45 Deputy Leo Varadkar asked the Minister for Communications, Energy and Natural Resources if his Department has calculated or received any calculation from any body under its aegis estimating the increase that would be required in the public service order levy to accommodate 800 MW of additional installed capacity for onshore wind energy and 800 MW of additional installed capacity for offshore wind energy at current fuel prices; if statistics for higher or lower levels of capacity are available; and if he will make a statement on the matter. [38299/10]

Ireland currently has 1,459 MW of installed wind capacity which is estimated to rise to 1,703 MW by the end of the year. We are on track to reach our 2010 renewable electricity target. Ireland's target of 40% renewable electricity target by 2020 will be largely met through onshore wind under the Gate 3 process.

There are three offshore wind projects totalling 800 MW of capacity in the Gate 3 connection process. EirGrid's Gate 3 programme shows these three offshore wind projects having firm access to the electricity system on a phased basis in 2013, 2018 and 2020.

The renewable energy feed-in tariff, REFIT, is paid on electricity generated. There are no payments in advance of projects being built and operational. This means that it is likely to be 2020 before there are 800 MW of offshore wind subject to REFIT support. The connection of onshore wind will continue progressively over the next decade with approximately 4,630 MW needed to meet the 40% target by 2020.

REFIT is funded by the public service obligation levy, PSO, which is calculated on an annual basis by the Commission for Energy Regulation, CER, and which is paid for by all electricity consumers.

The 2010-11 PSO decision was published by CER at the end of August. The total PSO cost calculation comes to €156 million for the next 12 month period. Less than one third of this figure, some €43 million, is in respect of renewable energy support costs, with the balance being mainly peat support prices. Generating plants that are supported by the PSO are typically supported for a 15 year period, so that over time these plants will start to leave the PSO support regime. By 2020 the existing conventional peat and gas plants and most of the alternative energy requirement, AER, renewable energy contracts, which together account for more than €100 million in support in 2010-11 will cease to be supported under the PSO.

REFIT supported renewable generation will come into the PSO calculations progressively over the period to 2020, as renewable capacity is delivered in line with the EU legally binding target for Ireland. The progressive flow of renewable generators coming into the PSO support mechanism will be offset to a degree by the categories of generators exiting the mechanism over the next decade.

The annual cost at current fuel prices of 800 MW of onshore REFIT supported wind generation is approximately €36 million. The offshore REFIT tariff has yet to receive approval from the European Union. It is expected in any case that new offshore wind projects would operate within a more integrated UK and Irish market which would allow for the exporting of such power and would lower the future cost of any such REFIT support measure. Market operators have outlined that the existence of wind generation on our system has had a significant effect in lowering the wholesale cost of electricity as the availability of wind generation has allowed us to scale back the use of more expensive low merit plant. I have asked the regulator to quantify the estimated savings that have accrued from this effect and will revert to the Deputy in due course.

Costs of wind drop commensurately as and when gas prices rise. For example when fuel prices result in a wholesale market price of €100 million per megawatt hour onshore wind would cost zero. The present level of wind on the system is putting strong downward pressure on wholesale electricity prices in the single electricity market. It is estimated that wholesale prices are already 6%, or €120 million less as a consequence of wind. There are many complex challenges inherent in building an offshore wind sector of scale not least of which are the capital costs of the technology and the need for offshore grids. Getting the project costs down and delivering offshore grids cost effectively is a shared challenge for Ireland and the other countries of the North Sea's offshore initiative. We will continue to work with all stakeholders to meet these challenges.

The Government's twin strategies of integrating renewable energy and increasing energy efficiency are the key to reducing Ireland's dependence on fossil fuels. These strategies make absolute sense from an economic competitiveness and environmental perspective. A high level of wind generation provides a hedge against the inevitability of high gas prices over the coming decade. It is worth emphasising that in 2008 when gas prices were high, wind generators received an adequate return at little cost to the consumer. The REFIT scheme is the best way of ensuring that strategically vital investment in wind generation takes place at minimum cost to consumers.

This is probably the answer I was most afraid the Minister might give. The question I asked was whether his Department had calculated or received any calculation from anybody under its aegis estimating the increase that would be required in the PSO levy to accommodate 800 MW of onshore wind, and the same figure for onshore wind. He was able to give me the figure for onshore wind, €36 million, which is acceptable and there is a clear economic case for this. What he was not able to give the House was a figure for the additional cost of offshore wind. The best he could say was that he would ask the regulator to quantify this further. That answer gives me great concern, because it indicates clearly that the Minister has embarked on this policy without calculating or estimating the cost, and he has admitted that.

I have had work done on this by some independent energy economists, which I shall publish in due course, and it is estimated that the cost will be in the region of €2 billion over the 15-year period, €500 million to pay for the energy and €500 million in pure premiums or subsidies. It is very hard to see why there is a case for this because if we can do this onshore, then we do not need to do it offshore. There is no environmental case for it if it can all be done onshore, since this is much cheaper, and we know the Minister has calculated the cost of it. It seems there is no economic case, either, and it would appear the Minister has not calculated that economic case. Perhaps he might tell the House why he has embarked on this policy without calculating up front the costs and benefits. He does not know the costs, and it would appear that the benefits are nil because this could all be done onshore, in any case, as it should be.

I am very glad to hear the Deputy's comments on the sense behind our onshore programme. Would he not agree, on that basis, to change what he has said in terms of stopping the PSO for onshore wind — concerning which he issued a statement in August — and which could create enormous devastation for the wind industry, if put into practice? I ask him to come back to me on that.

As regards offshore, we are looking into the question of costs and have worked out various cost scenarios. First and foremost we would have to get the REFIT scheme through Europe and have absolute confirmation on capacity and payments. In advance of that we cannot be absolutely specific on what the costs would be. Critically, I am very ambitious for the development of offshore resources, but in the context of their presenting an export opportunity for Ireland into the UK and French markets. We are working extensively with our UK and French colleagues as well as other governments across Europe on the development of an offshore supergrid for north western Europe, and it will be possible for us to get part European funding to support such a grid. It is on the basis of that work and plan that I see a future for an Irish offshore grid, and not just in respect of the 800 MW mentioned here. In the medium term we could be looking at a 5 GW development of offshore wind, within the Irish Sea, which we could, perhaps, exploit as an export opportunity into neighbouring markets.

However, that requires further work and analysis, as well as co-operation and trading arrangements with the UK and French Governments. We are working on that under the ISLES project, which is doing exactly what the Deputy is looking for. It is looking for a detailed market analysis as to how this can happen. I see us developing our offshore industry under that structure, as possessing massive economic potential for this country in exporting wind power, something I should have thought Fine Gael would also have been interested in.

It is customary for Opposition Members to ask the questions in this House, not the Minister, but I shall indulge him on this occasion, in telling him what I have already told him, namely, that the party has called for the PSO levy to be suspended for several months, pending a review, and that the moneys be taken away from the hyper profits of the semi-State companies the Minister likes to protect. I refer to the €500 million in profits they made last year which dwarf the money required for the PSO levy. I have already told him that, but obviously he does not want to listen.

I was very concerned at the Minister's answer. I heard him say, "We are looking at the cost." Why is he only looking at it now? Surely he should work out the cost before engaging in this policy. He said they had worked out various cost scenarios. My question specifically asked whether his Department had calculated or received any calculation from anybody under its aegis, estimating this, and he has not given the answer. Why is he concealing that answer? He has just admitted that he has "worked out various cost scenarios". Will he publish them? Why is he concealing them? Why did he deny this in his answer? Why has he misled the Dáil on that point? Why had he not worked this out before applying for new state aid?

My concern is here. I can buy into much of the Minister's ideological vision on this, and I am enthusiastic about much of it. However, one cannot have any ideology, no matter what it is, if one does not test it first with basic numbers and facts. The Minister seems not to be doing this, which is a matter of great concern for the public interest. He might tell us what those cost scenarios are and explain why they were not in his answer. He might also explain why he has misled the Dáil on this issue by concealing information from us and whether he intends to publish the information now that he has admitted it exists. He might also confirm to us that if Ireland does export wind to other countries — I hope we will be in that position if hydrocarbon fuel prices rise to an unsustainable level, and I share the Minister's vision in this regard — we will not be subsidising it before it goes out. In other words, we should not ask Irish people to pay part of the bill of French or British consumers. I ask the Minister to confirm that this will not be the case.

I am afraid I must disagree with the Deputy's claim because it is important in the context of the wider discussion. It is not true that we are going soft on the utility companies. We have taken around €500 million away from the profits of the ESB to bring down transmission prices and therefore prices for all energy users.

Not all — just big energy users.

No, for all energy users. It is important for large users in particular because that is where the jobs are and, yes, we want to support jobs. That is what we have done — not what the Deputy said. Crucially, the Deputy's proposal to stop PSOs for wind — even, as the Deputy said, on an interim basis — would have the same effect as a similar moratorium earlier in the last decade, which sent a message out to the financial community that its members should stop investing in wind energy projects in this country, doing major damage to the country. What the Deputy sees as a light little idea of stopping payments for a while would have a major negative effect in this industry, which creates a lot of employment.

On a point of order, a Cheann Comhairle——

Very briefly.

These are questions to the Minister. I asked the Minister a question and he did not answer it. He then asked me a question, which I indulged him by answering. He still will not answer my question. A Cheann Comhairle, would you ask him to answer the question?

I do not have any control over the adequacy or otherwise of the Minister's response.

This debate is about PSO assistance.

No, it is not.

The Deputy is proposing that we stop it.

No. There is a question I asked about the——

It would hugely damage this country and put up electricity prices.

We are on priority questions.

No. This is a serious point of order. I made the mistake of indulging the Minister by answering a question that he asked of me. Yet he refuses to answer my question. He has now admitted that various cost scenarios have been worked out and that he has deceived the Dáil. He has admitted that he will not——

Deputy, let us get back to the issue.

The public interest is not being looked after——

The Deputy may well have to find another way of addressing this. He has made a good start.

——when we have a deceptive, dishonest Minister who comes in here and asks Opposition spokespersons questions but will not answer any question himself.

We will move on.

It is appalling.

Excuse me, the Deputy will have to retract his statement.

No, I will not.

To claim someone is dishonest——

He is dishonest.

I am simply making the point——

He is simply not answering the question.

——with regard to the debate we are having on public service obligations, that his proposal to stop the system would result in higher prices and major economic damage for this country. That is a point that is entirely valid within this debate.

I ask the Minister to answer the question I asked him.

I have to——

To answer the Deputy's question——

I am sorry, Minister.

——although he certainly has not said he would not do it, which is a real concern——

I ask the Minister to resume his seat for a moment as I must deal with something.

This is ridiculous.

The word "dishonest" was used in respect of a Member of the House.

But it is dishonest.

I ask the Deputy to rephrase what he said.

No — I cannot——

I ask the Deputy to rephrase it.

I will rephrase it in this way. The Minister was asked a question by me which he refused to answer. I asked him if his Department had estimated, or received calculations from any body under its aegis estimating the increase that would be required in the PSO levy to accommodate 800 MW of onshore wind energy. He gave the figure for onshore wind but did not give the figure for offshore wind. He then went on to admit that the Department has worked out various cost scenarios. Yet he has not answered the question.

I ask the Deputy to withdraw the word "dishonest".

Without equivocation. He should just withdraw it.

I ask the Deputy to withdraw the word as it is inappropriate.

I withdraw the word "dishonest". However, what is very appropriate is to say that the Minister is not telling the truth. He has admitted that he has worked out various cost scenarios and he now refuses to publish them.

Deputy, we must move on. We are on priority questions.

What I said——

The Minister is not telling the truth.

A Cheann Comhairle, I require an opportunity to reply. I clearly explained about the potential costs for offshore wind energy. First, we would have to send our proposals to Brussels for clearance, and we have not got that yet, so I cannot give the Deputy an answer until that happens.

The Minister said that cost scenarios had been worked out.

Even beyond that, however, those cost scenarios depend——

Will the Minister publish them?

——on the outcome of the——

Will the Minister publish them?

Please allow me to answer the question. The Deputy is throwing out insults and slurs——

So is the Minister.

——but he will not listen to my answers. In answer to his question, as I said, further analysis is required — the likes of the study we are doing in the ISLES project, which requires us to work out what arrangements can be made within the UK market. The Deputy needs to know that before I can give him an answer. Anyone would.

We will have meetings over the next few months with the UK and French Governments on this very issue.

Minister——

Will the Minister publish the cost scenarios?

I cannot give the Deputy an answer until I have some sense of what they will say——

Will he publish the cost scenarios?

Please, Deputies. We will have to move on.

——because I see this as an export opportunity.

Minister——

Will the Minister publish the cost scenarios he has admitted exist?

That is straight talking. It may not be the answer the Deputy wants to hear, but it is the truth of what is happening in policy.

Will he publish the cost scenarios he has admitted to, or will he continue to be——

Deputy Varadkar, we must move on.

I wish the Deputy would change his policy, which is in danger of ruining renewables in this country.

I ask the Minister to answer Question No. 46.

I wish the Minister would stop concealing information, which he has admitted now.

The Deputy refuses to recognise that he got it wrong.

Respect for the House, please.

He should stop concealing information.

He is saying in the press that I would stop it, yet in here he says it is actually the right idea.

Minister——

I never said that. The Minister has admitted he is misrepresenting it.

I will come back to that because it is a problem the Deputy needs to address.

Could we address Question No. 46, please, Minister?

By all means. I am sorry, a Cheann Comhairle.