SPEECH BY PAT RABBITTE T.D.,Minister for Communications, Energy and Natural ResourcesMIDLANDS WIND ENERGY OPPORTUNITIES:an initiative of“CREATING THE NEW MIDLANDS ECONOMY”8th March, Tullamore, Co Offaly
Thank you for your invitation to speak to you today, on the potential for wind energy infrastructure of significant scale in the midlands based on the export opportunity that may present itself in the short to medium.
I commend the “Creating the New Midlands Economy Initiative” and am aware of the particular challenges that the region faces. The report launched by my Government colleague, Minister of State John Perry, in May 2012 highlighted that economic data in relation to the Midland Region indicates a continuous trend of comparatively low economic performance by the region in national terms. The trended nature of this economic performance indicates a need to do something different or in addition to efforts already being made to support job creation and economic development in the region. Key economic indicators for the Midland Region – unemployment, disposable income, gross value added, and population density – place it as the lowest or most economically deprived region in the State.
I am aware that a workshop held in June 2011 focused on five business sectors that would contribute towards regional job creation and the output from that workshop identified regional strengths and development opportunities for each of the five sectors. One of these targeted sectors was renewable energy. Today I will focus on the economic, enterprise and job opportunities associated with the various potential wind power developments in the Midlands.
Ireland has an excellent, largely untapped wind resource which could be developed for export. Expert advice suggests that Ireland has the capability to achieve its national targets for renewable electricity from onshore renewable generation alone, with capacity to spare. This means that there is potential for projects of scale onshore that are aimed at export markets. It also means that our offshore wind resource can be developed as an export opportunity.
You will be aware that in January of this year the United Kingdom Secretary of State for Energy and Climate Change Edward Davey and I signed a Memorandum of Understanding on energy cooperation. That Memorandum sent a strong signal of our shared interest in developing the opportunity to export Gigawatts of green energy from Ireland to Britain. Of course a key objective, from an Irish Government perspective, is to realise the potential for investment, jobs and growth.
By way of background, under the 2009 EU Renewables Directive, both Ireland and the United Kingdom must plan to ensure that, between now and 2020, there is a steady, progressive and measurable increase in the amount of renewable energy consumed in our electricity, heat and transport sectors. We have each been assigned binding targets about the proportion of renewable electricity we must produce. The targets are challenging, not least in the British context where the Government foresees increasing tightness in future years, in terms of the ability to meet growing demand, as a fifth of the existing generation capacity in Britain is due to be closed down.
The EU Directive provides a mechanism whereby renewable energy produced in one country can not only be exported to another but can also be counted towards meeting that other country’s national target. The electricity so exported is subtracted from the renewable output of the exporting state. This would not of course be permitted if the exporter was failing to meet its own binding targets.
Up to now, while there has been physical flow of electricity across borders, the renewable value of the electricity remained in the country where it was produced and could not be counted towards another country’s target. Under the Directive, a formal Inter-Governmental Agreement between the two Member States is required, under which the Governments agree that a certain proportion of renewable energy produced in one country is counted in the other.
It is I think worth stressing this point, because it may not be emerging with sufficient clarity from industry-inspired headlines. We are operating here under the terms of a 2009 EU Directive which sets out the ground rules for this exercise. What we are talking about is identifying one or a series of what the Directive refers to as ‘joint projects’. The Directive specifies that it is for the Government on whose territory the project is sited to identify a specific project to the Commission and to specify how much of the energy produced at that project is to be regarded as counting towards meeting the targets in the other country.
Electricity production is of course a commercial operation and we very much expect commercial operators to bid for these projects. But it is for our two Governments to co-operate on the design of what it is we want the market to provide. It may be that none of the products currently on offer will meet our specifications. If so, it will be for the developers to adapt their projects accordingly.
Ireland’s overarching strategic objective is not just to make renewable energy an increasingly significant component of our domestic energy supply by 2020 but also to make it a significant component of our export sector. We have in Ireland a rich and abundant wind and ocean energy potential which I firmly believe can be harvested and exported as a real economic opportunity for this island.
There are as yet unresolved policy issues, for both us and the British. First, we have to be clear as to the strategic benefit in establishing an export market. Is it better that this country host a series of private projects linked via their own private interconnectors to the UK national grid bypassing our domestic network – effectively off-Wales wind farms that just happen to be sited on Irish soil? Or do we want to integrate these projects into our own national transmission system?
Second, there is the question of State participation. Apart from any other consideration, the State and its agencies are the largest landowners in the country and wind farms need land. But our energy companies are also major participants in the renewable energy market. Should we be growing their participation, with a view to reaping the major commercial benefits that are down the line? Or should we leave this market to be developed by the private sector and simply enjoy rental income?
Third, State participation need not be active: it can instead consist of profit-sharing, perhaps through our taxation system. Whatever we ultimately decide, the commercial exploitation of our wind resources – which, under our Constitution, belong to the people – must be accompanied by a very real commercial return to the people.
The Memorandum of Understanding has triggered detailed analysis of how Irish renewable energy resources, onshore and offshore, might be developed to the mutual benefit of Ireland and the United Kingdom. Trading of renewable energy between the two States must, I believe, seek to achieve more cost efficient uses of resources, drive down deployment costs, be sustainable in the long term and reduce dependence on fossil fuels.
An agreed programme of work is already underway so as to prepare for the Inter-Governmental Agreement. This work programme includes economic analysis, addressing policy and regulatory questions and dealing with grid issues. There are very complex engineering and market issues to be teased out but the ambition is to settle on an Inter-Governmental Agreement in early 2014.
Such a tight timeline is essential if potential projects, which would be selected through an open competitive process, are to start exporting wind energy from Ireland to the United Kingdom by 2020.
For Ireland, there are very clear economic benefits. Significant employment opportunities will arise if we can properly exploit this opportunity. As an example, employment creation arising from a 3 Gigawatt project in the Midlands would be expected to be in the order of 3,000 to 6,000 job years in the construction phase, with the actual number dependent on the construction schedule to 2020. There would be about €1 billion of construction cost spending on Irish civil engineering works over 2 to 3 years. There would also be additional jobs created in the on-going maintenance of turbines over a 20-year operating life. Further employment opportunities would arise if turbines or components were manufactured in Ireland.
The Midlands has a rich heritage in energy production as both Bord na Móna and the ESB have strong roots in the region and that heritage is now set to evolve into the clean and green future that the above workshops identified. The announcement of investments in wind energy projects by Bord na Móna and others has generated much media coverage in the past few months
Bord na Móna is currently investing €110m in the Mount Lucas wind farm which will involve the construction of 28 wind turbines. When up and running this wind farm will have the capacity to provide electricity for up to 45,000 homes. Others are also planning large wind farm developments. The wind energy projects being developed are a great demonstration of the potential the Midlands holds for the future generation of power that could be exported to the United Kingdom energy market.
More generally, the shift towards renewable energy and related technologies promises to bring many benefits. There will be opportunities to develop new products across the information technology, remote communications and software. Irish universities are well
positioned in this sector. In the near future, we may see Irish-designed products managing everything from control of energy in the home to management of wind farms and ensuring energy on the grid is optimised. With its natural energy resources and strong capabilities in areas such as engineering and ICT, Ireland is well positioned to profit from this opportunity.
All relevant State agencies, particularly in the enterprise area, will have to co-ordinate their activities early in the process to ensure we maximise the employment potential of export projects. This opportunity has already been identified by the Industrial Development Authority of Ireland and Enterprise Ireland in their clean technology growth strategies. There would also be a flow of income to local economies in terms of rates, rent to land owners and local community funds.
There are also potential significant interconnection benefits, enhancing security of supply, allowing for increased intermittent wind generation and facilitating the operation of the single market.
In terms of costs, some concerns have been expressed about potential amenity and environmental impacts. We all know that securing public acceptance for renewable energy can be a major challenge.
Public acceptance is achieved in part by requiring industry to address and mitigate human, environmental and landscape impacts and to deliver the best possible engineering solutions. It is also achieved in part through transparent planning, construction and licensing procedures.
It is important that industry communicates the local as well as the national socio-economic benefits flowing from investment projects. A recent Irish Government policy statement on the matter acknowledges the need for social acceptance and for project developers to examine appropriate means of building community gain considerations into project planning and budgeting.
Many energy project developers have already done this and industry as a whole should take the lead from best practice. Irish legislation on the planning process for strategic infrastructure, which is now recognised as an exemplar, allows planning authorities to require developers to build or finance local facilities and services that confer a substantial gain on the community.
Any new wind farms will of course be subject to the Planning Acts, including the requirements for public consultation. The Department of the Environment, Community and Local Government is currently undertaking a focussed review of the Wind Energy Development Guidelines. My Department is working closely with them on this.
And it should also not be forgotten that Bord na Móna has large areas of harvested bogs in isolated locations. These offer potentially unobtrusive sites for wind farm development.
On any cost-benefit analysis, therefore, I am convinced that wind energy presents this country with a new mission into the future, one that secures employment and delivers clean energy.
In conclusion, while there are many challenges to developing the renewable energy export opportunity, I am confident that these matters can be addressed and the opportunity realised. I look forward to participating in your discussion.
Thank you.