Ossian Smyth (Dún Laoghaire, Green Party) | Oireachtas source

This Bill sets a cap on the market revenues of people generating electricity. It states that we are setting that at €120 per megawatt hour or 12 cent per kilowatt hour as a unit. What Senator Boylan is proposing is that we reduce the amount involved from €120 to €100. The path we are trying to tread here and the balance we are trying to strike is between making sure that we take a fair amount of money away from the electricity generators, in other words, removing money that they earned unfairly from the market during the time of the Ukraine war, and transfer it back to customer. At the same time, however, we want to ensure that we do not take so much money back from them that it will mean nobody will invest in the electricity generation market in Ireland. This is a real concern. Every few months we hold an auction in which electricity generation companies are invited to come to Ireland to build wind and solar farms and to see if they want to take part in building within the Irish market. We are competing with the other European countries and we have to make sure that we do not set a price that is so high that at the next auction we will end up with nobody wanting to build a wind or solar farm here because the signal that we have given to the market is that companies will not be able to make any profit at all. We have to maintain a balance between the two.

We had an auction recently that was oversubscribed; it could have been more oversubscribed. At that time, Deputy O'Rourke of Sinn Féin complained that the market conditions were not attractive enough for energy companies to come to Ireland and invest here. We are complying with Article 8(2)(c) of the EU Council regulation with the €120 cap. That is to maintain positive investment signals. We want to ensure that Ireland remains an attractive location for climate investment in order for Ireland to secure the investment required in renewable projects to meet our climate targets. The price cap of €120 per megawatt hour is in line with the contracted strike prices under the renewable energy support scheme. This demonstrates that a double-sided contract for difference which involves payback when market prices exceed €120 per megawatt hour does not hinder investment in wind generation. Coal, oil, peat and biomass by comparison will experience no increase in unexpected revenue due to the variable cap proposed by the Department. The variable cap contained in Article 8(2)(c) will allow for cost recovery to operate the generation units, and there will be a maximum margin limit based on the historical average margin received from 2018 to 2021. Following detailed discussion with a number of stakeholders, the Department is satisfied that the best available data was used to define windfall gains, and set an appropriate level of cap. It is for that reason that I do not propose to accept the amendment.