Towards a Sustainable Energy Future for Ireland
A Government White Paper, setting out the framework for future energy policy in Ireland, is due to be completed by Christmas, the Minister for Communication, Marine and Natural Resources, Mr Noel Dempsey, has pledged. The White Paper is expected to emerge after the consultation period that follows the recent publication of the Green Paper.
Speaking at the launch of the Green Paper "Towards a Sustainable Energy Future for Ireland" in Government Buildings, Mr Dempsey highlighted the challenges that must be confronted in ensuring the Irish economy and growing population are provided with a reliable and environmentally sustainable energy supply.
The launch of the Green Paper was accompanied by the publication of a review of the electricity sector in Ireland, conducted by consultants, Deloitte. The Green Paper points out that future energy policy is based on three pillars -- security of supply, environmental sustainability and economic competitiveness. The fact that Ireland is a small market on the edge of Europe poses particular challenges for scale, investment and supply and, because of these factors, the need to enhance our interconnection with Britain is all the greater, the Paper says. Setting a target of 2012 for an East West interconnector, the paper also makes the enhancement of North South Interconnection a key priority. Setting ambitious targets for renewable energy, the green paper expects that 30 per cent of Ireland's electricity needs will be met by renewable generation sources by 2020. The successful construction of the East West interconnector will help make this possible.
"The Government is committed to delivering on the full range of energy policy priorities, including: Support for ambitious growth in targets for renewable energy; energy efficiency strategies; identification and maximisation of indigenous energy resources; ongoing investment in energy infrastructure; research, development, technology and innovation; and the continued opening up of gas and electricity markets to competition." the paper states.
Expressing concern about the impact of high and increasing energy prices and their effect on competitiveness the green paper stresses that the underlying issues causing this situation are very complex. It adds that a combination of structural and market operation factors are contributing to high price levels. Small market size, high demand growth, low reserve margins, low levels of interconnection, ongoing record investment in networks and a high dependency on imported fossil fuels are all contributing to increased prices.
Dealing with competitiveness, the paper identifies "the perceived and actual dominance of ESB" as a barrier to market entry. This arises primarily from ESB's ownership of a large and diverse portfolio of plant, particularly price setting plant, according to the paper. The introduction of the single electricity market (SEM), due 2007, will not in itself address the dominance issue. Therefore regulatory action needs to be matched by policy measures to reduce ownership concentration, it adds. The case for change is compelling and significant investment in power generation presents the opportunity to deliver meaningful competition.
The paper commends ESB for the role it has played in the development of the Irish economy and supports the retention of ESB as a Vertically Integrated Utility. The paper says that consideration should be given to the establishment of a state owned landbank of key generation sites to encourage the introduction of more competition in the generation market.
