Naoise Ó Muirí (Dublin Bay North, Fine Gael)
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Deputy Daly has indicated that he will be late but we have received no other apologies. The committee has agreed to undertake this meeting to discuss energy storage solutions and the landscape. I would like to welcome the following representatives from Energy Storage Ireland: Mr. Bobby Smith, director, Mr. David Rossiter, senior communications and public affairs specialist; and Mr. Pat Lambert, senior policy analyst.

I remind all those in attendance to make sure their phones are in silent mode or switched off. Before they make their opening statements, I wish to state the following in relation to parliamentary privilege. Witnesses and members are reminded of the long-standing parliamentary practice that they should not criticise or make charges against any person or entity by name or in such a way as to make him, her or it identifiable or otherwise engage in speech that might be regarded as damaging to the good name of a person or entity. Therefore if a statement is potentially defamatory in relation to an identifiable person or entity you will be directed to discontinue your remarks. It is imperative that any such direction is complied with.

In terms of the format of the meeting, I will invite the witness to make an opening statement to a maximum of five minutes. I will then call on the members of the committee in the order they indicate to me to put their questions. The committee operates a rota system which provides each member with an initial five minutes to engage with the witnesses. This five minutes is for both questions and answers. Therefore, it essential for members to put their questions succinctly and for witnesses to be succinct in their responses. Please note that the duration of this meeting is limited and therefore the times must be adhered to. I ask everyone to be focused on their contributions.

I now invite Mr. Smith to make his opening statement on behalf of Energy Storage Ireland.

Mr. Bobby Smith:

I thank the committee for the opportunity to address it today. Energy Storage Ireland is the representative body for Ireland's energy storage industry. We represent over 80 companies across the full-storage value chain. That includes developers, manufacturers, investors, technology providers and legal and financial advisers, all working to build the storage infrastructure Ireland needs to deliver a secure, clean, and affordable electricity system. Our members currently operate more than 1 GW of grid-connected storage across the island. A further 10 GW of projects are in development. The industry is ready to build. We just need the right policy framework.

Ireland's electricity system is at a critical juncture. Electricity demand is rising rapidly, driven by data centres, electric vehicles and the electrification of heat. At the same time, Ireland has some of the highest electricity prices in Europe, with households and businesses continuing to bear the cost of our heavy dependence on imported fossil fuels. We are also wasting enormous volumes of clean, renewable energy. Last year, more than 11% of available wind energy was not able be utilised, either because the electricity grid could not accommodate it or because of system stability constraints. This wasted renewable energy had to be replaced by burning gas. This costs consumers money and increases our carbon emissions.

The good news is that Ireland has a solution. We have world-class renewable resources, a strong pipeline of storage projects and an industry that has already demonstrated it can deliver. When the Government provided a clear framework under the DS3 system services programme, the industry built 1 GW of storage capacity in a relatively short period. We can do it again and at a far greater scale, if the right conditions are put in place.

Energy storage has the ability to make much more effective use of our electricity grid, shifting power at times when we have excess renewables or when the grid cannot carry it and delivering this energy to Irish homes and businesses. Energy storage also provides vital system stability services, thereby reducing our need to bring on fossil fuel generators and curtail renewables. These abilities, driven by advances in battery technology and newer forms of long-duration energy storage, are truly a game-changer for Ireland’s energy system. A new economic study by leading consultancy AFRY, commissioned by ESI, quantifies the stakes. It finds that building 2 GW of additional storage capacity by the early 2030s would deliver €102 million in annual economic benefits for Ireland, a 10% reduction in grid emissions, and an 11% reduction in the volume of wind and solar energy being wasted. To hear more about this report, please consider attending our audiovisual room briefing, hosted by Deputy Barry Heneghan, at 3 p.m. on 9 June.

ESI is asking the committee to support action in three priority areas, the first of which is the establishment of a clear route to market for energy storage, backed by system studies. Ireland currently has no dedicated target for energy storage backed by a long-term revenue mechanism. Unlike wind and solar, which have capacity targets backed by the renewable electricity support scheme, RESS, which provides certainty for renewable developers, storage has no equivalent investment signal even though it is a vital complementary technology. Without one, the 10 GW pipeline will not be built. We are asking the Government to develop long-term indicative targets for energy storage backed by a revenue support scheme to procure at least 1 GW of long-duration storage before 2030 and to ensure a broader route-to-market framework is in place by 2028 to deliver longer-term storage needs.

Second, we are asking the committee to support the reform of network charges. For years, battery storage has been penalised for doing its job. Under current rules, batteries are charged as large energy users rather than as flexible assets supporting the grid and are charged at up to €30/MWh each time they charge from the grid. The CRU has recently published a welcome minded-to decision to fix this. We urge the committee to support its swift implementation. Independent analysis shows that this single change could deliver €37 million in annual consumer savings and double the commercial return on a standard battery project.

Third, we are looking for support for the enabling of hybrid and co-located projects. Ireland's planning and grid connection rules were designed for single-technology assets. They are now a barrier to the development of projects that combine wind, solar and storage on the same site. We ask the Government to update planning policy and grid connection rules to explicitly support hybrid projects, making better use of existing grid infrastructure and accelerating the delivery of clean energy.

The technology exists. The projects are ready. The industry has proven it can deliver. What is needed now is political commitment to deliver the required storage to lower wholesale electricity prices, strengthen our energy security and reduce our carbon emissions. Energy Storage Ireland looks forward to working with this committee to make that happen.

Naoise Ó Muirí (Dublin Bay North, Fine Gael)
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Now, members, I invite you in the order in which you indicated to engage with witnesses. The first member is an Teachta Dála Byrne.

Malcolm Byrne (Wicklow-Wexford, Fianna Fail)
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I thank the witnesses for coming here. I am very convinced by the arguments. Looking at the ideal scenario, we have heard about how much wind energy, for instance, is going to waste at present because we cannot store it, so let us project into the future. In five or ten years' time, do the witnesses envisage a situation whereby every household and every farm has battery storage on site? What capacity should it have, and how should we adjust our planning rules in that regard? Or do we look at it from the perspective of communities coming together? I ask the witnesses to paint for us the landscape in the ideal world in the next five to ten years, particularly as to how we will be able to store all that excess energy we are generating and make sure we can effectively use it.

Mr. Bobby Smith:

Absolutely. I am happy to address that. Over the next five to ten years, we will about double our onshore wind capacity and we will go to a substantial amount of solar electricity. That industry is going very well. In the 2030s we will bring onshore wind onto the system at substantial scale as well. In a strange way, then, the actual supply of renewable electricity will not be a problem; how and when we use it will be the challenge. At times it will be very windy and we will not be able to accommodate all that renewable electricity; at other times, like today, it could be very sunny and we will not be able to accommodate all that during the midday peak, for instance. Our ability to make more effective use of electricity is therefore paramount for the viability of the electricity system and, ultimately, for getting us off imported fossil fuels. We see energy storage as being key and the glue that holds the system together. It is the missing link that enables us to move ultimately from 70% or 80% renewables, which is the target to 2030, to 95% or 100% renewables, which is where we want to get to if we want to be truly energy independent and off fossil fuels. We see grid-scale storage playing a fundamental role in that. For instance, EirGrid's long-term analysis shows that if we continue to build that amount of targeted wind capacity and solar capacity that is in the Government targets for 2030 and beyond, we could be wasting up to 40% of renewable electricity on the grid by 2030 and beyond. Storage provides the solution because it can come in and store a lot of that renewable electricity and then it can use that stored electricity to displace the remaining 10% or 20% of fossil fuels, the residual fossil fuels that are on the system. We therefore see a huge role for different forms of battery storage of short, medium and long duration and even newer forms of longer duration technology that can store energy for days or even weeks. They are the missing link.

Malcolm Byrne (Wicklow-Wexford, Fianna Fail)
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Is Mr. Smith suggesting that they will be primarily at, say, the wind farms and the solar farms or onshore, as distinct from even domestic use of solar panels, and it is-----

Mr. Bobby Smith:

It will be both, simply put. We are already seeing quite a remarkable revolution in behind-the-meter domestic solar panels and now battery storage. Most suppliers will offer a battery system with solar panel installations. There are not necessarily grants for those domestic battery storage systems, but there is the electricity export scheme-----

Malcolm Byrne (Wicklow-Wexford, Fianna Fail)
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Should there be?

Mr. Bobby Smith:

I believe the cost of batteries has come down substantially, and now the payback period is around four to five years for a typical three-bed or four-bed house with solar panels and a battery storage system. You do get grants for the solar panels. If there were to be supports, targeting more vulnerable households or energy-poor households might be more relevant. We see a general take-up of this, regardless of the fact that the grants are not there, which is accelerating. We see a big role for domestic solar and battery storage, but in terms of the scale of the renewable electricity opportunity and the volumes of potential wasted energy or dispatch-down energy, that really is looking at a grid-scale solution - that large volume - to move bulk power around the grid at times. While the domestic solar and batteries will certainly help - for consumers, they are a massive help in terms of energy bills - for the grid as a whole we will need both.

Malcolm Byrne (Wicklow-Wexford, Fianna Fail)
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In the context of the grid, what kind of capacity storage are we looking at? In other words, how long can the energy last while stored?

Mr. Bobby Smith:

We did an analysis in 2022 with Baringa which looked at an additional 2 GW of long-duration storage, that is, between 24- and 100-hour duration storage on the system. We have 1 GW installed battery storage today. Obviously, 2 GW is more than double what we have today, but the duration of the energy storage is of particular relevance. We have developed a lot of battery storage that is very good at mitigating the very short-term system frequency issues or instability issues, and they help to keep the lights on, but we always talk about what happens when the wind does not blow and the sun does not shine. How do we supply energy that is not gas at the moment? In this study we analysed the 2 GW of 24-hour to 100-hour long-duration storage and showed that that could displace fossil fuels in the system by around 50% by 2030. We only picked 2 GW as a study target. You can go beyond that. It will obviously depend on market conditions and technology availability, but that is just to give the committee an idea of the scale of the difference it makes.

Naoise Ó Muirí (Dublin Bay North, Fine Gael)
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I call Senator Noonan.

Malcolm Noonan (Green Party)
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I thank the witnesses. They have provided really good explainers. They are very useful to me as someone who does not really have a great grasp of this. There was a project in my home town of Kilkenny, in Brett's sawmills. It was probably an early, crude form of battery storage off a small-scale hydro project. They were storing it onto a shipping container in batteries and transporting it to a project up here in Dublin, in Tallaght. This is going back many years. It is great to see the technology moving on. I was also engaging with a company - I am not sure if the witnesses are familiar with it - called Range Therapy Limited, which is taking second-life EV batteries. It seems like there is huge potential in it for households. A lot of batteries out of second-hand EVs will be decommissioned but could be used for short-term storage in households. Given the recommendations that came out of the report on Storm Éowyn, where the discourse has been around the purchase of generators, it would seem that the EV battery packs could provide a really good short-term solution for many households across the country that are in areas that would be vulnerable to outages, particularly rural areas.

Mr. Bobby Smith:

A hundred per cent. I am not familiar with the particular company the Senator mentioned, but we are aware of companies that have a focus on repurposing second-life batteries, particularly from EVs. We see now the scale of the EV industry coming to a point where it is mainstream, essentially. I think EVs are the dominant form of car sales today in Ireland, which is great to see. That means that a lot of first-generation EVs are now coming to the end of their life, and then second- and third-generation EVs will come to the end of their life in the next decades, so there will be a lot of batteries in the system, so to speak. The good thing about batteries as a technology is that they can be repurposed and recycled. With fossil fuels, we are bringing in and burning petrol, diesel, oil and gas and then using it up and looking for more, whereas batteries can be kept in the economy in perpetuity because we can recycle the core minerals. There is therefore certainly a use case for batteries as second-life applications in home battery systems or even in grid-scale battery storage systems. I would say that that will be more of an emerging market over the next five or ten years because now batteries are starting to come to the end of life in terms of first-generation EVs so we are starting to see companies do that. It is an interesting, exciting opportunity.

Malcolm Noonan (Green Party)
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Yes, it is. How simple is it to connect a house into an EV battery system? Is it relatively simple?

Mr. Bobby Smith:

Yes. Most solar panels come with an inverter. It is as simple as connecting the battery to that system as well. Generally, most of the suppliers offering solar today will also offer a battery. The battery systems tend to be maybe in the range of 8 kWh to 10 kWh.

They would be very useful for balancing energy throughout the day by charging the battery overnight at a cheap tariff or using the solar panels to charge the battery when there is excess generation instead of sending it to the grid. The energy can be shifted around. Batteries would be very good for using stored solar energy at the evening peak. The higher peak tariffs can be avoided if people are on one of the smart tariffs. Bigger battery packs can be obtained that would be able to power a home for a day or two.

We are also seeing a potentially very exciting market in vehicle-to-home capability where people have an EV. Those vehicles use a very large battery that typically provides 50 kW, compared with a domestic battery that might give 10 kW. People could potentially power their home for days during a blackout or storm event, as we have seen.

Malcolm Noonan (Green Party)
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Were there people doing that?

Mr. Bobby Smith:

Yes. It is not yet the standard offering of home-charging equipment or EV installers but the new generation of EVs are starting to offer it as a standard service. My 2021 model EV does not offer that vehicle-to-home capability but most new EVs offer it. People can use it to back up their homes in the unfortunate event of a blackout.

Malcolm Noonan (Green Party)
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It seems to offer great potential.

I attended a presentation this morning at NUI Maynooth on sustainable energy communities. Do the witnesses engage with that sector? From an energy democracy point of view, there looks to be great potential through those communities to develop battery storage and peer-to-peer energy trading systems. We discussed private wires here some weeks ago and we have talked today about grid infrastructure. We need the ability to be nimble with the grid, allow energy to be transported and provide some dispatch-down energy to low-income households. It seems we are missing an open goal in terms of energy democracy and local communities being empowered to produce and trade energy. Do the witnesses see potential for that being developed at scale in Ireland?

Mr. Bobby Smith:

Yes, and we have been looking at examples. In Australia, there is a scheme for community batteries that is quite successful. It can be done in one of two ways or a combination of the two. A battery can be put in every house or there can be a battery for an estate. Not every household uses energy at the same time and in the same way, so having one central battery or solar system helps to distribute energy more efficiently according to when homes in that area, and maybe businesses, need it. Right now, we know of no examples of community battery usage in Ireland similar to what have seen in Australia. That may point to the need for grant supports or energy schemes to help people to set up such systems.

It is worth pointing out that our work in Energy Storage Ireland predominantly focuses on the utility scale or the behind-the-meter scale at commercial and industrial level. While we are aware of some examples of community-scale battery systems in other countries, they are not something on which we work directly. It probably is an area for the Sustainable Energy Authority of Ireland, SEAI, which is involved in community schemes.

Malcolm Noonan (Green Party)
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I thank Mr. Smith.

Naoise Ó Cearúil (Kildare North, Fianna Fail)
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I thank the witnesses for their presentation. It is clear that energy storage, including battery storage, will be a particular issue as we increase the amount of renewable energy produced on the island in the coming years. Something that stood out to me in the opening statement was that when the Government provided a clear framework under the DS3 system services programme, the industry built 1 GW of storage capacity. Mr. Smith then stated: "We can do it again and at a far greater scale, if the right conditions are put in place." What are those conditions? Does DS3 not go far enough and is more needed? How do we create the conditions for industry to create capacity? I was at the same event as Senator Noonan earlier today and I will ask a question on that presently.

Mr. Bobby Smith:

Industry thrives on certainty. What the DS3 scheme delivered when it was put in place in 2019 was certainty for a sufficient period to enable developers to invest and build. When the scheme, which was led by EirGrid, came into operation in 2019, it offered a tariff-rate payment for flexibility providers, like Energy Storage Ireland, to earn a stable revenue for a five- to six-year period. Developers were able to take advantage of the scheme to get finance and build assets. The DS3 scheme is now winding up and a new, very different framework will be in place next year. We are saying that, right now, there is not the same level of certainty as existed in 2019 and 2020 when the DS3 framework was put in place.

It is important to caveat that by noting that the DS3 framework was targeted more at short-duration types of flexibilities for battery operators. The power system works when supply and demand are perfectly balanced. If there is an issue with a transmission line or one of the large power generators disconnects, there is a sudden imbalance in the system frequency. People might remember that the Iberian blackout was caused by a system frequency imbalance that then cascaded into a blackout. Batteries are very good at jumping in within milliseconds to inject power into the system, keep it stable and keep the lights on. They only need to do that in millisecond timeframes up to around 15 or 20 minutes. That is typically the duration of those events. The DS3 system services framework was very good at incentivising that type of capability.

What we are now seeing as a clear need in the power system is longer duration forms of energy storage that can shift power, such as when solar is generating over the day to the evening peak, which is typically around-----

Naoise Ó Cearúil (Kildare North, Fianna Fail)
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I appreciate all that but the core point is that the industry needs certainty from any new framework, and particularly in terms of private financing, I assume, that there will be a return on investment over a particular period. Looking back at 2019 and a lot of the investment in energy storage since then, has there been a focus on a five- to ten-year return on investment or are the finance houses and venture capitalists looking for a longer return on investment?

Mr. Bobby Smith:

Typically, developers look at the life cycle of an asset. A battery system today would be warrantied for approximately 20 years and investors would be looking to earn a return for the life cycle of that asset. As I said, battery systems are moving to longer durations, which requires more capital. If we go from a half-hour system to a one-hour system, that is doubling the amount of battery storage. Moving then to a four-hour system would be quadrupling the amount of battery storage. More capital is required and greater financial certainty is needed to build the business case for that. Right now, the Government has a renewable electricity support scheme, which provides 20-year guaranteed prices for renewable electricity. We do not have the same thing for energy storage in general, including battery storage, even though it is a vital complementary technology.

Batteries can earn money in the wholesale market. They can be bought low, with the batteries charged when demand is low overnight and the energy sold when the price is higher over the evening peak. They can compete with the more expensive fossil fuel-generated energy. However, that is a very uncertain business case. It is hard to forecast what the energy market price might be even for the next week, let alone the next five to ten years. Trying to get finance for that from a financial institution like a bank is very difficult. We are calling for a revenue certainty mechanism that says people should still trade the battery, optimise how it operates and try to earn as much revenue as possible, but there is a floor price below which there will be a topping up of the revenue.

Naoise Ó Cearúil (Kildare North, Fianna Fail)
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I am conscious of the time. What I am trying to get to is how we ensure certainty. The State needs to invest in community battery storage, including, as Senator Noonan said, for sustainable energy communities. For the private sector, does a contracted multi-year tariff give that certainty to a particular industry investor?

Mr. Bobby Smith:

EirGrid, which is Ireland's transmission system operator, TSO, and ESB Networks are considering a ten- to 15-year floor contract. If the battery provides a service to the grid, they will guarantee it earns a minimum amount of return over ten or 15 years. The batteries can earn revenue above that floor but subject to a cap or sharing mechanism. There is a sort of two-way risk management. If the batteries earn above the cap, they hand back to the consumer; if the market revenues fall before the floor, the batteries at least guarantee a certain amount of revenue. People can take that contract to a financial institution and secure better finance.

Naoise Ó Cearúil (Kildare North, Fianna Fail)
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That makes perfect sense. I thank Mr. Smith.

Mr. David Rossiter:

There is procurement going out for ESB and EirGrid as we go forward. Our policy asks include reform of the network charges. Currently, a battery or storage facility is charged as if it is a user of the grid, as we mentioned.

There is a "minded-to" decision to change that around so that the batteries would be charged as a supplier, effectively. That changes the business case for a lot of storage that currently has planning and is ready to go so we definitely would be keen to see that become more permanent. It is a more interim solution, as EirGrid is looking at a much wider review but in the interim, that would be a really positive step.

The third ask there was around hybrids and co-located projects, which is putting batteries on the same site as the wind or solar facility. In the past they would have had to have two different and separate connections to the grid. That increases the cost of having to procure two separate connections. It means that the developers might have to get separate financing for both of their facilities, whether it be wind or solar, and then the batteries. We are looking at that policy change where one could have a co-location hybrid on the one site sharing that grid. There is positive news on that going forward. These change the business cases for other developers as well.

Naoise Ó Cearúil (Kildare North, Fianna Fail)
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I thank Mr. Rossiter.

Réada Cronin (Kildare North, Sinn Fein)
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I thank Mr. Smith for the presentation. It is really concise, clear and easy to understand. Mr. Smith is obviously really expert in this area. I have just a couple of questions. Mr. Smith mentioned that 11% of available wind energy was not utilised. Is that just because of curtailment on the grid? Would we be able to solve that by battery storage?

Mr. Bobby Smith:

There are two main reasons the energy was curtailed. One is because of congestion or constraint on the grid. For example, wind energy was available in areas like Mayo or Donegal but the grid was not sufficient at the time to carry the power out to the demand centres like Cork or Dublin and that wind energy had to be turned down. This was around half of that 11% and the remaining half is what is called curtailment, which is because of wider system stability issues because EirGrid needs to keep a certain amount of fossil fuel generators running on the system today to provide services like inertia or voltage support to help to keep the power system stable. We are starting to remove those fossil fuel generators one by one by putting in new battery storage technology, so it is a solution, as well as other new types of system stability services but that takes time. While we expect that curtailment figure to go down, that will take a number of years.

Réada Cronin (Kildare North, Sinn Fein)
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Has it reduced much in the last three or four years?

Mr. Bobby Smith:

Curtailment has actually become a little bit more of a problem because we have not progressed as fast as we would like in removing some of those system operational constraints, whereas the wind and solar energy on the system has grown.

Réada Cronin (Kildare North, Sinn Fein)
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We hear complaints from local communities who were resistant to wind farms coming into their areas and then they see them not moving. Perhaps if they saw them working all the time and if they felt they were going to be getting cheaper electricity it would be-----

Mr. Bobby Smith:

Exactly. I will make just one point on the network congestion. Again, that is an area that battery storage can solve. It does take time to build up grid reinforcements. They are substantial projects and they have to cross long distances and across multiple counties at times. We have seen with the North-South interconnector the challenges of delivering large-scale grid infrastructure. Batteries can help to defer, or at least be an interim solution, because we can charge the battery in a constrained area of the grid when the wind is generating and then export when the grid is less congested such as, for example, overnight.

Réada Cronin (Kildare North, Sinn Fein)
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When renewable energy is wasted that has to be replaced by burning gas. Do the witnesses have any idea of how much that is costing consumers and households?

Mr. Bobby Smith:

It is substantial. EirGrid publishes an annual forecast of the cost to the system of having to turn down renewable generation and turn up gas generation in its place. The latest forecast for the current year was nearly €800 million per year. That is being funded through what is called "imperfections costs", and that is ultimately passed through to consumers on their electricity bills. Getting more battery storage and getting more grid built is one of the key means of reducing down that cost because we are able to make more use of the wind energy and, effectively, utilise a much more efficient grid and system.

Réada Cronin (Kildare North, Sinn Fein)
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The witnesses have seen the problem and they are coming up with the solution for it. Is it data centres and the amount of energy that data centres require? With AI now it seems to be insatiable. What kind of challenge is that going to be for the witnesses' sector now in meeting those needs?

Mr. Bobby Smith:

The wind energy curtailment we have seen so far, as I mentioned, is caused by a lack of network reinforcement and system stability concerns, so we would not link that directly to data centres. We do see, obviously, data centres growing on the Irish system in terms of what is already operational and what is contracted. That will drive demand for further electricity. Through mechanisms like the private wires legislation and through the ability of data centres to agree hire purchase agreements with renewables in wind, solar and storage, we see a way to offset that increased demand on the grid. We are seeing some positive movements in terms of data centres agreeing power purchase agreements with wind and solar electricity. We would love to see that expanded to things like energy storage. Private wires legislation is potentially one of the main mechanisms of doing that because it allows data centres to connect directly with wind, solar and storage rather than necessarily waiting on grid reinforcements or driving additional demand on the grid.

Réada Cronin (Kildare North, Sinn Fein)
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Energy prices are so high here and we really do not want to create the narrative that households are paying increased prices for their energy because data centres' demands are so huge. Are we just fulfilling the needs of data centres? We hear from our constituents that there are worries of fires from these kinds of storage facilities and these batteries. What can the witnesses say to allay local fears?

Mr. Bobby Smith:

I can answer on those two things and perhaps my colleagues will want to come in as well. On the data centres, battery storage connecting to the grid, or connecting next to wind or solar farms, supplies energy to the grid. That energy then goes to homes, businesses and even to data centres all around. It is not the case that battery storage connected into the grid, or wind and solar, is supplying electricity directly to data centres. It is supplying energy to homes and businesses and, as we have pointed out, it is helping to drive down electricity costs for consumers in Ireland. Fundamentally, it is extremely important to help to make more use of our wind and solar resources and to reduce down our dependence on imported fossil fuels. This is having a net system benefit for consumers.

On the safety aspect, it is something that we do hear and we are engaging with bodies like the fire services to help provide updated guidance and information on battery storage systems. Just for members' information, battery storage systems, and particularly lithium-ion battery storage systems which are the dominant technology today, use a technology very similar to the type found in laptops, phones and electric vehicles. It is aggregated at scale but there are multiple international standards of safety design that go into these systems before they are put in place in Ireland and internationally. It is a technology that has been in operation for decades. It is in people's homes and businesses and people are used to it. What we are talking about now is using it to store electricity at scale to help deliver energy independence and drive down our energy costs. Understandably there is a little bit of apprehension and some questions that people might raise about the technology but once people understand what it is, how safety standards go into the design, how it operates and the benefits it can provide, we think those concerns can be allayed.

Mr. David Rossiter:

On the curtailment side, we did a study recently with AFRY and we will do a briefing on it in the audiovisual room in a couple of weeks when we launch the results of that more widely. The study looked at maybe €103 million savings each year if we hit our targets for storage. That then filters into the wholesale price of electricity for households. It deals with that issue of curtailment and offsetting as we are burning less fossil fuels in the grid.

On the fire safety side, in certain areas of the country where there are planning permissions put in for battery storage, certain communities have been raising concerns around the fire safety side. Because this technology has become a lot cheaper it means that globally a lot more are being built. However, the actual incidence of fire has not increased with the same rate of build. That really speaks to the technology being used. It is very robust and it has been tested inside and out. As Mr. Smith mentioned, there are various different safety mechanisms that come with that. Some of the developers here in Ireland will be getting live information from some of their facilities to show if there is an increase in temperature, if there is any detection of smoke or any of that kind of stuff, and they can just shut it down straight away. Thankfully now because of the technology that is being built, to a large degree the fire incidents are not keeping pace. More domestically we have been engaging, and having some really positive engagement, with the Chief Fire Officers Association here at home as well. We spoke at their conference about two weeks ago and delivered a presentation on how might you respond to an incident.

We are engaged in a process now. We are probably going to come up with some national guidelines between ourselves, developers and the fire services so that if there is an incident, there is a clear process setting out how we respond and what the best practice is.

Mr. Pat Lambert:

I just want to add to Mr. Rossiter’s point and that of the Deputy on congestion management and our network becoming congested. One of the points I wanted to make was on certain products and schemes that can alleviate that. There is currently a scheme on the distribution network, which is owned and operated by ESB Networks. It involves a demand flexibility product with four-hour flexibility and, in some cases, batteries at certain locations or nodes on the system. It is very granular and local and addresses a clear need at specific locations. It is products like these that will solve some of the issues outlined in the question around the figure of 11%, as well as what Mr. Rossiter raised. EirGrid is considering developing a similar product, but obviously on a greater scale, on the transmission system. It is products like these that will help with the figures. It is really about getting them onto the system as soon as we can.

Ciarán Ahern (Dublin South West, Labour)
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I thank the witnesses for appearing before us today. Theirs is a relatively new organisation and this is their first time before the committee. They are very welcome.

I understand we have a national electricity storage policy framework but, in the submission for today, it is stated there are no targets for energy storage backed by a long-term revenue mechanism. Essentially, what the witnesses are saying is that long-duration storage will not be delivered at the scale we need unless the incentives are changed by the Government. Are the witnesses working with the Government on this and, if so, what level of engagement have they had to date?

Mr. Bobby Smith:

The lack of targets was addressed in the electricity storage policy framework the Deputy has referred to. It set out an action to identify the long-term need for energy storage in Ireland beyond 2030. Right now, we have indicative targets for 2030 that EirGrid has set out. We do not know what will be needed beyond those, which is an issue for an industry that is trying to develop projects, get projects through the planning process, obtain grid connections and be ready to deliver. We do not know exactly what will be procured or what the Government or EirGrid actually needs.

We are engaging with the Government and we engage with the Department quite regularly on this. It is a little concerning for us that we do not yet have the analysis to identify the long-term energy storage targets. That is certainly something we are calling for because, until we know what the actual aim is, it is difficult to procure or develop the market and policy framework to deliver.

Ciarán Ahern (Dublin South West, Labour)
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I am sorry to interrupt but has Mr. Smith been given any timelines or indications from the Department as to when he might expect to have clarity on that?

Mr. Bobby Smith:

It is a little vague in the policy. The policy sets an end date of 2028 for the analysis to be done and for the procurement framework to be put in place. Obviously, that is only a year and a half away and we have not yet seen progress on the analysis needed to back it up. It causes a lot of concern for us and our members that the route to market may not be in place by 2028, given where we are today.

Ciarán Ahern (Dublin South West, Labour)
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Is that having a chilling effect on investment or stalling investment in this area?

Mr. Bobby Smith:

It is. We mentioned the 10 GW pipeline of storage projects that are in development. Much of that is what we would call early-stage development. Developers may have secured land rights, submitted planning applications or obtained planning consent. The permissions will lapse over time. The developers have invested money at risk and are waiting to see how the market develops. They will not keep the projects going if certainty does not emerge. They will move them, go to other countries or spend their money where there is more certainty. There is a risk of missing the opportunity if we do not get a move on and provide certainty for the development pipeline.

Ciarán Ahern (Dublin South West, Labour)
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Maybe the committee could write to the Department about it, just to put a bit of pressure on.

I do not think the opening statement mentioned my next topic. Should the Government reintroduce household supports for batteries? There were some previously but they were removed. Does Mr. Smith have a view on that?

Mr. Bobby Smith:

I addressed it a little earlier but I am happy to go over it again. We are seeing battery costs decline to the extent that there now seems to be economic viability in the payback periods. Most households seem to be able to go ahead with the solar grant in place. If there are targeted supports, they might be more appropriate for vulnerable households or energy-poor households.

Ciarán Ahern (Dublin South West, Labour)
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I thank Mr. Smith. I appreciate that I was late to the party, so I apologise for that.

Mr. Smith’s association represents approximately 80 companies in the industry. There is a lot of focus on batteries but, at least according to my brother, who works for Codema, the energy agency, there is great potential for heat storage through district heating and thermal energy storage. These kinds of technologies can be far cheaper and less resource-intensive than batteries. Do the witnesses represent anyone working in that space and are there any plans for thermal energy storage in Ireland?

Mr. Bobby Smith:

Yes. I must give the caveat that my association is an electricity storage association, so it represents technologies that store electricity and convert it back into electricity. We do not necessarily represent those working on technologies that convert electricity into heat in the form of thermal storage. Associations such as the Irish District Energy Association, and even Ireland Electrified, which represents the electrification sector and was recently set up, would do so.

However, I can speak to the fact that there is huge potential in the heat sector, and the technologies are readily available. Thermal storage tanks, for instance, can store heat in water and then release it later for space heating or industrial processes, including industrial heating. Therefore, there is significant potential. As I understand it, the policy barriers are more around the cost of electricity compared with gas. Typically, if you have a factory, or a household even, you have alternatives in gas boilers, thermal storage and heat pumps. The electricity cost is a particular disincentive at the moment. It does not have to be that way. Essentially, many electricity costs are regulated, in terms of network charges or the PSO levy. There can be changes made to those charges to incentivise more flexible use of electricity. One can think of a hot water tank that could store energy overnight, when the price is low, and then use that during the day. If the right price signals existed, there could be an incentive for it.

Lithium-ion batteries are associated with the most common form of battery storage today because that form of storage is the most deployable and most understood and is operating in many countries. It has been operating in Ireland for five years. However, we do represent those in newer forms of energy storage. I will name two relevant projects. There is a project in County Donegal related to iron-air technology. The patented technology is being developed by a company called Form Energy, a US company. It uses iron, air and water and can store electricity for very long durations, up to 100 hours. Lithium-ion battery storage is quite different in that there might be a maximum of eight or ten hours of storage today. The second project is by a company called Energy Dome in County Offaly. It essentially uses compressed carbon dioxide to store energy in a sort of dome shape. That can store energy for ten hours and beyond.

There are new technology companies that we are representing. They see Ireland as a really interesting opportunity to deploy their technologies because it has a system with considerable wind energy and many constraints on our grid. The need for energy storage is very clear. Again, it comes down to certainty for companies investing in Ireland over the long term. That is what they require.

Mr. Pat Lambert:

I will add one point to Mr. Smith’s. Each of the various technologies has a different use case. Therefore, the 100-hour technology may not be in the same market as a half-hour, fast frequency response battery. Having all the technologies in the one system is ultimately where we need to get to.

On the point on certainty and what investors need to see, in the solar and wind industries planning issues and grid connections may be the main showstoppers. For us in the storage sector, the number one barrier to investment is the route to market we have been chatting about. I just wanted to emphasise that point.

Jennifer Whitmore (Wicklow, Social Democrats)
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Unfortunately, I missed the first part of the meeting, so forgive me if I go over something already explained. I am just trying to get a picture of the current situation in Ireland. There is no Government battery storage target. Is that correct?

Mr. Bobby Smith:

There is not.

Jennifer Whitmore (Wicklow, Social Democrats)
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There is an EirGrid target of 500 MW by 2030. EirGrid obviously set that in the absence of Government policy and said it was what we should be aiming for. We currently have 1 GW. Therefore, in the market there is double the EirGrid target? Am I correct about that?

Mr. Bobby Smith:

The Deputy is correct about the numbers but the 500 MW target for 2030 was in addition to what was already installed, which is 1 GW today.

Jennifer Whitmore (Wicklow, Social Democrats)
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It is extra.

Mr. Bobby Smith:

Yes.

Jennifer Whitmore (Wicklow, Social Democrats)
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Can Mr. Smith tell me what sort of duration is involved? If we look at the current GW amount, what is the duration of the storage? Is it all short term?

Mr. Bobby Smith:

Yes, the average duration is probably one to two hours.

Jennifer Whitmore (Wicklow, Social Democrats)
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Do we have any long-term storage at all?

Mr. Bobby Smith:

The longest form of energy storage we have is in Turlough Hill, the pumped hydro facility in County Wicklow. It can discharge energy for six hours. The longest battery storage facility we have is in Cushaling, County Offaly, which is a four-hour duration battery.

Jennifer Whitmore (Wicklow, Social Democrats)
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That is the longest. What is its capacity?

Mr. Bobby Smith:

That is approximately 20 MW for the four-hour duration. That went operational earlier in the year. It is co-located with a wind farm.

Jennifer Whitmore (Wicklow, Social Democrats)
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I had a quick look, and it seems we are very far behind our neighbours. The UK has 6 GW. Germany is similar. Australia is putting in an eight-hour battery. It is quite a small one, but it is an eight-hour battery. Is that standard? By comparison with other countries, Ireland is way behind when it comes to battery storage.

Mr. Bobby Smith:

The UK would be the world leader in energy storage. It was one of the first markets to do it, and we have followed suit. We should be further along than we are, given the nature of our system. The systems in the UK, Germany and Australia are high-renewable systems. Australia and Germany have a lot of solar energy. The UK has a lot of offshore wind. Those countries need energy storage, and that is why those markets are leaping ahead and doing that. Australia is a very interesting market to us because it is at the forefront of the long-duration energy storage technology evolution. It is procuring batteries with durations of eight, ten and even 12 hours. It has different forms of energy storage beyond batteries under procurement at the moment, which is exciting. We are looking at Australia as a market that we could follow. Given the nature of Ireland's system, where we are already constraining down a lot of our wind energy, and it is projected to get even worse because the necessary grid reinforcements will take time, we are going to need energy storage soon, by the early 2030s. Our concern, as the Deputy has highlighted, is that we have a target of an additional 500 MW, which is set out in the electricity storage policy framework by the Government for EirGrid to deliver. It is not necessarily an EirGrid target but a Government target that EirGrid must deliver. However, we have nothing beyond that. We can do the maths. It is 10 GW of a pipeline with 500 MW currently the target, and nothing beyond that, at least that we know of, even though we know there is a fundamental need for it on the system.

Jennifer Whitmore (Wicklow, Social Democrats)
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I have not looked at the document. In the framework, is a certain amount specified for long duration versus short duration, or is it just-----

Mr. Bobby Smith:

It states four-hour-plus duration of 500 MW by 2030. Beyond that, no duration is specified. A system study is required to understand the need and volume, which we appreciate, acknowledge and support. We need to understand the range or volume of the energy storage that we might need, but we do not know that yet.

Jennifer Whitmore (Wicklow, Social Democrats)
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I think Mr. Smith said earlier that longer storage essentially means more batteries. Is there any other technical difficulty? Is there anything else that is more complex? Is it just that we need more batteries?

Mr. Bobby Smith:

For lithium-ion batteries, it is a question of cost. It is not necessarily linear, but every time you double the number of battery packs, you are increasing the capital expenditure on a project. There is what is seen as a ceiling on the duration that lithium-ion batteries might get to, given that there is a ceiling on the cost.

Jennifer Whitmore (Wicklow, Social Democrats)
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What kind of cost are we looking at for an average two-hour-----

Mr. Bobby Smith:

We recently looked at four-hour duration batteries in a piece of analysis and the cost is approximately €1 million per megawatt.

Jennifer Whitmore (Wicklow, Social Democrats)
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Large energy users are required by the Commission for Regulation of Utilities, CRU, to have back-up alternative fuels and back-up generation. Does Mr. Smith see a place for battery storage there? Should we be looking to encourage, or indeed compel, these companies to have battery storage instead of using gas generation power?

Mr. Bobby Smith:

The CRU policy as it currently stands is that data centres of a certain scale must have equivalent back-up. That can be gas generation and-or storage. We see a potential role for storage there. The way the current market rules work, we think storage is at a structural disadvantage compared with gas. It would be harder for a data centre to make the business case for storage at the moment. There are certain market rules that we need to change to make storage more attractive. The network charges that Mr. Rossiter mentioned will make a big difference. Getting that policy through and approved quickly by the CRU will help to support the business case for battery storage and make it more attractive compared with gas. There is also another factor in what is called the capacity market. We have a capacity market that EirGrid runs every year to procure long-term capacity for the Irish system to meet growing demand. That typically has been gas generation. Batteries can participate in the capacity market but are at a disadvantage relative to gas because of what are known as derating factors. That puts a reliability factor on different types of technology. Data centres are being required to put in place the equivalent derated capacity for their demand and gas is more attractive than battery storage at the moment. Unless that changes, it will continue to be the case.

Jennifer Whitmore (Wicklow, Social Democrats)
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Current Government policy is favouring gas generation over battery storage.

Mr. Bobby Smith:

The way the capacity market is designed, which is a regulatory and EirGrid market, is favouring gas over storage.

Barry Heneghan (Dublin Bay North, Independent)
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I will seek clarity on that point. Is it because of the EirGrid system and the data centres that are on it that Mr. Smith is saying that the current system's codex has not been updated and is favouring gas? It is, by the way, great to see the witnesses and I am looking forward to hosting them in the audiovisual room next month. I was in my thoughts, listening to the witnesses' answers. I am looking forward to hosting them on 9 June.

Naoise Ó Muirí (Dublin Bay North, Fine Gael)
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The Deputy had better get the date right in his diary.

Barry Heneghan (Dublin Bay North, Independent)
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There was an error in the initial invitation. I will put that back on the witnesses. Is there an error in the current EirGrid system that Mr. Smith believes is favouring gas generation? A constant supply is required, particularly for data centres. What does Mr. Smith think is the main error in EirGrid's current approach to the system?

Mr. Bobby Smith:

Data centres are being asked under this new policy to put in place equivalent on-site storage or generation to match their demand. That on-site generation or storage must be the derated equivalent of their demand. Technically, a data centre has to have the equivalent of 10 MW of generation or storage that is derated. The way the capacity market is designed means that storage is derated a lot lower than gas. There are some fundamental reasons for that, which we will not argue against. We looked at international comparisons, and Mr. Lambert can speak to this. We looked at Great Britain, France and Italy, which have more favourable derating factors for storage than we have in Ireland. We think it is more of a legacy issue of how storage has been treated in the system rather than representing the current facts on the ground.

Naoise Ó Muirí (Dublin Bay North, Fine Gael)
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Mr. Rossiter wishes to come in.

Mr. David Rossiter:

More on the wider point, and circling back to the previous question about the duration, as mentioned by Deputy Whitmore, I thought it would be worthwhile outlining the context. We have treated storage up to this point to deal with frequency issues. If there is a drop in frequency, that is why we have that one- or two-hour capacity at the moment. That is why we are trying to get to the longer, four-hour duration because the batteries can supply the grid. I do not have the live figures here but the figures were released on Sunday for what was being supplied to the electricity grid. Solar was high. We were all sitting outside as the solar was doing its job. The batteries then got the signal to charge. When the sun set on Sunday evening, it dissipates back into the grid. Because we only have the one- and two-hour storage now, there is only so much we can do. We want to push into that four-hour storage so we can do that better and for longer. I just wanted to circle back. It is worthwhile looking at those stats from Sunday. They are a good example of how the batteries do their jobs.

Mr. Pat Lambert:

I will add to Mr. Smith's point about the capacity market and the international example's around derating factors, etc. As was outlined, the capacity market is a route to market for storage. It offers a ten-year contract, which banks and investors like. It is a viable route to market for storage. The problem with the derating factor is that it is competing against gas. The derating factor being quite low for storage at two- or three-hour, or perhaps even four-hour, duration is acceptable, viable and makes sense, but when we are getting up six, eight or ten hours, those derating factors need to increase because of the capacity being provided. We did a bit of analysis around trying to reform these derating factors. As Mr. Smith mentioned, we looked at France, Italy and Great Britain and their derating factors are substantially higher than they are here for those longer duration storage assets.

It is just to make that point. It is work that we have ongoing with the two regulatory authorities, trying to push the derating factors up, especially for longer durations.

Barry Heneghan (Dublin Bay North, Independent)
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I agree. To revert to the original question, the evidence that Energy Storage Ireland has sent to my office and submitted to the committee seems to show that industry is ready to invest but there are structures that have not caught up yet.

On the curtailment and dispatch down that we are constantly discussing, and given the energy costs that the public is paying for wasted renewables at the expense of imported fossil gas, are the witnesses of the opinion that battery energy storage systems, BESS, long-duration energy storage, LDES, lithium or any of the proposals from other countries would help us in bringing down the overall energy costs per kilowatt hour? Has a cost analysis been done by Energy Storage Ireland? There are multiple storage options and one of the larger ones, the gravity pump, was mentioned, but do the witnesses think that batteries are the best or are there other viable options, for example, the storage of carbon dioxide underground? What would be the best option?

Mr. Bobby Smith:

There is a cost to turning out wind energy and turning on gas generation in its place. Right now, that is around €800 million per year. EirGrid does the maths on that and publishes that figure every year. It is tracked. What we can do about it is build grid, energy storage and other types of flexibility provider into the system. According to more recent analysis that we have done, which we will be presenting in more detail in the audiovisual room briefing that Deputy Heneghan is hosting for us, for which we thank him, building 2 GW of six- and eight-hour duration batteries - the technology that is readily available today, and products already have planning and in-grid connection and could be deployed in the next few years - could save consumers around €102 million net per year. That includes the cost of the storage. It would reduce the imperfection cost and deliver a net saving to consumers of just over €100 million per year. That would reduce the wholesale cost of energy because we would be displacing the more expensive gas plants. We would be reducing the compensation costs for turndown wind energy and saving on carbon cost.

Barry Heneghan (Dublin Bay North, Independent)
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In relation to the current system, the Government's approach to private wires and the alternative approach that I am proposing, do the witnesses have to hand any evidence of delays in direct lines that could have been sped up by a private wire legacy or policy change?

Mr. Bobby Smith:

It is hard to get the exact numbers on how much capability there is from private wires to deliver on energy storage because energy storage is very deployable. We are talking about 20-foot containers. We do not need a huge land footprint. Planning considerations are relatively straightforward compared with other forms of infrastructure. Their potential is large for large-demand facilities, be those data centres, factories or pharmaceuticals. They have a nearby field. They can put solar and battery in and directly connect to that. We think that the potential is huge, although we cannot exactly put the numbers on it because it is hard to quantify. However, the potential is very large and would offer an opportunity to help relieve some of the pressure on the grid for this additional demand and help these facilities decarbonise in a quicker way if they are able to directly connect with wind solar battery.

John Clendennen (Offaly, Fine Gael)
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I thank our witnesses for joining us. In the opening statement, the first ask is on establishing a clear route to market. Regarding capacity targets, Mr. Smith mentioned renewable developments under RESS and referenced the UK in terms of the progress it has made. Is that because the targets were in place beforehand or is the UK who we should looking to in terms of targets?

Mr. Bobby Smith:

In Great Britain, the UK Government did the cost-benefit analysis a few years ago to identify an optimal range of energy storage on the UK grid by the early 2030s and the cost that would deliver to the system. Great Britain had a target storage range. It then began to develop a procurement mechanism for it, which is now going through its first stage of procurement. It is called the cap and floor mechanism. The UK Government is procuring up to 7 GW or 8 GW of long-duration - eight hours-plus - storage on its grid over the next few years. Those projects are in the procurement process at the moment. We do not yet know the winners, although I believe they are due to be announced soon. The most important thing under that type of mechanism is that it offers a 25-year contract at a guaranteed floor price. The batteries or energy storage technologies that participate in that, be they pumped hydro or new forms of energy storage, will guarantee that price and be able to provide other services. Regarding the revenue they earn above the floor, they will keep a certain proportion of it up to a cap and hand anything above that to consumers. It is a two-way risk mechanism.

John Clendennen (Offaly, Fine Gael)
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Regarding the 10 GW pipeline that Energy Storage Ireland envisages for Ireland, does it see that as an optimum figure or what is the possible maximum development of storage in the time to come?

Mr. Bobby Smith:

That is a really good question. It can depend on the type of energy storage. If we were to only procure lithium-ion batteries of six and eight hours, we would need more volume than if we were to procure a mix of storage with lithium-ion and longer duration forms of energy storage. We did a study with Baringa in 2022, which identified that 2 GW of a portfolio of different durations of energy storage would be optimal for reducing CO2 emissions by around 50% in the power sector. If we go beyond that and build more offshore wind or other renewables, the energy storage requirement will increase. A total of 2 GW of multiple durations of storage in addition to what we have today is a minimum target. When we look to 2040, 2050 and, hopefully, net zero, our energy storage needs will probably be some multiple of that.

John Clendennen (Offaly, Fine Gael)
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Is there a ratio of energy to storage? If we are going to hit 40 GW of offshore renewables, should we have 10 GW of storage? Is there a very simple sum in relation to that?

Mr. Bobby Smith:

Not exactly because it depends on what the demand is and how much renewables we are turning down. We would look more at what the residual fossil fuel that we need to remove is. To put another spin on this, we have done some analysis that shows that, if we build all the renewable targets that are there currently, which are the 5 GW offshore, 8 GW onshore and the 8 GW or 9 GW of solar, the residual fossil fuel generation in the system by the mid-to-late 2030s will be around 7 TWh of gas generation. That is what we need to remove. We can almost look at that as the storage target. We need 7 TWh of storage. That can come from batteries, including iron-air, or a mix. That is essentially what we are trying to target.

John Clendennen (Offaly, Fine Gael)
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I was looking at 2050 targets. What would the investment be quantified as in terms of euro? How long do we have before that starts to get redirected if we do not see change here?

Mr. Bobby Smith:

Not that long. That is our concern. The pipeline of projects is awaiting a route to market. They are ready to build. They have the planning and grid consent. They can start construction in a relatively short period of time if the certainty is there. Those projects are what we call at risk at the moment in the sense that money has been put down to agree land rights, go through the planning process and apply for the connection process. If the certainty does not materialise, those developers will move that capital elsewhere or the planning permissions will lapse, so the grid connection offers will lapse as well. The projects will have to go back into the system, which adds more delay and more cost. That is a huge risk to developers if they do not get the certainty.

What was the Deputy's first part of his question again?

John Clendennen (Offaly, Fine Gael)
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The timeframe before it starts to be redirected.

Mr. Bobby Smith:

We have a target by 2028 to have the long-term procurement in place. That is a target that our members are aiming for. If that is not hit, we would certainly see a big risk of investment pulling out of Ireland and those projects not going ahead.

John Clendennen (Offaly, Fine Gael)
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I visited Cushaling and saw how impressive it was in terms of an investment. Why has every wind farm not gone this route since day one? It should make financial sense.

I wish to touch on reform network charges as the organisation's second proposal. Does the organisation see any stakeholder that would have an issue with this proposal?

Mr. Pat Lambert:

I will jump in on the Deputy's first point around the collocation of batteries or storage with wind or solar. I completely agree with the premise of the Deputy's question that it makes perfect sense because, ultimately, it better uses the grid infrastructure that is there. It basically sweats the asset, so it is being used all the time. Why it is not happening right now is down to a couple of different things. One of the main ones is the sharing of export capacity. An example that we usually give is that if a person has a 50 MW solar farm and 50 MW battery, they would need a 100 MW grid connection. They cannot dynamically share that grid connection. As the Deputy can imagine, that adds significant costs and complexities to the project. Where we are now with that is that we have decision from the CRU that is trying to resolve that initial kind of step.

It is the first step of, hopefully, many that will see this resolved, get those projects on board and on the system and, ultimately, make better use of grid infrastructure, which is important. As we all know, given the delays in building grid infrastructure and the complexities there, making better use of what we have is critical and putting storage alongside an existing wind or solar farm makes perfect sense. It is something we have been pushing for really hard. It is good to see a bit of progress on that.

Mark Duffy (Fine Gael)
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I welcome everyone. It is great to have this discussion. It is something I have been speaking about regularly both here in this committee and in the Seanad. I note that the Minister, Darragh O'Brien, has announced that his Department is initiating the development of an integrated strategy on the use of renewable surplus energy. I do not know if the witnesses have seen that. If they have been contacted by the Department, it would be useful to contribute all of their findings and expertise to make sure that their views are front and centre. That is something we could have a discussion on as a committee at some stage because it is very important that there be an overall strategy. Nobody likes to see wastage and, obviously, battery storage can play a key part in addressing that.

I am from Mayo, where we have many wind farm developments. Deputy Heneghan mentioned dispatch down, which the witnesses are familiar with. Something I have spoken about here is battery storage, which is a brilliant opportunity from a fuel poverty point of view as well. Do the witnesses have a position on residential battery storage or is it the industrial scale they are more focused on? We saw what happened over the past number of months in terms of the fuel crisis. It brought the country to a halt. However, there is actually a very good story that can be achieved if we can get ahead of the potential that is there. I would welcome the thoughts of the witnesses on that.

Mr. Bobby Smith:

We will certainly engage with the Department on the policy. We are happy to input our views. The scale of the opportunity in terms of our wind energy and solar resources is enormous. That leads to challenges in terms of the potential for surplus and the potential for waste if we do not address that through more flexibility in the power system. Energy storage is one of the key means of doing that. We have analysis that shows that energy storage helps reduce dispatch down renewable energy substantially, up to 50% in some of our scenarios. In turn, that helps to reduce system costs because we are making much more effective use of that more affordable wind and solar energy. So, there is a net consumer benefit to delivering energy storage on the system.

In terms of residential, it is an area we can speak a bit to but I caveat that we are primarily a utility-scale or commercial industrial-scale association, so we are representing energy storage at that level. However, it is fantastic to see the take-up in residential solar and battery storage systems, and as the Senator rightly points out, they are helping to mitigate the fossil fuel price crisis that we are seeing at the moment for households that are able to take advantage of them. We see the payback periods reducing because the battery costs are coming down. Things like dynamic tariffs and people being able to charge their solar into the batteries are helping people to avoid higher energy costs, which is driving a shorter payback period.

As to the question of whether grants should be considered, they would obviously help. We feel that there is probably a need for more targeted grants in terms of energy-poor households or vulnerable households so that they would be better able to take up the technology. It is something that seems to be happening relatively well on its own just because of the economics of battery storage and solar at the moment. I should point out that there are still grants for solar panels that the SEAI provides.

In general, the scale of the opportunity is enormous for energy storage. As we have mentioned, the industry is ready to deliver. The pipeline is there. If we have the right policy certainty, the industry can deliver-----

Mark Duffy (Fine Gael)
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What are the obstacles to that at the moment?

Mr. Bobby Smith:

It is mainly down to route to market. There are plenty of projects through the planning system so that it is not a showstopper for us. The grid connection system is okay. Batteries work with the grid and fit within it quite well. It is the route to market. Looking to finance and build a battery storage system that could be in operation for 25 years needs certainty over the long term that it will be able to earn a reasonable rate of return. Right now, a battery storage system can trade on the energy market and earn money that way. It can buy when the price is low and sell when the price is high to earn the difference, but it is very hard to predict over the long term what revenue opportunities might be there and it is even harder to convince a financial institution like a bank to back that and provide the finance. It means looking at riskier, higher cost finance, which drives up the cost of the asset, which makes it harder to invest in.

We are calling for the Government to support a long-term revenue certainty mechanism for assets. All that assets need is certainty over the longer term. They will very likely earn more revenues just through trading in the energy market than is needed for the certainty mechanism to top up, but it is about providing that long-term stability so that they can get the finance.

Naoise Ó Muirí (Dublin Bay North, Fine Gael)
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I have a couple of questions. I thank the witnesses for coming in and presenting. I am trying to understand the Energy Storage Ireland model, because the RESS and the route to market seems to be an issue. Effectively, Energy Storage Ireland is buying electricity on the way in, storing it and selling it on the way out. Mr. Smith is saying that the delivering a secure, sustainable power system, or DS3, scheme is not available any more and that it was the scheme that worked. Playing devil's advocate, the RESS is targeted at people who are generating electricity. Energy Storage Ireland is not doing that. It is storing electricity. What does Mr. Smith see as the right or best model that would work in terms of storage?

Mr. Bobby Smith:

That is a great question. The contract for difference, CFD, scheme is very appropriate for generation because wind and solar are generating electricity, so all they need to do is get a fixed price for generating when it is windy or sunny. Energy storage is a bit different because it can earn different revenues. As the Chair said, it can buy low and sell high, it can earn DS3 revenue and it can earn some capacity market revenue as well. It is called a revenue stack. It does not work exactly like an energy generator in terms of wind and solar. That is why we feel that the idea of a cap and floor scheme is more appropriate for energy storage. That means at least a floor of revenue is guaranteed over the life of the asset and then there is a bound between the floor and the cap in which energy storage can participate. We would want energy storage to optimise the value it is providing to the grid so that if there is available opportunity to charge when wind is high and the price is low, the storage should do that. If there is an opportunity to sell to the space of fossil fuel gas plants later in the day, it should do that. We should not want to curtail that by putting in a fixed price like a CFD. So, you give a bound between the floor and the cap in which energy storage can operate-----

Naoise Ó Muirí (Dublin Bay North, Fine Gael)
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Is that in other jurisdictions?

Mr. Bobby Smith:

That is in the UK. The UK is rolling out the cap and floor scheme. Australia has a similar scheme. EirGrid is proposing it for the first 500 MW - that is under consideration for 2030 - with the idea of having a floor and share scheme, which we also support. The idea behind that is to provide a floor price over the life of the asset. Projects would bid, so it would be competitive. The projects that come in with the lower prices would get the contracts. They would then be guaranteed that floor price over the lifetime of the asset. Where revenue is earned above the floor from trading on the energy market and providing DS3, the projects would hand back a portion of that to the transmission system operator and the consumer while keeping the remainder. It is sort of a win-win from-----

Naoise Ó Muirí (Dublin Bay North, Fine Gael)
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That is how the consumer protection-----

Mr. Bobby Smith:

Exactly.

Mr. Pat Lambert:

On the international precedents that were outlined such as Great Britain and how it is doing it, one of the advantages we have by being a bit slower rolling this out is that we can learn a lot from those examples. Italy has tried to do this as well. It ran into problems with certain bidders bidding too low and then not delivering the projects. We have used Great Britain as a counter-reference for a lot of things on the energy side of the house before, so while I would not say we should follow its lead exactly, it makes sense to learn from whether its projects deliver.

Naoise Ó Muirí (Dublin Bay North, Fine Gael)
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In terms of the second point and batteries being treated as energy users rather than flexible assets, how is that handled in that jurisdiction?

Mr. Bobby Smith:

In the UK, storage is treated as generators, which is a similar proposition to what the CRU is now minded to implement in Ireland and something that we support.

Naoise Ó Muirí (Dublin Bay North, Fine Gael)
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Okay. End-of-life batteries were mentioned in relation to what Senator Noonan said. Energy Storage Ireland is a relatively new organisation, but the end of life and handling of the technology will be important. What is happening in that space at the moment? What is the experience? What can we expect?

Mr. Bobby Smith:

As the Cathaoirleach notes, it is relatively early stages so there is not a well-developed industry in terms of battery recycling in Europe yet but that will come. There is a battery regulation at European level which all member states are required to comply with. This mandates things around the supply chain when importing materials into Europe and then the end of life with recycling a certain amount of content within Europe and making sure it is disposed of appropriately if it needs to be.

The vast majority of lithium-ion batteries can be recycled; 99.5% of the components can be recycled.

Naoise Ó Muirí (Dublin Bay North, Fine Gael)
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But it is not being recycled at present.

Mr. Bobby Smith:

It is not currently being done because there is not the well-developed industry for it as the batteries have not come to that sort of stage yet. From an energy independence and security point of view, we see the potential to keep those critical minerals in the economy for as long as possible because that obviously supports energy independence and there is less reliance on other countries for those minerals.

Naoise Ó Muirí (Dublin Bay North, Fine Gael)
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Okay. Go ahead, Mr. Rossiter.

Mr. David Rossiter:

The operational lifetime of many of these batteries going into the grid is about 15 to 25 years. Again, because they have only gone in during the past five or six years, it is something that will be coming down the line in ten or 15 years' time. As Mr. Smith mentioned, the EU battery regulation, which came in 2023, will direct where those batteries go. There should be an industry developed in Ireland for repurposing and reusing them.

Naoise Ó Muirí (Dublin Bay North, Fine Gael)
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Great, thank you. We are going to do a quick second round. Does Senator Higgins want to come in?

Alice-Mary Higgins (Independent)
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I am very interested in battery regulation. It sounds like the witnesses are saying it is not just around the disposal part but also the question of ethical sourcing and the transfer of materials. It will be interesting to see how it comes into effect across Europe.

Following up on a couple of things, the witnesses mentioned backup generation before and the need for a shift away from what we are seeing with some of the very large users and data centres, where we have the backup of gas. Could the witnesses comment a little more on how we move towards that shift? That may be the concern I have with the hybrid piece as one of Energy Storage Ireland's recommendations. We definitely need to look more at hybrid energy in the renewable space but of course, the problem all the way up to the European taxonomy is that gas has woven or inserted its way into this space where it is named and framed as a transition fuel, etc.

Do we need to have measures that really target renewable energy and storage explicitly in that regard? There has been a little muddying of the line with gas going into that space. I am very open to the idea of hybrid but I am worried it will end up being the de facto rationale for continuing with gas. Similarly, on LNG, which is an issue we have looked at here in this committee, some of the rationale we have been given around LNG has been interesting in respect of the costing piece. Something that came up in that scrutiny was that when considering the best alternative, LNG was determined to be the most cost-effective approach. However, in the cost analysis, it was only tested against either wind or battery storage, rather than that combination of fuel. Do we need to ensure a proper cost-benefit analysis and everything else are properly taking in this duo of the storage and energy production, rather than treating them as very separate?

Coming back to things we have looked at as a committee, I am also a little concerned about private wires. We are looking at many measures to support more supply and we are hoping to displace gas on the grid. However, is there a danger with private wires that much of the new energy storage infrastructure that comes online will not be accessible to the grid through the TSO or DSO because of those obligations not being included? I am thinking in particular of crisis situations.

The witnesses addressed the domestic situation piece but there maybe is a little bit more to it. For storm situations and the idea of civic or municipal energy storage - which is somewhere in between your industrial, commercial and domestic - is this something we should be looking at, particularly in parts of the country that were so affected by Storm Éowyn, etc.?

Mr. Bobby Smith:

I might take some of those questions and then have my colleagues jump in on others. If I forget anything, please shout.

On the LNG potential, I agree we should be using a more appropriate analysis than just looking at one technology type or another because it will be a portfolio of solutions. LNG has potential to store a lot of energy, but you would not want to use it a lot of the time. It could be a backup that you ideally never want to use; it might be just an insurance policy. However, replacing that with just batteries would not be feasible. Batteries can do certain things very well, maybe more of the half-hour to eight-hour duration, that is, the very short-term within that balancing, but with an LNG terminal, if you need to provide energy over a week or two, that is not for batteries but is potentially for other forms of energy storage, like the iron-air technology I mentioned or green hydrogen could potentially have a role there. Absolutely, we should be looking at a variety of solutions as potential alternatives; we would support that.

On the private wires Bill and the access to the grid, it is worth pointing out that the TSO and DSO procurement of energy storage on the system that EirGrid and ESB Networks are both looking to procure is for the grid. The services that energy storage will provide are for the grid as a whole, so it is not ring-fenced for any one particular type of user, consumer or data centre. That will see system-wide benefits, and we are advocating for Government targets for longer term energy storage for the system, that is, for Irish homes and businesses, including data centres.

The private wires legislation is another route, and there can be two routes. There can be this grid-led model, which the TSO and DSO would procure to support their needs on the system, and then in the same way, data centres could connect through power purchase agreements with renewable generation. This helps support the additional build-out of renewables on the grid and offsets some of their own demand on the grid. We see the same option for energy storage.

In the CRU large energy user policy, we advocated for this idea of eventually transitioning to a more 24-7 energy matching solution for large energy users. Right now, many of our large energy users contract with generation on an annual basis. They have a set amount of annual demand and they contract with a renewable generator or a generator to match that demand on an annual basis. Other countries and some large corporates are also moving towards a more granular hourly matching basis. Every hour of the day, they want to be able to demonstrate that their demand is being met by renewables on the grid. That has to be a combination in Ireland of wind, solar and storage. Other countries have hydro and nuclear, and they can balance that out. For Ireland, that is very likely a portfolio of wind, solar, storage, maybe some biomass or biogas, etc. That is the model we ultimately want to see the country get to. We would have advocated for that in the CRU's large energy user plan.

On the hybrid piece, we are strongly advocating for Ireland to decarbonise and be energy independent, so we are backing up batteries collocating with wind and solar and unlocking the benefits of those. As my colleague Mr. Lambert said, they are more effective utilisation of those grid connection assets and reducing down the amount of wind or solar energy that would need to be curtailed.

As regards municipal energy storage, again it is not directly our area but we could certainly see the benefits in that being looked at, particularly to help support communities. Going on my limited knowledge on other countries like Australia that are doing this, it is almost like a pay-as-a-service storage scheme. The community might contribute jointly to this battery storage or solar support scheme and then that scheme is able to supply energy for that community as a whole. There might be some sort of model there but I am not an expert on it. Certainly, it would be worth exploring.

Mr. Pat Lambert:

I might just add to the LEU piece. Mr. Smith might have mentioned it earlier in the session but there are some LEUs internationally that have partnered with long duration energy storage companies that can provide power for anywhere between eight to 100 hours. That, alongside either a wind or solar power purchase agreement, fills in that gap really well. These things are happening internationally; they just may not have happened here yet.

Mr. Bobby Smith:

To add one important point, today, a large energy user can contract with a PPA - like a wind or solar PPA - which would roughly match 60%, 70% or maybe 80% of their actual hourly demand on the grid. To get to that remaining 10% or 20%, they will need things like energy storage. Data centres and large energy users will also need to be flexible.

There is a way to get it. The last few percent gets exponentially more expensive the higher we go up the curve. Some 90% to 95% is possible with today’s technologies, however. That remaining 5% is maybe more of a longer term solution that we will need to figure out. It might not be readily available today.

Alice-Mary Higgins (Independent)
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We could reduce demand.

Naoise Ó Muirí (Dublin Bay North, Fine Gael)
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Anyone who wishes to have a second round of questions will have two minutes.

Jennifer Whitmore (Wicklow, Social Democrats)
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I will follow up on Mr. Smith's response to Senator Higgins as well as on what he earlier mentioned with regard to the 100-hour battery project that is happening in Donegal. I was going to ask whether it was an experimental project or one to prove the technology, but it appears it is happening overseas. Are any of these projects operational overseas at the moment?

Mr. Bobby Smith:

Yes, there are operational projects in the US. The US-based company, Form Energy, has operational projects in the US. Its first customers are in the US because it is a US-based company. Interestingly, some of its first customers are the likes of Google and some of the other large energy users that are looking to contract this technology on their sites. They have also partnered with some of the utility companies in the US to help supply energy to their grids. That is where its market is starting but it sees Ireland as its first European project.

It is a solution that Ireland particularly needs because wind is, and will continue to be, our dominant form of renewable energy technology. Wind can be bulky in terms of the challenges it brings to the grid. It can be windy for days and then it may not be windy for a number of days, whereas solar is predictable as to when it is going to generate. Solar can be balanced pretty well with lithium-ion batteries. It is harder to balance a whole-of-wind system on lithium-ion batteries alone. Something longer is needed to cover those longer imbalances that wind energy tends to create. That is the 100-hour battery.

Jennifer Whitmore (Wicklow, Social Democrats)
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The project is Donegal is 10 MW. Are the ones in the US the same size as that?

Mr. Bobby Smith:

They are a bit larger. The utility companies have contracted larger projects. The project in Donegal is intended to demonstrate the use case in Ireland. That is why it is smaller scale. The company behind it is FuturEnergy Ireland, which is a joint venture between Coillte and ESB Networks. They are looking at additional projects over the longer term that would be larger scale. The 10 MW project is just to prove it works.

Jennifer Whitmore (Wicklow, Social Democrats)
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What is the cost difference between a lithium-ion battery storage facility and an iron-air one? Are they comparable or is one a lot more-----

Mr. Bobby Smith:

They are different because they are doing different things. I do not have the cost figures for the iron-air technology. I am happy to engage with the Deputy afterwards if that is something we can provide. The costs associated with lithium-ion batteries are more well-known and understood because they are a more established technology and available in different jurisdictions. It is around €1 million per MW for a four-hour duration asset. I think my colleague, Mr. Lambert, brought this up earlier. It is doing a different thing. A lithium-ion battery is a highly efficient technology. We want it to decylce and discharge regularly every day. We get approximately 90% of the energy we put into a lithium-ion battery back. The iron-air technology is meant to almost provide that long-term capacity over the system. Its efficiency is a lot less because it is not needed to cycle as frequently as a battery is. The cost profiles are different for that reason. We are not easily able to compare like for like because they are doing different things. Ultimately, we will need both of those types of energy storage.

Jennifer Whitmore (Wicklow, Social Democrats)
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When will that come online? There are no problems with it. If it is operational in the US, it is a proven technology. Is it pretty much guaranteed for 2029?

Mr. Bobby Smith:

The project secured approval from the local authority in Donegal. I believe it is under challenge at the moment and a decision from An Coimisiún Pleanála is expected quite soon. It has been with the coimisiún for over a year now.

Jennifer Whitmore (Wicklow, Social Democrats)
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It does not have planning permission yet.

Mr. Bobby Smith:

No, it does not have final planning permission, just the initial grant from the local authority. An application for grid connection will then be made, which may be a one- or two-year process. All things going well, construction will begin thereafter. The project is in the 2030 timeframe, roughly.

Jennifer Whitmore (Wicklow, Social Democrats)
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The construction period must be relatively short.

Mr. Bobby Smith:

The construction period is relatively short. The grid connection is, let us say, the bigger point of construction in that project. As these are containerised solutions, they can be transported, put on-site and installed relatively quickly. There is not a lot of civil work involved.

Jennifer Whitmore (Wicklow, Social Democrats)
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How long does it take roughly?

Mr. Bobby Smith:

I will compare it to a battery system, which is an equivalent containerised solution. Deploying a battery system, once the grid is ready, takes less than one year. The grid connection is the major milestone because that takes more civil work. The battery systems themselves are relatively easy to deploy. The availability of the grid connection and the transformer takes more lead-in time.

Jennifer Whitmore (Wicklow, Social Democrats)
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It will take one year for this iron-air battery, once we have the grid connection and everything-----

Mr. Bobby Smith:

Yes, once we have the grid connection. However, that might be more than a two-year timeframe, all going well.

Alice-Mary Higgins (Independent)
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I am interested in the long storage piece. We heard about daisy chaining technology a couple of years ago but it sounds like it is a completely different thing from that. I do not know whether that is still a thing that is in play. We heard about that daisy-chain approach in the previous climate committee, but now it sounds like it is something completely different. The witnesses might comment on that when they come back in.

I note Energy Storage Ireland’s engagement around network charges and its hope that the CRU moves in a different way with this. This question may be a little outside of the remit of Energy Storage Ireland. We know Ireland’s energy costs are so high because we still have rates set by gas. Separate from that, we also have an issue, which often comes up when the CRU is before the committee, with standing charges. Even if energy costs are going down, in some cases, the standing charges go up. People, therefore, do not feel or see the benefit in terms of the energy piece. While I know this does not fall within the remit of Energy Storage Ireland, is that a piece in the whole thing of making cost savings visible? From a climate perspective, it is a no-brainer. From a cost savings piece, that gets made visible within the costing system for users as well as in network charges.

Mr. Smith mentioned the critical minerals piece. Again, I am interested in that area. We know there is not a good gathering of lithium at the moment. There are small quantities in vapes. Does Ireland need to have a better strategy for critical mineral management?

Mr. Bobby Smith:

The concept of the daisy chain was that instead of having a long duration of storage technology, we just stack a lot of lithium-ion batteries on top of each other. That is a potential solution as well. I do not completely rule it out as of yet. It just depends on how the technologies compare in terms of cost and operational performance against each other. Again, there are different buckets of different energy storage technologies and what they are good at. Some cross over and others do not. There might be room for both.

I will address bill transparency from a more personal perspective. This is not something that Energy Storage Ireland necessarily looks at or has a policy position on. I would argue for more transparency in electricity bills as to where costs go and where the benefits are. For instance, the PSO levy is a cost item on the bill, although, in more recent years, the PSO is paying back to consumers. In previous years, however, it was seen as a cost item. The PSO supported renewable generation on the system but cost savings such as reduced gas generation or reduced fossil fuel imports were not shown. That information is never shown. It is always reported as a net cost, even though that has not been the case in recent years. It is actually a net saving to consumers now. That is not well understood by people. That is something I would like to see thought out more.

When it comes to critical minerals, in general, as we are part of the European Union, we take our lead and guidance from European regulations. For example, the battery regulation sets out very well the idea of the supply chain, transparency reporting in terms of what is coming into Europe and end-of-life processes. There is no need for anything additional in Ireland beyond that because EU regulations cover it quite well already. We just need to implement them.

Mr. Pat Lambert:

On the lithium piece, there is maybe somewhat of a slight shift in the industry towards looking at sodium-ion as a potential technology in the next couple of years. Sodium is plentiful so that would alleviate that concern. While there may be some differences, the lithium supply chain and the supply chain for these batteries would be transferable to a sodium-ion supply chain.

Mr. David Rossiter:

On the mineral side, there are older and newer batteries. The cobalt side has been taken out of all the newer batteries, which helps with the supply chains. The lithium can be repurposed and reused.

As we mentioned, the life cycle of the batteries going in now is from 15 to 25 years. Because we are covered by those EU regulations we see that there will be more end-of-life, circular economy benefits when we eventually get to that point. I think it is worth noting that the newer batteries have moved away from cobalt in particular, to ensure best practice.

Naoise Ó Muirí (Dublin Bay North, Fine Gael)
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Does Senator Noonan wish to ask a further question?

Malcolm Noonan (Green Party)
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I have no further questions. I just want to thank the witnesses. It was one of the most informative presentations the committee has had for a long time. I wish the witnesses all the best.

Naoise Ó Muirí (Dublin Bay North, Fine Gael)
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I thank the witnesses for coming in today. We will be publishing the opening statement on the committee's website. We will now suspend the meeting to allow witnesses to leave and then we will go into private session.