I am very pleased to welcome you to the launch of the Energy Green Paper “Towards a Sustainable Energy Future for Ireland”.
Some of you will be familiar with the painting behind me. Keating’s portrait shows the engineers who for the first time harnessed the power of our biggest river to deliver energy to homes around the country. There’s an excitement in the picture - a sense of being on the cusp of something great.
That’s where we are today.
I am going to set out where we would like Ireland to be in energy terms in 2020 and how we’re going to get there.
By 2020 we will have to have scored well on the three pillars of energy policy:
- Security of supply
- Environmental sustainability
- Competitiveness
Failure in any one of these tests means will mean we have failed in our energy challenge.
My overall vision in the Green Paper is a coherent one, where these pillars interact and reinforce each other. Success in one leads to success in all. Any success depends on our willingness to lead.
In 2020, Ireland will have met the challenge of security of energy supply by:
- Integration and interconnection with UK and Europe
- A diverse fuel supply regime, including optimum use of domestic fuel sources
- World class storage facilities
- Enhanced network and transmission infrastructure
- Robust Emergency planning and expanded oil and gas strategic reserves
I believe that more integration and interconnection with other markets is crucial. This is the way forward envisaged at European level.
Enhanced electricity interconnection with Northern Ireland and the development of a new electricity interconnector with Britain will be completed by 2012, and sooner if possible.
Further interconnection, possibly with the European mainland will be underway or in place by 2020.
The All-Island Energy Market project is the logical first step towards creating a regional market between the island of Ireland and Britain.
The Single Electricity Market’s will have the capacity to deliver the cost-efficiencies, transparency and investments needed to promote an efficient and secure electricity market that will contribute positively to competitiveness.
Fuel diversity is another method of ensuring security of supply. The status quo would involve continued growth in gas-fired electricity generation resulting in our gas dependency growing to over 70% by 2020.
By 2020, however, we will be using a much changed fuel mix in our electricity, transport and other sectors.
This Green Paper outlines the actions we can take to achieve this:
- Using clean-coal technology in further coal-based electricity generation
- Co-firing with biomass
- Significantly expanding renewable energy production
Renewable energy brings me to the second pillar of energy policy, sustainability.
Renewable energy is a key to sustainability. It must become centre stage within our overall energy demand in the coming years if we are to achieve the 2020 target.
Hand in hand, we must have reduced energy demand itself through energy efficiency and demand management strategies.
Greater use of renewables brings us greater diversity. Greater efficiency means lower demand and less dependence.
The Green Paper envisages an ambitious target of 30% of electricity produced by renewable energy by 2020. This is a doubling of the 2010 15% target.
We have taken the first step towards 2020 with the new €119m Renewable Energy Feed In Tariff (REFIT).
I announced on Friday the allocation of support, under this scheme to 55 new renewable powered electricity-generating plants. The combined capacity of these projects is over 600 megawatts (MW), with wind-power accounting for 98% of all the new support.
This additional capacity will bring the available electricity production capacity harnessing renewable energy resources up from 860MW to 1,469MW which is capable of generating power for one million homes.
This new capacity can also prevent the emission of over two million tonnes of polluting greenhouse gases annually.
In 2020, I want Ireland to be the “Renewable Energy Island”. We have one of the richest potential renewable energy resources in Europe - wind, ocean and bio-energy.
In 2020, the best commercial ocean energy technology should be Irish.
Biofuels and biomass will play a major role by 2020, underpinned by an overall long term National BioEnergy Strategy to be published in December.
Through energy efficiency people have the power to contribute to the 2020 vision. Relatively small changes by each of us can have a major impact on our environment, our security of supply and our competitiveness.
The Green Paper sets a target of a 20% reduction in energy demand by 2020. We want to be the global exemplars in energy efficiency.
Early last week I launched the national energy efficiency campaign called the Power of One aimed at changing people’s behaviour towards energy.
2020 will see a vibrant and active Irish energy research sector and more importantly, a significantly ramped up energy research capability.
That research capability will reflect an energy research policy aligned with wider energy, environmental, science, innovation, enterprise and education policies. Our energy research effort will be strongly focused on our needs and strengths in the renewables areas. It will also embrace all the key aspects of the energy agenda including innovative approaches to infrastructure and grid challenges.
This is fully reflected in the Government’s Strategy for Science Technology and Innovation 2006 – 2013.
Once again, the Green Paper shows form in terms of the coherence of our overall vision. The different policy actions – energy research and renewables – will interact and reinforce each other.
Turning to competitiveness, what we want to see well before 2020 is a stable and transparent market regulatory and investment framework underpinned by infrastructural and technological developments.
Such a framework will enable the energy sector to be competitive and to support national competitiveness, in a high growth economy and inclusive society.
High global energy costs are now a fact of life with the inevitable impact on prices. What Ireland needs to see by 2020 is as little as possible of those higher costs resulting from “own goals”.
A large proportion of the higher prices experienced in Ireland is currently explicable by our fuel mix, and the existing structural constraints of the market.
These factors limit our ability to manage/mitigate future energy price increases.
Our focus therefore must be on addressing controllable costs.
One option for dealing with those controllable costs relates to the funding of strategic national energy infrastructure.
The Green Paper considers the scope for funding strategic energy initiatives in the NDP.
By 2020 the energy market must be characterised by many players and a light handed regulation regime. The Green Paper also sets out the challenges to be faced to achieve this.
We asked Deloitte in the context of preparing the Green Paper, to undertake a review of the Irish electricity sector and provide us with a comprehensive in-depth analysis of institutional arrangements and market structures.
They found that the size of the Irish market is a significant factor. So is the perceived and actual dominance of ESB arising from its ownership of a large and diverse portfolio of plant and from its ability to set prices.
The report states that without changing the current structure, we will continue to face difficulties in attracting new entrants to develop competition and choice for consumers.
The market will evolve slowly without a competitive downward pressure on prices. There will be few opportunities to break the current cycle of market evolution.
This scenario is not in the interests of market players or consumers. Nor is it in the interests of the competitiveness of energy costs and the economy.
The Deloitte report is a useful contribution to the energy debate. The analysis is incorporated in the Green Paper.
The Deloitte report makes a specific recommendation to fragment the ESB.
The Government recognises the fundamental role played by ESB in the economic and social development of the State and the strategic value of maintaining the ESB as a strong and commercially viable company into the future.
The retention of natural monopoly networks in State ownership is also a core policy tenet for the Government.
The Government does not in any circumstances favour the fragmentation of the ESB. We believe such a move would not reduce prices, but could in fact increase them and endanger our security of supply and competitiveness.
What the electricity market needs is more competition, more innovation and more choice for consumers. I firmly believe that structural reform is necessary in the interests of the market, of the consumer and of ESB itself.
Increased competition in generation will act as a catalyst for improvements in operation and maintenance costs, productivity, availability, flexibility and innovation.
To achieve that competition the Green Paper suggests the creation of a ‘landbank’ of suitable sites, to offer a predictable pattern of access to suitable generation sites in Ireland for new entrants to this market. This would remove a significant barrier to new entry and has been used successfully elsewhere to encourage new entry.
To enhance competition the go ahead has been given to plan the construction of a 500mw electricity interconnector between Wales and Ireland by 2012 or sooner. We have also agreed that this vital strategic asset should remain in public hands and will be owned by Eirgrid on completion. I have asked CER and Eirgrid to fast track the design of a competition and the technical studies respectively, to ensure a speedy completion.
This Green Paper opens a two month period of debate and consultation. I want to emphasise the importance of this phase of the process.
We are open to all contributions and comments on the Paper. To assist that process, we have set out a range of questions where we are particularly interested in hearing the views of stakeholders. This should be seen as a guide for the public to structure their comments, or as a checklist to point people towards areas they might not have thought about. It is not intended to limit in any way the scope of contributions.
I am confident that the directions set out in the Green Paper provide a cohesive basis on which to positively shape the future of the energy sector and its contribution to competitiveness and well being.
Let me summarize my vision for 2020. Ireland will be a fully sustainable, secure, efficient, affordable and competitive all island energy market, supporting environmental, economic and social policy objectives.
The hallmarks of the market will be reliable supply, competitive prices and cleaner and more diverse energy sources underpinned by robust interconnection, optimum infrastructure and ambitious technology investment.
An island at the heart of Europe in energy terms, delivering for consumers, the economy and for all our citizens.
This Green Paper is the proposed roadmap by which we will get there.
ENDS