2pm, Tuesday 19 June 2018, Croke Park
Session: Driving the Energy Transition in Ireland
Check Against Delivery
Introduction
I am very pleased to be here with you this afternoon for the 2018 Energy Ireland Conference.
The Department that I lead is the Department of Efficiency. It’s about using the natural resources that we have in a sustainable manner to drive change, to transform rural Ireland, to support employment and to protect our people and planet for future generations.
Clean Energy Package / NECP
Presently, we see the Eurozone economy beginning to slow down as a direct result of rising oil prices. We must decouple economic growth from oil availability and price.
Using renewable energy and improving the efficient use of energy across our economies releases the EU from the constraining impact of fossil fuels.
Energy Council
Last week at the Energy Council in Luxembourg, I urged my Ministerial colleagues to become as 'self-sufficient as possible in terms of energy' with the primary focus on developing renewable energy and driving energy efficiency. This renewed focus is not just necessary to meet our climate targets but from an economic perspective it will ensure EU economies will grow in a 'long term sustainable manner'.
I also emphasized the need for the EU to become self-sufficient in the production of biofuels. We cannot replace imported oil with unsustainable imported palm oil, this undermines our long term economic sustainability as well as transferring emissions to another part of the globe.
We must bring renewed focus to the development of second generation biofuels which are based on waste streams, thereby having a double impact on our environment.
RED, EED and Clean Energy Package
Two days later, at the Trilogue discussions, I was happy to see the Renewable Energy Directive reach agreement, and I welcome the ambitious and challenging 32% renewable energy target for the EU by 2030.
I note that the Energy Efficiency Directive did not manage to reach an agreed position on the night but I understand that discussions were fairly close and I am confident that an agreement on this directive will follow shortly.
The EU Clean Energy Package, also currently being agreed at EU level, is essential in terms of delivering on the EU’s commitment towards the Paris goals and it will require significant effort from all member states.
NECP
Stemming from this package, Ireland will be developing a draft National Energy & Climate Plan (NECP) that must go to the European Commission by the end of this year, with finalization by the end of 2019.
In the Plan, Ireland must set out how it will make an appropriate contribution to EU level targets. As part of this process, we will of course be engaging extensively with stakeholders.
ISEM
Earlier this year, following feedback from market participants and the transmission system operators, the Single Electricity Market Committee put back the commencement date of the Irish Single Electricity Market (ISEM) to October 2018.
This additional period is seen as essential to allow for residual IT system issues to be resolved, and for a longer period of market testing and trialing.
The ISEM is a key part of our market development plans and I look forward to it coming into operation to ensure we have fully EU compliant market structures, while ensuring the system is sufficiently resilient and cost effective to meet our security of supply and competitiveness objectives.
Electricity
Across the three energy sectors of heating, transport and electricity, it is in the electricity sector that we have made the most progress on renewable energy to date. Preliminary estimates from SEAI are that we achieved over 30% of our electricity consumption from renewable sources in 2017. This represents more than a doubling of the equivalent figure in 2010 which stood at 14.6%, and leaves us on track to get close to our EU target of 40% by 2020.
By any standards, this is a significant achievement and more particularly so, in an Irish context, given that we have a relatively isolated electricity grid and low levels of interconnection.
The DS3 Programme has been a critical element of managing increased levels of renewable generation on the grid. In April, following a 5 month trial, EirGrid announced that they can now handle up to 65% variable renewable energy on the grid at any time. This is a critical step to underpin our growing renewable energy sector.
Onshore wind has been the largest driver of growth in renewable energy to date. However, the diversification of our energy mix is a key objective of my Department as we look out to 2020 and beyond. Technologies such as solar and offshore wind are becoming more cost competitive and there is an increasing interest by developers in developing offshore wind energy projects in Irish waters.
Offshore wind
The Offshore Renewable Energy Development Plan (the OREDP) sets out the policy framework for delivery of Ireland’s significant potential in this area. A mid-term review of the OREDP has recently been published by my Department. This review presents us with the opportunity to take stock of progress to date and look to the future of Ireland’s developing offshore renewable energy sector.
Work is currently underway in my Department to implement the Review’s recommendations so that we can move as quickly as possible to the next phase. Offshore renewable energy will play a critical role in Ireland’s clean energy future.
Bord Na Mona Bioenergy
Bord na Mona Bioenergy is a new venture that will seek to expand the production of bioenergy in Ireland.
Corporate Power Purchase Agreements
Corporate power purchase agreements (PPAs) provide a potential route for large energy users to reduce the cost burden on ordinary consumers of funding renewable energy projects. Globally, companies in 75 countries actively sourced renewable energy directly through corporate PPAs in 2017.
My Department is working with industry to organise a workshop on corporate PPAs in the coming weeks in order to examine the potential for corporate solutions in Ireland.
Micro-Generation
There is also a transition underway across the EU and Ireland, not just from conventional generation to renewables, but also from large scale generation to smaller scale distributed generation.
The new Renewable Energy Directive recognises the rights, obligations and entitlements of renewable self-consumers and renewable energy communities.
Their emergence in Ireland will be facilitated by the rollout of smart meters, the smart grid and the lessons learnt from various pilot schemes currently underway or under development.
My Department, along with the SEAI is developing a pilot scheme for micro-generation that will target solar PV and self-consumption amongst domestic customers. This pilot scheme will commence later this summer and further details will be made available shortly. This will be informed by the completion and consideration of the results of a study being undertaken by the SEAI into the likely uptake and demand for the scheme.
This in addition to a Code of Practice being developed in close consultation with industry and relevant state agencies that will detail the necessary safety and technical standards required to facilitate its successful delivery.
Heating
Due to the nature of our dispersed population and lack of a district heating network, we face particular challenges in Ireland in trying to decarbonise the heating and cooling sector, which accounts for around 40% of our energy consumption.
The recently published National Development Plan 2018-2027 includes a provision for supports for changing out oil-fired boilers to electric heat pumps, along with the provision of roof solar, in at least 170,000 homes. Furthermore last December I secured Government approval for the Support Scheme for Renewable Heat for the non-residential sector. The SEAI are currently developing the detailed terms and conditions for the scheme and my Department are engaging with the European Commission to secure the necessary State Aid approval, a process which typically takes 9 months.
I intend this scheme to be operational in the second half of this year.
Transport
The Transport sector, which accounts for a further 40% of our energy consumption, also presents us with particular challenges.
In April of this year I published a new Policy Statement on the Biofuels Obligation Scheme, which aims to provide certainty to industry.
This sets out an increase in the obligation rate to 10% from the start of next year and 11% from 2020. In addition, I plan to undertake a consultation next year in relation to changes for 2022.
The Low Emission Vehicle Taskforce made a series of recommendations prior to Budget 2018.
This led to additional incentives being put in place including
· a zero rate of benefit-in-kind for full battery electric vehicles
· a €600 grant for the installation of home chargers
· up to €7,000 support for the use of electric vehicles as taxis
· and up to 50% reduction in tolls set to be introduced next month
Whilst the first phase of work of the Low Emissions Vehicle Taskforce focusses on electric vehicles, the second phase of work will examine other low emission vehicle types. These include compressed natural gas, LNG, LPG and Hydrogen. To support the growth of CNG, Gas Networks Ireland is currently rolling out a network of 14 public fuelling points on the core TEN-T road network. In addition, research is underway into the use of Hydrogen in transport which includes the GenComm Project of which NUIG is key partner.
RESS
My Department is currently developing a proposed new Renewable Electricity Support Scheme (RESS) to assist Ireland in meeting its renewable energy contributions out to 2030.
A Government decision is anticipated before the summer recess. The state aid process, which is dependent upon this approval, would commence soon after.
This typically takes 6-9 months, so initial estimates for the first auction under the scheme would be in the second half of 2019.
Community Ownership and Community Benefit will be key design principles of the new scheme. If a renewable project wants to be supported under the new scheme, paid for by all customers, it will have to meet certain community based criteria such as greater and more transparent community engagement and collaboration.
I am not talking about solar panels for community centres or football jerseys for local GAA teams; I am talking about citizens having the opportunity to invest in, and own, and financially benefit from, renewable energy projects, in their area.
Energy Efficiency
Energy efficiency is economic investment. It is social action. It is climate action.
Using less energy and using it more efficiently is the most cost-effective and accessible way to address climate change.
Energy efficiency is a central component of Ireland’s National Mitigation Plan – our national strategy on climate. If the money that Ireland spends on energy imports can be redirected to energy efficiency and smarter energy services it will displace imported fossil fuels with local jobs and opportunities for Irish companies.
The sums here are not insignificant – in 2016 Ireland spent over €3.4bn on energy imports.
I would like to single out SEAI’s EXEED project as a great example of an energy efficiency initiative. I have more than tripled the annual support allocation to EXEED to €10 million this year. Last year’s budget provided an additional €35m for the expansion of the energy efficiency programmes in SEAI targeted at reducing CO2 emissions in the residential, commercial and public sectors, bringing total investment in this area to €117m.
Public Sector energy efficiency
Energy efficiency in the public sector is hugely important in terms of overall climate action and public sector reform.
This is a clear incentive that sits alongside the obligation on public bodies to improve their energy efficiency by 33% before 2020.
There is potential to build further on savings to date of an average of 20% across public sector bodies, and to redeploy further savings to other priorities. The cumulative avoided energy spend since 2009 is €737 million with 2.68 million tonnes of emissions avoided. That means hundreds of millions more money available for other priorities including front line services. Government has allocated a further €9 million to help support public sector bodies deliver on this objective next year.
Climate Action
We are as a country playing catch-up on our obligations in relation to climate change.
This is as much our opportunity as our obligation. In any event it is a moral necessity and a vital national interest.
Ireland relies on high emissions and imported fossil fuels to meet over 88% of our energy needs. This costs around €5 billion. That’s a cost we cannot afford in cash, and which our planet cannot afford at all.
Climate Action Fund
As part of Project Ireland 2040, I launched a ground-breaking €500 million Climate Action Fund, which will open for applications in the coming weeks. This will fund initiatives that contribute to the achievement of Ireland’s climate and energy targets in a cost effective manner.
It can support projects ranging from wave energy off our west coast, to electrifying our bus fleet, to heating our homes and businesses using farm and food waste.
This fund is a new way of thinking. A new way of problem solving in communities: both in urban and rural areas, business and enterprise; on climate and our environment. I believe this fund will stimulate innovative ideas and deliver concrete projects that will contribute towards our 2030 climate goals.
Climate Dialogue
Achieving our climate targets out to 2030 and beyond is only achievable if all of Government and all of society play their part.
That is why I have established the National Dialogue on Climate Action. It’s key objective is to ensure that wider society is part of an inclusive process of engagement and consensus building aimed at enabling our transformation to a low carbon and climate-resilient future.
I also intend that this process also subsume the proposed National Energy Forum, one of the key actions in the Energy White Paper. This Dialogue will kick off on Saturday.
Brexit
Last year I spoke of a number of international developments that will have long-term impacts on Ireland and our energy system.
The most notable development was undoubtedly the vote by the UK to leave the EU and also the publication of the Clean Energy Package by the European Commission which sets out a range of proposals for EU energy policy up to 2030.
Today I've outlined the progress on EU energy policy but sadly I'm not in a position to outline significant progress on Brexit.
But this has not been for the lack of effort by my team in the Energy Division or my work as Minister.
In dealing with the UK’s planned exit from the EU. I have met with my UK counterparts and raised Brexit issues at every suitable opportunity at IEA meetings and EU Energy Councils, where I have also taken the opportunity to speak with other European Energy Ministers.
As the Brexit negotiations continue, it is of critical importance for Ireland to protect security of supply and UK-EU energy trading.
We very much welcome the EU’s support, to date, in recognising Ireland’s unique position on energy trade with the UK. The strong and co-operative energy relationship which exists between Ireland and the UK on security of supply issues is one which we, together with our EU partners, continue to work hard to maintain.
There is no reason to believe that oil, gas and electricity will not continue to be traded post-Brexit.
However, the terms of this trade will be influenced by the final terms of the Withdrawal Agreement finally agreed by the United Kingdom with the European Union.
Celtic I/C
Separately, EirGrid is currently proposing an electricity interconnector with France and will submit an investment request for the Celtic Interconnector project to the energy regulator later this year. This would be a direct link to the EU Internal Energy Market, which would improve security of supply, enhance our ability to incorporate renewables onto the grid and to participate in the EU’s single electricity market.
Conclusion
Finally, implementation of the EU’s Clean Energy Package sets a clear framework to guide energy policy to 2030.
The energy transition has to be delivered in tandem with managing our security of supply and competitiveness, and ensuring that our energy markets are well regulated and efficient.
We must connect the essential requirements of energy infrastructure, developed for the benefit of the country as a whole, with the concerns of communities where it is built. Community-led electricity and energy projects offer a real opportunity for local economic growth.
Our role is to put the levers for change into the peoples’ hands. This is our work at home, while abroad we stand firm in our commitment to the Paris Agreement. Acting in solidarity, means redefining our self-interest and our national interest, as the essential interest for survival we share with the world.
Government initiatives such as Project Ireland 2040, including the Climate Action Fund, will play a critical role in driving the change needed to enable Ireland to achieve its energy and climate objectives.