Energy

Overview

The fundamental objectives of energy policy are the security, sustainability and competitiveness of energy supply for the economy and society. The objectives are set firmly in the context of EU and global energy developments. Ireland faces similar energy challenges to those being confronted worldwide. Our situation is made more acute by our small energy market, peripherality and continued reliance on imported fossil fuels. There are major opportunities to be realised in harnessing the full potential of renewable and bio energy resources and in delivering radical energy efficiency improvements.

The economic backdrop for energy policy has changed profoundly with the economic downturn and global developments. Among the key drivers for energy policy are the reduction in national energy demand, Ireland’s mandatory EU targets for renewable energy 2020 and the imperative to deliver energy at a competitive price for business and consumers. In that context upwardly spiralling global oil prices driven by robust demand in the emerging economies and geo-political turmoil in the Middle East and North Africa pose risks for cost of energy and potentially for security of energy supply. Other key drivers include the fundamental changes in the global gas supply market, pressures on the cost of capital for the capital intensive energy sector (state owned and private sector) and accelerated energy technology development. It is intended that new Energy Policy Framework 2012-2030 will be drafted and will reflect national, EU and international developments in the energy sphere.

Energy policy objectives are profoundly interlinked. Security, sustainability and competitiveness of supply are mutually reinforcing and impact and interact with each other. This is reflected in the close team working of the Energy Divisions on national, EU and international policy to ensure a fully integrated and cohesive approach. Likewise, there are close working relations with the energy sector, both the State Energy Companies and the private sector, as well as the Sustainable Energy Authority of Ireland (SEAI) and the Commission for Energy Regulation (CER). Energy policy is also interrelated with all significant areas of Government policy (including enterprise and competitiveness, consumer policy, agriculture, environment and climate change, transport, energy affordability). To that end the Department works to deliver structured engagement and cooperation with all Departments and Agencies as well as business, consumer and environmental groupings.

There is close cooperation with Northern Ireland on energy matters, exemplified by the setting up of the all-island Single Electricity Market in 2007 and current work to establish the Common Arrangements for Gas on an all-island basis. The bilateral relationship with the UK on energy matters is crucial given not least the fact that Ireland is part of the wholesale UK gas market, the progressive integration of electricity markets and the imperative for close cooperation on gas and electricity emergency planning.

Proactive engagement with the EU Commission, Member States and the Parliament is key to ensuring that Ireland’s energy priorities are progressed and that Ireland plays its full part in the collective delivery of EU energy policy. Preparing for Ireland’s EU Presidency in 2013 is a critical priority.

Key Immediate Priority Issues

• Urgent consideration and decision on the future locus of the electricity transmission assets (in the context of Transposition of the EU Third Package on internal market, the Frontier Economics cost-benefit analysis and the Programme for Government).
• Sustained priority focus on reducing energy costs for business (Large Energy Users and SMEs) and domestic consumers through: successful legal defence of the challenge to the carbon windfall levy; completion by CER of de-regulation of the retail electricity and gas supply markets; ensuring the most cost efficient network investment and reduction in operational cost by ESB, BGE and Eirgrid; comprehensive review of the PSO peat levy and review of cost effectiveness of REFIT; and maintenance of energy efficiency equipment capital allowances and the business energy efficiency programmes of SEAI.
• Decisions on arrangements for Ireland’s oil, gas and electricity Security of Supply and Emergency Planning, taking account of developments in the Middle East and North Africa and related European Union and International Energy Agency planning;

• Review of the capital investment programmes of the State Energy Companies (ESB, EirGrid, Bord Gáis, and Bord na Mona) in the electricity and gas networks and generation in light of the Programme for Government. The commercial State companies have ambitious investment plans but higher costs of capital may impact on the sustainability of the investment plans.
• Consideration of structural changes in relation to the State Energy Companies in light of the Programme for Government.
• Commission the review of the efficiency of the electricity and gas sectors which the Government is required to complete by end 2011 under the EU/IMF Programme.
• Government Decision in coming months in relation to strategic oil refining requirements (the future of Whitegate oil refinery) informed by expert external analysis.
• In line with the Programme for Government, and following briefing by EirGrid on Grid 25 and the North South project, develop the terms of reference for appointment of an independent expert commission on undergrounding all or part of the Meath – Tyrone 400KV transmission lines. An earlier independent consultant’s report recommended against the underground option.
• Urgent completion of legal transposition of the EU Directive on the promotion of energy from renewable sources and the EU Third Package Directives on completion of the internal energy market.

• Launch of the Electric Vehicle Grant Scheme 2011/2012, administered by the Sustainable Energy Authority of Ireland, for which €5m has been provided in the Department’s Vote for 2011. The Scheme is designed to pump-prime demand for EV’s, building on Memoranda of Understanding with Renault- Nissan, Peugeot and other car manufacturers.
• Decisions on the National RETROFIT Programme in light of the Programme for Government. (The draft RETROFIT Programme includes the progressive introduction, starting this year, of an energy efficiency obligation on all suppliers and significant changes to programme delivery for energy efficiency and renewable energy schemes).
• Finalisation, following public consultation, of the second National Efficiency Action Plan to be submitted to the European Commission by end June.
• Decisions on developing Ireland’s offshore renewable energy (ocean and wind ) potential including the Ocean Energy Strategy 2011, the establishment of a plan –led framework for development and to establish the costs and benefits of the potential for export of offshore renewable energy to UK and beyond.

• Finalisation and submission to the Government of the cross- Department/cross – Agency Affordable Energy Strategy;

Sara White
Deputy Secretary
March 2011

Organisation Chart

Energy Planning and Electricity Corporate Division

Head of Division: Mairéad McCabe, Principal Officer

Functions of Division

The Division’s responsibilities are to deliver on the shareholder role of oversight and corporate governance of ESB and EirGrid including the companies’ financial performance, corporate strategies, and investment programmes. The Division also leads and coordinates on cross cutting energy policy issues in relation to European Union and international developments, bilateral relations with the UK and other Member States and North –South cooperation on energy matters.

Key Priorities

· Submission to Minister of position paper on proposed arrangements for the unbundling of the electricity transmission assets in light of the requirements under the EU Third Package, the cost – benefit analysis carried out by Frontier Economics in 2010 with input from all key stakeholders in ESB and EirGrid, and having regard to the Programme for Government’s proposal to establish a new national Smart Grid Company for the gas and electricity networks and the implications of the pending McCarthy Report on the Sale of State Assets. It will be necessary to take a decision on this matter in the coming weeks, not least given the need to comply with obligations to transpose and implement the EU Third Package of Directives. In that context the European Commission has confirmed to all Energy Ministers and bilaterally also to the Department, that it acknowledges that Member States will take some time longer than the due date of 3 March to fully transpose and comply with the Directives.

· Approval by the Minister and the Minister for Finance of the terms of the ESB’s Pension Scheme Agreement to address the Pension Deficit of €1.9bn.

· Ongoing financial and corporate governance oversight of EirGrid, including the roll-out of the Grid25 transmission investment programme, delivery to schedule and on budget of the East-West Interconnector in 2012, and EirGrid’s operation of the Single Electricity Market.

· Intensive engagement with the International Energy Agency (IEA) over coming months in preparation for the IEA’s in depth expert review of all aspects of Ireland’s energy policy in Autumn 2011. The IEA undertakes a series of Country reviews each year. The last review of Ireland was published in 2007.

· The IMF/EU Programme requires the Government to commission an independent review of the efficiency of the gas and electricity sectors by end 2011. With the agreement in principle of the EU Commission, the possibility is being explored with the IEA of incorporating this specific efficiency review into the work of the IEA expert team.

· Leading and coordinating national Energy Policy inputs into Ireland’s negotiating position on EU’s ambitious energy policy initiatives to deliver on the EU Energy Strategy 2020.

Leading and Coordinating North-South Energy Cooperation Including:

· Joint Ministerial agreement to a new All-Island Energy Market Development Framework later this year (update of the Joint 2004 Energy Framework in light of developments).

· Progressing the Common Arrangements for Gas (all-island gas market), including requisite legislation North and South, to be completed by 2012.

· Ongoing enhancement of the all-island Single Electricity Market (SEM), positioning it well in the integration with the UK electricity market and the plans for accelerated European regional market integration.

· Ensuring all-island security of energy supply and emergency planning.

· Delivering the North South electricity interconnector by 2014 in support of renewable energy, market integration and regional economic development.

· Complementary North-South strategies for renewable energy (including offshore renewable energy (wind, tidal and wave), working also with Scotland and other members of the British-Irish Council Renewable Energy Work Stream.

· Resolution of the territorial sea boundary between Ireland and the UK to facilitate offshore renewable energy development North and South – having regard for the wider jurisdictional/legal dimensions (led by Department of Foreign Affairs and the Foreign and Commonwealth Office).

Electricity and Gas Regulation Division

Head of Division: Úna NicGiolla Choille, Principal Officer

Functions of Division

The Electricity and Gas Regulation Division is responsible for the formulation and implementation of policy and legislation on the liberalisation and regulation of the electricity and gas markets which is driven by EU requirements to complete the internal energy market in the interests of consumers. The Division also has responsibility for gas and electricity security of supply and emergency planning, strategic energy infrastructure, and the corporate governance of the Commission for Energy Regulation.

Key Priorities

• Transposition and implementation of the EU Third Package on the internal gas and electricity market for electricity and gas, including the unbundling of the gas (BGE) and electricity (ESB) transmission assets.
• Progressing to schedule (2012 deadline) the Common Arrangements for Gas (all-island gas market) with Northern Ireland, the energy regulators and the gas industry North and South.
• Finalising the Gas Storage Licensing Framework informed by the recent public consultation process.

• Decision on national roll-out of smart metering programme in light of cost-benefit analysis and technical/consumer trials.
• Consideration of strategy on Energy Emergency Planning and Security of Oil, Gas and Electricity Supply in light of global, EU and IEA developments.
• Progressing work underway to ensure cohesive emergency planning arrangements between the telecommunications sector and energy networks and power generation given their interdependency.

• Sustained priority focus, working with the CER , on energy costs for business and domestic consumers through successful defence of the carbon windfall levy, complete deregulation of the gas and electricity retail supply markets, regulatory price reviews of networks investment to ensure cost efficiencies, and comprehensive review by mid year of the peat PSO levy . High fossil fuel prices globally pose an ongoing pressure on Irish energy costs. The objective is to maintain parity as far as possible with EU averages in the interests of competitiveness.

Energy Corporate and Oil Supply Division

Head of Division: Vacant, Principal Officer

Functions of Division

The Division is responsible for the financial oversight and corporate governance of Bord Na Móna, Bord Gáis Éireann, the Irish National Petroleum Corporation (INPC) and NORA (National Oil Reserves Agency). The Division also has responsibility for oil policy, including emergency planning, and Ireland’s legal reporting requirements on levels of strategic oil stocks to the International Energy Agency in fulfilment of Ireland’s stockholding obligations. The oil market is fully liberalised and the Department’s policy role centres therefore on maintenance of strategic oil supply and emergency planning.

Key Priorities

• Ensure, working with NORA and the industry, the robustness of the national contingency plan to mitigate oil supply disruptions in line with IEA and EU obligations – in the context of the current geo-political upheaval in Middle East and North Africa.
• Working with NORA to maximise wholly owned oil stocks and oil storage facilities on the island.
• Complete strategic review, informed by external expert analysis, of Ireland’s oil refining requirements (given the expiry in 2016 of the operating agreement between the Government and Conoco-Philips in relation to Whitegate oil refinery) to inform a Government Decision by mid year.
• Work with the Regulatory Division and BGE to complete the unbundling of BGE’s gas transmission assets through the establishment of the new Independent Transmission Operator within the Group in 2011 (having regard for the Programme for Government proposals on structural change in the Energy State Companies).
• Oversee (and approve) delivery by Bord Gáis of its Corporate Plan 2010 – 2014 entailing capital investment, North and South, of up to €1.4 billion on the gas network, the build-out of the wind generation portfolio and other conventional generation assets, and building an integrated energy (gas and electricity) supply business (having regard for the Programme for Government proposals).
• Oversight of BGE’s financial performance is ongoing with regular engagement with the management team on performance against approved budget. Detailed review of 2010 financial outturns will begin in the coming weeks.
• Having regard to the Programme for Government, oversee/review delivery in 2011 by Bord na Móna on its strategies in terms of its (declining) core peat business, renewable energy (wind and biomass) business, and its waste management and environmental business.

Renewable and Sustainable Energy Division

Head of Division: Martin Finucane, Principal Officer

Functions of Division

The Division is responsible for developing and implementing renewable energy (electricity, heat, biofuels, electricification of transport) policies and strategies, including overseeing delivery of the National Renewable Energy Action Plan submitted to the European Commission in mid 2010, and is also responsible for policy and financial oversight and corporate governance of the Sustainable Energy Authority of Ireland (SEAI) which is charged with delivery of the renewable energy and energy efficiency programmes with a budget for 2011 of €108m.

Key Priorities

· The Statutory Instruments transposing the EU Renewable Energy Directive, including Ireland’s legally binding target of 16% renewable energy by 2020, are being finalised for Ministerial signature in the coming weeks.

· Finalise a new Service Level Agreement with the Sustainable Energy Ireland focusing on key outputs and outcomes.

· Oversee delivery by SEAI of its Strategic Plan 2010 – 2015.

· Ongoing financial and corporate governance oversight of SEAI to ensure the highest standards of accountability and cost effective expenditure on its many programmes.

· A submission to the Minister in relation to the Electric Vehicle grant scheme 2011 – 2012 is being finalised for Ministerial approval with the aim of launching the scheme shortly. €5m has been provided in the Department’s Vote for 2011. The SEAI will administer the scheme

· Progress with ESB and CER decisions in relation to the optimum model for cost recovery of the building and maintenance of electric vehicle charging infrastructure.

· Finalise State-Aid Approvals currently with the European Commission for the extension of the existing REFIT scheme and the proposed biomass and offshore renewable energy REFIT Schemes.

· Finalise, with SEAI, proposals for a national micro generation programme, including costed support options, for Ministerial approval (in line with the Programme for Government).

· Ongoing delivery of the ISLES project with Scotland and Northern Ireland which is assessing options for offshore grid and working with the nine fellow member countries of North-West Europe, and the EU Commission, on implementation of the North Seas Offshore Grid Initiative.

· Ongoing monitoring of delivery of Gate 3 for onshore wind development, including addressing existing and emerging barriers to delivery, in conjunction with CER, EirGrid, the Department of the Environment, Heritage and Local Government and the industry, and continued ongoing work to develop proposals for a plan-led next phase process.

· Finalise a comprehensive Bio Energy Roadmap designed to deliver a cohesive approach to supply and demand side issues in biomass and energy crops and delivery of the challenging target for renewable heat under the National Renewable Energy Action Plan.

· Decisions on developing Ireland’s offshore renewable energy potential, including re-affirmation of the Ocean Energy Strategy and agreement to proactively pursue the potential for export to the UK and beyond, based on full economic and cost-benefit analysis and a plan-led framework for development of the resource underpinned by the national Offshore Renewable Energy Development Plan and Strategic Environmental Assessment, which is currently the subject of public consultation.

· Review the first full year of the operation of the National Biofuels Obligation in consultation with NORA as administrator of the scheme in terms of outcomes, impacts and lessons for the future.

Energy Efficiency and Affordability Division

Head of Division: Stjohn O’Connor, Principal Officer

Functions of the Division

The Division is responsible for developing and implementing energy efficiency policy, programmes and measures to reduce Ireland’s energy consumption in line with EU developments and national targets, working closely with SEAI. The Division also leads the cross government/agency group on energy affordability.

Key Priorities

• Ministerial and Government approval in the coming weeks for the roll-out of the National Retrofit Programme which has been the subject of extensive consultation with industry and stakeholders. The Programme envisages the transition of SEAI’s energy efficiency and renewable energy programmes, including the Homes Energy Saving Scheme, Greener Homes and Warmer Homes, into a single programme that is progressively delivered by energy suppliers such as electricity, gas, oil and coal distributers through voluntary agreements with SEAI. It also takes account of the energy efficiency tax relief introduced in the Finance Act which is designed to complement the Programme. A detailed briefing session on the proposed programme with the Minister will be scheduled – in light also of the Programme for Government budgetary and other commitments.
• Finalisation of the second National Energy Efficiency Action Plan for submission to the European Commission by end June, building on the achievements to date under the first National Energy Efficiency Action Plan. It will also take full account of the new European Energy Efficiency Action Plan to be published this week.
• Finalisation of the Affordable Energy Strategy for Government approval. The Strategy, which is being completed with the support of a cross-Government/ cross-Agency Group, will set out a framework to ensure affordable access to energy requirements through initiatives and programmes designed to reduce energy demand, improve the thermal efficiency of homes, and protect those most at risk of energy poverty.

• Transposition and implementation of EU energy efficiency legislation in respect of products, labelling and energy services.

Office of Chief Technical Advisor (Energy)

Chief Technical Advisor: Bob Hanna

Functions of Chief Technical Advisor

The Chief Technical Advisor provides expert technical advice on all energy matters to the Minister and the Department and to other Agencies as required. He also has particular responsibility, working with SEAI, for the coordination and oversight of national energy research. The advisor represents Ireland on European and international technical, safety and technology fora and has specific executive functions in relation to gas technical safety standards.