EnergyGreenPaper1October2006 1 (PDF 4806KB)

EnergyGreenPaper1October2006 1 (PDF 4806KB)
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CONTENTS
MINISTERIAL FOREWORD
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EXECUTIVE SUMMARY
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1 BACKGROUND
1.1 GENERAL POLICY CONTEXT
1.2 SECTORAL PERSPECTIVE
1.3 CROSS-SECTORAL PERSPECTIVE
2 THE POLICY FRAMEWORK
2.1 ENSURING THE SECURITY OF ENERGY SUPPLY
2.2 PROMOTING THE SUSTAINABILITY OF ENERGY SUPPLY
2.3 ENHANCING THE COMPETITIVENESS OF ENERGY SUPPLY
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3.1 CONSULTATION AND COOPERATION
3.2 QUESTIONS FOR CONSULTATION
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ACRONYMS & ABBREVIATIONS
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GLOSSARY OF TERMS
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SELECTED SOURCES
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3 THE WAY FORWARD
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MINISTERIAL FOREWORD
Energy is fundamental to all our lives. Energy policy is therefore pivotal to ensuring that economic
and social policy objectives are met. In a developed economy its provision in a safe and reliable
manner is assumed.
There is no doubt that the challenges for energy policy are growing all the time. We live in a world
of high energy demand, sustained high oil and gas prices and concerns about security of supply.
Threats to the environment and climate change have to be addressed. Our current energy policy
is set against this global and EU backdrop of uncertainty. We must all now plan for the future.
This Green Paper “Towards A Sustainable Energy Future for Ireland” outlines options for the future
direction of energy policy based on the three pillars of:
• security of supply;
• environmental sustainability and;
• economic competitiveness.
It has been informed by an impressive range of analysis, commentary and input from public
bodies, organisations and the private sector.
It is set against the background of the Programme for Government together with “Sustaining
Progress” and “Towards 2016” which underline the Government’s commitment to deliver energy
policy priorities.
It is also set in the context of the specific challenges facing Ireland.
We have a strong economy and a growing population leading to increased energy demand into
the future, which will have to be met against the background of legally binding environmental
commitments and carbon constraints.
The fact that we are a small market on the edge of Europe poses challenges for scale, investment
and supply. Because of this we need to enhance our physical interconnection with the UK and
possibly Europe in the future.
We are building the all-island energy market in the interests of business and consumers, North and
South. We are setting ambitious energy efficiency targets. We are giving priority to energy research.
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Our energy costs are high and must be tackled in a range of ways. The current structure of
the Irish electricity market gives rise to higher energy costs. This in turn leads to questions of
dominance and the need for more competition. We need to improve competition urgently in the
sector.
Renewable energy is set to play a major role in addressing our energy challenges. This Government
is doing much to encourage this rapidly growing industry and the Green Paper points to a future
in which renewable energy will play an increasingly important role, particularly in terms of fuel
diversity. In the future these energy sources can reduce our negative impact on the environment
and help to secure our energy supply.
I am confident that the Green Paper will provide the basis to positively shape the future of the Irish
energy sector and its contribution to economic and social policy objectives.
It is now put forward for a period of consultation. While there is an emerging consensus on overall
priorities there are some differences of opinion over how these priorities are to be delivered.
Your views and comments on the full range of issues identified and the necessary actions under
the framework are welcome. We pose key questions for debate – the answers to which will help
us to shape policy directions for the future.
The review process will culminate in the publication of a White Paper, which will set out our
strategy for creating a Sustainable Energy Future for Ireland.
Noel Dempsey, T.D.
Minister for Communications, Marine and Natural Resources
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EXECUTIVE SUMMARY
Energy is fundamental to Ireland’s economic and social well-being. The Government is committed
to delivering on the full range of energy policy priorities, including: support for ambitious growth
in targets for renewable energy; energy efficiency strategies; identification and maximisation
of indigenous energy resources; on-going investment in energy infrastructure; research,
development, technology and innovation; and the continued opening up of gas and electricity
markets to competition.
It is clear however, that the energy policy of yesterday will not suffice for tomorrow. This Green
Paper puts forward energy policy options that will serve the country over the next decade and
beyond – policy options that create a vision for energy supply and energy use that meets the
needs of consumers and business and that can support and sustain our economic growth.
This Green Paper reflects the Government’s goals of ensuring safe and secure energy supplies,
promoting a sustainable energy future, and delivering economically efficient prices to Irish
consumers. The Government supports the delivery of these objectives through competitive
market mechanisms, supplemented by regulatory oversight. The energy system is highly
complex, impacting on various aspects of the environment, the transport and built environment
sectors. Delivering an effective energy policy requires an integrated programme, which is joined
up across all of government.
GENERAL POLICY CONTEXT
GLOBAL TRENDS
The world’s energy needs are growing rapidly. Over the next twenty-five years, population and
economic growth will cause global energy needs to increase by approximately 50%. Most of
this growth will be in developing countries, particularly China and India, and in the transport and
electricity generation sectors. The world remains largely dependent on fossil fuels, which are
projected to continue to be the dominant source in energy supply meeting 80% of the projected
increase in demand to 2030. The use of some energy sources with relatively low carbon intensity
(nuclear, hydro and biomass) is forecasted to remain relatively unchanged on a global basis. The
use of other renewables (geothermal, solar, wind, tidal and wave) may increase rapidly and are
forecasted to achieve a share of approximately 14% of final demand by 2030.
Meeting global energy needs is challenging. Substantial investment in energy infrastructure is
required to meet this demand and import dependence as well as concerns about continued
supply capability may result in increasingly high and volatile prices, particularly for oil and
natural gas. Continued dependence an fossil fuels also has implications for climate change, with
increased global emissions of greenhouse gases. An alternative policy approach concentrating
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on a move away from fossil fuels and promoting more efficient use of energy would provide a
path to security of supply and a more sustainable energy future.
EUROPEAN UNION TRENDS
With an established industrial base and more than 450 million consumers, the EU is the second
largest energy market in the world. Primary energy demand for the EU is expected to grow
at an annual rate of 1% through to 2030, influenced primarily by the needs of the electricity
generation and transport sectors. Dependence on fossil fuels, currently about 50%, is forecast
to grow with natural gas accounting for 30% of final demand by 2030. Investment in supply
infrastructure to access distant markets and uncertainty surrounding sources of import will be the
major threats to security of supply. The EU has recently published a Green Paper, which sets out
a new comprehensive European energy policy framework. The EU paper advocates measures
to reduce demand through increased efficiency, to shape supply through switching to renewable
energy and to achieve competitive prices through liberalised markets.
IRELAND TRENDS
The energy outlook for Ireland is a reflection of the global and EU context. Growth in energy
demand is forecast to be 2-3% annually out to 2020, with continued heavy dependence on
imported fossil fuels and a need to invest in energy infrastructure. This situation is made more
difficult by unique features such as relatively small market scale, low levels of interconnection and
limited indigenous fuel supplies.
SECTORAL PERSPECTIVE
GLOBAL TRENDS
An overview of each of the main energy sectors in turn shows that the key themes are the
development of competition, the impact of increased demand, changes in consumption patterns,
fossil fuel dependency in the supply mix, price volatility in oil and gas, the relative decline in
coal and peat in terms of market share, the increase in the growth of renewable energy, the
need for additional electricity generating capacity, investment in network renewal and new
interconnection.
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CROSS SECTORAL PERSPECTIVE
ALL-ISLAND ENERGY MARKET
A co-ordinated approach to energy policy North and South is set in the context of continuing cooperation between both Governments on common energy issues in line with the development of
the EU internal market for electricity and natural gas and the growing regionalisation of markets.
The joint publication of the All-Island Energy Market Development Framework in 2004 established
the short- to medium-term objectives and significant progress has been made in advancing the
project. The SEM, a wholesale electricity market to encompass Ireland and Northern Ireland, was
identified as an early priority and will be launched in 2007. The Government has also endorsed
increased North South electricity interconnection.
CLIMATE CHANGE AND EMISSIONS
The Kyoto Protocol was adopted in 1997 and entered into force in February 2005 as an
international legally binding agreement to mitigate the adverse impacts of climate change by
reducing greenhouse gas (GHG) emissions. Developed countries agreed legally binding targets
to achieve overall reductions of more than 5% in net emissions in the period 2008-2012, by
comparison with 1990 levels.
Within an overall European Union commitment to an 8% reduction below 1990 levels in annual
GHG emissions, Ireland is obliged to limit the growth in its annual emissions to 13% above 1990
levels in the same period. For Ireland, this translates into an emissions target of approximately 63
million tonnes of CO2 per annum.
The EU Emissions Trading Scheme (ETS) is the largest company-level scheme for trading in
emissions of CO2. The ETS has been operating on a three-year pilot phase since January 2005
and currently covers 105 installations in Ireland. The Scheme is administered by the Environmental
Protection Agency. A second National Allocation Plan (NAP) for the period 2008 – 2012 has been
finalised and a Review of the National Climate Change Strategy has been published.
ENERGY EFFICIENCY
Energy efficiency must become a key priority for Ireland. Measures aimed at improving energy
efficiency have the potential to make a further important contribution to addressing the challenges
of energy supply, competitiveness and sustainability. Our energy efficiency overall has improved
significantly over the last decade with a marked de-coupling of growth in energy demand from
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economic growth. The challenge is to continue to sustain economic growth without matching
increases in energy use.
Energy saving is the quickest, most effective and most economic means of reducing energy
usage and emissions. The potential savings dividend will be considerable and the objective is to
deliver cumulative improvements in energy efficiency of 20% by 2020.
TECHNOLOGY AND INNOVATION
Technological advances are key enablers of energy policy. The development and deployment
of new energy technologies is essential to deliver security of supply, sustainability and
competitiveness. In particular, efficient and low-carbon energy technologies constitute a rapidly
growing international market and both EU and Ireland must ensure that its industries are world
leaders in these new generations of technology. Stimulating advances in energy technologies
through research and innovation and incentives forms a key element of EU and Irish energy
policy.
Sustainable Energy Ireland (SEI) has already committed €7 million in grant funding to renewable
energy research, development and demonstration projects in Ireland. SEI’s funding programme is
primarily focused on stimulating uptake of renewable energy, and on assessing the development
of technologies that have prospects for the future. The focus of the Programme to date has been
on wind and biomass, reflecting the considerable potential of these sectors. In focusing the
RD&D programme on priority technologies, the programme aims to assist Ireland in maximising
the potential of its most valuable renewable energy resources.
THE POLICY FRAMEWORK
This Green Paper outlines the Government’s proposals to deliver an energy policy for the 21st
century. The policy has three pillars: security of supply, sustainability and competitiveness.
TECHNOLOGY AND INNOVATION
ENSURING THAT ENERGY SUPPLY CAN MEET DEMAND INTO THE FUTURE
The delivery of secure energy supplies to the island of Ireland has many dimensions. The
Government is committed to ensuring that energy supply meets the demands of Irish consumers
at all times. The independent regulator, the Commission for Energy Regulation (CER) has
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been given broad statutory functions in relation to security of supply. EirGrid, the independent
Transmission System Operator (TSO) monitors the adequacy of generation capacity over time
and reports to the CER accordingly.
The Government has put in place a long-term initiative for the integration of Ireland with neighbouring
energy markets. This strategic initiative will support the adequacy of gas and electricity systems
to meet the demand needs of Irish consumers. The development of the All-Island Energy Market
is central to energy policy. The delivery of further interconnection to Northern Ireland and to
Britain will be central to improving access to new supply sources. A doubling of existing North
South interconnection and the provision of a 500MW East-West electricity interconnector are to
be completed by 2012.
In electricity, Eirgrid, under certain assumptions, considers that generation adequacy will be
manageable up to 2009. Maintaining and improving current levels of plant availability continues to
be a critical priority. There are a number of immediate proposals to develop new generation plant
in the South-West and it is acknowledged that the anticipated growth in renewables, particularly
intermittent technology, will require a more flexible and responsive generation portfolio.
Under most scenarios, the existing gas transmission system is sufficient to cope with reasonable
expectations of demand. CER and NIAER will work together in the future to provide a comprehensive
overview of security of gas supply on an all-island basis.
Security of oil supplies to the country is essential to support economic growth and infrastructure.
A report will be commissioned later this year to review the security of Ireland’s access to oil. The
review will include the cost-benefits of possible oil infrastructure interconnection with Europe/UK,
possible pipeline distribution within Ireland, strategic supply strategies, strategic oil storage
enhancements, risk analysis and contingency planning.
ENSURING THE SECURITY OF GAS SUPPLIES TO THE COUNTRY
Over 80% of our natural gas is imported from the UK, which has itself become a net importer of
gas. The planned increase in gas supply capability and diversification of supply sources, including
Liquefied Natural Gas (LNG), in the UK will influence the security and cost competitiveness of
gas, as will the development of a functioning European gas market. The security of supply impact
of this level of reliance will depend critically on the level of indigenous supply and the availability
of LNG in the timeframe in question. The paramount consideration must be security of supply in
terms of supply sources and infrastructure.
In the domestic context, the Government’s commitment to offshore exploration is critical. The
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Corrib field, when it is developed, will bring significant volumes of gas into the Irish system,
enhancing the security of Irish gas supplies until 2018.
An All-Island study is being commissioned to assess the medium to long-term security of supply
on an all-island basis, including the scope for a common approach to gas storage and LNG. The
report will be completed this year.
Private sector investments in gas storage are encouraging. The first commercial natural gas
storage facility, operated by Marathon, is already operating commercially for short-term gas
profiling purposes and the proposal to develop an LNG receiving terminal on the Shannon
Estuary is also a welcome development.
ADDRESSING THE DIVERSITY OF FUELS USED WITHIN THE GENERATION SECTOR
Ireland is highly dependent on gas and oil, the prices of which are at record high levels. Such
reliance on the commodities of gas and oil exposes the economy to volatile international prices,
and Ireland is a price-taker. It is estimated that up to 70% of the current differential between
Irish and European generation costs could be due to the effect of this current fuel mix. The
Government seeks to ensure that we retain a diverse mix of fuels to mitigate the price risk for Irish
consumers. The choices are, however, limited.
The statutory prohibition on nuclear generation will be maintained. In the absence of significant
additional hydro resources and given the statutory nuclear prohibition, our dependence on natural
gas for power generation will be 70% by 2020, without policy intervention. In order to maintain
a balance in fuel mix it will be necessary to embrace all available realistic options to counter
increasing reliance on natural gas for electricity generation.
The extension of current coal capacity or the application of ‘clean coal’ technology may be
valuable elements in the Irish generation mix in the future. The fact that coal is in very long
supply and is not correlated to oil or gas supplies in price or supply sources make it attractive
in maintaining diversity in fuel supply where carbon sequestration can be used to manage its
environmental impact.
Co-firing biomass with peat would introduce additional diversity to the fuel mix with the technical
scope for co-firing up to 30% biomass at the three existing peat stations extending the availability
of peat in the energy mix beyond 2020.
The Government is committed to a significant growth in renewable energy. A new 2010 target of
15% of electricity consumption to be met by renewable energy has been set by Government, with
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a further target of 30% penetration by 2020, subject to technical considerations. The Government
notes that such a commitment to further growth in renewables will require a responsive generation
portfolio as well as further interconnection.
ENSURING THE PROVISION OF ELECTRICITY AND GAS TO HOMES AND BUSINESSES
OVER NETWORKS THAT ARE ADEQUATE AND SECURE
The Government believes that necessary infrastructure development and refurbishment should be
carried out on a timely basis, be appropriate in design and be regulated according to international
safety, technical and cost standards. The most cost effective procurement techniques should be
used in order to ensure value for money.
After a period of under-investment, ESB Networks is engaged in a major programme of network
renewal amounting to €7 billion from 2000 to 2009.
In terms of natural gas networks, Bord Gáis Éireann is also engaged in a significant investment
programme with €1.53 billion invested in the period 2001-2005 and a further €1.25 billion
scheduled for investment between 2006-2010.
The national gas market is maturing in terms of economic extension into new areas. Consideration
will be given to further extensions to the gas network where they are shown to be economically
viable. The major network investment in electricity will reduce transmission and distribution
losses, projected to result in savings of 132 GWh of avoided generation.
The All-Island Grid Study, to be completed in 2007, will assess the extent to which partially
dispatchable, non-dispatchable and embedded generation can be accommodated out to 2020,
as well as the network development options to accommodate increased renewable energy on the
system. This critical study will inform future transmission system planning and development.
The Government, through its agencies, is ensuring actions are taken to secure the potential of
small-scale renewable sources. The CER is examining the issue from a regulatory perspective
and SEI is undertaking analysis in relation to metering and reward systems that adequately and
equitably treat both generators and system operators.
Overall, the Government is currently reviewing the case for applying National Development Plan
2007-2013 funding towards future planned expenditure on strategic infrastructure projects such
as interconnectors.
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ENCOURAGING INVESTMENTS IN HYDROCARBON RESOURCES BY CREATING
AN ATTRACTIVE ENVIRONMENT FOR EXPLORATION
The Government is committed to realising the commercial potential of oil and gas resources that
exist offshore Ireland. Against the backdrop of high global oil and gas prices, the Government will
continue to encourage investment in oil and gas exploration.
The Government has recently participated in major regional resource assessment studies, which
have quantified the undiscovered oil and gas potential west of Ireland. This yet-to-find resource
potential is substantial and places the region on a par with neighbouring Atlantic Margin frontier
exploration provinces. Because of the enhanced potential it is now timely to review the terms
of our exploration and licensing regime. Ireland last revised its fiscal terms for hydrocarbon
exploration and production in 1992 and non-fiscal terms in 1987. Any future fiscal regime must
be sufficiently progressive to accommodate both future variations in oil and as prices and the
high cost of deepwater exploration and development in offshore Ireland. A process to review the
current fiscal scheme has been initiated in conjunction with the Department of Finance.
This work will be augmented by further analysis into the importance and value of indigenous gas,
the role of storage and other alternatives required to obviate the risks associated with Ireland’s
end-of-supply-chain position.
MITIGATING THE IMPACT OF ENERGY SUPPLY DISRUPTIONS BY ENSURING THAT
CONTINGENCY MEASURES ARE IN PLACE
The Government will continue to ensure that contingency plans are in place to mitigate the impact of
energy supply disruptions. In order to maintain the security of energy supplies in contingency situations,
State companies and agencies maintain sufficient stocks of fuels (such as peat, oil and coal) and have
contingency plans in place to mitigate the risk interruption of supplies in electricity and gas.
These contingency procedures are maintained in accordance with best international practice and are
continually monitored by Government and its Agencies. Incremental rebalancing of oil stocks by the
National Oil Reserves Agency (NORA) is proposed, which will involve holding a greater proportion of
owned stocks within the country.
With natural gas now the primary source of fuel in power generation, a co-ordinated approach between
the CER, the Department and the electricity and gas system operators will protect the integrity of both
systems in the event of emergencies on either network.
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PROMOTING THE SUSTAINABILITY OF ENERGY SUPPLY
CONTRIBUTING TO ADDRESSING CLIMATE CHANGE BY REDUCING
ENERGY-RELATED GREENHOUSE GAS EMISSIONS
The Irish energy sector has made a very substantial contribution to reducing CO2 emissions
through changes to the fuel mix, the increased use of renewable energy and energy efficiency
improvements. Renewable energy will continue to play a central role in the energy sector’s
contribution to meeting the Kyoto target, reducing the carbon intensity of electricity production.
STIMULATING THE DEVELOPMENT OF RENEWABLE ENERGY SOURCES
BY PROVIDING INCENTIVES
The rate of technology development and innovation is high in renewable energy with good
potential in areas such as offshore wind, wave and tidal ocean devices. These technologies
require support through research, development and demonstration to reach a stage where
significant deployment is commercially competitive.
The Government’s commitment to the delivery of ambitious targets for renewable energy, in terms
of specific targets, has been mentioned above. The Government’s 15% target of 1,650MW by
2010 provides the foundation for the 30% target by 2020. A minimum of 400 MW of new renewable
capacity will be supported under the new REFIT scheme, which provides direct incentives for the
development of new renewable facilities.
Bioenergy has significant potential for electricity generation as a renewable dispatchable fuel
source, for the heat market, which is supported by a grant package for installing biomass boilers,
and as biofuel for the transport sector, which is currently supported by an excise relief package.
The newly established Ministerial Task Force on Bioenergy will finalise a National Bioenergy
Action Plan, assessing optimum targets for the market penetration of biomass heating, electricity
and biofuel transport to 2020. This plan will be developed in the context of the European
Commission’s Biomass Action Plan.
The low level of deployment of Combined Heat and Power (CHP) in Ireland - a highly efficient
form of energy generation - will be addressed by a grant scheme for small scale CHP and largescale biomass-fed CHP. Separate initiatives to promote more widespread deployment include
examination by the CER of potential administrative and regulatory barriers and a substantial
information campaign by SEI.
Full delivery of the National Ocean Energy Strategy, launched in April 2006, will enable Ireland to
utilise its ocean energy resource within a decade.
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The introduction of the Greener Homes Grant Scheme will assist in increasing deployment of heat
pumps and solar thermal equipment
REDUCING DEMAND BY STRENGTHENING ENERGY EFFICIENCY
AND CONSERVATION MEASURES
ENERGY EFFICIENCY IN TRANSPORT, INDUSTRY AND THE BUILT ENVIRONMENT
Under Transport 21 the investment in public transport over the period 2006-2015 will encourage more
energy efficient forms of transport. Reduced journey times from the national road network upgrading
will also play an important role in improving energy efficiency in the transport sector.
Demand management is a fundamental way of reducing the energy intensity of the transport sector, and
a detailed strategy, initially in the Greater Dublin Area, will be developed for Government consideration
as the investment programme outlined under Transport 21 proceeds. A public awareness campaign,
centred around eco-driving, holds the potential to deliver reductions in greenhouse gas.
Tax incentives hold the potential to encourage the purchase of cleaner more energy efficient vehicles.
The VRT relief for Hybrid Vehicles has been extended to flexible-fuelled vehicles for a two year trial
period and funding for pilot projects for biofuel and hybrid-electric technologies is provided under
Transport 21 to complement the biofuels excise relief scheme. Global technological advances by car
manufacturers will be critically important in bringing more fuel efficient, novel and clean technologies
to market.
The new Energy Agreements programme, within the Large Industry Energy Network, will build on the
achievements to date, by requiring firms to work towards certification to the new Irish Standard on
energy management. Combined with the SEI Energy Management Action Programme aimed at the
Small Enterprise sector, has the potential to maximise energy efficiency throughout the economy.
On a wider front, the Government will develop an Action Plan on Energy Efficiency later this year,
targeting those areas capable of achieving more in this area. Other recent initiatives include revisions
to the Building Regulations, Building Energy Rating, the SEI ‘Houses of Tomorrow’ programme and
social housing demonstration projects. A major national energy efficiency awareness campaign
will be launched this Autumn focussing on all key aspects of efficient energy use and targeted at
individual consumers and specific economic sectors.
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DELIVERING A RESEARCH AND DEVELOPMENT PROGRAMME SUPPORTIVE OF
TECHNOLOGY BREAKTHROUGHS IN THE SECTOR
Energy research and innovation is high on international and EU energy policy agenda. A more
strategic approach to planning and financing national research and innovation is seen as key to
delivering results. The priority being given in the EU and the International Energy Agency has the
Government’s support and is reflected in national energy research policy objectives.
The 2005 review of Irish energy research concluded that current activities and funding should
be better coordinated and aligned with energy policy and economic policies generally. Support
for the medium term will include enhancing the strategic direction for Irish energy research in
the national energy infrastructure. Energy efficiency, demand management and renewable
technologies will also be key priorities with the related goal of building energy research capacity
in the higher education system. Opportunities to develop all-island initiatives in energy research
will build on existing cooperation.
The newly established Irish Energy Research Council will advise on Irish energy research priorities
to 2013 and for the longer term. The Council will co-ordinate existing energy RTDI activities and
provide analysis and advice on research capacity, on building links and on integration of energy
research with overall energy policy and other sectoral policies. It will also advise and assist on
the Irish engagement with the EU and international programmes. The all-island dimension will be
an important component of the Councils work.
The Government is substantially increasing Exchequer funding for energy RTDI. The new capital
budget line for 2006 of €3.5 million is set to increase over the period to support energy research
initiatives. Energy research will also play a key part in National Science, Technology and Innovation
goals, a high priority itself for Government demonstrated by the commitment of a significant level
of funding over the period 2006 to 2013 in the Science, Technology and Innovation Strategy.
ENHANCING THE COMPETITIVENESS OF ENERGY SUPPLY
EFFECTIVELY LIBERALISING GAS AND ELECTRICITY SECTORS BY
IMPLEMENTING ENERGY MARKET MECHANISMS
Ireland’s continued economic growth and competitiveness depends on a reliable and competitively
priced energy supply. The Government is committed to ensuring that real competition is delivered
in Irish electricity and gas markets. The power of consumer choice has been proven internationally
to be the most potent force for ensuring that economic prices are delivered to consumers. The
Irish Government has committed to a liberalisation process in that regard. At present competition
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is open for all consumers in electricity. Some 85% of the gas market by volume is open to
competition and by mid-2007 the Irish gas market will be fully open and contestable.
Ireland’s small energy market, peripheral position in Europe and exposure to sustained high
global oil and gas prices pose particular challenges in terms of competitive energy costs. Policy
actions in relation to security of supply, fuel diversity and sustainability aim to overcome these
challenges.
The creation of the Single Electricity Market in 2007 will both drive and enable a more competitive
market. The Government is committed to providing the legal basis for the market, delivering the
Single Electricity Market Bill by April 2007.
The protection of consumer interests is essential in fully liberalised markets and in this regard
the distinctive statutory role of the CER and the creation of the National Consumer Agency will
provide a strong consumer focus in the energy sector.
ENABLING COMPETITION BY REFORMING INSTITUTIONAL ARRANGEMENTS
AND MARKET STRUCTURE
Government is concerned about the impact of high and increasing energy prices, and their effect
on competitiveness. Irish electricity prices are notably higher than the European average for both
domestic and industrial consumers. Ireland is consistently ranked among the top three most
expensive countries for industrial consumers of electricity in Europe, many of which compete in highly
competitive international markets.
Underlying the headlines of price increase and record absolute price levels is a very complex situation,
with a combination of structural and market operation factors contributing to high price levels.
High electricity prices are a symptom of the underlying structural conditions such as small market
size, high demand growth, low reserve margin, low levels of interconnection with other countries,
on-going record investment in networks and a high dependency on imported fossil fuels.
Fuel mix, and the specific reliance on gas for a material proportion of generation needs, is the principal
factor contributing to high generation costs. The impact of fuel mix in Irish electricity stations accounts
for about 70% of the differential between Irish and European generation costs, where other Member
States have higher proportions of lower cost hydro and nuclear generation. Policy actions that allow
for the diversification of fuel mix will be crucial to protecting Irish consumers from the cyclical effects
of international commodities such as gas and oil.
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Deficiencies in terms of market structure and operation exist at present. Apart from the factor of
fuel mix, higher than average labour costs and low levels of plant availability cause Irish prices
to rank significantly above the European average. These costs negatively affect the contribution
of the energy sector and, in particular, the electricity sector, to national competitiveness and the
maintenance of sustainable economic growth.
The effectiveness and appropriateness of existing arrangements and structures has been widely
questioned. The current market structure is extremely heavily regulated with limited development
of competition. The lack of entry into the market by independent generators has raised concerns
about the security of electricity supply in the immediate and medium term. Poor plant availability
compounds this problem leading to very tight winter reserve margins.
One of the major factors identified as a barrier to market entry is the perceived and actual dominance
of ESB, arising from ESB’s ownership of a large and diverse portfolio of plant and particularly
price-setting plant. The introduction of the SEM will not of itself address the issue of dominance,
particularly in relation to price-setting ability. Competition needs to function effectively if the benefits
of increased scale, in terms of the all-island market, are to be passed through fairly to consumers.
There are challenges to be addressed in both markets if the required outcomes, in terms of
competition, transparency and consumer choice, are to be delivered. Regulatory action needs to be
matched by policy measures to reduce ownership concentration and ability to exercise dominance
in electricity generation and to send firm signals in relation to progressive structural change in
the electricity sector, North and South. Barriers to effective competition on both sides need to be
removed through policy as well as regulatory action.
This reinforces the case for embarking on a process of structural change in the electricity sector.
Enhanced security of supply, reductions in controllable costs and a more dynamic energy market
will create opportunities for all players including the renewable energy sector and for investors.
While competition in generation will not affect the strong price impact of imported fuels, it will act as
a catalyst for improvements in operation and maintenance costs, productivity, availability, flexibility
and innovation. Competition in supply will provide choice for customers and encourage innovation
in bundling products and services.
Without structural change the electricity market will develop and evolve slowly and improvements in
plant availability and efficiency levels will happen only over a long period. There will be no effective
downward pressure on price, little incentive for new entrants and intensive regulation, with its inherent
limitations for all stakeholders, will continue. The case for change is compelling and the need for
significant investment in power generation in the near term presents the opportunity to deliver
meaningful competition. It is recognised that change will have to be delivered in a progressive
manner working with all the stakeholders.
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The Government believes that it is important to retain a strong, commercially viable ESB, reflecting
its fundamental role in the development of the Irish electricity sector and its own commitment to
change. The Government believes that strategic electricity assets should be retained in State
ownership for the long term. The question of dominance and market power will need to be
addressed urgently. Consideration should be given to the creation of a State-owned landbank
of current and potential generation sites. The continued development of competition in energy
supply must be encouraged and facilitated in the interests of consumers.
Moving on from the status quo will create impetus for choice and innovation in a more suitably
regulated environment and a responsive market.
REGULATORY REFORM
The CER has regulated the Irish electricity market since 1999 and the gas market since 2002.
The Commission has wide ranging statutorily independent functions and duties, which have
evolved in a changing and challenging environment. The Government has committed to an
ongoing review of the regulatory framework, in line with the guiding principles set out in the
White Paper Regulating Better, to ensure that it is accountable, relevant and viable. It would be
timely and appropriate to undertake a review of the energy regulatory framework shortly after the
establishment of the SEM, with a view to positioning regulation to meet the energy challenges up
to 2020.
The Government continues to consider areas for improvement in the governance of state-owned
entities in the Irish energy sector and commits to a regular review of energy policy direction, to be
undertaken at five-year intervals.
THE WAY FORWARD : QUESTIONS FOR
CONSULTATION PROCESS
The Government wishes to see a productive consultation process and an informed debate on
the challenges identified and directions proposed in this Green Paper before finalising a White
Paper. The following questions have been framed to guide, structure and support that consultation
process.
20
ENSURING THE SECURITY OF ENERGY SUPPLY
1)
2)
3)
4)
5)
6)
7)
8)
In addition to enhancing the contribution of renewable energy, what actions could be
taken to further diversify the fuel mix for electricity generation and reduce dependence
on oil and gas?
How can generation and transmission adequacy in the electricity sector be improved?
What actions should be taken to create strategic storage capacity in the gas sector?
What are the challenges to greater participation by new players in the development and
operation of power generation plant - and how should they be addressed?
How, and over what timeframe, should Ireland pursue greater electricity interconnection
with Europe?
What measures could be taken to encourage the exploration and production of indigenous
energy resources?
Given the existing level of dependence on imported fossil fuels, what needs to be done to
enhance contingency measures?
Does the Green Paper generally set out the right policy directions for security of
energy supply?
PROMOTING THE SUSTAINABILITY OF ENERGY SUPPLY
9)
10)
11)
12)
13)
14)
15)
16)
What can be done to improve the pace and range of development of renewable energy
resources for electricity generation on a sustainable basis?
In addition to electricity generation, what actions should be taken to develop renewable
energy usage in the transport and heat sectors?
What significant new initiatives could be taken to increase energy efficiency across the
economy and in particular in households, businesses, the public sector, the transport sector
and the built environment?
What additional policy measures should be introduced to significantly expand energy RTDI
and what are the priority areas of research, which need to be targeted?
In light of the Government’s Science, Technology and Innovation Strategy, what needs to be
done to radically expand the national energy research capacity?
What are the key supply and demand questions to be addressed to underpin a fully cohesive
National BioEnergy Strategy?
Do we need to choose between mandatory targets and better incentives for renewable
energy and energy efficiency - or is a mix of both the best way forward?
Does the Green Paper generally set the right policy directions for energy sustainability?
21
ENHANCING THE COMPETITIVENESS OF ENERGY SUPPLY
17) In the context of liberalisation of the Irish energy market, what further actions should be taken
to develop more fully competitive electricity and gas markets and what specific barriers need
to be overcome?
18) What policy measures and targets should be introduced to reform institutional arrangements
and market structure, particularly in the electricity and gas sectors?
19) While a significant proportion of our energy prices are determined by international oil and
gas prices, what actions should be taken domestically to reduce the cost of electricity and
gas to consumers?
20) State-owned enterprises (e.g. ESB, BGE, Bord na Mona) have played a central role in the
development of the energy sector. How should the role of State- owned energy enterprises
respond to the challenges of meeting our energy needs in the future?
21) What further action should be taken to alleviate fuel poverty?
22) Does the Green Paper generally set the right policy directions for enhancing the
competitiveness of the Irish energy sector?
22
1 BACKGROUND
1.1 GENERAL POLICY CONTEXT
GLOBAL TRENDS
1.1.1
Over the next twenty-five years, population and economic growth will cause global
energy needs to increase from today’s level of 10.8 billion tonnes of oil equivalent (toe)
at an annual rate of 1.6%. By 2030, world primary energy demand is projected to be
approximately 16.3 billion toe, or 5.5 billion toe more than today. Most growth will be in
developing countries, particularly China and India, and in the transport and electricity
generation sectors.
1.1.2
Fossil fuels (oil, coal and natural gas) continue to be the dominant source in energy
supply, with more than 80% of the projected increase in demand to 2030 met by these
sources and fully 60% met by oil and natural gas. In this context, liquefied natural gas
(LNG) is forecast to account for 50% of global cross-border natural gas trade by 2030.
The use of some energy sources with relatively low carbon intensity (nuclear, hydro and
biomass) will remain relatively unchanged while use of other renewables (geothermal,
solar, wind, tidal and wave) may increase rapidly but still achieve a relatively low share
of final demand.
Table 1: World Primary Energy Demand by Fuel, 1971-2030 (Mtoe unless otherwise indicated)
Source: IEA. World Energy Outlook. 2005. p82
* Average annual growth rate
1.1.3
Growth in demand and the nature of the supply mix will stretch energy supply infrastructure
to the limit, requiring cumulative investment of US$17 trillion (in 2004 dollars) through 2030.
Import dependence on fossil fuels results in dependence on exporting producer States and
regions. These trends combined with other factors such as concerns over peak oil production
will likely result in increasingly high and volatile prices, particularly for oil and natural gas.
23
1.1.4
The release of carbon dioxide and other greenhouse gases (GHGs) into the environment
and the resulting impacts of climate change is a critical policy issue. Despite advances
through multilateral agreements such as the Kyoto Protocol and Asia-Pacific Partnership
on Clean Development and Climate, GHG emissions will continue to increase, leading
to climate change and calling into question the sustainability of the global energy
system.
1.1.5
Policy measures and behavioural changes can improve our situation. Governments
and consumers could take additional measures to switch away from fossil fuels and
promote more efficient energy use to achieve security of supply and environmental
objectives. Among other things, this would require additional research and development
on alternative energy technologies. Demand would grow at a lower rate and fuel
diversification would ease the pressures on energy infrastructure and prices.
EUROPEAN UNION TRENDS
1.1.6
With an established industrial base and more than 450 million consumers, the EU is
the second largest energy market in the world. Economic growth in the EU Member
States is generally projected to be on a par with other developed countries, increasing
at an annual rate of approximately 2.3% up to 2030. Based on these forecasts, primary
energy demand for the EU is projected to grow at an annual rate of approximately
1% through 2030. Electricity generation and transport continue to be the key sectors
influencing demand.
1.1.7
Half of Europe’s energy demand derives from imported fossil fuels, and this share could increase
to 70-80% in the next 20 to 30 years. The use of natural gas is projected to rise significantly to
meet incremental needs, accounting for more than 30% of final demand by 2030. In this context,
LNG trade will play an increasingly significant role in accessing distant and diverse sources of
supply for the EU. European LNG imports are projected to increase from the current rate of
9% of total gas consumed to 25% between 2010 and 2020. Renewables, especially wind, are
projected to increase rapidly but fall short of the EU target. Under the EU Renewable Energy
Directive, Ireland committed to an indicative target of 13.2% for the contribution of renewablegenerated electricity to gross electricity consumption by 2010. This target is consistent with the
indicative target contribution of 22.1% to gross electricity consumption for the EU as a whole and
the target contribution of 12% to overall energy demand by 2010. The use of other major energy
sources is expected to remain relatively stable.
1.1.8
The EU will experience challenges in meeting its energy needs. Much of the investment
needed to meet energy demand will be in infrastructure renewal, from replacing or
24
refurbishing nuclear generation to converting vehicles to use alternative fuels and
building new natural gas and electricity networks. These needs, coupled with uncertainty
surrounding imported sources, will threaten the EU’s security of energy supply and
result in high and volatile energy prices.
1.1.9
The European Commission recently issued a Green Paper titled A European Strategy
for Sustainable, Competitive and Secure Energy. This document outlines three broad
energy policy areas: security, competitiveness and sustainability. Many of the EU’s
energy policy initiatives can be categorised under these principles to serve as the basis
for a new comprehensive European energy policy framework. Following consultation, a
new energy strategy for Europe will be finalised with a view towards submission to the
European Council in Spring 2007.
1.1.10
Security of energy supply is a priority issue. It is a complex and evolving concept that
can encompass aspects of energy demand, supply and prices. It is an essential feature
of policy to attract and retain investment and sustain economic growth. From a policy
perspective, the EU has championed measures to reduce demand through efficiency,
shape supply through switching to renewables, and achieve competitive prices through
gas and electricity market liberalisation.
1.1.11
Competitiveness remains a key policy focus. Competitiveness requires a well-designed,
stable and predictable regulatory framework with considerable support for market
mechanisms. From a policy perspective, the EU has advocated a move to national, and
ideally international, markets for natural gas and electricity. Several EU Member States
have made progress; however, national efforts to implement reforms have been mixed,
cross-border trade is limited and differences in prices prevail.
1.1.12
Sustainability policy continues to evolve. The EU remains a strong proponent of the
Kyoto Protocol to address climate change, which came into force in February 2005.
From a policy perspective, the EU has established national and EU targets for the use
of renewable energy sources, addressed GHG emissions through a system of national
targets and the EU Emissions Trading Scheme (ETS) and encouraged efficiency and
diversification in energy demand.
25
IRELAND TRENDS
1.1.13
Ireland has experienced, and will likely continue to experience, considerable population
and economic growth associated with the Celtic Tiger phenomenon. In 2004, the Irish
economy grew by 4.4%, contributing to primary energy demand of 15 Mtoe. Final energy
demand in 2004 was 11.8 Mtoe, an annual increase of 2.3% over 2003. Annual growth
to 2020 is forecasted to be approximately 2-3%. Electricity generation and transport
continue to be the key sectors influencing energy demand in Ireland.
NOTE : Some statistical differences exist between inputs and outputs
Figure 1: Flow of Energy in Ireland, 2004
Source: SEI Energy in Ireland, 1990-2004, 2006. p.13
1.1.14
26
Ireland remains largely dependent on fossil fuels. Since 1990, Ireland has become
increasingly dependent on oil and natural gas, most of which is imported. The
country’s total energy import dependency in 2004 was 87%, with imported oil and
natural gas accounting for 73% of primary energy use (compared to 45% in 1990).
The use of coal and indigenous peat has declined over this period. Energy intensity
has decreased, and measures to increase the share of renewables and improve
efficiency have not yet achieved full results. However, the level of carbon dioxide
(CO 2) emissions per kilowatt-hour (kWh) of electricity supplied has improved
considerably, mainly due to the increased use of gas for electricity generation in
recent years.
1.1.15
Ireland faces considerable supply challenges. The National Competitiveness Council,
Forfás, IBEC, the Irish Academy of Engineering and others have pointed to deficiencies
in Ireland’s energy infrastructure and potential economic impacts, indicating that Ireland
compares poorly in this area relative to other developed countries. A substantial and
near-term investment in energy infrastructure is required, particularly in the electricity and
natural gas sectors. This is made more difficult by the relatively small scale of Ireland’s
energy markets, low levels of interconnection with other jurisdictions, limited indigenous
fuel supplies, environmental and policy constraints on supply mix, and dominance by
State-owned companies. Certain energy infrastructure priorities are addressed in the
National Development Plan 2000-2006 and the National Spatial Strategy.
1.1.16
Ireland has made firm commitments to address environmental issues, including targets
for the share of energy from renewable energy sources by 2010 and the level of GHG
emissions by 2008-2012. Environmental policy direction is provided in the National
Climate Change Strategy, National Allocation Plan, Green Paper on Sustainable Energy,
sustainability aspects of Transport 21 and related documents.
1.1.17
This Green Paper provides the basis for a comprehensive energy policy for Ireland. A
new policy framework will provide direction for this critical sector in the coming decades.
It sets out clearly the policy objectives and the actions that will be taken to meet Ireland’s
unique energy needs, in a manner that is consistent with the broader economic and
social policy direction of Ireland, the EU and neighbouring States. It is also informed by
recent assessments of Ireland’s energy policy, such as the review undertaken by the
International Energy Agency (IEA) in 2003.
The diagram below shows how the basic energy policy pillars outlined in section 2 of the Green
Paper – security of supply, sustainability and competitiveness – and how they relate to energy
supply and demand elements:
27
1.1.18
28
Implementing energy policy requires a coordinated approach. The energy industry
is complex and has a pervasive effect on other industries and policy areas. The
Department of Communications, Marine and Natural Resources is the Government
Department responsible for implementing energy policy. The Commission for Energy
Regulation (CER) is the independent regulator for the electricity and natural gas sectors.
The Department of Finance, the Department of Environment, Heritage and Local
Government, the Department of Enterprise, Trade and Employment, the Department
of Transport, the Department of Agriculture, Food and Forestry, the Environmental
Protection Agency (EPA), Sustainable Energy Ireland (SEI), the Competition Authority,
the National Consumer Agency, the National Competitiveness Council, Forfás, the
Economic and Social Research Institute (ESRI) and other organisations are also
involved in various ways in proposing, developing and/or implementing policy related
to the energy industry. The multiplicity of Departments, Agencies, authorities and others
involved underlines the need for an integrated and cohesive approach.
1 BACKGROUND
1.2 SECTORAL PERSPECTIVE
The following chart sets out details of the Primary Energy Requirement, or more simply, the total
amount of energy necessary to supply the country. It primarily focuses on trends in the fuel mix,
which are discussed within this section.
Figure 2: Total Primary Energy Requirement 1990-2004 (Mtoe)
Source: SEI, Energy in Ireland 1990-2004
The following are the main trends in national fuel share over the period:
• Oil continues to remain the dominant energy source with that dominance increasing from a
share of 46% in 1990 to a peak of 59% in 1999. The share of oil was almost 56% in 2004.
• Compared with the other fuels, renewable energy experienced the highest growth in 2004
increasing by 18%. This meant renewable growth outpaced the growth in primary energy consumption and this increased its share from 1.8% in 2003 to 2.2% in 2004, the highest share
since 1990. Since 1990 renewable energy has grown by 92% in absolute terms.
• Natural gas use increased by 153% over the period. In 2004, 62% of overall natural gas consumption was used for electricity generation.
• Peat experienced a decline in absolute terms over the period of 58% with its share of national
energy supply also falling from 14.4% in 1990 to 3.8% in 2004.
• The relative share of coal in energy supply declined from 23% to 13%. In absolute terms over
the period coal declined by 10%.
29
ELECTRICITY
1.2.1
Reforms of the sector are underway, led by the Department and the CER in accordance
with EU and Irish legislation and regulations. The CER was established in 1999 to
regulate and oversee the liberalisation of the electricity sector and it implemented
interim wholesale electricity trading arrangements, which will remain in force until the
establishment of the SEM in 2007. The retail electricity market was opened gradually,
from 28% in 2000 to 100% in 2005. The CER has also undertaken regulatory actions
to stimulate competition and regulate the Electricity Supply Board (ESB), as well as
other participants in the sector. Examples include administering a competitive tender
for generation capacity, virtual independent power producer (VIPP) programme, public
service obligation (PSO), and unbundling/ring-fencing of certain organisations.
1.2.2
The ESB group of companies, owned by the State (95%) and its employees (5%),
operates as a vertically integrated utility. It has several regulated core divisions and
ring-fenced subsidiaries in the generation, networks and supply segments. ESB Power
Generation (ESB PG) is a regulated generation business that owns and operates a
portfolio of power stations in Ireland. ESB Networks is a regulated business that owns
the high-voltage transmission network and owns and operates the medium- and lowvoltage distribution network. ESB Customer Supply is the regulated Public Electricity
Supplier (ESB PES) serving end-use customers throughout Ireland. Key subsidiaries
of ESB operating domestically include Synergen, a joint venture combined cycle gas
turbine (CCGT) at Dublin Bay, Hibernian Wind Power, a developer of renewable energy
in Ireland, and ESB Independent Energy (ESB IE), a competitive electricity supplier.
ESB International operates abroad as an energy consultancy and project developer.
1.2.3
Competition is emerging in generation and supply. Major non-ESB Power Generation
businesses active in the electricity generation segment include independent power
producers (IPPs) such as Huntstown Power, Tynagh Energy, Aughinish Alumina,
Edenderry Power and Airtricity. By 2005, non-ESB PG organisations collectively
controlled approximately 2,500 MW or 40% of installed generation capacity in Ireland.
Major organisations active in the electricity supply segment include competitive
suppliers such as Energia, Airtricity and CH Power as well as Ireland’s State-owned
vertically integrated natural gas utility, BGE. By 2005, non-ESB affiliated suppliers
collectively supplied approximately 7,120 GWh or 30% of customer demand. Much of
the competition that has developed in generation and supply was directly influenced by
regulatory actions undertaken by the CER.
1.2.4
Demand continues to rise based on economic growth. The fuel requirement for electricity
generation grew at an annual average rate of nearly 3.5% between 1990 and 2004 to
30
reach 5 Mtoe. The final consumption of electricity grew at an annual rate of nearly
5% over the same period to reach 2 Mtoe. Ireland’s electricity demand in 2005 was
approximately 25,300 TWh with a peak demand of 4,800 MW. Forecasts indicate that
the fuel requirement for electricity generation and final demand will continue to grow
at approximately 3% annually through 2020. Electricity demand is projected to reach
approximately 34 TWh by 2012, with a peak demand of more than 6,000 MW. (EirGrid
administers a Winter Peak Demand Reduction Scheme to mitigate peak demand
levels.)
Note: Some statistical differences and rounding errors exist between inputs and outputs
Figure 3: Flow of Energy in Electricity Generation, 2004
Source: SEI. Energy in Ireland, 1990-2004. 2006
1.2.5
Electricity consumption patterns are changing. Structural changes in Ireland’s economy
are causing changes in consumption patterns among end-use sectors. Consumption in
the residential and industry sectors experienced consistent growth through the 1990s
but recently started to stabilise or decline, resulting in shares of approximately 30%
each of final electricity demand in 2004. Agriculture experienced a similar consumption
pattern, yielding a share of 2.6% in 2004. In contrast, consumption in the commercial
and public sector has grown considerably to reach a 35% share in 2004. Electricity
consumption in the transport sector was less than 1% in 2004. Ireland’s electricity
31
system experiences its peak demand in the winter months, generally early in the evening
timeframe. Many of these trends in electricity consumption are expected to continue in
the near future.
1.2.6
The supply mix remains dependent on fossil fuels. Changes are also taking place in the
way Ireland meets its electricity needs. Between 1990 and 2004 the country witnessed
significant reductions in the use of coal and peat in the electricity generation fuel mix,
resulting in shares of approximately 28% and 6% respectively in 2004. At the same time
the use of natural gas increased significantly, resulting in a share of nearly 45% in 2004.
There was also a rapid growth in renewables and electricity imports, mainly toward the
latter part of the period. In contrast, the share of oil as a fuel source increased dramatically
early in the period but has reduced recently. Most of these trends are expected to continue
through to 2020, as is the Government’s legal ban on the use of nuclear fuel for electricity
generation in Ireland. ‘Business as usual’ projections indicate that more than 70% of
electricity will be generated from natural gas by 2020, most of which would be imported.
These outcomes will have implications for security of supply and diversity of supply in the
medium to longer term.
1.2.7
Generation adequacy is an issue of immediate and medium term concern. A component
of security of supply, generation adequacy, is the gauge of whether sufficient generation
is available to meet demand at any point in time. EirGrid indicates that generation
adequacy should be manageable from 2006 to 2009 provided that new generation
capacity being developed becomes operational as scheduled, the availability of existing
generation stations improves significantly, and there are no unexpected closures of
existing generation stations. Beyond 2009, EirGrid indicates that it would be prudent to
add new generation capacity to avoid a generation shortage. Principal factors affecting
generation adequacy include growth in electricity peak demand, lack of investment in new
generation capacity, poor availability and/or closure of existing generation stations, and
increased levels of intermittent generation capacity on the system (largely from renewable
sources). The latter will require a responsive generation portfolio with flexible operating
and maintenance regimes, as well as further interconnection.
1.2.8
A capital investment programme in the electricity sector is taking place. In terms of
electricity infrastructure, Ireland relies on an extensive high-voltage transmission network
and a medium- and low-voltage distribution network to transport electricity domestically.
It is also linked to Northern Ireland by means of an electricity interconnector and, through
Northern Ireland, to Scotland by means of a further electricity interconnector. Ireland’s
electricity transmission and distribution network has experienced a long period of significant
under-investment. To address this challenge, a network investment programme worth €4.4
billion, in both transmission and distribution networks, was undertaken between 1996 and
32
2005. An additional €3.2 billion investment in both transmission and distribution networks
is planned for 2006-2010. The two Transmission System Operators (TSOs) North and
South are jointly progressing plans to develop an additional North-South interconnector.
The Government has endorsed the planned build of a new interconnector with Britain (the
“East-West interconnector”). These new interconnectors will become operational by 2012
and will enhance Ireland’s security of supply and competitiveness.
Figure 4: Electricity Transmission Network
Source: EirGrid
33
1.2.9
Measures are in place to prevent and respond to emergencies. EirGrid plans and
operates the electricity transmission network to international standards. EirGrid has
plans in place, such as the Power System Restoration Plan developed to National
Emergency Standard, to deal with emergency events on the electricity transmission
network swiftly and effectively to avoid or mitigate supply disruptions. The CER, as
regulator, specifies rigorous performance standards and monitors the extent to which
EirGrid fulfils its statutory functions.
1.2.10
Electricity prices for industry and households are increasing. Electricity prices are one
important determinant of overall competitiveness of Ireland’s economy. Between 2000
and 2004, electricity prices to industry increased by 51% while those to households
increased by 41%. These price increases were among the highest of EU Member
States. The National Competitiveness Council, Forfás, IBEC, the National Consumer
Council and have indicated that high electricity prices are adversely affecting Ireland’s
international competitiveness. Such outcomes also impact the disposable income and
quality of life of Irish households. Rising costs of oil and natural gas and the limited
ability to switch to less costly fuels or import less costly electricity contributed to this
trend; however, other factors such as relatively high non-fuel operating costs also played
a role.
1.2.11
Environmental considerations are critical. The electricity generation sector is a significant
contributor to green house gases and other emissions. While the amount of emissions
has increased between 1990 and 2004, the carbon intensity of electricity generation
has decreased from 925 to 624 grams of CO2 per kWh. Factors contributing to this trend
include; commissioning of more efficient natural gas generation capacity including
combined heat and power (CHP) stations; the increased share of renewables and
electricity imports and reduction in the use of peat as a fuel. Despite these favourable
trends in carbon intensity, the electricity generation sector as a whole is unlikely to be
able to meet carbon reduction targets in the 2008-2012 period and will have to absorb
the associated cost of carbon.
NATURAL GAS
1.2.12
34
Progress is being made to reform the sector. Since 2002, the CER has been responsible
for regulating and overseeing the liberalisation of the natural gas sector. The retail natural
gas market has been opening to competition in phases since the mid-1990s, with 85%
of all customers (100% of non-domestic customers) eligible to choose their supplier by
2004. The CER has also undertaken regulatory actions to stimulate competition and
regulate the State-owned vertically integrated utility, BGE, as well as other participants
in the sector. Examples include administering a competitive tender for a franchise to
supply natural gas to customers in certain areas along the route of the Dublin-GalwayLimerick Ringmain (won by Flogas) and unbundling/ring-fencing of BGE transmission
and distribution arms.
1.2.13
BGE, which is wholly owned by the State, operates as a vertically integrated utility with
two regulated core divisions and ring-fenced subsidiaries. Bord Gáis Networks is a
regulated division that owns and operates the natural gas transmission and distribution
networks. Bord Gáis Energy Supply is the regulated supplier of last resort, serving
end-use natural gas customers throughout Ireland. BGE also operates the Scotland
to Northern Ireland Pipeline under contract for Premier Transmission and supplies
natural gas to customers in selected regions in Northern Ireland through its Firmus
Energy subsidiary. In line with EU requirements in relation to the legal unbundling of the
transmission and distribution system operations, BGE is in the process of establishing a
legally separate system operator subsidiary company. The system operator subsidiary
will hold the transmission and distribution system operator licences and will operate,
ensure the maintenance of and develop the Irish gas transmission and distribution
networks through service contracts with BGE.
1.2.14
Competition in the supply segment is emerging. Businesses active in the natural gas
supply segment include Flogas, a natural gas supplier that was awarded its franchise
in 2004 to coincide with the construction of the Dublin-Galway-Limerick Ringmain, as
well as competitive suppliers such as Energia, Vaÿu and RWE. By 2004, non-BGE
affiliated suppliers and self-supplied electricity generation stations collectively supplied
approximately 29 TWh or 63% of customer demand. Customers with larger demand
have demonstrated a higher propensity to switch suppliers.
1.2.15
Demand continues to rise based on economic growth. Final consumption of natural gas
grew at an annual rate of 6.2% between 1990 and 2004 for an aggregate increase of
133%. In 2004, 62% of natural gas consumed was used as fuel for electricity generation.
Much of this growth was driven by increases in consumption by the residential and
commercial/public sectors. Forecasts indicate that the volume of natural gas will grow at
annual rates of 5-6% between 2005 and 2020, achieving a share of 35% in the primary
energy requirement and continuing to displace coal and oil in electricity generation over
this period.
1.2.16
The wholesale gas price in Ireland is dictated by the traded price in the UK gas
market. UK gas prices are in turn very much influenced by the EU gas prices. The UK
infrastructure programme in LNG and interconnection with Europe will have positive
implications for Ireland in the future. Currently, natural gas prices for industry and
35
households are increasing. Natural gas prices are an important determinant of overall
competitiveness of Ireland’s economy. Between 2000 and 2004, natural gas prices to
industry increased by more than 100% while those to households increased by 29%.
These price increases were significant high natural gas prices pose risks for Ireland’s
international competitiveness. Rising costs of natural gas, declining indigenous supply
and increased imports contributed to this trend.
1.2.17
Uncertainty exists regarding indigenous sources of supply. Ireland’s demand for natural
gas is increasing but its indigenous production peaked in 1995 and decreased by
63% between 1990 and 2004. The country now supplies less than 20% of its demand
from domestic sources, with over 80% delivered from the United Kingdom through
the interconnectors. This trend is largely the result of depletion of existing Kinsale and
Ballycotton fields, lower-than-expected contributions from the Seven Heads field, and
delays in bringing the Corrib field into production. Low levels of hydrocarbon exploration
also contribute to the fact that exploited reserves are not being replaced. To alleviate
security of supply concerns the Department and the CER have authorised a storage
facility at Kinsale, which is operated by Marathon.
1.2.18
Transmission and distribution renewal is underway. BGE has undertaken substantial
investment in infrastructure in the recent past, which has resulted in the construction of
two subsea interconnectors to Scotland, the Dublin-Galway-Limerick Ringmain and new
connections and mains renewal programmes. In addition, BGE is currently completing
the Mayo-Galway pipeline to deliver gas from the Corrib gas field and the South-North
Pipeline, linking the Irish and Northern Irish markets, which will enhance security of
supply to Northern Ireland. BGE has also constructed the Belfast-Derry pipeline in
Northern Ireland, as well as winning the franchise to supply 10 towns within Northern
Ireland. In total, BGE has invested €1.53 billion in the period 2001-2005 with a further
€1.25 billion scheduled for investment between 2006- 2010 exclusive of electricity
generation.
1.2.19
Measures are in place to prevent and respond to emergencies. BGE as Transmission
System Operator and owner and operator of the natural gas interconnectors, plans
and operates the network to international standards. BGE has plans in place, such
as its various Crisis Management Plans, to deal with emergency events on the natural
gas transmission network swiftly and effectively to avoid or mitigate supply disruptions.
Specific contingency plans are in place for Bord Gáis Networks to manage the scope
and nature of any supply disruptions and restore the transmission system using the
North-South interconnector. The CER, as regulator, specifies rigorous performance
standards and monitors the extent to which the TSO fulfils its statutory functions.
36
Figure 5: Natural Gas Network
Source: Bord Gáis Networks
37
OIL
1.2.20
Oil demand continues to rise based on economic growth. The primary energy
requirement for oil grew at an annual rate of nearly 5% between 1990 and 2004, which
corresponds to an aggregate increase of approximately 95%, to reach 8.4 Mtoe and
a share of almost 56% by 2004. Forecasts indicate that oil will remain the dominant
fuel through 2020, achieving a 53% share of primary energy requirement. Most of this
growth will be driven by increases in consumption by the transport sector that will offset
reduced consumption in the electricity generation sector.
1.2.21
Oil prices for industry and households remain volatile. Oil prices remain high and volatile
relative to most forecasts. Between 2000 and 2004, fuel oil prices to industry increased
by approximately 21% while heating oil prices to households increased by 30%. Oil
price increases in Ireland were comparable to those experienced in other EU Member
States and were driven mainly by uncertainty surrounding the supply from major oil
exporting countries.
1.2.22
Environmental considerations are critical. The largest share of oil consumption is
attributed to use in the transport sector. Between 1990 and 2004, the transport sector
experienced an increase in energy-related CO2 emissions of 144% based on an average
annual growth rate of 7%. Emissions of greenhouse gases from the transport sector
grew from approximately 9% of total national emissions to nearly 18.4% of national
emissions over this period.
1.2.23
The Irish oil industry is fully privatised and deregulated with open entry and exit.
Direct State involvement in the oil industry ceased in July 2001 when the business
and commercial assets (Whitegate Refinery and Bantry (Whiddy Island) Oil Terminal)
of the Irish National Petroleum Corporation (INPC) were sold to the Tosco Corporation.
Following a series of mergers, these assets are now in the ownership of ConocoPhillips
and remain operational. In terms of the downstream oil industry therefore, the
Government is directly concerned with the maintenance of levels of national strategic
oil stocks – for security of supply in times of physical disruption and in compliance
with obligations arising from Ireland’s membership of both the European Union and
the IEA. The EU requires Member States to hold 90 days of stocks based on the prior
year’s consumption and the IEA requires 90 days of stocks based on the prior year’s
net imports
1.2.24
Under the European Communities (Minimum Stocks of Petroleum Oils) Regulations,
1995, the National Oil Reserves Agency (NORA) acts as an agent of the Minister and is
responsible for the maintenance of such levels of strategic oil reserves as the Minister
38
determines at least once a year. NORA’s operations are funded by a levy on certain
oil products and commercial borrowings. Oil reserves may comprise (i) stocks whollyowned by NORA, (ii) stocks held by NORA under cover of “stock tickets” (i.e. options to
purchase oil under contractual terms in the event of an emergency) and/or (iii) stocks
held by industry/large consumers operating in the Irish market. Stocks may, under the EU
Directive, be held abroad once a Government-to-Government Oil Stockholding Bilateral
Agreement is in place. Bilateral Agreements are currently established with Belgium, the
United Kingdom, France, Denmark, Sweden and The Netherlands. Figures from May
2006 indicate that approximately 99 days of stocks were held, of which 64 days were in
Ireland, with 67 of the 99 days held under the control, directly or indirectly, of NORA.
1.2.25
The Government has recently published draft legislation, The National Oil Reserves
Agency Bill, 2006, currently before the Houses of the Oireachtas. The purpose of the Bill
is, inter alia, to reform NORA’s legal and ownership structure, provide for the continuation
of the levy as a funding mechanism, and enhance corporate governance practices.
COAL AND PEAT
1.2.26
Bord na Móna (BnM) is wholly owned by the State. The company produces and sells
milled peat through its Peat and Allied Businesses division, which is responsible for peat
energy, horticulture and fuels activities. Sod peat is produced by the private sector.
1.2.27
Demand for coal is driven primarily by the fuel requirements of Ireland’s coalfired generation station, Moneypoint. Between 1990 and 2004, the primary energy
requirement for coal declined at an annual rate of nearly 1%, which corresponds to
an aggregate decrease of approximately 10%, to reach 1.9 Mtoe and a 13% share by
2004. Demand for peat is driven mainly by peat-fired electricity generation stations in
Ireland owned and operated by ESB and Edenderry Power. Between 1990 and 2004,
the primary energy requirement for peat declined at an annual rate of nearly 6%, which
corresponds to an aggregate decrease of approximately 58%, to reach 577 ktoe and a
share of 3.8% by 2004. In 2004/2005, BnM reported total sales of 2.7 million tonnes of
milled peat.
1.2.28
Coal and peat supply is more secure than other fuels. Coal is available at relatively
stable prices on world markets. Peat is an indigenous energy source experiencing
decreased demand and relatively stable prices. Total peat production peaked in 1995
at approximately 8 million tonnes. Total production in 2004 was approximately 5.3
million tonnes, of which 87% was milled peat. BnM’s production of milled peat in 2004
was 4.2 million tonnes or 108% of the year’s target, which compared with 5.1 million
39
tonnes in the exceptionally dry prior year. BnM’s current peat resources are estimated
at approximately 70 million tonnes, which should be sufficient to meet the current usage
of 3.5 million tonnes of milled peat per year for approximately 20 years. In addition,
other companies and private individuals own an estimated 15 million tonnes of peat.
1.2.29
BnM maintains strategic reserves of peat of between 2-3 years of the volumes required
by the peat burning electricity generating stations. This level of reserves ensures that,
during seasons where bad weather impacts on the peat harvest, the security of peat
supply for electricity generation is maintained.
1.2.30
Environmental considerations are important in this context. Coal and peat are both
relatively high-carbon content energy sources. Continued use of these fuels in the
electricity generation sector without the ability to reduce associated GHG emissions
means that prices will be affected by the cost of purchasing carbon allowances in the
EU Emissions Trading Scheme.
RENEWABLES
1.2.31
Renewable sources are achieving greater penetration. The contribution of renewable
energy to total primary energy requirement increased from 1.8% in 1990 to 2.2% in 2004.
The contribution of renewable energy to Ireland’s indigenous fuel mix also increased
from 5% to 20% during this period. Biomass and wind energy sources were largely
responsible for this increase. In 2004, the total contribution from renewable energy to
gross electricity consumption was 5.2%, providing an indication of progress that will be
required to achieve the 13.2% target. By May 2006, the installed renewable generation
capacity was approximately 850 MW, of which wind accounted for 575 MW. Additional
renewable generation capacity is under development with nearly 3,000 MW of wind
capacity applications waiting to be processed. In 2004, wind was the second largest
renewable contributor to total primary energy requirement, surpassing hydro for the first
time, while traditional biomass was the largest contributor.
1.2.32
The Government is strongly committed to the promotion and development of
renewables. Under the EU Renewable Energy Directive, Ireland committed to an
indicative target of 13.2% for the contribution of renewable-generated electricity
to gross electricity consumption by 2010. The EU Biofuels Directive establishes
reference values for the proportions of biofuels and other renewable sources that
should be placed on EU Member States’ national markets at 2% by 2005 and 5.75%
by 2010. Promoting the use of renewables also serves to meet national targets for
the reduction of GHG emissions under the Kyoto Protocol and related legislation. In
40
2005, the European Commission adopted a Biomass Action plan to promote the use
of biomass renewable energy sources.
1.2.33
Policy measures have been introduced in the sector. The Department and the CER have
established programmes to encourage the development of new renewable generation
capacity. Policy direction was provided in 1999 with the publication of the Green Paper
on Sustainable Energy, and in 2005 with the publication of All-Island Energy Market:
Renewable Electricity – A 20-20 Vision. The Alternative Energy Requirement (AER)
programme was a competitive tendering process that awarded long-term contracts to
supply electricity generated from new renewable energy sources. Since the programme
was launched, six competitions have been completed. By June 2005, approximately
250 MW of renewable generation capacity had been commissioned under the AER
programme. Technologies supported include wind, small-scale hydro and biomass.
The CER is also authorised to conduct virtual independent power producer (GVIPP)
auctions to stimulate interest among suppliers. In May 2005, the Department launched
the Renewable Energy Feed In Tariff (REFIT) programme as a replacement for the AER
programme. The REFIT programme will support the construction of an initial target of at
least 400 MW of renewable generation capacity.
1.2.34
Through the Government-established Renewable Energy Development Group, a series
of reports have been published addressing the array of challenges and opportunities
associated with the enhanced deployment of such technologies: These include
Renewable Energy Development 2006; Bioenergy in Ireland; CHP in Ireland; Ocean
Energy in Ireland; Renewable Electricity to 2010. To sustain the growth in renewable
capacity and meet ambitious targets, Government/ TSO/regulator and industry must
work towards development of responsive connection policy, synchronisation between
project development and incentive programmes, mitigation of adverse effects of
intermittent energy sources on generation adequacy and network operations, and
appropriate renewable support mechanisms.
MINISTERIAL TASK FORCE ON BIOENERGY
The development of Ireland’s Bio-energy potential, which encompasses biomass for the
electricity and heat markets and bio fuels for the transport market, requires a fully cohesive
approach across a number of Departments and State Agencies, working with all relevant sectors
and stakeholders.
As the Minister responsible for policy in relation to renewable and sustainable energy, the
Minister for Communications, Marine and Natural Resources is working with his colleagues in
41
Government to ensure that strategies for the development and use of bio-energy resources are
fully integrated. The Government has established a Ministerial Bio-Energy Task Force involving
all relevant Ministers and Departments, which will oversee delivery of an integrated national BioEnergy Strategy by end 2006.
The Strategy will set the agenda for collective delivery of the potential benefits of bio-energy
resources across the agriculture, enterprise, transport and energy sectors. It will inform the setting
of challenging targets for bio-energy deployment up to 2020 in light also of EU developments.
Chaired by the Minister for Communications, Marine and Natural Resources, the Task Force
will build on existing cooperation between his Department and the Departments of Finance,
Agriculture and Food, Transport, Environment, Heritage and Local Government, and Enterprise,
Trade and Employment, as well as all relevant State Agencies.
42
1 BACKGROUND
1.3 CROSS-SECTORAL PERSPECTIVE
ALL-ISLAND ENERGY MARKET
1.3.1
Expansion and integration of markets is a priority. The aim of the EU’s Internal Market
Framework for Electricity and Gas is the creation of liberalised markets on a national
and international scale. It is anticipated that such markets will support competitiveness,
security and sustainability policy objectives. Ireland and other EU Member States
have made considerable progress toward liberalising these sectors and implementing
markets. However, the European Commission’s recent Report on Progress in Creating
the Internal Gas and Electricity Market indicated that the most important shortcoming
to date is the lack of integration between national markets. Price differences between
Member States and relatively low levels of cross-border trade are key indicators of the
lack of market integration. In the case of electricity, the lack of market integration is
largely attributed to insufficient interconnection capability between markets. Another
factor is the high level of concentration and consolidation within these sectors in some
EU Member States. The EU and its individual Member States will only realise the full
benefits of competitive markets in gas and electricity with greater integration.
ALL-ISLAND ENERGY MARKET
A co-ordinated approach to energy policy North and South, developed by the Department
and DETI is set in the context of continuing co-operation between the both Governments on
common energy issues. They have a shared interest in more competitive energy markets,
reduced energy costs and improved reliability of supply. This joined-up effort is set against the
background of the development of the EU internal market for electricity and natural gas and the
growing regionalisation of markets. This policy recognises the existence of cross-border energy
markets, albeit in their initial stages, and pursues further integration via targeted and explicit
policy development, integration of market structures and market mechanisms, coordination and
harmonisation of the necessary policy, legislative and regulatory arrangements.
It is expected that the All-Island energy market will deliver the following benefits:
• A larger, single market with more competitive energy prices;
• open and transparent competition at all levels in the marketplace and for all energy sources,
including combined heat and power (CHP) and renewables;
• a more stable and attractive investment location;
• consequential improvements to national and international competitiveness of the wider industrial sector;
• greater security of supply;
• a robust, integrated infrastructure;
• a more diverse energy mix;
43
• greater energy efficiency;
• greater consumer choice of supplier of energy or of energy services;
• longer term savings through rationalisation of functions in regulation, system operation and
transmission asset planning and ownership;
• improved organisation of energy research through the emergence of an all-island network of
academic and industry expertise.
Co-operation between the North and South on energy matters takes place under the auspices
of a Joint Steering Group (JSG) established by the Ministers in July 2003. The group comprises of senior officials from the Department and DETI and the offices of the two regulatory
authorities (Commission for Energy Regulation (CER) in the South and Northern Ireland Authority for Energy Regulation (NIAER) in the North).
1.3.2
Ireland has committed to develop a regional energy market. The two Governments,
through the Department and the CER and their counterparts, the Department of
Enterprise, Trade and Investment (DETI) and the Northern Ireland Authority for Energy
Regulation (NIAER), have committed to establish a truly regional market for gas and
electricity. After stakeholder consultation, the establishment of a Joint Steering Group
(JSG) and the execution of a Memorandum of Understanding between the CER and
NIAER, the respective Ministers published the All-Island Energy Market Development
Framework describing this policy commitment in November 2004. The Framework
outlined short- to medium-term objectives in infrastructure, trading arrangements and
investment, dominance and market power, sustainable development, legislative and
administrative, and retail market design. The JSG was given responsibility for overseeing
the implementation of the All-Island Energy Market while the regulators were assigned
joint responsibility for managing the implementation. The Framework also provided a
high-level Development Programme. In addition, the Government has endorsed plans
to encourage the development of an electricity interconnector with Britain by 2012, to
enhance market liquidity.
1.3.3
Since publication of the Framework, significant progress has been made toward
implementation through the All-Island Project. The Single Electricity Market (SEM), a
wholesale electricity market to encompass Ireland and Northern Ireland, was identified
as an early priority and design and implementation initiatives are well underway.
The new Single Market will be launched in 2007. Some specific initiatives include
development of measures to address the potential abuse of a dominant position of
existing large players, establishing a scheme of capacity payments for electricity
generation, developing a single electricity market operator, increasing the gas
and electricity interconnection between Ireland and Northern Ireland, harmonising
44
electricity transmission network operation practices, and examining the case for a
single electricity transmission network operator.
CLIMATE CHANGE AND EMISSIONS
1.3.4
Climate change and greenhouse gas (GHG) emissions are widely recognised policy
issues. Since the industrialised countries agreed to the Kyoto Protocol to reduce GHG
emissions at the third Conference of the Parties to the United Nations Framework
Convention on Climate Change, the adverse environmental impacts of climate change
have been further evidenced. In 2001, the Intergovernmental Panel on Climate Change
(IPCC) published its Third Assessment Report, which concluded that there is new
and stronger evidence that most of the warming observed over the last 50 years is
attributable to human activities. These impacts may cause greater and more abrupt
climatic variations in the future, with increased frequency and magnitude of extreme
weather events and associated risks and costs. China, India and Japan are Kyoto
Protocol Parties. Japan has an emissions reduction target of 6% on 1990 levels. US
and Australia have signed but not ratified the Protocol. Countries outside the Kyoto
Protocol, together with the countries mentioned have also acknowledged the threat of
climate change and taken measures to address it through the Asia-Pacific Partnership
on Clean Development and Climate. The damaging effects of emissions of other gases
such as sulphur dioxide (SO2) and nitrogen oxides (NOX) also continue to be observed
in the form of pollution.
The Kyoto Protocol and EU Emissions Trading Scheme (ETS)
The Kyoto Protocol is an international legally binding agreement to mitigate the adverse impacts of
climate change by reducing greenhouse gas (GHG) emissions. Greenhouse gases in this context
include: carbon dioxide (CO2), methane (CH4), oxides of nitrogen (N0x), hydrofluorocarbons
(HFCs), perfluorocarbons (PFCs) and sulphur hexafluoride (SF6). The Kyoto Protocol was
adopted in 1997 as a successor to voluntary commitments under the United Nations Framework
Convention on Climate Change (UNFCC). The agreement entered into force as a legally binding
document in February 2005.
Under the Kyoto Protocol, developed countries agreed legally binding targets to achieve overall
reductions of more than 5% in net GHG emissions in the period 1990-2012. The European Climate
Change Programme (ECCP) is the European Union’s strategy to implement the Kyoto Protocol,
complementing the efforts of Member States. Effective common and co-ordinated policies and
measures under the ECCP, as well as being an important avenue for the EU to meet its overall
45
commitment, are also an important element of Member States’ strategies to achieve the required
emission reductions.
The European Union committed to reduce its annual GHG emissions to 8% below 1990 levels
by the period 2008-2012. Decision 2002/358/EC apportioned this 8% reduction among the EU
Member States and requires Ireland to limit the growth in its annual emissions to 13% above 1990
levels by the same period. For Ireland, this translates into an emissions target of approximately 63
million tonnes of CO2 per annum.
Domestic GHG emissions reduction programmes are the most direct way to meet national targets.
However, the Kyoto Protocol provides for three additional mechanisms: clean development
mechanism (CDM), whereby industrialized countries finance projects in developing countries;
joint implementation (JI), whereby industrialized countries acquire emissions credits by supporting
projects in other industrialized countries; and emissions trading, whereby participants are able to
trade quotas to meet targets. Ireland’s legal and regulatory framework allows for the use of these
mechanisms.
The EU Emissions Trading Scheme (ETS) is the largest company-level scheme for trading in
emissions of CO2. The ETS has been operating on a three-year pilot phase since January 2005.
During the first trading period (2005-2007), the ETS covers only CO2 emissions from large emitters
in the electricity and heat generation industry and in selected energy-intensive industrial sectors.
The ETS currently covers 105 installations in Ireland and is administered by the Environmental
Protection Agency.
1.3.5
At its Spring meeting in 2005, the European Council proposed that the EU should
explore with other parties, strategies for achieving necessary emissions reductions
and that, in this context, should consider ambitious reduction pathways in the order of
15-30% by 2020 compared to 1990 levels. Ireland has made various climate change
commitments. Ireland ratified the Kyoto Protocol in May 2002, along with the EU and
all other Member States, and is internationally legally bound to meet the challenging
greenhouse gas emissions reduction target. The Protocol entered into force in February
2005. Under the Protocol, the EU has committed to reduce its annual GHG emissions
to 8% below 1990 levels by the period 2008-2012. Enabling legislation apportioned this
aggregate reduction among EU Member States and required Ireland to limit the growth
of its annual GHG emissions to 13% above 1990 levels by the same period.
1.3.6
The Government has recently set directions for the next period (2008-2012) of the
EU Emissions Trading Scheme and a National Allocation Plan for this period has
been prepared by the Environmental Protection Agency. Confirmation by European
46
Commission of the Plan is expected before end 2006. A review of Ireland’s National
Climate Change Strategy (NCCS) has been published.
1.3.7
Regarding SO2 and NOX and related pollutants, commitments are governed by the
Convention on Long-Range Transboundary Air Pollution and associated protocols.
1.3.8
Progress is being made toward reducing harmful emissions. In 2002, the Government
published a Progress Report on Implementation of the National Climate Change
Strategy, which examined international developments, described the EU situation, listed
national developments, and outlined specific measures to implement the Strategy. The
ETS was launched in January 2005 and is scheduled to operate in two phases until
2012. The Environmental Protection Agency (EPA) administers this in Ireland. Under
the ETS, 109 Irish installations have been given allowances to emit a certain amount
of carbon dioxide, with reductions from previous levels varying based on each unique
set of circumstances. The EPA has finalised Ireland’s second National Allocation Plan
(NAP) for the period 2008-2012 for submission to the European Commission.
ENERGY EFFICIENCY
1.3.9
Energy efficiency is recognized as a worldwide challenge for all economies and is a
priority for the EU as well as for member countries of the IEA and the UN. Europe has
been to the forefront of efforts to enhance energy efficiency and to make it a global
priority. Energy efficiency is a key priority for Ireland and, with the necessary action
across relevant sectors, will make a further important contribution to addressing the
challenges of energy supply, competitiveness and sustainability. Our energy efficiency
overall has improved significantly over the last decade with a marked de-coupling of
growth in energy demand from economic growth. There is much more that can be
achieved and further gains to be made in the short to medium term. Over the period
1990-2004, Irish GDP grew by 140% whereas total primary energy requirement (TPER)
grew by 59% and energy related CO2 emissions by 45%. The challenge is to maintain,
build on, and expand this intensity gain while sustaining economic growth.
1.3.10
Energy saving is the quickest, most effective and most economic means of reducing
energy usage and emissions. By reducing energy waste, eliminating unnecessary use
and investing in energy-efficient technology (domestic, transport, manufacturing and
electricity generation) Irish business and consumers will get more value from the same
amount of energy. The potential savings dividend will be considerable and the objective,
reflecting EU ambitions, is to deliver cumulative improvements in energy efficiency
of 20% by 2020. The strategy will be to build on achievements to date, target those
47
sectors capable of delivering more efficient use of energy and work to achieve real and
measurable change in behaviour and consumption patterns by economic sectors and
individual consumers.
1.3.11
A major national energy efficiency awareness campaign will be launched this Autumn
which will focus on all key aspects of efficient energy use and which will be targeted at
individual consumers and specific economic sectors. The campaign will complement
existing and planned programmes and initiatives reflecting EU directives and policy
initiatives. Work is also underway within the all-island energy framework on energy
efficiency as an all-island challenge and opportunity.
TECHNOLOGY AND INNOVATION
1.3.12
Technological advances are key enablers of energy policy. The development and
deployment of new energy technologies is essential to deliver security of supply,
sustainability and competitiveness. The need for new generations of technology to satisfy
future energy requirements is stronger than ever. However, establishing and sustaining the
necessary conditions to lead to a technological breakthrough from concept to successful
commercialisation is a challenging endeavour. Globally, the research, technological
development and innovation (RTDI) programmes of governments will play a vital role in
allowing energy technologies to emerge and deliver their potential. Efficient and low-carbon
energy technologies constitute a rapidly growing international market. The EU and Ireland
must ensure that its industries are world leaders in these new generations of technology.
Stimulating advances in energy technologies through RTDI and incentives forms a key
element of EU and Irish energy policy.
1.3.13
The Government is committed to facilitating new technological advances. Much of the
EU energy legislation and policy addresses RD&D in a relatively indirect way, through
reference to a specific sector such as renewables and efficiency. However, the EU’s
recent Green Paper A European Strategy for Sustainable, Competitive and Secure
Energy, addresses the issue more directly by advocating the development of a strategic
energy technology plan for Europe. Ireland outlined many of its energy RTDI priorities
in the Green Paper on Sustainable Energy, including approaches for delivering RD&D
programmes and proposed topics for investigation. More recent policy guidance is
outlined in documents such as the Department’s Energy Research, Development and
Demonstration: Consultation Paper and SEI’s Emerging Energy Technologies in Ireland:
A Focus on Carbon Capture and Hydrogen.
48
1.3.14
Support is provided for research, development and demonstration. At present, much of the
support for energy RTDI in Ireland is provided through SEI. According to SEI, the volume of
energy RTDI carried out in Ireland in 2004 was nearly €25 million, of which approximately
63% was funded by private sector or individual resources and the rest was funded through
Irish and/or EU mechanisms. In terms of priorities, conservation and renewable technologies
together accounted for more than 80% of total funds. Within renewable technologies, wind
and biomass had the largest shares (approximately €1.2 million each).
1.3.15
Energy research is currently conducted by a number of agencies and entities. These
include public sector bodies such as Teagasc, the Environmental Protection Agency, the
Marine Institute and Enterprise Ireland, in the area of relevant technical research, with the
Economic and Social Research Institute conducting research relevant to economic policy.
ESB/ESB Networks, Bord na Mona, Airtricity Viridian and others undertake and/or support
energy related research related to their businesses.
1.3.16
SEI has already committed €7 million in grant funding to renewable energy research,
development and demonstration projects in Ireland. SEI’s €12 million funding programme
is primarily focused on stimulating uptake of renewable energy, and on assessing the
development of technologies that have prospects for the future. The focus of the Programme
to date has been on wind and biomass, reflecting the considerable potential of these sectors.
Seventy-two projects have been approved for funding by SEI including the development of
a new manufacturing process for wind turbine blades, the demonstration of the first large
scale commercial wood pellet fuelled boiler in Ireland and research into a wave power
device. In focusing the RD&D programme on priority technologies, the programme aims to
assist Ireland in maximising the potential of its most valuable renewable energy resources.
1.3.17
The Energy Research Council has recently been established to advise on research priorities.
Its mandate is dealt with further below in the final paragraphs of section 2.2 dealing with
sustainability.
FUEL POVERTY
1.3.18
Addressing fuel poverty is a critical aspect of Ireland’s energy policy. Fuel poverty affects the
well-being of some of the most vulnerable groups in society. The Government is committed
to reducing fuel poverty, which will assist in delivering on the sustainability principle of Irish
energy policy. Support is provided through several programmes, including the SEI Warmer
Homes Scheme and Low Income Housing Programme as well as the Household Benefits
Package (for Electricity and Gas Allowances), and the National Fuel Scheme (for Fuel
Allowances), as well as social welfare rates and other benefits generally.
49
50
2 THE POLICY FRAMEWORK
2.1 ENSURING THE SECURITY OF ENERGY SUPPLY
2.1.1
Energy underpins all areas of economic activity and social well-being. The primary
objective of Irish energy policy must be to ensure that affordable energy is consistently
available with minimal risk of supply disruption. Ensuring this security comprises a
number of dimensions:
•
•
•
•
Ensuring that energy supply can meet demand into the future;
Ensuring the physical security of gas supplies to the country;
Addressing the diversity of fuels used within the generation sector;
Delivering electricity and gas to homes and businesses over networks that are adequate and secure;
• Creating an attractive environment to encourage investments in energy infrastructure; and
• Mitigating the impact of energy supply disruptions by ensuring that contingency
measures are in place.
ENSURING THAT ENERGY SUPPLY CAN MEET DEMAND INTO THE FUTURE
SUMMARY POLICY TARGETS
•
•
•
•
•
•
Ensuring the adequacy of energy supply at all times;
Delivery of All-Island Energy Market
Participation in the development of European regional energy markets
Delivery of second North-South electricity interconnector by 2012;
Delivery of East-West electricity interconnector by 2012;
Ensuring an appropriate mix of baseload and flexible plant to allow for
further renewable growth.
POLICY CONTEXT AND INSTRUMENTS
2.1.2
The Government’s overriding priority is to ensure that the energy supply/demand
balance is always maintained. The Government has put in place a long-term initiative
for the integration of Ireland with neighbouring energy markets. This strategic initiative
will support the adequacy of gas and electricity systems to meet the demand needs of
Irish consumers.
51
2.1.3
The development of the All-Island Energy Market is central to Irish energy policy. The
current target is for the Single Electricity Market to be introduced by mid 2007 and
Governments, regulators and relevant institutions are working together to achieve this
ambitious deadline.
2.1.4
The development of further interconnection with neighbouring markets is a key strategic
priority for the Government. The delivery of further interconnection to Northern Ireland
and to the Britain will be central to improving access to new supply sources. It is also
fully in line with EU emphasis on physical interconnection. Working together with
the Northern Ireland authorities, the Government will continue to progress electricity
interconnection initiatives in the context of the All-island Energy Market. Specifically,
plans for a second North-South electricity interconnector, which will more than double
the existing cross-border electricity transfer capacity to over 600MW have been
announced with an expected completion date of 2012 at the latest. The Government
is also committed to progressing plans to allow construction of a 500 MW East-West
electricity interconnector. The Government has recently requested the CER to undertake
a competition to select a developer to secure the construction of this interconnector by
2012. Planning for decisions in relation to the further interconnection with the Britain
or potentially with the European mainland will begin in 2010. The Government will also
consider the extent to which major strategic energy investment projects up to 2020
might be supported by exchequer funding (National Development Plan 2007-2013).
2.1.5
In electricity, Eirgrid considers that generation adequacy will be manageable up to
2009 provided that projections by generation companies regarding asset performance
and availability are accurate. The conclusion regarding the adequacy of generation
capacity is made with regard to an indicator known as the Loss of Load Expectation,
which is set at 8 hours per annum for Ireland. The Government will work with the CER to
ensure that EirGrid is accountable for taking appropriate and prudent action to maintain
adequacy.
2.1.6
The short term availability and reliability of plant remains a significant concern
particularly in light of recent technical problems at certain plants. There are a number
of immediate proposals to develop new generation plant in the South-West. In addition,
it is acknowledged that the anticipated growth in renewables will require a generation
portfolio, which is flexible and responsive, as well as further interconnection. The
Government is concerned to ensure that adequate provision is made to encourage
the development of an electricity portfolio, which can support and complement the
aggressive targets for renewable growth. Decisions by the CER, EirGrid and the
Government will be taken which will ensure capacity and competition in the generation
sector while reflecting the overriding consideration of security of supply.
52
2.1.7
Encouraging improvements in plant availability from 2006 onwards continues to be
a critical priority for EirGrid, the CER and the electricity industry. Government policy
remains committed to ensuring that the appropriate institutions are empowered to
manage and monitor the adequacy of the generation base and to encourage new
entry as and when required. In order to enhance transparency it is intended that plant
availability data will be published quarterly in arrears, while taking account of the need
for commercial sensitivity.
2.1.8
Adequacy of gas supply to meet demand is continually monitored. Under most scenarios,
the existing gas transmission system is sufficient to cope with reasonable expectations
of demand. The Government will continue to assess the ongoing adequacy of the Irish
gas system through Gas Capacity Statements issued by the CER.
2.1.9
Under the All-Island Energy Development Framework, a number of initiatives relating
to gas transmission policy will be progressed including the co-ordinated release (with
the Northern Ireland Authority for Energy Regulation) of Gas Capacity Statements, with
a common methodology. When in place this will enable a comprehensive overview of
security of supply on an all-island basis.
2.1.10
Security of oil supplies to the country is essential to support economic growth and
infrastructure. A report will be commissioned later this year to review the security
of Ireland’s access to oil. The review will include the cost-benefits of possible oil
infrastructure interconnection with Europe/UK, possible pipeline distribution within
Ireland, strategic supply strategies, strategic oil storage enhancements, risk analysis
and contingency planning.
2.1.11
The Government is moving to address the acknowledged need to improve the quality
of its future scenario-casting ability in support of evidence–based policy-making and
for use by the energy sector. Work is underway to create an energy systems analysis
facility for the country. The newly established Irish Energy Research Council will play an
oversight role in ensuring a comprehensive national energy modelling service.
53
ENSURING THE SECURITY OF GAS SUPPLIES TO THE COUNTRY
SUMMARY POLICY TARGETS
•
•
•
•
Ensuring security of gas supply at all times;
Delivery of adequate volume of gas supplies to Ireland at all times;
Diversification of gas sources over the medium term; and
Reviewing the potential for further development of LNG and gas storage facilities in an
all-island context
• Supporting the development of a functioning European gas market
POLICY CONTEXT AND INSTRUMENTS
2.1.12
Working together with BGE and the CER, the Government has put in place a framework
to ensure the adequacy of gas supplies and transportation infrastructure into the country.
Within Ireland the Government’s commitment to offshore exploration is critical. The
Corrib field will bring significant volumes of gas into the Irish system and significantly
enhance the security of Irish gas supplies until 2018.
2.1.13
The UK market is now the source of some 80% of our natural gas, and the UK is becoming
a more significant importer of gas itself. UK regulatory reforms and developments in the
UK’s own supply / demand balance (e.g. the planned increase in gas supply capability
and diversification of supply sources including LNG) will benefit Ireland in the medium
term and influence the security and cost competitiveness of gas. The Government will
continue to monitor carefully developments in the UK.
2.1.14
An All-Island study is being commissioned to assess the medium to long-term security
of supply on an all-island basis including the scope for a common approach to gas
storage and LNG. The report will be completed this year.
2.1.15
Private sector investments in gas storage are encouraging. The Government welcomes
the first commercial natural gas storage facility, which is operated by Marathon. It is
already commercially available for short-term gas profiling purposes.
2.1.16
A key policy consideration is how best Ireland can utilise LNG as an alternative to
piped gas. The Government notes as a positive development the recent announcement
that Shannon Development, the regional development agency, has recently entered
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into an ‘option-to-purchase’ agreement with Shannon LNG who is proposing to build
a €400 million liquefied natural gas (LNG) receiving terminal on the land bank on the
Shannon Estuary. The Department and the CER will monitor closely the contribution
of these commercial developments to overall security and diversity of supply having
regard to the projected needs of the island while working closely with their Northern
Ireland counterparts. Further consideration is being given in the all-island context to the
potential for further development of LNG and storage facilities.
2.1.17
Further afield, the development of a functioning European gas market is central to
ensuring security of supply and competitive gas prices for all Member States. Recent
events have highlighted the need for a more coordinated EU approach to security of
supply and to expedite gas market liberalisation. The European Commission’s Green
Paper sets out key priorities in relation to European interconnection, liberalisation and
security of gas supplies, which the Government fully supports in line with Ireland’s
strategic interests. The Government, through its department and agencies, will continue
to support regional initiatives in Europe and internationally to improve the security of
Irish gas supply.
ADDRESSING THE DIVERSITY OF FUELS USED WITHIN THE GENERATION SECTOR
SUMMARY POLICY TARGETS
•
•
•
•
•
•
•
Statutory prohibition on nuclear generation will be maintained
Achieve 15% of electricity consumption from renewable sources by 2010;
30% of electricity consumption from renewable sources by 2020;
30% co-firing at peat stations by 2015, subject to supply constraints.
Reduce the relative dependence on natural gas for power generation by 2020;
Reduction in oil demand for power generation by 2020
Keep under review option of additional coal-fired generation, depending on pace and scale of
technological developments and environmental constraints
POLICY CONTEXT AND INSTRUMENTS
2.1.18
In the absence of significant additional hydro resources and a statutory prohibition on
nuclear generation, our dependence on natural gas for power generation will be 70%
by 2020 without policy intervention. This is not sustainable from a security of supply
perspective. The Government is committed to mitigating the adverse effects of an
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increasing reliance on gas in the generation sector by actively embracing all available
realistic alternatives
2.1.19
The Government intends to maintain the statutory prohibition on nuclear generation
in Ireland. The Government believes that for reasons of security, safety and
economic feasibility (and taking into account operational, capital, maintenance,
waste storage and decommissioning costs), nuclear generation would not be an
appropriate choice for this country. Developments relating to nuclear generation in
the UK and other EU Member States will be closely monitored over the period in
terms of implications for Ireland.
NUCLEAR ENERGY
The use of nuclear fission for the generation of electricity in Ireland is statutorily prohibited under
the Electricity Regulation Act, 1999.
Nuclear energy produces about one-sixth of the world’s primary energy in the form of 17% of the
world’s electricity. The first generation of nuclear power stations are coming to the end of their
operational life. There is renewed attention worldwide (including the UK and several other EU
Member States) on nuclear energy.
Costs of nuclear fuel are relatively low and quite stable – typically 2% of the overall cost of generation
(20% after processing and enrichment, but still only a fraction of that for coal-fired plants).
However the capital costs of the power station itself are typically three times that of fossil fuel plant,
mainly due to the special materials, other safety features and control equipment necessary.
Operation and maintenance costs are also about three times those of fossil-fired power stations,
and these have increased with increased concerns about operational safety and security.
Additional costs are involved with long-term storage of nuclear waste products and the costs of
decommissioning nuclear power stations at the end of their useful operating life.
From an electricity system viewpoint, the addition of a large baseload nuclear unit (typical size of c.
1600MW) onto a small island market with limited interconnection would not be desirable from either
a system reserve or running regime perspective.
In addition, the problem of nuclear waste disposal in general remains unresolved around the world,
whilst fears of terrorist action have increased.
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2.1.20
The extension of current coal capacity or the application of ‘clean coal’ technology may
be valuable elements in the Irish generation mix. In terms of existing coal capacity, the
Government has already approved a €368 million retrofit of Moneypoint to help meet
the significant emission requirements of the Large Combustion Plant Directive. In the
absence of nuclear or further hydro facilities being available as policy choices, the
Government believes that serious consideration should be given to applying ongoing
developments in coal technology. The fact that coal is in very long supply and is
not correlated to oil or gas supplies in price or supply sources make it attractive in
maintaining diversity in fuel supply where carbon sequestration can be used to manage
its environmental impact.
CLEAN COAL TECHNOLOGY
Burning coal without adding to global carbon dioxide levels in the atmosphere is a major
technological challenge. Clean coal technology describes a new generation of energy processes
that sharply reduce air emissions and other pollutants compared to older coal-burning systems.
There are a number of methods in which clean coal is derived:
• The most promising clean coal technology, called Integrated Gasification Combined Cycle
(IGCC) involves using the coal to make a mixture of hydrogen and carbon dioxide, burning the
gas in a turbine similar to that of a CCGT, and storing the resultant carbon dioxide by-product.
A further advantage of IGCC technology is that sulphur and nitrogen compounds can be removed from the gas before it enters the turbine, resulting in very clean emissions.
• It is by means of a separate technology called carbon sequestration that coal’s potential for
exacerbating global warming through greenhouse gas emissions can be tackled. Carbon dioxide is stripped out of the flue gases and pumped into underground reservoirs, or into the sea
or saline aquifers, rather than being released into the atmosphere and contributing to global
warming. This process is known as Carbon Capture and Storage (CCS). In certain instances
the process of pumping carbon into depleting oil fields can lead to operators being able to
recover further amounts of oil, which is known as Enhanced Oil Recovery (EOR). The Intergovernmental Panel on Climate Change has estimated that there is the potential for some 25
years’ worth of current CO2 emissions to be sequestered in one of these ways.
• Supercritical plant operates by raising the pressure and temperature of the generated steam to
more than critical conditions, increasing power plant efficiency, making more electricity from
less coal and reducing CO2 emissions compared to a conventional (‘subcritical’ ) plant. Current systems, called advanced supercritical boilers, have an efficiency level of around 42%.
It is estimated that replacing an old-style boiler, operating at about 30% efficiency with one of
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the new systems can cut CO2 emissions by 23%. The latest boilers also allow biomass to be
added to the fuel mix. Industry figures show that this can reduce emissions by a further 20%.
In the UK, application of CCS to electricity production, under 2002 conditions, is estimated to
increase electricity generation costs by about €0.01 – 0.04/ kWh, depending on the fuel, the
specific technology, the location, and the national circumstances. Including the benefits of EOR
would reduce additional electricity production costs due to CCS by around €0.01 to 0.02 /kWh.
It is estimated that the world market for clean coal technologies could amount to at least €725
billion over the next 15 years or so. The IEA forecasts have indicated that some 38% of the world’s
electricity will still be generated from coal by 2020. It is at present not clear what portion of this
will be accounted for by clean coal.
2.1.21
The possibility for extending the use of coal in the fuel mix will depend on both the pace
and the scale of technological development and on the level of carbon constraints,
which will be in effect in the period 2012-2020. This is an option which Government
intends to keep under review.
2.1.22
The use of biomass for co-firing with peat introduces additional diversity to the fuel
mix and the Government is supportive of its development. It is believed that there is
technical scope for co-firing up to 30% biomass at the three existing peat generating
stations, subject to supply considerations. It has been estimated that this could reduce
emissions by up to 500,000 tonnes per annum. Co-firing would also extend the use of
peat in the energy mix for a number of years. The new peat plants have been constructed
to facilitate the use of other fuels. The Government continues to consider the nature and
extent of the actions that will be required to realise this potential.
2.1.23
Ireland’s oil consumption has risen rapidly as a result of economic growth and now ranks
third in the EU in terms of oil consumed per capita. It is the dominant energy source in
Ireland with a 56% share of the country’s primary energy requirement, driven largely
by the transport sector. The Government is committed to taking mitigating measures to
reduce the usage of oil in transport, achieve greater fuel diversity in electricity generation
and take action on energy efficiency and demand management.
2.1.24
Ireland has rich potential in renewable sources of energy. The Government is committed
to exploiting this potential and encouraging a significant growth in renewable energy in
the period to 2020. A new 2010 target of 15% of electricity consumption to be met by
renewable energy has been set by Government, with a further target of 30% penetration
by 2020, assuming no insuperable technical difficulties. [The incentivisation of a broad
range of renewable technologies is discussed further in Section 2.3.10]
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2.1.25
Renewables will contribute to fuel diversity and security of supply targets. The Renewable
Energy Feed-In Tariff (REFIT) scheme will represent the most important incentive
mechanism for the construction of new renewable generation. The REFIT scheme
critically underpins the ambitious targets for renewable penetration by incentivising a
broad range of renewable technologies, including hydro and biomass technologies.
2.1.26
The Green Virtual Independent Power Producer (GVIPP) auctions announced by
the CER in 2006 represent another important mechanism supportive of this sector.
The auctions will enable licensed green suppliers to increase their sources of green
generation by successfully bidding to purchase electricity.
ENSURING THE PROVISION OF ELECTRICITY AND GAS TO HOMES
AND BUSINESSES OVER NETWORKS THAT ARE ADEQUATE AND SECURE
SUMMARY POLICY TARGETS
• Delivery of current network development programmes in electricity and gas on schedule.
• Completion of the South-North gas pipeline is scheduled for end-2006;
• Actions to support optimal fuel diversity informed by outcome of All-Island Grid Study in
2007;
• Ensure completion of current electricity network renewal programme; and
• Use all-island grid study to inform transmission system planning and development by the
TSOs and regulators in support of renewables from 2007.
POLICY CONTEXT AND INSTRUMENTS
2.1.27
Ireland’s economic and population growth is driving the need to substantially extend
and upgrade the electricity and gas network infrastructure over the medium term. The
Government is committed to retaining these strategic assets within State ownership for
the long-term. The Government, through its various agencies is concerned to ensure that
necessary infrastructure development and refurbishment takes place on a timely basis,
is appropriate in design and is regulated according to international safety, technical
and cost standards. The procurement and execution of network development should
also take place using the most cost effective procurement techniques in order to ensure
value for money to the taxpayer and consumer.
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2.1.28
The Government supports the ongoing extension of the Irish gas network and its
development on an all-island basis. The national gas market is maturing in terms of
economic extension into new areas. The major urban areas (Cork, Dublin, Limerick,
Galway, Waterford) are connected to the network, as well as most of the population
centres within economic reach of the existing network. The planned completion of
the South-North gas pipeline from Gormanston to Belfast by end 2006 will crucially
support the development of the gas network on an all-island basis. This is assisted by
a contribution of €12.7m from the Irish Exchequer. Consideration will be given to further
extensions to the gas network where they are shown to be economically viable and
contribute to regional development. In order to link the planned Corrib gas terminal to
the main gas network, a pipeline from Mayo to Galway is being built and is scheduled
for completion in 2007. In that context on foot of the CER’s recent decision to approve
BGE’s revised policy on connection to the natural gas network. BGE is re-assessing
which towns may be within economic range of this pipeline. Furthermore a feasibility
study and cost benefit analysis of a potential pipeline to Donegal Town via Sligo will
be undertaken as part of the Gas to the Northwest Study. The outcome of this study is
expected by the end of 2006.
2.1.29
The Government supports the major investment programme underway and planned
in electricity by the Transmission Asset Owner, ESB Networks. Since 2000, over
346,400 new connections to the electricity system have been made. In the period
2006 to 2010, ESB Networks is planning to invest some further €470 million in the high
voltage transmission network and €2,278m in the distribution network. As a result of
this investment and a move from rural medium voltage to 20kV operation, losses as a
percentage of electricity distributed are forecast to reduce from current levels, which is
projected to result in savings of 132 GWh of avoided generation.
2.1.30
The Government supports measures to ensure that electricity networks can accommodate,
in an optimally economic and technical way, an increased level of renewable generation
up to 2020 and beyond. The jointly commissioned all-Island Grid Study with Northern
Ireland will assess the resource potential for different renewables technologies on the
island of Ireland in 2020, the extent to which partially dispatchable, non-dispatchable
and embedded generation can be accommodated, network development options and
the economic implications of the consequent policy options. This critical study will be
completed in 2007 and will inform transmission system planning and development by
the TSOs and regulators in support of renewables from 2007 onwards.
2.1.31
The Government, through its agencies, is ensuring actions are taken to secure the
potential of small-scale renewable sources. The CER is also examining the issue from a
regulatory perspective and appropriate solutions will be developed. SEI is undertaking
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certain analysis in relation to metering and reward systems that adequately and equitably
treat both generators and system operators. SEI will undertake:
• An analysis of the ability of renewable and small-scale CHP electricity generation to
secure adequate payment for their exports;
• A review of connection standards and the connection process for smaller generators; and
• An analysis of the implications of the single electricity market for small-scale electricity
generation with recommendations on how micro generation can best be facilitated.
ENCOURAGING INVESTMENTS IN HYDROCARBON RESOURCES
BY CREATING AN ATTRACTIVE ENVIRONMENT FOR EXPLORATION
SUMMARY POLICY TARGETS
• Continued promotion of Ireland as a location for oil and gas exploration;
• Maximising the value of any oil and gas finds for the Irish people;
• Revise and consolidate the regulatory procedures and institutional arrangements for bringing
oil and gas ashore;
• Government should establish formal risk framework for major projects;
• Completion of review of licensing terms (fiscal and non-fiscal) during 2006.
POLICY CONTEXT AND INSTRUMENTS
2.1.32
The Government is committed to realising the commercial potential of oil and gas
resources that exist offshore Ireland. In addition to providing increased security
of supply, a reliable, secure indigenous source of gas has other associated socioeconomic benefits.
2.1.33
In a situation characterised by high global oil prices and the decline of Kinsale Head
production, the Government will continue to encourage investment in oil and gas
exploration. The Government is also encouraged by technological developments in the
field of petroleum exploration and development.
2.1.34
Ireland has serious disadvantages with regard to offshore exploration compared
with other locations. These include water depths, harsh climatic conditions, lack of
infrastructure and distance from shore, coupled with low perceived prospectivity (4
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discoveries declared commercial from 121 exploration wells drilled over the last 35
years). It should be noted, however, that only 9 exploration wells have been drilled west
of Ireland in the past 10 years and these led to two substantial discoveries – the Corrib
gas field in the Slyne Basin (1996) and the Dooish gas condensate accumulation in the
Rockall Basin (2002). In order to address these disadvantages, the Government has
put in place a number of incentives, principal among which are firstly, the introduction
of a complete statutory regime of petroleum taxation and secondly, the introduction of
appropriate Licensing Terms.
2.1.35
In order to dispel negative perceptions, the Government has recently participated in
major regional resource assessment studies, which have quantified the undiscovered
oil and gas potential west of Ireland. This yet-to-find resource potential is substantial
and places the region on a par with neighbouring Atlantic Margin frontier exploration
provinces. This will be augmented by further analysis commissioned by the Department
into the importance and value of indigenous gas. This analysis will also examine the role
of storage and other alternatives required to obviate the risks associated with Ireland’s
end-of-supply-chain position.
2.1.36
Ireland last revised its fiscal terms for hydrocarbon exploration and production in 1992
and non-fiscal terms in 1987. Given the significant increases in global oil prices and
the greater certainty surrounding the hydrocarbon potential of Ireland’s Atlantic waters
since that time, the Government believes there is a case for changing the current
regime. Any future fiscal regime must be sufficiently progressive to accommodate both
future variations in oil and gas prices and the high cost of deepwater exploration and
development in offshore Ireland. The Department has recently initiated a process to
review the current fiscal scheme, in conjunction with the Department of Finance.
2.1.37
The Department monitors all petroleum exploration and production operations to ensure
that the State is fully informed and fully benefits from these activities.
2.1.38
Arising out of the Independent Safety Review of the onshore section of the Corrib
gas pipeline, a number of reports were published in 2006. The first was the Safety
Review itself, conducted by Advantica, the consultants appointed to undertake the
safety review. The second was a report from the Corrib Technical Advisory Group.
This made a number of recommendations in addition to those made by Advantica,
both of which were accepted by both the Minister and the Developer and are being
implemented. The third was a report on inspection and monitoring issues. A number of
actions relating to the oversight and regulation of such projects require progression by
the Department as a result, most notably the development of a risk based approvals
framework for decision making on this type of infrastructure in the future. Other actions
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include the establishment of an independent inspection regime and the development
of a clear framework for developers of hydrocarbon resources encompassing technical
standards, safety requirements and approvals procedures and the drafting of a
Commercial Handbook for prospective developers.
MITIGATING THE IMPACT OF ENERGY SUPPLY DISRUPTIONS
BY ENSURING THAT CONTINGENCY MEASURES ARE IN PLACE
SUMMARY POLICY TARGETS
• Maintenance and regular review of adequate and integrated contingency plans for the energy
sector;
• Establish the National Oil Reserves Agency (NORA) as an independent statutory body;
• Maximisation of owned stocks of oil by NORA subject to NORA’s financial resources, storage
availability and value for money;
• Progressing Ireland’s strategic interests in IEA/EU Coordination Groups on Security of
Supply;
• Review of existing bilateral oil stockholding agreements in context of EU/IEA developments;
conclusion of new agreements as necessary.
POLICY CONTEXT AND INSTRUMENTS
2.1.39
The Government will continue to ensure that contingency plans are in place to mitigate
the impact of energy supply disruptions. The Overview section outlined current practice
regarding contingency planning and the holding of stocks and reserves within the
energy sector.
2.1.40
The Government recognises that the increasingly close links between gas and electricity
markets requires a coordinated approach to contingency management. Natural gas is
now the primary source of fuel in power generation (accounting for 45% of generation
fuel mix in 2004). A co-ordinated approach to electricity and gas emergency planning
is therefore required which protects the integrity of both systems in the event of
emergencies on either network.
2.1.41
The CER established a Task Force on Emergency Procedures in early 2005, comprising
the Department, the CER and the electricity and gas system operators. The Task Force
will continue to enhance procedures aimed at protecting the integrity of either gas or
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electricity networks in the event of emergencies. This plan would supplement, but not
replace individual system emergency plans. The Task Force intends to finalise its first
report and recommendations by Autumn 2006. Given the uncertainties about gas
supplies, an EU Gas Coordination Group has also been established to facilitate the EUwide coordination of security of supply and emergency measures and the Department
will actively participate on this Group.
2.1.42
Given the current significant reliance on imported oil for the country, the Government
will ensure that a prudent approach continues to be taken in relation to the holding
of oil stocks. This is especially important in light of Ireland’s reliance on sea-borne
imports, and the dependence on Irish-based industry/consumer stocks and storage
abroad to contribute to international stockholding requirements. The National Oil
Reserves Agency (NORA) is to be set up as an independent stand-alone body under
primary legislation. The National Oil Reserves Agency Bill, 2006, will strengthen the
effectiveness of stockholding regimes and will provide for the detailed functions and
responsibilities of the Minister and of the Agency in regard to stockholding.
2.1.43
A complete review of Ireland’s Bi-Lateral Oil Stockholding requirements has been
undertaken over the past 3 years. Arising from this review, new Bilateral Agreements
have been concluded with Sweden (2003) and The Netherlands (2005); existing
Agreements with the United Kingdom and Denmark were updated in 2005; the existing
agreement with Belgium is currently under negotiation while discussions have also
been opened with France on updating the existing Ireland-France Agreement.
2.1.44
The National Oil Stockholding Policy is currently under review. It is recognised that there
is a need to rebalance the strategic reserves held by NORA in favour of owned stocks.
In addition the Government believes that the volumes of NORA-owned strategic stocks
held in Ireland should be maximised, having regard to storage availability on the island
and value for money. Adjustments to the levy are provided for under the provisions of
the National Oil Reserves Agency Bill.
2.1.45
In conjunction with the Oil Industry and Government Departments, the Department is
developing an inaugural “Handbook on Oil Supply Disruption Contingency Measures”
detailing contingency planning arrangements for major oil supply disruptions affecting
Ireland and the relevant legislation and general procedures that underpin and inform
the decision-making process. It is anticipated that this Handbook will be finalised and
published before the end of 2006.
2.1.46
More generally, the Office of Emergency Planning (Department of Defence) is coordinating
proposals to strengthen where necessary the procedures for the engagement of key-
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decision making personnel and the mobilisation of effective communication and coordination arrangements across Government in the event of an emergency situation.
The following table summarises the policy targets and policy actions for Security of Supply:
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2 THE POLICY FRAMEWORK
2.2 PROMOTING THE SUSTAINABILITY OF ENERGY SUPPLY
2.2.1
A key energy policy objective to 2020 will be to ensure the continued ambitious
growth of sustainable energy resources. By 2020 the planned level of deployment of
renewable energy including bio-energy will help to ensure that Irish energy supply is
considerably more diverse, secure and sustainable. The 2020 Vision for Renewable
Energy consultation undertaken in conjunction with Northern Ireland sets out proposals
for the integration of renewable energy within the All-Island Energy Market. It represents
a key component of both Governments energy policy for the future.
Four elements will underpin the Government’s promotion of a sustainable
energy supply:
•
•
•
•
Addressing climate change by reducing energy-related greenhouse gas emissions
Stimulating the development of alternative energy sources by providing incentives;
Reducing demand by strengthening energy efficiency and conservation measures;
Delivering a research and development programme supportive of technology breakthroughs in the sector.
CONTRIBUTING TO ADDRESSING CLIMATE CHANGE BY REDUCING
ENERGY-RELATED GREENHOUSE GAS EMISSIONS
SUMMARY POLICY TARGETS
• Achievement of renewable penetration as a proportion of electricity consumption: 15% by
2010; 30% by 2020
• Set all-island renewable target by mid 2007
• Finalise contribution to consultation on NCCS Review in 2006
• Establish Ministerial Task Force on Bioenergy to co-ordinate action across all Departments
• Finalise contribution to EU Review of the operation of the Energy Crops Scheme
• Finalise National Bio Energy Action Plan
• Increase substantially the contribution of bio-energy in transport and heat
CURRENT POLICY CONTEXT AND INSTRUMENTS
2.2.2
The National Climate Change Strategy (NCCS) was published in October 2000 as
a basis for Government policy and action in relation to climate change. A review of
the NCCS has recently taken place which aims to takes stock of developments since
that time and examines options for achieving further abatement of greenhouse gas
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emissions in the future. It is being published to allow for a public consultation prior to the
preparation of a revised National Climate Change Strategy over the coming months.
2.2.3
Under the Kyoto Protocol, the EU agreed to achieve a significant reduction in total
emissions in the period 2008–12. Ireland’s contribution to the EU commitment is to limit
its greenhouse gas emissions to no more than 13% above 1990 levels in 2008-2012.
To achieve the long-term objective that global temperatures should not exceed 2oC
above pre-industrial levels, the Council has signalled the need for developed country
parties to consider reduction pathways in the order of 15-30% by 2020 compared to
1990 levels.
2.2.4
In February 2005, the Kyoto Protocol came into effect, a result of which emission
reduction targets agreed by developed countries, including Ireland, are now binding.
As well as triggering binding commitments, the coming into effect of the Protocol also
introduced three mechanisms - international emissions trading, joint implementation
and the clean development mechanism – to assist parties in meeting their emissions
reduction targets.
2.2.5
The review of the NCCS estimates the annual contribution of existing measures (those
adopted or under implementation prior to March 2006) over the 2008 - 2012 period,
which is shown in the table below. In total, average annual reductions of some 8 million
tonnes CO2e can be expected with existing measures.
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Even with these existing policies and measures already implemented or expected to be
implemented up to 2012, projections show that Ireland will continue to face an average
annual shortfall in its Kyoto target of some 7.174 million tonnes of CO2e in the 20082012 period. In summary, this shortfall (which is referred to as the ‘distance to target’) is
capable of being met through:
• further measures to be decided on by the Government, over and above those shown
above;
• emissions reductions, or purchase of carbon allowances in lieu of reductions, by
installations participating in the EU Emissions Trading Scheme; and
• use of the Kyoto Protocol flexible mechanisms by Government to purchase credits for
carbon allowances.
2.2.6
In March 2006, the Government decided on the proportion of Ireland’s ‘distance to
target’ that will be borne by participants in the EU Emissions Trading Scheme. This
decision was required so that the National Allocation Plan (the distribution of emission
allowances among the participants) could be finalised by the mid-year deadline for
submission to the EU Commission. As shown in the table below, this sector will be
responsible for 3.02 million tonnes of CO2e per annum of the national ‘distance to target’,
through a combination of internal emissions reductions or the purchase of allowances.
2.2.7
The table shows that the balance of the distance to target, i.e. 4.154 million tonnes
per annum, is to be the responsibility of the rest of the economy. Any emissionreducing measures that are adopted in the various sectors concerned, over and above
those set out in table, will count towards this. Whatever balance remains will be met
by Government purchases of carbon credits. The flexible mechanisms of the Kyoto
Protocol enable Governments to make rational economic choices between domestic
emission reductions or purchases of credits for reductions elsewhere in the world.
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2.2.8
The Government recognises that, in some sectors, the costs associated with achieving
emission reductions are high relative to the cost of purchasing credits in lieu of emissions
reductions. It will therefore be important to explore those policy options that deliver
cost-effective reductions so that a disproportionate burden is not placed on individual
sectors of the economy. The sectoral analysis shows that there are various measures
available, which will deliver synergies across a number of sectors. Measures will also be
assessed for the extent to which they can contribute to achieving other policy objectives
or whether they might conflict with existing policy objectives. Options with significant
costs must be justifiable to the Government in terms of their otherwise positive impact.
2.2.9
The Irish energy sector has made a very substantial contribution to reducing CO2
emissions through changes to the fuel mix, the increased use of renewable energy and
energy efficiency improvements, with a downward trend evidenced since 2001.
2.2.10
Ireland is rich in existing and potential renewable energy. The Government believes that
the strategic development and deployment of these resources in a cohesive way will
be the hallmark of policy. Given the decision not to develop nuclear facilities, and given
the immaturity of certain forms of clean coal technology, it is clear that renewables will
play a pivotal role in the achievement of the Government’s climate change targets.
The carbon intensity of electricity production will be progressively reduced with greater
penetration of renewable energy and the replacement of older generation plant with
modern power generation facilities over the period to 2020.
2.2.11
Wind-powered technology will remain prominent in the short-term. There are challenges
in accommodating large amounts of wind or any other intermittent technology onto an
island electricity system. The planned North-South and East-West interconnection will
crucially provide additional back-up for the grid system to support such technology.
The all-island Grid Study, which is due for completion in 2007, will provide essential
insight into issues associated with renewable growth over the medium term.
2.2.12
The contribution of bio energy (biomass, biofuels) to heating and transport demand
will also be systematically developed over the period. The Ministerial Task Force on
Bioenergy has been established and is chaired by the Minister for Communications,
Marine and Natural Resources (See box at paragraph 1.2.34) and will ensure a
coordinated approach is taken to developing national capacity in the bioenergy area,
including addressing in parallel all elements of the value chain (i.e. producer, processor,
and consumer) that will have wider sectoral benefits.
2.2.13
The Task Force will oversee and drive the finalisation of a National Bioenergy Action
Plan in 2006. This will set out the road map for bioenergy including biofuels to 2020 and
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ensure a cohesive approach to deliver benefits across the agriculture, environment,
enterprise, transport, and energy sectors. The strategy will inform the setting of
challenging targets for the period 2010 – 2020 in light of EU developments.
2.2.14
As part of the EU Strategy for Biofuels, the EU will review the operation of the Energy
Crops Scheme during 2006. Plans are also in train for a grant scheme for the planting
of short rotation coppice willow.
2.2.15
Ambitions for renewable energy are reflected in the joint commitment, North and South,
to enhance all-island energy sustainability up to 2020. This commitment will also address
the economic and technical challenges of accommodating different technologies in the
grid systems. All-island targets for renewables will be set during 2007.
STIMULATING THE DEVELOPMENT OF RENEWABLE ENERGY SOURCES
BY PROVIDING INCENTIVES
SUMMARY POLICY TARGETS
• Electricity: Achievement of renewable penetration as a proportion of electricity consumption:
15% by 2010; 30% by 2020;
• Transport: 2% biofuels by 2008 and 5.75% biofuels penetration by 2010;
• CHP: 350MW target by 2010;
• Heat: 5% of fuel used for heat purchases should be from renewable by 2010 (50% of which
would come from biomass);
• Make Ireland a centre of excellence for R&D in Ocean Energy;
• Further research of 2nd generation biofuels and specific targets for biofuels 2010-2020;
• Further initiatives to encourage the application of alternative technology in homes and industry; and
• DAFF to consider stimulating increased interest in energy crops by reviewing incentives domestically and in EU.
CURRENT POLICY CONTEXT AND INSTRUMENT :
WIND
2.2.16
The Government has committed to the delivery of ambitious targets for renewables.
Previously Government support for renewable energy projects has been provided by
way of competitive tendering under the AER programme. Following consultation, the
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Government announced in September 2005 that the support mechanism would change
to a fixed price tariff system (REFIT). A minimum of 400 MW of new renewable capacity
will be supported under the scheme. The REFIT scheme commences operation in 2006
and provides direct incentives for the development of new renewable facilities. It is
intended that this initiative will be pivotal in ensuring that the Government’s 15% target is
met by 2010 and provide the foundation for achieving the 30% target by 2020 assuming
no insuperable technical difficulties.
2.2.17
It is clear that a majority of the 2010 renewable electricity target of 15% will come from
land based windfarms. There is however a recognised need to expand the renewable
energy technologies available for commercial deployment in moving towards the more
ambitious 2020 target of 30%. Renewable energy is an area where the rate of technology
development and innovation is high and there is good potential for technology areas
such as offshore wind, wave and tidal ocean devices and the broad range of biomass
technologies to develop to a stage where significant deployment may become a
commercial reality. Our policy aim will be to support and develop these technologies
through appropriate research, development and demonstration stages and then to
move to commercial deployment levels when the market conditions are right.
2.2.18
The Government believes that the REFIT scheme will deliver material economic and
environmental benefits over time to the Irish economy. These include encouraging the
development of clean eco-friendly indigenous electricity; incentivising a major reduction
in greenhouse gas emissions from the electricity sector and thus delivering over €20
million annually of avoided costs for greenhouse gas emissions permits up to the 2010
target levels (based on 1.3 Mt savings from renewable and assuming €15/tonne CO2).
BIOMASS
2.2.19
The Ministerial Task Force on Bioenergy will finalise a National Bioenergy Action
Plan by the end of 2006. This plan will be developed in the context of the European
Commission’s Biomass Action Plan, which sets out a road-map for the development
of the sector on a Europe-wide basis. The Plan will assess optimum targets for the
market penetration of biomass heating, electricity and biofuel transport. It will also set
targets for the renewable heat and transport sectors generally to 2020. A sustained
afforestation effort is an important component of securing supply of raw material for
biomass initiatives.
2.2.20
The potential of biomass is significant in Ireland. The advantages of biomass as
a contributor to electricity generation is that it is indigenous, renewable and fully
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dispatchable, i.e. available on demand as a generation source. Currently the Bioheat grants programme is providing grant aid of 30% towards the cost of installing
biomass boilers. The Department of Agriculture and Food operates a grants scheme
to promote and develop sustainable forestry and plans to introduce a support
scheme for the purchase of specialist wood biomass harvesting equipment are at
an advanced stage.
BIOENERGY AND BIOFUELS :
BIOENERGY
Bioenergy refers to energy that is derived from:
Wastes - energy from waste biomass encompasses the production of heat, fuels and/or electricity
from agriculture and municipal wastes. Energy can be recovered landfill gas, biogas produced
through the anaerobic digestion of sewage, agricultural slurries and the organic component of
industrial and urban wastes and the combustion of municipal solid waste;
Crops and forestry - the three main sources of energy from biomass are forest residues, wood
industry residues and short rotation energy crops. Biomass is the oldest of the renewable energy
sources. In Ireland, its main use is as fuel-wood for domestic and process heating, which amounts
to just under 1% of total primary energy demand. There is an established market for ‘conventional’
industrial power or CHP generation using straightforward biomass. However, further R&D and
demonstration is needed for gasification technologies;
BIOFUELS
Liquid biofuels - Liquid biofuels are transport fuels, primarily biodiesel and bioethanol, processed
from agricultural crops and other renewable feedstock, which have significantly less CO2
emissions than their fossil fuel equivalents. At present most biodiesel in the EU is processed from
oilseed rape and sunflower, although biodiesel can also be made from animal fat products and
waste vegetable oil Bioethanol is processed from a range of crops including wheat, sugar beet,
and sweet sorghum. As well as reducing greenhouse gases, liquid biofuels produce less harmful
emissions during combustion than their fossil fuel equivalents. The main cost element in biofuel
production is the feedstock, however, with more research cheaper feedstock are predicted to
reduce the costs of fuel production quite considerably.
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2.2.21
The development of biofuels is a core component of the Government’s policy to improve
sustainability. Biofuels will contribute to the achievement of emissions reductions in the
transport sector, in line with the National Climate Change Strategy. Biofuels can also
contribute to waste management policies. In addition to these environmental benefits,
biofuels offer significant opportunities for rural communities to diversify into the growing
of energy crops. There is renewed interest in the potential for energy crops arising
from the reform of the Common Agricultural Policy, the introduction of the Single Farm
Payment, and the reform of the sugar regime. Finally, the development of a biofuels
sector will contribute to fuel diversity by developing domestic renewable fuel sources.
2.2.22
The EU Biofuels Directive sets indicative targets for biofuels market penetration of 2%
for 2005 and 5.75% for 2010. In common with most EU countries, Ireland is starting from
a low baseline in this area and the EU Commission has accepted Ireland’s commitment
to reach 2% target by 2008. The Government aims to set a target of 5.75% market
penetration of biofuels in line with the EU Directive. Targets for 2020 will be established
by the Ministerial Task Force, taking into account developments at EU level and limits
to indigenous production. It will also examine the potential contribution to longer-term
targets from second-generation biofuels in Ireland, which has a favourable climate for
the growing of key raw materials such as woody biomass.
2.2.23
With current land use patterns and limits on biofuel technology, a target of 5.75% will
require a combination of imported and indigenously produced biofuels. The 2010 target
could be reached either by further excise programmes or a biofuels obligation on fuel
suppliers or a combination of support mechanisms. Under current land use policies
10% of tillage area would give a yield of up to 2.5%. To achieve 5.75% by 2010 would
involve a significant change in land use policies and/or likely necessitate a level of
imports.
2.2.24
In 2006 the European Commission, in the context of a possible revision of the Biofuels
Directive, intend to prepare a report which will examine the implementation of the
Directive in Member States and possible future measures.
2.2.25
The Irish Government’s National Bioenergy Action Plan will address the most appropriate
measures required to achieve the 5.75% target, taking into account developments at
EU level. It will also address the heat and electricity markets taking account of biomass
supply and demand factors.
2.2.26
Current policy encourages the use of agricultural products in the biofuel sector. Byproducts of the farming and food processing industries can be recovered and used in
various ways as biofuels. The Department of Agriculture and Food’s Research Stimulus
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Fund Programme, which provides funding to support priority research projects, has been
broadened to support projects in relation to biofuels. The Department is considering
proposals for the introduction of establishment grants for miscanthus and short rotation
coppice. In addition, innovation and research in wood energy is supported through
funding from the Forest Service’s annual Call for Proposals and through COFORD.
Furthermore, Teagasc together with the Department of Agriculture and Food are
conducting research, which has already confirmed the potential of a range of crop
development (oilseeds, wheat, sugar beet) for the manufacture of biofuels. The scope
for development has been increased by changes in the cereal and sugar beet regimes,
where, for example, these crops may avail of set-aside entitlements under the Single
Farm Payment Scheme when grown as non-food crops. The Minister for Agriculture
and Food has called for a review of the premium payable under the EU Energy Crops
Scheme as insufficient to incentivise the growing of energy crops. The EU Commission
has undertaken to review the operation of the scheme.
2.2.27
The 2005 pilot mineral oil tax relief scheme has kick-started the development of an
indigenous Irish biofuels sector. In December 2005 the Minister for Finance, in
presenting the 2006 budget, expanded the relief scheme. The scheme gives excise
relief in excess of €200m over a five-year period, commencing in 2006. This relief, when
fully operational, is expected to support the use and production in Ireland of some 163
million litres (+/-) of biofuels per year, representing 2% of transport fuels by 2008.
2.2.28
The Government is also committed to reviewing other policy initiatives to encourage
biofuels investment and use. For example, SEI will be providing financial support for
pure plant oil projects, to assist with quality monitoring and engine modifications.
2.2.29
In the longer term, beyond 2010, the Government recognises that biofuels will be an
increasingly important feature of EU transport environmental policies going forward.
In order to position Ireland to avail of emerging opportunities in the sector, a level of
investment certainty is required. Recognising the need for such certainty, the Bioenergy
Ministerial Task Force will examine the most appropriate policy measures to achieve an
increased target. Options include further excise relief programmes, or an obligation
whereby fuel suppliers must place a certain proportion of biofuels on the markets over
a given period. It should be noted that “mandates” - where fuel suppliers are required
to produce a percentage of biofuel in each litre of fuel sold - are not currently permitted
under EU law. These laws and other policy options are currently being considered by
the EU Commission and any policy direction chosen by Government will have regard to
developments at EU level.
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2.2.30
Finally the work of SEI is central to the broad achievement of sustainability policy
objectives. Significant funding is being provided to SEI in 2006 to develop and implement
energy conservation programmes and to promote the uptake of alternative energy
sources. For example within the SEI’s ‘Houses of Tomorrow’ Research, Development
and Demonstration Programme, financial support is directed at encouraging developers
of housing, both new-build and refurbishment, involving clusters of 5 or more homes, to
incorporate design and technology features, which deliver significantly superior energy
and CO2 performance
2.2.31
The Greener Homes package is an important new approach for the heat sector. The
scheme includes funding for wood chip and wood pellet boilers and stoves, solar and
heat pump technologies. The scheme will be rolled-out initially over five-years and it
will support the conversion to renewable energy in over 10,000 homes. By its final year,
the scheme is expected to save 20,500 tonnes of CO2 per annum. There has already
been a high level of take-up in the range of renewable technologies covered by the
scheme. The solar, heat pump sectors are already experiencing steady growth and
the emerging biomass heating sector is increasingly popular with grant applicants. The
scheme will further support the growth of these sectors, underpinned by an all-island
network of installer training and standards. A number of technical and administrative
issues associated with micro-wind and CHP generation are being addressed in the
short-term with a view to increasing deployment of these technologies also. The scheme
will be closely monitored to ensure the ongoing development of a buoyant market for
these renewable technologies, which will include an all-island installer-training network
and standards.
CHP/ MICRO CHP
2.2.32
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Combined Heat and Power is a highly efficient form of energy generation because it
captures heat and electricity in a single process. Ireland has one of the lowest CHP
deployment levels in the EU (2.4% in 2004). In the absence of additional support to
assist CHP penetration, capacity had been expected to continue to grow slowly and
perhaps even contract, due to a range of factors including unfavourable fuel prices,
high connection charges and investment uncertainty. The Government is committed
to increasing the penetration of high-efficiency CHP in Ireland by addressing current
barriers to its deployment. This initiative will be underpinned by a grant scheme for
small scale CHP and large-scale biomass-fed CHP. The CHP programme is providing
grants of 30% towards the installation of small-scale CHP facilities, which offer
smaller industries the capacity to generate their own electricity and use the heat that
is generated from that process. Grants are also being provided for larger scale CHP
fuelled by biomass. Separate initiatives to promote more widespread deployment of
CHP include an examination by the CER of potential administrative and regulatory
barriers to becoming a CHP generator and work by SEI on a substantial information
campaign on the benefits of CHP.
OCEAN
2.2.33
Ireland has one of the most promising ocean energy resources in the world. Ireland is
positioning itself at the forefront of development of this resource. The National Ocean
Energy Strategy concerning the development of ocean energy was launched in April
2006. The strategy proposes to advance the speed at which ocean energy technologies
are deployed in Ireland by increasing the capacity for research and development, both
within academic institutions and commercial entities developing devices in Ireland. A
structured and phased strategy of development has been defined – delivery of this
strategy will enable Ireland to utilise its ocean energy resource within a decade. The first
phase of the strategy has already seen the deployment of a scale model-testing device
at a test site at Spiddal, County Galway. The Department estimated in its document,
Ocean Energy in Ireland, produced in conjunction with SEI, that some 84 MW of installed
capacity could exist by 2020, displacing some 90,000 tonnes of CO2.
2.2.34
The heat pump market is in rapid expansion in Ireland, with the domestic sector driving
the demand, especially in the new self-build segment of the market. Most applications
so far would have been using the ground as a heat source with horizontal collectors,
but air source heat pumps are becoming increasingly popular, in particular in projects
where space is limited. Sales were around 1500 units in 2004, a significant improvement
on the previous year (+50%). Feedback from the industry indicates that 2005 was a
record year and that 2006, with the introduction of the Greener Homes Grant Scheme,
is going to surpass expectations. The number of companies supplying heat pumps has
gone from a handful of players to over 130 suppliers this year.
2.2.35
The solar thermal market is booming as well. Sales in 2004 were estimated at 2000 m2
of solar thermal panels (+42% over 2003). Again the industry reports a tremendous
increase in demand in 2005, with the self-builders being most enthusiastic. It is worth
noting that a number of large installations have taken place last year in commercial
buildings and public buildings (e.g. Cork Environmental Research Institute), pushing
the numbers up again. The sector is evolving at a rapid pace from the single enthusiast
type of service provider to the highly organised distribution system, with heating &
plumbing merchants and large contractors taking a significant share of the market. It is
already clear that the Greener Homes Grant Scheme is going to have a major impact
on sales.
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REDUCING DEMAND BY STRENGTHENING ENERGY EFFICIENCY
AND CONSERVATION MEASURES
SUMMARY POLICY TARGETS
• Develop Action Plan on Energy Efficiency by end 2006, to deliver 20% improvement in energy
efficiency by 2020.
CURRENT POLICY CONTEXT AND INSTRUMENTS
2.2.36
Energy efficiency is a major priority for the EU and Ireland. Improved energy efficiency
has the potential to be the cheapest and cleanest method of reducing greenhouse
gas emissions and energy costs for consumers, both domestic and business alike.
Energy efficiency contributes to a range of national policy objectives including security
of supply, sustainable transport, affordable energy, economic competitiveness efficient
use of resources and environmental improvements particularly in relation to carbon.
Other benefits in terms of developing energy efficient products and services will
include the development of creating jobs and growth in the energy sector. Research
and innovation will also play its part.
2.2.37
While Ireland’s overall energy intensity rating has improved significantly over the last
fifteen years there is no doubt that there is still significant room for improvement. Over the
period 1990-2004, GDP has grown by 140% whereas total primary energy requirement
(TPER) has grown by 59% and energy-related CO2 emissions by 45%. While rapid
GDP growth and structural changes to the economy have contributed to this trend,
this improvement has also been significantly influenced by the increasing efficiency of
new plant coming into the electricity generation sector as well as increasing amounts of
renewable energy generation.
2.2.38
The EU in its recent green paper on energy efficiency ‘Doing More With Less’ estimates
that the EU as a whole could save up to 20% of its present energy consumption in a
cost effective manner. The Government is committed as part of its response to the EU
challenge on energy efficiency to ensure a market, which encourages ongoing research
and investment in increased energy efficiency measures.
2.2.39
The Government will develop an Action Plan on Energy Efficiency this year, which
will build on achievements to date, target those areas capable of achieving more and
support EU objectives. This will set out concrete measures to deliver 20% reduction
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in energy demand by 2020 in an Irish context and this would amount to about 3 Mtoe
per annum by that date. An intermediate target, which would put Ireland on track for
compliance with the Energy Services Directive, is to achieve savings of 1 Mtoe in the
nine years from January 2008. The potential savings dividend for the economy over the
period will be considerable and will support growth and job creation. It will achieve this
using the following measures:
• implementation of EU Directives on energy performance in buildings and end use
efficiency and energy services;
• promotion of the use of combined heat and power through new and existing SEI
schemes;
• provision of energy efficiency programmes into the Regional Operational Programmes
2007-2013;
• building of research and development and innovation capability in energy efficiency
and technology conversion;
• working with the authorities in Northern Ireland on the delivery of progress on an allisland approach to energy efficiency;
• encouragement of Demand Side Management initiatives to reduce peak electricity
demand; and
• the undertaking of a major national energy efficiency campaign across the period
2006 – 2009 targeting individual consumers, businesses public sector and transport.
2.2.40
The National Spatial Strategy has a particular role in helping to achieve emissions
targets in Ireland. Published in 2002, the Strategy provides a 20-year framework for
planning at national, regional and local level. Good spatial planning has the potential
to deliver beneficial environmental impacts in areas such as transport and a general
holistic approach to continued spatial development.
ENERGY EFFICIENCY AND THE BUILT ENVIRONMENT
• The Government revised Building Regulations in June 2002 in order to provide for higher thermal performance and insulation standards for dwellings. These higher standards, envisaged
in the NCCS to be implemented in two phases (2001 and 2005), were implemented in a single
step with effect from 1 January 2003.
• In December 2005, the Department of Environment, Heritage and Local Government made
further amendments to the Building Regulations to partly transpose Articles 3, 4, and 5 of the
Energy Performance in Buildings Directive and incorporate higher thermal performance/insulation standards for new non-domestic buildings (new offices, shops, factories, leisure centres
79
etc.) commencing on or after 1 July 2006, leading to an additional 45,000 tonne reduction
in emissions per annum by the end of 2012. The regulations also provide the legal basis for
the introduction of a revised building energy performance assessment methodology for new
dwellings.
• Building Energy Rating (BER) of new Dwellings will be required from 1 January 2007, of new
Non Domestic Buildings from 1 January 2008, and of Existing Buildings offered for rent or sale
from 1 January 2009
• The SEI ‘Houses of Tomorrow’ programme stimulates the uptake of energy-efficient practices
in building design and construction. The programme funds designers and architects who work
on “clusters” of buildings (normally 10–100 buildings) with considerably improved energy use
parameters, typically 20–40% better than the requirements of the current Building Regulations.
• To promote sustainable energy efficiency in housing, a number of social housing schemes
have been used to demonstrate new approaches to energy efficient design and the use of
novel energy efficient technologies.
• Finally in accordance with the requirements of the Energy Performance in Buildings Directive, national Building Regulations will be reviewed at about 5-yearly intervals. (A two stage
revision of Part L of the Building Regulations in relation to dwellings due in 2001and 2005
was combined in a single revision in 2003, making the next revisions due in 2008.)This is to
ensure the continuous upgrading of energy performance standards for new buildings and
material alterations of existing buildings. It will also present opportunities to take on board ongoing technological developments. Revisions of the Building Regulations in December 2005
to cover non-domestic buildings will be progressively applied to all building types over the
period to 2009. This will be underpinned by the introduction of a new methodology for newly
constructed non-domestic buildings, expressing building energy performance assessment in
a similar way to new dwellings, when this methodology has been developed.
2.2.41
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The Public Sector Investment Programme aims to stimulate the application of
improved energy efficiency design strategies, technologies and services in public
sector building construction and retrofit projects. It facilitates the delivery of significant
energy efficiency improvements in the design and specification of new-build and
refurbishment construction. The Programme is in the process of establishing energy
management bureaux to encourage the provision of contracted energy control and
management services for public sector buildings which lack the scope to provide the
service from internal resources, and to help public sector organisations to manage
their energy consumption and costs. Two bureaux are now fully operational: the first
is located in the Office of Public Works, covering over 150 of the largest buildings in
the central Government offices estate; the second covers the main third level colleges
in Dublin: UCD, Trinity, Dublin Institute of Technology and Dublin City University. Work
has commenced in establishing a Bureau that incorporates the five Dublin Academic
Teaching Hospitals: St. James’ Hospital, St. Vincent’s Hospital, Beaumont Hospital,
The Mater Hospital and the Adelaide and Meath Hospital incorporating the National
Children’s Hospital. These hospitals are some of the largest users of energy within the
health sector.
2.2.42
As part of the Energy Efficiency Action Plan, the Government will launch a major
national energy efficiency campaign in Autumn 2006, targeting individual consumers,
businesses, the public sector and transport. This multi-annual campaign will aim to
change behaviours to reduce waste of energy, use more energy-efficient equipment
and processes and use energy more wisely.
2.2.43
ESB Customer Supply has been directly engaged in promoting the benefits of greater
energy efficiency to its customers since 1991. It is estimated that between 1991 and
2005, the cumulative saving in direct costs to business, industry and residential
customers (lifetime savings) has been in the region of 6,300 GWh. The Winter Peak
Demand Reduction Scheme provides incentives for customers to reduce their
electricity consumption and to establish stable patterns of energy consumption. The
level of incentive increases with the amount of energy saved. In addition, the CER sets
measurable targets for ESB Customer Supply to achieve energy efficiency gains in
end-use of electricity. These targets are agreed between ESB Customer Supply and
CER at the beginning of each year and the performance against target is reported to
CER at the end of each year.
ENERGY EFFICIENCY AND TRANSPORT
2.2.44
In the transport sector, improvements in efficiency will act as an important way to mitigate
Ireland’s reliance on imported oil. The Government is committed to the integration of
spatial development and transport investment to encourage more sustainable travel
patterns for individuals and business (e.g. public transport, cycling and walking)
and deliver net benefits in terms of reduced environmental and health costs. Under
Transport 21 a record level of investment in public transport over the period 2006-2015
will provide choice and an alternative to the private car, particularly in the major urban
areas, thereby encouraging less polluting and less energy intensive forms of transport.
The planned upgrading of the national road network will substantially reduce journey
81
times on the key inter-urban routes while at the same time increasing reliability. This will
play an important role in improving the energy efficiency of the transport sector.
2.2.45
Demand management and energy efficiency is a fundamental way of reducing the
energy intensity of the transport sector. A detailed demand management strategy,
initially in the Greater Dublin Area, will be developed for Government consideration
as the investment programme outlined under Transport 21 proceeds. The European
Climate Change Programme calculated the reduction potential of eco-driving of
at least 50 million tonnes of CO2 in Europe by 2010. Funded under Transport 21, a
public awareness campaign, centred around eco-driving, and pilot projects to test its
feasibility, holds the potential to deliver major results in terms of CO2 emissions while
also benefiting the consumer in terms of fuel savings.
2.2.46
Tax incentives hold the potential to encourage the purchase of cleaner and more energy
efficient vehicles and thereby increase the fuel efficiency of the vehicle portfolio. There
is a 50% reduction in Vehicle Registration Tax (VRT) in Ireland for hybrid-electric cars
until end-2006, which aims to stimulate the market for these vehicles. This VRT relief
has been extended to flexible-fuelled vehicles for a trial period of two years, following
its announcement in the 2006 Budget. To complement the biofuels excise relief
scheme, Transport 21 provides funding for pilot projects for biofuel and hybrid-electric
technologies.
2.2.47
Ireland supports the EU Voluntary Agreement between car manufacturers and the
Commission as a cost-effective and efficient means of increasing fuel efficiency.
Emissions of CO2 from new passenger cars sold in the EU-15 have decreased by
11.8% between 1995 and 2003. In the absence of a domestic car industry, Ireland is
a technology taker and has little ability to influence the development of cleaner vehicle
technology. There are particular environmental challenges to be addressed in aviation
and maritime transport sectors in the absence of alternative fuels. Global technological
advances will be critically important in bringing more fuel efficient, novel and clean
technologies to market.
ENERGY EFFICIENCY AND INDUSTRY
2.2.48
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The Government supports initiatives within Irish industry to encourage energy
efficiency. Active engagement of Irish energy industries with research and development
programmes is needed to ensure that overall energy policy priorities are supported
by the necessary strategic research and innovation. The operation of the Energy
Agreements programme within the Large Industry Energy Network is aimed at Ireland’s
largest energy using companies. This new programme will build on the achievements
to date, by requiring firms to work towards certification to the new Irish Standard on
energy management, IS 393. In return, SEI will offer participating companies tailormade support in reaching the standard and in benefiting fully from the process.
ENERGY AGREEMENTS PROGRAMME
The recently launched Energy Agreements Programme is based on the Irish Standard on Energy
Management Systems (IS 393). By joining the Energy Agreement Programme, companies
undertake to work towards achieving certification to IS 393, supported by tailored advice from
SEI. IS 393 requires that energy is managed by companies through formalised structures to
achieve significant savings in energy use and greenhouse gas emissions. The Standard covers
all aspect of a company’s approach to managing its energy costs and use. It is designed for large
energy intensive enterprises, which may be more exposed than others to changes in energy
costs. It is expected that 20 of Ireland’s largest industrial energy users will have signed up to
the Energy Agreements Programme by the end of 2006. It is expected that Sustainable Energy
Ireland will eventually attract 60 to 100 of the largest industrial energy users in Ireland, with an
annual energy bill of €2 million qualifying for participation. A parallel Energy Management Action
Programme (EMAP) is in place for those companies who may not have the resources to commit
the audit requirements necessary to obtain IS 393.
2.2.49
SEI is promoting an Energy Management Action Programme aimed at the Small Enterprise
sector, which has the potential to maximise energy efficiency throughout the economy.
This will be a key element in the Government’s competitiveness strategy for the future.
The annual report of the Large Industry Energy Network, already ten years in existence,
will also provide a valuable review of work undertaken and results achieved against a
background of continuous improvement and increased involvement of energy users.
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DELIVERING A RESEARCH AND DEVELOPMENT PROGRAMME SUPPORTIVE
OF TECHNOLOGY BREAKTHROUGHS IN THE SECTOR
CURRENT POLICY CONTEXT AND INSTRUMENTS
SUMMARY POLICY TARGETS
• Full engagement with international research efforts, including the IEA and EU
• All-island research co-cooperation
• Increased funding and more strategic direction for RTDI as part of Government’s National Science, Technology and Innovation Strategy
• Identify key energy research priorities with advice from the Irish Energy Research Council
• Development of energy research capacity
2.2.50
There is a wider context for research spending generally, in that Government has just
recently committed a significant level of funding to science, technology and innovation
over the period 2006 to 2013, in the Science, Technology and Innovation Strategy
launched in early summer 2006. The cost is approximately €3.8bn over the lifetime of
the Strategy. This in turn represents a step change on the funding allocated over the
period 1997 to date, which saw funding treble in this area.
2.2.51
Energy research and innovation is high on international and EU energy policy agenda.
The EU recognises the importance of new energy technologies and energy-related
research for overall energy objectives, and for the EU economy. Energy efficiency, energy
diversity and low carbon technologies as well as electricity networks are key research
priorities. A more strategic approach to planning and financing national research and
innovation is seen as key to delivering results. The priority being given in the EU and
IEA has the Government’s support and is reflected in national energy research policy
objectives. Energy research will also play a key part in National Science, Technology
and Innovation goals.
2.2.52
The 2005 review of Irish energy research concluded that current activities and funding should be
better coordinated and aligned with energy policy and economic policies generally. This was in
line with the findings of the IEA Review of Ireland 2003. Support for the medium term will include
enhancing the strategic direction for Irish energy research in the national energy infrastructure.
Energy efficiency, demand management and renewable technologies will also be key priorities
with the related goal of building energy research capacity in the higher education system.
Opportunities to develop all-island initiatives in energy research will build on existing cooperation.
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2.2.53
The newly established Irish Energy Research Council will advise on priorities for
Irish energy research to 2013 and for the longer term. The Council will co-ordinate
existing energy RTDI activities, and provide analysis and advice on research capacity,
building of links and energy research with overall energy policy as well as with other
sectoral policies. It will also advise and assist on the Irish engagement with the EU
and international energy programmes including the EU Framework Programme. The
all-island dimension will be an important component of the Councils work.
2.2.54
The Government is substantially increasing Exchequer funding for energy RTDI. The
new budget line for 2006 of €3.5 million is set to increase over the period to support
research initiatives. This will complement other funding opportunities including the
potential for energy capacity building through Science Foundation Ireland. Active
engagement of Irish energy industries with research and development programmes is
to ensure that overall energy policy priorities are supported by the necessary strategic
research and innovation. Commitment to national energy RTDI will also encourage new
growth in the energy enterprise sector itself development of a strong national energy
research capability across all disciplines.
2.2.55
The support initiatives for RTDI are consistent with the recently launched Strategy for
Science, Technology and Innovation, which will form a central plank in the forthcoming
National Development Plan (see above paragraph 2.2.50). In the same way, RTDI actions
will increase the benefits and opportunities of science, technology and innovation and
help grow the economy in a sustainable manner.
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The following table summarises the policy targets and policy actions for ensuring Sustainability
of Energy Supply.
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2 THE POLICY FRAMEWORK
2.3 ENHANCING THE COMPETITIVENESS OF ENERGY SUPPLY
2.3.1
Ireland’s continued economic growth and competitiveness depends on a reliable and
competitively priced energy supply. Ireland’s ability to continue to attract high levels of
foreign direct investment and provide a favourable environment to Irish industry generally
will depend on its capacity to deliver a secure energy supply at a competitive cost.
Ireland’s small energy market, peripheral position in Europe and exposure to sustained
high global oil and gas prices pose particular challenges in terms of competitive energy
costs. Policy actions in relation to security of supply and sustainability aim to overcome
these challenges. The creation of the Single Electricity Market in 2007 will both drive
and enable a more competitive market.
2.3.2
The Government has two overarching policy objectives to ensure the competitiveness
of Irish energy supply:
• Effectively liberalising gas and electricity sectors by implementing energy market
mechanisms;
• Enabling competition by reforming institutional arrangements and market structure.
EFFECTIVELY LIBERALISING GAS AND ELECTRICITY SECTORS
BY IMPLEMENTING ENERGY MARKET MECHANISMS
SUMMARY POLICY TARGETS
•
•
•
•
Introduction of the Single Electricity Market during 2007;
Full opening of Irish gas market by 1 July 2007;
Legal unbundling of BGE Networks by end 2006;
Legal unbundling of ESB DSO by 1 July 2007.
POLICY CONTEXT AND INSTRUMENTS
2.3.3
The Government is fully supportive of the introduction of the Single Electricity Market
during 2007 and is committed to delivering the Single Electricity Market Bill, which will
provide the legal base for the market, by April 2007. In advance of this, the Energy
(Miscellaneous Provisions) Bill 2006 contains proposals from Government for the
expansion of the functions of the regulator in order to underpin its work in the allisland context.
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2.3.4
The achievement of the SEM continues to require a significant commitment of resources
of both Governments. The Government is also supportive of the establishment of a Single
Market Operator as outlined in the All Island Energy Market Development Framework. The
Government will continue to consider, in conjunction with the authorities in Northern Ireland,
the appropriateness of a single Transmission System Operator for the all-island market.
THE SINGLE ELECTRICITY MARKET: KEY CONCEPTS
Harmonising the market regime as part of the development of an All-island market involves the
movement to a Gross Pool market arrangement for the all-island electricity market. The regulatory
authorities of both Ireland and Northern Ireland (CER and NIAER) have been working together to
develop the mechanism for the Single Electricity Market (SEM).
The regulatory authorities have determined that the SEM will be a central commitment market
(gross pool) with a single clearing price and an explicit capacity payment mechanism. What this
means is that in the wholesale market all electricity must be sold through a central electricity pool.
There will be no opportunities for bilateral (company to company) physical power transactions,
although generators and suppliers will be allowed to enter into Contracts for Difference (CfDs).
Generators wishing to sell energy through the pool will be required to submit bids to the market
operator/ system operator. Therefore the most cost efficient generators will be called upon to
generate electricity first.
The SEM will have a single System Marginal Price (SMP) that is set for each half hour, by the last
generator in the order of efficiency that is called upon to generate. This SMP will be received by
all participants in the pool regardless of their original bid. The regulators are working together to
ensure that no market participant will have the potential to exert market power by manipulating
the system price to their advantage. This will be achieved by imposition of strict bidding rules and
monitoring of bidding behaviour.
Dominance by market players has been identified as a separate working topic by the two
regulators and is being carefully examined as part of the development of the SEM rules. The
small size of the Irish market and the higher concentration of control of plant in the “price setting”
region is an issue which needs to be considered to ensure economic and undistorted operation
of the gross pool mechanism.
In addition, the regulatory authorities have decided that the SEM will have an explicit capacity
payment mechanism. This means that generation plant will be encouraged and rewarded when
available to generate electricity even if that plant is not called upon to generate. This decision
is taken on the basis that an explicit capacity payment mechanism will offer greater security
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to the market and thereby consumers. An energy-only market would require price spikes in a
small number of hours each year to ensure revenue adequacy. On balance it is considered
more appropriate to implement a market with greater stability, less volatile prices and greater
security of supply. The details of this mechanism are currently being developed by regulators,
North and South.
The all-island electricity market will have around 2.5 million electricity customers (1.8 million in
Ireland, 0.7 million in Northern Ireland).
2.3.5
Government is committed to ensuring an increasingly competitive natural gas market in
the interests of consumers, enterprise and the economy as well as regional development.
Progress to date includes the phased opening up of the retail gas market, the actions
taken by CER to stimulate competition and to regulate BGE and the emerging competition
in the supply segment. The All-island Energy Market Framework is a key context for the
progressive delivery of competitive, sustainable and reliable gas markets on the island
of Ireland. Security of gas supply is a shared all-island concern. Ongoing investment in
infrastructure, North and South will contribute to enhanced security of supply as will the
joint review of gas storage and LNG potential on the island as a whole. The completion
of full gas market opening is a key deliverable in the immediate term.
2.3.6
Government fully supports the achievement of full gas market liberalisation by mid 2007.
Provisions are contained within the Energy (Miscellaneous Provisions) Bill 2006 to allow
this to proceed. In this context, the Government will also seek to ensure that the legal
unbundling of BGE’s TSO and DSO and the establishment of a new BGE subsidiary to
function as the Irish system operator take place before the end of 2006.
2.3.7
As part of the liberalisation process, Government is concerned to ensure that consumer
interests continue to be protected and promoted. The CER now has a distinctive statutory
role in taking account of and protecting consumer interests in the regulation of energy
utilities. The Government has established the National Consumer Agency, which will
provide a strong consumer voice in the regulated sectors. Enhanced representation
of consumer interests will contribute to greater transparency, choice and consultation
in the energy sector. These developments underscore the need for related action to
achieve more competitive outcomes.
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ENABLING COMPETITION BY REFORMING INSTITUTIONAL ARRANGEMENTS
AND MARKET STRUCTURE
SUMMARY POLICY TARGETS
• Retention of a strong commercially viable ESB;
• Retention of certain strategic electricity assets, including networks and certain generation assets, in State ownership for the long term;
• Reduction of market power held by any one player in price-setting generation plant;
• Consideration of establishing a State-owned landbank of current and potential generating
sites;
• Real and effective competition in energy supply must be encouraged and facilitated in the
interests of consumers.
POLICY CONTEXT AND INSTRUMENTS
2.3.8
The energy sector is a vital strategic sector and part of the national infrastructure, which
underpins economic growth. It is in this context that national energy policy must be
strongly focussed on contributing to enhanced productivity, national competitiveness
and to maintaining a strong economy.
2.3.9
Ensuring the competitiveness of Irish energy prices is a key concern for energy policy.
Irish electricity prices are notably higher than the European average for both domestic
and industrial users. Using different studies of price comparisons in 2004/2005, Ireland
is consistently ranked among the top 3 most expensive countries for industrial customers
in Europe. Prices for domestic consumers are also significantly above the EU average.
2.3.10
A combination of structural and market operation factors is contributing to high price
levels. Fuel mix, and the specific reliance on gas for a material proportion of generation
needs, is the principal factor contributing to high generation costs. The impact of fuel
mix in Irish electricity stations accounts for about 70% of the differential between Irish
and European generation costs, where other Member States have higher proportions of
lower cost hydro and nuclear generation. Generation costs account for approximately
50% of domestic bills and 70% of industrial/commercial bills. As outlined in Section
[2.1.25], policy actions that allow for the diversification of fuel mix will be crucial to
protecting Irish consumers from the cyclical effects of an international commodity such
as gas. However efforts to diversify the fuel mix away from gas will be implemented over
the medium to long-term.
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2.3.11
Apart from the factor of fuel mix, two further issues related to market operation cause
Irish prices to rank above European average. Firstly, high labour costs and secondly, low
levels of plant availability. Taken together, these elements impose significant additional
costs in power generation.
2.3.12
In addition, costs associated with the use of the transmission and distribution electricity
and gas networks also contribute to energy prices. The CER maintains price regulation
over these natural monopoly businesses. The Government considers that this regulatory
approach is consistent with internationally accepted standards in order to drive
efficiencies and control network related costs.
2.3.13
The effectiveness and appropriateness of existing arrangements and structures has
been widely questioned. The current market structure is extremely heavily regulated
and has relied on a combination of top-up and spill prices, auctions of power production
(VIPP) and competitions for long-term supply contracts to encourage independent
generators and suppliers to enter the market.
2.3.14
While some level of choice of supplier has developed for large industrial customers,
there has been limited competition for domestic consumers. The lack of entry into
the market by independent generators has raised concerns about the security of
electricity supply in the immediate and medium term and questions about competition
and dominance.
2.3.15
Poor plant availability compounds this problem leading to very tight winter reserve
margins. New generating capacity is needed as early as 2009, if not before. Growth
in renewable energy adds complexity in generation and networks as the intermittent
nature of wind generation requires flexible and responsive back-up generation plant, an
adequate reserve margin and further interconnection.
2.3.16
The current system will change with the introduction of the Single Electricity Market
(SEM) in 2007, which will create a wholesale electricity market based on a gross pool
system on an all-island basis.
2.3.17
One of the major factors identified as influencing the reluctance of independent
generators to enter the market is the perceived and actual dominance of ESB. This
dominance arises from ESB’s ownership of a large and diverse portfolio of plant and
particularly from the company’s ability to set prices. ESB owns all of the plant most
likely to set the marginal price in the SEM and, therefore, the effect that its dominance
has on the potential for market entry will continue. The introduction of the SEM will
not of itself address the issue of dominance, particularly in relation to price-setting
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ability. Competition needs to be functioning effectively in order to ensure that the
benefits of increased scale, in terms of the all-island market, are passed through fairly
to consumers.
2.3.18
Unbundling and market opening have not addressed ESB’s perceived and actual
dominance in the market. The current situation requires an undesirable level of heavy
regulation to create a functioning market, an approach, which exacerbates the classic
problem of information asymmetry between regulator and the incumbent.
2.3.19
Structural change will reinforce the benefits that can be accrued from the SEM and will
also deliver a more vibrant market environment on the island. The two Governments’
stated aim for the all island energy market is to provide for competitive, sustainable and
reliable markets at the minimum cost necessary with freedom of choice for consumers.
2.3.20
Regulatory arrangements to mitigate market power in the SEM are being developed by
both regulators. Regulatory action needs to be matched by policy measures to reduce
ownership concentration in power generation, particularly in relation to control of pricesetting plant and to send firm signals in relation to progressive structural change in the
electricity sector, North and South.
2.3.21
There are challenges to be addressed in both markets if the required outcomes, in
terms of competition, transparency and consumer choice, are to be delivered and if
the considerable political, economic and regulatory investment in the SEM project is
to be realised. In summary, barriers to effective competition on both sides need to be
removed through policy as well as regulatory action. A fully functioning effective single
wholesale electricity market on the island will in itself support a range of energy policy
objectives over the period.
2.3.22
It is against this background that Deloitte were commissioned to undertake a review
of the Irish electricity sector. Their Report, which will be published as a background
supporting document to the Energy Green Paper, is a comprehensive analysis of
institutional arrangements and market structures in which the consultants analyse
a range of options from the preservation of the status quo to the atomisation of the
ESB. The Report offers a series of proposals, which Deloitte believe would deliver
the most appropriate arrangements and structures over time, in line with policy
objectives for security of supply, competitiveness, sustainability and all-island
energy market developments.
2.3.23
The case made for change is compelling. There is an urgent need to make long term
decisions and investment now, that will over time, move us definitively towards a more
92
effective and diversified energy market and a much more efficient level of energy usage
as an economy, by international standards.
2.3.24
There is a strong case, from both the security of supply and market imperatives,
for embarking on a process of structural change in the electricity sector. Enhanced
security of supply, reductions in controllable costs and a more dynamic energy market
will create opportunities for all players including the renewable energy sector and for
investors. Competition in generation will act as a catalyst for improvements in operation
and maintenance costs, productivity, availability, flexibility and innovation. Competition
in supply will provide choice for customers and encourage innovation in bundling
products and services.
2.3.25
If we maintain the status quo the electricity market will develop and evolve slowly and
improvements in plant availability and efficiency levels will happen only over a long
period. There will be no effective downward pressure on price, little incentive for new
entrants and intensive regulation, with its inherent limitations for all stakeholders, will
continue. At a point when significant investment in power generation is needed, an
opportunity currently exists to break out of the current cycle of market evolution and
deliver meaningful competition. To miss the opportunity is not in the interests of market
players. Neither is it in the interests of the effective working of the all-island market, the
competitiveness of energy costs, consumers nor the economy as a whole.
2.3.26
The Government considers that any change will have to be delivered in a progressive
manner working with all the stakeholders. The following general principles are central
to the decision on how to move forward with the change imperative:
• The Government considers that it is important to retain a strong, commercially viable
ESB. This policy intention reflects ESB’s fundamental role in the development of the
Irish electricity sector and its own commitment to change. The Government does not
intend to privatise or atomise the ESB Group.
• The Government is also broadly supportive of the continued development of ESBI as
a successful international player.
• The Government is of the firm view that strategic electricity assets should be retained
in State ownership for the long term. This includes transmission and distribution networks and certain generation assets, including pumped storage and hydro facilities.
• The ownership of prime generation sites capable of further development for generation purposes is seen as conveying a number of advantages on ESB, over new
entrants seeking to establish themselves in the power generation sector, in terms of
planning and access to infrastructure. The Government is of the view that these sites
constitute a strategic national asset and believes that, as a possible policy option,
93
consideration should be given to the creation of a State-owned landbank of such
sites to incentivise the development of new independent generation capacity.
• The question of dominance and market power in price-setting generation plant will
also need to be addressed as an immediate priority
• Real and effective competition in energy supply must be encouraged and facilitated
in the interests of consumers.
2.3.27
By moving on from the status quo, all players can create impetus for choice and
innovation in a more suitably regulated environment and a responsive market. Over
time this pro-competition policy direction should allow for an improved rate of return on
State-owned assets through enhanced efficiencies and better performance.
REGULATORY REFORM
2.3.28
The CER has regulated the Irish electricity market since 1999 and the gas market since
2002. The Commission has wide ranging statutorily independent functions and duties,
which have evolved in a changing and challenging environment. Developments at EU
level have been the critical backdrop. Achieving the right regulatory balance points
to the need for an ongoing flexible approach to regulation of the energy sector given
the range of challenges for energy policy. The development of regional EU electricity
markets in which the CER, as a Member of the European Regulators Group for Electricity
and Gas, is playing a pro-active role, will complement progress towards an integrated
EU Single Energy Market.
2.3.29
The Government White Paper “Regulating Better” set out the guiding principles for
better regulation. These are necessity, effectiveness, proportionality, transparency,
accountability and consistency. In that context the Government has committed to an
ongoing review of the regulatory framework to ensure that it is accountable, relevant
and viable. Specific reviews of regulated sectors are planned Departmentally, taking
account of developing market structures and policy challenges. It would be premature
to undertake a comprehensive review of the energy regulatory framework before the
arrival of SEM in 2007. A review shortly thereafter will be timely and appropriate with
a view to positioning regulation to meet the energy challenges up to 2020. It will take
account of experience of the SEM and further developments in the EU.
2.3.30
The Government continues to consider areas for improvement in the governance of stateowned entities in the Irish energy sector and the discharge of its role as shareholder and
policy maker and taking account of the OECD Guidelines on Corporate Governance of
State-owned Enterprises (2005), where appropriate.
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2.3.31
Finally, the Government commits to a regular review of energy policy direction, to be
undertaken at five-year intervals.
FUEL POVERTY
Fuel poverty is a matter of concern to Government. It is being, and will continue to be, addressed
in the formulation of energy policy. Consideration will be given to the extension of current policy
initiatives to address the issue.
Other government Departments also play their part in trying to reduce or remove the threat of fuel
poverty. Current measures consist of the following: the Department of Social and Family Affairs
fuel allowances, as well as existing social welfare rates and other welfare benefits generally,
and once-off long-term capital investment measures aimed at improving energy efficiency and
lowering overall demand levels.
The Remedial Works programme (€65 million) provides remedial works on houses with serious
design or construction defects or in run-down urban estates. An initiative led by the Department
of the Environment, Heritage and Local Government (DoEHLG) will reduce the number of homes
without central heating through an investment programme over the four year period 2004-2008.
The programme is aimed at local authority houses and houses occupied by older people, noting
that older people in rural areas have the highest heating costs. The programme aims to address
9,000 houses in 2006 with a budget of €32 million.
SEI’s Low Income Housing Programme (delivered through a ‘Warmer Homes’ Scheme) was set
up to help establish and implement a national plan of action to deliver capital energy efficiency
investment measures in low income housing. Proposed capital expenditure for the programme in
2006 is €1.9 million, which will cover 2,700 homes, through installer agencies working to defined
quality standards. SEI will develop the framework for a significant extension of the Low Income
Housing programme (10,000 homes per annum) engaging private sector installers. This should
increase the capacity and accelerate the pace of the scheme, so that it makes serious inroads
on this national problem within a short number of years.
A Central Heating Scheme for local authority rented dwellings, which lacked such facilities was
introduced in July 2004. Some €42 million has been paid to date and a further €35 million has
been allocated to the scheme in 2006.
A key to tackling fuel poverty is to ensure that housing is provided with a method of heating
which will be efficient in operation and will ensure that all rooms can be adequately heated so
that they can be used by the occupants. Guidelines for Social Housing provide that all social
95
housing incorporate whole house heating properly designed and using efficient systems while
having due regard to the preferences of the likely occupants. The standards of insulation required
have been progressively improved in line with improvements with the Building Regulations. The
improved thermal performance and insulation standards will deliver reduced heating costs for the
occupants of local authority houses constructed to the higher standards and reduce greenhouse
gas emissions due to lower energy requirements. A review of the design guidelines is currently
underway and it is expected that revised guidelines will be published during 2006.
A directory of all schemes of assistance for the fuel poor, disabled and the elderly, (including
essential repairs, insulation upgrade, draught-proofing) whether implemented by central or local
Government will be compiled.
The following table summarises the policy targets and policy actions for ensuring the
Competitiveness of Energy Supply.
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3 THE WAY FORWARD
3.1 CONSULTATION AND COOPERATION
3.1.1
Energy is a pervasive and vital element of a modern economy and civil society. The
security, competitiveness and sustainability of energy supply are key determinants of
economic productivity, growth and competitiveness as well as social welfare. Policy
decisions taken today and over the next few years will have profound implications for
decades and future generations. The energy policy objectives, targets, measures and
instruments described in this Green Paper have the potential to impact diverse people
and groups, from individuals and households to businesses, sectors and industries.
The Government believes this Green Paper, followed by an informed debate on the
matters raised and a subsequent White Paper to be published by the end of 2006, will
provide clarity and certainty for the energy industry sector in terms of a national energy
strategy through to 2020.
3.1.2
The energy policy set out in this Green Paper involves a challenging and long-term
agenda for change. Consultation with the public, particularly with key stakeholders in
the energy industry, and cooperation among Government departments and agencies
are critical pre-conditions for successful implementation. The Government has already
undertaken extensive public consultation on each of the principal energy policy areas:
security of supply, competitiveness and sustainability. Recent examples of consultation
topics and channels include: electricity sector institutional arrangements and market
structure (Review of the Electricity Sector in Ireland); development of the All-Island
Energy Market (All-Island Energy Market Development Framework; design of the
Single Electricity Market (Proposed High-Level Design and subsequent documents);
energy from renewable sources (Renewable Electricity Consultation Document) and
(Renewable Electricity – A ‘2020’ Vision Consultation Document); energy efficiency
(Action Plan for Implementation of the EU Energy Performance of Buildings Directive in
Ireland Consultation Document); and energy research, development and demonstration
(Energy RD&D Consultation Paper).
3.1.3
The Government wishes to see a productive consultation process on the challenges
identified and directions proposed in this Green Paper before finalising a White
Paper. The Government remains committed to the Social Partnership principles
outlined in the National Economic and Social Council (NESC) Strategy 2006:
People, Productivity and Purpose and Towards 2016: 10-year Framework Social
Partnership Agreement, 2005-2015 and in active engagement of social partners.
3.1.4
Energy policy is interrelated with other policy areas. In addition to its pervasive
impact on the economy and society, energy influences and is influenced by a broad
range of policy areas. Key interrelated policy areas include: environment, public
and private enterprise, transport, social affairs, agriculture, finance, competition
and consumer affairs. Each of these policy areas and their respective departments
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and agencies must be taken into account when developing and implementing
energy policy.
3.1.5
The Government is taking a comprehensive and cohesive approach. While the energy
policy agenda is complex and challenging, the Government has many of the necessary
institutions in place to achieve its policy objectives. The Department will continue to
serve as lead department for energy policy development and implementation. The CER
will continue to play a significant policy implementation role as independent regulator
in the natural gas and electricity sectors. SEI will continue to provide energy-related
information and implement key policy programmes. Other departments and agencies
responsible for developing and implementing policy in the related areas described
above will also continue to play supporting roles.
3.1.6
Policy implementation must focus on tangible outcomes. The new energy policy agenda is
complex, dynamic and long-term in nature. The Government is committed to maintaining
strong accountability principles for developing and implementing specific policy proposals
and achieving the desired results. To be successful, a policy agenda of this scope and
complexity requires a comprehensive yet flexible implementation programme. In this
context, the Department will consult and cooperate with key stakeholders to develop an
appropriate programme and monitor and report progress accordingly.
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3 THE WAY FORWARD
3.2 QUESTIONS FOR CONSULTATION
As part of the process of developing energy policy directions to 2020, the Government now
invites comments from interested parties and individuals on the themes and issues raised in the
Green Paper. In addition, the following questions have been framed for specific views.
ENSURING THE SECURITY OF ENERGY SUPPLY
3.2.1
In addition to enhancing the contribution of renewable energy, what actions could be
taken to further diversify the fuel mix for electricity generation and reduce dependence
on oil and gas?
3.2.2
How can generation and transmission adequacy in the electricity sector be improved?
3.2.3
What actions should be taken to create strategic storage capacity in the gas sector?
3.2.4
What are the challenges to greater participation by new players in the development and
operation of power generation plant - and how should they be addressed?
3.2.5
How, and over what timeframe, should Ireland pursue greater electricity interconnection
with Europe?
3.2.6
What measures could be taken to encourage the exploration and production of
indigenous energy resources?
3.2.7
Given the existing level of dependence on imported fossil fuels, what needs to be done
to enhance contingency measures?
3.2.8
Does the Green Paper generally set out the right policy directions for security of energy
supply?
PROMOTING THE SUSTAINABILITY OF ENERGY SUPPLY
3.2.9
What can be done to improve the pace and range of development of renewable energy
resources for electricity generation on a sustainable basis?
3.2.10
In addition to electricity generation, what actions should be taken to develop renewable
energy usage in the transport and heat sectors?
3.2.11
What significant new initiatives could be taken to increase energy efficiency across the
101
economy and in particular in households, businesses, the public sector, the transport
sector and the built environment?
3.2.12
What additional policy measures should be introduced to significantly expand energy
RTDI and what are the priority areas of research, which need to be targeted?
3.2.13
In light of the Government’s Science, Technology and Innovation Strategy, what needs
to be done to radically expand the national energy research capacity?
3.2.14
What are the key supply and demand questions to be addressed to underpin a fully
cohesive National BioEnergy Strategy?
3.2.15
Do we need to choose between mandatory targets and better incentives for renewable
energy and energy efficiency - or is a mix of both the best way forward?
3.2.16
Does the Green Paper generally set the right policy directions for energy
sustainability?
ENHANCING THE COMPETITIVENESS OF ENERGY SUPPLY
3.2.17
In the context of liberalisation of the Irish energy market, what further actions should be
taken to develop more fully competitive electricity and gas markets and what specific
barriers need to be overcome?
3.2.18
What policy measures and targets should be introduced to reform institutional
arrangements and market structure, particularly in the electricity and gas sectors?
While a significant proportion of our energy prices are determined by international
oil and gas prices, what actions should be taken domestically to reduce the cost of
electricity and gas to consumers?
3.2.19
3.2.20
State-owned enterprises (e.g. ESB, BGE, BnM) have played a central role in the
development of the energy sector. How should the role of State- owned energy
enterprises respond to the challenges of meeting our energy needs in the future?
3.2.21
What further action should be taken to alleviate fuel poverty?
3.2.22
Does the Green Paper generally set the right policy directions for enhancing the
competitiveness of the Irish energy sector?
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COMMENTS SHOULD BE SENT NOT LATER THAN TWO MONTHS FROM PUBLICATION TO :
Energy Green Paper Submissions,
Energy Planning Division,
Department of Communications, Marine and Natural Resources,
Adelaide Road,
Dublin 2
Or (preferably) by email to: [email protected]
It should be noted that the Department proposes to publish all material submitted on the
Department’s website. Respondents should clearly identify material that is confidential and
which may not be published. The provisions of the Freedom of Information Acts 1997 to 2003
shall apply.
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ACRONYMS & ABBREVIATIONS
AER
BGE
CCGT
CER
CHP
DCMNR
DETI
DoEHLG
DSO
ESB
ESRI
ETS
GAR
IEA
LNG
Mtoe
MW
MWh
NORA
OECD
PSO
REFIT
RTDI
SEI
SEM
TSO
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Alternative Energy Requirement
Bord Gáis Éireann
Combined Cycle Gas Turbine
Commission for Energy Regulation
Combined Heat and Power
Department of Communications, Marine & Natural Resources
Department of Enterprise, Trade & Investment, Northern Ireland
Department of the Environment, Heritage and Local Government
Distribution System Operator
Electricity Supply Board
Economic and Social Research Institute
Emissions Trading Scheme
Generation Adequacy Report
International Energy Agency
Liquefied Natural Gas
Million tonnes of oil equivalent
Megawatt
Megawatt hour
National Oil Reserves Agency
Organisation for Economic Co-operation and Development
Public Service Obligation
Renewable Energy Feed In Tariff
Research, Technological Development & Innovation
Sustainable Energy Ireland
Single Electricity Market
Transmission System Operator
GLOSSARY OF TERMS
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106
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Commission for Energy Regulation. Strategic Plan, 2005-2010. 2005.
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Mitigation in the SEM: Decision Paper. 2006.
Department of Communications, Marine and Natural Resources. All-Island Energy Market: Renewable
Electricity – A ‘20-20 Vision’ . 2005.
Department of Communications, Marine and Natural Resources. Energy Research, Development and
Demonstration: Consultation Paper. 2005.
Department of Communications, Marine and Natural Resources and Department of Enterprise, Trade and
Investment. All-Island Energy Market Development Framework. 2004.
Department of Communications, Marine and Natural Resources. Green Paper on Sustainable Energy. 1999.
Department of Enterprise, Trade and Employment. Irish Electricity Markets Principal Challenges. 2005.
Department of Enterprise, Trade and Investment, N.I. Energy – a Strategic Framework for Northern Ireland. 2004.
Department of the Environment, Heritage and Local Government. National Climate Change Strategy
Ireland. 2000.
Department of Finance. Code of Practice for the Governance of State Bodies. 2001.
Department of Trade and Industry, U.K. The Energy Challenge – Energy Review Report 2006. 2006.
Economic and Social Research Institute. Medium-Term Review, 2005-2012. 2005.
Economic and Social Research Institute. Aspects of Irish Energy Policy. 2005.
EirGrid. Generation Adequacy Report, 2006-2012. 2005.
EirGrid. Transmission Forecast Statement, 2005-2011. 2005.
European Commission. A European Strategy for Sustainable, Competitive and Secure Energy. 2005.
European Commission. Doing More with Less: Green Paper on Energy Efficiency. 2005.
European Commission. Report on Progress in Creating the Internal Gas and Electricity Market. 2005.
European Commission. Energy Infrastructure and Security of Supply. 2003.
Forfas. Input to the Energy Policy Green Paper (unpublished submission). 2006
Government of Ireland. National Spatial Strategy for Ireland, 2002-2020. 2002.
Government of Ireland. National Climate Change Strategy. 2000.
International Energy Agency. Lessons from Liberalised Electricity Markets. 2005.
International Energy Agency. World Energy Outlook 2005. 2005.
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