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As the Department for the Economy in Northern Ireland (DfE) continues to formulate future policy for renewable energy, it has published detailed research on “The Future of Renewables in Northern Ireland”. Distilling industry views and scenario modelling, the report aims to inform the long-awaited new Strategic Energy Framework. 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 useful (if lengthy) reading.
Commissioned from Cornwall Insight in partnership with Ionic Consulting and stretching to over 120 pages, the “Future of renewables in Northern Ireland” report’s goal is to provide a guide for policy creation in Northern Ireland’s electricity sector beyond 2020. It presents the outcomes of research of the NI electricity sector, interviews with stakeholders and a high-level model developed to assess differing policy scenarios.
The report rightly recognises the “considerable expertise and passion in Northern Ireland” for renewable electricity. Having reached 44% electricity consumption from renewable energy sources for the 12 months to June 2019, the previous Strategic Energy Framework 2010’s target of 40% by 2020 has already been exceeded. This is of course to be welcomed and celebrated as a significant achievement. Nevertheless the report recognises that new policy is needed given UK climate change and Carbon Budget targets and the “trilemma” of system security, affordability and sustainability.
Perhaps unsurprisingly, stakeholder feedback in the report confirms there is “a desire for increased coordination” in developing renewables in Northern Ireland.
This report presents three scenarios based on different electricity consumption from renewable energy sources (RES-E) of 70%, 55% and 40% by 2030. Higher ambitions, it concludes, seem to give better return on carbon minimisation, but with an increase in overall cost. Interestingly the RES-E 70% scenario assumes that offshore wind will be deployed in Northern Ireland. Northern Ireland has not been included in the latest Crown Estate seabed leasing round and the report assumes the earliest it would be available is 2027. Clearly unlocking the potential for offshore wind in Northern Irish waters is a critical factor in achieving a significant increase in renewable generation. Onshore wind is presented as the lowest cost solution for new generation but the research also suggests diversity should be encouraged for example through solar, anaerobic digestion and biomass. Increased use of battery storage and co-location are also considered.
The proposed North-South Interconnector between Northern Ireland and the Republic – significantly - is assumed to be in place by 2024. With legal challenges and objections the report notes that the future of this project remains uncertain. Should it not become operational the report suggests Northern Ireland may require new fossil fuel plant to meet energy demand. Yet again, the critical nature of this infrastructure project, now over a decade in gestation, cannot be underestimated.
Grid access and costs are highlighted as a factor influencing investment and are thought to be a barrier for some market participants. The lack of capacity in the North West is noted in the report. Again this is no surprise and is a substantial issue that arguably has inhibited further growth potential for renewable generation whether under the NIRO or, latterly, subsidy free.
The report suggests it will be for the policy maker to decide how costs are recovered but would most likely expect a combination of public and private investment. In assessing how to stimulate private investment the report evaluates a variety of support options. These range from long term tendered contracts, through feed-in tariffs to tradeable certificates. What seems to be clear from this analysis is that a lack of any policy intervention or support mechanism is highly unlikely to garner substantive results. The prospect of raised targets being met purely by merchant projects or corporate PPAs must be met, the report notes, with a “certain amount of realism” by the policy maker.
This report is to be welcomed and represents an important synthesis of industry views and an objective assessment of potential scenarios for growth. The experienced participant in the NI clean energy market will recognise many of the current challenges and welcome this detailed expression of views and options. In essence, there is little in the report that should be surprising to the Department; perhaps the most critical issue is the need for new policy that has the capacity to provide investors with confidence over the next decade. Above all what is clear from this report is that expansion of the sector cannot rely simply on market forces and that policy intervention and support is required. Importantly, this does not necessarily have to be direct financial support, particularly as the cost of many technologies continues to decrease. In many cases, policy removing barriers to entry, for example by creating a more permissive planning regime could help to unlock substantial investment and growth, and help to meet the climate crisis head on.
05 August 2020