Chairmen, members of Cork Area Strategic Plan Committee and of Energy Cork, President of Cork Chamber and distinguished guests, I am delighted to be here today to formally launch the new energy industry cluster, energy@cork.
I commend this initiative, which seeks to exploit the strong energy industry presence already evident in the Cork area. This is exemplified by strong public and private energy sector enterprises in Cork and by an important and growing research presence. This initiative will help position Cork to avail of future opportunities that will flow from future energy sectoral development.
Today marks the culmination of over two years of collaboration by a Steering Group from industry and higher education stakeholders, which was convened by Cork Chamber and supported by Cork Area Strategic Plan partners, Cork City Council and Cork Council. The monies made available by both Cork local authorities through their Economic Development Funds provided a valuable initial financial injection.
The vision of Energy Cork is to develop an industry-driven energy cluster in the Cork region, which will coordinate action to boost enterprise, jobs and growth in the local energy sector.
I’m sure this coalition will focus its efforts within the wider national energy policy framework, but it will also take an EU and an international perspective, in order to fully exploit all synergies to create jobs and growth in energy and energy related industries around Cork.
The concept of an industry cluster is of course not new. However, it needs to be nurtured by a sound underlying structure. I believe what will stand Energy Cork in good stead is its impressive and ambitious Strategy Document. The cluster will pursue its aims under the headings of energy supply, demand side management, building standards and construction, transport and Clean-Tech.
I note that over the next two years, Energy Cork will work incrementally to broaden its membership base; it will use networking forums, collaboration platforms, information exchange and training workshops, in order to reach a wider audience.
As you are probably aware, Ireland is one of the 28 member states of the highly influential International Energy Agency. Last Friday, I welcomed Dr. Fatih Birol, Chief Economist of the IEA, to Ireland to launch the 2012 World Energy Outlook. The Outlook sets out authoritative projections for global energy trends between now and 2035 and provides insights into their implications for energy security, sustainability and also economic development.
The Outlook points to the profound changes taking place in global energy markets and Dr Birol’s address paid particular attention to the economic potential of energy efficiency.
It is clear that policy-makers face critical choices in reconciling energy, environmental and economic objectives. The changing outlook for energy production and use may redefine global economic and geopolitical balances. Developments in oil and gas production, combined with a rapid growth in wind and hydro, are having a profound effect on international energy markets.
Crucially, the Outlook points out that the considerable gains promised by energy efficiency are within our reach and will be essential to support a more secure and sustainable energy system.
I am convinced that we in Ireland are well placed to take advantage of these trends by reducing our dependence on imported fossil fuels and by exploiting our renewable and efficiency resources.
And we are making great strides in weaning ourselves off imported fossil fuels, with energy efficiency a key policy measure that is delivering tangible financial benefits across the economy.
Our core objective remains to deliver a major increase in the pace, scale and depth of investment in upgrading existing facilities and to ensure that Ireland meets its 20% energy efficiency commitment.
We have not escaped unscathed from the necessary consolidation in public spending, which was reflected in this week’s Budget. My Department’s current spending allocation has been reduced by less than 1%, but the capital budget is reduced by €19m, from €104m last year.
While the allocation reflects the challenging economic circumstances of which you are all aware, I remain confident that my Department will continue to deliver on its key priorities. In particular, we will continue our steady progress in reducing dependency on imported fossil fuels and promoting energy efficiency.
In the Budget on Wednesday we announced a new Energy Efficiency Fund to stimulate the kind of investment necessary to support energy efficiency projects in the public and commercial sectors. I am pleased that I was able to secure seed capital of €35 million, with a view to establishing a leveraged fund that attracts matching private sector contributions.
It will come as no surprise to anyone that the Exchequer cannot continue to fund the scale of retrofit that is required to meet our 2020 target. A number of years ago a study put the opportunity at 1 million buildings that would require retrofit by 2020. I hope this new fund will kick-start investment of the type and scale we will need. The details are still being finalised and there are some hurdles still to clear but I am firmly of the option that a financing mechanism like this will be crucial to unlocking the huge economic potential of energy efficiency within the domestic economy.
We are finalising proposals for the financing of up to 20 exemplar energy efficiency projects next year. In the existing economic climate, access to credit is particularly difficult for organisations seeking to reduce energy costs and carbon emissions. This sort of innovative financing mechanism will play an important role in unlocking the huge economic potential of energy efficiency within the domestic economy.
The Government is working hard to preserve an ability to conduct appropriate research here, despite our economic difficulties. In the Budget, we protected funding for a range of energy research projects – ensuring resources at least equal 2012 spend of €7m will be available for important innovative work. This followed from a Research Prioritisation Exercise, which our energy, marine and environmental experts participated in, to help focus efforts on optimising the use of limited resources.
Our aim remains an ambitious one – to position Ireland as a leading edge location for developing integrated energy solutions where knowledge-intensive international and Irish companies, along with leading research partners, can develop innovative energy solutions for global markets.
In that regard, two institutions based in Cork are worthy of particular mention as exemplars of the successful interaction of research and development and innovation.
The International Energy Research Centre is an industry led, world-leading, collaborative programme of research and innovation in integrated sustainable energy system technologies.
The Centre brings together international companies and researchers in the energy space, leveraging research capabilities and technologies to find commercial solutions to the global energy demand challenge.
Among the various projects currently under development and funded by Government are two new cutting-edge research projects which will focus on energy efficiency and energy storage in commercial buildings. The projects will examine in particular the use of wireless networks to control and manage heating, ventilation and air conditioning systems and redesigning and developing storage heating solutions.
Earlier this year, I was pleased to confirm funding for the new Beaufort Building for the Irish Maritime and Energy Research centre in Ringaskiddy. The new facility will house laboratory and research for UCC’s Coastal and Marine Research Group, the Hydraulics and Maritime Research Centre and the Sustainable Energy Research Group. The Centre is developing an integrated maritime research and enterprise campus at Ringaskiddy which will specialise in marine energy, maritime security and safety, shipping logistics and transport and marine recreation.
Strengthening such research facilities will assist in ensuring a critical mass of activity in terms of ocean research in Ireland, and will help to underpin the development of effective policy strategies. It is also in line with the ocean development strategy ‘Our Ocean Wealth’, which was published earlier this year and looks in detail at the great potential of ocean energy. That strategy identifies Marine Renewable Energy as one of the key priority areas for Irish research into the future. The designation of the new facility at Ringaskiddy as the National Ocean Energy Test Facility will ensure that there will be world class research infrastructure to support future development.
As you know, Ireland assumes the EU Presidency in the New Year. During the Presidency, energy matters will have a high priority and will in fact be the theme of a Summit meeting of heads of State and Government.
I will be hosting a major energy technology conference next May, focussed on the EU’s Strategic Energy Technology Plan, or SET-Plan for short. The SET-Plan is a mechanism for providing high-level, strategic guidance to the EU’s energy
research funding mechanisms.
There are strong industrial and research initiatives fostered by the SET-Plan. Earlier this year, we worked closely with the UK to get better awareness of the marine renewable energy technologies into the plan. We hope to use our Presidency to confirm a prominent place for marine technologies.
The Cork area has benefitted significantly from the presence of and investment by the State owned Energy companies. Bord Gáis has its headquarters here. The company has over the years played a crucial role in the Energy sector. In particular its investment in and management of the crucial national gas network has been vital to security of supply not just in gas but electricity as well. It has discharged this role in a hugely efficient manner and in the process underpinned economic and social development throughout the country.
More recently BGE has moved into the electricity generation and supply business, to very positive effect. The extremely modern gas plant build by BGE at Whitegate is a valuable addition to the State’s modernisation of its generation fleet. The company has also successfully entered the electricity supply market and in the process has helped generate competition in the sector.
As you are aware the Government have agreed to dispose of the BGE Energy business as part of the agreement with the Troika on disposal of state assets. I want to assure you that we will be vigilant to ensure that the State gets excellent value for money in this transaction. It is vital that any new owner maintains and builds on the strong performance to date by the State owned company. We will also be attentive to ensure that the position of BGE employees is protected in any transaction.
ESB, as a vertically integrated State energy company, operating in competitive markets in generation and supply within the framework of robust market regulation, also has a very significant presence in this area. As with BGE, they have put in place an extremely modern gas fired station in Cork – in their case in Aghada.
The impact of these 2 investments in modernising and making more efficient the nation’s generation fleet is very significant.
The fact that these 2 State companies were prepared to make this investment without a cent of Exchequer contribution at a time when security of supply was of concern is a singular tribute to them and underlines, in my view, the critical need from an energy security viewpoint, of continuing significant state company involvement in energy provision. It is also evidence of a stable regulated climate for investors in electricity and gas infrastructure.
I should also acknowledge the role played by Eirgrid as Transmission System Operator. They have planned and overseen key investment in the network and their Grid25 blueprint will when implemented further modernise our electricity network including in the Cork region.
It is therefore important to acknowledge the key contributions that our State companies have made in the Energy sector.
As far as I am concerned, and notwithstanding our commitment to some disposals, there must continue to be a significant state presence in the Energy area and especially control of the strategic gas and electricity networks. I do not accept that this necessarily leads to inefficiencies and higher prices or inhibits the involvement of the private sector. The record in fact shows a dramatic change in the energy landscape over the last decade or so.
We now have strong competition in both the electricity and supply sectors, with both public and private sector participation underpinned by the all- island single electricity market. It also shows the commitment of our public sector companies to invest to very good effect and to return significant dividends to the State.
Ireland’s offshore has recognised oil and gas potential but the level of exploration activity to date has been too low to demonstrate its true potential. In recent years, however, there has been an increase in both the number of exploration authorisations granted, together with an increase in the number of exploration companies operating in the Irish offshore. This positive development should result in an increase in drilling activity levels over the next few years.
Earlier this year there was encouraging news from the only well drilled in the Irish offshore in 2012. The Providence Resources operated Barryroe well achieved significant flows of oil on test. More work is required to determine if the discovery can be declared commercial. Exploration activity itself generates welcome economic activity at a local level and a new commercial development would generate activity of a much greater scale and would be good news for both Ireland and for Cork
Of course, ambitious energy projects need state-of-the-art infrastructure to underpin them. As I mentioned earlier, I am glad to note that good progress is being made by EirGrid under the Grid25 Programme in the Cork region. Various projects involving sub-stations and new lines – most notably GridLink which I announced here in Cork last spring - are being planned and must be delivered. The Government’s recent policy statement on Critical Energy Infrastructure will, no doubt, be considered by planning authorities and other decision makers as they expedite their determinations.
Finally, I would to once again congratulate all those of you who collaborated so successfully to establish the Energy Cork energy cluster. I look forward to hearing of the outcome of today’s discussions on the future direction of the cluster and on the actions planned by all its component parts.
In acknowledging the leadership and initiative shown by you all in creating this new project, I am confident that your future work can serve as a model for other regions to develop similar strategies in order to stimulate new economic opportunities focussing on energy.
As we move towards more integrated European-wide electricity and gas markets, it gives us a real opportunity to develop significant new markets for our renewable resources.
Thank you.