Address by the
Minister for Communications Energy and Natural Resources,
Pat Rabbitte T.D.
NOW Ireland Conference, Tuesday 15 November 2011
Chairman, I welcome the opportunity to address you today on realising the potential of Ireland’s renewable energy resources for the economy and for our energy and climate change policy imperatives.
2011 has been a further wake up call (if one was needed) for the European Union, the US and others, including Ireland, on the central importance of energy for economic recovery and the return to growth. The events at the Fukishima nuclear power plant and the upheavals in parts of the Middle East and North Africa have once again put security of energy supply centre stage. Reliable, safe and sustainable energy at the most competitive cost possible for business and domestic consumers is the challenge we all face.
As a committed member of the European Union, Ireland shares the objectives of the EU Energy 2020 Strategy for competitive, sustainable and secure energy. The goal is simple: to reduce Europe’s growing dependency on fossil fuel imports and to de-carbonise the energy sector. As a country that is still almost 90% dependant on imported oil and gas to meet our energy requirements, but with some of the best wind and ocean resources in Europe, Ireland faces big challenges but also big opportunities. As Minister for Energy I want to ensure that our strategies deliver sustainable and diverse energy supply at a cost which is as competitive as possible. Irish energy users require no less. And, as an economic opportunity, the prospects for renewable energy export need to be developed and realised.
And in doing so, we will help deliver on the challenge of de-carbonising the Irish economy and will play our part in delivering a decarbonised economy for Europe as a whole.
Climate change, energy security and competitiveness are inter-related challenges. They can best be addressed by a radical transformation of Europe’s economy from one based on a predominantly import based fossil fuel dependence to a low carbon economy based around radically increased energy efficiency, accelerated deployment of indigenous renewable energy resources and the building of smart networks. The European Union already has ambitious renewable energy, energy efficiency and climate change targets and the Commission is now setting longer term ambitions in its roadmaps for low carbon economy and low carbon energy systems for 2050. Ireland must be part of those ambitions.
The Government is fully committed to achieving its EU and international climate change targets. The energy sector will play a key role in underpinning this by delivering on our renewable energy and energy efficiency targets.
The International Energy Agency published its 2011 World Energy Outlook last week. The messages are stark. Despite uncertainty over the prospects for short term economic growth, demand for energy is set to grow exponentially over the next 25 years and the much needed changes in energy policy direction are not visible enough. Global primary energy demand increased by 5% in 2010 pushing global carbon emissions to a new high. The IEA has called for further action to tackle climate change through radical energy efficiency and renewable energy measures together with the necessary investment in networks.
The European Commission fully recognise this challenge and its newly proposed energy infrastructure package is designed to underpin the delivery of European strategic energy infrastructure in support of a transformation of the energy sector. It forecasts that in the next ten years at European level around €140 billion will be required for investment in high-voltage electricity transmission systems, storage and smart grid applications. This means that current investment levels have to be increased considerably and compared to the period 2000 to 2010, would require a 100% increase in the investment rate in the electricity sector compared to the previous period. I will be discussing the Commission’s proposals with my fellow ministers, including Minister Hendry at the European Energy Council next week.
Ireland’s deployment of renewable energy sources in electricity has been increasing steadily in recent years as we work, North and South, to deliver a 40% level of renewable electricity consumption by 2020. There has been good progress going from 5% renewable electricity in 2005 to around 15% renewable electricity this year. The challenge is to steadily increase renewable electricity generation year on year towards 2020 but also to go much further and move on to develop a renewable electricity export market.
I am confident that Ireland has the capability to achieve its domestic targets from the onshore wind projects already in the existing Gate processes despite the difficulties being encountered and the undoubted challenges which remain for a number of projects.
EirGrid projections show that around 4,750 MW of renewable capacity will be required to deliver our national 2020 target. With the roll out of Grid 25, strengthening of the North South grid connection and with the east west interconnector going live next year, I am satisfied that we can build out the necessary renewable generation capacity to meet our domestic requirements. But we do need to work together to overcome the barriers which include community acceptance of network development and sometimes of wind projects themselves and to ensure predictable and transparent support frameworks to attract investors.
I have also asked my Department to begin work with the Commission for Energy Regulation and EirGrid and with other stakeholders to prepare to develop a next phase, plan led, approach to delivering, in due course further additional onshore capacity commensurate with security of the electricity system and the roll-out of the grid This will not substitute for the existing Gate project pipeline but will, over time, serve to complement it.
I welcome the recent State Aid clearance from the European Commission on REFIT for Biomass technologies and I expect to receive clearance for the extended REFIT for onshore wind and other technologies in the coming weeks. As part of this overall renewable deployment programme, I also fully recognise the need to encourage offshore wind development. I am currently continuing to consider the costs and benefits of a feed in tariff for offshore wind and other renewable energy technologies given the pressures on the economy and the imperative need to keep energy prices as competitive as possible.
Ireland already has one of the highest wind penetration levels on an electricity grid anywhere in the world and it is crucial that we can manage and operate the grid in a secure and efficient manner while dealing with such a high intermittency level. The pioneering work of EirGrid and the Electricity Centre at UCD has put Ireland centre stage internationally in terms of managing high levels of wind on the system - winning regular plaudits from President Obama’s Energy Secretary - Stephen Chu among others
The combination of four elements: the All Island Grid study, EirGrid’s Grid25 strategy, the Facilitation of Renewables studies, and a comprehensive analysis of the long-term needs of the power system conducted in 2011, form the backbone of our plans to facilitate the 40% target by 2020. The work being done by EirGrid and SONI in Northern Ireland, in their ongoing facilitation of renewables projects is at the leading edge of world research in this area and will help to position Ireland right at the forefront of integrating wind onto grid.
EirGrid, through their membership of the European transmission body, ENTSO-E, are one of three national Transmission System Operators carrying out the modelling work for the European 10 year network development plan. This work clearly outlines the level of new infrastructure necessary in Europe to join together the energy markets and to strengthen the European grid to accept the level of future renewable electricity generation required. This work is also being fed into the North Seas Offshore Grid Initiative which is looking at the benefits that could be realised by member states co-operating with each other on cross border and offshore infrastructure developments.
The Commission for Energy Regulation is also working within ACER, the European Regulators representative association, in designing and implementing a new single European electricity market which will increase trade across borders and which will in particular assist in the development of cross border trade in renewables. While increased infrastructure and interconnection between Member States is important in facilitating cross border trade, market and regulatory rules need to work in a compatible manner to enable that trade to take place.
In the Department of Environment, Community and Local Government, My colleague, Minister Hogan, is currently finalising a Planning and Development (Foreshore) Bill with the purpose of “integrating the foreshore consent process under the Foreshore Acts 1933 with the existing on-land planning system”. Specifically, the Bill will seek to:
· integrate the foreshore consent process for major strategic infrastructure projects within the strategic consent process operated by An Bord Pleanála;
· integrate the foreshore consent process for non strategic infrastructure projects within the wider planning system operated by the local authorities; and
· provide for a plan-led approach for future foreshore development.
With some of the best wind and wave resources in Europe if not the world, the natural resources are clearly available in Ireland and the UK, but we need to work together to ensure that they can be harvested and developed in such a way that will bring national benefits to both of our economies. This is increasingly being recognised by our enterprise agencies, IDA and Enterprise Ireland, as they develop their Cleantech industrial strategies for the coming years. Boosting the deployment of renewable technologies in Ireland offers business opportunities to our companies, not only in traditional manufacturing and construction sectors but also in the ICT, financial, insurance and legal sectors. There are also opportunities for ports to develop new businesses and for deployment and support companies to prosper.
In Ireland, the scale of these natural resources is significantly bigger than the size of our own energy requirements and, over time and providing the right market structures can be developed, there is a real opportunity to create an electricity export market of scale. My Department and Sustainable Energy Authority of Ireland are completing a strategic environmental analysis of Irish waters for the development of offshore energy. The results, which were put out for public consultation earlier this year, show that the technical resource available for development of offshore wind and wave in the future is well in advance of the size of our own island’s electricity demand.
My Department has been working closely with Northern Ireland and Scotland in the ISLES project, which is looking at the feasibility of developing offshore transmission links between the jurisdictions. With each administration having ambitious renewable energy targets, there is likely to be significant electricity infrastructure built out in the Irish Sea area over the coming decades. The question the ISLES study looks at in detail is whether there is merit and cost savings available through co-operating and co-ordinating some of this development going forward and I understand that the report is quite positive on the benefits of this. I look forward to launching the completed report in Glasgow with Minister Ewing and Minister Foster next week.
The Irish Government together the UK Government, Northern Ireland, Scottish and Welsh administrations, working under the auspices of the British Irish Council, is firmly committed to developing the renewable energy resources of these islands and to developing cross border trade in renewable energy across our jurisdictions. We are also assessing how best we can cooperate to better plan and build our future energy infrastructure.
If, by combining our efforts, we can find ways to reduce the overall amount of infrastructure required and to ensure the optimal use of the infrastructure that is built, then all our consumers will be better off in the long run. I look forward to reviewing progress on all aspects of our joint cooperation with Minister Hendry later today.
Ireland is also working in Europe with the UK and 8 other Governments under the North Seas Offshore Grid Initiative to create a planning, market and regulatory framework to support offshore development and renewable energy trading across North West Europe. Our two Departments are at the forefront in jointly chairing the market and regulatory work stream under the North Seas Initiative.
The European Commission energy infrastructure package specifically names the North Seas area as being one of the key European electricity highways of the future and recognises the value of the regional approach being developed by the participating Member States. At the Energy Council in Brussels next week we will review the progress made so far in this initiative and highlight the importance of continuing on with this work.
We are clearly moving from an island based energy system into a more interconnected and joined up European energy market. As that structure and market develops over the next few years, it will provide new and bigger market opportunities for our renewable energy sector to engage in. With our proven natural resources in this area, Ireland is well placed to become a key renewable energy trading country.
Last March the European Heads of Government endorsed the Commission’s ambitious timeframe for integrating European energy markets. Together with our colleagues in Northern Ireland we led the way through the establishment of the Single Electricity Market on the island of Ireland. However, the challenge for this island energy market in the rapidly moving scenario of regional market integration is to achieve the undoubted benefits of integration but not at the cost of tearing up our own achievements to date to the detriment of power generators, investors and consumers North and South. I do not underestimate the risks and challenges. It is among the most significant strategic issues facing the energy sector but we will continue to work jointly with our Northern Ireland and UK friends to ensure good outcomes for the island of Ireland, and indeed for these islands in the drive to complete Europe’s internal energy market. As and from next year our two systems will be interconnected as the East West interconnector is commissioned. That new physical link underscores the need to develop compatible market trading systems.
I very much welcome our well established and flourishing cooperation between the UK and Ireland on all energy policy areas and in developing shared opportunities in renewable energy resources in particular. I look forward to moving that agenda ahead and with the objective of successfully arriving at quite a formal inter-Governmental Agreement using the co-operation mechanisms in the Renewable Energy Directive which will enable these islands to be among the first Member States to engage in cross border renewable energy trade to the mutual benefit of our economies. An export opportunity for Ireland can once again be an import opportunity for UK. This can indeed be a win/win for both our countries and for the industry players present here today. Let’s work together to make it happen in a way which delivers a fair economic and commercial return for all.