Tuesday, 2 November 2021
Energy Security: Statements
I thank the Cathaoirleach and Senators for this opportunity to update the House on the security of energy supply. I will address the challenge related to security of electricity supply. There are currently no similar short or medium concerns about oil and natural gas security of supply, which continue to be traded normally, albeit at high prices. For this reason, I will focus my comments on the security of electricity supply.
Ensuring a continued secure supply of electricity is vital for the proper functioning of society and the economy. It is also necessary to ensure people and businesses have confidence in switching to electrified solutions such as heat pumps and electric vehicles. The Commission for Regulation of Utilities, CRU, has statutory responsibility, under SI 60 of 2005, to monitor and take measures necessary to ensure the security of electricity supply in Ireland. The CRU is assisted in its statutory role by EirGrid, the electricity transmission system operator. The CRU is an independent statutory body and solely accountable to a committee of the Oireachtas for the performance of its functions. I, as Minister, have overall policy responsibility for the sector, including policy matters impacting on security of energy supply.
The CRU has advised that it has identified specific challenges to ensuring continued electricity security of supply. These challenges include lower than expected availability from some existing power stations; anticipated new power stations not being developed as planned; expected growth in demand for electricity, including due to the growth of data centres; and the expected closure in the coming years of power stations that make up approximately 25% of conventional electricity generation capacity.
The short-term immediate risk to electricity security of supply has been caused by lower than expected availability of existing power stations. This has resulted in a number of system alerts, which indicate an elevated risk level, on the electricity system but has not impacted the electricity supply to any customers. This risk has reduced with the recent return of gas-fired Huntstown power station and will reduce further with the return of another gas-fired power station, Whitegate in Cork, due later this month. Notwithstanding this, there is no place for complacency as there are continuing issues with reliability, as evidenced by another recent forced outage at the oil-fired Tarbert power station.
EirGrid’s winter outlook, published on Monday, 11 October, sets out that there is an expectation that the electricity system will enter an alert state at times over the coming winter, most likely at periods of low wind and low interconnector imports. It also sets out that there is an elevated risk, compared with previous winters, of the system entering the emergency state due to insufficient generation being available to meet the demand. This does not mean that electricity consumers will be without supply for any period. It does, however, indicate a higher than planned level of risk.
While it is not possible to guarantee that there will always be sufficient power to meet demand, the CRU and EirGrid are working to ensure secure supplies of electricity for all consumers. EirGrid and ESB Networks have put in place procedures to ensure that in the event that demand curtailment is needed, large energy users will be requested, in the first instance, to reduce demand where possible. This includes requiring data centres to switch to available on-site backup generation.
The medium-term risk to security of electricity supply is set out in EirGrid’s generation capacity statement, which was published on Wednesday, 29 September and covers the period from 2021 to 2030. EirGrid has identified a medium-term need to develop 1,850 MW of generation capacity by 2025. On the same day, the CRU published an information note setting out the programme of actions being progressed to deliver the required generation capacity. The actions include increasing the availability of existing generators; developing of new generation capacity, including temporary generation capacity in advance of winter 2022; extending the operational life of some existing generators; a new policy for the grid connection of data centres; and actions to enhance demand-side response, including large consumers reducing demand when the system margin is low.
The national development plan sets out that around 2,000 MW of new conventional electricity generation capacity will need to be delivered over the coming decade, with much of this needed by mid-decade. This generation, most of which will be gas-fired, is needed to support the operation of the electricity system and provide security of supply.
My Department is working closely with the CRU and EirGrid to ensure continued secure supplies of electricity. My Department is developing a policy statement on security of electricity supply in support of the CRU programme of work. It is envisaged that the policy statement will emphasise the importance of maintaining security of supply in meeting renewable electricity targets by 2030 and net zero emissions by 2050. It that context, it will provide certainty for investors in the appropriateness of developing new conventional electricity generation capacity and new grid, interconnection and storage infrastructure.
For the longer term, my Department is also carrying out a review of the security of energy supply of Ireland’s electricity and natural gas systems. This review is focusing on the period to 2030 in the context of ensuring a sustainable pathway to net zero emissions by 2050. The review will consider options that will address the key longer-term risks to our electricity and natural gas security of supply. These risks are likely to include the increasing dependence on imported natural gas from a single UK source, via two interconnector pipelines to the Moffat terminal in Scotland, for that majority of Ireland’s natural gas supplies. By 2030, it is expected that over 90% of all of Ireland’s natural gas needs will be supplied via Moffat in Scotland. The review will consider a wide range of potential options to mitigate identified risks, including the use of individual renewable energy technologies such as green hydrogen, biomethane, battery storage, pumped hydro, or a combination of these.
Again, I am grateful for the opportunity to address the Seanad this evening. I look forward to listening to Senators' contributions and responding to the issues they raise.
Cuirim fáilte roimh an Aire. He has a busy week ahead of him.
I thank the Minister for the work he has done to date. For the past 30 years, he has been one of the few people talking about energy conservation and the need for the country to become sustainable and independent energy-wise. Were it not for the Green Party, we would be trying to figure all of this out. It is great to see all the parties now echoing what the Green Party has been saying for 30 years about becoming energy self-sufficient.
The Minister's goal is to have 80% renewable energy by 2030, which is a great and positive target to have. We have a lot of work to do. I appreciate the funding provided to enable people on a personal level to reduce their energy demands. The issue is not only energy supply. For years, as a country, we have wasted a lot of energy in the way we heat our homes, travel and source our food. The two Departments which the Minister heads have done great work since last July on supporting homeowners and giving them opportunities and choices to reduce their energy demands. We had a great presentation from the National Transport Authority, NTA, on improvements to rural transport.We also had a very good one from the SEAI, which has done great work and is offering lots of free retrofits and infrastructural improvements to people on low incomes and social welfare. To that end, as I want to bring it back to the personal, I have three short questions for the Minister. Hopefully, there will be low-rate green loans coming in so that middle income earners and people on low incomes will have opportunities to get loans that they can cover. Once they get a photovoltaic system or their house retrofitted, it will reduce their energy bills and they can then use the savings to pay back the loans. How are we progressing with that? I know that the Minister, more than anybody else in the country, has been working on the three things I will ask him about. Apart from the low-rate green loans, there is also the renewable energy feed-in tariff, which I know the Minister has been seeking for a long time. Thanks to him, it is coming back. When can we expect it and does the Minister have any idea of how much it will be?
How is the solar Bill that we brought to Second Stage progressing? It is a great opportunity for schools, community groups and farmers. Coming from rural north Clare I see it is a potential positive for farmers who have lots of sheds and a big amount of roof space. They are more than willing to get involved in the green revolution when given the choice. I would love to get an update on those three issues. I wish the Minister the best of luck with his great task and most important work in Glasgow in the coming weeks on behalf of the country.
The Minister, Deputy Eamon Ryan, is welcome to the House to discuss the most important topic of energy security. While there is much to be said about the coming winter and the rising cost of electricity in Ireland and across Europe, I trust my colleagues to bring these issues to the fore and will instead take the opportunity to look forward to the future. Prevention is the best remedy. Now is the time to tackle the problems of the future.
When we debated the Climate Action and Low Carbon Development (Amendment) Bill this summer, the Minister stated:
The advantage we have in that is that offshore wind is the cheaper fuel now. I agree, we should look at nuclear options [...] I would not rule out anything because the climate crisis is so severe. We must look at every option. In truth, I do not see [...] nuclear energy developing in the way solar and wind energy is developing, with the costs coming down. It will never be competitive now - nuclear versus renewable - in our country because we have such a wind resource.
When we discuss costs, we speak of the euro per megawatt hour, €/MWh, the levelised cost of energy, LCOE, which is a measure of the average net present cost of electricity generation for a source over its lifetime. It is used for investment planning and to compare different methods of electricity generation on a consistent basis. Herein lies one of the most overused and flawed misconceptions when it comes to decarbonising the energy sector. I accept that solar and wind have lower levelised costs than nuclear, but this is a gross over-simplification. The US Energy Information Administration, which publishes its official LCOE figures, even says that not so directly when it compares the LCOE of wind and solar to other technology. It even goes so far as to show them in separate charts to discourage comparison. Why is that? I gave the Minister a copy of the diagrams before the start of the debate.
Let us start with solar power. It is all explained in this chart, which outlines negative wholesale energy prices. The light and dark coloured gold is solar power and all of the other colours put together is the demand. The chart is the value of electricity over the course of the day, the gross profit of an energy operator or producer per megawatt hour. In a traditional energy grid, without a lot of wind and solar, this value would go a little higher in a day when there is more demand for electricity. It is basic economics: where there is a higher demand, there is a higher price but when one floods a market with one's commodity, its value will go down. That is exactly what is happening in places like California, which has installed large amounts of solar and wind. Not only does the value of electricity become depressed, it actually goes negative during peak production hours. The more intermittent sources of energy that one adds to this depresses the value even more, to the point whereby energy providers have zero incentive to continue producing, unless one adds subsidies, which are a drain on the taxpayer and do not reflect value for money. Either this, or the systems get shut off, to artificially constrain supply and inflate costs, which likewise is a poor return on an investment in renewable energy infrastructure. The amount of solar energy on the market compared with the value, as more is added, gives a steady downward trend. The same issue applies to wind power also. These value drops jeopardise profitability, phased-out support schemes, the decarbonisation of the power system and the reaching of renewable targets, all of which is bad news for the Minister, as well as the Minister for Finance and, not least of all, climate.
The usual response is why we cannot just add batteries in long-range transmission to smooth out the grid. After all, it is windy in some cases and sunny in others. Data shows that helps a little but not much. Storage can help renewable profitability, but it also experiences diminishing returns. Modelling has shown that even doubling hydro pump capacity has a positive but minor impact on the value of wind power. The key to decarbonising the energy sector is adding constant, firm sources of energy such as hydro or geothermal, which are heavily limited by location, or nuclear power. Wind and solar will be of great benefit, but pure renewables will not be enough to get us to net zero.
I understand the allure of 100% renewables, but surely the Minister will agree that sustainable decarbonisation must be prioritised above ideology, be it renewable only, anti-nuclear or any other belief which places dogma over that which best serves the Irish people. The road to zero emissions in the energy sector is being unnecessarily lengthened by the continued existence of section 18(6) of the Electricity Regulation Act 1999, which prohibits the use of nuclear fission for the generation of electricity. The section owes its existence to the Minister's former party colleague, the then Minister, Trevor Sargent. I believe the banning of nuclear fission in Ireland was a mistake, born out of anti-nuclear sentiments in the 1990s, which were popularised by the fossil fuel industry and tapped into the passive Anglophobia in this country, as it was the UK that was accepting nuclear as a tool with which to combat climate change. If it is energy security that the Minister is after, a fixed output, reliable, safe and sustainable solution can be found in clean energy provided by fission reactors. If that is not recognised by the Government, then the public will pay the price down the line.
I welcome the Minister to the House for the debate on this important issue. He rightly concentrated his remarks on energy security on the electricity market. There is not an issue with oil and gas, other than the price of them at the moment, which is clearly as a result of what has happened during the pandemic. A lot of supply lines across a range of commodities are impacted by that.
The recent media reports that we were facing a potential series of blackouts was a considerable shock to many. I do not want to be alarmist, but the language suggested that we were getting very close to that. As the Minister put it, the risk of potential outages had increased. Even though I have followed the issue in the committee in recent years and I have raised it with different stakeholders in that time, nobody ever seemed to raise any real concern. I am somewhat surprised about that and I wonder if the Minister is too. The stated intention of decarbonising the electricity network as part of decarbonising the economy was aimed at a much greater usage of electricity and the various projections that had been made around that, such as moving away from fossil fuels to power cars and trying to get up to 1 million electric vehicles on the road by a certain date. We have targets for the retrofitting of homes and the installation of heat pumps. The ambition and targets were there. What I am surprised about is that it became an issue all of a sudden for those that have a responsibility in this regard. It was not necessarily overnight, but it had not been brought to the attention of the wider public. I wonder if it had been brought to the attention of the Government at an earlier stage to try to find a policy response.There are two issues in respect of electricity, which are the capacity to generate electricity to meet peak demand and the very considerable constraints on the grid. I remember I raised this with EirGrid a number of years ago at a committee meeting, because I was hearing of companies that, based on where they were located and where demand had increased, had to effectively supply their own electricity behind the meter. I raised that as an issue at the time because I thought it was rather bizarre that large companies were effectively generating electricity on site to meet their needs. It did not seem to be good overall policy for a country that was ultimately going to transfer much of its energy needs to electricity to have this patchwork quilt of a grid that, quite frankly, was not fit for purpose.
I know there are issues. It is a bit like trying to generate wind onshore. Nobody wants wind turbines in their backyard any more and it seems nobody wants grid infrastructure either. Notwithstanding all the developments that are in place, I do not know of anyone, or have heard anybody talk about, delivering electricity by Wi-Fi. We are going to need wires and poles for quite some time. Our cell phones are now powered by leaving them on chargers without a direct wire connection. It is a stated ambition of some of the car companies that, ultimately, as cars pass over certain strips on the road an induction current will, hopefully, recharge the batteries, but that is a long way off. The grid is an issue, which I am sure the Minister is well aware of and which he may speak about later.
On the supply side, the ESB has a very considerable ambition to develop offshore wind generation capacity off the Clare coast and into the Atlantic. That has very real potential for a positive impact on the economy, but we are looking at that ten years hence. There are certain impediments to foreshore licensing and legislation has to change, but if the Government was to take a very proactive approach, what more could we do to bring on that kind of renewable energy from that source more quickly? If an ambition and target was set to do it within five years, is it possible? Some of the technology is nascent and in development, especially the very large floating pontoons that are required. This is technology that is in development, but people glaze over when they hear that it is ten years away. It is potentially two or, at worst, three electoral cycles away and who knows who will be in power by then? Can we bring some of these proposals to fruition more quickly to benefit the economy as is necessary?
There has been a substantial impact on international wholesale energy prices. We have seen a substantial impact on gas prices, especially in Ireland, which has had a knock-on impact on energy prices. That is clear for everybody to see. Gas prices have been rising steadily since March 2020 for a variety of international reasons. They are currently unseasonably high, which puts upward pressure on wholesale electricity prices. That is not just affecting this country but many European states across the Continent. We have to ask ourselves what the best approach is to protect the Irish consumer in the face of rising energy costs. The best long-term approach to doing that, and what is our primary response as a Government towards a potential energy crisis, is to insulate Irish consumers from volatility in international wholesale energy markets by substantial investment in energy efficiency and, most important, renewable energy.
In recent months, that investment has come in many guises, shapes and forms. For example, building on our existing large capital budget for home energy upgrades of low-income homes ensures that lessening and alleviating energy poverty is a key consideration of the national retrofit programme, which is due to be published in the coming weeks. It also ensures that finances raised by increases in the carbon tax are ring-fenced to protect those who are most vulnerable against fuel poverty and higher fuel and energy costs. It supports a just transition for displaced workers and investment in a range of climate-related actions. It utilises the tax and social welfare aspects used by the Government, which we have seen in budget 2022, to increase the living alone allowance, the qualified child payment and the income threshold for the working family payment. These measures are in addition to adjustments to basic welfare and pension rates we have implemented that go a long way towards protecting Irish consumers.
Ireland is transitioning from the use of fossil fuels for generating electricity to using a majority of wind, solar and solar renewables. As was said at a recent meeting of the Joint Oireachtas Committee on Climate Action, natural gas will be used as a backup. Natural gas is deemed to be low carbon. However, it is still a fossil fuel. We have seen this year how fluctuations in gas prices can affect wholesale electricity costs and threaten Irish consumers with very high energy costs. I met a friend this morning, Ultan Murphy in Dundalk, who I have been meeting for the past year and who is a proponent of nuclear energy, an issue Senator Keogan has discussed. We should be able to have a conversation about nuclear energy. That is all I am asking for. The 1999 Act that outlaws nuclear power in this country has been mentioned. Nuclear power is completely carbon free. It is used in developed countries all over the world, such as the United Kingdom, France, Germany and the United States. I accept people might be opposed to nuclear power for whatever reason. They may think it is impossible to build a nuclear power station in the next ten or 20 years. If we had seen 20 years ago that we would be moving towards a renewable source of energy in this country, and around the world, people would have thought that was unlikely.
Ireland already consumes nuclear energy via our interconnector with the UK. It should at least be discussed and we should have a conversation about it as a viable option compared to all other possible scenarios. We have recently seen Ursula von der Leyen join ten EU countries in calling for nuclear power to be included in the EU's taxonomy for clean energy. It already generates 26% of the EU's energy consumption. Ursula von der Leyen stated that:
We need more renewables. They are cheaper, carbon-free and homegrown. We also need a stable source [of energy], nuclear, and during the transition, gas [also].
After I spoke to Ultan this morning, I read an article about a group of ten EU countries, led by France, that have asked the European Commission to recognise nuclear energy as a low-carbon energy source that should be part of the block's decades-long transition towards climate neutrality. Indeed, more than 90% of the EU's natural gas comes from foreign imports, with Russia as the main producer. This great dependency has been credited as one of the main factors behind the rise in energy prices. Supply tensions will be more frequent and we have no choice but to diversify our supply.
In 100 years' time, Ireland and other developed countries will be using nuclear power. We should not be bogged down by short-term thinking over the next ten or 20 years. We should have an open and honest discussion. I am simply asking that we have that conversation and that is all. We are at our best as a society when we challenge ideas, pit arguments against each other and get the best overall solution. We should be having a conversation about nuclear energy. If it turns out to be an idea that will not be useful in Ireland, or suit it, that is fair enough, but let us have the conversation and the debate in the first instance.
I welcome the Minister. It is fair to say Ireland faces a perfect storm, if Senators will excuse the pun, in respect of energy security issues, with low winds, pandemic delays and two power plants going down. That said, it is critical we reduce the overall demand for energy. Current Government policies have been likened to trying to go down an escalator that is going up.
We are an outlier when it comes to data centres. The EU average for data centres is 2% of energy demand whereas in Ireland they now account for 15% of our energy mix, with the potential to reach 30% by 2030. We need a moratorium on data centres until we can, at least, get our grid and renewable energy on track. Nobody is denying that we need data centres. People like to say that "you are using social media and you are happy to work from home", but it is very clear that Ireland has a disproportionate number of these data centres. They are not all providing essential services. In fact,The Business Post reported this week that the biggest energy consumer of data centres in Ireland is Amazon Web Services, which aids fossil fuel companies to identify, extract and transport oil and gas faster through its cloud logistics. It is part of the problem. We deserve transparency when it comes to how much we are paying these companies, if we have to ask them to turn down their energy demand or to use their on-site gas terminals. That information is not in the public domain and the public deserve to have information on how much it is costing us. It is not as simple as just asking data centres to power down and them saying okay.
We face medium-term supply issues as Corrib winds down and our renewables ramp up. Now is the time for us to make prudent decisions about our energy mix and not look at locking us into a fossil fuel future or leaving us on the hook for stranded assets. I absolutely disagree on the nuclear question. Nuclear energy might not have carbon emissions but we have a huge problem with the pollution that comes with it. It is a distraction from the very ambitious goals we have around renewable energy targets. We should focus on them. Nor is building LNG terminals the answer, as they would lock us into importing fossil fuels for decades. They are infrastructural projects with a 30-year lifespan whereas we only have a short-term energy problem over the next decade until we get our renewable energy and storage up to speed. If we go down the road of putting out contracts for the likes of terminals and allow them to go ahead then we are locked in, as a signatory of the Energy Charter Treaty, if we try to phase those out. We have seen what happened to the Dutch. In 2009 when gas prices were very high they decided to encourage coal plants to open up. They then tried to close those coal plants down faster and they are now on the hook for billions of euro.
We know the answer to energy security is more renewable energy. One of the stumbling blocks we have is of course the marine planning framework, which is very detailed legislation needed to pave the way for those very ambitious targets but we cannot sacrifice biodiversity on the altar of emissions reductions. That is why I am keen to see the marine protected zones being designated simultaneously, or at least being pencilled in, so we know where we should not put the offshore wind farms. Not only is that good for biodiversity but it is also protecting our marine environment and our wildlife out there, which is the largest carbon sink, though many people are not aware of that. It is also vital we learn from the many mistakes of onshore wind, that we work with communities, that the communities where that wind is going to be brought ashore feel that benefit and that the small fishing communities feel the benefit of the offshore wind terminals.
The second stumbling block to our becoming energy secure is the lack of a hydrogen strategy. We are one of only two EU countries that does not have such a strategy. There is definitely a place for green hydrogen. When I refer to hydrogen I obviously do not mean blue, grey or pink. Green hydrogen storage is an essential part of the move to fully renewable energy and will close the gap from intermittency. I would also like to ensure we can stand up to the vested interests that oppose our reaching of our renewable energy targets. It was deeply concerning to hear Phillp Boucher-Hayes's podcast talking about the impact horse breeders from outside the country were having on the planning systems in County Kildare and their resistance to battery storage in that area. It is important we stand up to those interests as well.
I thank the Minister for coming to the Chamber. It is particularly pertinent and important to be having a debate on energy security this winter. We cannot talk about energy security without talking about energy poverty. The cost of energy is rising at a shocking rate. Electric Ireland has announced average prices of electricity are going to rise by almost 10% this month. It was 9% in August. I am aware other Senators have referred to delays in supply caused by the pandemic but it is also notable it took four speakers before we got to Senator Boylan, who mentioned the impact of data centres on the national grid. It is not sustainable for households to have the rises that are coming up this winter and into the future. We need to ensure we are energy secure but also that people are protected from energy poverty.
Not planning for the impact of data centres on the national grid was unacceptable. The IDA and its foreign direct investment at all costs approach had an impact on that and it is something we need to be able to learn from. As Senator Boylan said, we are an outlier in Europe. Whereas other countries supply about 2% of their energy to data centres we are looking at up to 15% and the that figure is likely to grow. The overwhelming of the grid due to data energy needs to be highlighted. We need to diversify our energy by pushing for more renewable energy which will enhance our energy security and also bring down bills. That transition is not going to be easy and will present challenges.
As the Minister and other members of this Government are aware, a grid based on fossil fuel generators is not suitable for a future where most of our energy will hopefully be coming from renewable sources. The current delay in getting connections is preventing new renewable projects from supplying electricity in Ireland and our electricity supplies are under immense pressure from stretched capacity. The Irish Solar Energy Association states delays of up to two years in connecting new projects to the national electricity grid provided by State company EirGrid and ESB Networks are shutting out potential supplies.
This week COP26 is taking place in Glasgow and there is quite rightly a focus on climate action. As other Senators mentioned, Ireland has the potential to be a leader in climate action through the wind energy we produce and this is something we need to take seriously. The opportunities we have for renewable energy through wind are immense. I refer to the role of wind power in decarbonisation. Ireland has one of the best such resources in the world and could potentially make enough energy every year to power every home here. A single wind turbine can produce the energy equivalent of 16,000 solar panels. In the last decade Ireland has cut millions of tonnes of CO2 emissions and has steadily reduced our heavy dependence on fossil fuels through the use of wind energy and we can be a world leader in this area. I was recently in Brighton where you can see wind turbines across the bay working and producing energy. They are not intrusive and do not ruin the view, which are among the concerns people may have about wind turbines being placed along their coasts. However, the transition to wind energy must be based in local communities. It must mean people have quality, well-paid jobs replacing other industries that may have been there, such as fishing. It must mean investment and enhancement of the local areas where they are contained. It must also mean we have a just transition and a local transition. We can be the world leaders in this area.
On energy and the energy crisis, I will come later to the question of supply and demand but also the question of costs. It is really important we begin by acknowledging fossil fuels have been costing us the Earth, quite literally, already. The fact the costs on fossil fuels are high now is in some ways only a reflection of the fact fossil fuels are literally costing lives and costing billions for the developing world. That has been so for a long, sustained period of time and we have known it for a long period of time and failed to act. That is really important because the fact is the cost of fossil fuel-related energy is going to continue to go up. It is going to have to continue to go up. It will go up because of market advantage being taken but it will also go up as the costs are incorporated into it.
One of the most important things we need to do - in fact there is a motion on this in the House tomorrow to which I have an amendment - is to stop talking about things like carbon pricing as being a lifestyle encourager and be very honest about it being a Pigovian tax which recognises there has been an externalisation of the cost of fossil fuels and there has been massive subsidisation of fossil fuels by governments for many years. When you frame it in that way in an honest discussion, that is to say, we are in a crisis that has been created, then you can have the vital discussion about how to protect people from the worst impacts of this transition. Then you can plan for issues of fuel poverty and issues of retrofitting at a far larger scale than currently proposed. With respect to the low interest loans, it is disappointing our recovery and resilience fund is going into de-risking banks to give loans instead of going directly into retrofitting, for example. That is €40 million Ireland is paying to banks for them to give loans instead of doing it directly.
These are the matters we need to be addressing. Then when we frame it we are not having this narrative of it being about people's habits or demand, because the conversation about demand must be honest and we must talk about data centres. We simply do not have room to parade a set of new elephants into the room and that is what these will be. We are talking about potentially 33% of energy demand. Probably one of the most chilling Oireachtas committee meetings I have sat in on was a recent session with the CRU and EirGrid where the former seemed to have rowed back on its intention to regulate this area and the latter spoke about the need to cater for the economy and data centres. We need to be clear, just as Professor Barry McMullin, who spoke at that climate committee meeting, was. We need to control and regulate the economy so that it can operate within our environmental and energy boundaries, thereby allowing us to sustain society. Will the Minister speak about what measures he will take to ensure the prioritisation of society? Frankly, just requesting that data centres move to their own energy sources - it is unclear whether those sources would be renewable or contribute to our emissions - is an insufficient response. Asking them to change their peak hours is an insufficient response. If we cannot say "No" to offering up a brand new hostage to fortune, how will we deal with all of the problems that we already have? We let Corrib go ahead, after which we had a further ten years during which people stopped looking to prioritise renewable energy and we all returned to the old model. Now, EirGrid is talking about wanting to extend coal and oil usage and delay the exit from fossil fuels. There is no scope for us to do that. The space that is left in the world in terms of fossil fuels is for developing countries, which have used only a fraction of what we have and that need that energy now in order to make the transition to renewable energy. They are further behind the curve than us and need our support and our example. If we make excuses for ourselves, we will make it impossible for them.
The European Court of Justice has told us that the Energy Charter Treaty is incompatible with the achievement of the European Green Deal, yet the arbitration panels are choosing to ignore that. What is the strategy for exiting the treaty and how can we ensure that, in doing so, Europe can give an example and free others from the treaty in order that European companies, including Irish ones, do not force countries in the developing world to continue extracting fossil fuels and delay their transition to renewable energy?
The Minister is welcome to the Seanad. I always appreciate how he attends for our debates. This is a difficult time for him, given the major price increases in oil and gas. They do not just affect Ireland, but the world. People are afraid about receiving large electricity and fuel bills. I accept that a number of measures in the budget will be of assistance, for example, an increase in the qualified child payment of €2 per week for children under 12 years of age and €3 per week for children over that age, an increase in the living alone allowance of €3 per week, an increase in the fuel allowance of €5 per week, which most people know about, and an increase in the income threshold of the working family payment of €10 per week. However, we must acknowledge that petrol and diesel prices are at their highest in ten years. The cost of a barrel of crude oil was as low as $16 in April 2020 but is now $85. That is the highest it has been in almost four years. Much of this has been caused by the pandemic and is an issue of supply and demand. I hope that, over time, the situation will stabilise and prices will decrease in international markets, which should lead to an easing of fuel prices in Ireland.
I accept the Government is trying to support households with their energy costs through the fuel allowance, the household benefits package and the Sustainable Energy Authority of Ireland, SEAI, energy poverty retrofit scheme. However, that scheme has not got up and running as such. People are enthused by it and would love to participate, but the cost means that many families will not do so unless we do something in terms of providing low-cost finance and better grant aid. Many middle-income people believe the scheme is a great idea and would love to participate in it but doing so costs €40,000 or €50,000 in many cases. Some people have told me that they would get a grant of €20,000 or €25,000, but will the Minister examine this matter? Retrofitting has to be part of what we do and I am enthused by the idea but I am concerned that we could fall between two stools. Unless we support people in retrofitting, we will not achieve the success we would all like.
I wish to mention the issue of data centres. I am a little concerned that there seems to be a school of thought that data centres are causing all of the problems but that is not true. I appreciate that, the more of them there are, the more electricity they use. That is a challenge for us, but we must consider our planning laws and regulations and new ideas about how data centre companies can create energy of their own on site. I presume that the Minister has a significant interest in this matter.
Data centres play a significant role in Ireland's technology sector and contribute in a major way to Ireland's international reputation as a digital hub. We have extremely valuable information with a gross value of €52 billion to the Irish economy and the sector employs 140,000 people. As such, we must be careful in this debate. Energy efficiencies must form part of the debate, but let us not get into the arena of demonising data centres and blaming them for all of our energy problems. That is not the case.
What is most important is that the Government support families that are in a tight corner financially because of increased fuel and electricity bills and ensure that, if we see the situation deteriorating, we come to their aid without delay.
I welcome the Minister. It is important to see senior Ministers in the House and I acknowledge his attendance.
My life experience suggests that power outages are much less common now compared with the 1980s and 1990s. That is testament to the investment and expertise of EirGrid and ESB Networks in terms of their maintenance of the lines. From my recollection, blackouts were much more common back then.
As the Minister of State with responsibility for natural resources in 2016 and 2017, I would have said at the time that oil and gas would remain significant elements of Ireland's energy supply into the future, that Ireland would have to walk a fine line to balance the competing aspects of competitiveness, security of supply and sustainability, and that Ireland was committed to the transformation required to achieve a low-carbon and climate resilient future but that it would not take place over night, with natural gas remaining a significant element of Ireland's energy supply into the transition period as we moved towards an increased use of renewables, including wind and solar. I would also have spoken about the Celtic interconnector, which I hope will be operational by the middle of this decade. It will improve our energy security with another European country, giving us the capacity to power more than 450,000 homes. Subject to planning and so on, it will be built from 2022 onwards. The energy it carries will include some nuclear-generated power coming from France. A number of colleagues mentioned nuclear power. I am not here to advocate for it, but I have received correspondence about small, compact or minor nuclear reactors, depending on what one calls them.I had received correspondence regarding small nuclear reactors - compact or minor ones, depending on what you call them. Perhaps the Minister, Deputy Ryan, could comment on that.
In regard to the future of wind energy, I spoke about this in 2016, which is half a decade ago. You do not feel time going. I was delighted to see Fuinneamh Scéirde Teoranta awarded relevant status by the Department of the Environment, Climate and Communications in May 2020. This has since been acquired by the Macquarie Green Investment Group to build a 400 MW offshore windfarm off the Connemara coast. What are the timelines for such projects? I am not here to advocate on behalf of this new company, but obviously there is a need for this capacity. In regard to timelines on projects, what sort of consent process will it have to go through? Will there be the same issues that arise in all planning in this country at the moment? There is an absolute need in regard to energy security. Renewable energies are to be encouraged and are part of where we are at, particularly in relation to COP26 and all that has gone before it.
The strategic reliance on gas when required is prudent. It should not be seen as a failure that we still need gas. It could be argued it is a failure if we have a high number of blackouts. If that happens, we can blame previous Governments but it is always prudent to have that store and that capacity and to have a gas connection through the Moffat terminal in Scotland, which the Minister mentioned in hisopening contribution, to ensure that as we transition and as we see more offshore windfarms coming on stream, that security is provided and the threat of blackouts would recede. That is important. The potential in regard to becoming a net exporter of energy is something we aspire to and hopefully will be achieved, whether within a decade or two decades. As I said, it is half a decade since I spoke in regard to these matters as Minister of State at the Department of Communications, Climate Action and Environment with responsibility for natural resources. I talked about the Celtic interconnector and offshore energy but we still do not have offshore energy. It could be argued it will be another five years. Will some of these windfarms be on stream, besides the Arklow one? Will some of the western high potential generating windfarms be on stream and part of the national grid? Will we be exporting from them?
I thank the Minister, Deputy Ryan, for his attendance and look forward to his reply.
I welcome the Minister, Deputy Ryan, to the Seanad today. It is great to have him here to speak about security of our energy supply, which is so crucial. In his opening statement, the Minister spoke about some of the challenges we face, such as the closure of stations, power stations not coming online and the impact of geopolitics. Energy security is defined as the uninterrupted availability of energy sources at an affordable price.
In Ireland, as the Minister mentioned, the Commission for Regulation of Utilities, CRU, manages and monitors our energy and electricity supply, but Ireland is an energy importing economy. We rely on gas and oil imports to meet our energy needs and electricity is mainly from natural gas at the moment. We have increased our renewable energy, particularly wind energy supplies, but on the whole our electricity comes from natural gas. In the past few weeks the number of system alerts and warnings have surged. As the Minister mentioned, EirGrid has confirmed that Huntstown is now operational and that Whitegate in Cork is going to come online but we know that one of the UK-France interconnector cables went on fire. That has a huge impact and the UK has highlighted that it may not have enough energy, and so much of our energy is imported through our interconnector cables.
Last week the Financial Timespositively said that gas prices have tumbled by more than a fifth but they are still far in excess of prices last January. That has to do with geopolitics and with Russia and Gazprom.
If I bring it from the global and European to the local, the Minister mentioned previously that there may be an opportunity for some stations that have closed to support our energy shortages. I represent Roscommon and Galway and I am talking about Shannonbridge, which is less than 10 km from where I live, and Lanesborough. Can the Minister comment on future plans of the ESB for these stations?
Another question I have relates to the SEAI warmer home scheme, which I have recently dealt with and which it is excellent. Funding has been increased for SEAI energy retrofit schemes. More than €100 million has been allocated this year in budget 2021. This is an increase of more than €47 million. It is almost half of the total of the residential and community retrofit budget available to people suffering from energy poverty. The challenge we have is that the works are taking between 24 and 36 months. What are the plans? What goals does SEAI have to shorten that period of time for retrofitting?
Just transition is very important. In our area we have benefited from just transition schemes to support remote working but when it comes to retrofitting of homes, how are we going to ensure that our homes can be retrofitted within the next year? Can we reduce that timeline to say 12 months? Considering the budget has increased, what measures need to be taken?
The third question relates to the system amber alerts. IDA Ireland has commented that this is a serious concern, particularly for foreign direct investment coming into the country. In his opening statement, the Minister spoke about procedures relating to demand curtailment, and that would be to industry. In other words, homes, hospitals, public sector and schools are being prioritised for energy supply. How will that work? When the instruction is given to switch to onsite backup, how much advance notice is given? What plans have been put in place on that? Data centres have energy generators, or should have, that they can rely on, but how much of our other industry can do that? What areas is SEAI looking at?
On renewable energy, the climate action plan commits us to 51% reductions. As a spokesperson on research and innovation, I would like to highlight MaREI, the Science Foundation Ireland centre for energy, climate and marine research, headquartered in UCC with more than 200 researchers and 50 industry partners. Its area of research is energy policy and modelling and energy management. How does that feed into the current policies? As Senator Garvey mentioned, in regard to the Planning and Development (Solar Panels for Public Buildings, Schools, Homes and Other Premises) (Amendment) Bill 2021, at what stage is that? One of the key things we would like to see is the ability for individuals and businesses, SMEs and micro, to be able to generate electricity and feed it back into the grid and do so at a profit.
I thank the Minister for coming in today at this busy time. He has addressed many of the issues around the causes of the particular situation in which we found ourselves recently, so I will not address those issues. I would like to return to a couple of the issues raised and give my perspective, particularly in regard to data centres. It is very important to get the facts right. Data centres are not a bad thing but it is the energy and the source of the energy used in the data centres which is problematic. Unlike a piece of plastic that is created from fossil fuels, a data centre is as good as the energy that goes into it. The climate action committee heard that no service agreement has been signed with a data centre for a year with EirGrid. That should give people some confidence. There is a narrative that data centres are going in almost every week. Undoubtedly, there are many data centres that were already there. If we get it right, it can help us. That was very clear when EirGrid came before the committee because on the west coast of Ireland in particular, we need to find more industry in order to be able to use the energy, so that the homes around that can also use that energy. If we get it right, it could be a good thing, but we have to get it right and we cannot keep building them unless we get that piece right.I am given some confidence by EirGrid saying that it will come back to us with a plan over the next few weeks and I look forward to seeing that plan. I do not agree that it should involve telling the centres to produce their own energy in whatever way they wish. There should be more terms and conditions regarding it. We questioned EirGrid on that and the company took on board the concerns we expressed.
I regularly hear concerns expressed about the SEAI, some of which are valid. There is a backlog of people waiting to get their homes retrofitted. A lot of public representatives are getting calls about this, particularly in the west of Ireland, which does show that there is an appetite among people to invest because they know there will be a long-term return from doing so in terms of lowering their bills and having a more comfortable home. Again, we have been in government for a relatively short period but there has been huge investment in this area. The Minister, Deputy Harris, attended a meeting of the Oireachtas Joint Committee on Education, Further and Higher Education, Research, Innovation and Science today and the discussion was dominated by climate change. Every single Department knows that something needs to be done and understands that this is a crisis. We are all stepping up to the mark. I am given confidence by the Minister's opening remarks this evening. I wanted to put on record some of the things that have happened at the Oireachtas Joint Committee on Environment and Climate Action. The version of events at that committee has been slightly distorted and I wanted to set the record straight.
I will do my best to respond to all of the comments and questions raised in the discussion. I will start with three issues raised by Senator Garvey. She referred to the introduction of green loans for retrofitting, the ability to sell electricity back to the grid and amendments to planning regulations to allow for solar panels. I expect all three to begin within a short number of months. All three should be in place in the next three to four months. All three have a critical role to play and will be of benefit as part of the transition we need to make.
I must beg to differ with Senator Keogan. I am aware of the grid system in California. In fact, I did some work a few years ago on the issue and one of the interesting things in California is the lack of interconnection with neighbouring states. That is a real problem. Optimal grid design in the context of managing variable renewable power requires a level of interconnection and there is a real problem in California in that regard, among other problems. Senator Keogan provided some interesting information on the daily power generation mix in 2017 but even since then, the situation has changed significantly. The cost of battery technology and storage is plummeting, as is the cost of solar and wind generation but the cost of nuclear generation is rising. There are also huge uncertainties around it because it is so expensive and difficult to build. While it is true that we are importing nuclear power from France and Britain in the sense that we cannot differentiate between electrons produced by different generation methods, to go nuclear ourselves would be so expensive and so awkward within our system. I have never had a single person come to me with any serious intent to build a nuclear power plant here. Whatever about our legislation, there has not been a single instance that I can recall in 15 to 20 years working in this area where anyone in this country has seriously proposed that. Anyone making such a proposal would be deemed to be mad. The cost of offshore wind is coming down all the time, with auctions in neighbouring jurisdictions ranging between 40 and 50 cent per kilowatt hour. Bidding for nuclear in Britain, on the other hand, was index-linked at almost three times that level. Why would we go for a power supply that is almost three times more expensive, not to mention the other downsides to it? We differ in our views on this. I always enjoy the debates and conversations around nuclear power but to me it does not make economic sense in our situation.
Senator Dooley also touched on the issue of grid infrastructure. It is critical to bear in mind that the areas of the country where the grid is strong is where the opportunities for economic development will lie. Parts of our country have very weak grid infrastructure. As we all know, it is not easy to build grid infrastructure but Deputy Dooley's comment in that regard was appropriate. He asked if we could build offshore wind power sooner. All going well, we will set out a new climate action plan this Thursday and we will be aiming for somewhere in the region of 5 GW of offshore wind power by the end of this decade, with the potential for up to 30 GW from offshore renewables. We have been talking about this for quite some time and I believe we can deliver at least 5 GW by 2030 but it will be the latter part of this decade before it arrives. We will start with the first grid auction for offshore next year. It will take up to five years from that auction to construction because it will have to get through planning and get finance, as well as going through actual construction. We are talking about the middle to the end of this decade but it is absolutely doable. I do not think it can be done any quicker because we have to get the planning right, protect biodiversity and deal with some of the other concerns that have been raised.
When Senator McGahon started speaking I was in complete agreement with him. The best protection for consumers in this time of very high fossil fuel prices is, as he said, energy efficiency and renewables. However, I do not think nuclear energy is appropriate in our case because it would put up the price. It would further accentuate the problem because typically nuclear plants are very large and we would have to have significant back-up capacity in the event of a plant being closed down. What we need in an increasingly renewable system is flexible, variable supply but nuclear power is not flexible at all. People refer to small, marginal nuclear power plants but I have never seen one and do not know where they are in operation. Perhaps someone could show me a factory producing them. There is a lot of talk about that but I do not think it actually exists in reality or is likely to arrive within the next decade.
In response to Senator Boylan's contribution, I would tend to agree with Senator Pauline O'Reilly's view. There are real issues with data centres and there is absolutely no doubt about that. The increased demand is very significant and if that were to continue unabated, it would present real difficulties. Everything has to fit within the climate plan and data centres are no exception. They know that. They can help by varying demand depending on the balancing we need to do between supply and demand, by having back-up generation that can kick in when wind levels are low and by locating in areas where we do not have to build so much grid, thereby helping to balance the way in which the grid works. There is a variety of grid standards that we can use that will allow us to retain data centres. I am not in favour of a never-ending stream of data centres but neither am I in favour of a complete fatwaor an end to their use because they are a part of the wider economy which we need.
I agree with Senator Moynihan about the need to consider social justice, concern about rising prices as well as energy security and the importance of doing everything we can to make sure that element in the just transition is maintained. She spoke about offshore power coming ashore, with quality, well paid jobs being guaranteed for the supply industries that will service them and so on. I would go back again to the grid and to where the power exists. Where offshore power comes ashore is where the jobs will become available and where the industrial development will occur and accrue. The jobs will be well paid and secure because they will not be dependent on the international gas market or supply chain. We have this renewable resource which gives us a comparative competitive advantage. We live in one of the windiest parts of the planet and wind is one of the main, new, low-cost power sources. A lot of the analysis shows that in the context of where power comes ashore, distance does matter, particularly when we can create new hydrogen back-up supplies and industrial needs close by. Then the equation will start to work and jobs will follow in the locations where both offshore and onshore renewable energy is generated.
I agree with Senator Higgins about the cost of fossil fuels and the fact that the cost is too high if we lose the world. She spoke about EirGrid wanting to extend the use of fossil fuels.We should be careful on that because I do not think that EirGrid does want to extend the date. EirGrid, I understand, will come out next week with its shaping our electricity future plans, which will be of major historical importance for the direction of the economy. In its statements in the past two months, EirGrid has recognised that we will have to retain certain backup fossil fuel power supplies because we have a short supply. It is not that it wants to do that but to ensure we do not have power cuts. As soon as we get the open cycle gas backup generation that we need, we can balance the system. We will be using less gas in that. We have to have new open cycle gas flexible generation. However, this will only be used on a needs-be basis, when the wind is not blowing. While it will provide 2,000 MW of new power supply, it will not use further gas.
There is no intention to do that. I think 2025 was the closure date target under the emissions directive. Nobody is looking to extend the date. It is purely to get us through to a phase whereby we get a backup variable gas plant to give us cover.
I could not agree more with Senator Murphy on helping families in a tight corner. He referred to the increases to the living alone allowance, the qualified child payment and the fuel allowance. What is significant in the last two budgets is that in each instance we have been able to show, through independent analysis from the ESRI, that despite this environment of higher and increasing fuel prices, the social welfare increases protected those in the bottom four deciles from the increased prices they are experiencing. Every family has different circumstances. However, a large number of those on the lowest income got a net cash benefit. Using the carbon tax revenue to increase social welfare provisions is central strategy. The attractive thing about it is that it is stitched into law that the money will go back. Some 30% of it will go to social welfare increases, 55% will go to improvements in retrofitting and 15% will go to small farmers. That will all help families in a tight corner.
Senator Kyne is right that natural gas still has a role. The backup gas fleet we will need to complement renewable power will be key to having secure supplies in the next two decades. As I said, it will not operate most of the time. If we develop 5 GW of offshore wind, which tends to be more stable, 2.5 GW of solar and further interconnection with France and the UK, we will have more choices. However, we will need backup for that period, as well as for calm periods in the middle of winter. This summer, we saw slow periods of very little wind. We will need that gas, particularly for those periods.
The Senator mentioned the Sceirde Rocks offshore wind farm, one of seven projects we are dealing with because they have legacy consent, foreshore licensing consent and so on. They are in the first phase of offshore rounds. We expect them next year in an auction process. We do not know who will get through that process because it will depend on the auction. They will then have to get through planning and secure all the other consents. That will be first phase. The second phase will follow two or three years later with the next auction and there will then be a third phase.
Senator Boylan mentioned the Maritime Area Planning Bill, which will be critical in that process, particularly in the second phase and beyond the consenting process. The Senator is right that we have to provide biodiversity protection. We are in a biodiversity crisis and not just a climate crisis. We have to protect our marine environment in a co-ordinated way. It is critical that we get the maritime planning legislation through the Oireachtas as soon as we can. Even then, it will take us time to set up the maritime area regulatory authority, MARA, to issue the second phase consents. The first phase will be issued directly by my Department, pending the introduction of MARA.
Senator Dolan spoke about Shannonbridge and Lanesborough. Senator Dooley asked a question which I did not address. I apologise for running slightly over, but I would like to answer this out of respect to Senator Dooley. He asked if people were surprised that nobody had picked up on this shortfall. Yes, everyone was surprised. In the capacity statement two years ago, and in regulator statements, nobody had said this. I recall that ten years ago, EirGrid rightly said at the time that we need a load of backup open cycle gas plants. We have not delivered these since. It was only in the last year that the scale or nature of the problem arose. The auction process did not deliver. We had expected it to deliver for a whole variety of reasons. There was an underlying miscalculation whereby people did not see the need for that 2 GW of backup power. One of the consequences of this is that Shannonbridge, Lanesborough and other power locations with a grid connection, which often also have a platform, infrastructure and industrial expertise and capability, have potential. That is particularly the case in the midlands where there are real skills in areas such as voltage frequencies, stability and providing inertia and battery storage. Part of this energy revolution involves balancing variable supply and variable demand. Doing that and maintaining the frequency and stability of the grid are key. There are companies in the midlands that have real skills in how to provide this. Flywheel energy storage and other synchronistic converter technologies address the technical issue around inertia, voltage and frequency stability. The sites I described may have real potential in that regard.
A number of Senators suggested we need to further enhance or invest in the SEAI warmer homes scheme. It is not surprising that there is a long lead time for the scheme given that it is so attractive. However, we are looking at particular options for potential further funding for it. I hope to come back to the Seanad in the near future if we can get that to full fruition.
I will pick up on one point Senator Pauline O'Reilly said about getting this right. She is correct in what she said about data centres. A balance is needed between creating a stable, prosperous economy for our people and a sustainable low-carbon future. I will take the example of the data centres and the complex different things we could do. If we get this right, it will turn a negative into a positive. We will show we are good at this and become a place in which people will want to invest. We will be able to create stable employment for our people, which we need, because we will be getting it right. We will be decarbonising while still providing essential services.
The climate action plan will, I hope, be published on Friday. It will be an iteration of and will resemble in many ways the original plan from 2019 of the then Minister, Deputy Bruton. That plan was founded on the joint Oireachtas committee recommendations, which were, in turn, founded on the Citizens’ Assembly recommendations. We followed a process here. We took a climate approach based on all-party consensus and centred on the Oireachtas committee. The then Minister's plan came out of that and the forthcoming plan will be an evolution from that plan. It will be similar in many ways but more ambitious. There have been more learnings and developments since that can give us confidence that this is where we should go.
The climate action plan must, by law, change next year if we are not meeting our targets. This is the strength of the Climate Action and Low Carbon Development (Amendment) Act 2021 we now have. It will continue to evolve and iterate in getting it right in this complex balancing of energy security, environmental considerations and economic interests. The trilemma in energy policy is always how one gets it right. In that trilemma, the environment comes first in getting it right. Whereas one can change security and economic figures, one cannot change the physics of what we have to stop going into the atmosphere. That is a limit that is immutable in the sense that we have to listen to the science. That is the centre of getting it right. As regards the other variables then, we work around the environmental imperative and get it right in that way.
I thank the Minister for his time. I thank all the speakers for their contributions. I wish the Minister the best of luck with his onerous task in Scotland over the next couple of weeks. He has a lot of weight on his shoulders, as have our other leaders. Go n-éirí leat leis sin. When is it proposed to sit again?