Jim Walsh (Fianna Fail)

Cuirim fáilte roimh an Aire, an Teachta Éamon Ó Riain go dtí an Teach inniu chun an Bille tábhachtach seo, an Bille um Rialáil Leictreachtais (Leasú) (EirGrid) 2008, a phlé.

This is a very important Bill, as the Minister rightly underlined in his speech to the House. It is interesting that in recent times at committee level, as Senators Joe O'Toole and Martin Brady will be familiar, we have had both EirGrid and IMERA making submissions on interconnectors to us. It is a welcome development.

The Bill must be placed against the background of the energy market. In this country we have had unprecedented economic growth over more than a decade and that has given rise to a considerable increase in electricity demand, which has been outstripping generating capacity. The demand is projected to grow by 4% to 2010. I hope that will materialise even though we seem to be in a period where economic growth has reached a plateau. That is an issue for another debate. In many ways all areas of infrastructure were being stretched when we were experiencing double-digit economic growth and that is the experience of every country that has had a such rapid increase in its economy. It will do us no harm, provided we take the necessary prudent and cautionary measures to ensure that we do not slip into serious recession, for us to plateau for a period and then have more sustainable levels of growth. Of course our growth rates in the future will be from a much higher economic level than we have had in the past and therefore the quantum of the economic growth will be quite significant even if the percentages appear in lower single figures.

We have had a low level of international interconnection. The Minister pointed out that North-South developments constitute a major step forward in creating an all-island electricity market. Indeed, we are developing that in other ways in the economy as well. That will be ultimately to the betterment of the people on both sides of this unfortunate partition on the island. We are seeing the benefits in many areas and that will grow exponentially as it develops in the future.

Historically, there has probably been significant underinvestment in the electricity network. We have a high dependency on imported fuels, which has made us vulnerable to international fuel prices and which has contributed in part to the high electricity costs. Unfortunately, our electricity prices are the second highest in Europe and are 50% above the EU average. That is not a situation with which we should be comfortable or about which we should be complacent, and it is something we need to address. If industry and jobs here are to be maintained and to grow into the future, competitiveness is an important issue for the economy and for many of those industries, not to mention householders, energy costs are a fairly significant factor. The moves we are making in that direction are all positive and the interconnector is an important part of that.

It is significant that Ireland is ranked among the three most expensive countries in Europe in terms of electricity costs for industrial consumers. I hope the steps being taken on the renewable side will generate cost efficiencies. Renewables will be good for the environment, but also it is important that we get a benefit from cost efficiencies in order to achieve the competitiveness to which we aspire.

Our geographic isolation is a significant factor in all of this. There will be not only North-South connection, but, indeed, once the east-west one is established, bearing in mind that England will also be connecting to mainland Europe, it is hoped there will be considerable benefits. I noted that the Minister in his speech spoke of a regional development involving France, Britain and ourselves and that there can be some benefits, and economic savings, arising from that as well.

Apart altogether from the cost implications, the fact that we are a peripheral island and that we are subject to imported fuels makes us vulnerable to security of supply. It is important that steps are taken in that regard as well. We saw within the past few years the issue arising from decisions by Gascom to curtail the supply to Europe of Russian gas being more or less politically rather than commercially motivated. Being on the west coast of Europe, we need to be particularly conscious of that vulnerability and try as far as possible to obviate a situation where we are without supply.

Competition is an essential feature of all of this as well. The interconnector brings that also to the table in that it will allow us trade in electricity. Indeed, the potential for market opportunities for export, should we find ourselves in that position in the future, is also there to be exploited.

I would be hopeful about the growth in wind energy. There must be great potential for wave energy, if it can be harnessed economically and the technical mechanisms necessary can be achieved. On a recent delegation with one of the Oireachtas committees to Brussels, we met a number of EU Commissioners. The Energy Commissioner informed us that off the south-west coast of England there are fairly advanced studies being done. In these Houses Members have raised previously a project off the Galway coast where people are endeavouring to develop technology that can harness wave energy.

Given that the sea is all around us — Dominic Behan was thankful for political reasons for that — for commercial reasons I hope in the future we will look to it as being a great asset. It is not an asset we have exploited to anywhere near its potential. It is totally underexploited, as many of our fishermen will tell us. I listened with interest to what Senator O'Donovan had to say on that earlier. It is an area to which we could give much more emphasis and increased focus. I understand that some part of the technical area surrounding this will entail high-voltage direct current transmission across the Irish Sea and this will involve conversion stations to convert from AC to DC on either side of the interconnector.

EU regulations, as both the Minister and EirGrid pointed out, require full third party access to the interconnector. In recent weeks and months there have been debates on Europe and the pros and cons have been enunciated by the different sides, but this is an area in which the European Union has been a very positive catalyst for generating transnational connectivity. That is required to facilitate the effective implementation of the policy in place and to ensure consumers across the Community, including those on peripheral islands such as ourselves, will be beneficiaries of that common market in the trading of electricity.

The Minister said the development of this interconnector by EirGrid is on target to be achieved by early 2012 and that it will have a 500 MW capacity. It is important we allow private interconnectors. If we can generate competition, there is no reason the public sector cannot be as good and efficient as the private sector. If, however, a public or a private sector monopoly emerges, in general, the public sector will accumulate certain inefficiencies while the private sector will probably involve itself in profiteering. It is essential we have competition in the area. Within the regulations, there is a requirement for third party access on a fair and transparent basis. The Commission for Energy Regulation will regulate and ensure there is a level playing field.

We should try to achieve a less dominant contribution from the ESB to the overall capacity, which we have talked about for some time and which there has been great difficulty achieving. I believe that is due to technical difficulties apart from anything else, and perhaps lack of investment because investment in energy requires significant capital. There might be an opportunity through the interconnector to do that. If it is done on an equal and fair basis, would it fit with that objective?

If my figures are correct, this imported electricity will save us 2 million tonnes of CO2 per annum. That is not an insignificant contribution to what we are trying to achieve in that area and is a very positive aspect. The main thrust, however, should be to try to achieve lower prices for the consumer, whether commercial or private, in order that prices are closer to the EU average.

Some 60% of our electricity is generated by gas, although this move will assist in reducing that. Gas is a very clean fuel to use to generate electricity but it is also a primary source of energy. We are using a primary source of energy to generate another one. On the face of it, that seems wasteful of our energy resources. I welcome the fact it will decrease but we will need to decrease the amount significantly to achieve the benefits we should get from gas.