The UK’s dependency on energy imports could rise from 27 per cent in 2009 to 58 per cent in 2020. Ireland currently imports 89 per cent of its energy and Northern Ireland is 99 per cent dependent on imported fossil fuels for its energy needs. As a result there is a drive to create more indigenous renewable energy.

The UK is determined to move away from its reliance on coal to offshore wind, energy from waste, biomass and anaerobic digestion (as well as nuclear power and the development of carbon capture and storage).

Scottish ministers have executive devolution for energy matters. Their priorities are promoting renewable energy, implementing renewable obligation certificates and energy efficiency.

Energy policy is devolved to Northern Ireland, where the Executive has decided to focus on onshore and offshore wind and biomass.

The Republic of Ireland will continue to focus on onshore and offshore wind, biomass and new technologies such as ocean energy.

Each jurisdiction develops policy in line with European energy legislation. The 2009 Climate-Energy Legislative Package aimed at achieving (by 2020): a reduction of greenhouse gases by 20 per cent compared to 1990 levels; an increase in the level of renewable energy to 20 per cent by 2020; and a 20 per cent improvement on energy efficiency levels, compared to 2006.

That initiative incorporated the Renewables Directive which stipulated that 20 per cent of Europe’s final energy consumption (and 10 per cent of each member state’s transport energy) be from renewable sources by 2020.

Consequently, each member state developed its own targets.

In 2004, Northern Ireland and the Republic agreed to develop an all-island energy market. A step towards this came in 2007 when the Single Electricity Market (SEM) was established. The market encompasses approximately 1.8 million customers in the Republic of Ireland and 0.7 million in Northern Ireland.

In addition, interconnection is a pertinent issue for the four jurisdictions. While a 275kV overhead line currently connects Tandragee and Louth substations, it is comprised of two separate circuits and therefore is at risk of ‘system separation’ (making the disconnection of customer load a possibility). As a result, a second 400kV North/South interconnector, to be located in the counties of Tyrone, Armagh, Monaghan, Cavan and Meath, is out for consultation in both jurisdictions.

Work is under way on a 500MW electricity interconnector between Rush Beach in Dublin and Barkby Beach in north Wales. The interconnector will have a capacity of 500MW and is on target for completion in 2012.

A collaborative venture between the Scottish Government, the Northern Ireland Executive and the Government of Ireland, the ISLES project, is currently assessing the feasibility of creating an offshore interconnected transmission network and subsea electricity grid based on capturing wind, wave and tidal energy off the coast of western Scotland and in the Irish Sea.

Republic of Ireland

Targets

• 16 per cent of all energy consumed to be from renewable sources by 2020
• 40 per cent of electricity
• 12 per cent of heat
• 10 per cent of transport

Latest figures from the SEAI show that renewables accounted for 4.7 per cent of gross final energy consumption in 2009 (provisional). Of that, renewables accounted for 14.4 per cent of gross electricity consumption.

National priorities

Ireland’s energy white paper: ‘Delivering a Sustainable Energy Future for Ireland’ (2007-2020) set the following priorities:

• ensuring security of energy supply;
• promoting the sustainability of energy supply and use; and
• enhancing the competitiveness of energy supply.

Onshore wind

Windfarms: 110

Installed capacity: 1,379MW

Offshore wind

Arklow Bank project

Installed capacity: 25MW

Gate 3 projects: Carrickmines (364MW) and Oriel (237.5MW)

Hydro

Hydro-electric generators: 14 Installed capacity: 212MW Micro hydro-electric generators: 52 Installed capacity: 25.1MW Ocean

Target: 500MW of installed wave capacity by 2020

A number of wave energy device prototypes are in development in Irish waters but a commercial wave energy device does not exist yet.

Biomass

Target: 30 per cent biomass co-firing in Ireland’s three state-owned peat-generation stations by 2015 2008 progress: 3.8 per cent

Northern Ireland

Targets

• 15 per cent of all energy consumed to be from renewable sources by 2020
• 12 per cent of all energy consumed to be from renewable sources by 2012
• 40 per cent of electricity
• 10 per cent of heat

The current share of electricity generated from renewable sources is just under 10 per cent.

National priorities

The 2010 Strategic Energy Framework identified the following priorities:

• build cost competitiveness;
• ensure security of supply;
• enhance sustainability; and
• develop energy infrastructure. Onshore wind

Windfarms: 26 Installed capacity: 347.7MW

DETI believes Northern Ireland will reach its 2012 target of 12 per cent due to its wind energy.

Offshore

Potential offshore wind, wave and tidal development sites: 8 2020 capacity targets: 600MW offshore wind energy 300MW tidal energy

Two separate, parallel, competitive tender rounds are planned for offshore wind and tidal stream later this year. (see page 40)

Bio-energy

A cross-departmental Bio-energy Action Plan aims to:
• raise awareness and understanding of the benefits and opportunities of bioenergy;
• create and maintain a supportive and encouraging policy and regulatory framework;
• encourage and support targeted investment; and
• encourage focused research that is relevant to Northern Ireland.

United Kingdom

Targets

• 15 per cent of all energy consumed to be from renewable sources by 2020
• 30 per cent of electricity
• 11 per cent of heat
• 10 per cent of transport

In 2010, renewable accounted for 6.8 per cent of electricity, 1.8 per cent of heating and cooling and 3.6 per cent and 2.9 per cent of transport (renewable transport fuels accounted for 3.6 per cent of road transport fuels in 2010). Overall, renewable energy provisionally accounted for 3.3 per cent of energy consumption.

National priorities

The UK renewables policy framework is made up of three key components:

• providing financial support for renewables;
• unblocking barriers to delivery; and
• developing emerging technologies.

The July 2011 UK Renewable Energy Roadmap sets out actions for the UK Government that will “complement” parallel activity being undertaken by the devolved administrations. These include:

Onshore wind – provide long-term certainty for investors through electricity market reform and a managed transition from the Renewables Obligation.

Offshore wind – provide up to £30 million of direct government support for offshore wind cost reduction over the next four years.

Marine energy – provide up to £20 million over the next four years to support innovation in wave and tidal devices.

Biomass electricity – publish a UK Bio-energy Strategy.

Biomass heat – introduction of the Renewable Heat Incentive (RHI).

Ground source and air source heat pumps – introduction of the RHI for non-domestic installations and the Renewable Heat Premium Payment for eligible domestic scale heat pumps.

Renewable transport – support the market for plug-in vehicles by making up to £30 million available for investment in recharging infrastructure and providing a grant of up to 25 per cent of the purchase price (capped at £5,000) for eligible electric, plug-in hybrid or hydrogen fuel cell cars.

The Coalition’s Programme for Government states that “climate change is one of the gravest threats we face.”

Scotland

Targets

• 30 per cent of all energy consumed to be from renewable sources by 2020
• 100 per cent (equivalent) of electricity demand
• 11 per cent of heat
• 10 per cent of transport

Scotland aims to generate twice the electricity it needs i.e. 50 per cent used in Scotland and 50 per cent exported. Over 50 per cent of all electricity will be from renewables (accounting for the 100 per cent equivalent of the domestic demand) and the remainder from non-renewable sources.

In 2009, 20.9 per cent of all Scottish-generated electricity came from renewable sources. This equated to the equivalent of 27.4 per cent of electricity demand. The shares for renewable heat demand and renewable transport demand were 2.8 per cent and 1 per cent respectively.

National priorities

The 2009 Scotland Renewable Action Plan identified the following priorities:

• establish Scotland as a UK and EU leader in the renewable field;
• ensure maximum returns for the domestic economy; and
• meet targets for energy from renewables, and for emissions reductions, to 2020 and beyond.

Hydro

Hydro-electric generators: 145 Installed capacity: 1,500MW

Future projects: Two large-scale new pumped storage schemes in the Central Highlands 900MW

Potential for small hydro schemes: 7,000

Potential capacity: 1,204MW

Offshore wind

In 2009 the Crown Estate granted exclusivity rights to nine offshore sites with the potential to generate more than 6GW of offshore wind power.

Onshore

Windfarms: 117 (1,367 turbines)
Installed capacity: 2.4GW
Future projects: 20 (450 turbines)
Potential capacity: 1GW

Economies around the globe are facing a unique investment challenge as they transition over the next few decades to low-carbon economies. Leading the charge are developed economies, whose long consumption of fossil fuels has left them at the top of emissions tables and most in need of decarbonisation. Emerging economies are following swiftly behind however, and with growth rates tipping into double figures for some, the need to find cheaper, more sustainable sources of energy is charging up the business and political agenda. With traditional, carbon-intensive energy sources such as coal and oil dwindling and with tough emission reduction targets to adhere to, the pressure is well and truly on for governments.

This will be a journey of opportunities as well as costs however, with clear advantages in the shape of new industries, new jobs and new markets for those that get their economies in shape. Respective ministers in Stormont, the Dáil and Holyrood are keenly aware of the direct and indirect benefits, and have been pushing ahead with ambitious plans to kick-start and maintain investment flows in a range of renewable energy sources, from tidal and wind to biomass and geothermal. Parliamentary committees are doing their bit too, keeping pressure up and proffering evidence-based ideas for removing barriers to success on the green energy agenda; and of course businesses have stepped up to the plate, deploying innovative new technology and committing funds even where the risks are high.

Aquamarine Power for example, began to harness the huge potential of marine hydropower by installing the world’s first near-shore hydro-electric wave power machine, the Oyster, on the seabed off the Orkney coast in Scotland in 2009. With their next-generation Oyster 800 device about to be deployed in Orkney this summer and with strong R&D links with Queen’s University in Belfast, Aquamarine Power is showing the way. The company is now backed by utility SSE and international power conglomerate ABB who can clearly see the potential of the sector. Aquamarine Power now employs over 60 people directly, and boasts a supply chain which is over 90 per cent in the UK. The goal of Chief Executive Martin McAdam is to make marine power competitive on cost with offshore wind by 2017; judging on his company’s recent performance that seems like a target that will be met.

The challenge

For every success story however there are others of frustration and failure, and the huge demand for green energy makes attracting it to the outermost northwestern corner of Europe a pressing challenge. A recent CBI report ‘Risky Business: Investing in the UK’s Low Carbon Infrastructure’, identified three key specific challenges that are hindering investment in a range of low-carbon infrastructure, including renewable energy:

• Existing funding channels are insufficient to meet the pace and scale of investment

Capital is needed now, and lots of it. However, big investors are worried that the amounts are simply too high and that major utilities operating in Northern Ireland, the Republic and Scotland simply cannot accommodate such an outlay on their balance sheets. Research from Ernst & Young suggests that project finance from the banking sector and investment from infrastructure funds will not be able to make up the difference, amounting to what Barclays and Accenture are calling a “carbon capital chasm.” The investors holding the largest pool of capital – institutional investors such as pension funds – are usually only willing to accept very low risks, which is why they have so far generally chosen not to invest directly in low-carbon energy projects.

• A shift in finance and capital conditions has created a challenging backdrop to investments

The legacy of the credit crunch has had significant implications for debt finance, the availability of which has been constrained due to reduced liquidity in the banking sector and the need for banks to repair their balance sheets. Lending activity is also likely to be constrained by increased scrutiny and tighter due diligence requirements in the financial services industry. The cost of debt has increased, with project finance fees doubling in the last two years. Lending periods have reduced to around 6-7 years, posing a particular problem for large low-carbon infrastructure projects which will have much longer timescales and will therefore need to refinance.

In addition, it seems that the financial crisis has permanently dampened the risk appetite of investors at the global level, with the CBI’s 2009 Shape of Business report suggesting that a much lower profile will be shouldered in the future, including in the equity investor market. This will have implications far and wide in the economy, but will impact particularly badly on the renewable energy sector, whose risk-profile has long concerned funders who have forayed into the tech sector without the same fears.

• Low-carbon investments are perceived as too risky

Difficult market conditions shouldn’t necessarily prevent investment; if there are returns to be made, investment will be forthcoming. However the view among investors is that low-carbon investments are faring less well than conventional investments because their returns are either not sufficiently attractive or are too uncertain. Many low-carbon technologies, even those close to commercialisation, have no track record for investors to go by, which makes them a riskier investment prospect. For example, Round 3 offshore wind will use next generation wind turbines which are larger than existing turbines and as yet untested. Add to this considerable policy risk, with planning permission a particular bête noire of the renewable industry (see exhibit above for a snapshot of projects stuck in the UK Government’s planning process). And of course the capital intensity of most low-carbon infrastructure investments means that there are long and often uncertain payback periods, leaving investors exposed during the construction phase of the project.

The solution

Importantly though, co-operation and strategic partnerships are being developed between governments and regulators across the three regions, and the work of bodies such as the IBEC- CBI Joint Business Council underpins these relationships to help deliver the end-goal of a more attractive investment environment. The Tri-Energy Project for example, of which this renewable mapping supplement is a part, was designed to help increase investment and collaboration in renewables via engagement with government, industry and academia. Getting it right is easier said than done; even Chris Huhne, Whitehall’s Energy Secretary and a leading proponent of global action on climate change, recently lamented that his department’s regulations were of “a Byzantine structure, onerous for business, unworkable for government, and inefficient where it counts.”

But getting it wrong will be much more costly, both now and in the future, on a number of fronts: substantial fines from missed targets; insecure energy supply for homes and businesses; and lost jobs and prosperity from missed investment. The good news from the CBI’s report however was that the industry itself as well as the financiers that were interviewed during the course of the study, saw no insurmountable barriers to investment. Rather they were convinced that provided governments plot the right course of action to encourage low carbon investment, their economies can successfully complete the transition.

For further information please contact: Kirsty McManus, Joint Business Council
Programme Manager.
kirsty.mcmanus@cbi.org.uk

Europe is on track to meet, and possibly exceed, two of its three 2020 energy targets. However, more work must be done in order to become more energy efficient. Member states must collectively reduce greenhouse gases by 20 per cent, increase their share of renewables by 20 per cent and reduce energy consumption by 20 per cent from their 1990 baseline levels.

Marie Donnelly contends that while the greenhouse gas target is on track and the renewable target could be exceeded by 0.6 per cent, the energy efficiency projections only reach 10 per cent.

“As a consequence, this is where our policy efforts are focused at the moment,” Donnelly states.

She refers to the Energy Efficiency Plan, released in March, which encourages a stronger emphasis on energy efficiency in the public sector through public purchasing, the refurbishment of public buildings and the encouragement of high performance in cities and communities. The strategy also calls for better energy training in the construction sector; consideration of district heating in urban plans; and the establishment of energy service companies. These companies would deliver energy efficiency improvements, accept financial risk by covering – or helping to finance – upfront investment costs be financed through the savings achieved.

Energy efficiency

In addition, the Commission released its proposed Energy Efficiency Directive in June. According to Donnelly, the directive encompasses “one of our biggest problems; buildings.” She explains that Europe uses 40 per cent of its energy for heating and cooling. “If we can secure the envelope of our buildings we can dramatically reduce that demand,” she contends. However, “part of the difficulty is [that] we are an established economy; our buildings are there.”

Member states construct 1 per cent new buildings every year and retrofit 1.5 per cent. “That rate of retrofit is not sufficiently fast,” Donnelly states.

The directive calls for the public sector to lead by example “by retro-fitting at least 3 per cent of their square meterage every year to the highest level [in order] to show people what it will look like when it’s done.”

Also, energy suppliers will face an energy efficiency obligation “to save 1.5 per cent of energy each year cumulatively going forward.”

Donnelly points out that this scheme is operational in the UK, France, Italy and Denmark and “is proving rather successful.” She explains that it operates by energy suppliers “grant-aiding, supporting or even paying directly for cavity wall insulation, double-glaze, new boilers [and] efficiency systems in their consumers’ homes.”

Donnelly believes that “it’s a very consumer-friendly approach” but acknowledges that “it’s a challenge for the utilities to deliver.”

When people think of renewables they tend to focus on electricity and wind. Donnelly believes that heating and cooling and biomass are also important.

Because heating and cooling represents 40 per cent of our energy, it is “a key area to address going forward.” In order to ensure that Europe meets both the energy efficiency and renewable targets, reducing demand for heating and cooling is essential, Donnelly emphasises.

She points out that “many renewable energies can deliver cost-effective heating and cooling, for example, a solar thermal panel in the roof to heat water.”

The Commission is currently “looking at biomass contributing half of the renewable targets in Europe.”

Biomass currently contributes 80 per cent to the heating and cooling from renewable sources. This leads to concerns about land management. Donnelly states that lowering this demand is “key” because “the ultimate demand on our land will be huge if we continue on this basis.” Europe’s sustainability criteria are “the strictest in the world” because of concerns about land, therefore Donnelly suggests: “If you are going to have onshore wind farms, would it be possible to have very tall wind turbines that stand over the forest so that you are getting double usage of the land?”

Another idea, she contends, would be to place solar panels on ‘a leg’ so that they turn to the sun allowing light to come down and creating the possibility of growing biomass underneath.

“We are looking at a number of culminations like that; maximising the use of land so that we ensure we don’t jeopardise the supply of food and ultimately the living space that we need.”

In terms of energy infrastructure “there are some mechanical approaches that can be taken at national, regional and local level,” Donnelly says.

The first is workflow. She elaborates: “How many different authorities are involved? Do they all have a timeline and, if so, is it sequential or can all the mechanisms operate in parallel?”

Some member states have a system whereby there may be four to six authorities involved in the process, but only one will “give an answer.” Donnelly explains that “if there is an appeal, it is just against that single answer, as opposed to the individual six.”

She sums up: “This is a relatively mechanical approach to administrative streamlining which doesn’t endanger the legitimate right of citizens and consumers to have a say, doesn’t undermine the responsibility of authorities to do their jobs, but just applies a workflow approach to be as efficient as possible.”

Energy will continue to be a priority for the European Commission going forward, as shown by its commitment to increase funds spent on climate action by 20 per cent in its recent budgetary proposals for

2014-2020. Priorities for funding include renovation of buildings, smart grids, renewable energies and innovation in transport.

Donnelly adds: “Over the period of this financial prospectus [seven years], investment in energy has gone up each year. We hope that upward projection will continue and we do expect, from our discussions with member states, that they will support that general approach.”

Looking towards 2050, Donnelly stresses that energy efficiency will be the “first, second, third, middle and last” priority.

“If we could get our energy efficiency right, it would put us in an entirely different scenario,” she claims.

The second area to concentrate on is transport, she concludes.

“The reality is that we need transport, but the question is: ‘Do we need transport in the form we currently have and are there alternatives we can achieve?’”

As Chief Executive of the world’s largest independent developer of offshore windfarms, Andy Kinsella sees a bright future for offshore wind. Three and a half years after starting up, the company has its offshore centre of excellence in London and satellite offices in Glasgow and Berlin.

Mainstream had a jump-start in offshore renewables from day one, when Airtricity’s offshore team joined the company. Airtricity had designed, constructed and financed the first offshore windfarm in the British Isles, on Arklow Bank (25MW), just off Kinsella’s home town. Following on from that, it developed the Buttenbeg project off Germany (300MW) and the Greater Gabbard Round 2 project off the UK (500MW), which was the largest planned offshore windfarm when its construction started in 2008.

Within the first six months, it was bidding for the Scottish round of projects. Mainstream won Neart na Gaoithe (450MW), Gaelic for spirit of the wind, in the Firth of Forth. It has 100 per cent ownership of the site and the success was a “good validation” of its business in its early stages.

Mainstream then bid into the three largest zones of Round 3 and won the third largest, Hornsea, which is being developed in a joint venture, named SMart Wind, with Siemens Project Ventures (the project finance arm of Siemens Financial Services).

The other eight zones were awarded to utility-led consortiums but SMart Wind is a supply chain solution. Kinsella chairs the board of Mainstream, and one of his key staff, Chris Hill, is its General Manager, running the project day to day.

The supply chain consortium involves Siemens Wind, the leading supplier of offshore turbines in the world, and Siemens Transmission and Distribution Ltd. The latter is based in Manchester and is Siemens’ world centre of competency for windfarm interconnection.

“Further out to sea, distances dictate that for economic reasons, you move from AC to DC voltage technology,” he explains. Siemens is also one of only three suppliers of AC-DC converters for connecting to shore (alongside Alstom and ABB).

Siemens is also a co-owner with Dong Energy of A2SEA. A2SEA is an offshore wind farm installation and services company based in Fredericia, Denmark. The company is specialised on transport, installation, and servicing of offshore wind farms. In addition to Denmark, the company has subsidiaries in the United Kingdom and Germany. Another SMart Wind associate, Hochtief, is the second biggest engineering construction company at a global level and one of the few with offshore experience. Hochtief has formed a joint venture with Beluga, the world’s largest heavy lift shipping company, to develop four state-of-the-art vessels for offshore new generation installation in the North Sea. Each vessel will require £180-190 million of investment.

Mainstream fully owns the Horizont project (1,200MW) off Germany, which brings its North Sea portfolio up to 5,700MW.

Key drivers

While the EU’s 2020 commitments set legally binding targets for member states, the UK and Germany face two large difficulties when developing their renewable sectors.

For a start, onshore wind capacity ranges from a high point in western Ireland and Scotland to lower levels in Germany. In addition, the load centres in both countries are far removed from renewable sources.

“To meet climate change commitments is one thing but to meet them onshore is just not a possibility in these two large countries,” he states. “The solution for this then is to move offshore.”

Kinsella adds: “You essentially have wind blowing over a flat, undisturbed, frictionless surface. You get the most energy from it. You don’t have the restrictions in transmitting the electricity in that you can bring cable through the sea to the load centres onshore.”

Twice in the recent past Europe has had to face the threat of gas supply from Russia being interrupted. If this supply was to be interrupted, the continent would have a large energy deficit. The UK’s security of supply will also be affected by the closure of 15GW of coal plant under the Large Combustion Plant Directive.

Germany has “walked away quite dramatically, post-Fukushima, from its commitment to nuclear power.” In the UK, it will take at least 10 years to bring a new nuclear plant from its concept stage to commercial operation, and it may no longer be an acceptable source of electricity by that point.

Offshore wind offers a “quick fix at scale” which will also generate jobs in service industries, operational maintenance, construction, R&D and academia. Deprived regions will also experience economic renewal.

“With new technologies for offshore wind,” he notes, “it produces significant high-tech manufacturing opportunities and the UK, in particular, would look to regenerate the north of England and coastal towns on the basis of inward investment for manufacturers and the broad supply chain for offshore wind.

“Germany, at this stage, has more people employed in renewables than the automotive industry. I think that speaks for itself.”

Process

The minimum timeframe from the awarding of a site to full consent is three years in the UK. Mainstream will deliver consented projects in this time frame. Parallel to that, it seeks to complete the detailed engineering design of the wind park and to secure the supply chain and bring projects to financial close.

Construction can start within six to 12 months of consent and can last about two years for a large 500MW windfarm.

That combined five to six year process is “much, more shorter obviously than a nuclear plant.” In addition, he’s sceptical about whether carbon capture and storage will go ahead at scale. The technology is not yet even at the demonstration stage.

Asked whether the supply chain is developing properly, he points firstly to the demand for offshore wind. Western European governments are committed to 35-40GW by 2020. £120 billion in investment would be needed to achieve 40GW and, when grid development is added, that figure reaches £130-140 billion.

“I don’t see a shortage in turbines to meet this demand,” he notes. “You’ve a significant amount of players in the market at the moment.” Besides Siemens, examples include REpower, Vestas, GE and new entrants from South Korea and China.

The real problem is with cable. “In general, there’s not enough manufacturers who make high voltage submarine cable and it’s not just for the offshore wind industry,” he comments. “People are just using high voltage subsea cable for interconnection anyway. We don’t have an exclusive right to that supply.”

Cable manufacturing facilities tend not to be located where ports serving offshore wind installation are located. If they were at these ports (e.g. in eastern Britain), the cable could be directly loaded on to waiting ships. The less jointing a cable has, the quicker it can be installed and failure becomes less likely.

As explained, only three manufacturers build high voltage DC converters that are needed further out from the shore.

Kinsella remarks: “The first pinch-point will be cables and converters. Turbines won’t be a problem. We feel at this moment in time, between vessels that are there being converted, jack-up barges and new commitments to vessels, more than likely there will be enough vessels for turbine installation to meet the profiles and build out.”

That said, there may be a shortage of vessels for laying the foundations, which due to their weight and bulk are an installation challenge in themselves.

Variability

The crunch point for all wind technology, whether onshore or offshore, is its dependence on the weather.

Intermittency is not unique to wind. Kinsella points out how the Fukushima incident has affected a global industry and one of the world’s largest economies. He instead prefers to talk about variability and takes a long view of wind’s development.

“At the scale we’re going into in offshore and the distribution of offshore around our waters, we’re looking into the future. This is an industry where we’ve got to look 10, 20, 50 years ahead,” he states.

Europe’s offshore wind network will, eventually, be distributed over the North Sea, Irish Sea, the North Atlantic (off western Scotland and Ireland) and the Bay of Biscay: “The wind will be blowing somewhere most of the time and that will be part of the mitigation.”

Friends of the Super Grid is making the case for that network in Brussels, led by Chief Executive Ana Aguado. The organisation is funded by its 21 members, including Siemens, Alstom, Dong Energy and transmission system operators in the UK, Spain and France. It also aims to make the case for agreed technical standards so that components will fit together and share common voltages.

“Essentially, it’s an offshore fully meshed transmission network, mainly in DC, that would connect all the windfarms offshore in a truly meshed proper grid, not point- to-point connections as we see at the moment,” he explains. Point-to-point only transmits for 40-45 per cent of the time. Smart grids will also play a significant part in the future mitigation of such variability.

“It would allow great flexibility in selling power where it’s needed, where demand is most, and when you can arbitrage and trade like that, it will push the cost down.”

Ambitious plans for the supergrid see it reaching north and south throughout European waters. The system could be backed up by hydro-electricity, from Norway and Iceland, and photovoltaic power captured by the Desertec project in southern Europe and north Africa.

“They will all come together by 2050 to remove variability in terms of wind as an issue, but in the meantime we still have our conventional technologies: gas turbines, steam turbines, nuclear, coal,” Kinsella says. “We’re in a transition. That will be needed there to balance the variability of wind in the short and medium term.”

Outlook and cost

The outlook for offshore wind, in his view, is “pretty good”.

Germany has an offshore wind target of 25 GW by 2030, which would be delivered if the planned North Sea and Baltic Sea projects meet their potential. New legislation in Germany will increase the industry’s revenue stream and reinforces the law that interconnection “has to meet you in the water”, thus taking the connection risk off the developer.

The UK’s medium target is 18GW.

“My own suspicion is that as we come out of this recession, energy prices are only going to increase further,” he comments. “We’ll see growth. We’ll have the challenges in the UK of closing down nuclear plant, waiting for new nuclear plant to come on and closing down the coal plant under the Large Combustion Plant Directive.” Offshore wind and gas are the only ways to fill that gap.

At present, the levelised cost of energy over the lifetime of a windfarm is around £145 per MWh, which is “currently not competitive with other generation technologies”.

Nine offshore developers, which account for 70 per cent of the footprint of developments in UK waters, are working the reduce costs through the Carbon Trust’s Offshore Wind Accelerator Programme.

This involves around £15 million of investment across four workstreams: foundations; deep array losses; operational maintenance (i.e. remote operation and accessibility); and grid connection.

Reports from the UK Energy Research Council and Mott MacDonald suggest that the cost can be reduced by 30-40 per cent by 2020 “if we all commit to this as an industry.” This is further supported by resreach by the Carbon Trust and the Arup and Ernst and Young report for the RO (Renewable Obligation) review for DECC.

The UK Government is setting up a group to bring down the levelised cost to less than £100 per MWh by 2020.

“I looked at a profile recently where we build 6GW of offshore wind in UK waters by 2018. If I assume the average size of a wind turbine was 5MW, that gives me 1,200 machines and it gives me over 40 million operating hours,” he continues.

“By the time you’ve put out 1,200 machines, the costs will come down because the learning rates will go through the roof.”

In contrast, the same investment in gas turbines would result in 12 to 14 turbines and about 75,000 operating hours.

Pivot point

Kinsella’s attitude to the sector’s future development is confident and he sees policy moving in its favour.

“From an Irish point of view, we’re at a pivot point now,” he states. “The IEA in Paris see offshore wind playing a huge, huge part in essentially a carbon-free electricity generation by 2050.

“Then come back into Europe. We had the MoU signed by nine EU governments plus Norway before Christmas for the North Sea grid initiaitive. That involves Ireland but I think, more significantly, it’s signed by the UK and Germany. Where they go, everybody else will follow.”

Two British-Irish Council workstreams, on grid interconnection and raising the profile of marine renewables, started work in June 2009. They are led by the UK and Scottish.

The conditions are right to develop the sector across the British Isles, and the UK market is a “stepping stone” into the larger European market.

European Energy Commissioner Günther Oettinger wants to see a single electricity market with harmonised incentives, including harmonised incentives for offshore wind.

The technology exists and can be incentivised through renewable obligation certificates or the UK’s CfD scheme. Immediate government action on the British-Irish Council commitment is vital. The door is now open to a large market with a defined revenue stream. If that support comes together, the private sector “will deliver the investment and scale” to build offshore windfarms.

Profile: Andy Kinsella

A native of Arklow, County Wicklow, Andy Kinsella graduated in engineering from University College Dublin. He worked for ESB Power Generation for two years before moving to General Electric, which took him to its HQ in Schenectady, upstate New York.

After his training came a ‘world tour’ on large scale gas turbine projects in North Africa, the Middle East, North America, South East Asia and Japan. Kinsella then joined ESB International, where he was on the senior management team for three years, and then left to join the board of Siemens, heading up their energy and transportation businesses in Ireland.

He then returned to ESB international as a Director, before moving to the senior management team of ESB Power Generation and subsequently setting up Mainstream.

He runs a couple of half marathons every year, and is an avid hiker (conquests include Mont Blanc and Kilimanjaro). He enjoys hacking on his Irish draught horse Campbell and is a level two kayaker. “Anything outdoors is a real passion.” He also enjoys painting, cooking and reading.

Andy met his wife Angela skiing in France.

The phrase ‘green economy’ has become commonplace in our economic lexicon. The number of Irish environmental companies and the island’s renewable energy sector have grown significantly in recent years. They are now seen as a key driver of future economic growth.

A Forfás report on the green economy, published this year, stated that employment in the sector in the Republic as of November 2010 stood at 18,750 (to put it in context the ICT sector has approximately 70,000 employees), and is projected to rise to either 23,350 or 29,000 by the end of 2015, using two different projections.

The green economy is seen as having six sub-sections: energy efficiency and management; waste management and recovery; green ICT; environmental consultancy services; water and wastewater treatment services; and renewable energy.

The renewable energy component in Ireland’s fuel use continues to grow, with the SEAI’s 2010 energy report stating that consumption of renewable energy grew by 14.4 per cent in 2009. Renewables constituted 4.9 per cent of gross final energy use and 14.1 per cent of gross electricity consumption in the same year.

Wind is Ireland’s largest source of renewable energy, and the country is seen as having prime conditions for generating wind and tidal power. The Irish Wind Energy Association, for example, stated that there is the potential to create 16,000 new jobs in the sector by 2020. In 2009 private sector investment in wind energy was approximately €400 million. As well as the various sources of renewable energy, the sector also includes products, systems and services for generation and collection of such energies.

Targets and ambitions set by both the Irish Government and the previous administration express confidence that the renewable energy sector will continue to grow in the coming years. The Government has a target of 40 per cent of electricity to be sourced from renewables by 2020. Furthermore the Programme for Government states: “We will seek to establish Ireland as a renewable manufacturing hub to attract international and domestic investment.”

The importance of renewable energy in the years ahead is underlined by EU targets. Greenhouse gas emissions must be reduced by 20 per cent (from baseline 1990 levels) by 2020. 16 per cent of Ireland’s total energy consumption is to come from renewables, and 10 per cent of transport consumption and 12 per cent of heat consumption from sustainable sources by the same year.

With renewable energy generation having grown by 15 per cent per annum (28 per cent per annum of which was from wind energy) for the five years up to 2009, the latest SEAI energy forecast contains two scenarios for the coming nine years. Under its baseline scenario, 8.2 per cent of overall energy consumption will come from renewable sources. Alternatively, the National Energy Efficiency Action Plan and National Renewable Energy Action Plan scenario, which assumes national targets will be met, predicts renewable energy will account for 50 per cent of electricity and 18.3 per cent of total energy use.

Two companies typify the changing emphasis in Ireland’s energy demand. In its strategic framework to 2020 (published in 2008) the ESB, which showed a €339 million operating profit for 2010, aims to invest approximately half of its total €22 billion investment in renewables, aiming to deliver over 1,400 MW of electricity (one-third of its electricity generation) from such sources. Airtricity, which has invested €1 billion in Irish renewables, sourcing 500MW of renewable energy, announced the creation of a further 105 full-time jobs last October, bringing its total workforce on the island to over 930.

Difficulties remain in the form of a backlog of foreshore licence applications, barriers to micro-generation, public acceptance of grid development and perceived over- generous on-shore wind supports, highlighted by the ESRI’s Professor John FitzGerald in a recent review of Irish energy policy.

The next few years will be crucial for the renewable energy sector. The Forfás report states that progress has been made lately in investing in the grid and by building an East-West interconnector, providing incentives for farmers to produce renewable energy, the development of regional sustainable energy action plans and lowering the capacity threshold for wind farms under the planning laws. With immediate action on removing the remaining barriers, the report claims, the employment target of 29,000 green sector jobs could be reached, with renewable energy playing a significant role within that growth.

Renewable energy has been driven by European policy. Ireland and other member states set 2010 electricity targets and these where later developed into all-energy targets which then led to the 20:20:20 targets in the Third Energy Package. The latest initiatives, driven by climate policy, necessitate tackling cross- cutting issues. Although much of the focus to date has been on decarbonising electricity there is significant potential for renewable energy use in heating and transport.

Europe has significant renewable energy resources: the Nordic countries have huge hydro resources; central and eastern Europe huge biomass potential; and Ireland and UK significant wind resources. There has been a move towards exploiting offshore resources which makes sense in countries such as UK, Germany and the Netherlands where the ability to meet renewable targets onshore are limited. In the Irish context onshore wind is a cheaper and proven technology that should meet Ireland’s targets. However, exploiting offshore resources offers the potential for exporting.

There will be enough onshore wind energy on the system to meet Ireland’s 2020 target, with the Gate 1 and Gate 2 projects, and the Gate 3 offers. Some projects in Gate 3 are experiencing planning difficulties and others are affected by network constraints, but Gate 3 was sized to meet 2020 targets when demand was forecast to be much higher.

Support

At present the Department of Communications, Energy and Natural Resources has applied to DG Competition for two state aids: the extension of the onshore REFIT rates; and a new biomass rate. The REFIT rates for offshore wind and ocean energy will be finalised in the autumn of 2011. The objective of the varying rates is to achieve a balanced portfolio of renewable resources and not just onshore wind. The recent increase in natural gas prices has also helped the economics of renewable technologies.

The different REFIT technology bands reflect the different stages of commercial deployment for each of the technologies. Ocean technologies, wave and tidal, attract the highest rates as they are still at the pre-commercial testing phase. As the technology gets nearer to commercial levels any support will be reduced accordingly. Waste-to-energy support follows the definition in the EU Renewables Directive and applies only to the biodegradable fraction of any waste stream.

Challenges

In addition to the necessity of meeting national targets, there is a challenge for the renewables sector to be adequately rewarded in an electricity market that faces fundamental change by 2014. There is now a move towards greater market compatibility of power markets across Europe. The obstacle will be to get the design and structure of any integrated market to clearly facilitate renewable generation that undermine it. The bigger regional markets, which will include a North West European market, need to assist interconnection and network investment to accelerate increased levels of renewables. There are significant compatibility challenges in integrating the Irish Single Electricity Market with the market in Great Britain.

Any market changes should avoid the boom and bust cycles that will hinder the development of renewable sources. The increase in renewable energy capacity has seen the emergence of new types of energy companies in the Irish market, that are knowledgeable and ambitious, including BGE and Viridian.

Some have sought aggressive development overseas including Airtricity and Mainstream Renewable Power. Even in the midst of a severe economic downturn renewable energy companies and energy infrastructure providers have been able to attract private sector capital.

As Ireland continues to increase its renewable energy output, Sustainable Energy Authority of Ireland (SEAI) seems certain to remain central to progress. Established in 2002 as the national energy authority, it now works on a range of renewable and energy efficiency programmes concerning residential, commercial and industrial use. The authority receives its budget from the Department of Communications, Energy and Natural Resources and the EU (structural funds) and has six offices.

Renewable energy is at the fore of its work. It administers research project funding, grants to support greener homes and businesses, and produces analysis. Over 200 research, development and deployment projects, constituting €10 million, are being funded by the authority. It is also supporting 20 ocean energy projects to a combined value of €5.5 million and has an ocean energy development unit.

In the area of energy efficiency SEAI is providing a range of programmes and supports such as the popular home energy saving scheme (now the Better Energy Homes Scheme) and the Building Energy Rating system. Energy efficiency grants were given to 46,000 homes last year, while in the public sector, 14 organisations, accounting for half of total public sector energy spend, committed to energy efficiency partnerships with the authority. Private sector companies engaging with SEAI’s business support programmes avoided approximately €25 million in energy costs.

For Brian Motherway, head of strategy and innovation at SEAI, the two over- arching priorities for the authority are providing data and analysis to make the case for renewable energy, and making things happen. The first, he tells eolas, is about “convincing people of the economic and business case, dealing with some of the concerns which have been expressed in the market,” while the second is about SEAI “bringing people together and addressing some of the legislative and practical barriers which are out there,” for the industry.

Examples of the analysis SEAI has provided are the three energy roadmaps it published last November: plans from 2010-2050 for ocean energy, bio-energy and residential energy. If they are followed the authority believes Ireland could land significant economic and environmental advantages such as 70,000 jobs from ocean energy, bio-energy becoming a cornerstone of national requirements and residential carbon dioxide emissions reduced by 90 per cent.

In February it published a joint report with EirGrid on the impact of wind energy on wholesale electricity prices (it found it is not contributing to higher wholesale prices). Motherway describes it as “a major piece of information for policy makers: that this isn’t all about cost, that there are major economic as well as strategic benefits [from wind energy].”

As well as trying to make things happen by trying to removing barriers to renewable energy generation SEAI also provides information to the public and business about energy and the sector.

The authority’s renewable energy information office is based in Clonakilty, County Cork. Its work includes hosting events such as EU solar energy days, a workshop on the passive house planning package and bioenergy conferences.

One of SEAI’s current renewables projects is working with local authorities on how to produce good renewable energy planning and county level renewable strategies. This has involved “working closely with all the local authorities,” says Motherway, “to improve coherence in the way local decisions are made and local planning is done in terms of renewable energy.” The authority is working among the various stakeholders “to look in the short term at how we get renewable energy built in Ireland in the immediate future.”

“Renewable energy is a strategic issue for Ireland,” believes Motherway. “It’s not some kind of luxury or an ideological agenda: it’s actually an opportunity. We have the resource. It can bring wealth and create jobs in Ireland. It can improve the security of our energy system, and we’re focused on making that case.”

At a recent wind conference, concerns were raised that insurers will seek to impose onerous conditions, increase premiums or restrict cover on wind turbines reaching the end of their warranty period. With many wind farms due to exit the warranty period shortly, owners/operators need to consider whether to purchase extended warranty (EW) products or to rely upon their Engineering All Risk insurance to protect themselves.

It is therefore critical to understand the degree of overlap between insurance and extended warranty products in order to make an informed value for money decision. Throughout the initial warranty period (typically ranging from 5 to 12 years) the Engineering All Risks insurances will to some extent have had the benefit of protection from the warranty in place.

The question therefore is what impact will there be on premium and cover for machines out of warranty if an EW product is not purchased. This will be dependant on how the wind farm will be managed post warranty and which options are chosen. Consideration will be given to the purchase of an EW product in addition to insurance or the owner/operator may choose to solely rely upon their insurance policy.

It is equally important for owners/operators to understand what protections they are afforded by EW and by Engineering All Risks insurance and the degree of overlap in determining their attitude to risk retention. The protection to be provided by EW will be set out in the contractual wording. It needs to be borne in mind that there is no set standard that applies and additionally each EW can vary as a result of matters identified in the independent end of warranty inspection.

Whilst there is a far greater consistency of the protection provided by insurance regardless of the insurer concerned, the principal difference with EW is that there is a requirement for there to have been an actual incident resulting in physical damage or breakdown. Examples of where EW will afford protection over and above insurance would include component failure or the costs of correcting defective design/materials not accompanied by damage. In other words, insurance generally requires damage to have occurred whereas an EW may not.

Conversely the insurance policy will cover events which the EW is unlikely to e.g. storm, lightning etc. And, of course, insurance will also provide cover for business interruption that EW will not. The terms of each EW and insurance policy will require individual examination. In assessing the degree of overlap, it is essential to have the input of expert advisors.

If relying solely upon insurance, the question is whether insurers will automatically impose increased premiums, claims deductibles or cover restrictions. Whilst some insurance brokers have warned that onerous terms will automatically be imposed, our market experience shows that this is not the case and insurers will instead seek to understand individual owners/operators maintenance history. In our discussions with all leading insurers who specialise in this area, they have all expressed a desire to work with wind farm owners/operators. It is not their intention to impose onerous terms. Key to this will be the ability to demonstrate that pro active measures are in place to manage the risks of damage or loss post warranty.

Below we have highlighted some of the items consistently raised by insurers:

1. Independent end of warranty reviews

These inspections need to take place with all recommendations being implemented by the Turbine Supplier (TS) or a contractor approved by the TS. This will also allow the owners to document all

possible claims and submit them to the original equipment manufacturer well in advance of the warranty expiry date. By rectifying such issues before expiry, it greatly reduces the exposure to post warranty breakdown. Such inspections may even improve turbine performance. If a lender is involved, this certification will be required. From an insurance perspective it greatly increases market interest thus maximising the terms (cover and price) available.

2. Wind Farm owner/operator assumes responsibility

• What plans are in place to mitigate against the consequences of breakdown in the Wind Turbine generator – particular focus on dealing with the loss of major components such as the main transformer, gearboxes, brakes blades or cables.

• Consideration should be given to the stocking of spares, pooling of spares with other users, knowledge of service providers and local companies who service/repair or sell spare parts. Particular focus should be given to critical spares.

• Service and maintenance – Who is providing these services and what are their qualifications/experience?

• Access to the site in the event of a loss including hard standing for cranes. Consideration should be given to road conditions during winter or in adverse weather conditions.

• Condition monitoring/remote monitoring – This is something which is attracting interest from leading industry insurers given its ability to identify problems before major component failure.

• Provision of safety equipment, fire fighting equipment and apparatus.

• Working at heights, lone workers.

Wind farm owners/operators who are in a position to provide Insurers with a high level of comfort on these issues and their procedures towards identifying, analysing and controlling the risk, will inevitably secure lower insurance premium and wider cover.

Preventative measures put in place reduce the possibility of damage and consequent loss of revenue; it does not remove the risk entirely. The policy holder therefore relies on an insurance broker to arrange cover not only at the most competitive premium but also the widest in scope in terms of policy protection. At Willis we have many facilities and exclusive agreements to ensure this is the case for all our clients.

Conclusion

Ultimately, the decision which the owner/operator faces is whether to purchase an EW in addition to an insurance policy, thereby availing of the benefits of both products but obviously at a cost. Alternatively they can solely rely upon their insurance policy and invest in the type of risk management measures described above whilst forgoing the benefits of an EW. Experienced insurance advisers can provide a lot of assistance to windfarm owners / operators in understanding the benefits of each from not only a risk management perspective but also on value for money considerations.

About Willis Risk Services (Ireland) Ltd

Willis is Ireland’s leading corporate risk advisor and insurance broker, employing over 200 staff in offices based in Dublin, Cork and Limerick. We are part of the multinational Willis Group which has 16,000 staff worldwide and operates in almost 200 countries. Included in our staff in Ireland are 39 Fellows and Associates of the Chartered Insurance Institute, 4 Chartered Accountants, 4 Fellows of the Institute of Actuaries and 69 University Graduates

In Ireland, Willis has a significant position in the renewable energy sector with a large client base comprising clients in wind (onshore & offshore) biomass, solar, geothermal and wave/tidal.

What makes us different

• We understand the renewable industry and work constantly to keep abreast of new technologies. We too need to be innovative so that we ensure the best options are provided to our clients.

• We have a specific industry practice team dedicated to the production, placement and servicing of renewable energy business.

• Utilising our global resources but ensuring we deliver locally.

• Valuing and celebrating the importance of our people in delivering professional services so that we exceed our client expectations.

Contacts
Thomas Byrne
Willis
Grand Mill Quay
Barrow Street
Dublin 4
Tel: +353 (0)1 639 6408
Email: thomas.byrne@willis.ie

Darren Whelan
Willis
Grand Mill Quay
Barrow Street
Dublin 4
Tel: +353 (0)1 632 6962
Email: darren.whelan@willis.ie

John Barry
Willis
Grand Mill Quay
Barrow Street
Dublin 4
Tel: +353 (0)1 639 6305
Email: john.barry@willis.ie

Michelle Butler
Willis
Grand Mill Quay
Barrow Street
Dublin 4
Tel: +353 (0)1 639 6476
Email: michelle.butler@willis.ie

George Webb
Willis
Grand Mill Quay
Barrow Street
Dublin 4
Tel: +353 (0)1 407 4904
Email: george.webb@willis.ie

A member of the Viridian Group, Energia has 300MW of operational renewable electricity capacity contracted within its energy portfolio, with a further 540MW of windfarm projects currently in development across Ireland.

Energia recently achieved financial close for its €72 million investment in 51 megawatts of electricity capacity in new wind farms at Crighshane and Church Hill in County Tyrone. The development forms part of Energia’s all-island renewable energy plans.

150MW will come from other new windfarms throughout Ireland, including developments in Derry, Donegal, Kerry, Galway, Limerick and Waterford. Energia are directly involved in the development of eight new windfarm projects, and have power procurement agreements agreed with a further 22 separate developments.

In addition to this extensive number of windfarms, the company’s renewable portfolio also includes biomass, landfill gas, small scale hydro and ocean power.

The company in 2010 signed a preliminary off-take agreement to purchase the electricity generated from the pioneering Wave Energy Converter being operated by US firm Ocean Energy Systems (OES) off Bellmullet, County Mayo.

By 2012, Energia plans to be the largest independent renewable off-taker on the island of Ireland with 840MW, around 25 per cent of the Irish renewable market. It currently has longterm PPAs in place with 300MW of operating wind farms and other renewables, with a further 540MW scheduled to be operational.

Expertise

Energia has first rate expertise in all aspects of project development, project financing, and operations management and has an immediate pipeline of good quality projects. We have a good track record of building on time, and have good relationships with our project stakeholders, including local people, local authority planners, network providers, joint venture partners, operators, and of course Energia, our energy supply partner. Energia brings its utility know-how to managing its projects and operating its plant.

Windfarm development can be complex, needing careful management of landowners, connection providers and planning consents. It also needs access to finance and a solid commercial understanding. energia brings all this together.

Building sustainability

Peter Baillie, Managing Director of Energia Renewables, believes his business is proven capable of achieving project development and completion. However, if Ireland is to meet its renewable targets we need to see sensible solutions for planning extensions, greater focus and resourcing for the grid providers and contestability for distribution connections.

Renewable energy helping to protect the environment

Energia is one of Ireland’s leading lowcarbon-intensity energy suppliers. It currently has 300MW or renewable electricity capacity contracted within its energy portfolio, with a further 540MW of wind farm projects in development across Ireland.

Recently, Energia has started to take energy from a series of new wind farms in Ballymoney, Donegal, Sligo and Tipperary. Collectively these farms will supply over 30MW of new wind power to Energia’s renewable energy customers throughout Ireland. This development alone will remove 46,000 tonnes of CO2 from the atmosphere annually, providing the equivalent power of 20,000 homes.

Energia’s renewable energy portfolio eliminates over 465,000 tonnes of carbon dioxide a year from the Irish atmosphere – the equivalent of removing the emissions of over 200,000 cars on our roads. In this way, Energia’s operations make a very significant contribution to the carbon reduction in its electricity supply. These figures will increase significantly in the years ahead as further green projects come on stream.

In response to the massive growth in demand for green Power, Energia has signed a number of customers, including Marks & Spencer, Hibernian, Cork City Council, Bewleys, Wexford County Council, Ireland West Airport Knock and Waterford City and County Councils among their exclusively ‘green’ customers and a recent drive in Northern Ireland has seen ‘green’ customer numbers growing at a rapid rate.

For more information call the Energia lo-call helpline (NI) 0845073 0099 or (ROI) 1850 363 744

Grid25, EirGrid’s roadmap to uprate the electricity transmission grid by 2025, continues to be implemented so as to increase the capacity of the grid, to satisfy future demand, and to help Ireland meet its target of 40 per cent of electricity from renewable energy by 2020. EirGrid has recently stated that it expects the uprate to be delivered for significantly less than the €4 billion cost originally envisaged.

Recent months have seen projects such as the 110kV station at Lisdrum, the Blake- Maynooth-Newbridge 110kV line and the the Lodgewood 220kV station and loop in to the Arklow-Great Island 220 kV line completed. The uprating of the 220kV Killonan-Knockraha line, which was commissioned earlier this year, was done with a new conductor type on it. The project involved changing the existing conductor for a new high capacity conductor that increases the overall power transfer of the line by 50 per cent without having had to change any structures.

Circuit upratings and refurbishments are being completed on an on-going basis, as are the lodgement of planning applications for new projects. 300 kilometres of new circuit are expected to be connected in 2011/2012. By 2014 ten new 220kV sub- stations are expected to be completed. In total 2,000 out of the 6,500 kilometres of existing assets will be uprated during Grid25.

Reduced costs

Aidan Corcoran, manager of the Grid25 programme office at EirGrid says there are two main reasons why the Grid25 strategy is expected to cost approximately 20 per cent less than the €4 billion originally projected. “The first is in terms of us optimising [the strategy] much closer. We’ve moved on since 2008 when the report was first published. We’ve looked at the projects again and optimised those projects in line with what’s happening out there in terms of wind strategies, in terms of demand, growth and those various scenarios – and that’s one of the elements that’s caused the reduction in cost. The second element is certainly the introduction of these new technologies like the high potential low spec conductors that we’re using. That’s been a big element to it as well.”

Reduced energy demand, as outlined in two scenarios in SEAI’s 2010 energy forecasts to 2020, and cheaper construction costs due to the economic downturn, are likely added reasons for the reduction in Grid25’s costs.

North/South

One of the six major projects in Grid25, the proposed inter-connector between Meath and Tyrone, has been delayed. In June last year EirGrid withdrew its planning application for the €400m project during An Bord Pleanála’s oral hearing when an error in the public notice outlining plans to seek planning permission was noticed. Now the new Government has committed itself to establishing an independent expert commission to review the case for and cost of undergrounding all or part of the proposed line. The Minister has stated that the absence of a second north-south interconnector is imposing costs in the region of €20-30 million (and due to rise) each year for generators and consumers. EirGrid hopes to submit a new application later this year.

This is one of six projects that are key to the realisation of Grid25. Others include connection of renewable energy in the mid-west, connection from Moneypoint towards the Cork area, and the power infrastructure feeding into the Dublin area. These projects will take between five and ten years to complete.

There have been some difficulties due to opposition at local level to certain projects but Corcoran says there has generally been a positive reaction on the ground and a good relationship with stakeholders and landowners.

Corcoran says delivery of the infrastructure is vital to Ireland’s economic future, citing decisions by companies like Intel to expand in Ireland contingent on knowing there is a reliable transmission network.