Written answers

Tuesday, 19 July 2011

Department of Communications, Energy and Natural Resources

Alternative Energy Projects

10:00 pm

Photo of Noel HarringtonNoel Harrington (Cork South West, Fine Gael)
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Question 326: To ask the Minister for Communications, Energy and Natural Resources his plans to extend the wind renewable energy feed-in tariff; and his views on whether this scheme is designed with the best interests of the electricity consumer in mind; and if he will make a statement on the matter. [21352/11]

Photo of Noel HarringtonNoel Harrington (Cork South West, Fine Gael)
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Question 327: To ask the Minister for Communications, Energy and Natural Resources if he will state, regarding the wind renewable energy feed-in tariff, the reason there is no clawback for the consumer if the market price of electricity exceeds the floor price; and if he will make a statement on the matter. [21353/11]

Photo of Pat RabbittePat Rabbitte (Minister, Department of Communications, Energy and Natural Resources; Dublin South West, Labour)
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I propose to take Questions Nos. 326 and 327 together.

Ireland is bound under the Renewable Energy Directive to achieve a binding target of 16% of energy consumption from renewable sources by 2020, a five fold increase on 2005. As set out in the National Renewable Energy Action Plan (NREAP), the bulk of Ireland's target will be met by the electricity sector. 40% of electricity consumption will come from renewable sources by 2020, and 36% of this will be from wind - the highest proportion in any Member State of the EU. While we have made excellent progress in the electricity sector in recent years, achieving a threefold increase in our electricity consumption from wind over the course of this decade will be challenging.

It is important to maintain a stable and predictable policy framework with respect to the support schemes for renewable energy and apply a cautious approach when considering measures affecting existing investments.

My Department has applied for State Aid clearance to continue to offer REFIT for Gate 3 projects. This application is currently with the European Commission for decision. REFIT operates by providing developers with a guaranteed floor price over a 15-year period. REFIT was designed with no claw back for the consumer when the market price of electricity exceeds the floor price, as this was deemed necessary to incentivise sufficient new renewable development. Prior to finalisation of the new REFIT scheme I will be reviewing the arrangements comprehensively with my Department.

Financial institutions are unlikely to be willing to lend substantial amounts to developers to construct new renewable projects if a minimum price cannot be guaranteed, with significant negative implications for project build out, and ultimately for the achievement of our binding EU 2020 renewable targets and to ensure security of supply, improved diversity of energy sources and lower dependence on imported fossil fuels and their price volatility.

Photo of Noel HarringtonNoel Harrington (Cork South West, Fine Gael)
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Question 328: To ask the Minister for Communications, Energy and Natural Resources the reasons electricity suppliers are being guaranteed a 15% balancing payment for entering into the wind renewable energy feed-in tariff scheme power purchase agreement; his views on whether this is in the best interests of the electricity consumer; and if he will make a statement on the matter. [21354/11]

Photo of Pat RabbittePat Rabbitte (Minister, Department of Communications, Energy and Natural Resources; Dublin South West, Labour)
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The Renewable Energy Feed-in Tariff (REFIT) is designed to incentivise renewable energy generators and suppliers to participate in the wholesale electricity market. This market calculates an open market price every half hour and is therefore is very volatile; thus, new projects would find it virtually impossible to source finance without a predictable floor income.

Under the REFIT scheme, generators enter into a 15 year power purchase agreement with suppliers. Typically, suppliers pay generators for their output on a weekly or monthly basis but only receive the final metered REFIT payment at the end of the following market year. While suppliers receive a REFIT payment for these units in the appropriate market year, this is based on an average market price estimated in advance and as such is subject to forecast error.

The payment to suppliers is corrected two years later in the R-Factor correction administered by the Commission for Energy Regulation. On a system with a large proportion of variable, intermittent generation, such as Ireland's, the market revenue received by a supplier may deviate substantially between trading periods.

Because of the nature of the market structure, suppliers are almost inevitably exposed to prolonged periods where they are required to pay generators a support price in excess of the market price. In other words, they have to pay generators for the electricity produced, but have to wait a significant period before being themselves remunerated. Because of this, and because of the unpredictable and volatile nature of renewable electricity production, a cost is effectively imposed on them for managing the output of the REFIT generators in the market. This 'balancing' cost is recognised under the terms of REFIT and is paid to suppliers at a fixed rate.

The application for State Aid approval for REFIT extension, which is currently with the EU Commission, has altered the operation of the balancing payment in two ways. It has fixed it at its current rate of 0.99 cent per Kw/h and it has included it in the REFIT payment calculations so that in the case of high prices, no REFIT payment or balancing payment is made.

Photo of Noel HarringtonNoel Harrington (Cork South West, Fine Gael)
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Question 329: To ask the Minister for Communications, Energy and Natural Resources the forecasted capacity of wind-generated electricity for each of the next ten years; the percentage that is of projected annual consumption; when he expects us to be a net annual exporter of electricity; and if he will make a statement on the matter. [21355/11]

Photo of Pat RabbittePat Rabbitte (Minister, Department of Communications, Energy and Natural Resources; Dublin South West, Labour)
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Table 10 below from Ireland's National Renewable Energy Action Plan (NREAP) submitted to the European Commission in 2010 sets out the projected electricity generation from renewable sources in the decade to 2020. Two versions of Table 10 were included in the NREAP. One of these was modelled by the Sustainable Energy Authority of Ireland (SEAI) using their electricity and biomass models. The other is a non-modelled "export" scenario.

An explanation of the modelled export scenario is provided at the heading of the table. The 'Export Scenario' table set out below is not a modelled scenario. The table illustrates Ireland's potential to become an exporter of Electricity from Renewable Energy Sources (RES-E) to other EU Member States between now and 2020, were the appropriate conditions (economic, technical and environmental) to develop to allow this to happen and subject to a comprehensive cost-benefit analysis. Developing this level of electricity from renewable sources is currently limited technically by grid infrastructure. In order for this export scenario to be realised, significant further infrastructural investment in the period to 2020 would be needed, including construction of additional interconnectors and offshore grid and deep reinforcement onshore. The potential for this level of development in the export scenario arises from: offshore wind projects that currently have either foreshore leases or a grid connection offer; onshore wind projects already built, contracted with the Transmission System Operator (TSO) or due to receive a grid connection offer in Gate 3; potential for geothermal, pumped storage and solar and Ireland's 500MW 2020 ocean (wave and tidal) target.

In the period to 2020, the only way to trade in renewable energy is under the terms of the co-operation mechanisms set out in the EU Renewable Energy Directive 2009/28/EC. I attended the British Irish Council meeting with the Taoiseach in London in June, which focused on the considerable potential for close co-operation across these islands for the development and trading of renewable energy (under the co-operation mechanisms provided for in the Renewable Energy Directive). Ireland will be working with the UK, Northern Ireland and Scotland to deliver on this shared opportunity and challenge.

Table 10 Modelled Scenario

Estimation of total contribution (installed capacity, gross electricity generation) expected from each renewable energy technology in Ireland to meet the binding 2020 targets and the indicative interim trajectory for the share of energy from renewable resources in electricity 2010-2014

The data in this modelled scenario is influenced of necessity to a significant degree by planned Gate 3 generation. Technologies in the R&D category (e.g. wave and tidal) are not included in the Gate. However as noted at 4.2.6 (b), CER 09/099 is a new policy which sets out how small, renewable, low carbon generation can access the grid outside the Gate 3 process. Possibilities using CER 09/099 are reflected only to a limited degree in the modelled scenario, hence the low figures for certain technologies. Reports on the NREAP will be submitted on a biennial basis and the modelled scenario can be updated at that time to reflect technology and other developments that may occur in the interim. In the meantime, the non modelled Export scenario version of Table 10 which follows offers an alternative development trajectory, without the constraints built into the modelled scenario.

200520102011201220132014
MWGWhMWGWhMWGWhMWGWhMWGWhMWGWh
Hydro:234760234701234703234701234698234720
<1MW1818181818181MW-10MW202020202020>10MW196196196196196196
Of which is pumping000000000000
Geothermal000000000000
Solar:000000000000
photovoltaic
Concentrated solar power
Tide, Wave, Ocean000000000000
Wind:14941,5882,0884,8172,3255,9652,3706,1892,7947,4782,9077,756
Onshore4692,0524,7012,2895,8482,3346,0732,5426,6632,6566,942
offshore25361163611636117252815252814
Biomass:20116773478139384479131839134864
Solid2815281973221586951972544
biogas181086232062320623216232062320
Bioliquids000000000000
Total7482,4652,3995,8662,6407,0602,6887,3693,1599,0143,2759,340
Of which CHP213537642747751856
201520162017201820192020
MWGWhMWGWhMWGWhMWGWhMWGWhMWGWh
Hydro:234714234705234705234705234692234701
<1MW1818181818181MW-10MW202020202020>10MW196196196196196196
Of which is pumping000000000000
Geothermal000000000000
Solar:000000000000
photovoltaic000000000000
Concentrated solar power000000000000
Tide, Wave, Ocean0000134225813812475230
Wind:3,1518,3393,1728,4043,3678,9853,85810,2353,88710,2584,64911,970
onshore2,8997,5252,9207,5872,9517,6393,3298,5343,3548,5534,09410,228
offshore2528142528174161,3455291,7025331,7055551,742
Biomass:1378871409141439361469601509841531,006
Solid755677859381616846408866491687
biogas623206232162320623206232062319
Bioliquids000000000000
Total3,5229,9393,54610,0233,75710,6684,26311,9824,30912,0585,11113,909
Of which CHP961965107010708056180561

1Aggregated wind data only available - breakdown in GWh between onshore and offshore in 2005 unavailable

Table 10 Non-Modelled 'Export Scenario'

Estimation of total contribution (installed capacity, gross electricity generation) expected from each renewable energy technology in Ireland to meet the binding 2020 targets and the indicative interim trajectory for the share of energy from renewable resources in electricity 2010-2014

The 'Export Scenario' table set out below is not a modelled scenario. The table illustrates Ireland's potential to become an exporter of RES-E to other EU Member States between now and 2020, were the appropriate conditions (economic, technical and environmental) to develop to allow this to happen and subject to a comprehensive cost-benefit analysis. Developing this level of electricity from renewable sources is currently limited technically by grid infrastructure. In order for this export scenario to be realised, significant further infrastructural investment in the period to 2020 would be needed, including build of additional interconnectors and offshore grid and deep reinforcement onshore. The potential for this level of development in the export scenario arises from: offshore wind projects that currently have either foreshore leases or a grid connection offer; onshore wind projects already built, contracted with the TSO or due to receive a grid connection offer in Gate 3; potential for geothermal, pumped storage and solar and Ireland's 500MW 2020 ocean (wave and tidal) target.

200520102011201220132014
MWGWhMWGWhMWGWhMWGWhMWGWhMWGWh
Hydro:234760234760234760234760234760234760
<1MW1818181818181MW-10MW202020202020>10MW196196196196196196
Of which is pumping0000000
Geothermal000000000000
Solar:000000000000
photovoltaic000000000000
Concentrated solar power
Tide, Wave, Ocean000000000000
Wind:24941,5882,0885,5042,3256,1262,3706,2442,8897,7033,0538,133
Onshore46915882,0525,3932,2896,0162,3346,1332,6376,9312,8017,360
offshore250361103611036110252772252772
Biomass:20128825031146981468931771,0882091,283
Total7482,4762,4046,7672,6737,5842,7507,8973,3009,5513,49610,176
201520162017201820192020
MWGWhMWGWhMWGWhMWGWhMWGWhMWGWh
Hydro:234760234760234760239777259842284923
<1MW1818181818181MW-10MW202020202020>10MW196196196196196196
Of which is pumping00052550
Geothermal000000535535535
Solar:00132538411513
photovoltaic0132538411513
Concentrated solar power
Tide, Wave, Ocean00001253832256903259965001,533
Wind:3,6919,9374,00910,8994,57912,6255,57515,4405,90616,4387,14519,832
onshore3,1528,2833,1828,3633,2278,4803,7739,9153,81010,0124,73712,449
offshore5391,6548272,5351,3524,1451,8025,5252,0966,4272,4087,383
Biomass:2411,4782731,6733051,8683362,0633682,2584002,453
Total4,16612,1754,51713,3355,24515,6416,38319,0136,86720,5808,33924,789
20102011201220132014201520162017201820192020
Surplus for cooperation mechanisim (%)n/a2%2%2%2%3%3%3%3%4%6.6%

2Aggregated wind data only available - breakdown in GWh between onshore and offshore in 2005 unavailable

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