Noel Harrington (Cork South West, Fine Gael)
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Question 211: To ask the Minister for Communications, Energy and Natural Resources if he is satisfied that a fair and equitable market will be created between existing wind farms and renewable energy feed-in tariff-supported wind farms; and if he will make a statement on the matter. [21622/11]

Noel Harrington (Cork South West, Fine Gael)
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Question 212: To ask the Minister for Communications, Energy and Natural Resources the cost per unit of the PSO levy to finance the wind renewable energy feed-in tariff; if this will be a higher or lower percentage than in our EU partner countries; and if he will make a statement on the matter. [21623/11]

Noel Harrington (Cork South West, Fine Gael)
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Question 213: To ask the Minister for Communications, Energy and Natural Resources if he is satisfied that the wind renewable energy feed-in tariff is in the best interests of and benefit of the Irish electricity consumer, who pays all the costs, but in the event of surplus income, this is returned to the electricity companies and not refunded to the consumer; and if he will make a statement on the matter. [21624/11]

Pat Rabbitte (Dublin South West, Labour)
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I propose to take Questions Nos. 211 to 213, inclusive, together.

Ireland is obliged under the EU 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. The scheme design 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.

In January 2009, the Commission for Energy Regulation (CER) and the Northern Ireland Authority for Energy Regulation (NIAER) published a study entitled "Impact of High Levels of Wind Penetration in 2020 on the Single Electricity Market (SEM)". The study finds that increasing the level of wind generation on the Irish electricity system may have significant benefits for Irish energy consumers, as well as environmental and economic benefits. One of the findings of the study is that the design of the Single Electricity Market (SEM) in Ireland is robust enough to allow for the entry of a significant amount of new wind generation in the coming years. In that context it is for the SEM Committee to address in its market rules the challenge of ensuring that all generators are reasonably and fairly remunerated in the market while ensuring the most economic prices possible for electricity consumers.

In Feb 2011, EirGrid and the Sustainable Energy Authority of Ireland published a study entitled "Impact of Wind Generation on Wholesale Electricity Costs in 2011". Key Messages from that study show that the wind generation expected in 2011 will reduce Ireland's wholesale market cost of electricity by around €74 million. This reduction in the wholesale market cost of electricity is approximately equivalent to the sum of Public Service Obligation (PSO) costs, estimated as €50 million, and the increased constraint costs incurred, due to wind in 2011. The total cost of generation is the sum of the wholesale cost of electricity, the PSO cost of wind and the dispatch constraint costs. The total cost does not increase with the inclusion of the 2011 wind capacity.