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The long-awaited Energy Strategy for Northern Ireland was published just before Christmas following public consultation and will shape energy policy in Northern Ireland over the next decade. It will be reviewed every 5 years with annual progress reports published by the Department for Economy every year.
Energy accounts for almost 60% of Northern Ireland’s greenhouse gas emissions so the Strategy aims to set out a pathway until 2030 to aid the long-term 2050 vision of net zero carbon and affordable energy. Notably the first Climate Bill introduced at Stormont last year has a more ambitious net zero target of 2045 (see our recent legal insight). Neither it nor the separate Department for Agriculture, Environment and Rural Affairs Climate Bill have received Royal Assent yet but 2022 could be the year NI gets its first ever climate legislation pushed through the Assembly.
The Path to Net Zero Energy sets three key targets:
This is based on 5 key principles:
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. This is, in principle, a welcome approach given that the industry will likely learn from new and evolving renewable technologies. A more flexible or adaptable approach to the next decade is therefore potentially useful. That said, certainty is a fundamental pre-requisite for significant investment so it is of note that the Strategy will be accompanied by more detailed policy proposals which will be subject to consultation in their own right. It is unfortunate, given the length of time that the 2030 strategy has been awaited, that such detailed policy is not available ‘off the blocks’. We therefore await with interest the targeted action plan outlining the initial priorities for the year ahead.
Given the length of the consultation, we only summarise three main areas of interest below.
As expected, hydrogen has been recognised as a substantial investment opportunity in Northern Ireland. This includes utilising renewable electricity for green hydrogen production, trialling carbon capture to produce ‘blue hydrogen’ and taking advantage of the modern gas network across NI. This presents a unique opportunity to use renewable electricity that is unable to be accommodated on the electricity grid, with hydrogen production through electrolysis to be used locally or exported.
The Strategy also refers to Northern Ireland’s future offshore ambitions which to date has been lacking given the focus on onshore wind in NI. It recognises that substantial investment is required for the grid network which will be critical to achieve such a transition. SONI’s Shaping our Electricity Future roadmap is therefore also worth reading since it sets out how NI’s electricity transmission system will prepare for more clean electricity on the grid (link).
Given that offshore wind and hydrogen have in the past been more expensive than fossil fuels, investors will be keen to hear that the Department is considering extending the Contracts for Difference subsidy scheme currently operating in GB to NI, with a view to inclusion in the next Allocation Road in 2023. The Department is aiming to put in place another support mechanism should this not occur so developers should continue to watch this space.
The Energy Strategy encourages innovation based on low carbon technologies and starting from 2022, will initiate a programme of funding for research and development including in the private sector.
The Department for Infrastructure has separately commenced a review of strategic planning policy on renewable and low carbon energy in order to inform decision-making in this area and the local development plan processes (link).
Planning policy that promotes and facilitates clean energy development is fundamental to the success of the Energy Strategy. The planning issues paper focuses on the following areas:
Energy targets & strategic planning policy;
Siting new wind farms in perpetuity;
Wind turbines & amenity considerations;
Decommissioning and site restoration for new development;
Solar farms and agricultural land;
Co-locating renewable, low carbon and supporting infrastructure;
Re-powering existing wind farms; and,
Emerging technologies & other issues.
Whilst the existing Planning Policy Statement 18 and the SPPS helped to facilitate development of renewables during the 2010s the policy requires a substantial revision to unlock new development that the new Energy Strategy will promote. In particular the policy needs to specifically consider co-location, battery storage and widening the scope of where renewable development is acceptable in the landscape.
Whilst the Energy Strategy sets the direction of travel for low carbon technologies, it is critical to the success of the Strategy that the industry also takes part in the related consultation since ultimately it will l impact on how planning applications for renewable developments are decided in the future. The closing date for responses is 11 February 2022 and the response form can be found at the following link.
Further objectives of the Energy Strategy include delivering energy savings of 25% from buildings and industry by 2030, ensuring all new buildings are net zero ready by 2026/27 (earlier if practicable) and reducing the distance people travel in private vehicles.
The Strategy states “We may need to retrofit approximately 50,000 buildings each year – around three times the current level - with an increased whole building approach to retrofit” in order to achieve energy efficient buildings. Many developers will be asking; do we have the materials, skilled workforce and time? These are questions that need to be answered quickly and decisively, with the NI Executive committing to substantially increased funding for retrofitting.
Fossil fuel heating oil still accounts for around 68% of homes and businesses in NI so transition pathways for consumers needs escalated with the use of heat pumps and connection to the gas network, before full decarbonisation. This pathway of decarbonising gas is still uncertain but the proposed use of pilot schemes in the near future will assist in this journey.
New residential and commercial developments tend to be easier to future proof so we must ensure that these schemes lead the way whilst also ramping up the delivery of retrofitting schemes in a sustainable way.
This new Energy Strategy has been long-awaited, and whilst the consultation document is lengthy, it is perhaps disappointing that it does not yet contain detail on how its ambition will be met.
Since the closure of the NI Renewables Obligation in 2017 the development of new clean energy projects in Northern Ireland has been substantially constrained, coupled with under-investment in the grid and inflexibility in the planning system. In the interim period we have seen substantial activity and growth of new clean energy development in both Great Britain and Ireland, driven by a more favourable policy environment and availability of subsidies. If Northern Ireland is to fully unlock its great potential for clean energy, this new policy needs to create an environment that is at least comparable to its nearest neighbours, or investors will simply look elsewhere.
For those involved in the clean energy sector in Northern Ireland, follow the link to read the full Strategy.
07 January 2022
Insights 24 JANUARY 2022