Éamon Ó Cuív (Galway West, Fianna Fail)
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Question 12: To ask the Minister for Communications, Energy and Natural Resources if he is satisfied that the Government will reach its renewable electricity targets for 2020 and if he believes that the recent decision on curtailment by the Single Electricity Market Committee in relation to curtailment will have any effect on this; and if he will make a statement on the matter. [12852/12]

Pat Rabbitte (Dublin South West, Labour)
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The Government fully endorses the importance of the contribution of wind energy to energy security and environmental sustainability. Under the EU Renewable Energy Directive, Ireland has a legally binding renewable energy target of 16% by 2020. The National Renewable Energy Action Plan sets out the strategies for meeting the overall target through delivering 40% in the electricity sector, 10% in the transport sector and 12% in the heat sector.

The latest projections from the Sustainable Energy Authority of Ireland (SEAI) are that approximately 4,000 MW of renewable generation capacity will be required to achieve the electricity target, taking into account also delivery of national energy efficiency targets. At present, there are approximately 1,900 MW of renewable generation built and fully operational. It is necessary to double the amount of renewable generation on the system in order to meet the 2020 target. I am confident that Ireland can meet its 2020 target. However, given the scale of the necessary build-out required, any factor that potentially compromises the level or pace of wind energy development is a matter of serious concern.

Under the existing arrangements, renewable projects currently receive payments from the wholesale electricity market in respect of both "constraints" and "curtailments". Constraints arise where a transmission or distribution line is down for maintenance or due to some local fault. All generation that uses the line must be "constrained" until such time as the line is operational again. Curtailment typically arises where there is high wind at times of low system demand such as the middle of the night. In this scenario wind projects have to be curtailed, that is turned down or off, because the system cannot handle, and does not need, the amount of generation at that particular time.

The Single Electricity Market (SEM) Committee, comprising the energy Regulators North and South and two Independent Members, is statutorily responsible for the regulation and oversight of the single electricity market. The SEM Committee has been considering for some considerable time the future treatment of constraint and curtailment. Following a period of consultation the SEM Committee published its decision on 21 December last in relation to both constraint and curtailment. The terms of the Curtailment Decision took most industry stakeholders by surprise. In the case of constraints, the Committee decided that wind projects with "firm access" (that is fully connected to the system) will receive the market compensation. Projects without firm access as yet will be constrained down first and will not receive market compensation. I understand that this aspect of the decision has not been widely disputed by the industry and was expected.

However despite proposing in consultation that the Committee was minded to apply the curtailment rules pro rata to both existing and new build projects, the Committee's Decision of 21 December decided that grandfathering rights would also apply in the curtailment scenario. New projects until such time as they achieve firm grid access will be curtailed first and will not receive market compensation. By way of background, it should be noted that most wind farms connect to the grid system a few years in advance of a firm connection date. The grandfathering decision, as it stands, would clearly favour existing generation units deemed to have what is termed "firm connection" status. But it places the entire burden of curtailed output on new wind farms pending fully firm connection status.

Modelling done by industry indicates that non-firm wind farms could be affected by being turned down to a significant degree, such that the financial viability of the projects would be threatened. The industry's view is that the decision could slow down new projects by years, putting achievement of the national 2020 target in jeopardy. My Department has asked for a formal analysis of the impact of this decision from the Commission for Energy Regulation and also separately from EirGrid as the Market Operator and Transmission System Operator. The SEAI is providing its own assessment of this decision.

Over the last 2 months my Department has met the Irish Wind Energy Association and individual companies to hear their concerns at first hand. I welcome the fact that the SEM Committee invited industry representative associations to present their concerns and analysis to the members on 23 February. Given the adverse reaction of most of the industry to the decision of the Committee, it was important that industry were given the opportunity to set out their position and bring additional information to the SEM Committee. I am advised that the SEM Committee is now reflecting on those presentations by industry and an outcome to their deliberations is expected over the coming weeks.