Dáil debates

Thursday, 12 May 2011

Other Questions

Electricity Generation

3:00 pm

Photo of Brian Lenihan JnrBrian Lenihan Jnr (Dublin West, Fianna Fail)
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Question 7: To ask the Minister for Communications; Energy and Natural Resources his plans to increase the maximum level for consideration as micro generation to 50kw; and if he will make a statement on the matter. [10835/11]

Photo of Dara CallearyDara Calleary (Mayo, Fianna Fail)
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Question 23: To ask the Minister for Communications; Energy and Natural Resources his plans for increasing the tariff received for micro production of energy; the amount by which it will be increased; the proposed term of guaranteed tariff; and if he will make a statement on the matter. [10834/11]

Photo of Pat RabbittePat Rabbitte (Dublin South West, Labour)
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I propose to take Question Nos. 7 and 23 together.

The programme for Government commits to the provision of a feed-in tariff for microgenerators producing electricity for their own homes, farms and businesses and selling surplus electricity to the grid. The programme also states that the tariff will not be significantly above the single energy market price for electricity. In line with the programme for Government commitment, my Department and the Sustainable Energy Authority of Ireland are finalising a cost-benefit analysis of a feed-in tariff programme for microgeneration. I expect their assessment to be submitted to me shortly. Any microgeneration programme must be fully cost-effective, taking into account the overall cost implications for all electricity consumers. As part of their analysis, the authority and my Department are assessing the varying potential kilowatt levels of microgeneration installations in terms of the levels of support they would require. The kilowatt size of installations and related costs and benefits will be factored into the overall assessment of a cost-efficient programme.

ESB Electric Ireland is the only electricity supplier in the market that offers microgeneration tariffs to domestic customers who generate up to 11 kW. ESB Networks agreed in 2009 to provide the necessary import export metering free of charge to the first 4,000 domestic microgeneration customers. ESB Networks provides a support payment of 10 cent per kW hour for those eligible customers for the first 3,000 kW hours exported back to the grid annually for a period of five years. The take-up of 364 customers has been disappointingly low despite a potential overall tariff rate of 19 cent per kilowatt hour being available. This tariff is significantly above the single electricity market wholesale electricity price, which currently averages 7 cent per kilowatt hour.

The Sustainable Energy Authority of Ireland is in an 18 month micro-generation pilot scheme which entails close monitoring of the performance of the 42 installations taking part. Those participating in the pilot have been able to avail of the tariffs offered. The findings from the pilot scheme are providing useful data which will inform the overall assessment of the optimum way forward to encourage the micro-generation sector.

Photo of Éamon Ó CuívÉamon Ó Cuív (Galway West, Fianna Fail)
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Does the Minister agree that we do not need to reinvent the wheel given the large amount of information on micro-generation available internationally? With an average tariff threshold for micro-generation of 50 KW in the rest of Europe, is it not self-evident that economies of scale arise the larger one designates the threshold? Does he also accept that the average energy requirement of a farm - perhaps not in my part of the country but certainly in the Leas-Cheann Comhairle's part of the world - is approximately 50 KW? Permitting output of 50 KW would make such farms energy neutral and dairy and other farms would have zero net energy usage because they would be able to supply as much electricity to the grid as they took from it. Will the Minister give a timescale for the completion of the various reviews, taking into account the European example? Will he indicate when decisions will be made?

Photo of Pat RabbittePat Rabbitte (Dublin South West, Labour)
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I do not know enough about the issue but I am trying to find out and learn about it. I do not entirely agree that the Deputy is entitled to put on the beal bocht for Galway West as compared to Galway East given that farms in the east of the county tend to be small and the area does not have many milking parlours.

Photo of Éamon Ó CuívÉamon Ó Cuív (Galway West, Fianna Fail)
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There may be some in Galway East whereas there is not a single dairy farm west of Galway city.

Photo of Pat RabbittePat Rabbitte (Dublin South West, Labour)
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Yes. While stimulating the micro-generation sector is probably a positive thing to do, one has to consider the economics of the issue. I set out the figures on the cost of the current feed in tariff and the minuscule amount of electricity going back into the grid. I do not know whether economies of scale apply, as the Deputy suggests, although I am open to examining that proposition. It is interesting that none of the other suppliers has entered the market and the ESB is on its own in that regard. There will come a point at which it will no longer be economic, especially if only one of the electricity suppliers is playing a part in stimulating the micro-generation sector.

Photo of Éamon Ó CuívÉamon Ó Cuív (Galway West, Fianna Fail)
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On the economics of the system at national level and for private companies and producers, the micro-generation of electricity is potentially a good source of income for farmers and would put their land to good use. Does the Minister agree that in assessing the economics of the case for micro-generation, one must examine its potential for making small farms more viable, which is an objective to which the Government and European Union are committed? It would also be economical from the point of view of the State in that it would use freely available resources, namely, wind and water. One then has the economics for the private company. Where the economics of micro-generation for the country and producers trump those for private companies, does the Minister agree that the State must adopt a policy to ensure the economics of private companies do not overrule the national interest and that, on that basis, a national policy is required? Will he undertake to examine the reason the tariff threshold here is 11 KW on three phases and 6 KW on a single phase when the average tariff threshold in Europe is 50 KW? Is this connected to the robustness of our grid? Is upgrading the grid not the answer to the problem?

Photo of Pat RabbittePat Rabbitte (Dublin South West, Labour)
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I will undertake to examine the issue raised by the Deputy. I do not know whether the position here is exactly analogous to the position in other EU member states. While I support the idea of micro-generation in principle, we must examine the economics of the case. If it is the Deputy's case that the level at which the tariff threshold means inherent failure is likely and that a higher threshold would allow micro-generation to make a meaningful contribution, I will certainly examine that proposition.

It would perhaps be an understatement to say I receive occasional representations on the matter. I receive a regular dribble of representations from different areas, primarily in the south, which could indicate they may be from farmers with significant land. Now that the days are getting longer, I will examine the issue of micro-generation.