Wednesday, 1 June 2005
Alternative Energy Projects.
I thank the Ceann Comhairle for the chance to raise this very important issue. I could not help raising the matter after listening to the Taoiseach speak at the launch of the wind power plant off the coast of Arklow last week. He made it clear that he wished something could be done to ensure wind power would be fully utilised and that we would have a scheme in place shortly.
It reminded me that when AERVI licences were given out over two years, a commitment was given by the then Minister to those who failed to get licences that they would get an opportunity to proceed with their schemes through some other mechanism in a very short time. However, this has not happened yet and it needs to be dealt with urgently. For example, on Bendoo Mountain in the Kill area of County Cavan, 28 farmers have come together to provide sites for 33 or 35 wind turbines. This arrangement had been sorted out legally, planning permission had been granted and the application was made. However, the company has not received the go-ahead for the scheme or any support.
I raise this issue for two reasons. We have a serious problem with the cost of electricity and the cost of the fossil fuels that provide it. However, there is also an onus on this country at European level to provide as much green energy as it can. Second, those farmers understood three years ago that they would be in a position to get a reasonable additional income from their mainly poor quality farm land. An income from wind power would be an additional bonus for them that they could depend on each year.
It makes economic sense for Ireland to encourage the building of a significant percentage of renewable generation plants, confined not just to windmills but to other renewable sources. This would be at a known fixed cost and would therefore provide a hedge or insurance policy against volatile fossil fuel prices. Ireland is much more vulnerable to fossil fuel prices than its European competitors, with 97% of its electricity derived from fossil fuels. There should therefore be support mechanisms which would promote the maximum exploitation of Ireland's key natural renewable source, which is wind. This should be targeted in both on-shore and off-shore projects. We saw the opening of an off-shore plant the other day.
Given that Ireland is moving towards an all-Ireland energy market and an all-Ireland electricity market in 2007, it makes sense to realign renewable energy support in the Republic with that applying in Northern Ireland. Northern Ireland has just introduced the UK system of renewable obligation certificates, a market-based support mechanism whereby all electricity suppliers are forced to buy certificates from renewable generators. The cost of the ROC system then acts as a support for renewable generators.
We must ensure that all possible renewable energy is used in this country. We must no longer allow those individuals who wish to develop renewable energy to move to Scotland, Spain, the US and other places to do the work they want to do here. I hope the Minister of State tells us that aid will be made available at a level that will justify establishing these very valuable sources of energy. I welcome whatever good news the Minister of State has.
I welcome the opportunity to clarify for the House the steps this Government is taking to support the greater use of renewable energy technologies and future proposed actions. The Government fully recognises the importance of reducing our dependency on non-renewable fuels, whose prices are subject to the vagaries of global markets, and certainly the energy markets. We have taken a number of innovative measures to which I shall return.
In addition, from a national economic perspective not just an energy policy or environmental perspective, increasing the amount of renewable energy in the system will help in substituting costly fuel imports and in dealing with levels of uncertainty in the future evolution of energy prices. It will also assist in providing a more balanced fuel mix.
The Green Paper on sustainable energy, published in 1999, set a challenging target to add 500 megawatts of new renewable energy-powered electricity generating plant to the electricity network.
That target was subsequently increased by this Government to 728 mw. In addition, specific categories of offshore wind and biomass fed combined heat and power plants were added to ensure those technologies also are explored. An accelerated payment method was also introduced to further reassure investors of the growing opportunities available from investing in renewable energy technologies. These departmental actions were supported by actions of Sustainable Energy Ireland to place various reports and a wind atlas beneficial to all potential applicants in the public domain. Further support for innovative proposals is available under the dedicated research demonstration and development programme operated by Sustainable Energy Ireland. Additional practical support and advice is available from the renewable energy information office located in Bandon, County Cork. These centres are also supported by energy agencies located in some local authority areas whose programmes are funded or co-funded by Sustainable Energy Ireland.
In December 2003, a consultation paper was published to hear the views of all interested parties on future support mechanisms and targets. This was followed by the establishment of a renewable energy development group which included representatives of this Department, the Department of the Environment, Heritage and Local Government, the Commission for Energy Regulation, the network operators, the scientific community, the ESRI and representatives of both project developers and electricity suppliers. This is a broadly representative group and its work is reaching a conclusion.
However, my colleague, the Minister, Deputy Noel Dempsey, again demonstrating the urgency the Government attaches to the accelerated development of renewable energy technologies, satisfied himself on the basis of interim reports that there was sufficient consensus to announce certain conclusions. On 7 April last, addressing the annual conference of the Irish Wind Energy Association, the Minister announced future capacity requirements for renewable energy electricity generating capacity, broadening of the support mechanisms to include all supply companies in the market and changing the support mechanism from competitive tendering to a fixed price tariff.
The target announced by the Minister is to have more than 1,400 MW of renewable capacity built and operating on our electricity system by 2010. This will require us to more than double in five years what was delivered in the previous decade. Previous support contracts were exchanged between the ESB and successful applicants and the additional costs were recovered by the ESB through a public service levy. The electricity market is now a fully liberalised market and project developers are free to contract with any licensed supplier. The suppliers will be assured they will receive compensation on terms which match those already available to the ESB customer supply.
The most significant announcement by the Minister, Deputy Dempsey, was that the support mechanism will change from a competitive tendering process to a fixed price system. This announcement has received positive responses from representatives of project developers. I have already mentioned the support programme involves a public service levy, which is imposed on all electricity customers. There is, therefore, particularly in the case of a fixed price support mechanism, an onus on the Minister to ensure that the price imposed will deliver a reasonable and fair rate of return to project developers while ensuring that the interests of national competitiveness and the ultimate burden of cost to the final consumer are fully taken into consideration. The Department is finalising some finer details of the new support mechanism with the Commission for Energy Regulation and I expect that these discussions will be finalised shortly.