East Coast Smart Green Growth

Louth Economic Forum Conference

Brian Britton Secretary NOW Ireland

Thursday 9th June 2011

Ireland’s Export Opportunity

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Introduction

• Ireland has a number of opportunities from Offshore Wind

– To meet and exceed our renewable energy targets

– To export high value green electricity to europe

– To create jobs building and operating Irish Offshore wind farms

– To stimulate the €60bn Supply Chain Opportunity afforded by the development programmes for offshore wind in the Irish Sea and over €300bn in the rest of Europe

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Ireland’s Offshore Wind Resource

• Ireland potentially has the best offshore wind resource in the world.

• Offshore offers the capacity and greatest potential for substantial increase in

indigenous sources of all power generation thereby increasing “Security of Supply.”

• The only form of renewable energy which offers the scale to meet Irelands renewable energy targets.

• 2680 MW in planning, a further 4000 MW are feasible within Irish coastal waters

• Long term – Ireland can be an energy exporter

Average Wind Speeds at 100m above Sea Level in European Waters

Blue >10 m/sec, Red 8.5 – 10 m/sec,

yellow 7.5 – 8.5 m/sec , Green 6.0 – 7.5 m/sec

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NOW Ireland

The National Offshore Wind Energy Association of Ireland was established in 2007 to promote the development of Ireland’s substantial offshore wind resource and to ensure that our island leads the way in building a sustainable, green economy.

Set up by Ireland’s five largest operators

• Oriel Windfarm Limited• SSE Renewables• Codling Wind Park• Saorgus Energy Limited• Fuinneamh Sceirde Teo

• Capacity of over 2680MW from existing project areas with potential for a further 4000MW.

• Potential investment of over €8bn.

• This equates to 20,000 jobs for existing projects and over 50,000 jobs, if full potential were to be built out.

• Significant revenue could be obtained from exporting renewable energy, and even more from within supply chain.

By 2030, more than 375,000 people will be employed in the EU wind energy sector – 160,000 onshore and 215,000 offshore.

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Current Status of NOW Ireland Projects – A Case of Regulatory Disconnect

SSE Renewables Lease for 200 Turbines on the Arklow Bank

Codling Wind Park Lease for 220 Turbines on the Codling Bank plus extension application for a further200 turbines

FST Application for 20 turbines on Skerd Rocks

Oriel Windfarm Application for 55 turbines East of Dundalk bay.

Saorgus energy Application for 145 turbines on the Bray and Kish Banks

Not in Gate 3

Not in Gate 3

In Gate 3

In Gate 3

In Gate 3

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The Most Pressing Reason for Renewables

• Ireland is the fourth most energy insecure country in Europe

• Corrib will help secure medium term security of supply but not price security

• Increase in price of oil and gas prices has a disproportionate impact on Irish GDP because of

our circa 90% dependence on imported fossil fuels

• Ireland holds 11 days of gas supply, our resources come from the same source as the UK gas

supply

• OFGEM Chief has recently described UK as heading off the edge of a cliff – Ireland is in the

same position unless we develop a hedge

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Renewable Energy Targets

Status of Irish Wind Energy

• As of December 2010, 1,425 MW of Wind powered generation has been brought onto the system since the early 1990’s, with the development of about 100 wind farms and 30

extensions, in 23 counties.

• 115MW was brought onto the system last year and for the last 6 years the average has been 200MW per year.

• Many of the projects in the Gate 3 process for a grid connection will not be built, due to planning and financial constraints.

• The scale afforded by offshore wind power is needed to meet our renewable energy targets.

• 1873 MW or 48% of Gate 3 projects are in Natura 2000 sites and will have planning difficulties

• 2077 MW or 53% of Gate 3 have firm access dates post 2018

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Employment and Export Potential

Gate 3 Projects

• 795 MW

• 215 Turbines

• Cap Ex: € 2.4Bn

• 6000* jobs

• Plus 2.5% of top line revenue

Consented ProjectsOutside Gate 3

• 1885 MW

• 420 Turbines

• Cap Ex: ~ €5.6Bn

• 14,000 jobs

Developing Irish Sea full potential

• 4000 MW

• 400 – 800 Turbines

• Cap Ex: ~ €12Bn

• 30,000 * jobs

• Plus 2.5% of top line revenue

Revenue and Employment – Delivering the Green Economy

•Source EWEA 2007:15.1 Jobs created per MW Installed. NOW Conservatively use 50% of these estimates http://www.ewea.org/index.php?id=1638

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Indecon Cost Benefit Analysis

• Independent study commissioned by NOW Ireland in March 2008 resulting in “Economic Analysis of the Potential for Offshore Wind Energy Generation in Ireland” published by Indecon in September 2008

• Report Objective 1: Estimate net cost/benefit for enhanced offshore wind development in Ireland

• Report Objective 2: Estimate other benefits including Non-GHG emissions abatement, Kyoto compliance, tax and employment, fuel-price risk reduction, etc

• A Financial model based on a 1000MW wind farm for a 15 year period starting in 2012 was used.

• Conservative cost base used, i.e. €3.5 million per megawatt capital cost – Approximately €1m higher than costs used by EWEA

• Conservative fuel price forecasts used.11

Cost Benefit Analysis Conclusions

• Shows primary net direct benefit for Ireland Inc. of up to €1.7 billion 2012-2027

• Extra quantifiable indirect benefits €2.1 billion including Merit Order Effect, employment, carbon fines saved, reduced emissions, etc.

• In virtually all scenarios there is a direct net benefit, in all scenarios there is an economic benefit when indirect benefits are included

• Cost to Government of carbon fines 2008 – 2012 €1.17 billion

• 2680MW in the consenting process for NOW Ireland Members and an estimated further 4000MW possible on Irish east coast alone

•Although this report was written in 2008 when Oil prices and electricity demand were higher than they are today, due to the delays experienced in rolling out offshore projects to date, it is likely that demand and fuel prices will be back to where they were and more by the time projects are up and running from 2015. 12

Ireland has huge Offshore Wind Resources – An export opportunity

With more renewable energy generating capacity than required

Strongestpotential

Very highpotential

High/mediumpotential

Medium/lowpotential

Simplified map based on Risø National Laboratory, Denmark, 1989 13

Export Opportunity – Energy

• EU Renewables Directive issued June 2009 allows:

o EU inter state trading.o Requires individual member states plan to reach targets by June 2010.

• Affords a country like Ireland with its massive offshore wind and ocean resource the opportunity to export.

• Critical path analysis / timeline review for the industry 20/30 years out with coordinated forward planningrequired.

• Mechanism for export then needs to be developed by stakeholders in Ireland with objective of:

o Protecting the consumero Encouraging export development

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•There is over 100,000MW of offshore wind capacity under development in European waters.

• The European Commission expects the creation of 2.8m jobs by 2020 from renewable energy industry in Europe.

•Siemens have predicted that there will be €300bn invested in the offshore wind industry alone in the next 20 years.

•The UK is planning the installation of 33,000MW of offshore wind generation capacity over the next 10 years.

•The EWEA has predicted annual installations of offshore wind in Europe over the next few years as 1,100MW per year

Offshore Wind Projects in Development in Europe

Export Opportunity - Supply Chain

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Export Opportunity - Supply Chain €60bn

• The biggest supply chain market for offshore wind in the world is on our backdoor in the Irish Sea, a supply opportunity of over €60BN 16

Ireland is already involved in Offshore wind exports• Development Companies

– SSE Renewables – Mainstream Renewable Power

• Project Delivery Management

– Sepam

• Port facilities

– Harland and Wolff

• Marine Services

– Diving Companies– Work boats– Forecasting– Engineering and Environmental services

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Offshore Windfarm Construction Employment Opportunities

•Onshore

• Foundation Construction

• Substation fabrication and fit out

• Turbine Assembly

• Onshore substation and cables

• Commissioning

•Offshore

• Site Prep

• Foundation installation

• Turbine Installation

• Substation Installation

• Cable Installation

• Commissioning 18

Long term Operation and Maintenance Jobs

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“If we do not invest smartly, intelligently for the next ten years, then the total cost after is going to be even bigger. Because you lock yourself in with old technologies and then it makes it even more difficult to reach the targets you have got to reach after 2020.” Connie Hedegaard, EU Climate Action Commissioner

“We will need smart grids, but also strong long distance power transmission interconnectors. This will require finance. The Energy Infrastructure Package” which I plan to produce later this year will address these challenges.” Gunther Oettinger, EU Energy Commissioner

“Offshore Wind will generate 70,000 green jobs, the government plans to spend £60m upgrading British ports to make them suitable for handling large offshore turbines. GE will invest £100m in a manufacturing plant, creating about 1,900 jobs in 2020. Gamesa will spend £133m setting up its world wide centre for offshore wind in Britain generating 1000 jobs and another 800 indirectly with local suppliers. Siemens plan to invest £80m in a turbine factory creating 700 jobs in the North East.”David Cameron, UK Prime Minister

“Significantly more investment is planned by 2020 to meet Ireland’s Renewable Energy targets, including 780 MW of offshore wind under the Gate 3 target. This is an important stimulus offering us scope to broaden and develop our economy. Given the scale of our offshore resources, we could potentially harness more energy than we need ourselves. This brings us opportunities to develop an offshore renewable electricity export sector which could prove to be a significant part of Ireland’s future economic story”.Brian Cowen, Irish Taoiseach

Wind Bites

Europe needs Renewable EnergyIreland, Norway, & UK own the windy parts of the Ocean

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What are the keys to unlocking these opportunities

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Blueprint for the Development of Ireland’s Offshore Resources

1. Making Ireland’s Offshore Wind Resources Work

2. EU Message

3. Market Signals

4. How Ireland Benefits

5. Overview

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Conclusion

• Offshore presents a substantial opportunity for Ireland

– To achieve energy security

– To reduce carbon emissions

– To develop a new export product

– To grow a green economy

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NOW Ireland Contact Details:

Brian Britton NOW Ireland

2 Marine CourtBlackrockCo. Louth

Tel: +353 42 9322952

Fax: +353 42 9322995

bbritton@eircom.net

info@nowireland.ie

www.nowireland.ie26