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

I am pleased to have this opportunity to discuss energy security with the House. Energy security and the current energy crisis are having a significant impact on people's day-to-day lives. The Russian invasion of Ukraine in February 2022 has caused a humanitarian catastrophe and displaced millions of Ukrainian citizens. Even before the invasion began, Russia had been reducing its gas supplies to Europe. The invasion has triggered a decision by the European Union to phase out its dependency on Russian gas, oil and coal imports which has resulted in unprecedented action across the EU. Separate to the war in Ukraine, there are challenges to the security of electricity supplies in Ireland. Concerns over such risks have largely arisen due to the non-delivery of previously-contracted capacity, increasing electricity demand and the increasing unreliability of some existing plants.

I will first speak to the actions we are taking at a European level before turning to national developments. We are working closely with our European colleagues on EU legislative action to address the issues raised by the current energy crisis. The immediate response from Europe was to reduce dramatically the import of fossil fuels from Russia through sanctions. As of today, we are not importing coal and we are importing very limited oil and some natural gas. In parallel with reducing our reliance on Russian fossil fuels, we have introduced three urgent Council regulations to address the supply-demand imbalance by storing gas for the winter ahead; reducing gas and electricity demand and avoiding excessive windfall profits from energy companies.

The gas storage regulation agreed in June of this year requires that underground gas storage facilities in member states must be filled to at least 80% of their capacity before the winter of 2022-23. These gas storage facilities must be filled to 90% of their capacity before the following winter periods. Gas storage in Europe is now almost full ahead of schedule and this leaves us in a much better place for the winter that is coming.

Reducing our gas demand is an important tenet of our response to the current energy security situation. The EU's gas demand regulation agreed this August asks member states to reduce gas demand voluntarily by 15% during the winter period. There is also a mechanism to trigger a mandatory demand reduction target of 15%. However, this does not apply to Ireland as we are not directly connected to another EU member state. The energy security emergency group chaired by my Department is finalising our voluntary gas demand reduction plans.

Energy prices had reached such a high level that it was necessary for the EU to introduce emergency interventions to address them. Emergency interventions include a temporary solidarity contribution based on taxable profits for fossil fuel production and oil refining, a cap on market revenues for specific technologies in the electricity sector which have not seen significant increases in costs which includes wind and solar and a voluntary 10% electricity demand reduction over the winter with a 5% reduction obligation over peak hours, which are generally between 5 p.m. and 7 p.m. in Ireland. This regulation will apply from 1 December 2022 and my Department is working on its implementation.

The Taoiseach attended the European Council meeting on 20 and 21 October to engage in working collectively on Europe's response to the energy crisis. The focus of the meeting was on wholesale gas prices and decisions were made on a number of topics. The Council has asked the Commission to propose measures in a number of key areas.

First is the voluntary joint purchasing of gas. Second is a new complementary gas-price benchmark that more accurately reflects conditions on the gas market. Third is a temporary dynamic price corridor on natural gas transactions on the main European gas exchange, the title transfer facility, TTF. Fourth is a temporary EU framework to cap the price of gas in electricity generation while preventing increases in gas consumption. Fifth is the fast-tracking of the simplification of permitting procedures in order to accelerate the roll-out of renewables and grids and sixth is increased efforts to save energy.

More detailed work is now urgently needed on these topics and Ireland is working closely with its EU counterparts on their development. As Ireland secures its gas mainly from the UK, some of these measures may not immediately have an impact on us. However, they are intended to stabilise wholesale gas prices generally, which is in all of our interests.

I will turn to a national perspective on energy security. While Ireland is faced with broader security-of-supply issues, there are also national circumstances related to challenges within the security of our electricity supplies that have been exacerbated by the Russian war in Ukraine and these need to be addressed. In April 2022, the Government published the national energy security framework which provides an overarching and comprehensive response to Ireland's energy security needs in the context of the war in Ukraine. Within this document, the Government has focused on how it can support households and businesses and, in particular, those most at risk of fuel poverty and how to accelerate the country's shift to increased energy efficiency and indigenous renewable energy systems.

My Department has set up an energy-security emergency group, ESEG, to co-ordinate and oversee our activities and responses with regard to the impact of the Russian war in Ukraine on energy security. The group includes representatives from the Department of Enterprise, Trade and Employment, the Commission for the Regulation of Utilities, CRU, Gas Networks Ireland, EirGrid, the National Oil Reserves Agency and the Sustainable Energy Authority of Ireland, SEAI. Under the guidance of the ESEG, emergency exercises have now been carried out across the oil, gas and electricity sectors to prepare us for the coming winter.

The CRU, which has statutory responsibility for security of supply, has a programme of actions in place to address the security of our electricity supplies. The CRU programme includes a range of measures to mitigate risks for this winter. These measures include a considerable amount of maintenance that has taken place over the summer to ensure that our generation fleet is adequately prepared for the winter ahead; working with the large-scale energy users that have significant quantities of back-up generation in order to access that at times of system stress; the optimisation of grid batteries, the number of which is growing, to provide greater service during times of stress; and enhancing demand-side responses through a number of measures at a domestic and industrial scale.

The CRU-led programme of work on security of supply is supported by my Department and EirGrid. The Oireachtas has already introduced legislation to support EirGrid procuring temporary generation and is currently considering further legislation to support the permitting of these key projects. EirGrid recently published its winter outlook, which states that there is no risk of a system-wide blackout solely due to insufficient generation. However, the system will operate at a higher level of risk than optimal this winter. EirGrid is closely monitoring the situation and is working with conventional generators to ensure that plant performance and availability is maximised, as well as working to optimise our operation of the grid. While it cannot guarantee that there will be no loss of power this winter, it will take every measure available to prevent that from happening.

In June 2022, the Minister, Deputy Ryan, made a recommendation to the Government that a review of why emergency measures are needed to secure electricity supply over the coming winter be produced. Mr. Dermot McCarthy is a former Secretary General to the Government and the Department of the Taoiseach who has been engaged to conduct an independent review. The review will identify factors that have contributed to generation capacity shortfall.

It will also consider factors that contribute to any underestimation of the risk of a generation capacity shortfall; factors associated with roles and responsibilities that may have contributed to the situation; the possible role of the growth in demand from data centres; any learnings that may be relevant to strengthen policy, capacity, governance and operational effectiveness and any further technical analysis that may be helpful. I expect to receive an interim report of the review before the end of the year.

In respect of the medium- to long-term outlook for energy security, my Department is carrying out a review of the energy security of Ireland’s gas and electricity systems out to the period 2030 in the context of reaching net zero by 2050. This review considers potential risks to both our natural gas and electricity supplies and examines a range of measures to mitigate these risks. Detailed research has been carried out by consultants to inform this review and consider forecasted energy demand from EirGrid and Gas Networks Ireland’s annual plans. The review has identified a list of potential shocks to the energy system and a long list of potential options to mitigate these shocks. The long list was appraised against key criteria such as the potential for alleviation of identified shocks, feasibility and consistency with climate ambition to determine a short list for more complete modelled analysis. My Department is seeking feedback on all options, whether they are on the long list or the short list, and we launched the consultation for the review on 19 September. The deadline for submissions is 28 October. I will bring my recommendations on security of energy supply to Government once a review process has been completed.

One of the essential considerations in all discussions on security of energy supply is energy demand. There has been significant amount growth in recent years, including via data centres, and this is expected to continue to grow. EirGrid is now considering applications for connection to the grid on a case-by-case basis and that is in line with the assessment criteria set out by the CRU in November. The criteria include the ability of the data centre applicant to bring on-site dispatchable generation or storage, or both, equivalent to or greater than their demand. In practice, new data centres are expected to ensure their own security of supply and thus not impact on the wider electricity system.

In July, the Government published a new statement on data centres to ensure alignment with Ireland’s renewable energy targets, security of supply, sectoral emissions and climate priorities. Government policy seeks to enable the twin transitions of digitalisation and decarbonisation of our economy and society. For this to happen, digital and climate change policies need to move in tandem. Data centres are core digital infrastructure and play an indispensable role in our economy and society. Data centres provide the foundation for almost all online aspects of our social and work lives, including video calling, messaging and apps, retail, banking, travel, media and public service delivery, such as healthcare and welfare.

Members of this House will be acutely aware that the exceptionally high wholesale gas prices seen since Russia invaded Ukraine have led to an unprecedented increase 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. We are keenly aware of the pressure on households facing high energy bills. To address rising electricity costs for households the Government has introduced a new electricity payment of three €183.49 payments, exclusive of VAT, to domestic electricity accounts which will total €550 to be paid in the November-December, January-February and March-April billing cycles at a total cost of €1.2 billion. An extension of the 9% VAT rate on electricity and gas will remain until the end of February 2023. Budget 2023 also introduced further measures amounting to €2.5 billion to support households with rising electricity and gas prices. The Economic and Social Research Institute, ESRI, has found one-off measures announced as part of budget 2023 will insulate most households from rising prices this winter. Its research shows welfare increases in 2022 and 2023, together with the one-off measures, are large enough to leave the lowest income households better off on average than they would have been had welfare payment rates risen in line with inflation this year and next.

In addition, we are acutely aware of the importance of protecting jobs in order to protect families during this energy crisis and this has been key in the design of the new temporary business energy support scheme. This will provide up to €10,000 per business per month until spring 2023 to help meet rising energy costs. The scheme will support eligible companies by covering 40% of the increase in their energy bills.

Energy poverty is a key concern and my Department recently published a review of the strategy to combat energy poverty. This was alongside a public consultation. The consultation closed on 5 September and the responses are informing the development of a new action plan to combat energy poverty. The new energy poverty action plan will set out the range of measures being implemented across Government ahead of the coming winter, as well as key longer-term measures to ensure those who are least able to afford increased energy costs are the ones who are supported and protected the most. Our intention is that the new plan will be published in the coming weeks. I have also met the CRU and suppliers on safeguards and practical ways to protect pay-as-you-go customers. Electricity suppliers have customer supports available and their hardship funds can be accessed by pay-as-you-go goes customers in the same way as they can by bill-pay customers. The CRU has now instructed all suppliers to put customers with a financial hardship meter on the cheapest tariff available from 1 December. The CRU has also waived the €200 gas meter exchange and site works charge associated with a customer moving from a pay-as-you-go gas meter to a credit or regular bill-pay meter for all domestic customers. The winter moratorium on disconnections for all bill-pay domestic customers for non-payment of account will be from 1 December 2022 to 28 February 2023. Furthermore, the moratorium on disconnections for registered vulnerable customers began on 1 October and will be a place until the end of March. Vulnerable customers registered as reliant on electrically-powered equipment cannot be disconnected for non-payment at any time. As part of its enhanced electricity customer protection measures announced in August, the CRU is bringing in a reduced debt burden on top-ups for pay-as-you-go meters. The new measures mean the debt-repayment levels will reduce from 10% from a previous 25% on pay-as-you-go customers’ top-up payments.

Earlier this year the Government rolled out its Reduce Your Use campaign to raise awareness about energy efficiency and inform people of the financial supports available for households and businesses. The next phase of this campaign was launched recently and urges householders and businesses to ensure they are availing of supports that are in place. The Government is asking people to stay warm and well this winter and to know that help is available if they need it over the coming weeks and months. This campaign is research-led and current research shows people are worried about the energy situation but also that they want advice on how to make the biggest difference to their energy bills. Some of the key partners involved in the campaign are the CRU, the Money Advice & Budgeting Service, MABS, Alone and the SEAI. As part of the multimedia campaign, an information leaflet detailing how to access Government supports and advice on how to be more conscious about energy usage will also be delivered to every home in the country starting from November. As Members can see, the Government has taken swift and extensive action in response to the crisis and will continue to do so. I look forward to hearing other Deputies’ contributions.

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