Introduction
I am very glad to have the opportunity to address you this morning and, in particular, I would like to congratulate the conference organisers, AMICUS, on the strategic nature of the subject for today’s conference.
Energy policy will be at the forefront of our development as an economy and as a society for the future and the all-Island context to the development of our energy sector will be a focal point for administrations in both parts of the island.
AMICUS as an all-island representative body is well placed to be an important stakeholder in creating this future.
Policy Context
· Looking to the future, the outlook for the energy sector is very challenging, with a broad range of factors influencing world energy trends, including growing energy demand, volatile oil and gas prices with consequential impacts on competitiveness, and the need to significantly reduce greenhouse gas emissions in order to mitigate the effects of climate change.
It is no surprise that these factors have pushed energy policy to the very top of the political agenda both here in Ireland and on the European stage.
For Ireland, that focus is intensified by the need to improve national competitiveness and underpin unprecedented levels of economic progress, industrial activity and infrastructural development, all of which places additional demands on our overall energy requirements.
In common with other developed economies, security of supply, environmental sustainability and economic competitiveness are the key objectives of our energy policy. Meeting these objectives in the context of high prices, carbon emission constraints and a reliance on imported fossil fuels presents very serious challenges.
Tough choices will no doubt have to be made but more importantly we need to be innovative, ambitious and have a longer-term horizon in shaping energy policy so that we can continue to satisfy the needs of our economy and society.
In the context of our small energy market size and our exposure to high global oil and gas prices and supply risks, our priorities and current initiatives for energy policy have focused on:
- The delivery of critical energy infrastructure on an all island basis;
- Expansion of the contribution of renewable energy;
- Progression of structural change in the energy sector and the regulatory framework to encourage greater efficiencies on an all island basis, and
- Actions to improve energy efficiency and demand management across all sectors.
We owe it to the next generation to be more challenging and farsighted in our energy management strategy. The development of the All-island Energy Market provides a good example of this.
All-Island Energy
Since my appointment as Minister with responsibility for energy, I have made it one of my priorities to continue the efforts of my predecessors in securing the development of the All-island Energy Market.
As you know, the All-island Energy Market Joint Steering Group meets on a monthly basis to drive forward all aspects of the all-island energy agenda. The mutual benefits to be gained by working together on this agenda are already evident and I believe that what has been achieved to date offers a model for best practice in developing co-operation between North and South.
The development of the single market is a real opportunity to maximise market size on the island and to create economies of scale in the energy sector to the benefit of consumers and business on both sides of the border.
This co-ordinated approach is set in the context of continuing co-operation between both Governments on common energy issues in line with the development of the European Union internal market for electricity and natural gas, and the growing regionalisation of markets.
Single Electricity Market
The key short-term priority, of course, is the introduction of the Single Electricity Market (SEM) and there is strong political commitment, North and South, to delivery of the market in 2007.
A key task for both Governments is to ensure that an appropriate legal framework is in place to underpin the SEM. Implementing the market will require similar legislation to be enacted simultaneously in both jurisdictions.
Both Governments are fully committed to ensuring that the necessary legislation is enacted by Spring 2007 to allow the market to proceed and I am glad to say that the two Departments are making excellent progress.
In addition, the two Regulatory Authorities are delivering a massive work programme on the design and build of the new market. They are working closely with EirGrid and SONI and with all the industry players and I would like to take this opportunity to thank all concerned for their input to date.
The two Governments will continue to lead the way to ensure successful delivery of the market next year.
All-island Market Activity
It is interesting to note that players in the two markets are already increasingly availing of opportunities to establish themselves on an all-island basis.
In 2004, BGE completed the Belfast to Derry gas pipeline and was granted a licence to serve the main towns along its route. BGE is also set to complete the construction of the South-North pipeline from Gormanstown to Belfast later this year.
In the electricity sector, last year the ESB opened a 400MW gas-fired electricity generating station at Coolkeeragh near Derry while Viridian opened a 343MW gas-fired station at Huntstown in 2002 and is due to open a second unit at the same site next year.
Electricity Interconnector
The Single Market will be underpinned by the Government’s plans to improve the physical infrastructure through further interconnection. The planned second North-South electricity interconnector, which will be operational by 2012 at the latest, will enhance security of supply and double the existing cross-border electricity transfer capacity to over 600MW. This will contribute to a more robust electricity network capable of delivering long-term benefits to both economies.
Gas
While the SEM is the main priority of the All-Island Energy Market, I am glad to say that good progress is also being made in the gas area. The South-North gas pipeline from Gormanstown to Belfast is due for completion later this year and will support the development of the gas network on an all-island basis.
Another important gas initiative is an all-island study, which is being jointly commissioned to assess the medium to long-term security of supply on an all-island basis, including the scope for a common approach to gas storage and LNG. This report will be completed in mid 2007.
Renewable Energy
Ireland is rich in existing and potential renewable energies and co-operation in this area can play a key role in the island’s future.
The “2020 Vision” for renewable energy consultation, undertaken last year in conjunction with Northern Ireland, sets out proposals for the integration of renewable energy within the All-island Energy Market. The focus is on accommodating a significant growth in renewable electricity generation into the grid systems. Indeed the Green Paper on Energy has set out an ambitious target of 30% of electricity consumption to come from renewable sources by 2020.
As part of the process of developing a joint strategy going forward, the two Governments are laying the groundwork by undertaking, an innovative All-island Grid Study. This study, which will also be completed in mid 2007, will inform the long-term development of any investment in the grids to enhance sustainability and promote renewable electricity generation.
Progress to Date
So the fruits of this North-South co-operation across the energy sector are now visible and progress has been considerable.
In a very short timeframe we have moved to a position where we are now looking at taking the first step towards creating a seamless energy market on this island, with the establishment of the Single Electricity Market next year.
While much remains to be done, both Governments are encouraged by the widespread and enthusiastic support for the all-island project and we are confident that the challenges ahead will be met.
The Green Paper
In terms of the recent Green Paper on Energy, it is clear that the All-Island approach to energy policy is one of the main binding elements that strengthens the policy proposals set out in that paper. Our long-term energy future lies not as two distinct energy markets isolated from the rest of Europe, but rather as part of a regional energy market in conjunction with Britain and possibly with other North European neighbours.
Maximising our potential market size, ensuring competitive and efficient markets in both electricity and gas, expanding to the greatest extent possible our renewable energy base, increasing our energy efficiency and reducing overall energy demand are at the core of our approach and this places the All-Island dimension at the heart of energy policy development for the future.
The policy choices and targets set out in the Green Paper are designed to combine in a coherent way to positively shape the future of the energy sector and improve its contribution to national competitiveness and social and economic well being. /…
The Paper has been published with a two-month period for debate and consultation, a process which will culminate in the publication of an Energy White Paper early next year.
By 2020 we should have a fully sustainable, secure, efficient, and competitive all island energy market, supporting environmental, economic and social policy objectives.
The market will have secure and reliable energy supplies, competitive prices and cleaner and more diverse energy sources underpinned by robust interconnection, optimum infrastructure and ambitious technology investment.
We need to move from the proposed directions of the Green Paper to a definitive policy framework, to identify and put in place the practical actions and targets that will enable Ireland to achieve a sustainable energy future.
Your views are important in shaping this future and to that end I look forward to receiving your input.
I wish you well with the rest of today’s proceedings.
ENDS