Eamon Ryan (Dublin South, Green Party)
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Question 138: To ask the Minister for Communications, Marine and Natural Resources the reason for the failure to spend €5 million of the budget for sustainable energy in 2005 following on from the underspend of €15 million in 2004; and if he will make a statement on the matter. [27947/05]

Noel Dempsey (Meath, Fianna Fail)
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The economic and social infrastructure operational programme, ESIOP, runs from 2000 to 2006. Within the ESIOP a sustainable energy priority was agreed with part funding from the European Regional Development Fund and co-funding from Exchequer or other national sources.

The conditions agreed between the State and the EU require expenditure to be undertaken within two years of the original projection or the loss of the relevant European Regional Development Fund moneys. This is referred to as the N+2 rule. An amount of flexibility is built in to this rule and the national management authority can transfer funding from one priority or spending subhead to another with the agreement of the EU and stakeholders.

The sustainable energy priority comprises two measures dealing with energy conservation and with alternative energy. Energy conservation is on target to deliver its investment. The major part of the second measure is the grid upgrade development programme which was intended to fund the capital intensive portion of planned connections, thereby ensuring projects did not fail due to the high capital cost of a connection offer.

Getting new renewable energy powered electricity generating plants connected has been a slower and more difficult task than was foreseen when the grid upgrade development programme was put in place. In December 2003 the Commission for Energy Regulation authorised a moratorium on new connection offers to new undispatchable plants due to concerns about overall system stability of the electricity network. This decision and subsequent decisions of the network operators meant no new connection offers for renewable energy powered plants were confirmed between December 2003 and early 2005.

A consequence of an absence of new connection offers in this period was that the grid upgrade development programme could not be activated to fund the shared connection asset element of any such confirmed connection offer. Nevertheless the installed capacity is approximately 400 MW-equivalent now and is expected to reach 600 MW-equivalent under the current support programme.

The slower than expected delivery of connections following the moratorium and subsequent decisions of the network operators, has made it prudent to reallocate €5 million from this support measure this year to avoid Ireland losing the benefit of these Structural Funds under the N+2 rule. However, the grid upgrade development programme has recommenced and based on current projects on identified demand for projects with a firm or planned connection offer, its purpose and effect will not be in any way diminished by this reallocation. The plan is that as connecting parties are charged for access to the shared asset funding will be reinvested in further projects.