the historic Paris Agreement. The proposed Microgeneration Support Scheme Bill 2017 must be mindful of the grid connection problem. The Bill thus far has not taken this challenge into account and we view this as the main barrier to microgeneration and community microgeneration in Ireland. The Bill will effectively allow more domestic customers to invest in microgeneration as it will be more economically viable to make initial investments in renewable assets. Driving up the number of installations will attract competition and drive down to normal the cost of installation of micro small-scale renewable energy system, RES, installations in Ireland. The cost is very high compared with anywhere else in Europe.
One of the long-term issues will be grid disturbance from microgeneration. For more than a decade, MEGA has spent a great deal of time developing solutions to grid disturbance. Smart regional community energy systems are top of the list in Europe. It is recognised that Ireland is conducting state-of-the-art research with the leading institutions in disturbance-free community energy resolutions. Regulated disturbance neutral microgenerators will not suffer grid connection delays or obstacles. For this to happen, a new community system operator licensing system will be required and additional investment is needed to focus on disturbance neutral microgeneration solutions. This is extremely urgent and as important as a feed-in tariff or payment scheme for microgeneration and communities. These combined pioneering research and pilot projects will make Ireland a leader in the field of both renewable energy and smart grid deployment. This is urgent work of national strategic importance that is deserving of better recognition and resourcing. We need to see more microgeneration to enable us to demonstrate what we are capable of in Ireland.
There is a solution to ensure microgeneration and a fair price for domestic microgeneration in Ireland become a reality. We envisage a future where communities and citizens take charge in securing their energy futures through networks of community microgenerators supported by all key stakeholders.
Microgrids and communities are the logical way towards a safe and balanced grid, where local communities can contribute to the overall effort to achieve zero carbon emissions while also engaging with the undeniable trend of peer-to-peer economy. This is a worldwide phenomenon. Smart M Power is rolling out systems that are grid-supportive and fully community-driven. The energy transition to microgeneration will have lasting impact on the citizens of Ireland, ensuring energy security and energy resilience while also driving economic growth. We are now living in a digital sharing economy in which the future looks bright for community microgeneration and peer-to-peer energy trading and sharing. All stakeholders involved can benefit from this transition and the Micro Electricity Generation Association of Ireland, MEGA, will support any legislation, including this Bill, if it supports a community-focused transition.
Dr. Keith Sunderland:
I will start by thanking the committee for the opportunity to present today.
Research on topics concerning microgeneration is very rich. In general and in the context of smarter energy environments, there is a recognition that for low-voltage, LV, prosumers and other distributed sources such as electric vehicles to derive benefits, the challenge is network architecture flexibility. This architecture needs to be sufficiently flexible to support a market for prosumers but also sufficiently robust to accommodate the technical implications arising from their network contributions. Notwithstanding the research available, it is still very difficult to say definitively whether the measures proposed by the Bill will work for the Irish national interest.
It should be noted at the outset that in avoiding CO2 emissions there are cheaper alternatives to microgeneration. However it is appropriate for policy decisions to acknowledge microgeneration as a contributor as well as the environmental benefits created by social awareness of the technologies involved. Focus should therefore be on designing something that is economically efficient and socially equitable. With that in mind, my statement will examine some of the specifics proposed by the Bill. Further consideration will also be offered around the technical implications, the importance of information and the resolution of other barriers to the uptake of microgeneration. I have discussed the proposed Bill with colleagues and principal investigators at Technological University, TU, Dublin and my contribution to this meeting is reflective of research being undertaken at the Dublin energy lab, the electrical power research centre and the community grid project and demonstrator, cPAD, project.
First I would like to consider price arrangements. Price per kWh will be important in determining how many and what types of households will be incentivised to invest in the scheme. Our research has shown that larger households which have larger demand and are likely to have higher incomes will benefit more from this scheme. From the point of view of both economic efficiency and equity it is worth considering multiple feed-in tariffs based on the level of demand or the staged introduction of tariffs, increasing over time. There is also the potential to use smart electricity metering data to design individualised tariff regimes.
It is generally acknowledged that a lower capital cost for renewable energy systems is a requirement in making them more attractive to LV consumers. Decreases in the levelised cost of energy, LCOE, for solar photovoltaic, PV, energy are particularly reflective of advancements in systems. Ultimately any economic analysis needs to be cognisant of the changing cost environment and future subsidy opportunities. It should also be pointed out that while the Bill considers a range of microgeneration technologies, the dominant technology is still solar PV energy. Wind energy has seen technological improvements but when planning restrictions and practical limitations are considered, this form of energy harvesting is challenging and its deployment is restricted to outside areas of population density.
In the context of supplier obligations, how the percentage of microgeneration contribution is to be calculated must be carefully considered. Will it be on the basis of connected capacity, that is, the number of households and installations? Alternatively, will it be calculated in respect of the quantity of electricity generated? If it is the latter, what level of generation capacity will be considered? Will there be a time of use or seasonal consideration?
Another relevant question concerns the energy quantification or metering of the electricity produced. If the aggregated meter data reflect the electricity produced but do not account for any additional electricity produced and consumed on-site, should the supplier obligation be calculated on what the meter shows and compliance determined based on what is exported? Alternatively, should it be calculated inclusive of what was consumed, with compliance determined based on what was produced? Perhaps the latter is fairer and avoids market distortion, but this requires smart metering which measures import and export as well as on-site production.
The addition of communities in the Bill is welcomed. Communities organising themselves into energy communities to produce electricity can not only improve the return on investment through economies of scale, it will also make microgeneration more manageable for the electricity market as a whole. TU Dublin refers to such organised communities as community grids. It is imperative, however, that the combined financial net benefits to the community grid are sufficiently larger than the combined benefits that would accrue if each member was to invest individually. A mechanism should be found that values and assigns to the community grid the benefits that it brings to the electricity market.
The technical implications associated with microgeneration include system impacts and environmental benefits. The Bill has the potential for significant technical implications. The widespread deployment of embedded microgeneration could cause significant fluctuations in the demand for electricity at a national system level. This will be happening as we continue to promote large-scale generation using intermittent renewable energy technologies. This could lead to greater risks of system instability and possible power quality concerns. Work will need to be undertaken to ensure that the necessary knowledge and systems are in place to adapt to this new challenge.
However, these significant evidence-based analysis and assessment requirements also present research opportunities. They include resilience of networks to modern consumer requirements, particularly with increased proliferation of electrical vehicles; the complementarity of electric vehicles, requiring strategies to match charging demand to microgeneration support; demand-side response and management systems, including complementarity processes in which smart systems can be used to organise load and generation for effective prosumer engagement; resource appreciation and understanding, including enhanced models for solar PV and wind energy harvesting for domestic scales, where modelling of insolation patterns and cloud cover, as well as energy mapping will be needed; and network support mechanisms, including storage options and network voltage support requirements.
From an environmental perspective, the net life cycle benefits of the microgeneration technologies chosen for the support scheme should also be assessed and inappropriate technologies screened out. For example, a recent study of household-level gas-fired micro combined heat and power, micro-CHP, found that some technologies result in increased emissions when replacing conventional gas boilers. It is unclear why micro-CHP is being supported when these systems almost always use non-renewable fossil fuels. Marginal abatement cost assessments should be carried out on the preferred microgeneration technologies in order that those with reduced emissions at lowest cost are prioritised for support.
In respect of information, I note that not all microgeneration technologies are suitable for deployment in all situations. Many will significantly underperform, both economically and in terms of carbon emissions abatement, if they are not matched to the correct dwelling type and location. Careful thought matching technologies and design with end-use and siting is therefore required. This must be done in a manner that is accessible to the wider population, while at the same time informing of the technical capabilities and performance inhibitors. It is imperative that the necessary information for end user decision-making is available and widely disseminated.
Economic performance is not the only barrier to uptake of microgeneration technologies. For example, a study undertaken at the Dublin energy lab established that home owners worry about the reliability of microgeneration; are concerned about the disruption caused by fitting technologies into their dwellings; and have technology-specific concerns such as the reaction of neighbours and local residents to wind turbines. Moreover, process and management logistics are involved. The level of microgeneration advocated by the Bill raises issues concerning grid access, connectivity, logistics and competency. To connect to the network, registered electrical contractors perform what are termed "controlled works" and certification of the installation is required. While this is a technical requirement, regulation considerations and financial burdens are involved. Furthermore, the process is governed by an "inform-and-fit" connection process managed by ESB Networks. Should there be a significant proliferation of microgeneration, there will be logistical implications for the network operator to manage. These administrative issues, while not insurmountable in their own right, are relevant to the management of the technical implications that will become manifest and as such will require more stringent management processes, at least until smart meters become mainstream.
In summary, microgeneration contributes to wider environmental benefits but it is not the cheapest form of CO2 emission avoidance. Multiple feed-in tariffs based on level of demand or a staged introduction of tariffs should be considered. More consideration is warranted in respect of supplier obligations and how they are to be equitably apportioned. Community-based initiatives are welcomed in general but consideration is required to ensure net benefits are available to the community grid.
There will be a number of technical considerations with increased microgeneration proliferation and they should be conflated with current issues concerning e-mobility and demand-side management. It is imperative that relevant and accessible information is widely available and that it covers the spectrum of considerations involved. The barriers to microgeneration, including societal and logistical barriers, need further consideration, for a synergetic microgeneration scheme to be transparent and equitable. These concerns should be considered when assessing the likely success of the scheme and the likelihood of meeting policy targets. I thank the committee.
I thank the witnesses for coming in and giving their time. Their observations on the Bill are welcome. The Bill is an attempt to create a legislative structure and framework to allow microgeneration in the country. I am aware that the ESB has operated a pilot project and some of us may have questions on it. Will Mr. Peter O'Shea speak about the strengths, weaknesses and successes of that project? I outlined in the Bill that there are a number of ways that microgeneration can take place. It is accepted that solar energy will be a major part of that but having large rural areas in our country, small-scale wind generation may also be a considerable part of this. There may be other forms connected with agriculture. We do not believe that small scale hydroelectric generation has reached its potential. We tend to have a lot of water except for a few months in the middle of last year where we did not have much water but did not need much electricity. When we need a lot of electricity, we tend to have a lot of water, in winter and the wet seasons. We think that area needs to be examined further.
We set out the need for a minimum price tariff. We have left much flexibility and the Bill provides that the Minister shall draft Regulations that may be revised, which will contain the minimum contractual price, the minimum length of the contractual term for the tariff and the Minister may amend the applicable micro-generation equipment and generation capacity.
The 5% provision has been raised. Under the Bill, electricity suppliers must supply 5% of their electricity from microgeneration by 2025. The witnesses were right to raise that because we want to hear if they have difficulties with it. I am not that rigid about it, nor is the party that I represent. The Bill has passed Second Stage and we believe we have flexibility about what to do with it. There was a question about whether it was 5% of suppliers or 5% of electricity. To clarify, 5% of the electricity supplied should be from microgeneration by 2025. The idea of putting in a target is that if targets are not set, things tend not to happen. People say that they will reach it some other time. The climate change obligations are a good example of that, where we said we would leave it for another year or two. This is an attempt to move things on.
In the EirGrid contribution, Dr. Ryan outlined that we need more renewables. He raised the question about the 5% target that would make up a large proportion of our renewable electricity supply on a sunny day and that that would be a challenge. He also mentioned that with the improvement of battery technology, it may act as a counterbalance. Will he provide examples of where that has been solved?
Mr. O'Shea from ESB also mentioned the 5% target. The pilot that ESB is running is exciting. I believe 700 users are signed up to it, which is impressive. It is a bit more expensive. He might flesh out how much more expensive it is. What big problems does he come up against with the pilot? What is the potential success of it? Although it is slightly off the subject, EirGrid and ESB might refer to microgeneration for self-consumption.
I thank Mr. Dudley Stewart of the Micro Electricity Generation Association of Ireland for his presentation. He said that the main problems are with connections to the grid and markets. We hear that from people who are trying to do this. What do we need to get around that? Does Mr. Stewart have examples of how that is done internationally?
Dr. Sunderland spoke about fluctuation in supply. I understand that there was one very windy period two years ago where nearly 70% of our electricity came from renewables. The experts will tell us that the grid is okay with 65% from renewables. With the small share that microgeneration would have, why would that cause a problem at this stage? Mr. O'Shea has told me in more informal meetings that by international standards, we have a very good grid. I offer my compliments to EirGrid and others for modernising it. I understand that our grid would not be thrown off balance by a modest amount of microgeneration. The other thing that we are curious about is Germany and other northern European states where there is not a lot of sun and there may be similar weather patterns. They seem to be able to have microgeneration on a wide scale. What is the big difference? Why can we not do it here?
I thank the Chair for accommodating me. Our guests are extremely welcome and we are delighted that they are here to make their presentations, which were very interesting. I ask for their forbearance in that I will leave but I will read their responses to my comments. I am interested in this issue, as are the people who I represent. I will read more detail on it. I congratulate our colleague, Deputy Stanley, for his input and interest. I have five questions or comments. I would appreciate the witnesses' understanding that I lack technical knowledge and they can elaborate on matters in layman's terms insofar as it is necessary in response. I am a believer in microgeneration and think it is the way forward on many fronts. One of the significant matters is that if people are involved in microgeneration, it gives them a buy-in to the entire carbon reduction project. They get ownership of the project. It becomes their project and they feel pride in what they have done for it. They start to put moral pressure on others and to feel a right to speak on it. They expand their involvement with it from that position of making their own tentative steps, getting further into it, and it becomes a lifestyle. Support of microgeneration is crucial.
I know there was not a lot of focus on small wind turbines, given the expense and planning difficulties, but I am very interested in their potential. I compare them to the creameries at the end of the 19th and early 20th century.
At that time the local creamery became a focal point for the regeneration of communities and modernisation of agriculture and society. It was very important in societal evolution here. This also is a critical time and I see similarities between now and then. We could have small wind turbines owned by communities which are supported in the ownership of them. That could have a crucial educational buy-in value and I would like a comment on that possibility.
The big problem is that there have been slow financial returns for microgeneration. People do not like the idea that it takes seven years to free up the cost of their solar panels. The slow return is a problem. I take the point that the more use is made of them, the more cost is driven down because costs will fall as more units are produced and we have to try to achieve that. How do our guests think we can keep it attractive while capping output? The point was made that there must be a capping of output so no one person could exploit the system or use their output wrongly. I am not sure there is a big need for that. Could our guests explain the issue of capping and the level of use that a family or community could take from microgeneration, as well as the level at which they could make money? The way to get buy-in is by reducing the price of inputs and increasing the return for consumers. That is how to make them attractive and make people want them. What capping level would make it attractive?
Could our guests explain the minimum price tariff a little more? What would be an adequate minimum price that would be viable and attractive? When one thinks of the fines we will avoid, in broad terms, and the societal benefits, it is a no-brainer to try and do this.
The witnesses also should comment on the grid connection problems and how they might be overcome.
I am from the Cavan-Monaghan area, where there is much intensive agriculture and it is an important facet of our economic and social landscapes. I want to know about the digesters that could arise from intensive agricultural production, how those digesters could become a source of microgeneration, how the energy could come into the grid from them and how money could return to those people. There is a significant set of benefits to that. I am lacking in technical knowledge and knowledge of best practice in that area and I ask our guests to understand that. All I can say is that people I represent in that area would benefit enormously from digesters that could be economically viable with a good output.
I also raise the matter of linkage between waste management in individual households, communities and counties, and microgeneration. There should be a large, natural link because it is a means of overcoming two problems at once. I would like responses to that.
There were many questions there so I will allow the witnesses to come in as they want. Some of them were named particularly but if any of them want to come in on any of the questions from Deputy Stanley and Senator O'Reilly, please do.
Dr. Liam Ryan:
I will answer the question from Deputy Stanley about our concerns that 5% of electricity supplied should be from microgeneration by 2025. We are making the assumption that the solar rooftop will be the main contributor to that 5% and therefore, when we take into account a capacity factor, which is roughly 10% of the installed capacity, to meet the 5% average over a yearly timeframe, the majority of that will be made up during sunny days. Our calculations suggest that to make that average of 5% over that period of time we would need to have installed 2 GW of capacity. On a really sunny day, when all that capacity is being put onto the system, we have a reduced amount of consumption because there is less demand for electricity on sunny days. On those days, we would see approximately 3.5 GW.
We have, in the past, had similar challenges. As an industry and a community, what we have installed means that 65% of our energy needs can be met from renewables at the moment. This is another challenge we must overcome and storage is key to that. On a sunny day, if there is complementary solar and battery storage, people can store the excess generation from their homes and use it later to supply into the grid when required. That is a more holistic solution that we believe it would be more complementary and would make this more effective and efficient and allow for the greater penetration of renewables. We are looking for 75% instantaneous penetration for renewables in the future and an average that is much higher than the 40%, maybe even higher than 70%.
Dr. Keith Sutherland:
I will respond to Deputy Stanley's question about how this has been done in other jurisdictions and why it is potentially a problem for Ireland. It comes back to what Dr. Ryan just said about the scale of penetration. There is limited research that has looked at complementarity and how to complement peak demand and the high frequency fluctuation against the storage capabilities. Studies concerning how electronic vehicles can work in confluence with the actual generation are required.
I was lucky enough to be involved in a German-Irish Chamber of Commerce visit to Germany, following on from the Deputy's point, and they have a significant account of photovoltaic, PV, generation in the south and a lot of wind in the north and, at some points of the year, they could have 50% of their requirements in solar PV at one time. Even a place as well established as Germany has issues balancing it. The issues are the high frequency, the complementarity of the storage and the ability to capture it at optimal times for people to use when they want.
Mr. Peter O'Shea:
I will ask my colleague, Dr. McNamara to talk about the clean energy package because it captures many of the issues that have been raised in the various questions about microgeneration and beyond.
It is clear that we are moving from an electricity system which comprises a small number of very big pieces at present to one which will be a large number of very small pieces. That is the direction of travel and microgeneration is a key part of that. There are several technologies, probably the most prominent of which, in response to Senator O'Reilly, is solar rooftop. That is, in part, down to building regulations and it will be part of the overall mix we will need to manage.
We launched our current scheme nearly ten years ago and there are 700-odd microgenerators on that scheme. It costs Electric Ireland well over €100,000 per year to operate that scheme. The reason it needs to be looked at is because it is not scalable in its current form. It needs to be commercially integrated to the market arrangements but also integrated technically within the system. It is a scheme that has done what it said on the tin and has kick-started microgeneration in Ireland. The last time we were before the committee in September I wrote to the committee afterwards to explain more about microgeneration and where electrons go when they go from one house to another. Electrons come out of a solar panel and, if they are not consumed in the house, what happens to them and who pays for them? It gets complex quite quickly but those complexities must be dealt with. We must understand those complexities and develop a set of market rules to address them.
The Senator mentioned overall capability and the cap. If a volume obligation is put on suppliers, the price paid for export will, at times, be in excess of the value of that excess electricity to the system and supplier that is receiving it.
There will also be times when it is of greater value. In the middle of the summer, if demand is down, the value of solar excess might be low. It is important to recognise that. The reason we do not favour putting the obligation on suppliers is that it creates a subsidy between different classes of customers. That subsidy needs to be paid for by somebody. It could be paid for through a PSO, which is a very explicit means of moving money from one bunch of customers to another. It could be paid for through cross-subsidies and tariffs, which nobody would particularly want, or it could be paid from the Exchequer. There are many ways of doing it but there are difficulties with it.
In the context of digesters, a report by the SEAI, produced in 2015 and updated in 2017, considered biogas, which is what the Senator was speaking about. Biogas can be created by taking slurry and grass from agriculture. It may be upgraded to biomethane. One could potentially inject that biomethane into the grid system as renewable gas or burn it in a CHP, which may well constitute microgeneration if its capacity is below a certain level. There is considerable opportunity and potential. The SEAI report reckons Ireland could meet 28% of its gas needs through biogas production by 2030 and that half of the biogas would be used to power CHP plants. Half would be upgraded to biomethane and injected into the grid system. Dr. McNamara will comment on the clean energy package.
Dr. Fergal McNamara:
I have just returned from Brussels, where I was working for more than two years on the clean energy package. If it pleases the committee, I shall put some brief remarks on the record about it and state what it means in this context. It is Europe's response to the 2030 climate and energy targets we signed up to pursuant to the Paris Agreement. One of the really interesting aspects is the effort by the lawmakers to engage the customers in the energy transition. Customers are almost the same as citizens and it is in their name that the transition is being effected. They are the ones who will ultimately be paying. Therefore, there are many aspects to the clean energy package to try to kick-start and enable the customers. The very passages my colleague Mr. O'Shea read out are appropriate in terms of renewable self-consumers.
One will see references to citizen energy communities. These have been mentioned. The key question concerns how to allow the customers to participate in a transition so they can have the sense of involvement the Senator spoke about and also a sense of control and delight in reducing their own energy consumption. The key issues here is market access and the question of how consumers could achieve at least the market price for any excess they have from microgeneration on their premises. That is very important.
The renewable energy directive contains some requirements related to speeding up, streamlining and giving guarantees on the connection process. We have a particular issue with that in Ireland because we have the planning and permit process to go through in addition to the grid connection process. The clean energy package is very positive in this regard. The Bill could be framed in this wider context. Transposition into Irish law is expected by June 2021.
Mr. Dudley Stewart:
Many of the points raised by Deputies Stanley and Wallace are taken up in the paper in respect of grid connections. If we regard microgeneration as being of a tiny scale for individuals, we are looking at the most costly technology. It is costly because if one does not have the services to serve the area, there will be high costs. Everywhere in the world has pushed to increase technology deployment so the service cost will go down. Thus, the overall technology cost decreases.
This brings us to the European definition of microgeneration, which is community generation for own use. That is not tiny generation, however. It involves biogas digesters, micro-hydro and small-scale hydro. It involves a wide range of energy sources we have in Ireland that cannot be exploited because they are not really recognised as being associated with microgeneration. The methods are regarded as purely commercial generation and, therefore, they have to take a line in the queue like wind power projects designed by developers. One could wait five years or even more for interactive studies before getting a grid connection. If microgeneration is in accordance with the European definition, it could yield as much as 25% to 30% of what Ireland needs. Therefore, I agree with Deputy Wallace that the potential is very much underestimated.
There is also potential for unifying communities, community resilience and bringing people together. It is part of addressing the problem of how to balance power and deal with the "wandering electrons", as they say, using the foremost developments in digital technology. That is exactly what we are trying to do here. If Ireland, as a country, wants to solve this problem, we need to work together seriously, not play together. We are not seeing that now. Our group involves multiple parties. We represent active citizens, communities, academia and local authorities working hard in this area but we are not seeing the enthusiasm from the utilities that is needed for us to really harness our fabulous resource. We are not talking about 5% but about 30%. We are talking about more of our citizens and businesses being involved and a wider diversity of sources.
This is an important debate on something we need to get right quickly.
I will start with Dr. Ryan. The Joint Committee on Climate Action has just agreed, in a report launched today, that we would set ourselves a renewable electricity target of 70% by 2030. It is not unambitious. We will be testing the edge of the envelope. The target was influenced by the study Baringa compiled on behalf of the IWEA setting out how it might work. If I recall correctly, there is a reference to an additional 5.5 GW of wind energy, largely offshore. It is all-island figure, so we have to be careful. I believe an additional 2.5 GW of solar energy was estimated and 1.88 GW of battery storage. This is what Baringa estimated would work in our network.
The political question concerns solar energy. I agree with Mr. Stewart that there is a range of microgeneration options open to us but solar is the option with the most potential for growth. Has EirGrid done corresponding analysis? Given that the Government has already committed publicly to raising the target to 70%, has Dr. Ryan any analysis, in light of his perspective on maintaining a stable grid, of how a 70% target might be met? If we have a target of 70%, what would be the optimum solar component for 2030? I appreciate that we will be going beyond 2030.
Dr. Liam Ryan:
We have carried out some studies on this. We are aligned around 2 GW for solar energy coming into the system. The key is that it has to be complemented. We have pushed the barrier and envelope to get to a figure of 65% renewable instant penetration. We will push that further in the coming year or so to increase the proportion to 75%. To push it to an average of 70% is a challenge. We will work our way through it. Renewables and solar will form a key part. A figure of 2 GW is a reasonable estimation to achieve the target. Regarding how it will happen, be it from the larger solar farms or from domestic sources, EirGrid is very open. The key is to determine how to control and manage the energy as it enters the grid. It is a question of storing it and being able to use it at the appropriate times.
There will be times when we will have a lot of solar and other types of renewables coming into the system at the same time but we will only have a certain amount of demand. Part of the solution will be interconnection whereby we can export the excess at certain times and import at others. There has to be a holistic solution in order to make this happen. We are now starting on the journey of trying to work on the steps we need to take in order to make that new target a reality. We believe that we will be able to find a solution to it and work our way through it.
This is some feat, and we are going beyond it. From a political perspective, there is a huge advantage in favouring rooftop solar for domestic, farming and businesses in order that people have a sense of ownership and engagement with this transition. I would put it another way. This may be at the distribution level so it might not affect the transmission system - the entire system has to be integrated from here on - but would there not be a major advantage in really strengthening the distribution network? If it heeds our report, the Government will commit to a massive ramping up of the retrofitting of housing. The latter would involve a deep retrofit of at least 50,000 houses a year. Such a retrofit must involve the installation of heat pumps and electric vehicle charging points. If we achieve a total of 50,000 homes per year over the next ten years, that would mean the installation of 500,000 heat pumps. With 50 V boxes controlling access at each end house, I understand it is incredibly difficult to manage some of the distribution at street level. Is there not a huge advantage in using the rooftop solution in order to bring many of the solutions back to a local level as opposed to putting such pressure on the transmission grid? If we try to do it all on the transmission system, I do not see it working.
Dr. Liam Ryan:
Yes. I agree that we need to maximise the penetration to the distribution system. If we can meet the required local demand by having local microgeneration it should mean that we could invest less in the transmission system. There is, however, a counter to that. We also need to invest in the local storage. Electricity is a perishable commodity and if we do not have a way of storing or keeping it locally at times when wind or renewables are not generating energy, we need to be able to get the power to communities and local areas. The overall transmission grid will definitely need to change and evolve. EirGrid is looking at what is the right solution and is investigating various scenarios. I will hand over to my colleagues from the ESB in order that they might discuss the distribution side, but, from an EirGrid perspective, there are major benefits in having that local distribution.
Before we move on to that, I agree that we need massive interconnection to help us when we reach that 70% penetration level. It makes massive sense for us to have flexibility, not just in the context of the line to France but also with a significant number of interconnectors to give us that capability. I would like those interconnectors to be in the ownership of EirGrid in order that the transmission system will be a public asset.
My next question may involve straying away from microgeneration slightly but it is connected. Has EirGrid carried out a needs-based analysis to show that we need large numbers of new gas-fired combined cycle gas plants in the scenario whereby we have 70% renewables penetration? Would the company see that as being essential? If we are to do interconnection and if we are achieving 70% renewables, do we need many additional gas plants?
Mr. Arthur Moynihan:
We are not seeing an increase in the amount of gas required in the system but the make-up of those plants and the number may change. In recent auctions, a number of new smaller gas plants were successful. The make-up of the gas portfolio will change out to 2030. Beyond that, a lot depends on what happens with gas, renewable gas, power to gas and other technologies that may play a part, and how the coupling between electricity and gas out over the next 20 years can decarbonise the system.
So it is not additional but perhaps sightly more responsive. I read recently on the front page of The Irish Timesthat the ESB wants to build a lot of new gas plants to serve Dublin. My question is to Mr. O'Shea from the ESB-----
Mr. Peter O'Shea:
The generation analysis statement produced last year outlines a potential 57% increase in demand in the Republic of Ireland over the next ten years. That is a greater rate of increase than we have ever seen before. We need to be prudent about it. We have developed options around open-cycle gas turbines as one of a number of options within the capacity mechanisms. We are keeping various options open because of the significant level of uncertainty about where demand goes and what the requirements are. Flexibility is certainly a key part of it because-----
I will not labour the point but we have just heard from EirGrid that there is not necessarily a need and that the adequacy statement may change if we have further interconnection. As we get higher renewables penetration and as we ramp up the battery storage, perhaps those out of date adequacy statements should not drive investment decisions. What the ESB is stating in public - including on its hoarding on Merrion Square - is that it is all about the distribution system and the tens of thousands of generation points rather than more 400 MW facilities.
Mr. Peter O'Shea:
Absolutely. The future in that regard is about a large number of small things rather than a small number of large things. In the recent auctions, we won the rights to build lots of battery technology. We are looking at ocean wind and onshore wind. We have entered agreements with the Oriel project and with the Galloper Wind Farm in the UK. We are looking at a range of different options on the renewable side, but there is also a lot of uncertainty as to what will be the overall outcome.
On the previous question, I would characterise the network issues we are facing as upstream and downstream. Upstream is all about how we can manage what is an intermittent resource in getting it to the network in order that it can then feed downstream to customers. I am on record as stating that EirGrid has done a super job in that space over the past five to seven years in getting the intermittency up to a 65% level. The 70%-30% target that is emerging is 70% on average. To get the 70% on average, electricity from intermittent sources on the grid system would probably require 90% plus intermittency at any particular point, but the other representatives may know better in that regard. It is a major challenge. I have no doubt that we will get there in time but it is a big challenge.
Having solved that piece upstream, there is another challenge in bringing it downstream, particularly when we reflect on the fact that electrification of transport and heat will add a fair amount to the overall demand for electricity for the period. The challenge faced by our distribution business is how we get more of the juice from upstream to downstream through the existing cables and via the transformation capacity. Investment is required in additional transformation capacity, additional cabling and wires and also in smart technologies to try to even out the demand over the course of a day, for example, so that existing capacity can be used better.
I agree with Mr. O'Shea fully. The great job EirGrid has done can and will be matched by the amazing job the ESB is about to do by being one of the leading distribution companies in the world in managing this. What Mr. Stewart said is true: we have an economic opportunity. It is all about digital. By setting such a high target and by doing this, Ireland would pretty much be the leading country in the world. We would do the learning by doing. This would be of great benefit to Ireland in the right ways.
I want to return to the question I put to Dr. Ryan regarding the distribution system. Electric vehicles will take off like a rocket in the next few years. There are two charging points outside Leinster House but they are full. They have only been there a few months. There will have to be ten times that number of charging points in our car park. If one came in today to get access to a charging point in the Oireachtas car park, one could not do so. I am not an expert or an engineer but I have the technical query on the current the distribution system. Let us consider a row of terraced houses. I have a heating pump in my house and I will be getting an electric vehicle charging point. If my neighbours do the same, managing that at a local level will not be a small matter.
Managing that at the local level is difficult for the existing distribution system. It requires a complete reorientation of how we do it. Much of it involves sending signals to switch things on and off to avoid charging all four cars at the one time, or running all four e-pumps at the one time. Perhaps battery storage could be used in all those houses. If that is where it is going - and it seems that it is - the existence of rooftop solar panels on those houses would be of major benefit to the distribution network. It should not be seen as the power market being taken away from the distribution network or as neighbours being undermined. Far from it, it is an integral part of the solution any good distribution company would employ. Rooftop solar is a very good friend to such companies in completing the incredible task we have ahead. Does Mr. O'Shea agree with that?
Mr. Peter O'Shea:
I agree. I sometimes ask myself whether rooftop solar is a generation asset, as it generates electrons, a network asset, in that it could offset some network investment, or a supply asset, in that suppliers are generally promoting rooftop solar. We have seen the industry separate over the past 15 to 20 years but it is starting to meld back together at the edge. I agree with the Deputy's assessment. ESB Networks launched an innovation strategy approximately 24 months ago which looked at a stream of different projects and research and development to get ahead of the curve in terms of the sorts of issue the Deputy is raising. One example of that is the programme we are running in Dingle, which is about integrating all of these technologies in a particular geographical location to try to get more throughput in the networks in a manner that is sustainable, cost-effective, and secure.
That is a welcome development. It is a good example of learning by doing. Kerry people are smart, I am sure they will set us on the right course. The other advantage we have is that, as stated in the ESB's submission, what Deputy Stanley is proposing, which is an appropriate ambition for microgeneration, is also backed up by the European clean energy package. The package says that we must legislate in this area by 2021. Does Mr. O'Shea believe we should wait until 2021 or should we start before then? I particularly refer to the further quote from the clean energy package included in Mr. O'Shea's submission: "Renewable Self Consumers [...] to receive remuneration, including, where applicable, through support schemes, for the self-generated renewable electricity that they feed into the grid, which reflects the market value of that electricity". When will that be available to Irish customers?
Mr. Peter O'Shea:
The four issues are listed at the back of the submission. The biggest two issues are being able to measure the output, and ESB Networks will provide meters as and when they are required for microgenerators, and ensure that the outputs from those meters can be integrated into the business processes, which is determined by a number of different bodies including the CRU, the Department, EirGrid, and ESB Networks. We have to ensure that framework is in place so that it can be scaled up. If the Deputy recalls the previous session we had here back in September, the difficulty we now face is that if electricity is exported from a microgenerator it results in a reduction in the technical losses on the network rather than providing value to any individual supplier. We need to make sure that all the regulations in that space are joined up in order to give effect to that measure.
I recall that when I was Minister for Communications, Energy and Natural Resources, we introduced a pilot scheme from which to learn in 2009. We have been doing this for ten years. The previous Government stopped it but we were doing it for a number of years. I have one more question for the ESB and I will then come back to Dr. Sunderland. The clean energy package says that we should offer a price which reflects the market value of electricity. What should that price be and how should it operate?
Mr. Peter O'Shea:
It should be the wholesale price of electricity. On average, the price is approximately 5 cents per kWh. That is the average across the day. That price is influence by a low price at night and a high price during the day. It is during the day that the sun shines. If we were to go with the wholesale price of electricity under the integrated single electricity market, I-SEM, it would result in a price somewhere north of 5 cents per kWh. That price reflects the value of the electricity on the system at any point in time.
If we get up to the levels about which we are talking - and we are very far away from them so it will not be any time soon - the underlying difficulty in the development of renewables is that they always reduce the wholesale price. That even applies in respect of wind energy in Ireland, but it could also eventually apply in respect of solar on very sunny days. It would kill the incentive.
Dr. Keith Sunderland:
On the Deputy's point regarding complications at street level and how to manage that from the perspective of the network, one should look at it in the context of the consumer or "prosumer" and the aggregation opportunities. There is a demand-side response element to this issue. Intelligence at the consumer end looks to optimise the storage vis-à-visthe actual generation. Another thing which was not touched on too much is the potential vehicle-to-grid opportunities. The grid can be supported by the electric vehicle, EV. People are researching this question, but it has not got very far as yet. It is not only an issue for the grid or network, but for the prosumer as well.
I have one question for Mr. Stewart which I would like to put before he comes in. What he said about digital revolution and so on is true. A model which has been shown to work very well on the community aggregated supply and generation side is that of a Belgian company, Ecopower, based in Flanders. The attractive aspect of this model is that it aggregates. Individual shares can be as little as €250 and allow people to put in the outputs of larger microgeneration or even other generation assets. It also acts as a supply company providing the kind of innovative demand management services about which Dr. Sunderland has just talked - switching things on and off and so on. I agree with him that this aggregated community co-operative model seems to have significant potential to ramp things up at scale, because it is hard for any individual household to engage in this. I am familiar with, and hugely supportive of, the work Mr. Stewart is doing on the smart grid in Tallaght. Why have we not seen any such co-operatives, which are suppliers and generation aggregators, develop to date? What has been the obstacle to replicating what works in Belgium here? Mr. Stewart has been involved in this. What has blocked its real-world application in Ireland?
Mr. Dudley Stewart:
We can be supportive in this discussion as we have great evidence to bring to it. This is evidence we have acquired through State funding. Enterprise Ireland and IDA Ireland have always been aware of the importance of power quality and power reliability in Ireland. We have always operated on the basis that we must find solutions that allow us to exploit local willingness and ability to solve problems without compromising the grid.
Going back to the question the Deputy asked regarding south Dublin, Enterprise Ireland and IDA Ireland funded the smart grid test bed in south Dublin. South Dublin provided the main underpinning for that project. One of the biggest outcomes has been the development of district heating. Data centres' waste is being exploited for heating purposes. In that context, South Dublin County Council and the test bed were aware that utilities were looking at the issue of supplying power into that area. It is natural to try to supply power as locally as possible to take pressure off the grid. The State saw great value in this and Europe put €30 million into what is probably the fastest growing district heating scheme in Ireland arising from waste heat from data centres. There was a lot of community involvement from the whole south Dublin area. Despite all this, it took more than two years for South Dublin County Council to get its voice listened to with regard to having the maximum export-capacity connection charge be zero because there was no interest in getting involved and solving the problem. When the issue of generation came up locally, there was no attempt to link that generation to district heating schemes. Generation involves waste heat in a very big way. The best way to use waste heat is in an urban area. The best way to deal with that is to deal with communities. That is microgeneration and that is the very point we are making. Microgeneration is not about tiny rooftop solar generation.
Microgeneration is about people being able to solve their problems in their own way. This is the European Community model, not an idea that MEGA is putting forward. We have evidence that it took a long time to get connections to the test bed, that the utilities completely ignored the test bed and refused to get involved in it even though it was funded by the State. That test bed went on to win for Ireland the first EU Lighthouse City in Limerick, using technology developed without utility support in Tallaght, but with the support of TU Dublin and other universities in Ireland and other communities.
The evidence suggests that there is not a willingness in Ireland to embrace the fact that we have to involve other people in the solution of the energy problem, even though it is common sense. We have spent a long time treading the path trying to make clear to everyone that this should but uniting rather than dividing us. The days of empire building in utilities is long past. We are moving to a decentralised age where digital information systems are empowering for individual consumers. People can become more active in this area. This is important if we want a society that is happy with its governance rather than a society that is falling apart, as in the case of France.
It is obvious there are differing views on this issue. Up to now, the view was that the big players were not taking on board the need for microgeneration. I detect from Mr. O'Shea's comments that there is a shift in the ESB in that regard. Its previous position is understandable given that the ESB has been the main player in this area for generations. The new model will be made up of many small parts. There is, and will continue to be, a need for EirGrid and the ESB. There will also be local solutions.
The big players are often criticised. It is important to acknowledge the ESB's role in the pilot project, which is invaluable for us, the company and others interested in this area. I also acknowledge the roll-out of the EV charging points, which are a major success. Although not a matter for the ESB alone, the company delivered that project free of charge to customers. We accept that they cannot be provided free of charge forever but as a first step that is important. The picture is not entirely negative. We are faced with a challenge in rural Ireland where there are a large number of rural households, in respect of which many people are critical of the planning system. In the future, diesel and petrol operated cars will be replaced with EVs, such that we will need many EV charging points. Microgeneration is needed to meet that challenge. How we get around the questions raised by Mr. Stewart in regard to how local solutions will integrate with the grid and so on is beyond me. I worked for the ESB for a number of years but I do not have any great understanding of how everything works. It requires a lot of technical expertise. It is not a matter on which we should grind ourselves into the ground. Politicians do need to provide the policy and legislative framework to allow for the localised solutions, how they are to be integrated with the national grid and how the ESB transitions into its future position.
I thank all of the witnesses for their contributions, which have been very useful. I have learned a great deal from the contributions of the four groups.