The new Energy Strategy must set out how Northern Ireland will deliver on the need to decarbonise our economy in line with the UK Government’s ‘net zero’ by 2050 requirement and set ambitious targets for 2030.
Achieving decarbonisation will require a dissolution of the old silos of heat, transport and power. For example, the electrification of heat and transport presents a significant opportunity to reduce the emissions of these sectors as the technology and know-how already exists to significantly decarbonise power at a reasonable cost to the consumer.
NIRIG believes the following elements are vital to deliver a net zero power sector:
NI begins from a point were onshore wind has been a considerable success story, with 1.4GW of installed capacity and emissions in the power sector 24% lower than they were in 1990. More broadly, the all-island Single Electricity Market (SEM) is notable as it is a small, isolated power system, with a high penetration of renewable generation, low levels of interconnection, as well as constraint challenges. NI can seek to build on the success to date in this sector as part of the zero carbon energy transition.
Targets for Renewables
NIRIG’s assessment is that for NI in the next decade, onshore wind and solar will continue to be the primary sources of low carbon electricity generation. The renewables sector is innovative and as we see costs drop for offshore wind, the first tidal projects in Scotland and new advances in floating wind, it will be important for policies to be adaptable as new opportunities develop.
NIRIG believes that NI, with a starting point of ≈44% renewable electricity generation, should set itself a stretch target of 80% by 2030 and 100% renewables by 2035.
Market Policies for Renewables
If NI is to stimulate the level of investment needed to meet decarbonisation targets and maximise the economic benefits of renewables, it will be necessary to introduce a price balancing mechanism akin to either the RESS scheme or the GB CfD.
NIRIG is supportive of a replication of either scheme in NI. Working with GB or ROI counterparts would allow for savings in terms of design costs of any market system. In fact, with a parallel RESS scheme running in NI, the benefit of SONI (System Operator for Northern Ireland) being part of the EirGrid Group could be maximised with systems replication being relatively straight forward.
Furthermore, without a similar market mechanism, NI will be discriminated and disadvantaged in the SEM with a consequence loss of carbon savings and increased consumer bills.
Planning for New Renewables
In order to deliver new renewable projects, and the grid infrastructure required to support them, it is vital that we have a facilitative planning system. NIRIG is supportive of both the Strategic Planning Policy Statement (SPPS) and Planning Policy Statement 18 (PPS18). However, while these have facilitated the growth of renewables across NI, NIRIG is concerned that policies being brought forward at a local council level could severely inhibit the growth of renewables.
It is worth noting at 93%, NI has the highest support for renewables of any region of the UK.[i] While this does not necessarily translate to support for a renewable project in a given location, a survey conducted by the Irish Wind Energy Association (IWEA) shows 85% are either supportive or neutral to a wind farm being developed in their area.[ii]
Upgrading Grid Infrastructure
An ambitious target for renewable generation must be matched by the release of investment in grid infrastructure.
There is limited capacity left on the grid in NI to connect new renewable electricity capacity, so it is vital that new grid is built within the coming decade or otherwise, the renewable electricity required will not be able to connect. SONI and NIE-N should progress with the design and consent of this, which is relatively low cost compared to the construction phase but can often take the most time. This would provide reassurance to renewable projects that the grid will be available when their project is built.
Without the necessary grid reinforcements, new projects looking to develop and secure a route to market will likely see very high constraint levels which will add to the cost of renewable deployment.
NIRIG also believes it is important to consider existing infrastructure and how this can continue to be utilised. Achieving 80% renewable electricity by 2030 will require the development of new renewable energy infrastructure and the repowering of existing sites. Repowering is the process of replacing old turbines with newer, more efficient ones. Repowering has many associated benefits such as allowing for more efficient use of operational sites and the continued use of grid infrastructure. We believe a strategy for repowering is required covering planning, grid connection and route to market.
Energy Storage, both short and long duration storage, will play a vital role in the energy transformation and can provide a range of valuable benefits by acting in the System Services, Capacity and Energy Markets. For example, Baringa’s 70by30 report envisaged up to 1700 MW of battery storage on the all-island system by 2030.
Investment in long duration storage technologies will also be required to fully decarbonise the economy. We support measures to encourage research and development in new long duration storage technologies. For example, the potential for hydrogen electrolysis from renewable generation should be considered in NI’s long-term strategic goals.
It is important that long-term investment frameworks are put in place to incentivise development of different forms of energy storage.
As noted previously, achieving net zero emissions will require a dissolution of the old silos of heat, transport and power. Electrifying heat and transport can provide an often unseen form of energy efficiency. A typical heat pump is approximately 3 times more efficient than an oil or gas boiler, while an electric car is approximately 4 times more efficient than a diesel or petrol car.
NIRIG supports the electrification of transport either directly through the use of electric vehicles (EVs), or indirectly through the use of hydrogen powered vehicles. Ambitions for EVs in NI are further supported by an increasingly renewable power system, with 2020 renewable electricity targets exceeded. Setting ambitious renewables targets for 2030 will not only decarbonise the electricity sector, but can also unlock decarbonisation of transport via EVs.
Barriers to widespread rollout of EVs remain, including capital cost, range of vehicles and charging infrastructure. It is critical that charging infrastructure remains ahead of demand, to ensure consumers are not disincentivised from purchasing EVs due to range anxiety.
The Energia, Translink, Wrightbus partnership that created the first hydrogen double decker buses, shows what is achievable. Each being local companies there is significant potential for innovation, decarbonisation and job creation.
With heat responsible for 24% of emissions, the 2050 timeframe for energy efficiency is too long. Energy efficiency should be the first step in decarbonising heat and to some extent the decarbonisation of heat supply relies on it so it should be ‘front loaded’. NIRIG is supportive of moves to electrify the heat network, either directly through the use of heat pumps or indirectly, through the production of hydrogen to decarbonise the gas grid.
Electrification of heat will likely be through the use of heat pumps. This technology is only suitable in energy efficient homes therefore investment in retrofitting is first required. However, if this is not possible, particularly in urban areas, large heat pumps can deliver low-carbon heat using district heating pipes which Belfast is ideally suited for and if pursued, could target the funding available from the Heat Networks Unit of the Department of Business, Energy and Industrial Strategy (BEIS).
Electrification of heat through water heating could also provide a solution by using solar panels or as a way of using otherwise constrained/curtailed renewable electricity to heat home hot water tanks.
NI has the advantage of having a young gas infrastructure which can accommodate the injection of hydrogen. Whilst the injection of hydrogen into the gas grid provides a way of decarbonising heat, it is worth noting that not all premises have access to the gas grid. There are both carbon and consumer benefits to encouraging switching to gas in areas where there is existing grid and the level of take up is low.
NIRIG believes that 80% electricity from renewable sources (RES-E) is achievable by 2030 at a reasonable cost to the consumer.
The NIRIG commissioned The Wind Dividend report demonstrates that over the period of 2000-20 investment in wind energy has resulted in a £135m saving due to the downward pressure that renewables exert on the wholesale price compensating in large part for investment in grid and the public service obligation (PSO) levy.
In addition to this report its authors, Baringa, produced the 70 by 30[iii] report that shows across the SEM we can reach 70% RES-E by 2030 at a neutral cost to the consumer, if the levelised cost of wind averages €60/MWh. With onshore wind prices as low as €40/MWh in some European markets, it is possible that the meeting of the ROI target could result in a net saving for the consumer when compared to Baringa’s fossil fuel scenario.
Analysis by BVG Associates[iv] further demonstrates that renewables support does not necessarily come at a cost to the consumer and in the medium to long term can reduce consumer bills. From 2023 the Contracts for Difference (CfD) strike prices stay below the wholesale price of electricity with renewable generation not only placing a downward pressure on wholesale prices, but the CfD mechanism delivering a net £1.6bn payback to GB consumers by 2025. This does not negate the need for a market mechanism, as developers benefit from a guaranteed return on investment that the strike price brings, while consumers benefit from savings on their bills.
Baringa’s Store, Respond and Save report highlighted the key all-island benefits that technologies such as energy storage, demand side management, synchronous condensers and renewable generation can deliver in providing zero carbon system services instead of conventional fossil fuel plants. Baringa estimate that procuring all system services from these zero-carbon technologies by 2030 would result in €117 million (approx. £106.5 million) per annum system cost savings.
It should also be noted that the deployment of renewable energy in itself can provide significant economic opportunity to NI and in particular, the local areas in which development takes place.
Specifically, figures from the Department for Economy’s Energy in Northern Ireland 2018[v] show that low carbon electricity accounted for the following;
NIRIG’s investment analysis shows that the achievement of 80% renewable electricity generation by 2030 would equate to approximately £800m direct investment in NI over the next decade with a £177m ongoing annual operation and maintenance spend.