Irish and UK Governments working to build Europe's first cross-jurisdictional renewable electricity trade I was admiring the ocean racing craft on the way here this morning and I can see that sailors need no reminding of the strength and energy potential of our winds in the West of Ireland. It is a really impressive event, one of the top three global sporting events this year.
I also commend the organisers for putting together the conference this morning on sustainable energy, an arc which brings together nicely the marine, energy and green innovation sectors.
When it comes to attracting new jobs and investment to Ireland, certainty and confidence are both vital. Recent decisions by the Irish people have shown that Ireland is a country serious about its future and serious about rebuilding our economy and getting our people back to work.
Our serious commitment to these tasks and our achievements to date were singled out and recognised at last week’s Summit in Brussels, which was the most significant meeting both for Ireland and for Europe in many months and which had a most welcome outcome.
As well as recognising the need to break the connection between bank debt and sovereign debt, the European Council agreed a Compact on Growth and Jobs. It is for us now to design and present the projects that deserve investment and that will stimulate growth in the depressed European economy.
Job-creating growth must be at the top of the agenda, both here at home and in Europe too, if we are to create lasting confidence for citizens, enterprise and investors.
The Government is committed to delivering on that growth agenda and to creating the conditions and exploiting all the opportunities that will revitalise and secure the development of this country.
Energy policy has a pivotal role to play in creating the conditions for a return to economic growth and job creation right across the regions of Ireland. As the Taoiseach has pointed out to you, this Government recognises the importance of sustainable development not just in how we respond to climate change, but also in how we rebuild our economy and create new and lasting jobs.
Our focus is on creating sustainable jobs in expanding green industries and we share with many of you here you the vision of economic transformation to a resource efficient, low-carbon and climate resilient future.
The renewable energy sector has long been identified as a key area where new jobs can be created by taking advantage of Ireland’s natural resources. The scale of the renewable energy resources in Ireland is significant by European standards. Providing we can develop a sensitive and appropriate planning system, and get the necessary infrastructure built, then there is an enormous regional development potential here.
Our aim is to create a low carbon economy which will deliver benefits in terms of growth, innovation, competitiveness, job creation, energy security and environmental quality. And I firmly believe that achieving these objectives will provide us with the opportunity to transform our economy and to transform the regions.
This is where renewable energy will play a key role in shaping Ireland’s energy future, by decarbonising our electricity generation over the coming years, using natural resources located within our own borders, and reducing our dependence on an increasingly expensive and volatile fossil fuel supply.
The latest analysis by the Sustainable Energy Authority of Ireland shows that we generated almost 18% of our electricity last year from renewable energy sources, mainly wind. In doing so, we were able to reduce our dependency on imported gas by over 20%. That is very significant and it shows the real security of supply benefits of renewable energy.
Under European Union targets, we must ensure that, between now and 2020, there is a steady, progressive and measurable increase in the amount of renewable energy consumed in the electricity, heat and transport sectors. And we have made good progress in this regard, going from around 5% in 2005 to around 18% renewable electricity today.
Of course we face many challenges.
We must have predictable and transparent support frameworks, to attract commercial investment at a cost which is competitive.
We need regulatory certainty, which supports renewable energy development in the long term interest of consumers.
There has to be cost effective and timely investment in our transmission and distribution systems.
We need to be able to build the necessary infrastructure to strengthen electricity supplies in the regions and to facilitate new renewable energy projects.
And we must ensure ‘best practice’ planning and permitting procedures and coherence between our environmental and renewable energy objectives.
Our island is not simply a resource. It is also our home and our bequest to future generations. While we live and work here, we are also custodians of the physical environment for future generations.
So, our development ambitions and policies must be capable of ensuring public acceptance for development and of securing real benefits for local communities. We need to ensure that we plan new projects appropriately and in a sensitive manner, that we fully respect the local environment and that we site developments in suitable areas.
Up to now, our focus has been on developing renewable electricity to meet our own national requirements, but we now have a real opportunity to go further than that.
In December the EU published an Energy 2050 roadmap which sets out a number of different scenarios for developing a decarbonised energy sector over the coming decades. It is clear under all of these scenarios that there will be a significant increase required in renewable energy deployment in Europe well over and above the 2020 target levels.
We have long known that Ireland has renewable energy resources that are considerably greater than our own needs. As we move from today’s island-based, stand-alone energy system to a more interconnected and integrated single European energy market, we now have a real opportunity to go beyond providing for our own needs and to develop our abundant natural resources to become a renewable electricity exporter of scale.
The potential of our abundant renewable energy resources is nowhere more evident than where we are today. Because of its location facing the Atlantic, the West has not only some of the best wind but also wave resources in Europe, if not in the world. A wind turbine on a good site in the West of Ireland can generate on a yearly basis almost twice the amount of electricity it would yield if it were built in Northern Germany.
However, our renewable energy is not of course confined to our coastal regions. There are major plans for commercial exploitation of the wind potential of the midlands. And our bioenergy potential is only beginning to be tapped.
The key is to develop our renewable resources at sufficient scale to generate a commercial return on investment. And key to that is being able to access a much larger electricity market. The electricity market in the UK is around ten times the size of the market in Ireland. And we know that, for a variety of reasons, for the British to be self-sufficient in meeting their renewable energy targets would be a massively expensive undertaking.
What we are talking about as an alternative is offering projects in Ireland or in Irish waters that would produce too much electricity for our own domestic connection and consumption, but which can sell that power to Great Britain at a price far lower than their offshore alternative.
In the short term, there are opportunities for on and off shore wind and biomass projects, but in the medium to longer term as technologies mature and become commercially deployable, there will also be opportunities for wave and tidal developers. The volume of trade that could develop has the potential to become very significant over time.
As part of the export potential, we have a real opportunity to develop a few large-scale, onshore, renewable projects, some of which have the potential to be combined with large scale electricity pumped hydro storage. Electricity storage on that scale will require significant technological, logistical and environmental challenges to be met. If these challenges are met, the potential opportunities could be very considerable for renewable energy export and could provide real benefits and economic opportunities to the regions where they are located.
If we can develop a sufficient number of projects and at sufficient scale, there is job potential not just during the construction phases but in component manufacturing and in the operations and maintenance area.
Renewable generators are also commercial businesses and they form part of the rate-paying base. At a time when local government finances are under pressure, renewable developments are a long term and stable source of income for local authorities.
A growing majority of windfarm developers also operate some form of local community fund, where payments are made available to deliver local
amenities.
The Taoiseach and I are both committed to delivering on each of these potential streams, by creating the framework and conditions for a bilateral and eventually multilateral trade in renewable energy.
Our work on this is now intensifying. Last month, building on the June 2011 British Irish Council agreement on developing an all islands energy approach, I had the latest in a series of meetings with UK Energy Minister Charles Hendry around the issue of developing renewable electricity trade between the two countries. We agreed to work towards concluding an intergovernmental Memorandum of Understanding by the end of this year.
Officials in the two Departments will be joined by teams from the two transmission operators and the two market regulators to examine a range of issues around the electricity market, regulatory and technical grid areas where agreement is needed to underpin the creation of Europe’s first cross-jurisdictional renewable electricity trade.
The intergovernmental agreement is a necessary step under European legislation and it is an important step in designing the framework for renewable energy trade between the islands.
The trade itself will of course be undertaken by commercial operators, looking for a commercial return. Investors in these projects need to know the shape of the market to come and they need regulatory certainty. I hope we can bring that knowledge and certainty to the market when we publish our final decisions in the weeks and months ahead.
As I said at the outset, certainty and confidence are both vital in order to attract new investment and create new jobs. I do believe confidence is returning to our economy and I am committed to securing certainty for this sector of the market.
Finally, while naturally we in Government will assist by putting in place the required regulatory framework for the development of this sector, forums like this provide excellent opportunities to discuss the innovative types of funding structure that can be put in place to develop the required infrastructure. I look forward to hearing and learning from the contributions of the speakers and other participants gathered here.