As the Taoiseach has just outlined energy policy is now centre stage not just in Ireland but in Europe and globally.
This is as it should be because energy is central to all of our lives. It affects all of us individually and collectively. It fuels the engine of the economy and it is key for job creation and national competitiveness. It is central to how we protect our environment and how we respond to climate change.
For these reasons energy has been high on the Government’s agenda for many years now and has been a policy priority over the past two years.
There is widespread consensus that we must reduce energy costs for consumers and deliver the best possible conditions for competition and customer choice in the Irish energy market.
Government policy must demonstrate the ambition to envisage a different energy future to deliver on these objectives and the commitment to take the actions to necessary to achieve it.
Over the past two years I have quite deliberately set about a process designed to imagine that future and to get people thinking about what is practically required to get there. In doing this, I have ensured that stakeholder involvement and consultation were an integral feature of the process.
The Energy Green Paper published last October was about ideas, proposals and options. I am pleased to say, it prompted a vigorous debate and attracted over 100 written responses which broadly confirmed the approach suggested in the Green Paper.
In terms of the White Paper, I always intended that it would be strongly action oriented, setting out strategic goals for:
Security of Supply;
Sustainability; and
Competitiveness
with a full set of actions to achieve those goals.
The White Paper also sets out a high level strategy for delivery built around a “Whole of Government” approach, including regular consultation and review over the period to 2020.
There are over 200 separate actions set out in the White Paper making up an overall strategy designed to bring fundamental change to the way we produce and use energy.
This morning I would like to focus on Ireland’s new energy future and the actions agreed by Government to achieve it.
In respect of developing the sustainability of our energy sector, the White Paper incorporates the National BioEnergy Action Plan published last week. That plan set out ambitious and achievable targets for renewable energy in the electricity, transport and heating sectors. As a result by 2020 one third of electricity consumed in this economy will come from renewable sources.
These ambitious actions are designed to reinforce our path to a more sustainable energy efficient future.
The White Paper also confirms the importance of ensuring security of supply. The development of the Single Electricity Market on an all-island basis and the building of new electricity interconnection North/South and East West will contribute greatly to this objective.
These are the first steps towards Ireland becoming an integral part of a wider North West European regional energy market and benefiting from enhanced security of supply.
It will also mean more competition, more innovation and more choice for consumers.
We will continue to ensure that there is adequate generation capacity to 2010 and beyond through the building of new flexible plant of at least 240 MW within the next 12-18 months. We have also made provision for immediate additional provision should that be required.
We have also set out a series of actions to ensure and enhance the security of Irish gas supply.
These measures, in addition to ensuring security of supply, contribute to reducing costs and improving competitiveness - key objectives in the White Paper.
High global energy costs are now a fact of life with the inevitable impact on prices. Here in Ireland, our scale, our fuel mix and the structural constraints of the market intensify these effects.
Approximately 70% of the costs of generating electricity are due to international factors, outside of our control. The remaining 30% of costs are attributable to domestically controllable factors.
To tackle these costs Government has decided:
• To transfer the electricity transmission assets to EirGrid
• The distribution network business will be operated under a risk related rate of return with the benefits passed on in full to electricity consumers
• The creation of a landbank to facilitate new independent power generation.
These actions will transform the landscape of the Irish electricity market and improve its attractiveness for new and existing players.
They will address the structure of the market and ensure that the benefits of competition result in lower prices for the consumer.
The creation of a landbank of power generation sites in conjunction with the CER/ESB Asset Strategy Agreement, which is designed to reduce ESB’s market share, will improve the investment potential of the Irish market.
Furthermore, the output from the new Aghada power plant will be ringfenced and its output sold to independent suppliers other than the ESB. This will create further impetus for customer choice when it comes to suppliers.
The decision to transfer the transmission assets to EirGrid, establishing it as both the owner and the operator of the national transmission system will reduce the amount of heavy regulation on both EirGrid and ESB.
It will also deliver efficiencies and significantly reduced overheads for EirGrid. The result will be reduced costs for the consumer.
Above all, combining the ownership and operation of the transmission system in EirGrid will deliver confidence to all market players that the system is run in a non-discriminatory way. It will underpin the efficient operation of the all-island electricity market.
It will also enable more efficient and timely integration of renewable energy on to the grid system. This is critical for delivery of our ambitious renewable energy targets.
These actions demonstrate the Government’s commitment to ensuring a level playing field, to underpin a transparent and competitive electricity market.
The Government has firmly ruled out any privatisation of the transmission and distribution networks.
Because of this the Government believes that the networks should be run to minimise the price to consumers and not to maximize profits. They must also be run to deliver the necessary investments to maintain and develop the networks.
Accordingly, we are instructing the Regulator to revise the rate of return for distribution network charges to a risk related rate of return.
The resultant savings, through reduced network tariffs, and a lower shareholder dividend from the networks business will be passed on in full to electricity consumers, through lower prices.
We are adopting these positive reforms in the interests of consumers and the economy.
This White Paper is a comprehensive, coherent and detailed action plan to create a better energy future for all of us. I am confident that the directions set out in the White Paper provide a cohesive basis on which to positively shape the future of the energy sector.
I am also confident that the Government’s ambition will be matched by the response of the stakeholders – structural change in the market requires leadership, resolve and pragmatism from the industry.
At an individual level, we need to change the habits of recent years and recognise the value and importance of energy.
The challenge of climate change is a challenge to each and every person; a new individual and collective responsibility is needed to ensure a sustainable future.
In 2020, Ireland will be a fully sustainable, secure, efficient, affordable and competitive all island energy market, supporting environmental, economic and social policy objectives.
Our energy market will have a reliable supply, competitive prices, cleaner and more diverse energy sources, underpinned by robust interconnection, optimum infrastructure and ambitious technology investment.
This is the vision of an energy future, which we will create, through a collective national enterprise, to deliver for future generations.
ENDS