Ireland’s Transition to a Low Carbon Energy Future
Across Government, we are talking about what is the defining issue of our generation - Climate and our transition to a low Carbon future.
As you will expect, I have a lot to say about renewable energy, but energy is part of a wider portfolio and no one element sits in isolation.
Notwithstanding the decision of our closest neighbours, we are a committed member of the European Union and all five pillars of the Energy Union must inform our approach to Energy Policy.
It’s not just about how much we generate, though that matters. It is also how we deal with connectivity and efficiency. The role we play in underpinning security, solidarity and trust; and in ensuring energy security and co-operation across Member States.
When the European Union adopted the Renewable Energy Directive in 2009, we in Ireland started from the seventh lowest position in terms of the share of renewables in our energy mix (3.1% - 2005), actually the fifth lowest.
The ask of Ireland was onerous - to deliver more than a fivefold increase in renewables by 2020 (16%). Ireland has significantly stepped up to that ask in electricity where early indications are that we will have reached between 31% and 33% by the end of 2017 with a target of 40%. However yes there are strong indications that we will be less successful in renewable heat and transport.
In Budget 2018 I was able to secure funding for significant new schemes in these areas, supports for EV expansion, development of infrastructure and support for home charging. I also received the agreement of my colleague the Minster for Finance and Public Expenditure and Reform for 0% rate of Benefit in Kind to incentivise Electric Vehicles without mileage conditions for at least three years. The BIK rules will ensure that there is no BIK liability associated with recharging EVs in workplaces.
In the area of heat I have introduced a new support scheme for Renewable Heat that provides both direct cash grants and ongoing support, but the simple reality is that we will need to do a lot more in these areas.
We also need new and joined up thinking in terms of making different developments complementary. Data centres are significant producers of heat, and a significant part of their energy needs goes into cooling these centres.
How can we capture this heat, which is currently wasted, and use it in district heating systems. If not in domestic dwellings, then in larger users like commercial centres, hospitals, educational institutions? Indeed more generally, how can we make district heating, with its economies of scale, play a greater role in our future?
Yes, some may point to our settlement pattern, but something like a third of the dwellings in 2050 are not yet built. We need to have all five pillars of energy policy in mind as we develop our strategies and we need to think of our energy systems in the bigger European context too.
I am sure you are well aware of interconnection projects to the UK and Europe that are currently being progressed, but a longer term perspective on energy is reflected in Europe’s ambition for at least 15% inter-connectivity by 2030.
It is not just about existing energy systems. It is about what energy will be traded and how markets will need to evolve. Equally as important; how will community and social consent to this future be secured? Few here will need reminding of problems that arose some years ago in relation to proposals for the export of electricity.
Yet Ireland does have real potential, we are the fourth largest European nation in terms of size when we include our sea area. We have one of the best wind resources in the world and that brings enormous benefit. The potential from the technological advances around the world in offshore wind in the last ten to fifteen years is huge. Realising this potential, which the SEAI has put as potentially high as 50GWs is a strategic and game changing challenge.
There will be legislative, technical and financial issues to be addressed, but key will be securing a broad national consensus. It will not be enough to work out the money and the engineering and then produce what I’ve heard described as ‘the Community playbook’. We will need a broad holistic approach, and I recognise this is a project which will take several years to design, let alone put in place.
These are some of the high level issues that I wanted to share, but now, I might turn to some of the more immediate challenges, and opportunities in renewable energy in Ireland.
Review of 2017
2017 saw more renewable electricity being generated and consumed in Ireland than ever before.
On June 11th last renewables accounted for over 66% of electricity demand over the course of the whole day.
This is a remarkable achievement, made possible by significant investment by the State, technical expertise and innovation by the system operators, and of course delivery by the renewable energy sector. Ireland is now a world leader in integrating renewables onto the electricity grid.
For this trend to continue, and there is no alternative, it is going to require a transformational change in how we design, build and operate renewable electricity projects.
Which technologies will be used, which projects will get support from the State, where will they be located, and how can individual citizens and communities be part of the solution? The transformational change is starting with the new Renewable Electricity Support Scheme (RESS).
Last year I spoke to you about how we needed to reduce our use of fossil fuels from an economic as well as an environmental perspective. I also spoke about our need to re-design the relationship between renewable electricity projects and the communities in which they are located. I would like to take this opportunity to acknowledge the work that you have done over the past 12 months to engage productively with my Department, whether on the Renewable Electricity Support Scheme, Micro Generation, the Support Scheme for Renewable Heat, or the Wind Energy Guidelines;
Recently I spoke to children in Leixlip where solar panels had been installed on the roof of their school through support from local industry, an energy supplier and the Sustainable Energy Authority of Ireland and also part funded through my Department; We have also seen trials involving solar PV and battery storage in rural Kerry.
This shows what can be achieved together.
At EU policy level, we’re working closely with the EU Commission and like-minded Member States to ensure that the agreement reached at the December Energy Council of Ministers on the Clean Energy Package matches Ireland’s interests. That package covers electricity market design, energy efficiency, Energy Union governance and renewables. The recast Renewables Directive provides the framework for renewable energy development in the period 2021-2030.
Whatever the final EU ambition ends up being, there will be significant opportunities for you, the Irish renewable energy sector, to participate domestically and internationally.
These opportunities are not limited to subsidies and state supports - last year the SEAI estimated that Irish business had the potential to capture between €42m and €216m of the EU Solar PV market, each year.
Globally, we have seen a number of projects successfully compete in renewable auctions without the need for subsidies. This trend looks set to continue with technology costs falling, with auctions creating increased competition between projects and with the growth of corporate Power Purchase Agreements.
I want to be clear with you here today, that while we diversify our renewable technology mix through increased renewables deployment and energy auctions, we will do so in a sustainable and responsible manner, with a focus on ensuring cost effectiveness and value for money for customers.
I will not allow an approach which locks in high costs for customers. I welcome the diversity of our renewable technology mix, at the appropriate time and at the appropriate cost.
Last year saw the establishment of the Micro Renewable Energy Federation (MREF) and the Renewable Energy Consumers and Producers (RECAP) association. These groups marks a shift in how we, as a country, and you as an industry, can work together to deliver for Ireland both nationally and internationally.
In terms of the year ahead, there are a number of projects underway.
Renewable Electricity Support Scheme (RESS)
As we look towards 2030, the new RESS will be the first step for Ireland in delivering its contribution towards the EU’s 2030 targets. The scheme is also being designed to increase community participation in and ownership of renewable electricity projects.
As expected, the interest was significant. Over 1,250 submissions were received from the public consultation.
It is encouraging to see the almost unilateral support for the measures and policies proposed that will enable community-led schemes. The industry has listened, and has provided ambitious ideas.
What is particularly significant for me is that there will be a separate, ring fenced community category to provide opportunities for communities and citizens to take part in renewable electricity projects.
I will receive a final design of the new scheme by the end of March and I will then bring it to Government for approval.
Subject to Cabinet and European Commission State aid approval, we will hold the first renewable electricity auction in Ireland next year.
The reality is that bringing microgen onto a system designed for large generators is complicated.
It impacts how we pay for the network, how we manage regulation and how we technically manage the system.
These same challenges are now being faced by other EU Member States who have already implemented schemes and are now having to reform them.
While I will not let these challenges be a barrier to bring support to this key sector, it would be reckless if we didn’t learn from the experiences of other countries and implement best practice.
The recast Renewables Directive recognises the rights, entitlements and obligations of both renewable energy communities and renewable self-consumers; and the Directive will instruct Member States to implement measures to remunerate these micro generators who feed self-generated electricity into the grid.
I am committed to supporting this. Late last year, my Department and the SEAI hosted a stakeholder workshop on micro-generation. On foot of this workshop, I have asked the SEAI to conduct a behavioural and attitudes study into the likely demand for and impact of microgeneration among the public. It is my intention to open a grant aided pilot scheme this summer for solar PV microgeneration, targeted initially at self-consumption and for domestic properties.
This will be the first phase in a multi-phased implementation of supports for microgeneration in Ireland, as we explore other options toward the new Directive and enable the renewable self-consumer.
Biomethane Grid Injection
The production of biomethane from anaerobic digestion and its injection into the natural gas grid has potential in Ireland’s renewable energy future. Not only is it a source of renewable energy, but it also provides an outlet for food and farm waste.
We produce enormous amounts of food waste in Ireland - two tonnes a minute. This needs to be reduced, but where absolutely unavoidable it should be a resource.
Anaerobic digestion facilitates this, and along with biomethane grid injection, they form links in establishing a circular economy that is essential for the sustainability of our economy and the survival of our planet.
My Department recently held a stakeholder engagement workshop to discuss the options to support biomethane grid injection with a view to bringing a proposal forward as part of this year’s budgetary process.
We must all recognise the significant developments made in this sector over the past year, and I acknowledge the role played by this industry in bringing us to this point.
Last year I said we were at a key juncture. This year, while I believe we are moving forward and in the right direction, I want us all to change gear and start to deliver and build our focus out to 2030 and beyond.
I will provide the policy and regulatory framework and my ask to you here today is to provide the innovation and the solutions needed to continue to drive us on our one way ticket to a low carbon Ireland.