Jimmy Deenihan (Kerry North, Fine Gael)

Like previous speakers, I am delighted to have the opportunity to make a contribution on this important Bill. It may not involve a large number of sections but, nonetheless, it is very important.

It is important on occasions like this to recognise the contribution the ESB has made to this country. It has been one of our most successful State companies and I am always proud to remind people that it was the first Government of this country that put it in place in 1927 after the success of Ardnacrusha. The Government had the vision to put the ESB in place at the time and it was criticised for doing so. It has been one of the most successful State bodies in this country, and comparatively one of the best of any country.

At that time the ESB was set up to manage the power generated at Ardnacrusha. That station now generates less than 2% of our gross output, so that gives an example of how our energy network has developed since 1927. EirGrid was established in 2006 and is a new State-owned company. It is separate from all parties in the Irish electricity sector and it took over responsibility for the operation of the Irish national grid. It has its own separate board and it reports to the CER and its main shareholder, the Government. It was established as the operator of the Irish transmission system, but ownership remains with the ESB. On 12 March last year, the Government policy on energy stated that ownership of the transmission would be vested in EirGrid from the end of 2008. EirGrid is responsible for balancing electricity consumption and generation and for the development of the power system.

In October 2006, the decision to proceed with the development of a 500 MW electricity interconnector with the UK and to give ownership of the asset to EirGrid was announced. The delivery of the interconnector is a key priority in the energy White Paper and in the programme for Government. This Bill simply provides the statutory basis for EirGrid to carry out the functions associated with building and operating such an interconnector. The main provisions of the Bill will be to expand the functions of EirGrid to include the construction and ownership of an interconnector and the operation of an interconnector, subject to the appropriate authorisation by the CER. Another provision is to amend the Electricity Regulation Act 1999 to clarify the position of interconnectors not owned by the ESB, and to make it an offence to operate an interconnector without the appropriate authorisation from the CER.The Bill also provides for the establishment of subsidiaries by EirGrid, the increase of its statutory borrowing limit, allows for capital expenditure by EirGrid and other ancillary matters.

Interconnection is crucial to the security, price competitiveness and environmental sustainability of Ireland's energy supply. First, in the event of a shortage in electricity supply in Ireland for any reason, connection with other grids increases the chances that our supply will not be inadequate. Second, greater interconnection in effect makes Ireland a part of a larger electricity market, with many more competing generators and increasing economies of scale, thus leading to lower prices. Finally, greater interconnection is crucial for the development of renewable energy. Many renewable energy sources, such as wind and wave energy, are intermittent and can only work if there are backup sources of electricity. Interconnection provides a greater bank of such backup sources, thus enabling us to increase the proportion of our energy that comes from wind. Furthermore, greater interconnection across Europe generally dramatically increases the potential for wind energy.

However, the pace of the interconnection programme to date can be criticised to some extent. Many other European countries, including those isolated by the sea, have much greater interconnection with their neighbours than we do. They are pushing ahead with even more ambitious plans. For example, Norway currently has 2,800 MW of interconnection with Sweden, 1,000 MW with Denmark, 100 MW with Finland and 50 MW with Russia. A 580 km interconnector between Norway and the Netherlands that will generate 700 MW is currently under construction, while another sub-sea cable to the UK is at the planning stage. Deputy Coveney pointed out that Denmark has interconnection with Sweden, from both the western mainland and the eastern islands, amounting to a total of 2,800 MW, as well as substantial connection between its various islands.

Ireland's interconnection is in a very poor state by comparison. The total currently amounts to 480 MW with Northern Ireland, and that is no longer properly classed as interconnection since the establishment of the all-Ireland electricity market. In spite of this, interconnection projects are proceeding very slowly. That is why I welcome this Bill and hope it proceeds rapidly. Fine Gael will not be doing anything to delay its passage.

It is proposed that EirGrid will develop a 500 MW interconnector between Great Britain and Ireland in the next four years. With the demand for energy estimated to grow at an average yearly rate of between 2.7% and 3.6% over the next seven years, the planned east-west interconnector will contribute to securing energy supply in Ireland. The interconnector will hopefully increase competition and facilitate growth in renewable energy in Ireland. The Ireland to Wales undersea electricity link being developed by EirGrid will be capable of carrying power to supply the equivalent of approximately 350,000 homes. The interconnector will link two separate power transmission systems, which will enable two-way transmission of high voltage electricity. The interconnector will carry electricity for all parties in the electricity market, such as the ESB, Airtricity, SWS, Tynagh, Viridian and others. EirGrid does not generate or sell electricity and so is totally independent.

I was a member of Kerry County Council some years ago when there was a major discussion on wind energy. Enterprising people in Kerry like Mike Barry saw the potential in wind generation. We proposed that we would draw up a special wind policy for the county and would designate certain areas as being suitable for turbines. As a result, the Stacks Mountains have come to resemble an energy park. There are turbines right across those mountains and although people had initial reservations on how these turbines might affect them or the skyline, they have grown to live with them and the turbines are quite aesthetically pleasing to the eye. The Stacks Mountains generate more wind energy than the rest of the country put together. There is further capacity there and more wind farms will be coming on stream.

Planning permission was granted to provide 4,000 MW of electricity, but because we cannot utilise this capacity whenever the demand is not there, that is why the interconnector will be important. Our turbines can generate electricity all of the time, which will make wind energy far more viable as an alternative source in Ireland. I hope that this will provide further impetus to the wind energy industry here, as it has really taken off in County Kerry.

I will now turn to the power station in Tarbert. The ESB decided to sell off some of its power stations, including Great Island, Tarbert, Poolbeg Thermal and the Marina Steam Turbine. The ESB decided in June 2007 that these stations would be closed by 2010. This was greeted with many reservations in Tarbert. People were shocked. There are 130 jobs in Tarbert where there are no real alternative sources of employment and it was a shock to the community. The ESB has been synonymous with Tarbert since 1969 when the foundations for the current generating station were laid.

The ESB has now advertised these plants and has sought formal expressions of interest in respect of their assets. In October 2007, it invited bids for Tarbert and Great Island. I am enthused by the reaction I understand it received. Hopefully, the plant will be bought and will continue in operation as a power generating plant. Apparently, setting up a plant now costs about €300 million and €150 million of the infrastructure is already there if people want to change from oil at that location. As we heard from previous speakers from County Meath and elsewhere, putting pylons and wire over ground leads to much controversy. The wires are already in place here so why would one enter into all that controversy when one has the infrastructure in place as it is? It is critically important that the ESB offloads this to somebody who will continue to operate it.

A major proposal for a liquid natural gas plant on the Shannon estuary has gone through An Bord Pleanála and is on track. An application for a pipeline must now be made. That focuses people's minds and interest in the very unique land bank in public ownership in the Tarbert-Ballylongford area that is known as the Tarbert-Ballylongford land bank. IDA Ireland and Shannon Development should designate that land bank as an energy park. There are 1,000 acres there between land in public ownership and land owned by companies. It could be called the national energy park in the same way as the facility in Limerick has been designated as the national electronics centre. There is a mix of coal and oil generation just across the river and there will now be gas on site.

There are turbines in the locality so there is a mix and balance of energies there. I am sure that as someone who thinks creatively, the Minister of State will agree to considering this move. It provides IDA Ireland and Shannon Development with an opportunity to do something very creative with the site. It provides them with an opportunity not just to provide a holding operation for liquid natural, but to provide for other alternatives as well, both for supply and production. I see no reason that companies could not move into that area to generate alternative forms of energy.

I visited Silicon Valley recently, which should really be referred to as Innovation Valley because most of the innovations in the world come from there. That is the way their universities are set up for innovation. Everybody out there is thinking about innovation. The visit was an eye opener. It is no coincidence that the microchip and most of the other developments in recent times have come from there.

They are looking at applying their technology to green technology. I visited one plant where solar energy panels are being used. Their total electricity was being generated and water for the house was being heated. In Ireland, we are just heating water with solar panels. I have been involved in a few projects relating to heating water, such a swimming pool and our own dressing rooms at home, which have been very successful. However, this particular company, Akeena, is generating electricity for 2,000 homes with its panel. It is not unlike the panels we are using here but it can do more than just heat water. I contacted another company, NovaSolar, which operates in San José and is very interested in looking at Ireland and seeing what we are doing here.

A few weeks after that, the Governor of California made a major announcement with that company of something like $300 million in investment into future green energy alternatives. As a country, we could be the leaders on wind, wave and tidal energy if we just pursue it. Generally speaking, Irish people are very creative. I know measures have been taken but there is so much more scope there and we must take this area very seriously.

In respect of the LNG plant on the Shannon estuary, there was strong local support because that land has been lying idle for 30 years or more. Some of it was bought back in the 1960s. However, there were also reservations. Obviously, it will affect some local people's quality of life. I know that Shannon LNG is speaking to local development companies. I would advise it to continue its dialogue with just the local people and accommodate their wishes and needs in any way possible. These people are very reasonable, but also very concerned. I say that here today because it gives us so much opportunity going forward in that area not just in respect of providing facilities and terminals for liquid natural gas, but also providing for associated industry.

We have become very uncompetitive in respect of attracting industry to Ireland. During my visit to Silicon Valley, one of IDA Ireland's officials there pointed out to me that we have considerable competition from India, China, Malaysia and other countries but that the total cost of employing a person in Silicon Valley is $26 per head. The figure is €28 in Ireland and €6 in Poland. Our energy costs are becoming a major disadvantage when we try to promote Ireland. The biggest advantages we have at present are the 12.5% corporation tax rate and our very well-educated and creative workforce. They are our two big advantages but we are not competing in respect of labour and energy costs. Hopefully, this Bill will not only fuel wind energy generation in this country but might make our energy costs more competitive at some point down the road.

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