John Paul Phelan (Carlow-Kilkenny, Fine Gael) | Oireachtas source

I will speak first because, under Standing Orders, the Minister may only speak once on Private Members' business. I commend Deputy Stanley on introducing the Bill and thank Deputy Cullinane for thanking the Government for not opposing it. The Government subscribes to the principles outlined in Deputy Stanley's contribution and we will not oppose them in legislation. I welcome the opportunity that this debate gives to highlight the important role the citizen should play in Ireland's energy transition and community and citizen participation in renewable energy projects.

The Government is supportive in principle of the ambition reflected in the Bill and the route to market it provides for citizens and communities to generate their own renewable energy and receive a fair and efficient price for doing so. The Bill is very much in line with one of the Department of Communications, Climate Action and Environment's flagship projects, the renewable electricity support scheme, RESS, which places community's at the centre of its design.

It is also a key provision of the EU's clean energy package and, in particular, the recast renewable energy directive, which entitles renewable self-consumers, or microgenerators, to receive remuneration for excess electricity exported to the grid.

The Government is not opposing the Bill but it will be necessary for the Government to develop its own legislative proposals to fully transpose the terms of the EU directive. A number of policy measures are already under way or planned and signalled to the market that will ultimately provide for an appropriate microgeneration scheme domestically. The Government is supportive in principle of the ambition contained within this Bill as it aligns with energy policy as set out in the energy White Paper 2015, the new renewable energy directive and the clean energy package. The energy White Paper recognised the important role that the citizen should play in Ireland's energy transition. Moreover, community and citizen participation in renewable electricity projects was identified as a key policy objective to be delivered via the new renewable electricity support scheme.

The Government will need to assess the best way to implement any remuneration for excess electricity exported to the grid. There are different methods of approaching this and we will need to consult with industry and other relevant stakeholders along the way. The 2015 energy White Paper committed that Government would explore the scope to provide market support for microgeneration. The Department duly assessed microgeneration of various technologies as part of the economic assessment to underpin the new renewable energy support scheme design, and the evidence generated indicates that the relative cost of microgeneration is very high.

The Department continued to explore ways to support microgeneration and, last year, in conjunction with the Sustainable Energy Authority of Ireland, SEAI, hosted a microgeneration stakeholder workshop which attracted over 100 attendees. The workshop identified a number of structural, technical and financial challenges that need to be overcome before a support scheme for micro-renewable energy could be implemented. This aligns with experience from other EU member states which have introduced schemes and have either had to reform them or close them down completely due to costs getting out of control. The workshop identified a series of "quick wins" for microgeneration which could be achieved in advance of the implementation of the recast renewable energy directive and, in particular, Article 21, which deals with renewable self-consumers or microgenerators. The workshop also heard calls for the establishment of an umbrella group for the microgeneration sector and, subsequently, the Micro Renewable Energy Federation was formed, which was a welcome development.

Microgeneration is generally operated at the electricity system distribution level, and consumers who invest in such generation usually do not participate directly in the wholesale electricity market. Consequently, some of the primary support mechanisms that require renewable electricity generators to directly participate in the wholesale market may not be suitable for microgeneration. In most EU member states, no specific schemes to support microgeneration and self-consumption exist. In fact, in a number of member states, distribution system operators do not even measure the volume of self-generated electricity. Nevertheless, even in these countries, consumers may find they can save money by generating their own electricity from small-scale renewable electricity installations, for example, rooftop solar photovoltaic, PV, installations, rather than buying it from the grid. Examples of this type of activity are happening across Ireland today without subsidy or payment.

Following on from this, in summer 2018 a pilot scheme supporting microgeneration was launched and the Department, along with SEAI, which administers the scheme, has been working closely with the Micro Renewable Energy Federation to develop an industry code of practice which will ensure a sustainable microgeneration industry for years to come. The design of the pilot scheme was informed by a behavioural and attitudes study undertaken by SEAI into the likely demand for and uptake of microgeneration among the public. The pilot scheme will run up to the end of 2020. It will be subject to a review early in 2019 which will examine scope for broadening it out to other technologies and other user groups. The evidence gathered during the pilot scheme will also assist in the implementation of Article 21 of the recast renewable energy directive, which sets out the rights, entitlements and obligations of the renewable electricity self-consumer.

The scheme focuses on the deployment of domestic solar PV, whereby applicants can receive a rebate for installing solar PV panels and-or a battery energy storage system in their home. The main principle of the scheme is that the solar PV system installed should provide electricity for self-consumption within the home. The scheme opened in July 2018, when applicants could register their interest with SEAI to install solar PV and battery storage systems. The payments portal opened in October 2018. By mid-November, over 3,000 people had expressed interest and approximately 100 rebate claims have been requested. SEAI expects to begin making payments under this scheme early next month. A code of practice for microgeneration is also being developed and, in conjunction with the industry umbrella group, the Micro Renewable Energy Federation, the building blocks for a sustainable microgeneration sector are being put in place in advance of the implementation of the clean energy package.

Looking forward to future remuneration for microgeneration as part of implementation of the clean energy package requirements, a number of options will need to be considered, costed and subjected to regulatory impact assessment. Based on the analysis carried out by the Department to date, these are likely to include a requirement for suppliers to pay microgenerators the wholesale market price for electricity exported to the grid. Based on international experience in this area, it is of utmost importance that the distributional costs of such a scheme are assessed, particularly relating to network charges and any costs paid through the public service obligation. Allocation of costs through consumers' electricity bills can have significant socioeconomic impacts, and this is particularly so at a time when energy prices are on the rise, with recent price increases announced by retail suppliers.

If the policy is not assessed and designed properly, there is a real risk that providing incentives for those investing in microgeneration will lead to increased costs for households who cannot afford such investments. International experience is instructive in this regard and suggests that reform of network tariffs needs to be delivered as part of a package of measures to make microgeneration work for the citizen and community, while also ensuring that ordinary consumers are not disadvantaged as a result. In this regard, and as part of the implementation of the microgeneration requirements of the clean energy package, the Department will work with SEAI, the Commission for Regulation of Utilities and suppliers to build on the work done by the Deputy in bringing forward this Bill.

Some elements of the proposed Bill will require careful scrutiny and likely amendment. It does not provide information on potential costs to the Exchequer or electricity consumers from the proposed introduction of a tariff for microgeneration. Moreover, the Bill does not include any evidence to indicate what level the proposed tariff should be set at or the overall cost to consumers and the economy of a 5% requirement on suppliers for electricity from microgeneration by 2025. This Bill will, therefore, ultimately require financial and regulatory impact assessment. For these reasons, the Government recommends that the Bill would undergo detailed scrutiny by the Oireachtas to discover the full cost of the proposals in advance and allow Government determine whether a money message is required. The Minister intends to revert to Government in due course as this legislation proceeds through the Oireachtas. In recognising the ambitions behind the drafting of the Bill, the Government will not oppose its current progress and is likely to develop further legislative proposals in this area.

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