Dáil Éireann - Volume 656 - 29 May, 2008

Other Questions. - Price Supports.

Deputy Phil Hogan asked the Minister for Communications, Energy and Natural Resources the guaranteed price support under the GATE Three scheme; and if he will make a statement on the matter. [21471/08]

  Deputy Eamon Ryan: The GATE Three process has recently been the subject of public consultation by the Commission for Energy Regulation, CER. I am advised that no decision has yet been made on the scale or timeframe of GATE Three.

Projects under the GATE Two process with grid connection offers and planning permission can access the renewable energy feed-in tariff, REFIT, support scheme, which is operated by my Department. The REFIT scheme supports the construction of new renewable energy powered electricity generating plants. The support programme delivers fixed purchase-prices to project developers.

The guaranteed prices remove a price uncertainty for developers arising with pool market prices in the single electricity market and the associated revenue earning uncertainty. This certainty on prices increases the predictability of future cash flows which is crucial for renew[83] able energy investors at this time. The REFIT guaranteed prices are indexed to the annual change in the consumer price index and are capable therefore of absorbing increases in investment costs and operating costs in that range.

The public consultation process on processing GATE Three applications and the settling of any disputes on connection requests generally are matters for the Commission for Energy Regulation. I have no statutory function in the matter. However, my Department is monitoring developments closely and is liaising with the renewable energy sector, the CER and all relevant agencies through the renewable energy development group. A fully cohesive approach by all stakeholders is critical to delivery on the complex challenges inherent in achieving our ambitious targets for renewable energy.

  Deputy Joe McHugh: Offshore energy projects currently get a set figure of €140 per megawatt hour, but will there be parity between offshore and onshore projects? If so, what will the rate be, assuming it will not be exactly the same? When will it be announced and what confidence can the Minister instil for the project investors? We are not talking about the super-rich, but about small farmers who got together and built their own projects. They want a timeframe for access to the grid. Can the Minister shed some light on the matter?

  Deputy Eamon Ryan: I do not believe that in the immediate future there will be parity between support measures for offshore and onshore for the simple reason that the environment and the capital costs of offshore are in excess of anything on onshore. It is still an evolving technology and is not yet on a commercial scale. I made a strategic decision that it was right for us as a country to seek to develop our offshore potential. If we were not, at this stage, giving a signal that we wanted to get into that business we would see investment concentrating in Germany, England, France, Portugal and elsewhere where they have given similar support prices to the one we have outlined as our support price. Failure to give a price in that range would have meant that investment would have gone to other countries. I still think, even with that support price, there is no guarantee of the transfer of capital resources and other engineering expertise into the offshore area because it is expensive and there are certain constraints in terms of shipping and grid access that make it difficult to develop the offshore.

In the future, we will develop our onshore potential first — something of the order of 4,000 MW was set out in our all island grid study as our onshore capability between now and 2020. We will then develop our offshore in tandem. It is probably an additional 2,000 MW first. The advantage of offshore, if we crack it and if we get the economies of scale down, is that it can be scaled up to a very large scale and the wind is more consistent.

The onshore business has also experienced difficulties, largely because of turbine availability, increasing turbine costs and operational and maintenance costs. We have reviewed and kept in mind our support price system. I outlined a series of changes in that regard at the recent Irish wind energy conference, including changes we would allow, such as contestable construction of the grid connection which is a major benefit for smaller developers. We retrospectively increased the price to take into account an earlier year’s inflation increase. We have been working to determine a market price floor that gives some certainty to financers in the area. We are working to fine tune our support price system which is necessary because of the new single electricity market in which we operate. I believe we are getting that right. We are starting to see investment in onshore wind on the scale needed but that is only the start. We will then move on to offshore and a number of other sources.

  Deputy Liz McManus: Has the Minister done everything he was supposed to have done in regard to offshore wind? I think it was last year he announced the tariff scheme for offshore. I welcomed it at the time and I thought the industry indicated that there was the possibility of an investment of €4 billion in offshore, but we have seen no developments. When I raised this matter with the industry at a committee meeting, the response was that the scheme had not [84] actually been introduced by way of a statutory instrument. Perhaps the Minister will comment as I was surprised to hear that.

I am sure the Minister would congratulate, as I do, the tidal energy company that has successfully connected the Irish energy company that is successfully connecting to the British grid. Would he not consider it is something of an indictment that this is an Irish company, which has successfully innovated abroad and is getting contracts abroad, yet it is not happening in Ireland? Surely that is a disappointment.

  Deputy Eamon Ryan: It was in January that we announced that scheme. These are projects that require very large capital investment and they take time.

  Deputy Liz McManus: I am only asking about the Minister’s role.

  Deputy Eamon Ryan: My role is to obtain European state aids clearance, which I have not yet got, prior to the issue of a statutory instrument.

  Deputy Liz McManus: Why did the Minister announce it then if he had not got clearance?

  Deputy Eamon Ryan: We announced that was what we were seeking in Europe.

  Deputy Liz McManus: Has the Minister not got it yet?

  Deputy Eamon Ryan: I do not foresee a difficulty with it, but one must have it prior to being able to——

  Deputy Liz McManus: This is the month of May. The industry thinks it is a problem.

  Deputy Eamon Ryan: I do not believe it is a problem.

  Deputy Liz McManus: That is very worrying. When does the Minister expect to get it?

  Deputy Eamon Ryan: As soon as the European Commission comes back. We are working. Subsequent to that meeting in January, we established a renewable energy development group which is the focal point for setting out the terms and details that underpin that support price mechanism.

On the second issue, I also welcome the success of the Irish company in developing tidal technology which it is deploying to a grid connector site in the UK. As I understand it, the technology is being built in Ireland so it is delivering jobs in the Irish economy. It is an example of the type of projects we are supporting. We set out a €25 million support package to grant aid prototypes, to build a grid connection in Belmullet, County Mayo, which we are progressing, to provide a wave and marine testing facility in Cork——

  Deputy Liz McManus: When was a grid connection in Belmullet agreed?

  Acting Chairman: According to the Order of Business we must conclude.

  Deputy Eamon Ryan: It has been set out as our policy.

  Deputy Liz McManus: The Minister is looking to the developers to agree and they are not agreed on it.

  Deputy Eamon Ryan: It is a site we have selected following detailed analysis as the focal site.

[85]   Deputy Liz McManus: Is the Minister saying it has not been agreed?

Written Answers follow Adjournment Debate.