Ruairi Ó Murchú (Louth, Sinn Fein)
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Apologies have been received from Deputy Duffy.

On behalf of the committee, I welcome Dr. Paul Deane and Mr. Cillian O'Donoghue. Dr. Deane is senior research fellow at the Science Foundation Ireland, SFI, research centre for energy, climate and marine in University College Cork, UCC. Mr. O'Donoghue is the director of policy at Eurelectric which is based in Brussels. We will discuss the European Union's policy response to the current energy security issues in Europe, including the implications of EU energy security policy for Ireland.

Before we begin, I will read a note on privilege and some housekeeping matters. All witnesses are reminded of the long-standing parliamentary practice to the effect that they should not criticise or make charges against any person or entity by name or in such a way as to make him or her or it identifiable, or otherwise engage in speech that might be regarded as damaging to the good name of the person or entity. Therefore, if the witnesses' statements are potentially defamatory in relation to an identifiable person or entity, they will be directed to discontinue their remarks. It is imperative that they comply with any such direction.

Mr. Cillian O'Donoghue:

I am director of policy at Eurelectric, which is the European electricity industry association. Despite being an Irish national, my focus is very much Brussels based and on EU climate and energy legislation. Thus, I will focus more on the European side today. I will talk about the cause of the current crisis, the impacts we have seen so far, the potential solutions which have been proposed at EU level and how we see things going forward.

The first matter I will discuss is the cause of the current energy crisis. It is pretty simple in that it is a gas shortage crisis. The root cause of the crisis is a shortage of gas in the system. This is having major contagion effects on electricity prices given that gas is often the price-setting technology for many hours of electricity. I am oversimplifying, but the electricity price is often just the gas price, multiplied by two and with the CO2 price added on top. This means that when gas prices become extremely high, as we have seen, we get very high electricity prices. To put it into context, gas prices are usually approximately €15 to €20 per megawatt hour at the Dutch title transfer facility, TTF. What we have seen is an explosion in prices. Prices reached more than €300 per megawatt hour in August and are now at €150 per megawatt hour which is ten times higher than they usually are. This is not a result of market dynamics but market manipulation and geopolitics.

Other factors have contributed somewhat.

We had a very hot summer, which means hydro reserves are low. It also makes it harder to transport coal. We have also seen low winds. Concerning nuclear outputs in France, 32 of 57 nuclear plants are not operating at full capacity. That has posed a challenge, but essentially it is a gas shortage issue. We get 40% of our gas from Russia; that is about 155 to 170 bcm. At the moment we are only getting 9% from Russia. Replacing that gas is a major challenge. That is the cause; I will now talk about the consequences.

The consequences have been quite major since this began. Wholesale energy prices have increased by 532% at EU level and retail prices have increased by 84%; there has been quite a dramatic increase. I will break down retail and wholesale. If we look at households, as I said, there has been an increase of about 84%. It is important to understand that for households, much of the electricity is purchased ahead in forward markets. Households are not fully exposed to the cost increase. While customers are already feeling the pinch, they have not been fully exposed. Some 80% of it is hedged and 20% is fully exposed. The price increases are only on the 20% that has not been hedged. We need to be conscious of that - it will come around in a couple of years. To contrast with Spain, it has a much higher exposure with less hedged electricity, meaning that their customers are feeling the pinch straight away at a higher level than in countries like Ireland.

The impact on industry has been quite dramatic. At European level, steel, chemicals and non-ferrous metals have been very much affected. I used to work in the non-ferrous metals sector in aluminium production for about six years - 50% of that industry has shut down since this crisis began. To restart an aluminium smelter costs between €200 million and €400 million. When you close one, it is quite a big deal. Generally, it does not re-open. The reason for that is the price increase. If you are an aluminium smelter in Spain who was paying €30 per megawatt hour two years ago and now you are paying over €300, then you are losing almost €2 million a week. That puts things into context. Electricity is 40% of costs for these industries.

I will now discuss what we have done at EU level. Two main things have been done: we have the REPowerEU strategy and a series of emergency interventions. The REPowerEU strategy was published in June as a reaction to the Russian invasion in February. It has three main pillars, the first of which is to reduce demand. We are going to try to reduce gas demand by 15% and electricity demand by 10%. This is quite a challenge. To put it into context, during Covid-19, when everything shut down, we only managed to reduce electricity demand by 8% to 9%; 10% is a major reduction. For consumers, behavioural campaigns are the best way to go. We need to raise awareness among consumers. For industries, we need to have incentives to reduce their production.

The second element is the need for a big increase in renewables. That is the smart way to go. The Commission said that we need 732 GW of wind or solar by 2030; these are ginormous numbers. To achieve that, we need two things. We need increased permitting and to sort out the bottlenecks in the supply chains. I am not an expert on the Irish market, but I think both of these also apply to Ireland. The final thing is diversifying supplies. We are building more LNG capacity terminals, but these things take time. We have gotten a lot of LNG from the US since the crisis began, but we will not have enough for this or next winter. The other thing we have done is come up with a series of emergency mechanisms, the first of which is transferring money from companies to vulnerable consumers. We need to protect the most vulnerable; that is important. We also put a cap on the price that can be charged of €180 per MWh. Our concern is that it is not EU-wide. One rule is needed for the entire EU. Different patchworks among member states is not good. There is also a solidarity tax from the oil and gas sector, which basically says that 33% of their profits should be taxed and redistributed.

On the outlook, I must be honest and say that this is a big crisis and one we expect to last not just for this winter but also next winter. Gas reserves are full at 91% at European level, but these reserves were filled with Russian gas. Next winter, we will not have that option. We expect two tough winters with high prices. In the medium term, the outlook is much better. If we can have a big buildout of renewables like the Commission is pushing for, that will make a massive difference. I thank the committee for its time.

Ruairi Ó Murchú (Louth, Sinn Fein)
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I thank Mr. O’Donoghue. That was enlightening and absolutely frightening. I call Dr. Deane to make his opening statement.

Dr. Paul Deane:

I thank the committee. I am speaking from a very wet, windy and blustery County Cork. I will give a short summary of my opening statement. Ireland is one of the most fossil fuel-reliant countries in Europe with fossil fuels meeting just over 86% of our energy supply in 2021, 77% of which was imported. We are currently spending over €1 million every hour on importing fossil fuels like oil and gas into the State. The cost of this massive reliance on imported fossil fuels is now reflected in the prices we pay to heat our homes, fuel our cars and power our appliances. While Ireland’s energy and climate policy is strongly influenced by that of Europe, our delivery of fuels like oil and gas is also impacted very much by what happens in the UK. Ireland’s geographical position on the periphery of Europe with no direct physical infrastructure connecting to other EU member states means that while we look to the EU for policy, we must also look to the UK for partnership in energy-related matters, especially in relation to natural gas.

Natural gas is an important fuel in Ireland. It heats over 700,000 homes and businesses and generates over half of our electricity. Over the next decade, the implementation of the Government’s climate action plan to reduce the pollution from greenhouse gases means we will use less gas on aggregate - about 40% less - in 2030, but there will be individual days when we will use more, especially when heating and power demand are high and generation from renewables like wind and solar is low. To understand gas security, it is important to distinguish between a physical interruption, where an importing pipeline is cut off, and a price risk, where gas is available but becomes expensive. Given our reliance on gas for energy, a physical disruption in supply from the UK into Ireland for any long period of time would be catastrophic, whereas a price disruption, which we are experiencing right now, results in extremely high prices of gas, rather than a physical interruption. While Ireland is not physically connected via pipelines to Russia, we are connected via prices and we see the consequences of Russian actions in our heating and electricity bills, which are passed through on European and global markets. The challenge of building gas infrastructure with the objective of enhancing energy security while at the same time reducing gas consumption with the objective of meeting climate targets is a new paradigm for policymakers in Ireland and across other EU member states.

Our analysis in University College Cork undertaken on behalf of the Electricity Association of Ireland shows that renewables such as wind and solar are by far the best way for Ireland to reduce its emissions and reliance on fossil fuels. They do this because they reduce the use of fossil fuels in power stations, but importantly, they do not replace the need for conventional power stations, which will remain for the next ten to 15 years especially during times of calm weather over north-west Europe. Decisions on building infrastructure to increase national energy security are complex because they involve value judgments of an uncertain future where large investment decisions must be made with imperfect information. What is clear is that all options to increase energy security in Ireland must be considered and evaluated, but it is not clear which are most appropriate and which options can be future-proofed to align with decarbonisation goals. All options for gas diversification and storage take time to deliver - two to three years at least. In the short term energy conservation in Ireland and across Europe is key to enhancing energy security in Ireland. A 10% reduction in national energy consumption delivers the same supply benefit as building 4,500 MW of wind, which would be like doubling today's wind capacity in the Republic of Ireland. While there are certainly external dimensions and risks to energy security such as the war in Ukraine, there are also internal challenges that must be acknowledged, chiefly the lack of agility in planning, permitting, and delivery of energy projects in Ireland.

While Ireland is not physically connected via pipelines to Russia, we are connected via prices and we see the consequences of Russian actions in our heating and electricity bills which are passed through on European and global markets. The challenge of building gas infrastructurewith the objective of ing to enhance energy security while at the same time reducing gas consumption with the objective of meeting climate targets is a new paradigm for policymakers both in Ireland and across other EU member states. Our analysis in UCC undertaken for the Electricity Association of Ireland shows that renewables such as wind and solar are by far the best way for Ireland to reduce our emissions and our reliance on fossil fuels. They do this because they reduce the use of fossil fuels in power stations, but importantly, they do not replace the need for conventional power stations which will remain for the next 10-15 years especially during time of calm weather over north-west Europe. Decisions on building infrastructure to increase national energy security are complex because they involve value judgments of an uncertain future where large investment decisions must be made with imperfect information. What is clear is that all options to increase energy security in Ireland must be considered and eveluated, but it is not clear which are most appropriate and which options can be futureproofed to align with decarbonisation goals. All options for gas diversification and storage take time to deliver - two to three years at least and in the short-term, energy conservation in Ireland across Europe is key to enhancing energy security in Ireland. A 10% reduction in national energy consumption delivers the same supply benefit as building 4,500 MW of wind in Ireland. That is like doubling today's wind capacity in the Republic of Ireland. While there are external dimensions and risks to energy security such as the war in the Ukraine, there are also internal challenges that must be acknowledged, chiefly the lack of agility in our planning, permitting and delivery of energy projects in Ireland.

We have declared a climate emergency in Ireland, there is a war in Europe and we have an associated energy crisis, yet the pace of energy infrastructure delivery and action in Ireland is at odds with these emergencies. I acknowledge the large financial package and measures the Government has put in place to protect families and firms to help them manage this current energy crisis, but we have yet to deliver on a plan to mitigate against it. We must take ownership and responsibility for our energy production in Ireland while being mindful of our European obligations and we must progress our continued co-operation with our good neighbours in the UK. Ireland should play to its strengths as a country with large renewable potential. We must also address weaknesses in planning and acknowledge that it will take decades to deploy these renewable resources. We must prepare for an energy transition which is taking place against a backdrop of a volatile and uncertain future in Europe. We must be mindful not to let long-term optimism on the real potential of offshore wind and fuels like hydrogen blind us to the short-term vulnerabilities of our energy supply. Actions must be taken on national security options such as gas storage and demand conservation in parallel with a massive buildout of renewables and implementation of energy-efficiency measures.

Action must be taken on national security options such as gas storage and demand conservation in parallel with a massive build-out of renewables and implementation of energy-efficiency measures. Ireland's energy security challenge is not the future. It is the present and demands the highest level of political focus possible. These will be our insurance policies as we transition away from fossil fuels towards the goal of a clean, sustainable energy future.

Seán Haughey (Dublin Bay North, Fianna Fail)
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Both witnesses delivered a stark message. My first question is for Mr. O'Donoghue and relates to how this crisis fits into the aims and objectives of the European Green Deal. Is this a crisis that can be exploited to reach net zero emissions by 2050?

I will ask Dr. Deane about the Irish situation. The Irish regulatory authority is the Commission for Regulation of Utilities, CRU. I have heard it said that perhaps the CRU needs more powers - excuse the pun - especially in the area of reduction of demand, which is what the European Union is endeavouring to achieve with the regulation. Does the CRU need more powers to deal with this unprecedented crisis?

My third question, on the development of offshore wind energy, is also for Dr. Deane. How is Ireland doing in that regard? It appears it is not doing particularly well at the moment. Is Dr. Deane satisfied that plans are in place to ramp up the production of offshore wind energy? I will also ask a related question about the European regulation of gas storage capacity. Dr. Deane dealt with it in his opening statement. Will he expand on the Irish position on gas storage capacity and what we need to do about it?

The message that both Dr. Deane and Mr. O'Donoghue have delivered is sobering in that this crisis will last this and next winter. We can take some consolation from the fact that the outlook is a little better in the medium term.

Those are my initial questions. If either of the witnesses wants to answer all the questions, that is also fine.

Mr. Cillian O'Donoghue:

I will respond to the first question as it was directed to me. The question was what this means for the European Green Deal. Will it be a step back? The opposite is the case. Electrification and decarbonisation will be accelerated but in the immediate short term coal usage will increase this winter. As regards power reduction, there has been a slight increase in greenhouse gas emissions in the electricity sector, which is not good but the general trajectory is positive. We expect electricity generation will be decarbonised by 2040. We are going in the right direction although coal usage will increase slightly this winter for security of supply reasons.

At European level, the ambition has increased since the Green Deal was agreed in June 2021. In June 2022, the REPowerEU strategy was issued and that is more ambitious. We have increased renewables targets to between 40% and 45%. We have also increased the target for the number of heat pumps and aim to have 20 million tonnes of hydrogen fuel in Europe by 2030. In reaction to this crisis, we observe more energy independence and increased ambition on tackling climate change.

Dr. Paul Deane:

Deputy Haughey asked whether the CRU needs more power. I do not believe so. We need to be more agile. This is not a criticism focused only on the CRU, but rather across all institutions working on energy provision in Ireland, whether they work on planning, processing or permitting. We need to display a level of agility. When I reflect on the last crisis, the Covid-19 crisis, and the remarkable job we all did in responding to that, in particular the Government, I note the level of agility and urgency was unprecedented. We took actions that were commensurate with the urgency of the crisis. We are not seeing that agility at the moment. The energy system is a little different as there is much more inertia in the system and permitting challenges are real.

The CRU does not need more power. Typically, if the CRU demands reductions in the electricity or gas sectors, it yields power through prices. It sends price signals to consumers and, as Mr. O'Donoghue said, we know those price signals work. We must acknowledge the pain in those price signals if we want people to reduce consumption. Whether it is industry, commercial use or residential sectors, some level of burden sharing and pain will be involved. The CRU has mechanisms at its disposal to exert influence through pricing.

Ireland used to be a leader in offshore wind. In the early 2000s, Ireland built one of the first offshore wind farms in the world, the Arklow bank. We were once a leader in this area and unfortunately we are now at the back of the pack. We have not built any offshore wind farms since. There is an expectation in the industry that the next offshore wind farm will not be delivered until after 2025 and many believe it will be 2027 or 2028. That is disappointing when one considers the timeline, the resource we have in Ireland, the crisis, our reliance on fossil fuels and how much we are spending on them every single hour. I mentioned that €1 million is leaving the State and going to companies around the world, while we have a rich resource on our doorstep and on our shores that we are not quick enough to exploit.

The potential for performance in offshore wind energy is real and the magnitude is massive. It is not just about producing energy but also about providing meaningful jobs, reducing our emissions, increasing our resilience and robustness as a society and becoming more responsible for our energy production. The energy production in Ireland for the past few decades has essentially been outsourced to other countries such as the United Kingdom, Norway and the United States. Those are the countries that produce most of the energy we use in Ireland. We need to take economic and environmental responsibility for our energy production and the great assets we have are our wind, both on and offshore, and even solar power. Our agricultural and farming communities also have huge potential to generate energy and as households we all have huge potential to save energy. In short, our offshore wind story is disappointing. We were once a leader but we are now at the back of the pack and that is disappointing when one considers the resources available here.

Ireland is relatively unique in comparison with other EU member states in not having any gas storage capacity. We used to have the Kinsale Head gas field which had the ability to store a limited amount of gas but it was important. Gas storage would be fundamentally important if there was a physical interruption of gas supply from the UK to Ireland. We get a little gas from the Corrib gas field, which meets about 25% of our annual gas needs. Unfortunately, that is dwindling and we will become more reliant on the UK for the transit of gas into this country. Most of the gas comes in via two undersea pipelines. If anything happened to those pipelines, it would be catastrophic, especially over a long period. Gas storage would help to mitigate that risk. The Government has launched a consultation process energy security to consider the gas storage option and options for liquid natural gas, LNG. We need to consider and evaluate those options to understand which of them is best suited to Ireland's needs but also to our long-term decarbonisation goals.

Once we decide which one it is, we need to act with agility. As Mr. O'Donoghue said, this crisis will not go away over the next couple of years. It will endure. We will have a hard winter next winter and Ireland will continue to have that exposure to fossil fuels. The crisis we are seeing at the moment is an energy crisis, but at its core it is a fossil fuel crisis. As Ireland is one of the most fossil fuel-reliant countries in the world, we need to do everything to reduce our reliance to that exposure.

Ruairi Ó Murchú (Louth, Sinn Fein)
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Go raibh maith agaibh. Senator Keogan will be followed by Senator Chambers.

Sharon Keogan (Independent)
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I have a few questions for the witnesses. I am quite shocked to hear this morning that we may expect this to last for another year. The public will be very disappointed to hear that this crisis is going to last that length of time and possibly even longer. I have a number of questions. My first question is for Mr. O'Donoghue. Many European countries such as France rely on nuclear power as their main source of energy. Could Mr. O'Donoghue give a brief overview of the role that he sees nuclear power playing in Europe's energy policy, both in the medium and long terms? Does he think more countries are likely to become reliant on nuclear power due to the war in Ukraine?

The cost of gas is increasing, largely due to the war in Ukraine. In addition to being one of the biggest exporters of gas, Russia is also one of the world's biggest exporters of uranium. Uranium prices are likely to go up in the same way that gas has. I would like Mr. O'Donoghue's view on that.

Ireland is investing heavily in wind energy. Our Government, under the Green Party, is hoping that wind can become our main source of energy. Could Mr. O'Donoghue comment on this energy policy? I visited Derrybrien wind farm last week with a number of my Independent colleagues, including Senator McDowell. Could Mr. O'Donoghue discuss his views on the decommissioning of Derrybrien wind farm, which is responsible for approximately 1% of Ireland's wind energy, during this energy crisis? There are 70 turbines there. They would provide energy for up to around 50,000 homes at this time. At a time when our Minister for energy is telling us all to have five-minute showers, it makes a mockery of the proposed green energy future to have 70 turbines in Derrybrien not turning. I would like Mr. O'Donoghue's views on that.

Ireland is investing heavily in wind energy. Our Government, under the Green Party, is hoping that wind can become our main source of energy. Could Mr. O'Donoghue please comment on this energy policy? I visited Derrybrien wind farm last week with a number of my Independent colleagues, including Senator Michael McDowell. Could Mr. O'Donoghue discuss his views on the decommissioning of Derry farm which is responsible for maybe 1% of Ireland's wind energy during this energy crisis? There are 70 turbines there. T hey would provide energy for up to around 50,000 homes at this time, at a time when our Minister for energy is telling us all to have five-minute showers and we have 70 turbines in Derrybrien not turning it just makes a mockery of the green energy future we are proposing to have. I would like Mr. O'Donoghue's views on that.

I believe Dr. Deane is a supporter of small fission nuclear reactors. I think he spoke about that on Newstalk in June 2021. Does he think there is a future and a place for a small fission nuclear reactor in Ireland? I know the Energy Regulation Act 1999 would need to be amended. As legislators, we have to look at the challenges that must be overcome if we are to adapt to nuclear power. Maybe that is something Dr. Deane could speak to as well. What are the challenges we would face as politicians? How practical does Dr. Deane think it is for Ireland to rely on wind as its main source of renewable energy? Would it be more or less practical, in his view, to build nuclear power stations or import nuclear power from abroad? We are already importing some from the UK and from France at this moment in time. I would also like Dr. Deane's views on the Derrybrien wind farm situation.

Ruairi Ó Murchú (Louth, Sinn Fein)
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A number of questions have been asked. We will start with Mr. O'Donoghue again.

Mr. Cillian O'Donoghue:

I thank the Senator for her three questions, which relate to nuclear, to uranium and to offshore wind. I was quite open and honest when I said that I see this crisis lasting. I think we need to be clear. We must communicate to citizens that it is something which will probably last at least 18 months.

The Senator asked about nuclear power and the outlook in Europe. Nuclear is a very sensitive issue across Europe. It is very different among member states. In the past year, we have seen something of a renaissance in terms of the pro-nuclear countries. Before the election in France, Mr. Macron said that he wants a big build-out of new nuclear plants. Sweden has recently said the same thing. A new nuclear plant in Finland was finally inaugurated and opened last month. I expect there to be an uptake in demand for nuclear, depending on the member state. We need to be conscious that large-scale nuclear new builds are quite expensive at the moment. At Hinkley Point C, the strike price was £92.50 per megawatt hour. I think that was in 2011, although I might have the dates a bit wrong. It was about ten years ago. With inflation, that goes to over £100. That is quite expensive. The issue we see is that new-build nuclear is quite expensive. When it comes to base load sources of decarbonised power, you basically have nuclear or hydro power, and hydro power is based on geographical endowments. Hydro has to be located close to certain geographical endowments. Wind and solar with battery is another option but, again, that is an intermittent supply which needs to be balanced out. We expect nuclear to increase in the role. It is important to understand that electricity demand in general is going to increase dramatically. We expect an increase in demand by 2050 - it will probably double - which means that even if the share of nuclear in the energy mix stays the same, the quantity of nuclear that we will produce will increase.

I will speak on small modular reactors, SMRs. This is a new technology but it has some potential. I am oversimplifying here but the idea is that it is a bit like an iPhone. By mass-producing this product - the nuclear SMR - you make it much cheaper. I was recently at the international electricity summits which were attended by representatives from USA, Japan, Canada and Australia. There was a big focus on SMRs and the potential we see there. We have to see how it develops but I think it has a lot of potential. That is something which is the subject of a lot of interest in the industry.

The uranium market is relatively diversified. The biggest producer is now Kazakhstan, which has overtaken Russia. The market is largely diversified. The only issue is for countries that are reliant on Russia. Certain plants in eastern Europe are reliant on Russian fuel and on what are called cakes, or nuclear rods, from Russia. It is hard to transition to non-Russian sources, particularly in countries like Slovakia and in the case of one of the reactors in the Czech Republic. There is about three years of supply there, but being able to switch to non-Russian sources is a bit of a challenge. They have three years to find a solution but it is a challenge. For new builds, however, there are many uranium sources. That is not an issue.

I am not an expert on the offshore wind situation in Ireland but I would say that offshore wind tends to make a lot of sense. In Ireland there is a target of 7 GW of offshore wind. It makes sense to support that strategy. Many member states cannot go for offshore wind projects. The two big obstacles are permitting and supply chains. We need to speed up permitting. At EU level, we are trying to pass legislation which will basically come with go-to areas for nuclear builds. This will ensure that projects can only be slowed down for a maximum of two years. We are in a strange situation because projects take seven to ten years to get planning permission and less than two years to build. That is not correct. We need to find a solution there. The second thing is supply chains. A lot of the big companies that supply wind components are not doing very well and some are losing money. I refer to companies like Siemens and Vestas. We need to find solutions so that we have the components because they are getting very expensive. That is also linked to raw materials. The prices of the raw materials we use for windmills - steel and copper, etc. - have gone up. Although we should definitely go for offshore wind, we need to find solutions to those two challenges.

Sharon Keogan (Independent)
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Does Mr. O'Donoghue have a view on the Derrybrien wind farm or is he familiar with it?

Mr. Cillian O'Donoghue:

I am not familiar with it so I should not comment. Dr. Deane is better placed to comment on it.

Sharon Keogan (Independent)
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I thank Mr. O'Donoghue.

Dr. Paul Deane:

I thank Senator Keogan. Respectfully, I cannot answer questions on the Derrybrien project because unfortunately I do not know enough about it. I know very little about it, so I apologise.

I would respond to the Senator's questions about nuclear power by saying that I am a supporter of any decarbonisation option. It is not so much that I am a fan of nuclear power, but that I do not like what the science of climate change is telling us. It is very serious. In a country like Ireland that is so reliant on fossil fuels, we need to keep our minds open to all options to help us to reduce that reliance, no matter how socially or politically unpopular they may be. Nuclear is one of those options. We need to manage our expectations around nuclear. Traditional nuclear plants like Hinkley Point in the UK, or the large nuclear plants they have in France, would not be suitable for Ireland in terms of its size. As Mr. O'Donoghue mentioned, there would also be issues in terms of the build-out time. It would take way too long. The SMR type of nuclear technology that has been discussed may or may not be suitable for Ireland, but again we need to manage our expectations around that. These reactors are conceptual at the moment. They are not commercially available.

Looking at the different peer-reviewed and scientific literature they may not be available until 2030 or 2035. That is at least one or two decades away. That is too far for the current energy crisis. We should keep our minds open, and an eye on that technology, but it is very far away and again we should not let the long-term optimism of that technology blind us to the vulnerabilities we have in the short term. We should keep our minds open on that technology, but the technology needs to be proved commercially viable and, more important, to be socially safe before we start looking at it in Ireland. Wind energy is our greatest strength. We do not have massive fossil fuel reserves in Ireland. We do not have large hydro resources as they have in Scandinavia. We do not have a huge nuclear tradition as they have in France. What we have in Ireland is lots of weather. We have lots of wind and reasonable amounts of sunshine. We have a huge offshore resource. It is our greatest strength in Ireland, so it makes a lot of sense to tap into that strength.

In terms of our overall energy supply, wind will do a lot of the heavy lifting in future. It will get us most of the way there in reducing our reliance on fossil fuels, but it will not get us all of the way there. We need to acknowledge that there will be days, often ten days or even a number of weeks, when wind speeds will be low. We will have dark periods, whether it be night-time or winter time when we will need to look at some form of strategic or seasonable storage of energy or electricity in Ireland. There are a number of options such as decarbonised gases like hydrogen, but again I caution that this is a decade or two away. At the moment we are still 86% reliant on fossil fuels in Ireland. We need to have a massive build out of renewables before we get to any kind of serious thinking around the strategic need for energy or electricity storage in Ireland. Our studies in UCC have demonstrated when we simulated lots of different futures on the energy and power system in Ireland that wind can do a lot of the heavy lifting. However, it is going to need something else to step into the breach when it is just not windy and the weather is not there, particularly across north-west Europe. I hope those have answered the Senator's questions.

Lisa Chambers (Fianna Fail)
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I thank Mr. O'Donoghue and Dr. Deane for their presentations. I agree with Deputy Haughey that what they have told us is frightening. I do not think most of us in the Oireachtas are aware of the scale of what has been outlined. Mr. O'Donoghue is taking more of a high level European view and, therefore, I want to ask about the REpowerEU plan that was announced to deal with the war in Ukraine and imports of Russian gas. If we are looking to reduce our demand by 15% but we import 40%, how are we planning to deal with that? It does not look like the numbers add up. Are we relying heavily on renewables increasing in the short term? Are we relying heavily on demand reduction, given it is difficult to calculate how much we can achieve? I think he said 5% was challenging but doable, which seems like a small amount even at that rate. Can he elaborate on hedging and how he sees that playing out in the next 12 to 18 months? I was aware that a lot of the energy was bought in advance, but I think it is still misunderstood as to how that will impact on consumer prices in the next year to 18 months.

I would like ask Dr. Deane about the Irish situation. According to the figures he outlined, it is quite embarrassing that we still rely on fossil fuels to the level of 86%. It is even worse and almost negligent that we are still importing those volumes of fossil fuels at the cost of €1 million every hour. It is disgraceful we are still at that point. With regard to the Corrib gas field, which I acknowledge is on the decline, is there any other potential there? What is the short-term solution for gas storage? What can be done in the next 12 months to try to address that issue? I was also struck by what was said about there being no mitigation plan against the energy crisis. We are reacting and throwing money at it, for want of a better phrase, for the next while. What kind of mitigation plan would Dr. Deane put in place in Ireland? What should we ask the Minister with responsibility for energy to do in the next 12 months?

Mr. Cillian O'Donoghue:

I thank the Senator. There were two questions for me. The first was about the replacement of Russian gas supply and demand, and the second was about hedging. The Senator's analysis is correct in terms of supply and demand. Traditionally, we received 40% of our gas from Russia, which was 155 to 170 bcm. We are now getting 9%. Approximately 150 bcm needs to be replaced. It is quite tricky to reduce demand. With gas we will try 15% and with electricity we will try 10%, but that still will not bring down the curve enough. We are hoping that a milder winter will mitigate the situation, but we are trying to get more gas in via LNG. In particular we have the idea of using floating terminals, also known as FSRUs, which are used in certain member states. For example, there is a joint project between Estonia and Lithuania to at least get minimum gas in for this winter. It takes a year or longer to build a LNG terminal, but that is something we will try and build out. However, the Senator's analysis is correct and that is what I am flagging for this winter. The supply and demand curves just do not match. The demand is inelastic and hard to reduce. It is also hard to get new supply on board. That is the challenge. We hope that France, which traditionally exported 10 GW of electricity but is now importing 10 GW, will quickly get back up nuclear plants that are currently down. There is a big push in France to do that. We hope that the weather is suitable as well.

Hedging is a normal strategy in the electricity sector. We see from the current crisis that it creates winners and losers. I will speak both to the consumer perspective and then the electricity producer perspective and will use the example of the aluminium sector in which I worked for six years. If consumers are hedged and, therefore, have bought electricity for the next 15 years at a set price of €30 per MWh, they are not affected by the high prices now. They are only paying €30 instead of €500, which is the price to which some hours have gone. They are making a lot of profit as they are hedged. From the other side of the coin, if a company is a supplier and has to sell this electricity for €30 per MWh, even if buying it at a much higher price from Russia, then it is losing money and some companies are going bust. That is how hedging works. They buy out in the time ahead and it creates winners and losers. I will give one example from Germany. A large German company had a long-term contract for Russian gas. It has to sell its electricity at a certain price to its customers. The Russian gas, which was at a set price, was cut off. It then had to buy from the market at an extremely high price, but has to sell to its customer at the agreed price, which is hedged. It made a huge loss, because it is buying gas from the spot market at an extremely high price but is locked in to sell to its customer at a low price. The state had to intervene to find solutions to alleviate that problem. That is how hedging works, and I hope I have explained it well enough.

Dr. Paul Deane:

I thank the Senator for those questions. With regard to our reliance on fossil fuel, I agree it is incredibly disappointing and there is a low awareness of that right among the public. We tell the world we are green and clean, but we are not. We are one of the most fossil fuel reliant countries in Europe. The main source of fossil fuel in Ireland is oil, and after that it is natural gas. As I said, we are now spending an incredible €1 million every hour importing those fuels. I am reflecting while looking out the window here in west Cork, and when considering the wind and waves and the natural resources we have in this country, it is a terrible indictment. We could even include farms. I am looking out at some small farms. Our small farmers and rural communities have the ability to produce our own renewable gas, particularly farmers who are looking for an exit strategy from farming sectors that are not financially productive. We could produce approximately 15% of our natural gas needs from our land by 2030, if we put a good focus on it. Not only would that meet some of our future natural gas needs, it would also help those rural communities and farmers who are struggling. It would give them different options to use their land for something more financially viable. It is disappointing and a terrible indictment. We came out of the previous energy crisis in the 1970s and 1980s and we were approximately 90% reliant on fossil fuels.

Today we are about 86% reliant on fossil fuels. What has changed since then is that now we have the technologies. We know we can produce huge amounts of electricity from onshore and offshore wind farms and from solar farms. We know we can save huge amounts of energy from our homes and from our transportation system. It is not that we do not know what to do. We know what we have to do and we have the technologies. That is important.

To address the question of the idea of a plan, we have put in place some very generous financial measures and means for families that are struggling at the moment. That is necessary, particularly to ensure that those on the lowest incomes get the highest level of financial protection. That is a short-term plan and we need to think more in the long term. We have a number of policy instruments and policy packages that tend to be operational. We have a national development plan and a climate action plan. We have different plans around healthcare and transport but what is really needed is an integrated plan to make the most of our energy resources. Norway for example, has done an incredible job in harnessing the potential of its offshore resources which are oil and gas. For Ireland it would be onshore and offshore wind. We must look at how Norway uses that resource, not just to earn money for companies but to improve society. People are put at the centre of that resource potential. The resource is used to develop the education and healthcare systems. This is important because we do not just need an energy plan in Ireland, we need a plan for our wider society. Energy does not just stop at the end of a cable or at the end of a pipeline. It comes into our communities; it affects our physical and mental health and affects us in many more ways. We are seeing those impacts at the moment through high prices right across society. I would call for a wider masterplan in how we use our natural resources and how we harness that potential. This is not just to make us energy independent and to move away from fossil fuels, although that is fundamentally important, but also how we can use it to enable other societal developments which are important for us in the same way that Norway has done around its healthcare, education systems and infrastructure. Looking to other countries for ideas on how we develop those resources is fundamentally important. It is not just about energy. It is about people and communities and it is about having a coherent plan that allows everybody to come on board as we move away from fossil fuels.

On the Corrib gas field, today, this field meets about 25% of our annual gas demand but it is dwindling. We will become more and more reliant on the physical infrastructure we use to import natural gas from the UK into Ireland. As I have mentioned, the Government has a consultation process on energy security at the moment. This process looks at a number of options, such as floating offshore energy which would be State owned and strategic gas storage, either onshore or offshore. Demand-side measures are also being looked at but we need to temper our expectations. A lot of those measures will take three to four years or longer to achieve in terms of implementation, permits and delivery.

In the short term, the most powerful thing we can all do is conserve energy. I appreciate this is often politically and socially unpopular. Encouraging people and giving them information on how they can save energy at home, in the office, in schools and universities is fundamentally important. Unfortunately, some of these ideas get ridiculed within the media but it is no laughing matter for a lot of families out there. Yes, taking shorter showers is an idea that is often socially unpalatable but electric showers are one of the appliances that use most electricity in an Irish home. They use between €400 to €500 worth of electricity per year for a typical Irish house. Empowering consumers, families and communities on options to reduce our reliance on and our exposure to these prices is something that is necessary. I appreciate the political difficulties of this but we are in a very serious situation here.

As Mr. O'Donoghue and I have outlined, this crisis is not going to go away. The measures we need to put in place will take time but time is not on our side. We need to act now. One of the most pragmatic things that can be done, and I acknowledge that it will not be politically popular, is to give people information on how to reduce their energy use. That increases our resilience in terms of security of supply and it reduces people's energy bills for electricity, transport and heating. That is fundamentally important. It should be our goal in the short term until we find a line of sight out of this current energy crisis.

Marian Harkin (Sligo-Leitrim, Independent)
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I thank our contributors. I missed some of the presentations at the beginning. From what I have heard, I am not sure if that is good or bad. I have heard enough in the meantime to have loads of questions and if they have already been asked, please ignore them. I will address the first question to Mr. O'Donoghue. At the meeting on 25 October the energy ministers will look at a number of measures. These include a new pricing benchmark to limit prices, joint procurement of energy reserves and the EU supporting energy supplies in Ukraine and Moldova. I would like Mr. O'Donoghue to elaborate on each of those points, especially on some kind of new pricing benchmark to limit prices. In regard to joint procurement of energy reserves, are we bidding against one another as it is. What is the current situation? There is also talk of a one-off, windfall tax which Mr. O'Donoghue might be able to elaborate on. My other question is around the European Green Deal. He spoke about increased ambition on heat pumps and hydrogen usage. Perhaps that could be elaborated on and the practical steps that could be taken might be outlined.

This is for both of the witnesses. In the area of farming energy; bio-digesters, small turbines and solar panels, what is the Green Deal saying and doing to promote these? Dr. Deane said that the challenge for Ireland's energy security is the present not the future. That is the kind of thing that strikes fear into the hearts of everyone. Dr. Deane is talking about this winter and the next. We have already looked at some immediate short-term measures; perhaps the witnesses would like to elaborate on any of those.

I want to go back to the issue of saving energy. Dr. Deane mentioned earlier that it was unpopular but I actually think that it is not as unpopular as he may think. From my conversations with people I find that they are interested in how they can save energy. The crucial aspect is how that information is presented. If it is presented by Ministers as a means of getting the Government off the hook for policy failure or inaction or whatever word one wants to use, then people are not interested. It needs to be presented as a solution for families and businesses. I was in with my hairdresser on Monday and he was speaking about the fact that he is now checking on the immersion. He is asking how many people are booked in. He is checking the amount of energy he is using. He is going around switching off the lights like everyone else, but he is specifically looking at his business, as many households are at the moment, to see how they can save energy because people cannot afford their energy bills. How the message is delivered is crucial. I think we delivered it in the most inappropriate way to begin with. It is really hard to go back from that but that is the responsibility of all of us.

My second question refers to the Commission for the Regulation of Utilities. Deputy Haughey already asked whether this body needs more power and the answer was "No" but what about the issue of standing charges? The CRU cannot deal with this issue. It is an absolute rip-off. We need to look at legislation so that the CRU certainly has a role to play there. I would like to get the witnesses' comments on this.

Reference was also made to there being no gas storage facility in Ireland and that if there was an interruption in supply from the UK that it could be catastrophic. We know that anything can happen. It is not likely, but we know that it is possible. As far as gas storage options are concerned, what are those options that can be brought on board as soon as possible?

What is the shortest amount of time before we have meaningful gas storage options that would contribute? Do the witnesses have any comments on the LNG terminal at Shannon? I will understand if they do not. I was concerned when Mr. O’Donoghue spoke about the winter ahead. He said that they are hoping for a mild winter and that France can ramp up its production of electricity. That strikes fear into me because it seems as if we are in a position where there is very little we can do in the short term. Will the witnesses share their thoughts on very short-term measures other than saving energy? As I said, that is crucial and we need to revamp the message we are giving people.

Mr. Cillian O'Donoghue:

I thank Deputy Harkin. I think there are three questions; the first is about the emergency mechanism discussions on 25 October, the second is about the windfall tax and the third is about hydrogen and heat pumps.

Three things will be discussed on 25 October. Gas price caps would have made more sense if we had done them earlier in the process. It is quite technical - the price of gas is linked to the title transfer facility, TTF, which is the hub. It is a fluctuating price. Before ten years ago, gas was linked to oil via oil indexation. Now, it is linked to the TTF hub, which means that when the price at the TTF, which was €15 to €20 traditionally, goes to €300 or €150, the revenues of exporters such as Russia and Norway and, to some extent, Algeria increase dramatically. Russia has made a huge amount of money since the war began, as a result of this pricing mechanism. If the price of pipeline gas had been capped early in the process, much of the revenue which accrued to the Russian state could have been reduced. It would have also helped to reduce electricity prices. I am referring to pipeline gas. LNG is different. Like oil, it is a global market, so the exporter can say no. With pipeline gas, there was some consumer market power to ask for a lower price. It would still have been higher than usual, but there was some scope. Gas price caps make sense if they are well designed and do not undermine security of supply. This is something that should perhaps have been considered earlier in the process.

Another issue is joint procurement. In the interest of European solidarity, it is good to have some joint procurement processes. Traditionally, the European Commission or any European entity is not designed to buy gas. It is a bit like the position with Covid-19 vaccines - we are not set up for that. Usually, it is done by companies. In the interest of solidarity, we need some mechanism to be put in place. That is being set up now. I cannot comment on the rush for gas between member states; I am a member of a European association so I must be sensitive in what I say. We need to show solidarity. There are concerns in internal energy markets that some potential go-it-alone strategies by member states could undermine this solidarity. It will be a test this winter. It is very important that we stay together. That applies not just to the purchase of gas but to exports of electricity also. In the internal electricity market, IEM, electricity flows where it is best to flow. It is important that it stays open. If some member states say they are not going to export electricity because they want to give it to their citizens locally, that is not good. It should be avoided. It is not something that just relates to Ireland, it relates to all member states. Some member states are saying that they want to prioritise their own citizens this winter if there is not enough electricity.

The final question was about the new pricing benchmark. The reference in Europe is the TTF, which is the title transfer in the Netherlands. People are noting that the prices for LNG are much lower in the Asian market compared to Europe. They are asking why we are not investigating the use of an alternative benchmark to the TTF, such as the Asian benchmark, and adding a premium on top to get the supply to Europe. That would entail using the east Asian benchmark, hypothetically, and adding 10% to outbid east Asia. If a shipment is coming from Qatar and it can go to either east Asia or Europe and it will get 10% more in Europe, that might work for LNG. It is starting now but will take a few months to set up. It might make sense. There was a lot of manipulation between the TTF and Russia, which got a lot of revenue from that.

The second issue asked about was the idea of a windfall tax. We cannot do a tax at the European level. As the Deputy will know, tax is the competence of member states and is important for Ireland. As a member state, we have certain taxation arrangements which the EU cannot touch because it is not an EU competence. We came up with an inframarginal revenue cap of €180 per MWh. A tax cannot be retroactive. There needs to be some visibility of where we are going. The inframarginal tax was a kind of compromise but it is not the ideal solution. There probably needs to be some redistribution. There is a solidarity contribution from the oil and gas sector. It is important to understand that the oil and gas sector are the ones making the real profits, rather than the electricity sector, which is very different. That is represented in the company share prices. If you look at the share prices for oil and gas majors, they have really gone up since the beginning of the crisis. That is not the case in the electricity sector. It is important to distinguish between electricity and oil and gas.

The other issue was about REPowerEU and hydrogen and heat pumps. On hydrogen, we have an objective of 20 million tonnes by 2030. It is very ambitious. It is a very nascent industry. We are trying to get 10 million tonnes from Europe and 10 million tonnes imported, particularly from north Africa. That is the objective; we will have to see how that goes. We need to get these projects up and running as soon as possible. We all know that heat pumps make a lot of sense. Many of the obstacles are at the local and household level. I do not think as a member of a European association that I am best placed to comment, as the obstacles are more of a local issue. As Dr. Deane said with regard to savings this winter, it is important that politicians communicate to consumers that anything they can do to reduce their consumption is much appreciated. Campaigns on behavioural change will help a lot.

Dr. Paul Deane:

I thank the Acting Chairman and Deputy Harkin. To pick up on Mr. O'Donoghue's point, the Deputy is spot on. How we deliver the message and who delivers the message are fundamentally important. When you step back and think about it, it is about showing people how to reduce their energy consumption, rather than telling them. That nuance is fundamentally important. I agree with the Deputy that there is an appetite out there. It is frustrating, disappointing and a little sad when I see many people in my own community spending a lot of time plugging out things like phone chargers and televisions, which is not very impactful. For example, if you were to leave the television screen the committee is using to see me on standby for a full year, it would probably use between €5 and €10 worth of electricity, which is not impactful. Things like tumble dryers, washing machines and home heating are significant areas that can allow us to reduce our energy use, bearing in mind that many of those things are not suitable for the elderly or vulnerable. They are primarily suited to families who are fit, able and healthy. This is also part of the messaging in carving out the families that this information should go to and how it can be delivered. It is fundamentally important. UCC's analysis showed that just five appliances in our homes use about half of our electricity. Those are typically things that heat something up or cool something down. That should be the national focus for families to keep on top of. We also need to keep an eye on our driving and home heating. The home heating point should be prefaced by the fact that it is only suitable for families who are fit, healthy and able. The vulnerable and elderly probably cannot save much more, as they are already struggling and incredibly lean in their overall energy use, which also needs to be considered.

I cannot answer about the standing charges set by the CRU because I unfortunately do not know enough about it. Whatever about more powers, institutions such as the CRU, EirGrid, An Bord Pleanála and local county councils dealing with environmental planning need more people and resources. When we consider the pipeline of energy projects that are waiting to be delivered and the workforce that has to process them, the two are at odds. Powers are one thing. People, or human resources, and increasingly climate and energy literacy are fundamentally important across the public institutions to ensure the applications for permits can be processed at an appropriate speed for the crisis we are in. The issue is not so much about railroading through planning decisions quickly - that cannot happen - but about making good decisions fast and a lot of people are needed for that. In respect of gas-storage options, the previously mentioned consultation on energy security the Government is engaging in at the moment looks at a number of options including State-owned floating LNG and strategic gas storage. The report states that floating offshore LNG storage is the option that would be the quickest to implement. It would fully mitigate against a 30-day physical interruption of gas supply from the UK. However, expectations on that need to be managed.

Floating LNG is a hot resource at the moment. As Mr. O'Donoghue will attest, many other European countries including Germany, the Netherlands and Lithuania are looking at options for floating LNG facilities. Many people are looking at this to increase their gas security diversity, but only there are only about 37 of these floating facilities in the world. Ireland would have to challenge hard to get access. Knowing the options is one thing, but how feasible or realisable that option is during the current energy crisis is difficult to understand. We need to evaluate all the options from floating LNG storage, to offshore exploration, to onshore gas storage, while being mindful that these options are probably deliverable within a window of three or more years. In the medium term the most fundamental action we can take is to encourage and inform people to take ownership of their energy consumption and help them to understand how to reduce it as much as possible. We still need to be mindful that will not shield us from the energy crisis but it will blunt the edge of the blade a little.

Marian Harkin (Sligo-Leitrim, Independent)
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I agree about people needing information, but who delivers the message is crucial. I have met too many people who feel the responsibility is being put almost exclusively on their shoulders as the Government is unable to take any meaningful short-term measures. Any message must be definite, "realisable" - that is the word Dr. Deane used earlier about the floating offshore energy terminals - it must be doable and must have a timeframe. If people receive both of those messages together it will make a difference, but when people feel the responsibility for most or all of this is being put on their shoulders it is not a good message.

Joe McHugh (Donegal, Fine Gael)
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A quick succession to the Chair happened during that contribution. I have been listening attentively to Dr. Deane and Mr. O'Donoghue and I thank them for their solid, if somewhat sobering, presentations as regards the grim reality we are all facing. I will not delay. I thank Deputy Ó Murchú for chairing in my absence. I call Deputy Troy.

Robert Troy (Longford-Westmeath, Fianna Fail)
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I will ask a couple of quick questions. Considering our dependency on fossil fuels is at 86% and 75% of that is imported, will either of the witnesses indicate, at the time Ireland was permitted to use industrially harvested peat, what percentage of our energy was derived from our peat power stations? Energy security for Ireland, as both speakers have been at pains to say, cannot be dealt with in isolation. It is part of the energy security of Europe and while Ireland is wholly dependent on external factors, we have a major opportunity at this time to harness wind energy.

It is disappointing to hear that in the space of 20 years, we have gone from being a leader to being a laggard. Some of that is down to NIMBYism, some is down to bad policy decisions and a lack of foresight, but given the energy crisis we are now in, what can be done to accelerate the generation of wind energy, especially offshore wind energy? Mr. O'Donoghue stated that planning and permitting takes seven to ten years while construction only takes two years. Surely we can do something at a European level to streamline the permitting and planning process in order to speed it up.

It was mentioned that as a country that is dependent on agriculture, 15% of our natural gas usage could be provided with what I presume is anaerobic digestion. Correct me if I am wrong. Solar power was not mentioned much today. Perhaps the witnesses could explain what could be done to incentivise farmers to invest in anaerobic digestion and solar energy. Mr. O'Donoghue stated the reserves are okay this year at 91%, but most of that is Russian gas and he is concerned about how we will maintain our reserves for 2023-2024. Does he have any suggestions about how to address that?

Mr. Cillian O'Donoghue:

I will let Dr. Deane speak first and I will respond afterwards.

Dr. Paul Deane:

I thank Deputy Troy for his questions. I do not have the figure for peat but I estimate it is likely to be in the low single digits. Electricity accounts for about 20% of the energy we use in Ireland. We often confuse energy and electricity. If we look around our homes, offices and the room we are in at the moment we see that electricity is commonly used to power appliances. However, outside our homes we see trucks, heating systems and large industry use oil and gas for heating and transport and these are the dominant vectors of energy. Electricity accounts for about 20% and I estimate peat probably accounted for single digits as a percentage of our overall electricity production.

As the Deputy was speaking I was reflecting on the remarkable transition that utilities such as Bord na Móna have delivered in the midlands in transitioning away from peat and bringing on new energy sources such as onshore wind, anaerobic digestion and planning for hydrogen and different combustion fuels. It is a cause of great hope as it demonstrates what can be done when people put their minds to it, there is a strong political focus, society has trust in those utilities and there is a strong social focus. We should look to the transition in the midlands to give us optimism. I acknowledge it has not always been easy. People have encountered many difficulties and much hardship but the transition by Bord na Móna in the midlands from a solely brown producer of electricity to trying to be one of the largest green producers of electricity and energy, is a good example for Ireland and the rest of Europe about what can be done when we put our minds to it.

I will also bring in the agricultural dimension. We have huge potential to grow energy, especially from anaerobic digestion as the Deputy mentioned. We are brilliant at this in Ireland. We grow silage. We have large quantities of slurry. When silage and slurry are put into a metal tank, a renewable gas is produced and that is what we need at the moment. What farming families and communities need are options to diversify away from elements of farming that are unprofitable. What is fundamentally important to realising anaerobic digestion is not the technology. Countries such as Germany and Austria have thousands of digesters.

It is not technology; it is a strong stable policy. If we are asking farming families and co-operatives to come on a journey with us to produce energy, the thing they would need most and crave most is a secure, stable and long-term policy. That would mean that if they are to make this investment from using their land to produce food to using their land to produce fuel in different ways, they would need some element of financial cover because it is a large investment but also something that is necessary. It is something that is not suitable for all elements of farming but it is something that should be explored and gives farming families options and allows us to be responsible for a lot more of our natural gas production in Ireland.

Coming back to the point I made in my opening statement, while we need to move away from fossil fuels in Ireland, they are not going to go away overnight. Moving away from fossil fuels is a two to three decade transition. We will need fossil fuels in 2020, 2030 and 2035 and producing those from indigenous sources in a responsible and sustainable way is something that is very important.

On the Deputy's final point about solar, we do not often think about Ireland as a very sunny place. With the recent advances in solar technology, particularly the reductions in cost, coupled with the increases in electricity and energy prices we are seeing at the moment means, solar makes a lot of environmental, social and economic sense in Ireland. We recently did a study for the Irish Solar Energy Association where we looked at the potential for residential solar production in Ireland. We counted the household roofs that could be used in a meaningful way to produce their own electricity and we found that about half of the homes in Ireland are very suitable for solar panels. For example, if a family in Dublin put six or seven solar panels on their roof, they would reduce their electricity bill by about €400 this year. They would get a payback on their investment of about seven to ten years but what is really nice about solar energy is that they reduce their energy bill this year by about €400 but they also reduce it for the next 24 years to 25 years because that is the period these panels last. When we think about the one-off financial measures we are giving to families at the moment, they are practical but giving families the opportunities and possibilities to produce their own electricity is something that will endure and, hopefully, outlast and outlive this energy crisis. Looking at supporting solar panels for residential development, for farmers and for business is a really good idea. We do that to a certain degree at the moment through generous grants from the Sustainable Energy Authority of Ireland. From a sourcer's perspective, having a closer look at 100% grant funding for families who are in receipt of a fuel allowance is something that would be very impactful and meaningful not only for those families who produce their own electricity for their homes but also for the wider benefits in terms of jobs and employment in Ireland.

Mr. Cillian O'Donoghue:

I will respond to Deputy Troy's three questions on wind, solar and farming biogas. On wind, Denmark is a good country to use as an example. It went very much pro-wind over a decade ago. I do not know the numbers off the top of my head but I think more than 50% of its generation is wind. It is a good country to take inspiration from. I repeat that the obstacles are permitting and supply chains. On permitting, at EU level we have come with a new proposal to speed up permitting processes. That is now going through the European Parliament in what is called co-decision. The idea is that when this is approved, one can hold up a project for a maximum of two years. There is the principle of an overriding public interest, which means that in designated go-to accelerated areas, the project can only be held up for two years. We think it would help a lot and we ask for Ireland's support for that as it goes through co-decision.

Solar makes a lot of sense. The REPowerEU strategy came with a solar power strategy. We should put solar on rooftops wherever we can and wherever it makes sense we should do it. Again, there are some supply chain issues with silicone from China and so on but we think we should put solar wherever it makes sense. Some Irish MEPs, particularly Mr. Seán Kelly, MEP, who is based in Brussels, is also pushing solar and we work with his office on that and fully support it.

On farming an renewable gas, the REPowerEU strategy thinks we can have 35 billion cubic metres of renewable gases by 2030. There is potential there. More broadly speaking, and in the long term, at Eurelectric we see big potential for a win-win between energy production and farming going forward. There is a lot of farming land and if we can find a way, a sweet spot, for it to be a win-win for both farmers and energy producers, it will have a lot of potential. In the Common Agricultural Policy, CAP, review, we should integrate the energy dimension for farming and see what can be done there to have energy as a source of income or a win-win for farming.

Joe McHugh (Donegal, Fine Gael)
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I thank Mr. O'Donoghue and Dr. Deane.

Ruairi Ó Murchú (Louth, Sinn Fein)
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I agree with much of what has been said. Not only were the interventions comprehensive, they were absolutely sobering in terms of where we are at. Some of might have had a general notion that this will be bad for a considerable period of time but sometimes how bad it is going to be just needs to be laid out. If we are talking about where we are at, and the plans we have had in this State, there was a missed opportunity with Corrib in that we did not have an element of State involvement. The Scandinavian model of taking some money back, which you could plough back in and be a major player in all sorts of renewables is something we really have to go with.

I am always worried about nuclear. I get that nuclear is with us in terms of France and Germany and how much of it is used. I would ask a question about the dangers, and that is accepting we are not necessarily dealing with the Chernobyl-type technology. I would like to think there are more checks and balances. However, we had Fukushima and all that needs to go wrong is for everything to go wrong all at once. We live in a world where that happens more often. We have always had worries and particular difficulties as regards Sellafield. I would throw that question out for an answer.

The witnesses have said wind energy is where it is at and that we need to get our house in order. A significant amount of work has been done lately on that. There is the wider issue of planning. The Attorney General is carrying out a review and there may be legislative changes. There is a need for resourcing. If there are various points in the planning process, there is not much point in having them unless they are resourced, so people are not held up for a considerable amount of time, whether for small or big projects.

I would add my voice to what Deputy Harkin said as regards the Commission for Energy Regulation, CRU, in that we have to change the rules to ensure the State can buy backup generators, which unfortunately we will not have this year. We have a particular issue even if we had an endless supply of fuel at this point in time. The CRU is very good at telling us what it is not responsible for, whether we are talking about communal heating systems, for example, but this may be changing. There is also the issue with standing charges but that is what it is.

The witnesses, especially Mr. O'Donoghue, spoke about the European Union's proposals and proposals which have been implemented around changes in the energy markets and so on. We probably could have done something earlier, particularly if we were talking about capping. It has been said that there has been a lack of imagination in dealing with the reorganisation of the market and how it is orientated, and that is accepting there is a huge number of anomalies. The witnesses spoke about hedging and so on. Sometimes people think this can be a very simple process but we really need to deal with that.

The witnesses dealt with the issue of anaerobic digestion. We need to get our act together on it and on solar. On one level, we have talked to death about what needs to be done as regards wind, but we just need to get it done.

I want to ask specifically about geothermal energy because it is being looked at a possible solution in the context of some of the communal heating systems we have in this State that have ended up being gas-powered and utterly inefficient. People are dealing with huge costs at this point.

I have 14 other pages of notes, but I think we will just go with that.

Mr. Cillian O'Donoghue:

From my side, there were kind of two questions. One was on nuclear and the second was on whether we need a massive reform of the energy market.

On nuclear, my association is source-neutral. It is not my job to sell nuclear. We all know the pros and cons. That is the decision for policymakers on the basis of engagement with society to make a decision on whether to go for nuclear or not.

Basically, it needs to be broken down. There are four sources of decarbonised electricity – nuclear, hydro, wind and solar. There are some other smaller sources, but those are the four main ones. I understand that, from an Irish perspective, the potential of hydro is quite limited. If nuclear is ruled out, that leaves wind and solar. If Ireland goes all out on wind, it will have to have a balancing storage strategy. It has to be safe. If Ireland goes all out on wind, how does it balance the intermittency? In that context, a good discussion is needed. Is it hydrogen, batteries, hydropower or gas? This is a discussion that needs to take place in Ireland. If Ireland rules out nuclear and goes all in on wind power, how will it balance the grid? That is an important discussion. I do not know how the discussion in this regard is progressing in Ireland, but it is important that members are aware of that.

Electricity markets generally work quite well. What we need going forward is perhaps an evolution rather than a revolution. The issue is the gas market, which is being manipulated. I do not think we should go for the electricity market when the problem is in the gas market. That is the root cause of the problem. There are a few things in the electricity market that will help going forward. We think consumers should be more active, meaning more prosumers, more demand response and more role for the consumer to be active. We think also long-term contracts, which are kind of linked to hedging, will mitigate the risk from short-term price spikes. Those are some changes we can integrate. There would be a review. Next year, the reform will take place. I would just flag, once again, that the electricity market works well. It is the gas market that is the problem and the contagion effect of the gas market on electricity is what is driving up prices.

Dr. Paul Deane:

I agree with the Deputy on the nuclear safety issue. It is fundamentally important. We should again just stress that nuclear is our promise for the future – it should not be a distraction to our current problems. In a best-case scenario for Ireland, nuclear is 15 years away. It is the next 15 months that are fundamentally crucial for us. It should not become a distraction from the things that we need to do. If a decision is to be made on nuclear, it will likely be in the next decade, if the technology becomes available. We have to acknowledge that it is still yet to move from conceptual to the commercial. It is long way to go yet. In 15 years’ time, we will all be much older and much wiser, and perhaps the technology will have progressed. At the moment, it comes to back to what I said in our opening statement, which is that Ireland needs to play to its strengths. We have a lot of wind, space and ability to produce energy in Ireland. We have many clever and smart communities in Ireland who can help us with that. That is what we need to focus on now in the short term, rather than waiting for a technology that may or may not develop and all the issues that go with that.

On the Deputy’s question on the royalties and offshore extraction, I agree with him. This is an important decision point for Ireland.

Dr. Paul Deane:

There is some background interference coming from someone’s microphone.

On the resource extraction, it is an important junction at this early stage for Ireland’s offshore potential. One can look at the model that the UK took in terms of oil and gas exploration, or one can look at the Norwegian model. The Norwegian model, or the Scandinavian model, is interesting because the Norwegian Government took an active, rather than passive, role in partnership. When a country takes on the role of being an active partner in these projects, it must help to de-risk the projects to some degree. When a country de-risks projects, it can then demand royalties. That would mean that the Irish Government will have to have some element of skin in the game, if you will, in terms of helping with the permitting, resource measurement and resource extraction.

It is an important point for Ireland to figure out at this early stage. We do not want to end up at a level where we have many wind farms built off the coast of Ireland in ten or 15 years’ time and we then realise that we have missed a huge opportunity. Now is the time to have those discussions. It has to go beyond a policy sphere to the societal sphere and it has to go beyond energy to our wider economy and those families who will be benefitting from those. It is an important conversation to have at this early stage, rather than later, when it may or may not be too late.

Vincent P Martin (Green Party)
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This is a most interesting discussion with experts. One area I would like to concentrate on is anaerobic digestion. It is like a second coming for it. I recall attending the launch of a local machine to great fanfare and hope more than ten years ago. It is a slow-burner – excuse the pun. Is it potentially a silver bullet? It is being listed as one of the areas of positive attack that the agriculture sector can use to try to meet its emission targets. Where are we now in respect of it? If there is a league of EU member states, we are probably way down, I imagine; however, I would like to hear that from the experts. How expensive is it to roll out? Is there a good EU comparator? What percentage aspiration can we hope for? What size of farm justifies an individual apparatus? Do our witnesses foresee smaller farms pooling resources and operating as a sort of a co-op?

It has been mentioned that both waste matter, slurry and silage, are important components or ingredients. Is there any unintended consequence in placing too much emphasis, if you like, on plant-based silage to the detriment or slurry? Should the emphasis not be on slurry to drive this in case there are any unintended consequences? The alternative could be used elsewhere in the opportunistic farming environment.

Mr. Cillian O'Donoghue:

I might let Dr. Deane go first, if that is okay.

Dr. Paul Deane:

I would caution against the use of silver bullets with regard to energy. There are no silver bullets; it is all hard work. It is all difficult and it all takes planning. There are no game-changers. All of this stuff is difficult. Again, I will come back to my opening statement. When a state, such as Ireland, is almost 90% reliant on fossil fuels, we have some big challenges ahead. However, there are certainly some big opportunities for anaerobic digestion in Ireland. As I said, by 2030, it could meet about 20% of our natural gas needs. That would be about 6 TWh. That is actually currently within the climate action plan - to achieve that goal it is about 5.6 TWh, which is significant.

The Senator is right that it needs policy support. The cost of producing a unit of renewable gas from farmyard slurry and farmyard grass is about somewhere between €70 and €100 per MWh. As Mr. O’Donoghue mentioned, when we look at natural gas prices on global markets, at the moment they are probably trading this morning at about €120 per MWh. At present, renewable gas is competitive with fossil fuels. Of course fossil fuel prices will not remain high forever, but over the short-term foreseeable future, it will remain competitive.

There needs to be a strong recognition of the sustainability requirements. It is fundamentally important when producing any type of fuel from farmland, be it meat or renewable gas, that it done in a sustainable way and it fits within the renewable energy directives at European law and also respects biodiversity, bird life and wildlife habitats within the current Irish legislation.

We have much of the legislation in place so in many ways it is just about enforcing it and making sure that any projects that go ahead for anaerobic digestion respect it.

On the Senator's question on where Ireland is in relation to other European member states, we have one of the largest potentials on a per capitaor on a per land area basis but we have one of the lowest realisations of that capacity at the moment. If we look at that value of 6 terawatt hours, or about 20% of our natural gas in 2030, that is roughly 2% to 4% of the agricultural grasslands that we would need in Ireland. We are not talking about a vast mono-culture where vast swathes of farming are turned over into anaerobic digestion. It would be small. My personal rather than professional view is that it would be more suited to the co-operative-type organisations that we have in many parts of Ireland. They have a lot of social and community strength and trust. They also have capital. These types of investments would not be suitable for individual farmers. They would be more suitable for groups of farmers, with maybe ten or 12 farmers coming together, pooling their slurry and grass silage to produce renewable gas. It would have to be a mixture of slurry and grass, or maybe a little more grass, but it is typically a 50:50 mix. There is too much liquid content in slurry and it would not be strong enough on its own to produce enough natural gas. Of course, with grass, we need to be careful how it is grown, avoiding as much chemical fertiliser as possible. There is much very good research done in institutions, such as Teagasc and Devenish Farms, looking at different swards that can be used that would allow the production of more grass by using less chemical fertilisers. The initial findings of those studies are quite positive. Not only can they produce more grass, but they also tend to be healthier in terms of the health of the soils and allowing more biodiversity within those swards of grass. However, I would caution that this is an area where the technology and the knowledge exist but the policy is simply not there to encourage farmers to make that leap of faith. What would really be a foundation is a strong, stable policy that offers farmers or co-operatives a good and dignified return on their investment.

Seán Haughey (Dublin Bay North, Fianna Fail)
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M question for Mr. O'Donoghue is in relation to the UK and Norwegian markets. Obviously, the UK is not in the European Union anymore. Does the European Union have any kind of relationship with the UK and Norway regarding these matters? Are there any co-operation agreements or understandings between the EU and the UK and Norway? Could Mr. O'Donoghue elaborate on the position of the UK energy market if he is up to speed on that? I appreciate that it is not totally his brief but Ireland is very reliant on the UK and Norway for gas supplies. How does he see that going forward? Is that supply threatened, particularly having regard to the politics in the UK at this time?

On Dr. Deane's comments, nobody mentioned data centres here this morning. Data centres are very much part of our economic model and part of our foreign direct investment strategy. How do they operate here and are they on board as far as energy saving or energy demand reduction is concerned? Is the construction and provision of more data centres in the future something that needs to be reviewed?

Joe McHugh (Donegal, Fine Gael)
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I would like to take up Deputy Haughey's first point in relation to the UK relationship. Mr. O'Donoghue mentioned that there are sensitive discussions regarding the solidarity within the European Union. It would help in my understanding of what is the supply chain between the UK and Ireland. I thought that we were almost totally reliant on gas coming from the UK. How do we fit in, as a European Union member state, with that solidarity?

Mr. Cillian O'Donoghue:

I will speak about each country separately. Norway is part of the internal energy market. It is part of the EEA. Norway is fully integrated with our structure, although it is not an EU member state. The UK is not. This is an important difference. We have a very close working relationship with Norway. The country is our second biggest supplier of gas and we are discussing with it bilaterally the reduction of gas prices. Norway is also a very important battery for European electricity. The country has a huge amount of hydropower which acts as a battery or as a reserve. In southern Norway, electricity prices are very high at present. Normally, what would be done is that some of that hydropower would be released to alleviate the price increases in the south of the country. However, the Norwegians are not releasing this hydropower because they are using it as a storage for this coming winter. Norway is playing a very important role in European electricity security. There were some internal discussions in Norway with some parties saying that the country should not be exporting to the UK and Europe and that they should have electricity at lower cost. However, the general consensus among politicians was that the country was fully part of the market and had an important role to play in electricity security.

Regarding the UK, co-operation is now much better. We have offshore sea co-operation where the UK was excluded for a short time but now it is back in and co-operation is very good. It is very important regarding energy that we treat the UK as a full member of the Internal Market even though it is not. On the supply risk from the UK to Ireland, I have to be careful what I say here. That is a political judgment. By and large, Northern Ireland and Ireland are one single energy market so I cannot see any incentive from the UK side to cut off or reduce supplies to Ireland. However, I am not an expert on that situation and someone else would be a better judge, but from my understanding, it should be pretty secure.

Dr. Paul Deane:

I will address Deputy Haughey's question on data centres. There are pros and cons to data centres in terms of their impact on energy and on climate. We are quite fortunate in Ireland that we have a lot of very ambitious data centre owners, some of the large corporates, for example. They have very good net-zero targets for 2030. These are actually more ambitious that our national targets. It is important to have those people in this country because it creates a policy pull. They are investing a lot in renewables and different smart technologies. That is important. We must also acknowledge the financial contribution that those companies make to the Exchequer and also in terms of digitalisation. I did not have to come to Dublin today because I can use Teams. Data centres and the modern digital economy play a fundamental role in enabling a lot of the really positive stuff.

On the cons, any increase in electricity demand is mainly coming from data centres. This makes Ireland a little bit unusual in comparison to other European member states. About 14% of all the electricity consumed last year was by data centres. This year we added on the equivalent of about 200,000 homes worth of electricity usage onto the power grid from data centres alone.

We are going through a number of crises within the energy and electricity sectors in Ireland. We have a physical crisis within the power sector and we have a price crisis. The price crisis is very clearly, as Mr. O'Donoghue mentioned, caused by natural gas and the invasion of Ukraine by Russia. However, the physical crisis that we have here is our own doing. It is our own failure to deliver new gas-fired generation. To help out the power system when the wind is not strong and the sun is not shining, we need to have conventional generation. That is where we have dropped the ball in Ireland. The consequence of increasing demand at a time when the ability to produce energy is reducing is not a good strategy. My view is that there needs to be a pause for reflection until we figure out and resolve the physical crisis that we have in Ireland.

Once we do that and build the conventional generation that allows us to restore the Irish power system to its needed reliability, adequacy and robustness, the conversation needs to pivot not on how many data centres we have but on the type we encourage and welcome. Some of the large corporates have ambitious strategies for what they call the 24-7 use of renewable energy, which entails using green power every hour. Companies that can deliver on that would have a much lower impact on emissions and a benign impact on the power system in Ireland. To deliver on it, the data centre companies would need not only to invest in renewables, which many of them are doing, but also invest significantly in flexibility on their own side and in energy storage. If we can carve out a pathway whereby we can attract the data centres into our economy and society and prove the concept can work, the centres will have a benign impact on our emissions and energy system. To remain relevant in a world in which we all need to reduce emissions, we need to reduce fossil fuel reliance. Data centres that cannot demonstrate an ability to operate right across the year with as much renewable energy as possible are just not compatible with our national goals.

Ruairi Ó Murchú (Louth, Sinn Fein)
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Dr. Deane has engaged in a fair bit of commentary, accepting that our supply chain through Britain makes us slightly different from other parts of the European Union. Geopolitically, it is fair to say that things are not going particularly well for Vladimir Putin. One of the only games in play that is working for him is the fact that we are facing economic carnage. We have severe worries at this point about the entire energy sector. We must ensure Mr. Putin does not get that win and that we keep the show on the road, as was done during the Covid pandemic, societally and economically. That would maintain necessary solidarity across Europe and even with Ukraine. There has been talk to the effect that the EU and European Commission have not been sufficiently imaginative or have been slow to the game. From here on in, what do we need to do that has not been proposed?

I have a question on our weakness in respect of gas storage. I get the idea that if we are considering gas storage, we must be careful that we do not make an agreement with a commercial entity that locks us in for 40 or 45 years. We must ensure what we need to do as quickly as possible. On the wider question, Dr. Deane expressed his fear that, while we could have a green hydrogen strategy, we do not necessarily have the capacity to put it into operation yet. It is a matter of alternatives in that regard.

Could any of the witnesses respond on geothermal energy? I brought up the issue of communal heating systems and the difficulties with them, but I am aware that the SEAI and even the Department are considering the feasibility of using geothermal energy as a possible solution to replace the gas-fed heating system. They are specifically examining Carlinn Hall in Dundalk. I have a particular interest in the latter but I am just wondering about the witnesses' views on that.

Mr. Cillian O'Donoghue:

On what we can do, I will speak from an Irish perspective, not a European one. While my answer will involve a bit of repetition, there are three steps we can take. The first, and most important, is to speed up the permitting for renewables, particularly offshore wind energy. There is a 7 GW target for 2030, so the permitting process needs to be speeded up in that regard. Second, it is important to have a clear storage strategy. If we are going all out or heavy on wind, we must determine the balancer. Is it natural gas, hydrogen or batteries? Third, I would encourage the reduction of demand this winter via behavioural campaigns aimed at citizens. These are the three things that should be prioritised in the medium term.

Dr. Paul Deane:

I completely agree with and support Mr. O'Donoghue’s suggestions. In many ways, with this energy crisis it is almost a case of hoping for the best and planning for the worst. Hope, however, is not a viable strategy when it comes to energy policy, so we do have to plan for the worst. Again, it means looking internally at our resources and strengths rather than externally at what is happening in Ukraine.

The energy crisis we had in Ireland coming out of the 1970s and into the 1980s was different because we did not have options. We did not know what to do. It was very much about oil. We considered coal and built Moneypoint but the technology required to exploit our renewable resources did not exist at the time. We have that now. We are now going through a similar energy crisis, which has exposed our reliance on fossil fuels, but now we are not hostage to confusion. We know we have technologies to get out of this. It will take time. I reiterate Mr. O'Donoghue's point that while we know what we have to do and why, we have to determine the how and the what quicker. That fundamentally comes back to permitting, licensing and planning. The time it takes to get energy projects off the ground and implemented in Ireland, and, let us be fair, in many other European states, is completely at odds with the urgency of the crisis we are experiencing. It is not about making bad decisions and railroading things through; it is about the ability to make good decisions quickly and deliver the infrastructure we need to get out of this crisis.

Ruairi Ó Murchú (Louth, Sinn Fein)
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Can someone give me an answer, if possible, on the question on geothermal energy?

Dr. Paul Deane:

Apologies, but I do not know enough about it. However, the Deputy raised an important point. We have spoken a lot today about electricity for our appliances, gas for our electricity and gas for our homes, but just under 1 million homes in Ireland use oil or kerosine to heat their homes. That is a high level of reliance. Ireland has one of the highest levels of reliance on oil-fired heating per person in the EU. Anything we can do to reduce that is fundamentally important, not only environmentally because oil is polluting, but also socially. We are all exposed when it comes to gas prices but we see the volatility in kerosene prices and home-heating prices and, therefore, any technology we can use on the supply side, be it geothermal technology, air-to-earth heat pumps or sustainable biomass, is fundamentally important, but we also need to consider the fabric of our built infrastructure. A typical Irish home built before the 2000s probably leaks 60% to 70% of its heat. Giving people heating systems is one element that we need to consider but we must also make sure the heat stays in the houses.

Sharon Keogan (Independent)
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Do Dr. Deane and Mr. O'Donoghue believe the Government should assess the feasibility of building small, modular nuclear reactors to address the long-term needs in Ireland regarding energy?

With regard to prioritising our own citizens, data centres currently consume 14% of our electricity, as mentioned by Deputy Haughey. The building of more data centres would increase Ireland's demand for electricity by at least 40%. Some estimates suggest data centres could consume up to 70% of Ireland's electricity by 2030. If we are prioritising our citizens, surely we have to pause the building of more data centres in this country. That is my view but I would like to know the view of the witnesses.

I understand the position on speeding up the permitting of offshore wind developments and the storage strategy for wind, but what is the backup plan for wind energy?

Wind turbines only operate about 35% of the time. They do not operate in a similar way to nuclear plants which operate maybe 92% or 93% of the time. What is the back-up supply? We will not have that with wind. With regard to the behavioural campaign will the EU take an authoritarian role, as such, as it did with the Covid-19 measures? Will it undertake an advertising campaign like that so that people will know exactly what they should do? It is unfair that here in Ireland the people have to shoulder the brunt of this. It is the people who it is going to cost. I have already seen businesses close down. We will see much more of that following what we have heard today. People might get to Christmas and then think if it is worth their while opening next year because they are going to face another year of this. If the witnesses can answer a few of those questions I would welcome their thoughts.

Mr. Cillian O'Donoghue:

There are three questions. One is on small module reactors, SMRs, another is on storage and then on behavioural campaigns. Taking SMRs and storage together, whether Ireland should do SMRs or not, that is not for me to decide. However, we need to be clear that we need a base load source of electricity going forward and if that is not gas then nuclear is probably the best option. That is for policymakers to decide. On storage I agree with what Senator Keogan said. We need a clear plan to have flexible and storage. If we go all out for intermittent wind what balances the grid? Is it batteries, hydro, gas or nuclear? Those are the things that need to be considered. It definitely should be looked at and an impact assessment done before deciding if SMRs are the way to go. That is for policymakers to decide.

On behavioural campaigns, the EU will not be taking a controlling approach on this. I had a meeting earlier this week, a round table with the US and EU where we discussed various best practices to reduce demand. The main thing we need is to have awareness-raising among citizens and share information on what has worked. Smart meters make sense, where people have technologies on their phones so that they know they should not use energy between certain hours. It is linked to digitalisation. The more data we have on energy usage and the more proactive the consumer is, the better it will be in terms of reducing electricity usage in peak hours. That is definitely an important way to go.

Dr. Paul Deane:

In regard to nuclear, we should look at all options to reduce our reliance on fossil fuels. We must also be realistic and temper that with reality. The likelihood of SMRs moving from the conceptual space to the commercial space is probably ten to 15 years away. As I mentioned we are spending €1 million every single hour on importing fossil fuels into Ireland. We need to temper our expectations around the future availability of technologies with the reality that they will take time to deliver. Yes we should look at all options. However, they should not be a distraction from what we need in the present. The next 15 months and the next decade are going to be crucial and we cannot continue our reliance on fossil fuels. We will need backup. As I mentioned renewables reduce the use of fossil fuels and power plants but they do not replace the need. In the next eight to ten years that backup is probably going to have to come predominantly from natural gas. That is why the security of supply of Ireland's natural gas, the storage of natural gas and understanding our accessibility and reliability of our natural gas system are fundamentally important. We are not going to move away from fossil fuel overnight. We will transition slowly away from it. During that transition period we are going to need insurance policies such as gas storage. We will need to think carefully about our natural gas. In the long term vision, looking along the same timelines as SMRs, we are getting into the realm of different decarbonised gases such as hydrogen maybe coming on board. That is probably a conversation for the next decade rather than being useful for this decade. However, we are going to need backup. That is clear.

In regard to data centres I am not familiar with the 70% number mentioned by Senator Keogan. I know some of the numbers from EirGrid show a very strong increase of data centre demand growth into the future. I reiterate that the conversation needs to change from how many data centres we have in Ireland, to what type. Data centres that can demonstrate they can use renewables and store renewables to meet their energy needs will have a very positive impact on the energy system in Ireland for having a benign impact on climate emissions. For that we need to look for leadership with the data centre industry. We know at a conceptual level how energy can be stored and how flexibility can be moved around but commercially these things are very expensive. To remain relevant in a society and in the economy of the country that is demanding that everything should be greener and cleaner we probably need the data industry owners to step up to leadership on that issue and deliver some of those very flexible, what we call 24-7 or green power every hour operations.

Sharon Keogan (Independent)
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At this point in time they are not doing that. If Dr. Deane was appointed as Minister for energy tomorrow morning, would he pause the building of data centres in this country to prioritise our citizens at this time?

Dr. Paul Deane:

Yes. Until we get a line of sight out of this current physical energy crisis, yes.

Joe McHugh (Donegal, Fine Gael)
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One final supplementary from Deputy Harkin.

Marian Harkin (Sligo-Leitrim, Independent)
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I thank both of the witnesses. Everybody is saying the same thing. We attend many meetings but the clarity of their answers and the scope and breadth of their knowledge is coupled with the ability to share it in a way that I understand. I thank them for that.

I have one or two brief questions. What is the possibility of small co-operative windfarms or even individual turbines perhaps on a person's own land? Are there issues around supply of materials or technology? You see the odd one. What is the feasibility of that either for individuals or for communities? At one time I visited the one in Tipperary and I was impressed with that but it took forever, about ten years, until they could get it up and running. I am talking about small scale.

The other point is on smart meters. I just got that installed and I have not mastered the technology yet but there seems to be some concern, and the witnesses may or may not be able to comment on this, that they are not delivering for consumers in the way they should. In some cases it can actually cost people more. I am sorry I do not have more detail on that. If the witnesses do not have more detail I understand that they cannot answer the question. I have been hearing about that in the media. Finally on the issue of data centres where Dr. Deane talks about the type of data centre, I hear what he is saying but is he including the idea that they would produce their own renewable electricity? Is that an important part of it? If they use renewables then they are hooked into the system, but is Dr. Deane talking about them producing their own?

Mr. Cillian O'Donoghue:

I will not comment on the windfarms but I can comment on the smart meter roll outs. It varies a lot between member states. By and large we see member states that are very active with smart meters, in particular I flag Estonia which has a digitalised economy and consumers are hooked up to the new generation. We see big benefits there. They have apps, they react to when prices are low and when prices are high. We had a recent meeting with the CEO of Eesti Energia who is in charge of energy in Estonia. He was giving advice to many EU member states on how they have done in Estonia. It is a good model to follow. Maybe there are some hiccups of which I am not aware but by and large smart meters and more information lead to better decisions from consumers which leads to less usage of energy at the wrong hours. All things considered they are generally a good thing. We should definitely promote them.

Dr. Paul Deane:

I am a great believer in the possibility and potential of community energy schemes. It is tricky with wind turbines because the capital outlay tends to be large but now, there is the advent of solar power.

To a certain degree, I suppose for farming communities, anaerobic digestion is a lot more possible. It is something I would like to see a lot more of. It allows people to engage with energy production in Ireland. As I mentioned, most of the energy we consume here is produced in other countries. Allowing our communities to get involved in that process is something that can only be beneficial. With the advent of solar, that will probably be an easier pathway that is less financially constraining and less of a financial outlay for many community groups. In terms of the planning and permitting process, we have now lifted the planning regulations on solar installations for many buildings. That is something that should allow those things to be fast-tracked.

In terms of the data centres, yes, we want them to produce and procure their own renewable energy. As a country, we must take ownership of our energy needs and consumption. That needs to go from the family level up to the farm level. Of course, data centres should not be exempted from that.

Marian Harkin (Sligo-Leitrim, Independent)
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Regarding solar, are there any issues around the materials themselves, the supply of them, etc.? I asked another question about the wind. I am talking about individual homes. I have seen the odd small wind turbine around, although you would not even call them turbines. Do these have any potential for individuals? Are they cost reasonable?

Mr. Cillian O'Donoghue:

I can take the solar and raw materials angle. Yes, there are big challenges. Fifteen years ago, we had a solar industry in Europe, particularly in Germany, but now we do not. By and large, the jobs and the production have gone to China. In terms of materials, silicone is a very important source for solar. In general, most of that production is taking place elsewhere. We are coming with a new raw materials strategy and this is called a critical raw materials strategy. As we move from a fossil fuel intensive economy to a raw materials intensive economy, our dependence on certain critical raw materials, such as silicone, lithium, cobalt for electric vehicles, etc., is going to shift. We need to be able to react to that. I would also flag that much of the energy intensive industries that make these raw materials are suffering a lot under this crisis. We need to find solutions so that they stay in Europe. I do not think it is wise to become overly dependent on China for imports of these critical raw materials. In the last six months, we have seen what an over-dependence on one supplier can do. We thought we had an inter-dependent relationship with Russia. It turns out that was not the case. We have seen what happens when we become too reliant on one supplier. As we shift from a fossil fuel to a raw materials intensive economy, we cannot let the same mistake happen.

Vincent P Martin (Green Party)
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Deputy Harkin had one other question. Maybe the witnesses can emailed us. I have seen wind turbines as well. I have seen the one wind turbine in a large garden, which is for the family or household. If at all possible, I would like to hear some expert analysis of that.

Dr. Paul Deane:

The challenge with smaller wind turbines is that they tend to rotate a lot quicker. They tend to be a little bit louder so good wind speeds and good neighbours are needed. They tend to be more suitable to rural locations with more open space. Again, this is because they tend to be a little bit more intrusive than solar panels which are a lot more passive.

Marian Harkin (Sligo-Leitrim, Independent)
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What about the cost? Is the cost feasible for farming families, let us say?

Dr. Paul Deane:

It is feasible. In my area, I can think offhand of five or six farm families who have those small wind turbines. They tend to be farm locations. Again, that is more a reflection on the space that is needed for these turbines rather than the energy consumption. Wide open space is needed. That comes back to the fact that they tend to rotate at a much higher wind speed and a much higher rotational speed, so they tend to be a little bit louder than the larger wind turbines we see around the country.

Vincent P Martin (Green Party)
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Deputy Harkin summed it up in a very eloquent way but it is such an important point that I would like to be associated with what she said in respect of the quality of the contributions today. I do not recall ever attending a better session. It was so informative. The witnesses are so up to speed on their briefs. It has been inspiring listening to them, so I thank them all very much.

Ruairi Ó Murchú (Louth, Sinn Fein)
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I would agree but without being half as eloquent.

Joe McHugh (Donegal, Fine Gael)
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I thank Dr. Deane and Mr. O'Donoghue. Senator Martin and Deputy Harkin have stolen my final contribution quite expertly, and I would like to thank them for that. Go raibh maith agaibh as ucht bheith i láthair linn inniu. Thug sibh eolas agus comhairle chuimsitheach dúinn gan dabht, ní hamháin ó thaobh na deacrachtaí nó na fadhbanna atá i gceist ach thug sibh réiteach gearrthéarmach agus fadtéarmach dúinn fosta. Cloisim bhur dteachtaireacht go soiléir agus tá dualgas orainn uilig anois. Tá dualgas ar an Rialtas maidir leis an bplean uaillmhianach agus solúbtha atá de dhíth san am atá romhainn.

I thank Dr. Deane and Mr. O'Donoghue once again. We are very grateful. They did not just give us the problems. We all know where the problems and the difficulties lie but they gave us the solutions for the short term and the long term. I want to be associated with the comments of Senator Martin and Deputy Harkin.