Energy Strategy for Northern Ireland

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NI’s Department for the Economy is consulting on policy options its developing for a new Energy Strategy for Northern Ireland

A long-awaited updated Energy Strategy for Northern Ireland is moving forward with the launch of a consultation on policy options, which is now open until 30 June 2021. There is still ample time to contribute to the consultation for what will be a key document in shaping energy policy in Northern Ireland over the next decade.

This is the second stage of public consultation for the development of a new Energy Strategy for Northern Ireland, following a Call for Evidence in December 2019. The Department for the Economy has also published research into the Future of Renewables in Northern Ireland (July 2020, see our previous legal insight), research into the Future of Energy Efficiency Policy in Northern Ireland (January 2021) and a series of Energy Strategy e-bulletins. Informed by the responses to this newly launched consultation, a new Energy Strategy is now due to be put in place by the end of 2021.

Net-zero goal and vision

The strategy proposes to “address climate change, achieve net zero carbon-energy by 2050 and ensure energy is affordable”. It presents a vision for net zero carbon and affordable energy and the intent that all future energy policy will be aligned to delivering this vision. Notably the Climate Bill introduced at Stormont a few weeks ago has a net zero target of 2045 (see our recent legal insight).

The consultation

The consultation puts forward a number of policy options being considered but highlights that these are neither exhaustive nor final. It focuses on options with “best decarbonisation opportunities in the short-term” (such as renewables and energy efficiency) alongside trialling and testing new technologies for the medium to long-term.

As well as seeking opinions on the overall goal and framework, the 158-page, 79 question consultation covers a wide range of energy issues across “Five Principles for the new Energy Strategy”:

  • Placing you at the heart of our energy future” – developing policies that enable and protect consumers through the energy transition focusing on affordability and fairness.
  • Grow a green economy” – economic opportunities, jobs and innovation.
  • Do more with less” - targets, standards and regulations that drive improvements in energy efficiency.
  • Replace fossil fuels with indigenous renewables” – phasing fossil fuels and decarbonising power, heat and transport.
  • Create a flexible and integrated energy system” - creating a flexible, smart and digitised energy system that integrates renewables and enhances security of supply.

The Energy Strategy will include, and report on, specific targets and objectives within each of these principles. It is intended to be a “live” document that is monitored and updated at regular intervals.

Recognising that the future of the energy system out to 2050 cannot be predicted and that there are a wide range of approaches that can be taken, the consultation also presents a number of scenarios using a new Energy Transition Model.

While the scenarios are purely illustrative and not expected to be outcomes of the strategy or to represent any policy intent, they are presented to provide indications of the scale and types of actions required. They range from “Business as Usual”, to “High Electrification”, “High Gasification” and “Diverse”. Six priorities are also laid out: security of supply, costs, intelligence, legislation, regulation and governance.

Given the length of the consultation, we only summarise three main areas of interest below – phasing out fossil fuels, hydrogen and electric vehicles.

Phasing out fossil fuels

So far in Northern Ireland decarbonisation has focused on power and significant progress has already been made with 49% of electricity consumption coming from renewable sources. With a proposed renewable electricity target of 70% by 2030 this decarbonisation of power is set to continue to be a priority. The consultation acknowledges that 70% is ambitious but also proposes the flexibility to increase the target to 80% should it “prove achievable and cost effective”.

Nevertheless, power only makes up 16% of Northern Ireland’s total energy consumption. The consultation therefore proposes action in other areas such as decarbonising heat, stating that “Fossil fuel heating oils have no long-term future in our energy mix” – this in the context that Northern Ireland is much more heavily reliant on home heating oil than the rest of the UK. Decarbonising transport (electric vehicles, and alternative fuels) exploring zero carbon energy sources such as biogas and hydrogen, and reviewing fossil fuel exploration are also proposed.

Further options include an action plan for offshore and marine renewables, trialling heat pumps and the use of decarbonised gas and biofuels for heating. A strategic approach to planning locations for renewables projects and associated grid infrastructure are also proposed. Funding however remains a key consideration. The proposed introduction of Contracts for Difference, similar to Great Britain, aims to protect both developers and consumers and attract investment in NI. The Republic of Ireland also has a Renewable Electricity Support Scheme to bring forward investment.

Hydrogen

Many respondents to the 2019 Call for Evidence supported the view that hydrogen can make a significant contribution to meeting decarbonising energy and can be a significant driver of the green economy. The UK Government has committed to generating 5GW of low carbon hydrogen production by 2030 and hydrogen forms an important part of the recently published Industrial Decarbonisation Strategy.

The consultation considers that ambitious future plans present a unique opportunity to use renewable electricity that cannot be accommodated on the electricity grid, with hydrogen production through electrolysis to be used locally or exported. 

The document notes that there is already momentum in Northern Ireland in the hydrogen economy, with £5 million funding for NI Water to procure an innovative new hydrogen electrolyser at its Waste Water Treatment Works – the first project of its kind across the UK. Translink is also introducing new hydrogen buses to its fleet. There is also potential for a large-scale centralised hydrogen production in the future.

Hydrogen is more expensive than fossil fuel equivalents so funding will have to play a key role to make it commercially viable. The industry will also have to work closely with the Department to provide the necessary skills within the hydrogen economy.

Electric vehicles & alternatives

Unlike heat and power, transport policy is not fully devolved so UK Government strategies and interventions will apply in Northern Ireland. The intention to develop a Northern Ireland strategy once the UK Transport Decarbonisation Plan has been published is included in the consultation – meaning a Northern Ireland specific response to the UK-wide approach can be developed with all-island considerations. 

The document provides some insight on EV uptake in Northern Ireland with “around 4,200 low emission vehicles registered in Northern Ireland” and notes that uptake has been slower than in the rest of the UK and Ireland. An EV communication campaign and expansion of the charging network are therefore highlighted to encourage increased EV uptake.

An EV Charging Infrastructure Plan to develop the charging network in Northern Ireland is proposed in partnership with government, public, private and third sectors. The key role of private sector following the removal last year of the Maximum Resale Price for ULEVs by the Utility Regulator in Northern Ireland is also highlighted, and removal of further barriers to the commercial viability of EV infrastructure projects is also mentioned. See our previous legal insight on planning changes for EV charging in NI. 

The consultation considers that EVs will not provide a single solution for phasing out of diesel and petrol engines and so proposes that demonstrator projects of alternative vehicle fuels are trialled in Northern Ireland to test technology and viability of alternative fuels. Recent moves to trial zero emission buses, including some which are hydrogen-powered, for example, are highlighted.

The implications: our view

The breadth and scope of the consultation emphasises the challenges that Northern Ireland faces in the next decade to move towards net zero, but also the huge opportunities if the Framework creates some genuinely ambitious goals.

A fundamental underpinning of the strategy is the target for renewable generation since this will drive many other aspects of the Framework. For example it will help to facilitate the “hydrogen economy” and provide the renewable electricity to power the transition to electrification of transport. For this reason the overall renewable target should be ambitious and 80% is achievable, and would promote Northern Ireland’s status as a genuine leader in renewable energy.

A further critical element of the strategy has to be a closer working relationship between government departments. Planning is a clear example; if planning policy is not itself adapted and improved to create a significantly more permissive regime for renewable development, a near-doubling of current renewables penetration will not occur. Both onshore and offshore wind in particular will inevitably play a role in significant increases in clean energy generation along with solar PV and energy storage.

Recent impasses in development of both wind and battery storage arising from planning legislation and policy need to be resolved and the economic and environmental benefits of such schemes must be given greater weight if new development is to be approved.

Decision-making for major infrastructure must also be streamlined; it is fundamentally unacceptable that the North-South Interconnector, for example has taken well over a decade to be approved, and even now remains subject to a High Court challenge. For this reason, any outcome of this Framework must be closely aligned with new planning policy and a fresh look at how major infrastructure is assessed in this jurisdiction.

New subsidies also will play a pivotal role. The consultation proposes that NI is brought into the CFD framework currently applicable in Great Britain. This will allow NI to compete with the Irish RESS auction scheme, but detailed consideration must be given to how NI can operate competitively within a UK-wide scheme, if that is the intention.

For those involved in the clean energy sector in Northern Ireland who plan to engage further with the Department and help to shape policy, it is essential (if lengthy) reading.

Follow the link to take part in the consultation before 30 June 2021.

Contributor: Sarah Mulholland

This publication is intended for general guidance and represents our understanding of the relevant law and practice as at June 2021. Specific advice should be sought for specific cases. For more information see our terms & conditions


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