Background Briefing

Renewable Energy in Ireland

Opportunities, Forecasts and Critical Issues

February 2010

Joe O’Doherty

2

Contents 1 Executive Summary ............................................................................................................................ 3

2 Introduction ........................................................................................................................................ 4

3 Overview ............................................................................................................................................. 6

3.1 Onshore Wind........................................................................................................................... 8

3.2 Offshore Wind ........................................................................................................................ 11

3.3 Microgeneration ..................................................................................................................... 15

3.4 Biomass................................................................................................................................... 17

3.5 Geothermal............................................................................................................................. 19

3.6 Combined Heat and Power (CHP/cogeneration) ................................................................... 21

3.7 Hydro (Incorporating Wave and Tidal) ................................................................................... 23

3.8 Solar ........................................................................................................................................ 25

4 Forecasts ........................................................................................................................................... 28

4.1 Ireland..................................................................................................................................... 28

4.2 Europe .................................................................................................................................... 30

5 Developing the Green Economy in Ireland – Report of the High Level Group on Green Enterprise,

November 2009 .......................................................................................................................................... 33

6 Report of the Irish Academy of Engineering ..................................................................................... 35

7 Eirgrid’s Roll-out ............................................................................................................................... 39

8 CER Strategic Plan and the EWIC ...................................................................................................... 42

9 Green Investment ............................................................................................................................. 45

10 Conclusion ........................................................................................................................................ 48

11 Bibliography ...................................................................................................................................... 50

3

1 Executive Summary This briefing reviews the current state of play with regard to renewable energy in Ireland. Having

committed to meeting 16% of final energy consumption from renewables by 2020, Ireland has sought to

reach this target by way of a commitment to source 40% of its electricity from renewable sources by the

same date.

Following an analysis of various available renewable technologies it emerges that Ireland’s energy mix

will require a significant investment in renewable energy sources (RES) if it is to achieve the above-

stated targets, and that wind energy (onshore, for the large part) will be the primary focus for

investment and expansion over the coming decade.

That decade will see substantial changes in demand, and will require an ongoing commitment to

investment in RES if Ireland – and indeed its European neighbours – is to achieve its stated objectives.

With this in mind, the Government formed a High Level Group on Green Enterprise, whose report in

November 2009 included a number of ambitious targets in order for Ireland to develop the

environmental goods and services (EGS) sector.

This report of the High Level Group largely ignored the findings of a controversial report from the Irish

Academy of Engineering, published in June 2009. The IAE was critical of the Government’s investment

programme – particularly large infrastructure projects – at a time of economic difficulty, and

recommended a policy of promoting energy efficiency over projects such as the East-West

Interconnector (EWIC) with the UK, Eirgrid’s Grid 25 plans, and large-scale investment in renewable

technologies. The IAE report is also at odds with the development plans of Eirgrid, which promote

renewables through a process of significant capital investment and R&D, which are backed up by the

CER’s Strategic Plan to 2014.

Finally, this briefing seeks to take a snapshot of where Ireland’s Green Economy stands today in relation

to renewables; what the prospects are for its development; and how it can best compete

internationally. The disparity with Government investment proposals from those suggested in reviews of

‘best practice’ is marked and is food for thought for policy-makers and investors alike.

4

2 Introduction The greening of the Irish economy and the development of green enterprises are essential for

sustainable economic recovery in Ireland. The Environmental Goods and Services (EGS) sector1 was

valued at approximately €2.8bn in 2008,2 and is currently estimated to be worth between €4.3bn and

€5.2bn annually and is developing rapidly.3 In view of the potential scale growth of this sector going

forward, Ireland cannot afford to ignore it.

Although there are many facets to the development of the green economy (including, inter alia, energy

efficiency, renewable technologies, regulatory reform, capital investment and planning), this report

focuses primarily on the current state of play in relation to renewable energy technology and

development in Ireland, and as such aims to present much of the recent research and reporting in this

area.

To this end, it is worth stating at the outset that ‘renewable technologies’ is assumed herein to include

the following: wind (onshore and offshore), biomass, geothermal, combined heat and power (CHP),

hydro (incorporating wave and tidal) and solar. It does not cover ‘clean’ fossil fuels, carbon capture and

storage or nuclear.4

As part of this review, the following recent reports are summarised and discussed:

‘Developing the Green Economy in Ireland – Report of the High Level Group on Green

Enterprise’, November 2009

‘Review of Ireland’s Energy Policy in the Context of the Changing Economy’, The Irish Academy

of Engineering, June 2009

‘Commission for Energy Regulation Strategic Plan – 2010-2014’, February 2010

1 The EGS Sector encompasses a wide range of activities, and definitions of the sector differ. For example, the US

Department of Commerce (http://www.commerce.gov/) defines it as those environmental technologies that

‘advance sustainable development by reducing risk, enhancing cost-effectiveness, improving process efficiency,

and creating products and processes that are environmentally beneficial or benign’. The European Commission has

adopted the OECD/Eurostat (http://www.oecd.org/) definition that ‘the environmental goods and services

industry consists of activities which produce goods and services to measure, prevent, limit, minimise or correct

environmental damage to water, air and soil, as well as problems related to waste, noise and eco-systems. This

includes cleaner technologies, products and services that reduce environmental risk and minimise pollution and

resource use.’

2 Department of Enterprise, Trade and Employment/Forfás, 2009, 7.

3 BCM Hanby Wallace, 2010.

4 In fact, there is a legislative ban on energy derived from nuclear fission anyway, following Section 18 of the

Electricity Regulation Act 1999.

5

Other issues discussed include an update of Eirgrid’s network development and the East-West

Interconnector (EWIC), energy forecasts for Ireland (SEI) and Europe (DG TREN), and emissions trading.

6

3 Overview Ireland is committed to meeting 16% of final energy demand from renewable energy sources (RES) by

2020 under its obligations towards an overall EU target of 20%.5 The Minister for Communications,

Energy and Natural Resources (and his predecessor in office) has vowed to reach this target by setting a

40% target for electricity generation from renewables before 2020. He has stated that wind energy will

form the bulk of Ireland’s commitment to reaching these targets.6

A European Commission report in January 2007 noted that of domestically-produced energy, a

commendable 17% was produced from renewable sources.7 However, this accounted for just 2% of the

overall energy mix, as oil – not domestically-produced – accounted for 56% of Ireland’s energy usage.

This serves to highlight two important truths in relation to Ireland’s current energy mix: firstly, Ireland is

over-dependent on fuel imports for energy production and secondly, a massive investment effort is

required in order for Ireland to meet its commitments by 2020.8

This change will come about to some degree through a process of technological innovation – whether in

Ireland or abroad – as well as a policy shift that encourages the development of non-fossil-fuel energy

through subsidies, grants, education and/or by legislative means.9

The Renewable Energy Feed-In Tariff (REFIT) was launched by the Minister for Communications, Marine

and Natural Resources in 2006 in order to guarantee private investments in renewable wind, biomass

5 Directive 2009/28/EC of the European Parliament and of the Council of 23 April 2009 on the promotion of the use

of energy from renewable sources (“the Renewables Directive”) is derived from an agreement of EU leaders in

2007 to source 20% of EU-wide energy needs from renewable sources by 2020. Each Member State has a different

target (calculated on the basis of current energy production from renewables, as well as GDP per capita). On this

basis, Ireland is committed to increasing the share of renewables in total energy production to 16% by 2020. A

series of ‘indicative trajectories’ targets require that from an initial base of below 4% in 2008, Ireland must be 20%

closer to its target (around 6.4% share for renewables in total energy production) on average between 2011 and

2012, rising to a 30% average (c. 7.5% share for renewables) between 2013 and 2014, 45% (c. 9.4% share of

renewables) between 2015 and 2016, and 65% (c. 11.8% share for renewables) between 2017 and 2018.

6 D/CENR, 2007, P. 5-7.

7 European Commission (DG TREN), 2007, P. 1.

8 Sustainable Energy Ireland claims that 89% of Ireland’s energy is derived from imported supplies and that Ireland

is ‘the least self-sufficient country in the industrialised world (for energy production/consumption)’

(http://www.sei.ie/Renewables/Wind_Energy/).

9 At present, the production of electricity from fossil fuels is cheaper than from any renewable source (Nuclear

energy is the cheapest source of electricity). However, other countries are leading the race to develop

commercially-viable renewable energy. In this sense, Ireland is being left behind and is becoming a ‘technology-

importer’ and, with a few exceptions, is missing the associated income and development potential that comes with

patents, copyrights and commercial sales of this technology.

7

and hydro projects for a fifteen year period. Applicants for the scheme must have planning permission

and a grid connection agreement, and investors for approved projects have their monies largely

guaranteed by the State. The extension of this scheme in September 2009 to cover biomass/anaerobic

digestion, Combined Heat and Power (CHP), ocean energy (wave and tidal) and offshore wind is subject

to European Commission approval in relation to state aid.10

In terms of both policy and technology the focus at the moment is on onshore wind farms. Other

technologies – at various stages of development – must also be considered, and each is analysed briefly

below.

10

For more information on the REFIT, see the websites of the Department of Communications, Energy and Natural

Resources (http://www.dcenr.gov.ie/Energy/Sustainable+and+Renewable+Energy+Division/) and Sustainable

Energy Ireland (http://www.sei.ie/Renewables/Renewable_Energy_Policy/Policy_Support_Mechanisms/).

8

3.1 Onshore Wind

3.1.1 Technology

The sun heats the earth unevenly, causing flows of air as nature attempts to equalise temperatures in

different regions. As an island next to a large ocean, Ireland is exposed to some of the strongest winds in

Europe, and is thus well-positioned for the development and deployment of wind energy technology

(see Figure 1).

Sustainable Energy Ireland (SEI) points out that ‘wind turbines produce no pollutants, no harmful gas

emissions, no effluent, no waste products and no radioactivity’.11 They are also far less polluting to

install and decommission, with the majority of decommissioned materials available for re-use.

Concerns exist that wind farms can negatively affect local scenery, wildlife, property values and tourism,

but each of these factors can be largely negated in the planning and development stages, and many are

ill-founded myths, according to a survey by SEI.12

Finally, it is crucial to note that wind farms can only produce electricity when it is windy (generally

considered to be speeds above 16-18kph), and will shut down for safety reasons if it is too windy (over

80kph). Optimal efficiency is at around 40kph. Thus, wind is an inconsistent source of energy and, on its

own, unsuitable for base load energy. However, wind farms can be combined with facilities that store

energy, such as batteries (which are expensive and inefficient, particularly for anything above the scale

of microgeneration – see below), pumped-storage hydroelectric stations (such as at Turlough Hill),

compressed air energy storage, hydrogen energy storage or thermal energy storage. Nevertheless, this

combination process to convert renewable wind energy into base load energy – in order to deal with

changing demand throughout the day (“load-levelling”) – increases the cost of wind energy projects

significantly.

11

SEI, 2010 – 3.

12 SEI, 2003.

9

Figure 1: European Wind Atlas - onshore wind conditions in Ireland are seemingly excellent for the deployment

of wind energy13

13

http://www.windatlas.dk/Europe/About.html

10

3.1.2 Current Contribution

The first wind farm opened in Ireland in 1992 at Bellacorrick in County Mayo. Since then, production of

energy from wind farms (both onshore and offshore) has increased steadily. Sustainable Energy Ireland

(SEI) claims that ‘it is envisaged that wind power will make the most significant contribution to the

achievement of national and international targets for green electricity, due to its environmental

benefits, technological maturity and increasing competitiveness’.14

At present, Ireland has 1,235 MW of installed onshore wind capacity, with another 25 MW derived from

the off-shore facility at Arklow Bank. The total installed electricity generating capacity in Ireland is 6,317

MW, meaning wind energy accounts for approximately 20% of Ireland’s total installed capacity.15

However, the actual energy derived from these farms is far below capacity due to the intermittency

problem discussed above.

3.1.3 Planned Projects

There are currently 1,415 MW of contracted wind farms in development that, once completed, will be

connected to the national grid. As well as this, there are 3,994 MW planned as part of the Gate 3

scheme and 11,268 MW of capacity planned outside the Gate 3 scheme. 16, 17

As a way of illustrating how dominant wind energy will be among Ireland’s future renewable energy mix,

it is worth noting that all other existing and planned renewable projects bring the total for renewable

energy capacity to 18,913 MW (or 57.2%). This means that other RES projects will account for a mere

3.3% of capacity.

14

SEI, 2010 – 2.

15 Eirgrid, 2009 – 1, P. 2.

16 ‘Gate 3’ allows for group processing of connections of renewable energy generators to the transmission and

distribution networks, usually for smaller producers. The project incorporates the Commission for Energy

Regulation (CER), Eirgrid (the transmission system operator), and ESB Networks (the distribution system operator).

Gate 3 expedites the process of connection, and was introduced as part of the overall target of achieving 40% of

electricity generation from renewable sources by 2020 (CER, 2008).

17 Eirgrid, 2009 – 2.

11

3.2 Offshore Wind

3.2.1 Technology

Although it would be imagined that producing energy from offshore wind is very similar to producing

energy from onshore wind, offshore wind technology has more in common with oil platform technology

than onshore wind farms.18 It is thus a much more expensive method of producing energy.

However, by situating wind turbines away from the coast, one can overcome many of the problems

associated with onshore wind farms that are noted above. For example, such projects are unlikely to

interfere with tourism, property prices or scenery. Even the problem of inconsistency of supply is

reduced (but not eliminated) by basing wind farms offshore, where wind is generally greater and more

constant.19 Finally, offshore wind farms can be much larger, as there is less onus on appeasing local

interests, and – as the State has the right to exploit coastal waters within Ireland’s continental shelf –

land costs could be much lower.

3.2.2 Current Contribution

Although Ireland is ideally suited to take advantage of its comparatively large area of windy coastal

waters (see Figure 2), there is currently only one offshore wind farm in operation, at Arklow Bank. That

project is situated in relatively shallow water, avoiding much of the ‘oil drilling technology’ referred to

above.

18

Irish Academy of Engineering, 2009, Appendix 5.

19 The National Offshore Wind Association of Ireland notes that ‘offshore wind delivers considerably higher load

factors, offering between 1.5 and 2 times the efficiency of onshore wind. This is due to the higher wind speeds

available at sea. Offshore wind turbines typically have a higher electricity output than onshore, with turbines of

5MW capacity now in production, and larger turbines of up to 10MW capacity in development, this compares to

an average turbine capacity of around 2MW for onshore wind’ (http://www.nowireland.ie/).

12

Figure 2: European Wind Atlas - Wind conditions off the Irish coast are particularly good for the deployment of

wind energy.20

20

http://www.windatlas.dk/Europe/About.html

13

3.2.3 Planned Projects

At present there are five companies involved in developing offshore wind energy projects in Ireland;

Airtricity, Oriel Windfarm, Codling Wind Park (Eco Wind), Saorgus and Fuinneamh Sceirde Teoranta.

As well as further development of Airtricity’s facility at Arklow Bank, Eco Wind has full consent for their

project at Codling Bank. The other companies have projects at various stages in the planning process.

According to the National Offshore Wind Association of Ireland (NOW Ireland), it is estimated that the

total capacity of these sites could provide up to 2,000 MW of energy into the national grid in a relatively

short time-frame with investment of €4bn.21

Figure 3: Location of existing and proposed offshore wind farms.22

21

NOW Ireland, 2010.

22 http://www.nowireland.ie/offshore-wind-energy-ireland.html

14

By way of comparison, it is interesting to note the UK government’s recent decision to grant rights to

energy companies willing to spend £75bn installing 6,400 offshore wind turbines at ten wind farms, and

creating as many as 20,000 jobs by 2020. This is the ‘biggest expansion of wind energy ever seen in the

world’ according to the British government.23 Moreover, as a result of this massive expansion in wind

energy deployment, the UK’s target of a 20% use of renewables in its energy mix by 2020 will be easily

exceeded.

The UK project includes plans for a 4.2 GW-capacity wind farm in the Irish Sea, 15 km from the coast of

Anglesea in North Wales. Figure 13 shows the proposed route of the East-West Interconnector (EWIC),

and its proximity to this development, and indeed, the proximity of the development to Ireland.24

Three other projects in the UK scheme have an Irish influence; the 3.5 GW project in the Forth of Firth,

25 km off the coast of Fife in Scotland, and the 9 GW development in the Dogger Bank, 125 km off the

coast of Yorkshire, are to be operated by consortia involving SSE Renewables, the recently rebranded

energy development business of Airtricity; and the 4 GW project in the Hornsea Zone, also off the coast

of Yorkshire, will be operated by Siemens Project Ventures and Mainstream Renewable Power, a

consortium involving Mainstream Renewable Power. Both SSE Renewables and Mainstream Renewable

Power are headquartered in South Dublin.25,26

23

D/ECC, 2010.

24 Although Ireland may import electricity derived from this wind farm via the EWIC, it will not be possible to use

this to offset a portion of Ireland’s 16% target under a condition of the Renewables Directive. The Directive allows

for the importation of renewable electricity, but not from another Member State.

25 SSE Renewables, 2010.

26 Mainstream Renewable Power, 2010.

15

3.3 Microgeneration

3.3.1 Technology

Microgeneration is a catch-all term for small-scale energy production attached to the low-voltage

distribution network.27 Individuals, businesses or communities can derive energy from a wind turbine,

small hydro plant, solar power, domestic-scale combined heat and power (DCHP) equipment, or some

combination of these technologies in a hybrid system.

The majority of microgeneration plants are in remote areas, or temporary structures (caravans and

mobile homes).

3.3.2 Current Contribution

At present, the process for connecting a microgeneration plant to the electricity network involves a

single-page application to ESB Networks. Indeed, the planning process for wind turbines and solar

panels receives a general exemption for projects generating up to 11kV, though there are location-

specific exceptions to this exemption.28

Although there are a number of Government-sponsored grant schemes to assist homeowners and

businesses to consume less energy, and to assist in using renewables for home-heating, there is

currently no equivalent scheme in place to encourage microgeneration for electricity production.29

In other jurisdictions, such schemes are commonplace, and again it is enlightening to look at the

situation in the UK, where in April 2006 the Department of Trade and Industry (DTI) launched the Low

Carbon Buildings Programme to provide grants for microgeneration schemes.30 In that year’s budget, it

27

Microgeneration is classified by ESB Networks as grid connected electricity generation up to a maximum rating

of 11kW when connected to the three phase grid (400V). The vast majority of domestic and agricultural customers

are connected at single phase (230V) and for these customers to be classified as microgenerators the maximum

rating permitted is 5.75kW. These ratings are in line with Irish conditions prescribed in European standard

EN50438 (from http://www.sei.ie/Renewables/Microgeneration/).

28 SEI, 2010 – 1.

29 The “Greener Homes Scheme” provides assistance to homeowners who intend to purchase a new renewable

energy heating system for existing homes. The “Warmer Homes Scheme” aims to improve the energy efficiency

and comfort conditions of homes occupied by low-income households. The “Home Energy Saving Scheme”

provides grants to homeowners who are interested in improving the energy efficiency of their home in order to

reduce energy use and costs as well as greenhouse gas emissions. “The Renewable Heat (ReHeat) Deployment

Programme” provides assistance for the deployment of renewable heating systems in industrial, commercial,

public and community premises. All of these schemes are administered by SEI. SEI provides information on the

Greener Homes Scheme, the Home Energy Saving Scheme, the Warmer Homes Scheme and the Low Carbon

Homes Programme (see http://www.sei.ie/Grants/).

30 See http://www.lowcarbonbuildings.org.uk/.

16

was declared that income derived from selling surplus electricity to the national grid from

microgeneration plants was not liable for UK income tax.31

3.3.3 Planned Projects

ESB Networks plans to make it easier for generation units of up to 50kW to connect to the network, as

at the moment these projects face the same stringent tests as much larger power plants.

Further, a field trial of around fifty microgeneration plants was announced by the Minister for

Communications, Energy and Natural Resources in February 2009 ‘in order to provide field data on the

performance of generators and factors affecting performance and reliability’.32 This is with a view to

having a similar scheme to that in existence in the UK once the pilot phase is complete.

31

See http://www.hmrc.gov.uk/budget2006/index.htm.

32 SEI, 2010 – 4.

17

3.4 Biomass

3.4.1 Technology

Biomass energy production covers a wide array of technologies, but two broad categories are

distinguishable from the literature on biomass energy conversion.

Firstly, organic material such as short-rotation forestry, organic waste, agricultural residue, manures or

purpose-grown crops (such as rape seed or sugar cane for producing bioethanol and biodiesel) can be

combusted in the same manner as fossil fuels in order to produce energy. The emissions from this

process are offset to a large degree by the CO2 absorbed by the fuel when it is being grown.

Bioethanol (produced by fermenting sugary and starchy crops) can be used as a partial substitute (up to

5%) in regular petrol combustion engines for transport vehicles.33 Similarly, Biodiesel (produced

primarily from rape seed oil) can be used as a partial substitute for diesel in the extant vehicle/home

heating stock. The European Biofuels Directive entered into force in May 2003 and set targets for

biofuels, including 5.75% biofuels penetration by 2010.34 These targets were repeated in the ‘Bioenergy

Action Plan for Ireland in 2007,’35 and were assisted when grants were provided in the 2007 budget for

growing willow and miscanthus, both of which are short-rotation forestry crops. However, the Directive

was shelved in 2008 over concerns that the production of biofuels had unintended social and

environmental side-effects.36 As such, liquid biofuels are currently only a potential replacement for

distilled fossil fuels such as petrol and diesel, until such time as technical and agricultural developments

permit yield to be improved. Despite this, the passage of the Energy (Biofuels Obligation and

Miscellaneous Provisions) Bill 2010 through the Oireachtas is ongoing, the provisions of which would

oblige petroleum companies to use 4.116% biofuel in their products, and to register each litre of biofuel

sold with the National Oil Reserves Agency.37 It also allows for this percentage to be increased in order

for Ireland to achieve its obligations under the Renewables Directive.

33

All Maxol garages in Ireland now stock “E5” petrol at the same price as regular unleaded petrol that contains 5%

domestically-produced bioethanol (See http://www.maxol.ie/general-content/e5-questions-answers.html).

34 The Directive on the Promotion of the Use of Biofuels and Other Renewable Fuels for Transport (Dir.

2003/30/EC).

35 D/CMNR, 2007.

36 Environment Commissioner Dimas echoed the concerns voiced by the House of Commons that the cultivation of

biofuel crops was causing farmers in developing nations to replace food crops with fuel crops, causing increased

food prices, and was causing deforestation in order to clear land for crop growing

(http://news.bbc.co.uk/2/hi/europe/7186380.stm).

37 http://www.oireachtas.ie/viewdoc.asp?DocID=13968&&CatID=59

18

Secondly, gases emitted by organic or waste material as it decomposes can be utilised in a similar

manner to ‘natural’ gas for energy production. This gas can be produced anaerobically (in sealed

chambers where oxygen is not allowed to interfere with the production of other gases) or aerobically

(where oxygen – itself a combustible gas – is part of the process as the biomass is open to the air). The

by-products of these processes are often usable as compost for agriculture, or as a coal substitute for

cement production.

3.4.2 Current Contribution

Biogas is currently only contributing in the form of microgeneration plants in Ireland. Greenstar, a waste

treatment company, has two sites producing energy (c. 750KW) from aerobic digestion gases.38 One of

these, at Knockharley landfill in Meath, changed from flaring off excess gas to converting this gas to

energy in January 2010.

Despite the roll-back on its increased production, Ireland currently produces over 150 million litres of

liquid biofuels for heating and transport, equivalent to 2% of transport fuels.

3.4.3 Planned Projects

The Greenstar site in Meath is located very close to a Panda waste facility that will produce both gas and

solid fuel from ‘black bin’ (i.e. unrecyclable contaminated) waste in order to produce electricity (1.3

MW). Energy derived from this facility will be as a result of anaerobic digestion, as described above. As

far back as January 2005 the Environmental Protection Agency (EPA) had earmarked anaerobic digestion

as ‘a viable policy option to address national commitments in the areas of global warming (and)

renewable energy’.39

Only a short distance away again in Duleek, a waste-to-energy facility (incinerator) is being constructed

by Indaver Ireland which will eventually convert municipal waste and organic matter into 21 MW of

energy for the national grid. According to Eirgrid, this facility is due to be completed in November

2010.40

38

Greenstar, 2009, P. 2.

39 EPA Strategic Policy Unit, 2005, P. 17.

40 Eirgrid, 2009 – 3.

19

3.5 Geothermal

3.5.1 Technology

Primarily, the Earth is heated by the sun, and in hot seasons the Earth’s crust absorbs some of this heat

which it emits during colder months. In addition, and since the formation of this planet, the Earth’s core

has been emitting heat – the core of the Earth is estimated at approximately 4,200°C. As such, two

forms of ‘geothermal’ heat energy exist that can be exploited to produce energy that is sustainable, if

not theoretically renewable.41

Firstly, ‘deep’ geothermal energy derives heat by drilling very deep into the Earth’s surface in order to

tap into some of the heat emanating from the Earth’s core. Traditionally, this was only possible along

the fault lines between tectonic plates (where heat penetrates closer to the surface) but recent

developments in plant and drilling have led to tests further away from fault lines. One such test in

Switzerland was halted after only a few days when it was found to have triggered earthquakes and this

technology is a long way from being a viable option in Ireland’s energy mix.42

Secondly, ‘shallow’ geothermal energy derives energy from heat stored in the ground close to the

surface of the Earth. This heat can be extracted from the ground using geothermal heat pumps, and is

sufficient to heat a household. However, the higher temperatures required for large-scale industrial

geothermal energy exploitation can only be derived from much deeper excavation/drilling.

It should be noted that, as well as heat, deep geothermal wells release greenhouse gases trapped deep

within the earth, but these emissions are much lower per energy unit than those of fossil fuels. Deep

geothermal energy is thus not a ‘zero-emission’ sustainable energy source, but is far less damaging than

the combustion of fossil fuels.

3.5.2 Current Contribution

Globally, nearly 60GWh of geothermal energy is converted to power for human use each year, but this is

exclusively in countries that are close to the fault lines in tectonic plates.43

41

The Earth’s core emits energy in the form of heat at a rate of 44.2TW, and is replenished at a rate of 30TW due

to radioactive decay of minerals. The net outflow of energy is far greater than the entire energy consumption of

mankind, but it is only possible to tap into a small proportion of this. Thus, the Earth is very slowly cooling, and so

geothermal energy is not strictly ‘renewable’. However, given the extremely long time frame in question, it is

reasonable to call this ‘sustainable’ energy (See Pollack H et al, 1993).

42 http://www.swissinfo.ch/eng/index/Geothermal_project_shakes_Basel_again.html?cid=46284

43 Lund, 2007, P. 4.

20

In Ireland 154 MW of energy for the purpose of home-heating is derived from single-unit pumps in

approximately 2,000 homes throughout the country, and a further 100 MW is derived from slightly

deeper projects for the purpose of heating whole colleges and office blocks.44

Much of this uptake has been on the back of the Government-sponsored ‘Greener Homes Scheme’

initiative, which provided grants for the installation of such technology.

3.5.3 Planned Projects

Deep excavation is probably more than a decade away at least for Ireland, but a pilot bore hole in

Newcastle, Co. Dublin has gone to a depth of 1.4km to find water of 42°C, with plans to drill deeper in

the future.45

In 2004, CSA Group completed a study commissioned by SEI which aimed at identifying the potential

resources of geothermal energy in Ireland. One of the outcomes of the project was to create a series of

geothermal maps, which are available from the SEI website.46

Further, the “GTR-H Project” on the regulation of geothermal energy on a Europe-wide scale has been

established in order to ‘review and establish the regulatory barriers and deficiencies of four,

unregulated EU target countries through a process of discussion and consultation with key target actors

and stakeholders at a national level’.47, 48 Along with representative organizations from Poland, Hungary

and the UK, the Geothermal Association of Ireland is an active member of the GTR-H project, and its

discoveries are understood to be considered at a cabinet level in this country, where a legislative

framework for the regulation of geothermal energy has become a matter of high priority.

44

In interview with Gareth Jones, Secretary of The Geothermal Association of Ireland, 27 January 2009.

45 Ibid.

46 It is not possible to download these maps, but it is possible to view them at

http://maps.sei.ie/SeiGis/geothermal.shtml.

47 GTR-H is an abbreviation of ‘GeoThermal Regulation – Heat.

48 http://www.gtrh.eu/

21

3.6 Combined Heat and Power (CHP/cogeneration)

3.6.1 Technology

Many forms of energy production produce heat as a by-product that is allowed to dissipate into the

atmosphere via cooling towers or chimneys. CHP generation plants recycle this heat to be used in

another generation process or to heat neighbouring buildings or communities. For example, a power

plant in New York uses excess steam to heat much of Manhattan.49

Whether CHP is a “renewable” form of energy production really depends on the fuel used in the initial

generating process, but it is certainly a more efficient use of the gross energy generated than allowing

the heat by-product to dissipate. Using biofuels, for example, would allow a CHP plant to generate both

heat and power more efficiently than mere combustion of these fuels.

The use of some of the electricity or heat produced to operate a cooling system is often referred to as

“trigeneration”.

The efficiency benefits of CHP are shown in Figure 4.

Figure 4: "Sankey" diagram showing the efficiency improvement of applying CHP technology. The same output

(30 units of electricity and 50 units of heat) can be achieved using less input (100 v. 133 units) because losses are

minimized in the CHP process (20 v. 41 units).50

49

http://www.coned.com/

50 SEI, 2010 – 7

22

3.6.2 Current Contribution

The majority of CHP generation in Ireland is at a large-industry level such that it serves a large office

block, college or shopping centre.

Only a few of these plants are of a scale to provide electricity to the national grid, and only one of those

is of a scale that it is connected to the transmission network.51 As well as the 130 MW capacity of this

facility, fourteen plants on the distribution network have the capacity to supply a total of 51.3 MW.

3.6.3 Planned Projects

A total of fourteen CHP generation plants are either contracted to be connected to the national grid, or

have permission to do so. Once completed, the combined contribution of twenty-nine CHP generation

units to Ireland’s energy capacity will be 327 MW, which is less than 1% of projected capacity.52

51

This plant is at Aughinish Island, Askeaton, Co. Limerick and is run by UC Rusal, the world’s largest producer of

Aluminium and Alumina, in order to run a smelter. The plant has the capacity to produce 130MW of energy

(http://www.rusal.ru/en/aughinish_factory.aspx).

52 Eirgrid, 2009 – 2.

23

3.7 Hydro (Incorporating Wave and Tidal)

3.7.1 Technology

Broadly, there are three distinguishable types of hydro-power (though sub-categories and

developmental technologies also exist).

Firstly, hydroelectric power usually refers to energy derived from dams that create reservoirs, from

which the flow of water is used to power electric generators. Approximately one-fifth of the world’s

power is derived in this manner.53 Hydro-electric power is often used as a method of meeting ‘peak’

demand, and is often considered to be a poor method of producing baseload energy, as dry or icy

seasons can cause shortages. However, hydroelectric technologies are often used as a method of energy

storage, such as at the facility at Turlough Hill.

Secondly, tidal flows can be harnessed to generate electricity. Energy can be derived from the horizontal

flow of tides as seawater moves in and out of an estuary, but alternatively the vertical vector of tidal

movement can be harnessed in what is referred to as ‘tidal stream power’, the first working example of

which is at Strangford Lough in County Down (See Figure 5).

Thirdly, the power of waves can be used to generate electricity via a variety of developmental

technologies, but none of these has reached large scale implementation yet.

3.7.2 Current Contribution

Facilities at Ardnacrusha, Carrigadrohid, Cathleen’s Fall, Erne Cliff, Inniscarra and Pollaphuca currently

have capacity to produce 237 MW of hydroelectric power, or around 6% of Ireland’s electricity

generating capacity.54 Further, the facility at Turlough Hill is capable of producing 73 MW of pumped-

storage hydro, though this facility uses more energy than it produces and as a consequence is used to

meet peaks of demand.55

3.7.3 Planned Projects

According to Eirgrid a total of twelve projects that will deliver 1.1 MW of hydroelectric power and 415

MW of pumped-storage hydro to the national grid are in various stages of development.56

53

From the database of the US Energy Information Administration

(http://www.eia.doe.gov/emeu/international/electricitygeneration.html).

54 Teagasc, 2006, P. 1.

55 Eirgrid, 2009 – 4.

56 Eirgrid, 2009 – 2.

24

Further, the establishment in 2006 of the

National Strategy for Ocean Energy as a

joint venture of SEI and the Marine

Institute has led to the government

announcing an Ocean Energy Strategy, the

Ocean Energy Development Unit and its

associated Prototype Development Fund

of €26m. This has the specified targets of

nurturing and developing tidal and wave

energy projects to a commercial stage,

such that 75 MW of energy will be derived

from these sources by 2012, and 500 MW

by 2020.

In December 2008, Luirc Energy Ltd.

successfully completed the application

process for a tidal project in Moyarta, Co.

Clare. This 36 MW project is outside the

Gate 3 connection system, and – once

developed – will be connected to the distribution network, though a connection date is not yet

available.57

On 5 February 2010 Ocean Energy, a wave energy R&D company based in Cork, announced a large

development deal with Dresser-Rand, a US energy company seeking first mover advantage in the

commercialisation of wave energy.

57

Eirgrid, 2010, P. 36.

Figure 5: The world's first commercial tidal stream generator,

"Sea Gen", in Strangford Lough

25

3.8 Solar

3.8.1 Technology

It is easy to forget that photosynthesis – the process that ultimately underlies all plant growth on Earth –

is a form of solar power. Further, since the days of the Roman Empire, mankind has used greenhouses

and magnifying glasses to harness the energy of the sun in order to provide heat.

However, it is only since the 1970s that development of large-scale projects to harness the sun’s energy

for conversion to electricity has gathered pace, with the twin incentives of higher fossil fuel prices and

constantly-improving technology.

SEI notes three forms of solar power technology:58

1. “Passive Solar”: Architectural methods that seek to maximise the light and heat provided by the

sun, while at the same time insulating against energy loss.

2. “Active Solar Heating”: The use of solar collectors to heat water for domestic use. In Ireland,

active solar heating can provide 50-60% of a household’s hot water needs.59

3. Photovoltaic Systems: Photovoltaic systems use daylight (not necessarily direct sunlight) to

convert solar radiation to electric current. Such systems are common in watches and calculators,

but on a much larger scale – and in the right location – can produce renewable energy to feed

into national/regional grids. Similar to wind power however, solar power can only be produced

during hours of daylight, and is thus unsuitable for providing baseload energy, unless it is

combined with a method of energy storage such as a pumped-storage hydroelectric plant. A

research body in Germany has successfully piloted a system that combines photovoltaics with

wind, biogas and hydrostorage to produce reliable baseload electricity entirely from renewable

sources.60 Photovoltaic solar power is a comparatively expensive form of energy production

however, with energy derived from wind power costing as little as one-sixth as much.61

58

SEI, 2010 – 5.

59 SEI, 2010 – 6.

60 http://www.solarserver.de/solarmagazin/anlagejanuar2008_e.html.

61 The Economist, 2010.

26

3.8.2 Current Contribution

Ireland is poorly situated geographically for large-scale energy production from solar power.

Unsurprisingly, given what is evidenced in Figure 6, Southern Spain and Portugal are the sites for much

of Europe’s solar photovoltaic energy development and production.62

However, it is possible to harness solar power in Ireland, most commonly for water-heating using roof-

mounted ‘solar panels’. SEI estimates that ‘in 2005, over 3,000 households used a solar heating system

in Ireland’.

62

It is interesting to note that large Government grants for the production and use of solar panels in some

countries, particularly Germany, have concentrated much of the world’s photovoltaic technology in areas where it

is inefficiently employed (The Economist, 2009).

27

Figure 6: Solar irradiation map of Europe showing photovoltaic Potential for producing electricity.63

3.8.3 Planned Projects

With little evidence of an economic rationale for large-scale energy production from solar in even the

warmest countries in Europe (despite massive subsidies it is still a very expensive form of energy

production), it is unsurprising that Ireland has no plans to develop the technology for large-scale

deployment here.

However, the ‘Greener Homes Scheme’ provides grants for owners of existing homes who wish to

retrofit a variety of technologies, including heat pumps and solar panels. Over half of the 26,500

applications to date are for grant assistance for solar panels.64

63

EC JRC, 2006

28

4 Forecasts

4.1 Ireland

Perhaps the most accurate, and certainly the most recent, forecast of future energy provision and

requirements is SEI’s “Energy Forecasts for Ireland to 2020”.65 SEI has undertaken a forward-looking

modelling exercise that projects renewable energy, greenhouse gas emissions and other energy sector

outcomes in 2020 using the ESRI’s HERMES economic modelling tool.66

SEI uses two distinct scenarios in its analysis (“White Paper Plus” and “Exploratory”), comparing them to

a baseline scenario, and each represents a different path towards Ireland meeting its energy-mix and

carbon abatement obligations by 2020.67

Under the “White Paper Plus” scenario, Ireland would narrowly miss its EU obligation to have 16% of

final energy consumption derived from renewable sources by 2020 (the figure would be 15.4%) by

achieving figures for renewable penetration of 40%, 12% and 10% in electricity generation, heating and

transport, respectively. Under this scenario, Ireland would also become a net exporter of electricity. The

report notes, however, that should some of the increased wind capacity planned as part of Gate 3 be

implemented on top of those recommendations in the White Paper, Ireland could easily meet its EU

obligation.

Figure 7 demonstrates the fuel mix in electricity production in Ireland for every year from 1990 to 2008,

as well as the projected fuel mix under the three scenarios as far as 2020.

64

http://www.sei.ie/Grants/GreenerHomes/Scheme_Statistics/.

65 Walker et al, 2009.

66 For more information on the HERMES model see Bradley et al, 1989.

67 The “Baseline” scenario is akin to a ‘business-as-usual’ scenario, against which alternative policy scenarios can be

compared. The “White Paper Plus” scenario assumes the achievement of renewable energy targets and power

generation fuel diversity targets in the Government’s 2007 “Energy White Paper”, as well as subsequent

Government targets for renewable electricity and the share of electric cars by 2020. The “Exploratory” scenario

makes all of the same assumptions as the “White Paper Plus” scenario, but assumes that all of the wind-energy

generation plant in the Gate 3 process is accepted (which would give wind a 52% share in electricity production in

2020).

29

Figure 7: Electricity Generation by fuel 1990-2020 in the SEI modelling framework under 3 scenarios: Baseline

(top), White Paper Plus (middle) and Exploratory (bottom). Note these graphs use the unit TWh (terawatt-hour).

When measured a whole year 1 TWh = 0.114 GW.68

68

Walker et al; 2009; 26, P. 46 & 48.

30

Under the “exploratory” scenario all of the wind-derived energy in the Gate 3 process is completed.

Ireland would exceed its 40% target of renewables in electricity generation and would in fact derive 52%

of electricity from renewable sources and 17.5% of final energy demand.

The two scenarios represent the poles of a range of options that can be met based on the degree to

which the Gate 3 process is implemented.

It is interesting, given the critique of the EWIC plans from the Irish Academy of Engineering to note that

increased interconnector capacity could go hand in hand with increased wind deployment, assuming

that Ireland would import energy from the UK/Europe when wind generation is low (i.e. when it is not

windy).69 Against this background, the Irish Academy of Engineering recommends the cessation of all

energy infrastructure projects (especially the EWIC) pending a robust techno-economic analysis.70

However, one should treat this modelling exercise with caution. The modelled scenarios are predicated

on a policy-determined future electricity plant mix and interconnector capacity. Therefore, failure to

meet these policy targets would make it very difficult for Ireland to meet its renewable energy

commitments by 2020.71

4.2 Europe

The European Commission’s Directorate General with responsibility for energy and transport (DG TREN)

has produced two documents that provide energy forecasts on a similar timescale to those considered

for the Irish forecasts above. Firstly, ‘European Energy and Transport; Trends to 2030’ (“The 2007

Report”) was published in 2007 following similar reports in 2003 and 2005. However, it does not appear

to have been updated since.72 Secondly, DG TREN’s Market Observatory for Energy published a report in

2008 titled ‘Europe’s Energy Position; Present and Future’ (“The 2008 Report”).73

The 2007 Report bases its assumptions and predictions on the PRIMES economic modelling system, of

which the ESRI’s HERMES model (as used for the SEI report, above) is a part, and looks only at the

‘baseline’ (“business-as-usual”) scenario. Under such assumptions there are no policy changes or great

technological advances other than those already in train. Under these circumstances, the energy

intensity of economic growth will decrease (i.e. a de-coupling of economic growth from energy demand)

and the ‘primary energy consumption increase of some 200 Mtoe (mega-tonnes of oil equivalent)

69

Walker et al, 2009, P. 52.

70 This is discussed in further detail below.

71 Op. Cit.

72 DG TREN, 2007.

73 DG TREN, 2008.

31

between 2005 and 2030 will be met by renewable and natural gas’.74 Figure 8 and Figure 9 demonstrate

this.

Figure 8: Gross electricity generation at an EU level by source, changes to 2030.75

Figure 9: Renewables share in electricity generation (gross) at an EU level, changes to 2030.76

74

Ibid, P. 12.

75 DG TREN, 2007, P. 14.

76 Op. Cit., P. 15.

32

The 2008 Report again uses the PRIMES model for its projections, but compares the baseline scenario to

a scenario (“New Energy Policy”) wherein the EU and its Member States take action ‘to achieve agreed

EU targets on climate change mitigation, namely a reduction of 20% in GHG emissions compared to

1990, along with a 20% share of renewable in the final energy demand in 2020, and to bring about a

substantial improvement in energy efficiency’ – the so-called 20-20-20 targets.77 This is further divided

into scenarios assuming a low and high oil price. The comparison with the baseline scenario described

above is perhaps best illustrated in Figure 10 and Figure 11.

Figure 10: Fuel mix in energy production in 2005 and 2020 with a high and low oil price.78

Figure 11: Consumption of renewables.79

77

DG TREN, 2008, P. 11

78 Ibid.

79 Ibid.

33

5 Developing the Green Economy in Ireland – Report of the

High Level Group on Green Enterprise, November 2009 In its framework for sustainable economic renewal (‘Building Ireland’s Smart Economy’) the Government

committed to establishing a High-Level Action Group on Green Enterprise.80 In May 2009 the Group was

formed by the Tánaiste and mandated with developing an action plan to foster the growth of the green

economy in Ireland.

The terms of reference emanated from previous Forfás and InterTradeIreland research assessing

enterprise opportunities in the environmental goods and services sector, and included the obligation to

identify areas where Ireland could succeed in the green economy, with a focus on job creation.81 As

such, the report ‘attempts to represent a balanced and consolidated overview of actions required to

promote the growth of the green economy in Ireland’.82

The key recommendations of the Group are:

1. Promote key sectors that can drive exports and job creation. These are:

Renewable energy (particularly wind and wave energy)

Efficient energy use and management, including eco-construction

Waste management, recovery and recycling

Water and wastewater treatment

2. Deliver ‘green zones’ and a green IFSC, to take advantage of economies of scale and scope that

can be delivered from grouping cleantech organisations geographically close to each other.

3. Create world class research centres

4. Remove basic hurdles to the development of the green economy

Planning barriers

Access to finance

Ireland’s ‘brand’

80

Department of the Taoiseach, 2008.

81 Forfás and InterTradeIreland, 2008.

82 High Level Group on Green Enterprise, 2009, P. 5.

34

5. Appoint a Minister / Minister of State with to oversee the green economy, and establish a

Cabinet Committee to ensure inter-departmental coordination of these goals

The Group estimates that the green economy currently employs 6,500 people and was ‘conservatively

valued’ at €2.8bn in 2008, but has the potential to be a major source of employment in Ireland.

Their report cites research and ambitious development plans in the USA, Denmark, Germany, Korea and

Japan, and notes that ‘internationally, approximately $416 billion (about 16% of the total committed

stimulus plans to combat the current global recession) can be characterised as a green stimulus.’83 In

addition, private sector investment in the EGS sector is such that ‘clean technology was ranked the

fourth largest venture capital investment category in North America in quarter one 2008.’84 Combined,

the Group argues that there is thus significant potential for growth in this area for Irish exporters,

regardless of any domestic investment programme.

Further, citing reports from the RES industry,85 the construction industry,86 a European think-tank87 and

the waste industry,88 the report estimates that the EGS sector could employ up to 80,000 people

directly, and that ‘jobs in the green economy will also support indirect employment in other sectors of

the economy.’89

83

Ibid, P. 17.

84 Ibid.

85 Biopower Group plc, 2009.

86 DKM, 2009.

87 Curtin, J, 2009.

88 InterTradeIreland, 2009.

89 Op. Cit., P. 18.

35

6 Report of the Irish Academy of Engineering

6.1 Introduction

In June 2009 the Irish Academy of Engineering (IAE) published a report entitled ‘Review of Ireland’s

Energy Policy in the Context of the Changing Economy’.90 Many of the views expressed therein are in

stark contrast to much of the analysis that prevails in relation to energy policy in Ireland.

6.2 Criticisms and Recommendations

6.2.1 Value for Money

Taking cognisance of the changed economic circumstances in which any future policies will be made or

implemented, the IAE report recommends, for example, that all current capital expenditure should be

halted, ‘pending a robust techno-economic analysis’ that would incorporate changed patterns of energy

demand, the requirement for greater energy security, and current pricing trends.

The REFIT scheme (and presumably the subsequent REFIT II extension) to support renewable energy

production through Government subsidies is supported only insofar as it is required to meet Ireland’s EU

obligations; at the moment these obligations amount to a commitment to have 16% of final energy

consumption being provided from renewable sources by 2020. Even within this commitment, the report

recommends that capital investment should be focussed on those projects that provide the greatest

value for money, preferably using a system similar to the American ‘Rate Impact Analyses’.91

6.2.2 Energy Efficiency

The report confirms that ‘as a general principle, investment in reducing energy usage (which can be

expressed as improved energy efficiency or energy conservation) shows a better return than investment

in new energy supply.’ In this one statement, the report casts doubt over the necessity for investment in

renewable energy sources of electricity (RES-E) when an alternative exists to act in a more energy-

efficient manner. This is borne out in The Government’s National Energy Efficiency Action Plan where it

was neatly summed up by the phrase “energy efficiency first”,92 and confirmed in a report for the SEI in

July 2009 titled ‘Ireland’s Low Carbon Opportunity’ (See Figure 12).93 To this end, the Action Plan seeks

90

Op. Cit.

91 Rate Impact Analyses are often carried out prior to many capital investments in order to determine how this

investment will affect tariffs for consumers.

92 D/CENR, 2009.

93 Motherway and Walker, 2009.

36

to improve overall national energy efficiency by 20% by 2020 (based on 1997 efficiency levels).94 Such

goals are supported by the IAE report, which recommends a diversion of capital from energy

production/distribution projects towards conservation/efficiency programmes. One method of

improving efficiency is smart metering,95 but the IAE report recommends postponing any major

commitment to smart metering investment pending the result of national and international pilot

schemes.96 Such a scheme is currently being implemented by the Commission for Energy Regulation

(CER) and Sustainable Energy Ireland (SEI) in 6,500 homes nationwide (see below).97

94

Energy efficiency in a given industry is a ratio of energy usage by that industry to gross output in the industry in

question.

95 Smart metering involves the replacement of mechanical meters for measuring electricity consumption with

sophisticated meters offering a range of benefits to both consumers and utility suppliers, by providing real-time

information on customer’s energy consumption and cost.

96 Op. Cit., Section 1.3.5.

97 CER, 2010 – 1.

37

Figure 12: Ireland's CO2 abatement cost curve (assuming crude oil consistent at $60 per barrel, and assuming a

robust market in emissions trading). Those options below the €0 axis (on the left) are the most cost-effective

methods of reducing emissions.98

6.2.3 The Nuclear Option

As it has argued previously,99 the IAE is supportive of overturning the legislative ban on nuclear power

generation in this jurisdiction, supporting what it terms “technology neutrality”. The report avoided

98

Motherway and Walker, 2009, P. 11.

99 IAE, 2006.

38

pointing out what the Minister for Communications Marine and Natural Resources said in 2006 that “as

far as the existing interconnector goes, we are already using nuclear power generated in Britain”.100

6.2.4 Buying Our Way out of Trouble

Although the report states that ‘purchase of emission quotas is a valid low risk policy option’, it provides

the caveat that domestic efforts to reduce carbon, or produce carbon sinks (sequestration) can be

almost revenue-neutral when one considers that it could create employment and other externalities.

6.2.5 Network Development Plans

The report is keen to point out the inefficiencies inherent in Eirgrid’s current network, as well as those in

the network operator’s plans for infrastructural development (below). What the IAE terms ‘optimum

transmission locations’ are places that should be prioritised for infrastructural development so as to

reduce the requirement to expand the network unduly. From this standpoint, it points out the flaws in

Eirgrid’s infrastructural plans. Included in this critique of Eirgrid is a crude analysis of the interconnector

plans to connect the Irish distribution network directly with that of mainland Britain (EWIC). By

comparing this project with a similar connection between Britain and the Netherlands, the report asks

‘whether the EWIC has been optimised for size’, and criticises the assumption that the EWIC would be

used at 100% capacity all of the time, which is unlikely to be the case.

It should be noted that Eirgrid is assisting with the implementation of a joint project involving SEI and

the CER to group small generation sites before connecting them collectively to the

distribution/transmission network, under the title Gate 3.101

100

The Sunday Business Post / Ed Walsh, 2007.

101 For more information on the Gate 3 project see http://www.eirgrid.com/customers/gate3/.

39

7 Eirgrid’s Roll-out

7.1 Introduction

Under Section 38 of the Electricity Regulation Act 1999, Eirgrid is required to publish a periodic

statement of the company’s forecasts for changes in its transmission network. The most recent of these

was published in December 2009 covering the period 2010 to 2016.102 It provides an insight into the

intended roll-out of Eirgrid’s infrastructural plans following the Grid 25 report, published in October

2009.103

7.2 Grid 25 and discord with IAE report

Grid 25 is a substantial statement of Eirgrid’s strategy for the development of the national grid in the

medium to long term (i.e. through to 2025), though many of its assumptions and recommendations are

in direct opposition to those contained in the report of the Irish Academy of Engineering (above). For

example, Grid 25 predicts that electricity demand will grow steadily in this period, reaching 8GW by

2025 (current demand is for just over 5GW). In contrast, the IAE report foresees a much slower rate of

demand growth, just over half that of Eirgrid’s predictions.104

In other areas too, the two reports disagree; whereas Eirgrid sees the EWIC as essential to Ireland’s

energy future, the IAE feel it should be stalled pending a ‘techno-economic’ analysis; whereas Eirgrid is

committed to its development plans on the assumption that they can ‘ensure that these developments

are completed on time and in a cost-effective way’, the IAE notes that ‘the risk-return calculations for

such projects are currently little better than a lottery’ because ‘it is difficult to have any confidence in

the ability of Ireland’s planning, regulatory and legal framework to facilitate the delivery of new major

energy projects on time or on budget’.105

However, it must be noted that on this last point Grid 25 states that ‘we will need to find quicker ways

of progressing through the various phases of planning and construction to deliver a system capable of

accepting large amounts of new renewable and conventional generation’, and thus effectively agrees

with the IAE report.106

Although Ireland is committed to meeting 16% of energy demand from renewable sources by 2020, Grid

25 bases its plans and assumptions on two scenarios:

102

Eirgrid, 2009 – 5; this is not yet the final version of this report.

103 Eirgrid, 2008.

104 Op. Cit., Section 2.1.

105 Op. Cit., Section 1.2.5.

106 Op. Cit., P. 7.

40

1. Meeting 33% of electricity demand from renewable sources by 2020, and

2. Meeting 40% of electricity demand from renewable sources by 2020.

Although the Government has committed to the 33% target, there is no legal requirement to do so, and

this level of overreach is heavily criticised in the IAE report, which notes the economic repercussions of

such unnecessary over-reach could be considerable.107

7.3 Renewables in the Grid 25 plan

The commitment to renewables noted above is supported by Grid 25 and is thus contained in

network/generation development plans. By way of illustration, Table 1 shows existing and committed

wind capacity totals in MW.

Table 1: Existing and Committed Wind Capacity Totals, MW.108

Connection 2009 2010 2011 2012 2013 2014 2015 2016

Transmission 792 1030 1030 1030 1112 1158 1158 1158

Distribution 753 973 1067 1092 1092 1288 1288 1355

Total 1545 2003 2096 2121 2203 2446 2446 2513

The majority of future investment in renewables will be in wind energy, and Eirgrid has based this

forecast on the Government’s White Paper ‘Delivering a Sustainable Energy Future for Ireland’.109 The

following ambitious targets in relation to RES-E generation, upon which Eirgrid’s roll-out is largely based,

are as follows:

To achieve 15% of electricity consumption on a national basis from renewable energy sources by

2010 and 33% by 2020;

To achieve at least 400 MW from Combined Heat and Power (CHP) by 2010 and will aim to

achieve at least 800 MW by 2020;

To set an initial ambition of at least 500 MW of installed ocean energy capacity by 2020;

107

Op. Cit., Section 1.4.1.

108 Eirgrid, 2009 – 5, Section 4-4.

109 D/CENR, 2007.

41

To support further long term development of offshore wind projects through a review of cost

benefits, further R&D and developing solutions for effective integration of offshore wind energy

into the grid;

To pursue the potential for solar energy in Ireland in photovoltaic and solar thermal research,

technology and manufacture;

To achieve a minimum target of 5% market penetration of renewables in the heat market by

2010;

To achieve a target of 12% renewable heat market penetration by 2020;

To achieve the EU target of 5.75% biofuels market penetration by 2010;

To achieve a biofuels penetration target of at least 10% for 2020; and

To support further research of second generation biofuels.110

110

Ibid, P. 36-37.

42

8 CER Strategic Plan and the EWIC The Commission for Energy Regulation (CER) was originally established in 1999 as the regulator for

electricity in Ireland. It has since been expanded to become the regulator for natural gas also.111 Its remit

covers the safe delivery of gas and electricity, fair pricing and environmental protection. Further, under

the Petroleum Exploration and Extraction (Safety) Bill 2008 it is proposed to expand its remit to cover

safety regulation also.

In analysing the role of the CER in relation to renewable energy in Ireland, it is prudent to focus on two

areas of the CER’s operations:

1. Future initiatives, as revealed in its Strategic Plan 2010-2014; and

2. Its role in developing the EWIC.

8.1 CER Strategic Plan, 2010-2014

The CER’s mission statement incorporates the goal ‘to ensure the environment is protected...this goal is

all about ensuring that the development of renewable energy is encouraged and Government targets for

renewable energy are met while remaining conscious of not doing this at the expense of a competitive

energy sector’.112, 113

The headline objectives for the CER are to incorporate over 3,500 MW of renewables connected to the

electricity system by the end of 2014, full implementation of all aspects of the Renewables Directive,

and incremental improvements in levels of emissions and the environmental impact of the energy

sector.114

Specifically, this will involve a commitment to the Gate 3 process, a reduction in the barriers faced for

the establishment of new microgeneration, a commitment to helping customers become more energy

aware via improved information and – though it has no formal role in transport policy – interaction with

Government to facilitate the use of electricity in transport. Finally, the CER hopes to see initiatives from

the energy sector in the area of climate change, the vagueness of which is perhaps an effort to remove

itself from a space more easily occupied by SEI (CER, 2010, 29-31).

111

The CER was established under the Electricity Regulation Act, 1999. The functions of the CER along with its

name were changed by the Gas (Interim) (Regulation) Act, 2002.

112 The CER has set itself strategic goals: ‘To ensure that the lights stay on, that the gas continues to flow, that

prices charged are fair and reasonable, that the environment is protected, that electricity and gas are supplied

safely, and the provision of a top quality regulatory service’ (CER, 2010 – 2, P. 1).

113 CER, 2010 – 2, P. 28.

114 CER, 2010 – 2, P. 29.

43

8.2 The East-West Interconnector (EWIC)

Although Eirgrid is the primary facilitator of any plans to further connect Ireland’s grid with that of the

UK, the CER has said that it will develop the required market rules to facilitate the EWIC and ensure that

barriers to trade are decreased.115

Current plans for interconnection involve a 500 MW high-voltage direct current (HVDC) between Rush,

Co. Dublin and Barkby beach in North Wales (See map in Figure 13).

Figure 13: Route for proposed East-west interconnector.116

115

CER, 2010 – 2, P. 14.

116 From www.interconnector.ie.

44

Completion of the project is seen by both Eirgrid and the CER as essential for ensuring Ireland’s future

energy security as well as competition in the Irish (and European) electricity markets.117, 118 As of January

2010, Eirgrid has stated that it is currently preparing for the construction stage of the project with a view

to have the interconnector operational in 2012.119

117

http://www.interconnector.ie/projects/east-westinterconnector/benefits/.

118 CER, 2010 – 2, P. 14.

119 http://www.interconnector.ie/projects/east-westinterconnector/buildingworksprogress/.

45

9 Green Investment

9.1 Ireland: Where We Stand

In a global market estimated at up to €3 trillion with exponentially-increasing enthusiasm from venture

capitalists the EGS Sector/Green Economy could be a massive growth area in Ireland over the coming

years.120, 121

This much was recognised in the Government’s Framework for Economic Renewal: ‘Building Ireland’s

Smart Economy’, in which investment in the EGS sector was seen as a key pillar of economic recovery.122

However, in a rapidly-expanding and massively lucrative marketplace, it is prudent to ask what exactly

Ireland is doing – particularly in relation to RES – and what is being done elsewhere.123

The Government’s ‘Smart Economy’ plan contains the following provisions, which in different ways are

aimed at enhancing the environment and securing energy supplies:124

€400 million was to have been spent in the years 2008 to 2010 by the private sector creating an

additional 400 MW of wind power;125

Eirgird will spend €4 billion between 2008 and 2025 on the transmission network in order ‘to tap

into renewable energy resources;’126

ESB will become a ‘zero-emission’ company by 2030, a process that will be assisted by the

company’s €22 billion investment programme;127

Bord Gáis has earmarked €5 billion for the development of the gas network and RES;128

120

Brennan, 2009, P. 5.

121 Brennan (Ibid.) notes that ‘VC investment (in the EGS sector in 2008) was €6.3 billion, up from €4.7 billion in

2007’. EPS Consulting (2008) noted that ‘in 2006 clean technology became the third largest venture capital

investment category in North America’ (2008, 25).

122 Op. Cit., P. 82-91.

123 For a thorough overview of EGS opportunities for Ireland see EPS Consulting, 2008.

124 Op. Cit., P. 82.

125 Ibid, P. 84.

126 Ibid, P. 84-85.

127 Ibid, P. 85.

128 Ibid.

46

The National Development Plan budget includes a provision for upgrading environmental

infrastructure and enhancing environmental sustainability;129 and

An efficiency audit of public housing stock will be undertaken with an initial €5 million

retrofitting budget.130

The budget allocation for the latter of these projects provides an interesting example of the

underinvestment in RES and environmental infrastructure in Ireland. Brennan notes that a complete

retrofitting project to make Ireland’s housing stock energy-efficient would cost in the region of €13.5

billion, which dwarfs both the €5 million noted above and the €49 million budget for the SEI’s Home

Energy Saving Scheme. 131, 132

Although the introduction of electric vehicles is outside the remit of this paper, it is enlightening to note

that the Government’s plans also include the provision that further appropriate modifications to the

motor tax system will be considered to encourage continuous improvements in the efficiency of the car

fleet and to encourage a move from advanced plug-in hybrid vehicles to full electric vehicles.133

Admirable as this is, it is given rather short shrift for a project that Deputy Simon Coveney and the Joint

Committee on Climate Change and Energy Security have termed ‘potentially the single largest GHG

emission reduction measure currently under consideration’ in Ireland.134

9.2 International Comparison and Scale of Required Investment

It is a matter of arithmetic that if the EGS sector is larger, relatively, outside Ireland, and expanding

faster also, then other countries are currently more successful than Ireland at research, development

and execution in this area. The focus of a report by EPS Consulting for Forfás in 2008 was on a

comparison of the green economy in Ireland with those in Austria, the UK and the US.135 Although each

of these countries had markedly differing approaches to the development of their green economies, it

was evident that each had a long-term approach to attract capital assisted by a regulatory environment

providing clear, consistent and long-term signals to develop industries that were best-suited to succeed

in that country.

129

Ibid, P. 93.

130 Ibid, P. 86.

131 Op. Cit.

132 http://www.sei.ie/Grants/Home_Energy_Saving_Scheme/.

133 Op. Cit., P. 89.

134 Coveney, 2009, P. 9.

135 Op. Cit.

47

The report concludes that ‘for Ireland…the messages emerging are clear: allied to implementation of EU

environmental and energy Directives, set an ambitious strategic policy framework that will stimulate the

development of the EGS as enterprises will respond to the rigorous implementation of legislation in

areas such as water quality, energy efficiency, renewable energy, etc.’136

The report deduces that ‘the level of investment that may be needed by 2020 if Ireland is to meet its

legal obligations on foot of EU Directives on the environment, RES-E and energy efficiency is in the

region of €38 billion.’137

136

Ibid, P. 10.

137 Ibid, P. 4.

48

10 Conclusion This briefing sought to review the current state of play with regard to renewable energy in Ireland.

Having committed to meeting 16% of final energy consumption from renewables by 2020, Ireland has

sought to reach this target by way of a commitment to source 40% of its electricity from renewable

sources by the same date.

The technologies that underpin wind (onshore and offshore), microgeneration, biomass, geothermal,

CHP, hydro (including wave and tidal) and solar energy were described, as well as the status of – and

prospects for their future – deployment in Ireland.

It emerged from this analysis that Ireland’s energy mix will require a significant investment in RES if it is

to achieve the above-stated targets, and that wind energy (onshore, for the large part) will be the

primary focus for investment and expansion over the coming decade.

That decade will see substantial changes in demand, and will require an ongoing commitment to

investment in RES if Ireland – and indeed its European neighbours – is to achieve its stated “20-20-20”

objectives.

With this in mind, the Government formed a High Level Group on Green Enterprise, whose report in

November 2009 included a number of ambitious targets in order for Ireland to develop the EGS sector.

Among these were:

The promotion of key sectors that can drive exports and job creation, including renewable

energy;

The development of a ‘Green IFSC’;

The creation of world class research centres;

The removal of bureaucratic barriers to investment, and

The appointment of a dedicated Minister / Minister of State.

The report of the High Level Group largely ignored the findings of a controversial report from the Irish

Academy of Engineering, published in June 2009. The IAE was critical of the Government’s investment

programme – particularly large infrastructure projects – at a time of economic difficulty, and

recommended a policy of promoting energy efficiency over projects such as the EWIC, the Grid 25 plans,

and large-scale investment in renewable technologies. The IAE report is also at odds with the

development plans of Eirgrid, which promote renewables through a process of significant capital

investment and R&D, which are backed up by the CER’s Strategic Plan to 2014.

Finally, this briefing sought to take a snapshot of where Ireland’s Green Economy stands today in

relation to renewables; what the prospects are for its development; and how it can best compete

49

internationally. The disparity with Government investment proposals from those suggested in reviews of

‘best practice’ is marked and is food for thought for policy-makers and investors alike.

50

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(Online, Available from http://www.sserenewables.com/media-centre/press-releases/)

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Available from http://archives.tcm.ie/businesspost/2007/03/18/story21937.asp).

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54

Sustainable Energy Ireland (2010 – 1): Microgeneration (Online, Available from

http://www.sei.ie/Renewables/Microgeneration/)

Sustainable Energy Ireland (2010 – 2): Wind Energy (Online, Available from

http://www.sei.ie/Renewables/Wind_Energy/)

Sustainable Energy Ireland (2010 – 3): Wind Farms and the Environment (Online, Available from

http://www.sei.ie/Renewables/Wind_Energy/Wind_Farms_and_the_Environment/)

Sustainable Energy Ireland (2010 – 4): Small- and Micro- Scale Generation Pilot Field Trials (Online,

Available from http://www.sei.ie/Grants/Microgenpilot/)

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http://www.sei.ie/Renewables/Solar_Energy/)

Sustainable Energy Ireland (2010 – 6): Solar Heating at Home (Online, Available from

http://www.sei.ie/Renewables/Solar_Energy/Solar_Heating_at_Home/)

Sustainable Energy Ireland (2010 – 7): Combined Heat and Power (Online, Available from

http://www.sei.ie/Your_Business/CHP/)

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from http://www.eia.doe.gov/emeu/international/electricitygeneration.html)

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for Ireland to 2020 (Online, Available from

http://www.sei.ie/Publications/Statistics_Publications/Energy_Modelling_Group/Energy_Forecasts_for_

Ireland_to_2020.pdf)

11.2 Legislation

Directive 2003/30/EC EC of the European Parliament and of the Council of 8 May 2003 on the Promotion

of the Use of Biofuels and Other Renewable Fuels for Transport (Online, Available from http://eur-

lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2003:123:0042:0042:EN:PDF)

Directive 2009/28/EC of the European Parliament and of the Council of 23 April 2009 on the Promotion

of the Use of Energy from Renewable Sources (Online, Available from

http://www.europarl.europa.eu/sides/getDoc.do?pubRef=-//EP//TEXT+TA+P6-TA-2008-

0609+0+DOC+XML+V0//EN&language=EN#BKMD-1)

Electricity Regulation Act, 1999 (Online, Available from

http://www.irishstatutebook.ie/1999/en/act/pub/0023/index.html)

55

Energy (Biofuel Obligation and Miscellaneous Provisions) Bill 2010 (Online, Available from

http://www.oireachtas.ie/viewdoc.asp?DocID=13968&&CatID=59)

Gas (Interim) (Regulation) Act, 2002 (Online, Available from

http://www.irishstatutebook.ie/2002/en/act/pub/0010/index.html)

Petroleum Exploration and Extraction (Safety) Bill 2008 (Online, Available from

http://www.dcenr.gov.ie/NR/rdonlyres/BF894EA6-6FA1-4DED-AE6D-9DDE4DF05B67/0/HeadsofBill.pdf)

11.3 Interviews

Gareth Jones, Secretary of The Geothermal Association of Ireland, 27 January 2009