Department for the Economy’s Richard Rodgers on delivering an integrated decarbonised energy system

Economic opportunity through delivery of an integrated decarbonised energy system

Six months on from the publication of the Government’s Energy Strategy, the Head of Energy in the Department for the Economy (DfE), Richard Rodgers, talks to David Whelan about short-term progress, medium-term aims and the ultimate ambition of a decarbonised energy system, which supports the transformation of our local economy.

“Delivering self-sufficiency in affordable renewable energy as quickly as possible”, Rodgers sets out, emphasising his belief that energy decarbonisation represents the greatest opportunity for society in the region, since the industrial revolution.

The Head of Energy acknowledges a sea change in public awareness in recent years which has shifted mind sets away from viewing energy as simply a cost. In fact, recent global events, not least COP26 and rising energy costs have thrown a spotlight on Northern Ireland’s ever-present over reliance on fossil fuels. However, he acknowledges that there is a significant communication challenge to gain public understanding and buy-in for the potential of renewable energy and zero carbon technology, that would support the transformation of our local economy and help to deliver a healthier and more prosperous society.

“What we have is the greatest opportunity for local society. Our size, at 1.9 million people in around 768,900 households, provides the flexibility to move away from importing the vast majority of energy that we use and wean ourselves off fossil fuels,” he explains.

“The opportunity and the government message is that through energy decarbonisation, we not only create a healthier environment but that we move away from being subject to energy price volatility and sending money outside of the region for fuel and instead capitalise on our natural endowment.”

In December 2021, following two years of extensive engagement, the Executive published its long-term Path to Net Zero Energy, a pathway for energy to 2030 and towards a 2050 vision of net zero carbon and affordable energy by 2050. A short-term annual action plan for 2022, which included 22 actions, was published in January.

Investment in energy decarbonisation will be largely from the private sector and consumers –the former in the infrastructure, which will be fully regulated, and the latter in home appliances and technology. Given the complexity of the energy decarbonisation pathway and also that many of the technologies are developing, the overall cost can only be forecasted. However, the Committee for Climate Change, the UK government advisor, is clear in its forecast that overall there will be a net benefit to consumers.

The Northern Ireland Government’s role is to set the policy and the regulatory frameworks, as signalled in the Energy Strategy, to ‘pump prime’ “Currently, we are operating at 75 per cent System Non-Synchronous Penetration (SNSP) which, with credit to SONI, NIE and our local engineers, is world leading. If we can apply that innovation to the whole-energy system, in the future, our unique selling point will be the delivery of an integrated, AI-controlled and decentralised energy system, meaning that not only will we ensure energy is affordable but also offering the opportunity to rebalance the economy.”

It is this whole-system energy approach which is guiding the thinking around renewable support. While the action plan includes plans to consult on a renewable electricity support scheme for delivery in 2023, Rodgers believes thinking needs to move away from prioritising certain technologies, which he believes has led to a “subsidy chase” elsewhere.

“When we talk about support schemes, I don’t think the future is about individual tariffs. Yes, we will need to have some grant support to pump

prime markets but what we really want is a fully regulated energy system in Northern Ireland. That system will deliver stable prices, breaking the link to volatile global commodity markets and based instead on the capital we invest on the cost to maintain that capital.

“International investors have visited and told us that we are one of the very few places that has this joined-up vision and while we still have to work through the details, the aspiration is for a central, common support scheme,” he explains.

“International investors have visited and told us that we are one of very few places that has this joinedup vision and while we still have to work through the details, the aspiration is for a central, common support scheme.”

the pathway with public sector investment in demonstrator projects and also provide overall financial support for the integrated energy system solution.

“The intention of the action plan is to drive shortterm progress towards what is our ultimate goal, a regulated energy system that is, for the first time ever, across all of heat, power and transport,” he explains. “To do this we need to move from the impressive decarbonisation of the power sector, where we already have over 40 per cent of our electricity generated renewably, to a 100 per cent scenario. We also need to work out how to efficiently store energy for when the wind doesn’t blow.”

Decarbonised electricity, coupled with energy storage and an envisioned smart grid, has the potential to revolutionise Northern Ireland’s energy system and Rodgers believes that Northern Ireland has already indicated its potential to be a global leader on energy innovation.

Skills

Rodgers emphasises that the expertise that will be needed to develop and deliver low- and zerocarbon technologies and to then potentially export those solutions, already exists in Northern Ireland, however, he is aware that more need to be done do develop the skills capacity if the region is to make the most of the opportunity on offer. The 2022 action plan includes an action to carry out an energy skills audit for energy decarbonisation by the end of the year. 4

“Our size, at 1.9 million people in around 768,900 households, provides the flexibility to move away from importing the vast majority of energy that we use and wean ourselves off fossil fuels.”

To this end, he believes the whole-ofgovernment approach being applied to energy decarbonisation is advantageous. “Through the over-arching strategy and annual action plans, all of which will be reviewed, we are bringing a private sector formal business rigour to the public sector and we are also ensuring collaboration across government. The skills audit links into the Department for the Economy’s vision for a 10X economy and the Skills Strategy, but we’re also linked into the Department of Agriculture, Environment and Rural Affairs and its landing of the Green Growth Strategy, the Department for Communities’ work around fuel poverty and the Department for Infrastructure around planning and infrastructure delivery. Again, the economic opportunity and societal advantages of energy decarbonisation are being developed and delivered across government.”

The Deputy Secretary is aware that while the vision is clear, a range of challenges will need to be overcome in order to deliver it. Asked what he sees as the biggest barriers to the 2050 goals, the Head of Energy says: “There is always room for more urgency in government. I want to see things move faster, however, we also must ensure that they are done properly and I say that cognisant of the fact that we are still dealing with the shadow of the Renewable Heat Incentive. The resource challenge is not just a financial one, we need to continuously develop our people to deliver good policy.”

He believes that the confidence to successfully move at pace is underpinned by checks and balances introduced to ensure that fundamental mistakes, such as that which occurred with RHI, are caught.

Offshore

Interestingly, among the ambitions to diversify Northern Ireland’s renewable energy mix, included in the Energy Strategy is the ambition to develop an action plan to deliver 1GW of offshore by 2030. The feasibility and affordability of developing offshore generation in Northern Ireland has long been questioned, firstly because of a complex leasing system with the Crown Estate, and secondly because of the nature of the geology. Rodgers acknowledges that the geology, whereby the island’s coastline has steep shelves, means that floating technology will be required. Suggesting some initial interest already from developers, he says that a challenge from the private sector is to reduce the normal 10-year development timescale for offshore generation into a shorter time period, to aid the 2030 ambitions. He reiterates that the whole-of-government approach will be an asset in this regard.

Concluding with a summary of short-term progress, the Head of Energy expects to report on the progress of the 2022 action plan early in 2023, while at the same time publishing the action plan for the year ahead. On whether current political instability in Northern Ireland will impact on delivery, Rodgers believes that the need for energy decarbonisation is supported by all political parties and there is collective buy-in to the strategy.

“We want to ensure the visibility of our delivery progress. When you consider the seismic shifts that have already occurred in relation to energy even since the action plan was published in January 2022, there is an understanding that our vision has to be flexible but also that we remain focused on the need for urgent delivery.”

80 by 30: Now is the time to act

RenewableNI announce their new Programme for Government (left to right): Paul Carson, Deputy Chair of RenewableNI and Managing Director, Strategic Power Projects; Tamasin Fraser, UK Director, ABO Wind; Steven Agnew, Head of RenewableNI; and Garth McGimpsey, Chair of RenewableNI and Senior Project Manager, RES. Credit: Paul McErlane.

After years of campaigning, RenewableNI recently celebrated success at seeing our ambitious goal of 80 per cent renewable electricity by 2030 included in the Climate Bill.

RenewableNI is a not-for-profit representing businesses across the renewable electricity sector. We work together with our members and stakeholders to create a better future, powered by clean electricity.

RenewableNI promotes responsible development, supports good community engagement and the delivery of lowcost electricity generation from sources such as wind, solar and battery storage, using our greatest natural resources.

The ‘80 by 30’ renewables target is a welcome but very challenging one, which will only be met through joined up government and collaboration with industry.

It is therefore imperative that a new Executive is established as soon as possible to begin delivery of the energy transition. RenewableNI welcomes the appointment of a new Infrastructure Minister and look forward to working with John O’Dowd MLA in his new role, as his department will be key to the success of the Energy Strategy. How much can be achieved by a caretaker minister is uncertain, but it is no benefit to business to have an Assembly that cannot assemble.

We are launching our Renewable Energy Programme for Government at the end of June and will invite all the newly elected MLAs to attend, as well as other key stakeholders. You will be able to view this on our website, and I welcome people in the industry contacting me about it.

RenewableNI will highlight the vital role that the planning system can play in enabling a green economic recovery. Currently it is dysfunctional and under resourced and is blocking new renewable development.

Wind farms are spending more than twice as long in planning here than in Great Britain. This is a considerable disincentive to investors who are operating across these islands and globally. We are facing a climate emergency and we have seen through Covid that government can deliver at pace when required to do so. We now need a Covid type response to climate.

It is clear that without significant improvement of planning timelines that we will fail to achieve our renewables and decarbonisation targets.

RenewableNI is hosting our free webinar series and our Smart Energy Conference, which will take place on Thursday 6 October in the Clayton Hotel Belfast. These events focus on the key aspects of delivering new renewable generation including markets, grid and planning.

RenewableNI and our members know now is the time to act, to ensure a greener and cheaper electricity system for everyone in Northern Ireland. We hope to see you at the conference in October to add your voice to the call for action.

You can find out more about these events, and our ongoing work, at www.RenewableNI.com/news or by emailing me at Steven.Agnew@RenewableNI.com.

RenewableNI T: +44 (0) 28 9044 6240 E: Steven.Agnew@RenewableNI.com Judith.Rance@RenewableNI.com W: www.RenewableNI.com Twitter @RenewableNI LinkedIn www.linkedin.com/company/RenewableNI

Lessons from the Northern Ireland energy crisis

While predictions show that energy prices are set to remain high for at least another year, there are early lessons that companies, advice organisations, and policy makers can take to help consumers, according to the Director of Infrastructure and Sustainability at the Consumer Council, Peter McClenaghan.

The impact of the cost-of-living crisis in Northern Ireland is harrowing. As Northern Ireland’s representative consumer body, the Consumer Council works with consumers daily, hearing their concerns, and providing advice. We hear first-hand how upset, worried, and angry people are about price increases. While consumers understand the increases are due to global factors, that knowledge doesn’t make paying their bills any easier.

The demand for our front-line consumer advice and complaints service has risen by 70 per cent on pre-pandemic levels. Coupled with the increase in demand, is an increase in detriment. The magnitude of individual need and distress is clear; and is being witnessed by all our local energy suppliers, debt advice centres, and charities.

Fuel poverty

It is no surprise that the Utility Regulator estimates fuel poverty could increase to a staggering one in two households.

In December 2021, the Consumer Council undertook research that estimated fuel poverty at 31 per cent and further research with 1,003 households in February and March 2022 that indicates fuel poverty rates are now 34 per cent.

Between December 2021, and March 2022, our Home Energy Price Index shows energy prices increased by 48 per cent and with forecasts that energy prices will remain high for some time, greater consumer support will be essential during the winter of 2022/23.

Consumer Council Composite Energy Price Index

The Consumer Council’s Home Energy Index tracks changes in household gas, electricity and home heating oil prices in Northern Ireland. A composite index is calculated, meaning that all three energy prices are combined to create one overarching figure which uses appropriate weighting to reflect usage and market share.

The Consumer Council’s role in the inaugural fuel bank scheme

In September 2021, anticipating a winter of high energy prices, we undertook research into the establishment of a fuel bank for Northern Ireland. Armed with this research we used our statutory position in the energy market to engage with companies to encourage them to fund the proposal to provide emergency assistance to households at imminent risk of disconnection. We also succeeded in encouraging the Department for Communities to match fund company donations ten-fold, meaning supplier donations of a quarter of a million pounds were effectively covering the administrative costs.

The scheme proved highly successful and was augmented by a further £55 million government support fund distributed to individuals on qualifying benefits.

We are proud to have played a role in the first Northern Ireland fuel bank scheme, in partnership with the Department for Communities, energy providers, and Bryson Charitable Group. On its launch the charity run fuel bank scheme received unprecedented demand. This demonstrates the urgent need to increase such financial support as the number of vulnerable households in our community continues to increase.

The benefits of regulation

Within a fortnight of the Russian invasion of Ukraine, energy prices had doubled for the two-thirds of households in Northern Ireland who use heating oil. This extreme rise demonstrates the peril of having consumers subject to global spot market prices for their essential energy needs.

The fact that the supply market for heating oil in Northern Ireland is only subject to limited self-regulation has understandably come into focus again in recent months.

The Competition and Markets Authority (CMA) recently compared Northern Ireland’s off-grid consumers to the majority of UK domestic energy users, highlighting that the former group do not benefit from standard protections including debt support, a priority services register to address consumer vulnerability, or a requirement on suppliers to provide energy efficiency advice.

The CMA also noted the lack of formalised regulations on charging, the lack of access to mandatory independent alternative dispute resolution, and the limited payment options available to heating oil consumers which is particularly important given consumers must make bulk purchases of at least £250 of heating oil at current prices. While the introduction of such protections would not insulate consumers from price increases it would improve service standards and consumer resilience.

Trust and net zero

Despite such hardship and the significant media attention on energy due to constant price increase announcements, we have seen no evidence that consumer knowledge of the sector is being enhanced. Rather, we have seen significant misunderstanding, misinformation, and growing consumer distrust in the sector.

Our research into consumer attitudes in Northern Ireland’s large, unregulated off-grid sector provides an indication of the low levels of consumer trust in suppliers operating in an unstable market.

If credible solutions are not found to address the market instability, fairness, and affordability issues emanating from this crisis, we risk a significant and wide-ranging erosion of trust in the energy sector. As our collective efforts in the pursuit of decarbonisation grows, we must not ignore the importance of trust and understanding in encouraging consumer behaviour change.

Finding solutions

Solving these problems will require significant change to our energy infrastructure and regulatory regime. In making this long term change we must redouble our efforts to place consumer’s needs; energy and technology affordability, guaranteed standards regardless of fuel source, and security of supply, at the centre of energy transition planning.

However, we will not retain consumer’s trust in the decarbonisation journey without a significant uplift in immediate financial support, energy efficiency advice to consumers, and further resourcing of the advice sector.

We are in unchartered territory so as policy makers, regulators, and industry leaders, we must coalesce around solutions that ensure the energy transition is accessible and affordable for all.

Contact Peter McClenaghan on: T: 028902 51852 E: contact@consumercouncil.org.uk W: www.consumercouncil.org.uk