Martin Heydon (Kildare South, Fine Gael) | Oireachtas source

I welcome the opportunity to discuss our energy system and the pressures Irish households have faced because of high energy costs. I thank colleagues from across the House for their contributions. The pressures placed on households and businesses by high energy costs remain of deep concern to the Government. Providing supports to alleviate this pressure has been a priority for the Government and extensive work has and will continue to be undertaken across the Government to address these challenges.

The most significant factor affecting retail electricity and gas prices in Ireland is the wholesale price of gas. The Commission for Regulation of Utilities was established as an independent statutory regulator by the Electricity Regulation Act 1999 and ended its regulation of retail prices in the electricity market in 2011, and in the gas market in 2014. Consistent with the direction of European policy, Irish electricity and gas markets are liberalised, with price setting by electricity suppliers solely a commercial and operational matter for the companies concerned. The position of successive Governments has been that competitive energy markets result in greater choice for consumers and businesses, and fosters competition to drive down prices. We have seen this in recent months with the announcement of significant price reductions across electricity and gas markets. While the energy crisis has had a huge impact across Europe, Irish energy prices are also influenced by long-standing issues including our isolated island location, low levels of interconnection, a widely dispersed population, and a historic reliance on fossil fuels.

The best long-term approach for Ireland to insulate consumers from volatility on international wholesale energy markets is to invest in energy efficiency and renewable energy, expand interconnection with neighbouring markets, and deepen the internal market in energy. The climate action plan sets out the strategy in place to achieve these goals, which support our decarbonisation and climate objectives.

In recognition of the high energy prices resulting from the Russian war in Ukraine, the Government has introduced a comprehensive suite of measures to support households including more than €2.5 billion in credits to each domestic electricity account, and a range of targeted supports through the social protection system.

Developments in the energy market are monitored by the Government and the regulator. We have recognised that some fossil fuel companies and electricity generators made extraordinary profits on the back of unprecedented energy shocks over the past two years. The Government implemented windfall measures of Council Regulation 2022/1854 through a cap on market revenues of specific technologies in the electricity sector for the period December 2022 to June 2023, and a temporary solidarity contribution on surplus profits in fossil fuel production and refineries. The measures implemented went beyond the minimum requirements of the regulation, with a 75% rate on surplus taxable profits implemented through the temporary solidarity contribution, compared with the 33% minimum set out in the regulation.

Approximately €185 million has been collected by the cap on market revenues, and €167.2 million was collected in 2023 through the temporary solidarity contribution, totalling over €352 million in proceeds collected to date. A further collection of the temporary solidarity contribution is due in September 2024. The moneys raised from the cap on market revenues are required to be used to support final electricity consumers, while the proceeds from the temporary solidarity contribution were utilised for the third electricity credit scheme.

As set out in the programme for Government, the carbon tax will increase on an annual basis to 2030. This will raise an estimated €9.5 billion over that period. The Government is committed to ensuring this is a socially progressive measure, by ring-fencing revenues to support those at risk of energy poverty, as well as retrofitting programmes, agri-environmental supports for farmers, and just transition goals. This has enabled record levels of funding for the national retrofit plan and particularly for energy efficiency upgrades for lower-income homeowners funded through the SEAI and local authority retrofit schemes. These upgrades reduce energy usage and bills, and increase comfort and well-being in the home.

The Government is also working to revise the energy poverty action plan. It is considering recommendations made through a recent consultation which ran from March to May 2024, and feedback received at the energy poverty stakeholder forum held on 24 June. This revised plan will set out a wide range of clear, time-bound actions aimed at tackling energy poverty with appropriate governance and evaluation.

Renewable electricity is now at the core of Ireland's energy system. The Government has introduced a suite of measures to support community and domestic ownership of renewables. These include the microgeneration support scheme, which last year supported more than 22,000 households to install solar PV, and the SRESS, the second phase of which was launched in May. A solar PV scheme for vulnerable customers registered as being dependent on electrically powered assistive devices is also under way. This €20 million scheme is targeted to provide direct support to medically vulnerable customers relying on lifesaving equipment, who may have limited opportunity to reduce their demand.

These schemes complement the grid-scale investments in renewable generation under the RESS, which are critical to securing Irish energy independence and reducing emissions in the electricity sector.

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A renewables-led system is a critical element of Ireland's decarbonisation strategy. Increased deployment of indigenous renewable generation is key to achieving our national, EU, and global climate action targets, while providing us with a clean, affordable and secure supply of electricity and delivering green jobs to the economy.

The Government is committed to providing support to the people and businesses affected by the unprecedented high energy costs in the short term, while making the critical strategic investments required to decarbonise our society and economy. I welcome this debate and I thank Deputies from all sides for their contributions.

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