Ossian Smyth (Dún Laoghaire, Green Party) | Oireachtas source

I thank the Regional Group for raising this important motion. We are all too aware of the pressing matters of energy security, energy prices and protecting our vulnerable consumers and businesses. At the outset, I would like to emphasise the impact the war in Ukraine is having on gas market prices and, in turn, the impact on both gas and electricity bills over the coming winter and beyond. Europe has not faced an energy challenge like this since the 1970s oil crisis.

The Minster, Deputy Ryan, attended a Council of Energy Ministers meeting on 9 September to address the extraordinary situation of energy prices in the EU and to work on possible emergency measures to mitigate current high prices and support demand reduction for electricity to strengthen the EU's winter preparedness. These problems are being faced by all EU member states and a united, determined and immediate response is being taken by the European Union, as stated by President von der Leyen in her State of the Union address earlier this week. At the Council meeting, Ministers agreed that immediate action must be taken to ensure the EU's security of supply and alleviate pressure on customers, while maintaining consistency with the current efforts to reduce gas demand and the objectives of the European Green Deal and REPowerEU.

The Commission has proposed a number of short-term exceptional emergency measures in recent days. These include a proposal incentivising co-ordinated electricity demand reduction across the EU. Other proposals include capping the revenues of inframarginal electricity producers with low costs of production and introducing a solidarity contribution from fossil fuel companies to be used to mitigate the impact of high energy prices on customers.

The Commission's proposed legislation is already under urgent negotiation by member states in order to have agreement by the end of the month. Ireland believes a well-functioning EU electricity market remains crucial for the integration of our internal energy market and for providing the necessary investment signals for the integration of new renewables, which are essential ultimately to break our dependence on fossil fuels. We support the overall threefold approach being taken in the regulation to first, remove excess rents being earned by non-gas electricity production; second, to reduce electricity demand; and, third, to apply a solidarity payment from the producers of oil and gas. Nationally, the national energy security framework, NESF, which was approved by Government and published in April 2022, sets out Ireland's response to our energy security needs in the context of the invasion of Ukraine and our specific national circumstances.

The short to medium-term oil supply outlook has stabilised, with petroleum product availability having improved recently, and we have seen a slow softening of the international oil price. The National Oil Reserves Agency currently holds approximately 85 days of oil stocks, the overwhelming majority of which is in the form of physical product, with approximately 85% stored on the island of Ireland.

Gas supplies from Russia to Europe have been severely reduced over the last year and continue to be a cause for concern for Europe's energy security. This has resulted in natural gas prices that are approximately ten times the levels seen just two years ago. The continued supply of natural gas to Ireland has not to date been reduced or interrupted as a result of the war in Ukraine. The UK, from where 75% of our gas comes, is at a strategic advantage compared to other European countries as it has a diverse source of gas supplies. The European Council recently agreed a regulation on reducing gas demand by 15% this winter. This regulation requires all member states to put in place a demand reduction plan. As Ireland is not directly interconnected to another member state, it is not required to meet the mandatory reduction target in this regulation. However, preparations are under way to put the voluntary demand reduction plan in place in Ireland.

Separate to the war in Ukraine, there are challenges to the security of electricity supplies in Ireland.

Concerns over such risks had arisen largely due to the non-delivery of previously contracted capacity, increasing electricity demand and the increasing unreliability of some existing plants. The Commission for Regulation of Utilities, CRU, is managing a programme of work initiated in April 2021 and finalised in September 2021 to address this challenge, with the support of EirGrid and my Department.

There are challenges to the security of electricity supplies in Ireland. The system outlook for this winter is similar to last winter, when we fully met all demand, although this winter, imports from the UK may not be as readily available as it, too, faces tighter margins. Specifically for this winter, a range of measures are being taken. A large amount of maintenance has taken place over the summer to ensure our generation fleet is adequately prepared for the winter ahead. We have been working with the large-scale energy users, which have significant quantities of backup generation, to enable us to access that backup supply at times of system stress. The optimisation of grid batteries, the number of which is growing, will provide greater service during times of stress. We are also enhancing demand-side responses through a number of measures at domestic and industrial scale. Furthermore, I welcome that the CRU is reviewing the capacity remuneration mechanism to make sure it is fit for purpose. In carrying out this review, it is vital that we support the projects that have been rewarded contracts under the existing mechanism and that planned capacity auctions continue to deliver. In respect of the longer-term outlook for energy security, the Department of the Environment, Climate and Communications is carrying out a review of the energy security of Ireland's gas and electricity systems for the period to 2030. I expect a consultation to launch in the coming days.

Members will be acutely aware that the exceptionally high wholesale gas prices seen since Russia invaded Ukraine have led to increases in electricity and retail gas prices faced by consumers. This, in turn, has resulted in a very significant increase in the number of people at risk of energy poverty. Recent estimates from the Economic and Social Research Institute, ESRI, indicate that up to 29.4% of households are now spending more than 10% of their income on their home energy needs. The Government is keenly aware of the pressure on households facing these bills and has already implemented a €2.4 billion package of policies and measures to support energy customers. These supports included an electricity costs credit, which was applied to more than 2.1 million domestic electricity accounts, a reduction in VAT on electricity and gas bills from 13.5% to 9%, and increases to the fuel allowance.

The Government also greatly enhanced the home retrofit supports available to households. For example, the number of free energy upgrades for households at risk of energy poverty delivered each month is more than double what it was last year. In addition, a new 80% grant support for cavity wall and attic insulation was introduced as a response to the exceptionally high energy prices. These supports will help to protect homeowners from energy price increases in both the short and long term.

However, the Government recognises that more needs to be done as prices continue to increase. Therefore, additional measures to support households and businesses are being examined in the context of the forthcoming budget. I very much welcome the recent announcement by the CRU of a range of additional consumer protections under the national energy security framework. The Department also recently published a review of the strategy to combat energy poverty, alongside a public consultation that will help to inform the development of a new action plan to combat energy poverty. The new action plan will set out a range of measures to be implemented ahead of the coming winter, as well as key longer-term measures to ensure those least able to afford increased energy costs are supported and protected the most. It is intended that the new plan will be published shortly after the budget. The development and implementation of the plan is being overseen by a cross-departmental steering group, chaired by my Department.

In response to questions about anaerobic digestion and the planning exemption conditions on solar panels, without wishing to pass the ball, I will leave it to my colleague, the Minister, Deputy Eamon Ryan, to address that in his later statement.

See this speech in context