Eamon Ryan (Dublin Bay South, Green Party) | Oireachtas source

I move amendment No. 1:

To delete all words after "Dáil Éireann" and substitute the following: "acknowledges the Government's comprehensive response to the significant increases in energy prices for households and businesses due to the Russian invasion of Ukraine and the significant progress being made in ensuring a just transition to renewable energy;

recognises that:

— across Europe, Vladimir Putin's illegal invasion of Ukraine had a severe and immediate impact on energy prices, where wholesale prices reached peak levels in August 2022 that were 706 per cent higher than January 2021, while wholesale electricity prices increased by 463 per cent; and

— Russian illegal manipulation of energy markets was specifically aimed at undermining societal cohesion and decreasing satisfaction levels in governments; and

agrees that the Government's comprehensive response includes:

— a €4 billion social transfer from Government to households in terms of emergency payments via increased payments and lump sums via the Fuel Allowance, Living Alone Increase, Working Family Payment, Child Benefit, Carer's Support Grant and Disability Allowance;

— a total of seven universal electricity payments to all occupied households totaling €1,250 per household; and

— a comprehensive levy on windfall gas and electricity earnings, this had one of the lowest price caps and highest windfall levies in Europe;

— regarding Retrofit Schemes:

— a best in class, socially just retrofit program, where the majority of the funding goes to those homes who need the support most;

— this scheme has led to 1,000 homes per week being upgraded, including a fully funded low-income comprehensive renovation of 5,900 homes per year; and

— enhanced grants for shallow retrofit measures, where approximately 80 per cent of the cost of attic and cavity wall insulation is funded by the State; and a new Home Energy Upgrade Loan Scheme, which will help reduce the financial challenges for many homeowners;

— regarding Renewable Energy Schemes:

— renewable electricity support schemes for onshore wind, offshore wind and solar in addition to commercial and domestic microgeneration support schemes that has already delivered the third highest onshore wind of any country in the world;

— that Ireland is internationally recognised as one of the leading renewable electricity countries in the world;

— that Ireland has already delivered 15 Terra Watt hours (TWh) of renewable electricity, contracted a further 17 TWh, and will likely see another 10-12 TWh from future auctions opening this year or corporate purchases that will deliver in the next five to seven years;

— a clear understanding that building grid, including projects like the North-South Interconnector are integral to the utilisation of renewables in Ireland; and

— putting in place comprehensive task forces that are delivering increased, secure, competitive and clean power for the citizens of Ireland;

— regarding Solar Photovoltaic (PV) Schemes:

— a comprehensive domestic solar PV support system that includes a grant of €2,100, the removal of Value-Added Tax (VAT) and the exemption of planning permission that has resulted in 94,000 homes to date installing solar PV;

— a vulnerable customer solar PV scheme for those dependent on medical devices to reduce running costs;

— a wide-ranging commercial solar scheme with grants up to €162,000 that has resulted in 1,300 applications since July 2023;

— a renewable electricity support scheme that has contracted over 2,700 megawatt (MW) of solar PV to date and will contract further this year; and

— recognising huge success through the delivery of 4,000 MW of either contracted solar or installed small scale solar; and

— regarding energy markets:

— the position of successive Governments has been that competitive energy markets result in greater choice for consumers and businesses, in terms of suppliers, products and prices; and prices in the electricity and gas retail markets have been fully deregulated since 2011 and 2014 respectively;

— the fact that the Commission for Regulation of Utilities (CRU) has performed a comprehensive assessment of energy suppliers hedging strategies through the electricity price crisis and has found no adverse findings; and

— the transposition of enhanced regulatory powers due shortly from the Internal Electricity Market Directive 2019 will enhance the powers of the CRU should they require them.".

I thank the Deputies for raising these important matters and allowing us time to discuss them today. Since 2022, we have seen significant increases in the prices that households and business pay for energy. This has come alongside inflation at rates we had not seen in recent memory. While there have been some price falls in the energy market since August of last year, energy prices and cost-of-living pressures remain matters of serious concern. The Government is aware of the challenges that householders still face in meeting these costs and remains committed to supporting those most at risk. I will take this opportunity to reaffirm to the House that the Government will continue to take action to support households to meet the cost of energy so that they can stay warm and well. Today, I will address the steps that the Government has taken to support households to meet these costs and the actions being taken to protect Irish consumers over the long term by making critical investments in renewable energy and energy efficiency.

First, I want to address the international dimensions of our energy market and some of the challenges we have seen in recent years. The pressures we face are not unique to Ireland. Rising energy costs have been seen across Europe since the economic recovery from the pandemic and Russia’s invasion of Ukraine in early 2022. The invasion introduced great volatility into the wholesale gas market, which has directly led to higher prices being paid by households and businesses across Europe for electricity. There remains a strong correlation between wholesale gas and electricity prices as gas remains an important source of fuel in the electricity generation mix. Wholesale electricity prices are set on a merit order system and gas generation provides the marginal wholesale price. At their peak in August 2022, wholesale natural gas spot prices were trading at a multiple of 13 times their pre-pandemic average levels. Wholesale prices have stabilised and fallen since then but remain elevated compared to the pre-pandemic average. In line with rising wholesale prices since the post-pandemic recovery, which have been accelerated by the war in Ukraine, household electricity and gas bills rose significantly in 2022 and have remained elevated since.

In the Irish electricity market, hedging means that suppliers purchase a significant proportion of the energy they trade up to 18 months in advance. This may impact their ability to reduce prices immediately in line with wholesale price shifts. However, hedging also reduced the impact to final customers of higher wholesale energy prices in advance of and during the peak wholesale prices reached in 2022. This meant a more gradual increase in prices was experienced by final customers in Ireland. This gradual increase has been mirrored by a slower decrease in retail prices as wholesale spot and futures prices decline. Given that energy prices in Ireland are not regulated, in line with the deregulation of European energy markets, price setting and hedging is a commercial matter for suppliers.

Last year I wrote to the CRU requesting that a review of the pricing and hedging strategies be carried out to determine if there have been any market failures. The CRU published its report in September 2023 and outlined that it sees no evidence of failure in the retail market, but that it will continue to monitor this. We have now seen significant falls in energy prices which are now being seen on consumer bills. Across the autumn and winter period all major suppliers announced at least two rounds of price cuts, with each being in the region of between 8% and 30%. However, the Government is aware that energy customers in Ireland still pay significantly more on their energy bills than they did in 2020 and has taken action to ensure households are supported over the short term to meet these costs.

Budget 2024 included a new electricity cost emergency benefit scheme, through which €450 was credited to each domestic electricity account in three payments of €150. The estimated cost of this scheme is €1.007 billion. Combined with the previous electricity cost benefit schemes, over 2.1 million households will have automatically received €1,250 of support onto their electricity bill since the start of 2022, at a total cost of over €2.5 billion. The budget also provided for a range of lump sum social welfare payments to assist people with cost-of-living pressures. These were targeted at the most vulnerable in society. The regulator also played an important role in protecting consumers, including the introduction of a winter disconnection moratorium for all domestic electricity consumers from the start of December 2023 to the end of January 2024 and an extended moratorium for vulnerable customers, the introduction of extended debt repayment plans and reduced debt burden on prepay energy top-ups and the promotion of vulnerable customer registers, which have seen a significant increase in the number of people registered, who are afforded additional protections due to particular vulnerabilities.

Budget 2024 also included record funding to the SEAI to support the achievement of our targets under the national retrofit plan. This reflects our core objective of improving the energy efficiency of our built environment and the principle that the cleanest and cheapest energy is that which we do not use. This year, a total of €300 million will be spent on SEAI energy poverty schemes and local authority retrofits. This will build on the progress of 2023, which saw 5,900 free upgrades provided to homes at risk of energy poverty through the better energy warmer homes scheme. This scheme, and the wider retrofit plan, is rooted in the principle of ensuring fairness to all and supporting a just transition. These ambitions, and the record levels of funding, have been directly supported by the Government’s decision to ring-fence revenues from the carbon tax.

A core objective of this Government is to reduce emissions in the electricity sector and increase renewable electricity generation in Ireland. To that end, we have introduced schemes to support the development of renewable electricity generation including the renewable electricity support scheme, RESS, the microgeneration support scheme, MSS, and the small-scale renewable electricity generation scheme, SRESS. Through the success of these schemes and through various public and private investments being made across the country, we have made considerable progress in decarbonising and increasing the efficiency of our electricity sector. Ireland is a world leader in the integration of variable renewable electricity onto the grid. Data from the SEAI and the EPA shows an average of 46.1% of our electricity in 2023 came from renewable sources while the electricity generation sector saw emissions fall by nearly 24%.

In conclusion, the Government has made and will continue to make the critical investments needed to achieve a just energy transition, as outlined in the Climate Action Plan, but we are also committed to providing effective and practical supports for those struggling with their energy costs.

I have one or two observations about some of the comments made by Sinn Féin Deputies. The cause of the higher prices here compared with some other European countries is clearly due to two main components. The first is that we have a large percentage of gas electricity produced in our system, at about 50%. We can get rid of that in the next decade by switching to renewables, storage and investment in the grid. That will be the best way of protecting our consumers. The second main component is we have a very dispersed population. That is a cost we cannot ignore and we are not going to walk away from because we must provide universal access to every single household. However, we have a real opportunity in both the retrofitting schemes and the switch to renewables, that is, in efficiency and renewable generation, to set up a future where our economy is secure. We would be keeping money and jobs in our country rather than exporting them by purchasing imported fossil fuels.

I differ with the Deputies in respect of their commentary that our retrofitting scheme is not socially just and is not working. Deputy O'Rourke and I were discussing this earlier at the select committee in the context of the Revised Estimates. We have the highest level of activity in Europe now in retrofitting on a per capitabasis. It is proving hugely successful. There are 1,000 households a week being retrofitted, which means they have warmer, healthier and more cost-effective homes. The truth, as set out in the response I gave earlier, is that €300 million of the supports we provide are targeted at the most vulnerable. We are being very strategic in looking to ensure those most at risk of fuel poverty are protected most, and that is happening at scale across our country. For those slightly above that category - that is, not in receipt of fuel allowance - there was an announcement that two further banks, AIB and Bank of Ireland, are launching low-cost loan schemes. This is €70,000, ten-year lending without it having to be secured at 3% interest rates. That allows everyone to get access to the grants, which are, as I said, really generous by European standards. It is working well and that is something. I do not think any independent analysis could accept that it is not socially just and that it is not effective. It is working. That is the best way of addressing fuel poverty and we are doing it at scale.

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