EU Commissioner for Energy Kadri Simson discusses the role of

Credit: Olga Makina

Energy priorities of the European Commission

Kadri Simson, EU Commissioner for Energy outlines the role of member states and the energy system in achieving the EU’s raised ambitions on climate change.

The 2019 European Green Deal recognised the need to fundamentally transform the EU’s energy system, states Simson, highlighting that 75 per cent of all the EU’s greenhouse gas emissions come from the energy sector and that this is a priority area if Europe is to be carbon neutral by 2050.

In September, the European Commission stepped up its ambitions by proposing the new 2030 Climate Target Plan which saw an increase in ambition for the greenhouse gas reduction to 2030 of at least 55 per cent, which Simson believes has added “further urgency to the green energy transition”.

Setting out the significance of the ambition shift, Simson explains: “It also means that by 2030 electrification needs to reach 40 per cent and the rate of building renovation has to double. Additionally, 24 per cent of transport will have to be powered by renewable fuels. Oil consumption must be reduced by almost one third and natural gas consumption must be reduced by one quarter.

“We know reaching a 55 per cent reduction is doable but it will require massive changes and actions in all sectors. We will not only need to change but we will need to change fast,” states the Commissioner.

Highlighting that to date the power sector has led the way in decarbonisation, making it the most decarbonised system in the world, Simson says that the level of ambition will require action on other fronts as well.

In June, the European Commission presented the strategies for energy system integration and hydrogen, the first of which sets out the main characteristics of the energy system of the future and the other which looks at the role of renewable hydrogen in that system. Simson highlights that these strategies also provide solutions to how other sectors can follow the lead of the energy generation sector.

On 14 October, the Commission published its Renovation Wave Strategy, which aims to double renovation rates over the next decade, making sure that renovations lead to higher energy and resources efficiency. It’s estimated that by 2030, 35 million buildings could be renovated in Europe, with an additional 160,000 green jobs created in the construction sector.

Additionally, Simson confirms that by November, the EU will launch a European offshore renewable energy strategy, aimed at giving a strategic

direction for the ambitious development and integration of this type of energy by 2030 and 2050. The Commissioner recently presented the strategy to the annual conference of the Irish Wind Energy Association (IWEA), where she described Ireland as one of the “global champions” of wind energy. The Commissioner outlines that the strategy will not just cover offshore wind farms but tidal and wave energy also.

Tying these various channels together, the Commissioner explains that it is the Commission’s intention to propose an updated framework for Europe’s energy infrastructure policy before the end of 2020, which she says, “will help us to make our future investments climate proof”.

Finance

Simson highlight that as well as establishing long-term plans for the future, the Commission must also react to the challenges of the present. To this end she says that while political buy-in and momentum exists, financial investment and public support are crucial.

In July, EU leaders supported the Commission’s proposal to create a €750 billion recovery plan for Europe, named Next Generation EU. Speaking on the unprecedented levels of finance being made available, Simson says: “We will need to be smart when deciding where to invest this money. Our analysis shows that investment in clean energy technologies generates more value added than investment in fossil fuel sectors, both in relation to profit and in terms of job creation.

“This means that we need to seize the moment and make sure we are accelerating our investments in the clean energy transition. This brings duel benefits of supporting recovery and increasing job creation in the short-term and in the long-term, helping us achieve our climate goals.”

Explaining the significance of shifting Europe away from being one of the world’s largest natural gas and oil importers, she adds: “The energy transition is also an investment in our resilience and independence because going climate neutral reduces our import dependency and our spending on fossil fuel imports.

“To ensure we achieve the expected

“We know reaching a 55 per cent reduction is doable but it will require massive changes and actions in all sectors. We will not only need to change but we will need to change fast.”

transformation we must rethink and renew our energy system. We can no longer act in silos and we must look at the energy system as a whole, creating synergies and looking for cost-effective solutions for our households and business.”

Simson explains that the recently adopted EU-wide assessment on the national energy climate plans brings together the efforts of member states in stepping up their ambitions.

“Each member state now has a forward-looking blue print for clean energy targets in terms of transformation and investment. Combining the 27 plans, predictions are that we will surpass our 2030 target for greenhouse gas reduction of 40 per cent.”

The Commissioner highlights that the picture is especially encouraging when looking at renewable energy, where Europe is a global technology leader and has recognised a steady fall in prices. The National Energy and Climate Plans (NECP) Assessment outlines that Europe is on track to produce more than 33 per cent of its energy from renewables, an overachievement on its original target of 32 per cent.

However, recognising that the national plans were prepared with the current 2030 targets in mind, Simson days that more must be done to reach the 55 per cent reduction of greenhouse gases goal by 2050.

“The impact assessment foresees the need for a 38-40 per cent share of renewables in our energy mix by 2030 and 36-39 per cent improvement in our energy efficiency. With the Climate Target Plan, we commit to reviewing the Renewable Energy and the Energy Efficiency Directives, including those targets, and we will make a proposal in June 2021.”

Simson states that a change of this magnitude will require “serious investment”. The Commission estimates the need for €350 billion per year. Explaining the significance of the EU’s announced recovery package, the Commissioner says: “The Green New Deal was always meant to be a growth strategy and even the health crisis has shown that this is not simply a slogan.

“In July the EU leaders agreed on the unprecedented recovery package of €1.8 trillion, which sets sustainability at its core. The package brings together a reinforced EU budget for the next seven years, complimented by €750 billion from a stimulus plan. This is the Next Generation EU and the package gives us a unique opportunity to reboot the economy and accelerate the clean energy transition, which was already underway, and build a more sustainable and competitive economic future.

“I believe that the economic recovery and sustainability need to go hand in hand and respond to the needs of our people and our businesses and we need to invest in tomorrow’s technologies, not yesterdays.

“Change is necessary but managing this change will be for the benefit of all.”

A greenprint for economic recovery

SSE believes that a green economic recovery from coronavirus can deliver a ‘win-win’ for both economy and climate by unlocking private investment in low-carbon infrastructure, creating new jobs, and supporting people in decarbonising their homes and businesses, writes Stephen Wheeler, SSE’s Ireland Country Lead.

I was delighted to join the Irish Energy Leaders’ Debate at this year’s Energy Ireland Conference, which was a great opportunity to discuss how our industry can drive a ‘decade of decarbonisation’ between now and 2030. As one of Ireland’s largest utilities and, having made a total contribution of €3.8 billion to Ireland’s economy over the past five years, SSE stands ready to play our part.

Earlier this year, in our Greenprint for Economic Recovery, SSE set out five priority areas which we believe can be actioned quickly in order to kick-start that green recovery. These can be progressed through the policy framework outlined in the Programme for Government, whether it be the Climate Action Bill, Carbon Budgets, National Energy and Climate Plan, Whole of Government Plan, or as standalone initiatives. The key is that they are progressed at pace so investment can be unlocked as soon as possible.

The new annual carbon reduction target and carbon budgets provide investors with some of the certainty needed to progress projects and initiatives. In particular, SSE welcomes the Government’s reinforcement of the 70 per cent renewable electricity target by 2030; this target is achievable with timely policy signals to drive final investment decisions. Indeed, as the electricity sector has made great progress in decarbonisation so far, and as it can assist in the decarbonisation of other sectors, such as heat and transport, SSE believes Ireland should consider targeting a net zero electricity system by 2040.

We are heartened to see that the new Climate Action Bill copper-fastens Ireland’s target to reach net zero carbon emissions by 2050 through five-year carbon budgets. We also believe that the Climate Change Advisory Council will continue to be crucial in recommending policies to deliver on our net zero ambitions.

With the imperative of tackling climate change, through focusing on the priorities outlined below, we can stimulate investment and support many thousands of jobs in all regions of the country, building stronger, sustainable domestic supply chains that increase our self-sufficiency and security. SSE looks forward to partnering with the Government to deliver on these ambitions to build a cleaner, more resilient economy.

Facilitate the delivery of 1GW of offshore wind by 2025

Installing operational offshore wind farms in the Irish Sea by the middle of the decade, and within the lifetime of this Government, will be vital in maintaining the momentum initiated by last year’s Climate Action Plan and further committed to in the new Climate Action Bill. It is crucial that we utilise our abundant natural resources to establish an offshore wind energy industry to decarbonise our energy supply, while developing an indigenous, job-creating supply chain sector.

The new Government’s ambition to deliver an increased 5GW of offshore wind energy off Ireland’s eastern and southern coasts by the end of the decade is welcome. However, this must be delivered at pace and with immediate effect. In the UK, currently the world’s largest offshore market, it took nearly 15 years to achieve 5GW of offshore wind. Ireland needs to re-commit to delivering 1GW of new offshore wind by 2025 in the Irish Sea if the country is to get on track to meet our 2030 goal. The delivery of 1GW of offshore wind in this timescale will also contribute 2 per cent towards our 7 per cent annual carbon reduction target.

Ireland will need to compete in a highly competitive global offshore energy marketplace if we are going to achieve our new 5GW offshore ambition. Action is needed now if Ireland is to deliver the renewables revolution promised in the Programme for Government. The commitment in the Programme to a first RESS auction for offshore wind in 2021 is hugely welcome. Given the time needed to construct and finance offshore projects of scale, we encourage Government to prioritise the auction arrangements and the necessary grid connections policy. This will safeguard developer and market confidence that Ireland is finally open for business for offshore wind energy and unlock offshore wind investment as early as possible.

SSE Renewables is actively progressing the development of the 520MW second phase of Arklow Bank Wind Park to help meet the 1GW target by 2025. When complete, the wind farm is expected to power over half a million homes, offsetting over 600,000 tonnes of carbon emissions. Completion of Arklow Bank Wind Park in the next five years will itself directly contribute to just over half the 2 per cent reduction in carbon emissions that can be achieved by delivering 1GW of offshore wind by 2025.

Arklow Bank Wind Park will require an investment of over €1 billion, and SSE Renewables is committed to ensuring the project delivers a significant economic and job-creating boost for County Wicklow, the Eastern Region and the country. In June 2020 we selected Arklow Harbour as the preferred location for the Operations and Maintenance Base, while announcing that this new purpose-built facility will be

“In the UK, currently the world’s largest market, it took nearly 15 years to achieve 5GW of offshore wind. Ireland needs to re-commit to delivering 1GW of new offshore wind by 2025 in the Irish Sea if we are to get on track to meet our 2030 goal.”

home to 80 full-time employees once the project enters operation. By way of comparison, SSE Renewables’ recently completed Beatrice Offshore Wind Farm off the coast of Scotland, similar in size to the proposed Arklow Bank Wind Park, added £2.4 billion of value to the UK economy, created hundreds of direct jobs during the construction phase as well as long-term highly skilled jobs for the 25-year duration of the wind farm’s operations.

Delivering projects like Arklow Bank Wind Park in the next few years will help to power a renewables revolution in the very near-term. Progressing longer-term projects off eastern and southern coasts under the upcoming marine planning legislation will maintain the green recovery through the rest of the decade and beyond.

Continue the onshore wind success story through balanced planning standards

As Ireland’s largest developer of onshore wind, and as operator of Ireland’s largest community fund for wind farms, SSE is convinced of the need for, and benefits of, continued deployment of onshore wind. We welcome the introduction of the RESS support scheme, and we are pleased to see the first auction is progressing this year as planned.

There are undoubtedly challenges to developing onshore wind, however, we can effectively balance the achievement of Ireland’s renewable ambitions with sensitive planning and development through the Wind Energy Guidelines

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“Decarbonisation efforts must benefit customers, by providing a secure and affordable supply of energy as well as empowering people to directly take part in the green transition.”

a more efficient planning process overall. As some of our older wind farms approach the end of their lifespans, attention must turn to repowering existing wind farms with superior new technology.

Policy should encourage new and repowered developments by setting a trajectory of renewables auctions volumes for the next few years. Updating the Wind Energy Guidelines in a balanced way can ensure that Ireland takes advantage of the infrastructure already in place and does not slip backwards in its renewable achievements.

In socio-economic analysis carried out on the delivery of Galway Wind Park, SSE Renewables found that the 174MW onshore wind farm delivered over €88 million in economic contribution to Irish Gross Domestic Product (GDP) while supporting over 1,600 years of full-time employment. By extension, the delivery of an additional 4GW of onshore wind

by 2030 to meet the Climate Action Plan target can support over 38,000 years of full-time employment in Ireland, contributing over €2 billion to the Irish economy.

Provide customers with attractive decarbonisation options

Energy efficiency

Decarbonisation efforts in the energy sector must benefit customers, by providing a secure and affordable supply of energy as well as empowering people to directly take part in the green transition. This will be furthered by the ambitious energy efficiency targets set out in the Programme for Government and the options outlined for providing affordable finance through the National Recovery Fund, Strategic Banking Corporation of Ireland, and loan guarantee scheme. Financing is one of the main barriers impeding households and businesses from adopting energy efficiency measures. As ever, the focus must be on minimising costs for consumers and avoiding imposing unnecessary policy costs on energy bills, which if badly designed could act against the adoption of lower-carbon energy sources such as green electricity.

A partnership approach and continued collaboration between utilities, the Sustainable Energy Authority of Ireland (SEAI) and local authorities have been successful to date and, supported by a system of grants and incentives, will continue to be vital to the development and delivery of Ireland’s National Retrofit Programme.

We must learn from the experiences in other jurisdictions and consider the most appropriate proposals on financing models, bearing in mind some of the challenges we have seen materialise with the UK’s Green Deal. The potential for on-bill finance to create a barrier to switching and competition is a concern. Attaching repayments to bills also risks undermining the benefits of energy efficiency, in the form of reduced energy bills, in the minds of consumers.

Early collaboration with industry in the design of finance and other incentives can help to deliver an efficient and effective package of incentives.

SSE Airtricity has recently launched an energy efficiency partnership with An Post, with the aim of making high-quality home energy efficiency upgrades as easy and affordable as possible for customers. The Generation Green Home Upgrade Programme is a onestop home energy upgrade service. It gives access to free home assessments, affordable finance and end-to-end project management for home energy upgrades. Microgeneration

As set out in the Programme for Government, microgeneration provides an opportunity for customers to get directly involved in the renewables revolution and SSE welcomes proposals to design effective incentives in this area. The Smart Metering programme can enable more active energy citizens by providing greater data on energy use and facilitating the benefits of microgeneration. Discussions with industry on incentives to encourage

investment in microgeneration can help design a scheme that both encourages customers to adopt these technologies and realises savings in energy bills.

Decarbonise flexible generation by strengthening carbon pricing and system stability services

SSE is fully behind a renewables-led transition to net zero, however, from a technical standpoint we know flexible thermal generation will continue to be required to maintain security of supply and system stability. This class of generation will have to be decarbonised if we are to achieve net zero and we welcome Government commitments to focus on research and development for hydrogen.

SSE is involved in a number of lowcarbon industrial clusters in Britain and is progressing what we hope to be the UK’s first gas-fired power station equipped with Carbon Capture and Storage (CCS) technology. We believe there is great potential for CCS and hydrogen power generation in Ireland too. Indeed, as a company we have committed not to develop any further thermal generation without a pathway to decarbonisation.

SSE believes carbon pricing is an effective and enduring policy mechanism to progressively decarbonise the whole energy sector, and we support the strengthening of the EU ETS or exploration of a carbon price floor to drive investment in low-carbon technologies and discourage investment decisions that lock in carbon for the coming decades. We are pleased to see similar recommendations on carbon pricing in the electricity sector in the Climate Change Advisory Council’s latest Annual Review. In the meantime, Government has rightly emphasised the DS3 programme, which will enable many of the innovative stability services our grid needs.

Electrify heat and transport to harness progressive decarbonisation of electricity supply

Electricity is already on a steeper

decarbonisation trajectory than other sectors, and it can be used as a workhorse to decarbonise heat and transport.

The electrification of the public and private transport fleet will have a significant impact on reaching Ireland’s climate targets, improving local air quality, reducing carbon emissions and helping to integrate renewables into the electricity system. Decarbonising Ireland’s public transport network through electrification and encouraging modal shift are of critical importance. Enabling the shift to private electric vehicles is also needed if we are to encourage hundreds of thousands of motorists to make the switch over the next decade. Greater collaboration will be required to identify areas where on-street charging infrastructure is needed and the creation of public tenders will enable third parties to deliver this infrastructure at the scale required. The extensive roll-out of EV charging infrastructure will be necessary to stimulate demand. SSE believes local authorities, transport authorities and electricity companies are best placed to innovate and to lead the competitive delivery of this via a new partnership model.

The Government has made welcome proposals to encourage the adoption of heat pumps and district heating and to refresh incentives to encourage the uptake of electric vehicles and rollout of charging infrastructure. These technologies all have the potential to create employment, and given technological readiness, their rollout can start to scale up now and build gradually with the right incentives. SSE recommends introducing these incentives as early as possible, to influence uptake as people come to change their cars or upgrade their heating, and to avoid decisions that lock in carbon consumption for another investment cycle.

Stephen Wheeler is Ireland Country Lead for SSE plc, a FTSE-listed company and one of the country's largest energy utilities. SSE operates 28 wind farms and four thermal power stations across the island of Ireland, as well as supplying greener electricity and natural gas to over 700,000 customers.

T: 01 655 6888 E: media.ireland@sse.com W: www.sse.com