I thank the Chairman and committee members for the opportunity to come before them today to provide an overview of who we are, what we do, what we see as the challenges facing the island of Ireland in respect of climate action, and how EirGrid can play a key role in enabling Ireland’s transition to a low-carbon economy. This meeting comes after the Intergovernmental Panel on Climate Change, IPCC, issued its most stark warning to date on 8 October. According to its press release, "Limiting global warming to 1.5°C by mid-century would require rapid, far-reaching and unprecedented changes in all aspects of society". I hope we can provide some guidance on where progress can be made on the immense challenge that climate change presents to committee members as policy makers and to ourselves as a vital commercial utility.
I commend the work of the Citizen’s Assembly members who, when exposed to international experts across many disciplines relating to the science of climate change, demonstrated great understanding of the subject matter and delivered a remarkably coherent and consensus view via a set of recommendations on the necessary direction of travel for the economy and society.
As background for those less familiar with our work, in 2006, EirGrid was spun off from the ESB, as required under European directives, to manage, operate and develop the national high voltage electricity grid for Ireland. The industry term for EirGrid is the transmission system operator, TSO. EirGrid subsequently became the system operator for Northern Ireland, SONI, and, since 2009, the transmission system functions on a fully integrated, seamless, all island basis.
We operate on a 24-7 basis, 365 days of the year, from control centres in Ballsbridge, Dublin and Castlereagh, Belfast to bring conventional and renewable power from where it is generated in hundreds of different locations around Ireland to where it is needed in Ireland and Northern Ireland.
We use this grid to supply power to industry and businesses that use large amounts of electricity and here in the Republic, our grid also powers the ESB’s distribution network, which supplies the electricity people use every day in their homes, businesses, schools, hospitals, and farms.
We also manage and operate the all-island electricity market where generators, suppliers and other electricity traders buy and sell electricity in real time, a market with an annual turnover of approximately €2.5 billion. As recently as 1 October 2018, we managed the transition of the market from the old single electricity market to the new integrated single electricity market which places the Irish electricity market on a pan-European trading platform and this has created the environment for a more competitive market and opens the door for greater connectivity with Europe in the longer term.
A vitally important part of what we do is developing new electricity infrastructure which supports both a growing economy and population. In doing so we are very conscious of the impact on communities and have made great efforts over the last number of years to engage with communities and improve overall understanding and acceptance levels for energy infrastructure across the island. We support competition in energy, promote economic growth and job creation and, most important for this committee’s consideration, we enable the growth of renewable energy onto the electricity system.
As a nation, we are becoming increasingly aware of the stark reality of what is happening in the world. I believe this committee, working on the strong platform provided by the Citizens' Assembly report, is a very positive step towards placing Ireland on the right trajectory towards a low carbon future, thus addressing the very real and existential threat of climate change.
I will speak to three major topics which are very relevant to Ireland’s decarbonisation challenge and then conclude with some broad-reaching comments.
I will begin with the critical matter of successfully integrating renewables on our power system. The island of Ireland is an isolated stand-alone electricity system on the western periphery of Europe with limited connectivity to the UK as an alternative source of power. This contrasts with mainland Europe where extensive cross-border interconnection creates significantly greater flexibility for European countries.
The physics of electricity which originates from renewable sources such as wind and solar is significantly different from that deriving from conventional generation which has been around for over 100 years. As a result, significant challenges to power system stability arise when attempting to integrate high levels of renewables on a conventional or synchronous power system, to use the technical term. Were I asked ten years ago what level of renewables could be accommodated on Ireland’s synchronous power system at any point in time, I might have said 10% at an absolute maximum. Ten years of pioneering work by our scientists and engineers under a programme called DS3 has delivered a world record level of 65% renewables on the power system, an achievement which will underpin an expected average delivery of over 30% renewable electricity on the Irish system in 2018. Our innovations have delivered a new industry in system services which resulted in the awarding of over 100 contracts in May of this year. These services ensure system stability when high levels of renewable are on the system.
Our achievements in this area are recognised internationally as we entertain fact finding missions from across the globe on a regular basis. I was privileged last Thursday to host EU Commission Vice President Maroš Šefovi to our national control centre to demonstrate how we have innovated to achieve this renewable energy milestone. The EU is looking to replicate Ireland’s achievements on a pan-European basis, having allocated €20 million to a project called EU Sysflex, which is being led by EirGrid.
However, we can – and I believe we will – go further in terms of integrating ever higher levels of variable renewable energy onto the grid. We have publicly committed to moving to integrating 75% variable renewable energy on the system by 2020 in order to underpin Ireland and Northern Ireland’s ambitions to deliver 40% of electricity from renewable sources by this date. The renewable electricity target is a vital component in Ireland’s 2020 overall renewables target, particularly in a context where the transport and heat targets are under severe pressure. This is challenging, but we believe it can be done and, more important, that it must be done if we are to truly move away from our dependence on fossil fuels.
Second, we are endeavouring to transition to a low carbon economy at a time when the forecast for both economic and population growth is very strong, infrastructure across many, if not most, sectors of the economy is under pressure and demand for electricity, indeed all forms of energy, is expected to be strong over the next five to ten years. Growing demand means that advance planning is now more important than ever. This is as relevant to planning the future needs of the electricity grid as much as it does for schools, hospitals and roads.
Over the last two years, we have devised a scenario planning report called “Tomorrow’s Energy Scenarios” which sets out four potential energy scenarios to the year 2030. The scenario which will be realised depends greatly on which policy levers are put in place by policy-makers such as this committee over the coming years.
If one looks at what is happening in the global economy, and we must remember we are one of the most open economies in the world, I believe it is reasonable to say that the world is on an inexorable trajectory to transitioning towards economies and societies which are free of carbon. Ireland is unlikely to diverge from this global trend and, considering our current position in the European league table, we will need to refocus and accelerate our efforts to decarbonise our own economy and society over the next decade. I can assure this committee that we in EirGrid understand the compelling case facing the country and are working to ensure that we will be to the fore in enabling this unprecedented transition.
Third, the question is repeatedly asked about where the next generation of renewable generation will come from. In terms of a managed transition from fossil fuels to renewables, we see there being a requirement for a broad spectrum of renewable sources. To date, the bulk of the renewables delivered on the system and forecasted to 2020 has been onshore wind. We should ask ourselves why onshore wind has been so successful, so that we can leverage those lessons as we look to the challenges of the next decade. I will outline those key lessons. First, in 2008 the Government set a clear and unambiguous target of 40% of electricity from renewable sources. The policy was crystal clear. Second, the Government provided the policy framework to enable the regulatory authority to administer a connections policy for renewables projects. Third, the Government designed a support mechanism, with appropriate State aid approval from Europe. Finally, industry, both private sector and commercial State sector, supported by an eco-system of planning, engineering, legal and financing expertise responded and delivered projects varying in size from a few megawatts to over 100 megawatts in scale, resulting in close to 5,000 MW of onshore wind across the island of Ireland by early next year.
While onshore wind will play a vital role in the next decade, it cannot provide the totality of requirements for Ireland’s decarbonisation needs. There is a role and a need for a broader range of technologies including solar and offshore wind.
EirGrid is currently progressing connection offers for a significant quantum of solar projects across the country and we look forward to the Department’s plans to design an appropriate support system to enable solar projects to be financed, constructed and ultimately connected to the power system.
I now draw the committee’s attention to the area of greatest opportunity and positive impact for Ireland in dealing with the challenges around our carbon emissions trajectory, namely the enormous potential in Ireland for offshore wind energy developments. A very big onshore wind farm can generate 100 MW while a small offshore wind farm can generate 500 MW with the potential can exceed 1,000 MW.
Currently there is only one 25 MW offshore wind farm in operation in Ireland or Northern Ireland, with approximately 5.6 GW having applied to connect to the electricity system, predominantly off the east coast. Offshore wind is a very mature technology, prices have dropped considerably in the last decade, European auctions for offshore wind farm projects have seen highly competitive pricing and, frankly, the time has come for Ireland to embrace offshore wind at scale as a vital element in our fight to reverse the trajectory of carbon emissions from industry and society. However, our understanding is that the consenting regime for offshore wind farms is not fit for purpose and is therefore operating as a barrier to developers to committing development capital to new developments which means that a pipeline of such projects will not be ready to compete in future auction processes.
EirGrid has conducted significant studies to identify the optimum delivery model for planning and enabling the development and connection of offshore wind energy to the Irish transmission system. We have assessed a number of grid delivery models in other jurisdictions and our view is that the most cost effective optimum model is the centralised model which is used in countries such as Denmark and the Netherlands. The centralised model would mean EirGrid, in a co-ordinated way, would masterplan and secure planning consent for an optimum offshore grid network into which offshore wind developers would ultimately connect. Phase 1 of such a masterplan would be focused on the east coast of Ireland.
EirGrid is advancing our Celtic interconnector project with our counterpart in France, a project which is designed to provide 700 MW of interconnection between Ireland and France by 2025-26. This project is vital to supporting Ireland’s renewable energy ambition as it will provide a vital outlet for Irish wind energy at times when demand on the Irish system is low.
EirGrid has a vital role to play, and we will play that role, in enabling the transformation of our economy and our society, a change which is arguably greater than the industrial revolution or the arrival of the Internet.
I will conclude with some broad reaching comments which are not necessarily restricted to EirGrid’s remit, but where we can offer an authoritative and dispassionate view on those matters which are currently impeding progress in renewable energy.
The challenge is very significant and the urgency is manifest. Electricity has delivered the best performance to date in terms of decarbonisation and is likely to bear a heavy burden in the next decade. No single technology offers a silver bullet. By our calculations onshore wind, solar and offshore wind will all be required in significant quanta to make the necessary impact in the next decade. Explicit targets for 2030, at a policy level, for RES-E, RES-H and RES-T must be set which when combined are capable of delivering the necessary overall result for Ireland.
Wind energy guidelines for onshore wind are essential to enable the next generation of onshore projects to be consented. A robust policy on a consenting and connections regime for offshore wind needs to be put in place as a matter of urgency. Technology-specific support mechanisms, for example offshore, need to be signalled, designed and made ready for implementation in the near term.
I hope we have given members an understanding of what we have already achieved in the fight against climate change and what we believe must now happen to ensure all elements of the power system can make the necessary contribution to delivering a substantially decarbonised electricity system in the next decade. I commend the members of the committee on their efforts to date and encourage them to be ambitious in the report they will be writing for Government in the new year.