The mutual energy company
1st October 2009
Changing our ways
1st October 2009

Power for the future

Power for the future agendaNi reviews Northern Ireland’s draft Strategic Energy Framework.

“The choices are not easy – but we cannot afford not to make them”, writes Arlene Foster as she introduces Northern Ireland’s draft Strategic Energy Framework, which has just closed for public consultation.

Published on 6 July, the document follows on from last year’s review of the 2004 framework and aims to “set out the direction of travel” for energy policy. No ‘stop date’ is set but the department expects to update the framework again in five years’ time.

It would be “practically impossible” to prescribe all energy-related activities for

the foreseeable future, DETI admits. The local energy sector is also based on the private sector delivering public policy goals through competitive markets; it is not a straightforward public service.

A policy context is set and energy goals are summarised under four inter-related headings: competitiveness; security of supply; sustainability; and infrastructure.

Competitiveness

“Northern Ireland remains overly dependent on fossil fuels, for power generation, heating and industrial use”,

the document notes with concern. Declining fossil fuels and expensive measures to tackle climate change will push energy prices in one direction, although these trends can also open opportunities for low carbon technologies.

2008 was an “exceptional” year for global energy markets, resulting in the local price hikes. Prices are expected to remain high in the near future, so energy efficiency and demand-side management will help to cut energy costs for businesses. Saved energy is saved money.

Greater competition between energy companies will naturally lead to more choice for consumers. It is important to ensure that the market is transparent and systems are standardised so that customers can switch suppliers more easily. The Common Arrangements for Gas project can proceed if the benefits are sufficiently clear; DETI is working with the Utility Regulator and the Republic’s energy regulator to establish these.

Wind energy is still envisaged as the main renewable source but the department will seek to diversify the renewable energy portfolio where this is economic. However, financial support in the short- to-medium term will be needed to make this possible. The Northern Ireland Renewables Obligation is being amended to tailor the level of financial support to each technology and DETI will “urgently consider” how to fund a significant increase in renewable heat.

“These measures to support renewable energy deployment will add to consumer costs”, it states, although the department will try to keep these as low as possible. The Stern review is quoted as saying such costs must be viewed as an investment to avoid more climate change.

At present, 4,300 people work locally in energy and the environment. Over 33,000 renewable energy jobs could be created in Northern Ireland, according to the Carbon Trust and new industries can “spin out of old” as shown by Harland and Wolff. More of this activity is encouraged and an action plan is to be published by the end of December 2009.

Security of supply

Ninety-three per cent of Northern Ireland’s power is generated using imported fossil fuels.

Energy efficiency can reduce long-term demand for those fuels but renewable energy has a more significant role in improving security. The importance of maximising renewable heat is particularly promoted as heat takes up 80 per cent of non-transport energy use. Meanwhile, infrastructure is ageing and must be renovated; the most significant grid upgrade since the 1960s will take place between now and 2020.

Having local gas storage could bring “significant benefits” for the whole island as import dependency increases. Northern Ireland’s oil supply arrives ‘just in time’ but it has no strategic oil storage, unlike Great Britain. A cost assessment for local oil storage will also be carried out by DETI.

Sustainability

This is the largest section of the document. An inter-departmental working group on sustainable energy was set up in November 2008; it plans to report on how to better co-ordinate sustainable energy activity by the end of this year.

At present, 7 per cent of local electricity comes from renewables; the current target is 12 per cent by 2010. A new strategic goal is set: 40 per cent by 2020. Onshore wind provides the bulk of renewables – and is the cheapest to deploy – but the department wants to diversify this supply. A strategic action plan for offshore wind, tidal and wave is being drawn up. Offshore wind and tidal are preferred but the “excellence” of local research into wave is recognised.

Sources within the industry have suggested that onshore wind has received a high level of attention while other forms of renewable energy have been neglected.

Energy-from-waste offers a “significant opportunity” but will require much investment. Renewable heat is an urgent priority but DETI needs more statutory power to develop policy on this; a tentative 10 per cent by 2020 target is set. Some form of financial support is probably needed to encourage uptake and a full strategy will follow.

Large scale renewables can cut emissions more effectively than micro-generation but this energy form is expected to become more common to meet new building regulations. The potential of combined heat and power, and geothermal energy, is also recognised and briefly discussed.

Again, energy efficiency has a role to play as lower energy consumption means fewer renewables will be required to meet demand. DETI has signed voluntary agreements with all major energy suppliers, to reduce energy use, which will run to 31 December 2016. The level of savings from smart metering needs “more investigation” to prove the economic case.

Infrastructure

To accommodate more renewables, another 200km of transmission lines and 1,500km of distribution lines are required. The grid is “comparatively weak” in the North West and West, which have the most wind potential. Estimates put the potential cost at £1 billion over the next 10 to 12 years, with the infrastructure having a 40-year lifespan.

A greater proportion of open cycle gas turbines – rather than combined cycle gas turbines or coal plant – is likely to be needed to provide electricity when wind power is low. New interconnection is also important to link local infrastructure with electricity and gas supply systems in the Republic and Great Britain e.g. the second North/South Interconnector and the East-West Interconnector between Dublin and Wales.

Gas connections will continue to grow but the economic downturn is currently resulting in fewer housing connections and less industrial gas usage. The department will examine the technical and economic factors associated with extending the network into the North West, the West and east County Down.

Next steps

The document comes with eight annexes, covering DETI’s statutory duties on energy, how the new renewables target was calculated, energy efficiency activities, a list of consultation questions, a glossary and bibliography, consultation criteria and an equality assessment.

With consultation now closed, DETI will develop “targets and key milestones” for energy policy which will be published alongside the final document, which is due to come out by the end of 2009.

Article from agendaNi issue 31 October 2009