Wednesday, 17 December 2003
Dáil Eireann Debate
24. Mr. Coveney asked the Minister for Communications, Marine and Natural Resources if he will make a statement on the Government's strategy to develop renewable energy here, making specific reference to a decision by the Commission for Energy Regulation not to allow further national electricity grid connections for wind farm projects in 2003 and plans for increased interconnection capacity with the British electricity grid. [31607/03]
25. Mr. Broughan asked the Minister for Communications, Marine and Natural Resources the implications for Government energy policy and the Government's target of producing 12% of electricity generation from renewable sources of the decision of the electricity regulator to prevent new wind farms from connecting to the electricity system; his views on the contention of the ESB's national grid that there are technical issues which need to be resolved before further wind energy connections can be made to the grid; and if he will make a statement on the matter. [31425/03]
26. Mr. Eamon Ryan asked the Minister for Communications, Marine and Natural Resources the legislative, regulatory or administrative changes which have been put in place in his Department to effect the transposition of the EU renewables directive which was due by 17 October 2003; and the way in which the decision of the regulator to put a temporary block on new wind connection contracts accords with the requirement in the renewables directive that the State authorities take all necessary measures to guarantee transmission of renewables on the grid. [31547/03]
On 3 December last, the Commission for Energy Regulation, CER, decided as an interim measure that the electricity network operators, ESB and ESB Networks, are not required to offer new binding connection offers for wind farms before the end of the year. There is no block on new connections where offers are in place. In this matter the CER was exercising its exclusive competence under section 34 of the Electricity Regulation Act 1999. The Minister has no statutory authority to intervene. The CER was acting in response to concerns raised on the part of the grid operator about system stability and reliability.
However, in the medium to long-term the decision could potentially impact on the Government's demanding targets to increase the contribution from renewable energy technologies in electricity production and is, therefore, being monitored by the Department and Sustainable Energy Ireland. The CER has published the relevant papers relating to the decision on its website.
The factual position set out in those documents is that the decision is only valid to the end of the year and there are new wind powered projects amounting to 619 MW with binding offers which are not affected by the decision. To put this capacity in context, if all the projects with binding offers proceed, the amount of wind powered capacity on the network will more than quadruple from the documented 166 MW currently connected. It is misleading to imply, as some questions seem to do, that the CER's decision will stop further connections to the electricity network.
Wind energy technology has an important role to play in meeting our national targets for renewable energy technologies. However, because wind is intermittent and there is no economically viable means of storing the energy as a fuel source or storing the electricity produced, it cannot be solely relied upon to deliver electricity in response to customer demand. Under the national support programme operated to date, wind powered plants have been allowed, in effect, to self dispatch. In other words, if the wind is blowing, the networks are required to accept, as a priority, the electricity generated irrespective of overall customer demand at the time. This was justified and possible because of the relatively low levels of wind powered plant connected to the networks and it allowed wind generated electricity producers to maximise revenue earnings and ensure the financial viability of such projects.
An independent study commissioned by the CER and Ofreg, its counterpart in Northern Ireland, estimates that, if self dispatch is maintained, the amount of wind powered plant which could be accepted at selected transmission system grid supply points in Ireland by 2005 is 790 MW. The published data on existing wind powered plants and binding connection offers to new wind farms is at 775 MW.
I have no basis to repudiate or challenge Garrad Hassan, the wind energy consultants of international repute who established the 790 MW threshold. As part of the decision, the CER requested ESB National Grid to conduct a public forum to give all interested parties an opportunity to submit their views on the situation before a final decision is issued by the CER. The public forum was held this morning.
The current renewable energy target as published in the Green Paper on sustainable energy is to add an additional 500 MW of new renewable energy-based electricity generating capacity to the network by 2005, to be built independently in the fully liberalised green market or with support under the AER programme. The Minister has already announced that, subject to State aid clearance for the increases proposed, it is intended to award an additional 140 MW for onshore projects, 50 MW for offshore projects; 28 MW for a biomass-fed combined heat and power plant. The allocation of an additional 140 MW is designed to better ensure the 500 MW target will be delivered at a minimum, even if some selected projects fail to proceed. It is a matter for each project developer to secure a connection offer under the rules prevailing at the time.
However, there are binding connection offers in place of 619 MW for wind farms alone at this time which is a positive indicator that the 500 MW minimum target from all technologies will be delivered or surpassed. Following the completion of the selection process in the current support programme, AER 6, it is proposed to publish before Christmas a consultation document on future targets and future support mechanisms for renewable energy technologies. It is therefore premature to speculate on future policy initiatives until all interested parties have had an opportunity to respond to the consultation document and those responses are considered.
The technical feasibility of an Ireland-Wales electricity interconnector was confirmed by an initial limited feasibility study in 2002 undertaken by ESB National Grid and National Grid UK. The cost benefit analysis published by the CER in June 2003 confirmed the benefits of such interconnection in terms of adding reserve margin, supply security and possible assistance to the operating economics of wind powered generation.
The case for progressing an east-west interconnector is strong and discussions are continuing with CER as to how its development can be advanced as a priority. However, I foresee an ongoing future programme to support renewable energy technologies at the national level continuing in parallel with that process, commencing with the consultation document to be published before Christmas.
The EU renewables directive requires Ireland to increase consumption from renewable sources to 13.2% of total electricity consumption by 2010, to provide priority grid access for renewable energy technologies and to ensure grid costs to renewable energy operators are objective. The existing large hydro facility together with the current AER support programme and activity in the liberalised green market are well capable of delivering the majority of the 13.2% target. Additional steps which will be taken in the coming year following consultations with all interested parties will ensure the overall target is delivered if not exceeded.
The Electricity Regulation Act 1999 accelerated the liberalisation of the national green electricity market and preceded the renewables directive of 2001. It established administrative procedures to licence green electricity operators and established an appeals procedure which would also be required by the renewables directive. The Act also established the legal framework for the development of administrative procedures to provide objective costs and network access for green electricity generators. The provisions in the directive on grid systems issues state, “Without prejudice to the maintenance of the reliability and safety of the grid. . . . .” The decision of the CER is therefore well within the scope of a predictable concern recognised in the directive.
In addition to these requirements, member states are also required to publish a national report and to submit a report on compliance with the requirements of the directive to the European Commission during 2003. The report to the Commission has been dispatched. It is proposed to publish the national report simultaneously with the consultation document on future programmes to support renewable energy technologies in the coming days. This arrangement will provide a better context for both documents.
Without intruding into the operational function of the network operators or the regulatory independence of the CER, I am satisfied that, if all parties proceed diligently and in good faith, the moratorium on new connection offers in place will be seen in hindsight as a valuable step in developing the stable regulatory environment necessary for new proposed wind powered plants.
Mr. Coveney: That was a long answer and I hope we will be allowed some latitude in posing supplementaries, particularly as three priority questions are being taken together. Who decides on energy policy? As far as I can see, whenever we discuss energy policy the Minister of State seems to outline the policy as set by the CER. He appears to be little more than a spectator when it comes to renewable energy policy and issues concerning grid capacity.
Why have we not seen the promised consultation process on the post-AER 6 strategy? The process was promised last May by the Minister, Deputy Dermot Ahern, who said it would happen during the summer, yet we still have not seen it. There has been little or no consultation with the industry, and the consortia planning to build wind farms across the country have been left out in the cold since then.
Since my question concerns more than wind energy, will the Minister of State outline what other renewable energy sources the Government plans to target for support in future? How does he intend to provide that support? Will he comment on whether he thinks it is a slap in the face for the wind energy sector to announce, without prior notice, that all grid connection contracts are being stopped until the end of this year? Will he confirm that the amount of wind-powered capacity on the grid is only 166 megawatts? Even though the existing arrangements for connection that have been agreed would, if developed, produce 700 megawatts, will the Minister of State acknowledge that process may take up to two years to achieve? If that is the case, why are we sending out all the wrong signals and slowing down the momentum that has built up behind the development of wind power generation? A negative signal has been sent to the industry that we are stopping any new connections to the grid.
Are any successful AER 6 candidates currently being prevented from getting connection agreements with Eirgrid because of the moratorium in place? If so, what are the potential consequences for those projects? If they have been given a contract by the Department, yet are now being prevented from connecting to the grid and are therefore not fulfilling the contract, what will happen to those consortia or individuals?
I recognise that there are technical difficulties and this has been confirmed by independent reports. Anyone who says we can produce endless amounts of wind power for the national grid is being naive. However, the report to which the Minister of State referred also stated that if we can overcome certain technical difficulties through investment, we could provide more than 750 megawatts quite comfortably. What is the Department doing to overcome those technical difficulties so that in future we will have well over 1,000 megawatts coming on to the national grid?
At the moment, the CER, wind energy groups, Sustainable Energy Ireland, Eirgrid, the ESB and the Department are all in consultation with each other. The forum held this morning is also very welcome. Will the Minister of State drive this process forward by providing political direction where necessary, as was done to a certain extent for broadband? This would ensure that the provision of significant quantities of renewable energy will become a reality. Without that political drive it will not happen.
What capacity will the so-called east-west interconnector between Wicklow and Wales have? When does the Minister of State envisage it will happen and who will pay for it? I contend that the State should pay for, run and own it. Will the Minister of State acknowledge that the only true way for Ireland to achieve its full potential for wind and other renewable energy is to link up with the British and European grids? Given our competitive advantage from natural wind resources, Ireland could supply many megawatts of power to Britain and, eventually, to Europe.
Mr. Browne: The consultation document will be available this week and will take into account the issues that have arisen over the past couple of weeks. As regards alternatives to wind energy, the biomass strategy group – which has been established in my Department, comprising the industry, Sustainable Energy Ireland, the Department itself, and various sectors of other Departments – had its first meeting last month and expects to produce a report next year.
With regard to the decision taken by the regulator, it is of course up to the Department to drive policy. However, the regulator is the independent person appointed to deal with such issues and it would be remiss of the Department and the Minister not to take into account the decisions the regulator has taken in this regard. I accept what the Deputy said, that people who have received planning permission and had aspirations to connect to the grid will be disappointed in the short-term. The regulator has made it quite clear, however, that there will be a pause until the end of December, and then the issues will be re-examined.
I can inform the House that the feedback from this morning's meeting of the consultation forum, which was run by Eirgrid, recognised that there are serious technical problems. The industry, the Department and the wind turbine suppliers need to work together to deal with these problems. Storage is one of the major issues that came up for discussion. Given the small scale of wind energy produced here, it is not currently viable to provide storage capacity. In America, they are investing approximately $27 billion on hydrogen fuel research to deal with this matter. One can therefore see the enormity of the storage problem and the financial implications of dealing with it.
Deputy Coveney also asked about approved AER 6 candidates that may not get connection agreements, and he is factually correct. There may be some people who have been approved under AER 6 but do not yet have a contract with the CER. They will have a difficulty, but this morning the forum examined how this could be overcome. Both the Minister and I have asked our officials to see how the matter can be dealt with. The regulator has made a decision and he is determined, as is the Department, to deal with the technical problems before us. The Deputy can rest assured that the target of 500 MW set down by the Minister will be achieved with the existing contracts.
Mr. Broughan: The problem is that we cannot rest assured. We know there will be a shortfall of approximately 1,200 MW by 2007 in our general energy output. We have had a cumbersome and unfair system, through the AER process, to encourage wind generation but in terms of the outlook, winter after winter we import temporary generators to keep the lights on. I have great respect for the Minister of State, Deputy Browne, but it is regrettable that the senior Minister is not here to answer questions or take important legislation.
Mr. Broughan: The specific issue I raised in this question concerns the technical measures. Did we all not know years ago, including the Commission for Energy Regulation and Mr. Reeves, that there were technical issues to be resolved in terms of wind power? I have before me the letter and the accompany report from ESB National Grid which highlights the key issue of the grid code. Perhaps the Minister of State can confirm that Derrybrien and King's Mountain got derogations from the potential grid code but the report lists issue after issue which must be addressed because of the nature of wind generation, for example, the fault ride through, the frequency control and regulation, the voltage control and regulation, the signalling, communications and dispatch and the applicable provisions for distribution connections. We were only thinking about this for mid-2004 and therefore we tried to call on-stream, in a very cumbersome way, 700 MW of wind power but we had no grid code under which this wind power would be fed into the national grid. That is gravely unfair to the promoters of wind power who have tried to move our country, under the Kyoto targets, to a greener form of energy to allow sustainable economic development.
What does the Minister of State intend to do as a matter of urgency because this is a matter of policy? It is not just a matter for the regulator. It is for those of us in this House and particularly the Minister of State and the Minister, Deputy Dermot Ahern. What do they intend to do about addressing these technical matters and at least making people aware that the grid code exists and that all these issues must be addressed if we are to have stability of supply, given that we could be going into the next general election with the lights flickering or going out? That would be another disaster from this disastrous Government.
Mr. Browne: On the technical aspects, ESB National Grid argued that because wind is an intermittent energy source, the amount connected can impact adversely on system stability. That argument has been made previously. It is nothing new. It has argued that the limit should be about 400 to 500 MW. It has allowed a capacity, including connected capacity and binding connection offers, to rise close to the independent consultants' recommendation of 790 MW before intervening.
Mr. Browne: Denmark is connected to a number of different grids – Germany and Scandinavia – and has a much wider base to deal with. That is the reason Denmark has been so successful. We do not have those types of connection opportunities.
Mr. Browne: We are now dealing with a situation that has arisen, decided upon by the regulator, and we now have to deal with that problem. All sections of this industry have accepted, and they accepted it again this morning in the forum, that there are technical problems which have to be addressed and that the only way they can be dealt with is by the industry, the suppliers and the Department working together. The Deputies can rest assured that with the existing contracts and the connections agreed, we will reach the targets laid down by independent consultants, not by us.
Mr. Eamon Ryan: Will the Minister of State agree it was deeply embarrassing for his senior ministerial colleague that on the day he was trumpeting the budget provisions for the development of renewable energy and that we were looking at a new dawn with the expansion of the Irish renewable energy industry, at the same time his press release was put through his fax machine, there was another one coming in the other direction from the regulator and from Eirgrid, both State appointed bodies, to the effect that no more connections would be made in the renewable energy sector because we could not handle what was already on the table? Was that not an incredible example of the Minister responsible for this area not having the faintest idea what was going on in the area under his control?
I will give four brief examples of where the Minister might start intervening and casting his eye on the whole energy area. First, in the broadband area we heard him talk the other day about a failure of the market and that he had to intervene to effectively create an alternative market. Fair play to him, but we have a clear disaster in the energy area because of our inability to develop renewable energy. A country with the best wind energy resources in Europe is the least developed in terms of exploitation of those resources.
Does the Minister intend to take up the independent Garrad Hassan report he referred to earlier and will he point out to the regulator and to Eirgrid that, according to page 85 of the report, the international expert believes we can take up to 2,000 MW of wind power before curtailment starts to be of any significance? The international expert in this field believes we can take at least up to 2,000 MW before we run into any difficulties in terms of curtailment of wind power. Will the Minister be instructing the regulator on that basis? That is the target we should be seeking in the medium term. Beyond that we can start discussing the storage issues which the Minister rightly said become an issue once we get up beyond that level of wind power.
Second, will the Minister start to take an interest in Eirgrid's development of the grid itself – some €3 billion to €4 billion has been invested – and make sure that investment is made on a basis that assists the development of renewable energy because a key criteria as to whether we can take further wind is how that money is invested? To date, the Minister has said nothing on the matter and he has given no direction on how that investment should be made.
Did the Minister of State say in his response that our transposition of the renewables directive is unnecessary because we have the 1999 Act which sets out the appeal and marketing mechanisms? Is he saying we do not have to do anything else in terms of amending our own legislation, regulations and administrative systems to take into account the requirements of that directive? Was I correct in taking that import from the Minister of State's earlier response?
Third, is the Minister of State happy that a State company, Eirgrid, which, as Deputy Broughan pointed out, had approximately five years to establish the grid code we would need to have in place to develop wind energy and determine how it would get further wind resources onto the grid, at this late stage in that five-year process states out of the blue, with no consultation with the Minister or the industry, that we cannot do it and that this is the end of any further connections? Is the Minister of State happy with that type of planning in the Irish energy sector?
Fourth, does the Minister of State agree that come what may in my lifetime, which I hope will be long, the electricity generation sector will make a complete transition from fossil based to renewable energy because the fuels on which we are dependent today will not be available or will cost so much we will be forced to move towards renewables? What is the Department's long-term vision in this area? Mine is to have 20% renewable energy by 2010, 50% by 2030 and 100% by 2050, by which time I will still be hale and hearty. Does the Minister of State disagree? What exactly is the Government's vision? Is it content to say nothing as it has done for the past two years?
Mr. Browne: If he was sitting on this side of the House and had to implement policy, his vision might be slightly different. The Minister is totally committed to expanding and developing green energy and is one of the few Ministers who has been at the forefront of pushing and developing the green energy programme. Perhaps he is a victim of his own success as regards the targets—
Mr. Browne: The regulator's decision has created a pause. Representatives of the industry attended the consultancy forum this morning to try to deal with the current technical problems and I have no doubt they will succeed.
We cannot have it both ways. The Department drives policy, while the appointed independent regulator must make and implement decisions as he sees fit. The Minister cannot instruct him and would be criticised by the Deputies if he were he do so. Negotiations, consultations and talks are taking place, particularly within the forum, to address the serious circumstances which have arisen.
We are all aware of planning permission applications for wind turbines which have been granted and of the importance of wind turbines and wind energy for the future. I have no problem with Deputy Eamon Ryan's aspirations. While his vision of what will happen in the future in the area of renewables and fossil based fuels is valid, achieving it in the shorter term will be the difficulty.
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