The Cabinet has this week approved a package of measures to help mitigate the rising cost of electricity bills and to ensure secure supplies to electricity for households and business across Ireland over the coming years.
The package of measures includes changes to the PSO (Public Service Obligation) levy. The PSO levy is charged to all electricity customers in Ireland and supports the generation of electricity from sustainable, renewable and indigenous sources.
The changes will result in rebates, meaning savings, for domestic electricity bills over the course of the next PSO year beginning in October.
This further reduction in the PSO levy occurs because of a fall in the relative cost of renewable energy, compared to fossil fuel generation.
Renewable electricity
Also this week, the government approved the final results of the second onshore Renewable Electricity Support Scheme (RESS 2) auction.
This is expected to bring significantly more indigenous wind, solar and hydro-electric energy onto the national grid. This, in turn, will reduce reliance on increasingly expensive imported fossil fuels.
These auctions provide pathways for renewable developers, including solar and offshore wind projects through dedicated offshore auctions, to plan and develop their projects.
The package also includes government approval for the provision of funding for back-up generation capacity, to address risks to security of electricity supply over the coming winters.
The Commission for the Regulation of Utilities (CRU), which has statutory responsibility for security of supply, has directed EirGrid to procure additional temporary emergency generation capacity (for the winters of 2023/2024 to 2025/2026).
The aim is to ultimately provide flexible and temporary back-up capacity, to safeguard secure supplies of electricity for households and businesses as the government deploys longer-term generation capacity.
Details of savings
The measures also see an increased borrowing limit (€3 billion) for EirGrid, to strengthen the national grid as part of ‘Shaping Our Electricity Future’ and to deliver the Celtic (Ireland-France) Interconnector.
According to the government, an increased borrowing limit (€650 million) for Bord na Móna will drive greater deployment of indigenous renewable energy across the midlands and beyond – as part of its ‘Brown to Green’ strategy.
The government previously announced that the PSO levy would go to zero from October 1, 2022, which will lead to an annual saving of €52 (excluding VAT) on household bills.
In a further move, the proposed PSO levy will decrease from €263 million for 2021/2022 to an estimated figure of minus €408 million for the forthcoming year.
This will result in a rebate for domestic household bills – equating to an ‘indicative’ annual saving of €75 (excluding VAT) for householders and consumers.
Combined with the €52 saving, this will result in a combined ‘indicative’ saving of €127 (excluding VAT) – for 2022/2023.
At the end of July, the CRU will issue a final decision on the exact PSO levy that will apply for the period from October 2022 to September 2023.
Energy security
A new Energy Security Emergency Group has been established to coordinate and oversee Ireland’s response to the current challenges.
This group, chaired by the Department of the Environment, Climate and Communications, has overseen the development of a new National Energy Security Framework.
The National Energy Security Framework coordinates work on energy security across the oil, gas and electricity sectors and sets out a whole-of-government response to energy security, including a key focus on energy affordability.