Green Paper on Energy Policy in Ireland - Teagasc...Overview of Green Paper process The purpose of...

Green Paper on Energy Policy in IrelandMay 2014

http://www.dcenr.gov.ie/

Contents

Foreword – A Message from Minister Pat Rabbitte, T.D. 4

I. Setting the Context 5

Overview of Green Paper process 5

Introduction – Energy policy developments since 2007 6I. (i) Key Irish Energy Policy Achievements 6

I. (ii) Key Energy Policy Developments 7

I. (iii) Collective Delivery 9

I. (iv) International Developments 11

I. (v) Developments in the EU 12

I. (vi) Developments since 2007: economic context and energy prices 15

II. Green Paper Energy Policy Priorities 20

Six Energy Policy Priorities to frame the Discussion 20

Priority 1: Empowering Energy Citizens 211.1 Contextual Background 21

1.2 Protecting Vulnerable Energy Citizens 22

1.3 Saving Energy at Home 22

1.4 Decarbonising Energy in the Home 23

1.5 Innovative Relationships between Energy Suppliers and Consumers 23

1.6 RealisingtheBenefitsofCompetition 24

1.7 TheEducatedandInformedCitizen 25

Priority 1 – Empowering Energy Citizens: Questions and Policy Options 26

Priority 2: Markets, Regulation and Prices 272.1 Contextual Background 27

2.2 EnergyPrices:Secure,Sustainable,Affordable 28

2.3 Market Integration and Regional Initiatives 30

2.4 TheRoleoftheRegulator:Certainty,Stability,Flexibility 31

2.5 MarketTransformationandIndustryStructure 34

Priority 2 – Markets, Regulations and Prices: Questions and Policy Options 36

Green Paper on Energy Policy in Ireland

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Priority 3: Planning and Implementing Essential Energy Infrastructure 373.1 Contextual Background 37

3.2 ElectricalInfrastructure 37

3.3 OilInfrastructure 39

3.4 GasInfrastructure 40

3.5 Planning and Public Engagement 40

Priority3–PlanningandImplementingEssentialEnergyInfrastructure: Questions and Policy Options 43

Priority 4: Ensuring a Balanced and Secure Energy Mix 444.1 Contextual Background 44

4.2 FuelDiversityandIndigenousResources 45

4.3 Electricity 46

4.4 Coal 48

4.5 PeatandBiomass 48

4.6 NaturalGas 48

4.7 Nuclear Energy 49

4.8 Heating 50

4.9 Energy in Transport 51

4.10 Storage and Emergency Planning 53

Priority 4 – Ensuring a Balanced and Secure Energy Mix: Questions and Policy Options 54

Priority 5: Putting the Energy System on a Sustainable Pathway 555.1 Contextual Background 55

5.2 MakingourUseofEnergyMoreEfficient 56

5.3 RenewableEnergy 58

5.4 Grid Development and Sustainability 60

5.5 Job Creation and Economic Growth 60

5.6 Climate Change 61

5.7 RoleoftheSustainableEnergyAuthorityofIreland(SEAI) 62

Priority 5 – Putting the Energy System on a Sustainable Basis: Questions and Policy Options 64


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Priority 6: Realising Economic Opportunity 656.1 Contextual Background 65

6.2 Contribution by Commercial State Energy Companies, and Government Support Programmes to the Overall Economy: Investments, Employment and Training 65

6.3 SkillsandTraining:Tomorrow’sEnergyWorkforce 66

6.4 Procurement: Spending Strategically 67

6.5 Research,TechnologicalDevelopmentandInnovation 68

6.6 Modelling 69

6.7 EnergyDataasanEnablerofInnovation 70

6.8 PeopleandProcess:Cross-GovernmentCollaboration 70

Priority 6 – Driving Economic Opportunity: Questions and Policy Options 72

Appendix 1: Glossary 73

Appendix 2: Key Department Publications since 2007 75

Appendix 3: Other Relevant Publications 76

ListofFigures

Figure1:PrimaryenergyuseinIrelandbyfuel,1990-2012 16

Figure2:Realenergypricechangetohouseholdssince2005inEU-15(index) 17

Figure3:Realenergypricechangetoindustrysince2005inEU-15(index) 18

Figure4:Ireland’stotalprimaryenergyrequirementandtotalfinalconsumption,2012 19

Figure5:DomesticElectricityPrice,RelativeShareofComponent,2011(BandDC) 29

Figure6:Forecastprimaryenergyrequirement1990–2020(NEEAP/NREAP) 45

Figure7:Electricitygenerationfuelmix2011-2012(grosselectricityconsumption). 47


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Foreword– AMessagefromMinisterPat Rabbitte, T.D.

Energy is the lifeblood of Ireland’s economy and society.Electricity andgasdemand for business and for householdsmustbemet safely and securely ona continuousbasis 365days a year. Ireland’s ability to attract and retain ForeignDirect Investment and sustain Irish enterprise depends on

guaranteeing energy supply at competitive cost at all times. Accordingly, the three key pillars of Ireland’senergypolicyaresecurity,sustainabilityandcompetitivenesswhich recognise theimportant role energy policy plays in driving economic activity. A smart energy policy has a pivotalroletoplayincreatingtheconditionsforrebuildingtheeconomy,creatingjobs,deliveringregional development, protecting our environment and contributing to our wellbeing as a people.

Irelandfacessignificantinter-relatedchallengesinrelationtoclimatechange,energysecurityandcompetitiveness.ThesecanbeaddressedbytransformingIreland’seconomyfromonebasedon a predominantly imported fossil fuel to amore indigenous low carbon economy centredaroundenergyefficiency,renewableenergyandsmartnetworks.ThistransformationliesattheheartofthisGovernment’senergypolicy.

TheGovernment isdetermined toensure that theneedsof thecitizensof Irelandarealsoatthecoreofthisnecessarytransition.Energyinfrastructuremustbenefitsocietyasawholeandeverybodyshouldbeabletoaffordtoadequatelyheatandlighttheirhome.Givingconsumersmore control over their energy choices by providing them with options through efficiencyprogrammes and promoting real and active competition, will empower consumers to make decisionsthatcanbenefitthem.

Since thepublicationof the2007EnergyPolicyFramework, ‘DeliveringaSustainableEnergyFutureforIreland’,theglobal,EUandIrishenergylandscapehasundergoneprofoundchangeasnewtechnologiesunlockcleanerfuels,theworldeconomyregainspositivemomentum,andaddressingthethreatofclimatechangebecomesevermorecritical.ThesignificantchangesinIreland’s economic position mean that key assumptions supporting policy, as outlined in that White Paper, are no longer valid.

AstheEUlookstowards2030and2050,itistimelytoreflectonwhathasbeenachievedandtoreorientIrishenergypolicyprioritiestowardsthe2030horizon.Wemustnowrethinksomeofthekeycomponentsofourenergypolicy.

I hope that this Green Paperwill stimulate a broad and informed debate on this issue. ThefeedbackfromthatdebatewillcontributetothepreparationofanewWhitePaperthatwillsetoutabalancedandworkableenergypolicyframeworkfortheyearsahead.

Pat Rabbitte T.D. Minister for Communications, Energy and Natural Resources


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I. Setting the Context

OverviewofGreenPaperprocessThepurposeoftheconsultationprocessontheGreenPaperistoinvitewrittenviews,observationsandsuggestionsfrominterestedpartiesontheshapeofIreland’sfutureenergypolicy.Oncompletionofthepublicconsultationprocess,theMinisterwillhavedue regard to all submissions received. It is envisaged that the public consultation process, along with the relevant stakeholder engagement, will contribute strongly to thedevelopmentofanEnergyWhitePaper for Ireland thatsetsoutabalancedandworkableenergypolicyframeworkforthemediumandlongterms.

Takingintoaccountthethreeenergypolicypillarsandthefourthfocusonjobcreationandeconomicgrowth,theGreenPapersetsoutsixpolicypriorityareasinrespectofwhich views are sought:

Priority 1: Empowering Energy Citizens

Priority 2: Markets, Regulation and Prices

Priority 3: Planning and Implementing Essential Energy Infrastructure

Priority 4: Ensuring a Balanced and Secure Energy Mix

Priority 5: Putting the Energy System on a Sustainable Pathway

Priority 6: Driving Economic Opportunity

A number of questions are posed in relation to each of these policy areas in theGreen Paper and interested parties are invited to structure their submissions around these questions.Submissions are not restricted to the questions posed. They may include any issues, suggestions or concerns that a person may have, including identifyinggaps,opportunitiesandweaknessesinrelationtoexistingenergypolicy.

The Green Paper also sets out the main developments in the Irish, European and global energylandscapesincetheEnergyWhitePaper2007,andidentifiesthemajorenergypolicy documents, strategies, plans and reports published since 2007.

The Green Paper is available on the Department’s website: www.dcenr.gov.ie/greenpaper

Copies are available in hard copy, on application to the Department.

Submissionsmaybemadebyemailatthefollowingdedicatedmailbox:

[email protected]

Alternatively submissions may be made in writing to:

Energy Policy and Planning Unit, DepartmentofCommunications,EnergyandNaturalResources, 29-31AdelaideRoad,Dublin2.

Ifyouhaveanyqueriespleasecontact35316782934. The public consultation will conclude at 17.30 on Thursday 31st July 2014.

Please note that all submissions and comments submitted to the Department of Communications, Energy and Natural Resources for this purpose may be subject to release under the Freedom of Information Acts 1997–2003 and the Access to Information on the Environment Regulations (2007); and may be placed on the Department’s website.


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Introduction – Energy policy developments since 2007Thesevenyearssincethepublicationof the2007EnergyPolicyPaper, ‘DeliveringaSustainableEnergyFutureforIreland’,havebeentransformationalfortheIrishandall-island energy market. The EU and international energy landscape have also undergone profoundchangeasnew technologiesunlocknewsourcesof fossil fuels aswell aslow-carbonalternatives,andtheglobaleconomyregainspositivemomentum.

The2007policypaperwas the first comprehensive Irish energypolicydocument inseveral decades. It provided policy certainty and a cohesive vision for Irish energymarketsupto2020.Itunderpinnedsomeverysignificantachievementsoverthepastseven years and also provided direction for a wide range of detailed action plans,schemes,measures and investment programmes. The continuing implementationofthese actions will ensure achievement of Ireland’s ambitious energy objectives andtargets by 2020.

AstheEUlookstowards2030and2050,itistimelytoreflectonwhathasbeenachievedand to reorient Irishenergypolicypriorities towards the2030horizon.The followingsection highlights key developments in the Irish, EU and international energy markets and sets out the changing economic backdrop. This contextualises the approach to the followingchapters,whichfocusonenergypolicyasitinteractswithcitizensandasaninputanddrivertoeconomicrecovery.SixkeyprioritiesareidentifiedfordiscussiontohelpformulatethenextIrishEnergyWhitePaper.

Thissectionaddressesthefollowingareas.

(i) Key Irish energy policy achievement

(ii) Key energy policy developments

(iii) Collective delivery

(iv) International developments

(v) Developments in the EU

(vi) Developments since 2007: economic context and energy prices

I. (i) Key Irish Energy Policy Achievements

In2007,Irelandfacedanumberofsignificantenergypolicychallengeswithconcernsover generation capacity and network constraints, the slow pace of developingcompetition in wholesale and retail markets, a lack of clarity as to how renewableandenergyefficiencyambitionswouldbeachievedandgrowingconcernsonenergyprices and their impact on households as well as on national competitiveness. Against thisbackdrop,thefollowingkeyachievementsdemonstratestrongdeliveryonenergypolicy objectives and underpin the approach to 2030 priorities. A list of key policypapers and reports is in Appendix 2.

Key achievements include keeping the lights on and gas flowing during two ofthecoldestwinterperiodsin50years.Whilesecureenergysuppliesmaybetakenforgranted,thiswasonlypossiblefollowingmulti-€bninvestmentprogrammesinelectricity


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andgasnetworks,thedeliveryofcriticalnewgenerationcapacity,andverysignificantnew renewable capacity by both State and private sector energy market participants.

Thesuccessfulestablishmentin2007andsubsequentoperationoftheall-island Single Electricity Market (SEM)hasbeenhailedasanexemplarofregionalco-operationbytheEUandhasprovidedcostreflectivewholesaleelectricity,competition,transparency,greater consumer choice, diversity of generation, security of supply and increasedrenewable penetration. It has exerted downward pressure on electricity prices and has also attracted new market entrants.

Theacceleratingpaceofretail market competition initially pushed Ireland towards thetopofEUleaguetablesforcustomerswitchingandprovidedIrishenergyconsumerswith new services, including prepay and price comparison and switching websites, as well as choice and value from an increasing number of suppliers. This has alsoled to retail tariff deregulation in all but the domestic gasmarket, so that suppliersare competing actively, including on price and discounting, in the electricity, gas and dual-fuelmarkets.TheEast West Electricity Interconnector is a strategically vital energyproject for the islandof Ireland, linking itwith theUKandbroaderEuropeanenergymarkets.Itwasdeliveredon-timeandwithinbudgetbyEirGridandfinanciallysupportedbyanEUgrantof€110m.

Increasing renewable energy supplies have helped decarbonise the Irish economy andprovidednewopportunitiesforjobsandgrowth.Attheendof2012,Irelandhadachieved 19.6% of electricity generation from renewable energy sources, 5.2% inrenewableheat,and2.3%inrenewabletransport.Anewbiofuelsobligationof6%setfor2013hasseenfurtherincreasesinrenewablefuelsintransportin2013.Underpinnedby a robust and transparentmarket, regulatory andpolicy framework, including keysupportschemessuchasREFITsupportandthebiofuelsobligationschemes,Irelandis now on a path towards meeting our legally binding 2020 renewables targets.

Energy efficiency enhancementsunderpinnedbyawiderangeofprogrammesandmeasuresundertheNationalEnergyEfficiencyActionPlan,havedeliveredcarbonandenergycostsavingsforIrishenergyconsumersandtheeconomy.Substantialbenefitsin cost and emission reductions have been achieved by households, business and thepublicsector.Thereismuchfurtherpotential,particularlyaroundtheforthcomingnational roll-out of smart meters,tocontributetomeetingenergyefficiencytargetswhile providing business opportunities for emerging energy service providers andinnovators.

I. (ii) Key Energy Policy Developments

Followingthepublicationofthe2007WhitePaper,Irishenergypolicyhascontinuedtoevolvethroughabroadrangeofkeypolicydecisions,actionplans,measures,schemesandprogrammes,someofwhicharehighlightedbelow.

In line with EU network unbundlingrequirementsintheThirdEnergyPackage,in2013,theEUCommissioncertifiedthe Irisharrangements forelectricity transmissionsystemownershipandoperation inaccordancewith the relevantoptionapplied forunder theThird Package electricity directive (known as Article 9 9.). Also in 2013, BGE’s application fortheIndependentTransmissionOperator(ITO)modelwascertifiedbytheCERtaking


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utmost account of the EU Commission’s opinion on the application, in line with therelevantprovisionsintheThirdPackagegasdirective.ThecompletionoftheBGÉsaletransactionwillrequireanewapplicationtobemadebyBGÉforcertificationofthegastransmissionsystemundertheFullOwnershipUnbundlingmodel(FOU)inthePackage.

The Government Policy Statement on the Strategic Importance of Transmission and Other Energy Infrastructure, published in 2012, emphasises that it is in national and regional interests that investment programmes, including EirGrid’s Grid25, are delivered inthemostcostefficientandtimelywaypossible,onthebasisof thebestavailableknowledgeandinformedengagementontheimpactsandthecostsofdifferentengineering solutions.

The National Smart Metering Programme isacentralcomponentof thestrategyto radically enhance management of energy demand, deliver smart networks andenable greater energy efficiency through the use of cutting-edge technology andconsumerempowerment.Amajorprogrammeof technologyanduser trialsshowedthat a national rollout ofSmartMeters could lead to significant reductions in overallelectricityandgasconsumption,aswellasan8.8%reductioninpeak-timeelectricityconsumption.Anationalroll-outofSmartMeterswillthereforeleadtolowercustomerbills,greatercustomerinformationandchoice,lowerCO2 and other polluting emissions withconsequentialenvironmentalbenefitsforIreland.

In 2013, the Government published a report on the Strategic Case for Oil Refining Requirements on the Island of Ireland, which highlighted the additional security benefits that an operational refinery may offer and underlined that existing oil importfacilitiesontheislandofIrelandofferarobustinfrastructurethatwouldprovidecomfortablealternativesintheeventofaseriousdisruptionatanyofthesixprincipaloilports.

TheGovernmentlaunchedanumberofinitiativesinrelationtoenergyefficiencyincludingBetter Energy: the National Upgrade Programme(May2011)inthecontextoftheGovernment’s Jobs Initiative.1

Warmer Homes – A Strategy for Affordable Energy in Ireland, presents a cohesive framework for achieving more affordable energy, ensuring that existing and futuremeasures are targeted at householdswhere the risk and adverse effects of energypoverty are greatest.

In 2013, Ireland submitted its second National Energy Efficiency Action Plan (NEEAP)to2020totheCommission.ThesecondActionPlanidentifiesactionsacrosssixareas:PublicSector,Residential,Business,Transport,EnergySupply,andCross-Sectoral.Irelandhasinvested€35masacornerstoneinvestorinanenergyefficiencyfundforthenon-residentialsectorin2014.

Ireland’s Strategy for Renewable Energysetsoutfivestrategicgoals–increasingonshoreandoffshorewind;buildingasustainablebioenergysector;fosteringR&Dinrenewables such aswave and tidal; growing sustainable transport and building outrobustandefficientnetworks.

1 The Better Energy Homes Programme is designed to support the energy efficiency upgrades of onemillion homes,businessesandpublicbuildings.TheProgrammehasoverseentheupgradeofover136,000homessinceitbeganinMay2009.


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To support this strategy, Ireland adopted two Renewable Energy Feed In Tariff (REFIT) schemes, extending supports to include new onshore wind and biomass capacity. These schemes have played a central role in enabling Ireland to become a worldleaderingridintegrationofvariableenergy.

Ireland also published a comprehensive National Renewable Energy Action Plan (NREAP) to demonstrate how EU renewable targets for electricity, transport andheating will be met.

In 2012, Ireland adopted an Integrated Marine Plan (IMP) entitled Harnessing Our Ocean Wealth which put in place an integrated system of policy and programmeplanningforIreland’smarineaffairsincludingrenewableenergy.InFebruary2014,theOffshoreRenewable EnergyDevelopment Planwas published. This plan provides aframework for thesustainabledevelopmentof Ireland’sabundantoffshorerenewableenergy resource

InaccordancewiththeEUobjectiveofreducinggreenhousegasemissionsby80-95%by 2050, Ireland is developing a National Low-Carbon Roadmap, which will set out the strategy to be employed to meet these targets. The Roadmapping process will be coordinatedbytheDepartmentoftheEnvironment,CommunityandLocalGovernmentwithsubstantialinputfromrelevantDepartments.

The Action Plan for Jobs 2013containsanumberofdisruptivereforms2, including transformingIrelandintooneofthemostenergyefficienteconomiesinEuropeby2020.ThePlanidentifiesthevitalrolethatenergyefficiencycanplayinreducingthecostofenergyforbusinessesanddomesticconsumers.

1.(iii) Collective Delivery

Collective delivery acrossGovernment, agencies and industry aswell as the furtherstrengtheningofthecriticalall-islandandEastWestrelationshipshasbeenahallmarkof the key energy achievements over the past seven years and provides a strongfoundationforfurtherengagementtoco-deliveron2030priorities.

Agrowingnumberofprivate sector energy companies are playing an increasingly important role, including through investing in power generation, competing actively for the benefit of energy consumers, implementing the biofuels obligation scheme,delivering on energy efficiency obligation schemes, developing innovative energyservices and technologies and contributing broadly to energy policy, regulatory and market developments.

2 Anewcategoryofhighimpact,crosscuttingmeasuresthattheGovernmentisdeterminedtodeliverthatwillhavearealandimmediateimpactonenterpriseandjobs.


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The commercial State energy companies(BordnaMóna,EirGrid,BordGáisÉireannand ESB) have played a critical role in delivering secure, sustainable and competitive energy supplies through:

n delivering critical electricity and gas network investment programmes,

n addingsignificantfossilfuelandrenewablegenerationcapacity,

n developingco-firingofpeatwithbiomass,

n complyingwithEUunbundlingrequirements,

n reducingdominance(inthecaseofESB)bydivestinggenerationcapacity,

n enhancingcompetitionbynewmarketentry,andofferingnewservices,choiceand value to consumers, and

n investinginR&Dandinnovation.

The State energy agencies have also contributed strongly to collective delivery ofenergypolicyprioritiesasfollows:

n CER – providing a consistent, predictable and stable market and regulatory framework to underpin competition,market entry, and investments in supportofenergycompetitiveness,securityandsustainability,whilealsoembracingnewfunctions includingensuringconsumersafety,protectingconsumers (includingvulnerable consumers) in competitive markets, and supporting innovations such astherolloutofsmartmetering.

n SEAI – playing a leading role in transforming Ireland into a society based onsustainable energy structures, technologies and practices through statistical and analytical expertise, and implementation of support services, educationalprogrammes and grant schemes.

n NORA–enhancingoilsecuritythroughasuccessfulrebalancingofstrategicoilstockssothatby2013,over70%ofstocksareheldasphysicalstocksontheislandof Irelandwith the remainingwholly-ownedstocksheld inneighbouringmarkets,aswellasimplementingthebiofuelsobligationscheme.

Whole of Government delivery remains crucial to developing and delivering energy policyobjectives,particularlyintheareasoftransport,marineandbuiltenvironmentsandsocialprotection.ThesuccessfulimplementationofenergyactionsandobjectivesisalsoanincreasinglyimportantunderpinningforotherkeynationalstrategiessuchastheClimateChangeRoadmapandtheActionPlanforJobs.

Collaboration with Northern Ireland on energy matters is now deeply embedded in Irish energy policy. Such co-operation contributes to competitiveness, security ofsupplyandsustainabilitythroughanumberofprojectsincludingmarketdevelopment,joint capacity and adequacy planning and co-operation on energy security andemergency planning. Industry collaboration and bodies such as the Single Electricity Market (SEM)Committeeand theAll-IslandMarket JointSteeringGroupprovideanimportantplatformforfurtherco-operationon2030priorities.


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UnderpinnedbygreaterphysicalinterconnectionandfurtherintegrationofregionalandEuropean markets, the Ireland/UK relationship is also deepening across increasingly wide-rangingprojects, including theUK/IrelandGasEmergencyPlanningGroup, theintegrationofregionalenergymarkets,collaborativeapproachestooff-shorerenewabledevelopmentsandotherareasofcommoninterest.

I. (iv) International Developments

Climate-change international commitments

Ireland, with the EU, is a party to the Kyoto Protocol which set binding targets to reduce greenhouse-gas emissions for the first commitment period 2008-2012. In Doha, anamendmenttotheKyotoProtocolwasadoptedthatsettargetsforasecondcommitmentperiodwhichcommitsEUMemberStates to jointlyachievea20%reduction in theircombinedgreenhouse-gasemissionsoverthesecondperiodcomparedtothelevelin1990 or their other chosen base years. This reduction commitment is consistent with the 2009‘climateandenergypackage’oflegislationandmirrorsthepackage’sreductionmeasuresatEUandMemberStatelevel.TheFifthAssessmentReportbytheUnitedNations’ Intergovernmental Panel on Climate Change (IPCC) underscores the critical importanceofthesituationandhasanimportantroletoplayininformingdiscussionsatnational,EUandInternationallevels.TheReportconcludedthattheeffectsofclimatechange “are already occurring on all continents and across the oceans but the world is ill-preparedforrisksfromachangingclimate”.Moreover,“nobodyonthisplanet isgoing tobeuntouchedby the impactsofclimatechange”. Ireland remainsengagedand committed, both domestically and internationally, to appropriately advance this work,includingthroughparticipationattheUnitedNationsFrameworkConventiononClimateChange(UNFCCC)wherenegotiationstowardsanewglobaldealonclimateare underway and due to conclude in Paris in December 2015. Any such deal will need toreflectequitableeffortsharingamongallparticipants.Itisexpectedtotaketheformofaprotocol,anotherlegalinstrument,or‘anagreedoutcomewithlegalforce’,andwillbe applicable to all parties.

Exploitation of Unconventional Energy Sources

The 2012 International Energy Agency’s (IEA) World Energy Outlook highlighted a significant change in the global energy landscape due to increased deployment ofhydraulic fracturing (fracking) and horizontal drilling. US unconventional oil and gasproduction is having a profound impact on international energymarkets and pricesand is likely to have significant implications for EU competitiveness, and geopoliticsgenerally. In the EU, the possible exploitation of shale gas is controversial due toconcerns about pollution and climate change. In Ireland, a research programme on the EnvironmentalImpactsofUnconventionalGasExplorationandExtractionisunderwayundertheauspicesoftheEnvironmentalProtectionAgency.

Notwithstanding these new oil and gas resources, oil prices have remained at a high level for thepast twoyears,affecting theglobaleconomic recovery.Thedisparity innaturalgaspricesbetweenregionshasalsoaffectedrelativeeconomiccompetitivenessasUSgaspricesremainsignificantlybelowthoseintheEUandinJapan.


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Nuclear Energy – Post Fukushima-Daiichi Nuclear Power Plant Disaster

Following the accident in Fukushima in March 2011, stress tests were carried outon existing EU nuclear power plants to ensure they could withstand severe natural disasters.Somestatesarecontinuingtheirnuclearprogrammes(forexample,theUK’sHinkley Point C plans), while others are phasing out theirs. Ireland has maintained its stance that nuclear installations should meet the highest international standards with respecttosafetyandenvironmentalprotection,whilerespectingtherightsofstatestochoosetheirowngenerationfuelmix.

International Energy Agency (IEA) Developments

The IEA continues to play an important role in Irish energy policy by contributing to a betterunderstandingofglobalenergydevelopments,internationaloilmarketdynamicsandoptionstomeetclimatechangetargets.TwoIEAin-depthreviewsofIreland’senergypolicywerepublishedin2007and2011.Thefollowingarethekeyrecommendationsfromthemostrecentreview:

n continuetoencouragegreaterdiversificationandflexibilityofgassupply,

n maintainfundingsupporttodevelopanddeploynewlow-carbontechnologies,

n further enhance the consultation, planning and consenting process for criticalenergyinfrastructureprojects,

n ensure that participation in regional energy markets brings benefits to Irishconsumersandcertaintyforinvestors,and

n ensurethatthepowersoftheenergyregulatorareenhancedasnecessary.

Inaddition,theIEAcarriedoutanEmergencyResponseReviewin2009,makingfurtherrecommendationsinrelationtooilandgassecurity,back-upandemergencymeasureswhich are currently being implemented.

I.(v) Developments in the EU

The European Union’s Third Energy Package,agreedin2009,isaseriesoflegislativemeasuresaimedatthefurtheropeningupofthegasandelectricitymarketstocompletetheestablishmentof theEU’s InternalEnergyMarket (IEM).The IEM’sobjectivesaretheachievementofbetteroutcomesforEUcitizensthroughcontributingtoeconomicgrowth,jobs,secureenergyataffordableprices,andsustainabilityinenergyuse.TheThirdPackagealsoprovidesfortheunbundlingoftransmissionanddistributionassets.

The EU Commission’s developing agenda on public interventions in the internal energy market

TheEuropeanCommissionhasbeenactiveinthelastyearorsoprovidingaframeworkforMember States as they develop and design policy interventions in their energy markets andhighlightinghowtheimplementationoftheinternalenergymarketinparticularshouldshape such initiatives. The Commission published its “Communication on delivering the internal electricity market and making the most of public intervention” in November 2013.Theguidingprinciple for theargumentsarticulated in theCommunicationand


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accompanyingStaffWorkingPapers (SWP) is thataproperlydesignedmarket,withsomelimitedpublicintervention,willprovidesufficientpricesignalstoencourageandremunerate investment in electricity markets throughout the European Union. It states that, while public interventions may be necessary in some cases, to support renewable electricity generation and provide sufficient generation adequacy, such interventionsmustbewell-designedandcoordinatedandthattheyshouldnotinhibitthecompletionoftheinternalenergymarketbyintroducingcounterproductivedistortionstoit.

While the Communication is not legally binding, the Commission has made it clear that itwillenforcetheguidelinesthroughrigorousimplementationofThirdEnergyPackagelegislation and through the revised guidelines on environmental and energy state aid for2014-2020.These revisedguidelineswillbedeveloped in2014.Potentially thereare significant implications for national energy policy as the European Commissionseekstoinfluenceandalignappropriatenationalpublicinterventionsinenergymarketswitha view toenhancing the integrationofMemberStateenergymarkets.SuchanapproachmayrestrictIreland’soptionsinthedesignofpolicyinitiativesandregulatoryinterventions in the energy area.

TheEUEnergyRoadmap2020makesprovisionforanon-bindingEUenergyefficiencygoal of 20% energy savings by 2020. A review of each Member State’s progresstowards the European 20% objective will take place in 2014. The new Energy Efficiency Directive(2012/27/EU)translateselementsoftheEuropeanEfficiencyPlaninto binding measures on Member States.

In 2011, the EU Commission published an Energy 2050 Roadmap which sets out a number of different scenarios for developing a decarbonised energy sector overthecomingdecades.Underallofthesescenarios,therewillbeasignificantincreaserequiredinrenewableenergydeploymentinEurope.

In 2007, the European Union agreed a Renewable Energy Directive with new climate and energy targets: 20% reduction in greenhouse gas emissions, 20% improvement in energyefficiency,and20%oftheEU’senergydemandtobefromrenewablesourcesby2020.TheDirectiveestablishedacommonframeworkforthepromotionofenergyfrom renewable sources. It set mandatory national targets for the overall share ofenergyfromrenewablesourcesingrossfinalconsumptionofenergyandfortheshareofenergyfromrenewablesourcesintransport(aminimumof10%).

The Commission’s Renewable Energy Communication(2012)identifiesareaswhereeffortsshouldbesteppeduptoachieve2020renewableenergygoalsinacost-efficientmanner. These are the:

n completionof the InternalEnergyMarketandadoptionofconsistentschemesacross the EU that encourage cost reductions and avoid over compensation,

n increaseduseoftheco-operationmechanisms,and

n improvedco-operationintheMediterranean.


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In January 2014, the European Commission published a Communication on the policy framework for climate and energy in the period from 2020 to 2030, which will guide discussion on energy and climate policy at EU levale during 2014.

TheEURegulationonGuidelinesforTrans-EuropeanEnergy Infrastructure came into forceinMay2013,andaimstoensurethatmajorEUenergyinfrastructureofstrategicimportancetoEurope,includingnetworksandstoragefacilities,areinplaceby2020.ProjectsofCommonInterest(PCIs)designatedundertheRegulationcanavailofmorestreamlinedplanningarrangementsandotherbenefitsandanumberofprojectswithcrossborder impactsbetween Ireland and theUKweredesignatedon the firstPCIlist,whichapplies for thenext twoyears in theareasofelectricity transmission,gastransmission,LNGandgasstorageandelectricitysmartgrids.Theseprojectsareofascalecapableofmakingasignificantcontributionto improving Ireland’ssecurityofenergy supply, to facilitating the development of the renewable energy sector, andto enabling greater consumer participation in the energy market through smart grid technology. An Bord Pleanála has been designated Ireland’s competent authority under theRegulationandwillnowhaveasignificantroleintheplanningandpermittingprocessforIreland’sPCIs.OtherstrandsoftheRegulationarebeingimplementedvariouslybythe EU Commission and ACER and in Ireland’s case by the CER as Ireland’s energy regulator.PCIsmaybe eligible for EU fundingunder theConnectingEuropeFacility2014-2020 (CEF)whichwasestablishedunderaseparateRegulation,also in2013.It aims to support the completion ofmajor EUpriority energy, transport anddigital/communications infrastructure projects with some €5bn earmarked for energy. TheCommissionwilllaterthisyearlaunchthefirstcallforfundingproposalsforqualifyingPCIsundertheCEF.

In2010,theEUadoptedmeasurestosafeguardsecurity of gas supply (Regulation No994/2010) to improvesafeguards in relation tosecurityofgassupplyacross theEUandtoensurethatMemberStatesarebetterpreparedtorespondtoamajorgasdisruption.TheRegulationwasimplementedinIrelandbyEU(SecurityofNaturalGasSupply)Regulations2013(SINo.336of2013).

In relation to Energy Research, Technological Development and Innovation the European Strategic Energy Technology Plan (SET-Plan) gives a strategic orientationfortechnologydevelopmentandresearchintheenergyfielduntil2020.Itorganisesastructureddialoguebetweentherelevantplayers,definespriorityareasfortechnologydevelopment and focuses on industrial applications through large scale projects ofEuropean value. The recent Commission Communication on Energy Technologies and Innovation, launched at the SET-Plan Conference during the Irish Presidencyin 2013, sets out how the high-level policy should be implemented and articulatesvariouspotentialmodalitiesforensuringgreaterconvergencebetweennationalandEUresearchsupportprogrammes.IthasalsoshapedtherecentcallforproposalsundertheHorizon2020researchprogramme,thesuccessortotheFrameworkProgrammesforResearch.


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I. (vi) Developments since 2007: economic context and energy prices

In recent years, Ireland has experienced dramatic economic change, representing an important backdrop for developments in energypolicy.With the onset of the globalfinancial crisis in 2008, the countrywas plunged into recession, ending a period ofunprecedented economic growth. Government, working with international partners, has since enacted measures to put the Irish economy back on a sustainable growth path. The Economic and Social Research Institute (ESRI) predicts a strong recovery, with 3% growth in GDP expected in 2014, and 4% average annual growth expected in thefollowingyears,upto2020.

Energy, as both a sector within the economy and a cross-cutting input into everyaspectofthewidereconomy,isinextricablylinkedtothebroadereconomiclandscape,and has an integral role to play in enabling future growth. Government recognisesthat reliable, sustainable, affordable energy is vital to Ireland’s economic successboth at home and abroad, and has continued to make critical investments in energy research and infrastructure, despite challenging economic conditions. The EirGridGrid25initiative,announcedin2008,hasearmarked€3.2billionupto2025toupgradeIreland’s electricity transmission network, and substantial investments are being made to improve the Irish gas network. These critical efforts are helping to bring moreenergytomorepartsofthecountrythaneverbefore.Investmentinrenewableenergyinfrastructure has facilitated remarkable levels of clean-energy generation in Ireland,allowing the country to make impressive progress toward its sustainability targets and explorethepotentialforadditionaleconomicbenefit.

Recentstudieshaveshownthepositiveimpactofenergyefficiencyonjobcreationandeconomicactivity.Energyefficiencyprogrammes,deliveredbySEAI,areestimatedtohavesupported3000jobsin2013andprovideanimportantstimulusfortheconstructionsector.Internationally,thereisevidencetoshowthatevery€1millioninvestedinenergyefficiencycreates19jobs.3Publicfinanceofenergyefficiencyprogrammesisfoundtoleveragesignificantamountsofprivateinvestmentanddeliverpositivesocietalreturns.Every€1spentontheBetterEnergyprogrammebySEAIdeliversanetbenefitof€5tosociety through energy, CO2 and other pollutant savings.

Despitereducedenergyconsumption,Irelandstillspends€6.5billiononenergyimports,takinglargeamountsofmoneyfromthedomesticeconomy.Developingourindigenousrenewable energy sources allows more energy and economic independence, reducing our exposure to international energy prices and cutting our energy import bill.

3 JanssenandStaniaszek(2012),Howmanyjobs?Asurveyoftheemploymenteffectsofinvestmentinenergyefficiencyofbuildings. A report for the Energy Efficiency Industrial Forum. http://www.euroace.org/PublicDocumentDownload.aspx?Command=Core_Download&EntryId=433.

CopenhagenEconomics(2012)MultipleBenefitsof investinginenergyefficientrenovationofbuildings:ImpactonPublicFinances.AreportforEuroace.http://www.renovate-europe.eu/Multiple-Benefits-Study.


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http://www.euroace.org/PublicDocumentDownload.aspx?Command=Core_Download&EntryId=433

http://www.euroace.org/PublicDocumentDownload.aspx?Command=Core_Download&EntryId=433

Anotherareawithconsiderableeconomicpotentialisthatofhydrocarbonexploration.To encourage investment in this regard, the State is:

n offering attractive and innovative licensing opportunities, such as the 2011Atlantic Margin licensing round,

n providingafit-for-purpose,transparentandrobustregulatoryregime,

n deepeningknowledgeofouroffshorepetroleumpotential, inparticularthroughdataacquisitionandsupportingkeyresearchprojects,and

n promotingactivelytheopportunitytoinvestinexplorationintheIrishoffshore,inparticular to companies not currently active here.

I. (vi) (a) Energy use

Since2007,overallprimaryenergyusehasdecreasedby19%(seeFigure1),drivenlargelyby thedownturn in economic activity andbygains in energy efficiency.Withtheexceptionofcoalandrenewables,allenergysourceshavedecreased,consistentwiththeoverallscenario.Useofrenewableenergyhas increasedconsiderably inthesame period, in 2012 it grew by 11% from 2011 to represent 7.1% of final energyuse.4 Resulting from both decreased demand and successful energy policy, Irelandhasmovedfromapositionofrequiringadditionalgenerationtobeadded, inthe lastdecade,toenjoyingacomfortablelevelofcapacityavailableincomingyears.

Figure 1: Primary energy use in Ireland by fuel, 1990-2012

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2

4

6

8

10

12

14

16

Mtoe

Coal Peat Oil Natural Gas Renewables NR(W) Net Electricity Import/Export

Source: SEAI, Energy in Ireland 1990 – 2012, 2013 report

4 SustainableEnergyAuthorityIreland,“EnergyinIrelandKeyStatistics2013,”December2013.


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I. (vi) (b) Prices

The factors influencing Irishelectricityandgaspricesare identified in thetextbox inPriority2butamong themain factors is that Ireland isaprice-takeron internationalfossilfuelmarkets.Energypricescontinuetobeshapedbyglobaltrends,includingtheboominUSnatural-gasproduction,adeclineinnuclearenergyfollowingthemeltdownatJapan’sFukushimaDaiichiplant,andincreasingdemandinfast-growingcountrieslikeChina,IndiaandBrazil.InIreland,beingsubjecttoglobalmarketpriceshasmeantthat, in timesof economicgrowth, high Irishdemanddoesnot necessarily increaseprices, and similarly a drop in economic activity does not yield lower energy prices. However, Government policy emphasis on energy efficiency and renewable energydevelopmenthasmeant that Irishconsumersareat their leastdependenton foreignfossil-fuelimportssince2000.

Ireland’s status as an island nation, a geographically dispersed population and high dependenceonimportedfossilfuelsgenerallyresultinIrishenergypricesbeinghigherthanthoseformanyofitsEuropeanneighbours.Intheperiodsince2007,theaverageprice paid by residential and business consumers for energy throughout theOECDandtheEU,includingIreland,hasbeenonanupwardtrend,asillustratedinFigures2and 3.

Figure 2: Real energy price change to households since 2005 in EU-15 (index)

80

100

120

140

Index 1st Qtr 2013 (yea

r 2005 = 100)

160

180

200

220

United Kingdom

Sweden

Spain

Portugal

Netherlands

LuxembourgIta

ly

Ireland

Greece

Germany

France

Finland

Denmark

Belgium

Austria

OECD Europe

■ Household Gas Price Index (real)■ Household Oil Price Index (real)■ Household Electricity Price Index (real)

Source: SEAI, Energy in Ireland 1990 – 2012, 2013 report

Overall,realenergypriceshaveincreasedforIrishhouseholdsby27%between2007andthefirstquarterof2013,reflectingourhighdependencyonimportsofoilandgas.


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Global oil and gas prices rose in 2012, resulting in Irish household energy prices rising by 9.1% between 2011 and 2012. Within the Euro Area, Irish household electricity priceshaveremainedbelowtheaveragesincethesecondhalfof2009.IrishhouseholdgaspriceswereconsistentlybelowtheEuroAreaaveragefromthefirsthalfof2008untilthesecondhalfof2011.Sincethen,IrishhouseholdgaspriceshaveincreasedatafasterratethantheEuroAreaaverage.

Figure 3: Real energy price change to industry since 2005 in EU-15 (index)

60

90

120

100

150

180

210

240

Index 1st Qtr 2013 (yea

r 2005 = 100)

United Kingdom

Sweden

Spain

Portugal

Netherlands

LuxembourgIta

ly

Ireland

Greece

Germany

France

Finland

Denmark

Belgium

Austria

OECD Europe

■ Industry Gas Price Index (real)■ Industry Oil Price Index (real)■ Industry Electricity Price Index (real)

Source:SEAI(2013),EnergyinIreland,Figure41(basedonIEAenergypricesandtaxes)

RealenergypricesforIrishbusinesseshaverisenby31%since2007,againreflectingIrishdependenceonoilandgas,whichwerethemaindriversofglobalenergypricesover the period. Industry electricity prices showed the biggest increase at 80%,comparedwith gas and oil prices.Competitiveness in terms of electricity prices forIrishbusinessesimprovedfromthesecondhalfof2008untilthesecondhalfof2011,however, electricity prices increased in Ireland at a higher rate than the EU and Euro Areasincethesecondhalfof2011.Since2007,Irishgaspricesforbusinesseswerebelow the EU and Euro Area average formost of the period,with the exception ofthefirsthalfof2009whentheywereabovetheEUaverage.Therehasbeenupwardpressureongaspricesto industrysincethesecondhalfof2011comparedwithEUandEuroArea.IrelandhasoneofthehighestdependenciesoffuelmixforelectricitygenerationonfossilfuelsinEurope,at72%.

Aswithresidentialusers,consumersof lessenergypayarelativelyhigherpricethantheir European counterparts. In keeping with residential prices, as demonstrated in Figure3,theEUaveragepriceforbusinessconsumersisonanupwardtrend.Thesepricesareweightedtotakeaccountofdifferentpricebandsreflectinglevelsofuse.


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I. (vi) (c) Energy mix 2012

Energy is used in the economy in electricity, heating and transport, and in approximately equal proportions in each of the three sectors.5 Figure 4 illustrates Ireland’s totalprimary energy requirement and total final consumption in 2012. It shows that theeconomyremainslargelyreliantonimportedoilandgasforitsenergy,withpeat,coaland renewables contributing to a lesser extent.

Figure 4: Ireland’s total primary energy requirement and total final consumption, 2012

Hydro 69 ktoeWind 345 ktoe Biomass, Other Renewables

& Wastes 468 ktoeElectricity Imports(net) 36 ktoe

Briquetting 14 ktoe

Natural Gas own use /loss 61 ktoe

Oil Refining104 ktoe Electricity Transformation

& Transmission Losses2,514 ktoe

Transport 4,195 ktoe

Residential 2,715 ktoe

Industry 2,252 ktoe

Services 1,326 ktoeAgriculture & Fisheries273 ktoe

Peat 802 ktoeCoal 1,482 ktoe

Natural Gas 4,023 ktoe

Oil 6,005 ktoe

Note: Some statistical differences exist between inputs and outputs

Tota

l Prim

ary

Ene

rgy

Requ

irem

ent

13,2

29 k

toe

Total Final Consumption 10,761 ktoe

Source:SEAI(2013),‘EnergyinIreland1990-2012’,Figure5.

I. (vi) (d) Summary of current economic context

Asnotedabove,Irelandhasundergonesignificanteconomictransformationsincethe2007WhitePaper.Followinganunsustainableboom,theeconomysufferedanalmostunprecedentedcollapse.Since then, signsof recoveryhaveemergedbutmuch stilldependsontheperformanceofourtradingpartners.Asaprice-takeroninternationalmarkets,Irelandisvulnerabletomovementsoffossil-fuelprices.Whileenergymarketshave been liberalised to bring competitive pressures on prices, they have historically been high,relativetoourEUtradingpartners,duetoanabsenceofindigenousalternatives,geographic isolationand lowpopulationdensities. Improvements inenergyefficiencyandanincreaseintherenewableenergyshareoftheenergysupplyarehelpingIrelandtobecomerelativelylessdependentoninternationalfossil-fuelprices.

5 Source: SEAI Energy in Ireland 1990-2012, 2013 report.


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II. Green Paper Energy Policy Priorities

SixEnergyPolicyPrioritiesforDiscussionAsdiscussed inprevioussections,energy is integrated intoall sectorsandareasofmodernlife,therefore,manydifferentthemesandissuesarerelevantinaconversationaboutIreland’sfutureenergypath.Tohelpstructurethediscussion,theDepartmentofCommunications,EnergyandNaturalResourceshasidentifiedsixpolicypriorityareasforconsiderationintheGreenPaper:

Priority 1: Empowering Energy Citizens

Priority 2: Markets and Regulation

Priority 3: Planning and Implementing Essential Energy Infrastructure

Priority 4: Ensuring a Balanced and Secure Energy Mix

Priority 5: Putting the Energy System on a Sustainable Pathway

Priority 6: Driving Economic Opportunity

TheDepartmentrecognisesthatcertainsubjectsarecommontoseveralpolicypriorities.It selected these six policy priority areas simply as a way to organise the discussion. In particular,Priority5and6,onsustainabilityandeconomicopportunity,areexamplesofcross-cuttingthemesthatareintegraltoallenergypolicypriorityareas.Attheendofeachpolicyprioritysection,aseriesofopen-endedquestionsissetoutforthepurposeofstimulatingdiscussiononkeyissuestobetakenintoaccountinthedevelopmentoffutureenergypolicy.Readersareencouragedtogive feedbacktotheDepartment inresponsetothesequestionsortosuggestadditionalinputs.


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Priority 1: Empowering Energy CitizensThescaleoftheenergytransformationthatwillhappeninthecomingdecadeswillbeunprecedented.TheinvolvementofIrishcitizensinchoosingtheappropriatepathwayfor energy policy is essential in enabling Ireland to realise its potential to be a low-carbon, inclusive, competitive and secure energy society. To ensure that the citizen remainsatthecentreofenergypolicy,energyusersmustbe informedandproactivecontributorstotheongoingevolutionoftheIrishenergymarket.Challengesanddifficultchoices lie ahead, so it is important to engage citizens in seeking and implementing solutions. Priority 1 aims to start a discussion on the role that Irish citizens can play, as we collectively transform the Irish energy system, and on what is needed fromGovernmenttoenableandencouragepeopletojoininthisprocess.

1.1 Contextual Background

AstheEuropeanUnionaimstodecarbonisetheenergysystemby2050,fundamentaland profound decisions about how we generate, transport and use energy willhave to be addressed by energy consumers and policymakers alike. There are two complementary paths to decarbonising the existing energy system: optimising energy usethroughefficiencyandconservation,anddeployinglower-carbonenergysources.Energycitizenscanembraceboth,totheirbenefit.Savingenergyathomeoratworkissimpleandcanbeachievedoftenatarelativelyminorcost.Likewise,mechanismsareinplacetostimulatetheinstallationofrenewableenergytechnologiestohelpoffsetfossil-fueluse.

Theenergyenvironmenthaschangeddramatically forconsumersover thepast twodecades. Liberalised energy markets have provided Irish consumers with more choice than ever before, better information is now available to consumers in a variety offormats, and innovative technologieshave tremendouspotential to further empowerIrish energy users. Although the future direction of energy priceswill always remainuncertain, greater variety allows consumers to switch between retailers, ensuring that they enjoy themost competitive tariff, and transitioning energy users from a role ofpassive consumer to active, engaged energy citizens. At the same time, the evolution ofenergymarketshasmade the roleof theenergycitizenmorecomplex,making itdifficult toaccessalloftheways inwhichconsumerscanmanageenergycostsandshape energy policy.

Afunctioningenergymarketrequiresasafeandreliablegridinfrastructure.Sincethe1990s, thenationalgridhasbeengreatlyexpandedand reinforced inorder tomeetIreland’s growing population and increased economic activity. As new technologies and power sources continue to emerge, the ongoing renewal of Ireland’s energyinfrastructurewillneedtocontinue.Theplanningregimeprovidesarigorousandrobustplatform for developing essential energy infrastructure. It is imperative that publicauthorities work in partnership with industry and community stakeholders to ensure thattheplanningsystemcantakeobjectivedecisionsonenergyinfrastructureforthebenefitofsocietyasawhole. In2012,theGovernment issuedapolicystatementon


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the strategic importance of transmission and energy infrastructure.6 The statement reaffirmedtheimperativeneedfordevelopmentandrenewalofourenergynetworksinorder to meet economic and social goals.

1.2 Protecting Vulnerable Energy Citizens

Inabilitytoaffordadequatehomeheatingorlightingisdetrimentaltohealthandwellbeing.TheGovernment has recognised the challenge faced by those experiencing energypoverty through the Affordable Energy Strategy,7 which aims to make energy more affordableforlow-incomehouseholdsinIreland.Theunderlyingfactorsthatinfluenceenergyaffordability areenergyprices, thermal efficiencyand incomes.While incomesupports,suchastheNationalFuelSchemeandHouseholdBenefits,playanimportantrole inreducingthefinancialburdenofenergybills, theyrepresentanexpensivewayofmitigating energy poverty. In contrast, improving the thermal efficiency of homesremainsthemostcost-effectivemeansofincreasingenergyaffordabilityandreducingenergy poverty. By the end of 2013, more than 105,000 low-income householdsacrossthecountryhadreceivedfreeenergyefficiencyupgradesthroughprogrammesadministeredbytheSustainableEnergyAuthorityof Ireland (SEAI),savingmoney forvulnerablefamiliesandimprovingthelivesofhundredsofthousandsofenergycitizens.

1.3 Saving Energy at Home

Withresidentialenergyrepresentingmorethanaquarteroffinalenergyuse,citizenscollectivelyarebigusersofenergy.Whilenewbuildingsarebecomingmoreefficientthankstotighterspecificationsonenergyperformanceinrecentbuildingcodes,8 these represent onlyarelativelysmallpercentageofbuildingsinIreland.Furthermajorimprovementoftheenergyperformanceoftheexistingbuildingstockwillbeneededinthefuture.

Citizens can have a strong impact on the energy market by taking steps to reduce their energy demand and costs in their homes.Commonly available energy-efficientproductsand technologiesallowhouseholds tocutenergywastewithout sacrificingconvenience.Indeed,energyefficiencyhaslongbeenrecognisedasthemosteffectiveway to control costs, and it is internationally recognised as themost cost-effectiveapproachtoreducinggreenhouse-gasandotherairemissionsfromtheenergysector.When implemented at a national level, simple steps such as installing attic insulation or high-efficiency lighting canhaveprofound implications for overall energyuseandcarbon pollution. For example, if every household in Ireland installed high-efficiencylight bulbs, residential electricity consumption would drop by 7%, saving 600 GWh, orover€41millionperyear.Ireland’sreachingoftheEUtargetofa20%reductioninenergyuseby2020willdelivercollectivesocietalsavingsvaluedat€2.36billion.9

6 DepartmentofCommunications,EnergyandNaturalResources (2012), ‘GovernmentPolicyStatementon theStrategicImportanceofTransmissionandOtherInfrastructure’.

7 WarmerHomes:AStrategyforAffordableEnergyinIreland.http://bit.ly/R6ZY9w

8 BuildingRegulations 2011, Part L:Conservation of Fuel andEnergy – dwellings: http://www.environ.ie/en/Publications/DevelopmentandHousing/BuildingStandards/FileDownLoad,27316,en.pdf.

9 TheNationalEnergyEfficiencyActionPlan.


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http://www.environ.ie/en/Publications/DevelopmentandHousing/BuildingStandards/FileDownLoad%2C27316%2Cen.pdf

http://www.environ.ie/en/Publications/DevelopmentandHousing/BuildingStandards/FileDownLoad%2C27316%2Cen.pdf

Giventheupfrontcapitalnecessarytostimulatesuchsavings,Governmenthasmadegrants available for the installation of home energy efficiencymeasures through theBetter Energy programme to help ease the initial cost to consumers. The Better Energy Homes scheme, administered by the SEAI, has grant-aided the upgrade ofmorethan150,000homes,ontopofthe105,000vulnerablehomesmentionedabove.Total investmentstimulatedby theseprogrammescomes tomore than€600million,generatinglifetimeenergycostsavingsofmorethan€1.2billion.Astheenergyupgrademarketgrows,homeownerswillneedaccesstoaffordableprivatefinancinginordertorealisefurthersavings.Severalschemesareunderconsiderationtoencouragegreaterlendingbyprivatefinancialinstitutionsforenergyefficiencyprojects.

Through the Better Energy Communities scheme, citizens can collectively apply forfundingfortheircommunitytoupgradebuildingsintheirneighbourhood.In2013,SEAIawarded€15millionthroughtheBetterEnergyCommunitiesschemeto84communityenergy projects countrywide, which involved the upgrade of 3,540 homes and 291community,publicandprivatefacilities.

1.4 Decarbonising Energy in the Home

Renewable energy also plays an important role in empowering citizens. The building regulationsrequireallnewhomesto integraterenewableenergy technologies.Whencombined with high thermal performance, these measures reduce energy demand,whichinturnwouldreducetheamountofnewgenerationthatwouldneedtobebuilt,resulting in lower costs to consumers.

Micro-generation incentives, such as feed-in tariffs or grants that enable individuallyhosted solar arrays, wind turbines, and other technologies are policy instruments that couldallowhomeownerstobecomeincreasinglyenergyself-sufficient.Thiscouldalsofacilitateagradual transition toadecentralisedgrid; thecost implications relating tohowsuch incentiveswouldbepaid forandbywhomrequiredetailedconsideration.Greater electrification of home heating could also lower heating-related emissionsparticularlyfromsolidfueluse.WhilethesemeasureswouldultimatelyreduceIreland’sdemand for importedoil andgas, their large-scaleadoptioncould requireadditionalinvestment in the electrical grid. Such incentives would also need to be supported by accessiblefinancingoptionstomitigateup-frontcapitalcosts.

1.5 Innovative Relationships between Energy Suppliers and Consumers

As society and markets experience a broad shift towards technological innovation,citizens will see a corresponding trend across the energy sector. The impending arrival of internet-enabled and -connectedenergyproducts and serviceswill result in bothopportunitiesandchallengesforpolicymakers,regulatorsandconsumers.

Obligations on energy suppliers to meet specified energy savings targets will driveinnovation in the services offered by suppliers and their role in supporting energyefficiency. Energy suppliers will be actively looking for citizen partners to engage inreducing energy demand. Under the National Smart Metering Programme, smart


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meterswill be installed inhomesnationwide,beginning in2015/16, allowingenergyuserstomonitortheirconsumption inreal time.Thesmartmetersshouldhaveuser-friendly interfaces thatallowcitizens toeasily interpret theirenergyuseand facilitatechange inbehaviour to reduceenergyconsumption. It isanticipated that thesmart-meter rolloutwillbeaccompaniedby time-of-use (TOU) tariffs,whichwilloffer lowerelectricity pricing during off-peak hours in order to incentivise consumers to switchusagefromhigh-demandperiods.GiventhatTOUwouldcertainlyaffectpeakprices,a possible concern is that this pricing structure could present challenges for thosewhomaynotbeinapositiontoadjusttheirenergyconsumptionwithoutassistance,possiblythosewithmedicalneeds,vulnerablecustomers,orthosewhofinditdifficulttomanageelectronicallytheirenergyconsumption,forwhateverreason.Government,regulators and industry will need to implement smart energy-saving measures in amannerthatachievesthedesiredsavingswhilemaintainingafavourableenvironmentfor consumers, including specifically addressing the capabilities of all categories ofconsumers to adjust their behaviour to take account of TOU pricing. Indeed,whencombined with better access to energy data, digitisation also creates economic opportunitiesforintermediariestocollect,analyseandpresentenergy-useinformationin easily understood ways that allow the consumer to take greater control over their consumption and costs.

Beyonditsimmediatebenefittoenergyusers,smartmeteringwillfacilitatethetypesofinnovativedigitaltechnologiesthataresettounderpinthefutureoftheenergysector.Smart metering also supports efficient use of wind generation, increased demandparticipationandefficientuseofnetworks.Theremaybescopetoencouragesimilarinnovations in the adoption of renewable energy and energy efficiencymeasures inhouseholds.As cleaner sourcesof energy andmore efficientproducts and servicesbecome available, the regulatory environment should remain flexible and responsivein order to accommodate new technologies. Creating the right regulatory conditions for the widespread adoption of emerging energy technologies could reduce furtherIreland’simportoffossilfuels,andoptimisegridperformance.

1.6 Realising the Benefits of Competition

GiventhatmanyofthedriversunderlyingIrishfuelpricesarenotcontrollable,creatingacompetitiveframeworkintheelectricityandgasmarketsisakeyfocusofGovernmentand regulatory action on costs. Competition ensures that consumers have choices aboutproducts,pricesandsuppliers,andcaneasilyswitchtothebestoptionfortheircircumstances. Since the 2007 Energy Policy Framework, competition in Irish retailelectricity and gas markets has grown. In 2013, there were seven active suppliers in the electricity retail market, in both the business and domestic segments. Recently, new entrants and innovations in themarket have included firms offering the supplyofelectricityviapre-paymentmetersand the launchofacampaign tosecuregroupdiscounted electricity and gas prices. There are eight active suppliers in the retail gas market,fiveofwhichoperateinthedomesticgasmarket.

Inorder to fully realise thebenefitsof competitiveenergymarkets, consumersmustalsobeable toeasilyaccesscomprehensiveenergyusageandprice informationsothat they can switch suppliers according to their needs and options. To aid customers in


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confidentlycomparingproductsandservices,theCERhasestablishedanaccreditationframeworkforpricecomparisonwebsiteservices,underwhichtwopricecomparisonwebsites have been accredited.

Supplierswitchingoffersanimportantmetricofcompetitionandconsumerengagementin the retail markets, and Ireland’s switching rates rank highly in a global context. Since 2010 there have been more than 1.3 million electricity switches, representing nearly 60%oftheIrishmarket,andover343,000gasswitches.Switchingcontinuestotakeplace in both the electricity and gas markets. While both markets saw a reduction in switching between 2011 and 2012, switching levels in 2013 increased over 2012 levels:theswitchinglevelforgas(17.8%)surpassedthepeakof2010,whilethelevelforelectricitywasabove11%in2013.Withincreasedsuppliercompetitionandinitiallyhighlevelsofswitching,switchingmaybeworthyoffurtherresearchandanalysis.10

1.7 The Educated and Informed Citizen

Irishpeoplearemoreawareofenergythaneverbefore,intermsofthecoststothemandtheirfamilies,thewiderdebatesofwhereourenergycomesfrom,itsenvironmentalimpacts,andtheinfrastructurerequiredtodeliverit.Overthepastdecade,SEAIhasdevelopedinformationservicesonenergyefficiencyandcleanenergyoptions,makingit a focal point for citizens seeking information on energy matters, with more thanamillionhitsayearonthewebsite.Italsoinformsdebatesthroughitsstatisticalandmodellingoutputs,andthroughconferencesandeventssuchastheEnergyShow.

Empowering all energy consumers tomake informeddecisions about how theyuseenergy is an importantpartof nationalpolicy.Thisextends fromeverydaydecisionsaboutenergyusetomajordecisionssuchasbuyingacarorahomethatwillhaveastrongimpactinenergyuseovermanyyears.BuildingEnergyRating(BER)certificatesarenowrequiredforallhomesofferedforsaleorrent;theseallowpotentialpurchasersor renters to factor futureenergycostsandcomfort into their choices.Over45,000IrishhomesalreadyhaveBERs,meaningthatourknowledgeofenergyuseinhomesisgrowingrapidly.Evidencehasalreadyemergedofapremiuminpriceofsaleorrentforhomes with better energy ratings.

Educationinschoolsisavitalpartofbuildingnationalawarenessofenergyissuesandinformingthenextgenerationofdecision-makers,societalleadersandenergyconsumers.SEAI’s energy education programmes have directly engaged more than 250,000 school pupilsinthepasttenyears.Educationandinformationwillremainacentralpartofbuildingournewenergysystemsofthefuture.Publicconsultationisalsogrowinginitscentralityinthedevelopmentofenergypolicyandspecificprogrammesandinitiatives.

Givenitsimportanceforclimateandcleanairpolicies,energyisalsooneofthecorethemesoftheGreenSchoolsProgrammewhichrunsinover90%ofschoolsinIreland.TheGreenSchoolsProgrammeisrunbyAnTaisceandisfundedbyvariousGovernmentDepartments, local authorities and private companies. The programme aims to instil a strongsenseofenvironmentalawarenessandresponsibilityinstudents.

10 Hyland, M., R. Lyons, and S. Lyons (2014), The value of domestic building energy efficiency – evidence from Ireland, ESRI Research Bulletin, Dublin: https://www.esri.ie/UserFiles/publications/RB20140103/RB20140103.pdf.


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Priority 1 – Empowering Energy Citizens: Questions and Policy Options

1. Howcanweencouragecitizenstobepartofourtransitiontofutureenergypathsand the policymaking process that goes with it? Given the scale of changesneeded,whataretherightmechanismstoengagecitizens(e.g.would‘energycitizen’impactassessmentsforenergypolicydecisionsortransitionfromwrittenconsultations to interactive workshops with interested stakeholders be more effective)?

2. What formal and informal mechanisms could be used to enhance citizenengagement with regulatory and policy decisions and how should they be structured?(e.g.shouldtherebegreateruseofconsumerpanels?)

3. Howcanweincreasetherateofhomeretrofitradically?WhatcanGovernmentdotoencouragecitizenstoundertakeambitioushomeupgradesinlargenumbers?Arethereparticularbarriersthatneedtobeovercome,suchaslackoffinance,information,andskilledprofessionals?

4. Howcanweraiseawarenessofthescaleoftheenergychallengesfacingusandtheways thatcitizenscanbepartofcollectivesolutions?Whatcanwedo toimprovecitizens’accesstoenergyinformation?

5. How have other countries effectively engaged citizens in infrastructuraldevelopment,andwhichinnovativeorinterestingapproachescouldbehelpfulinIreland?

6. IstherefurtherscopeforswitchingintheIrishretailelectricityandgasmarketstoenablecustomers toavailofalternativepriceandproductopportunities,ordo thenumbers indicate that Irishswitchinghasplateaued? If there is indeedfurtherscopeforswitchingforconsumerbenefit,aretherebarriersthatneedtobeovercome,suchasavailabilityofinformationorconsumerdifficultieswiththeswitchingprocess?

7. Is micro-generation the most cost-efficient solution to decarbonising homeenergy, andwho should bear the costs of any associated support scheme –consumers,taxpayersorindustry?

8. What is needed to ensure that smart meters enable greater consumerempowermentintheIrishenergymarket?Aretherestepsthatshouldbetakento allow smart meters to play the fullest role in enabling greater consumerempowerment in the Irish energy market, in particular in relation to behavioural change, aside from CER’s ongoing preparations for the national smart meterrolloutprogramme,anditsassociatedregulatorydecisions?


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Priority 2: Markets, Regulation and PricesAstableregulatoryframeworkwillhelptodelivercompetitive,secureandsustainableenergyoutcomesforIrishelectricityandgasconsumers,enablingIrelandtorealisethefullbenefitsfromachievingtheEU’senergypolicyobjectivesofgreaterenergymarketintegrationandbetterregulationandtofacilitateinvestmentintheIrishenergysector.


Theregulatory framework iscritical toachievingcompetitive,secureandsustainableenergyoutcomes.Theestablishmentofregulators,withvaryingdegreesofindependence,is now a common feature of energy policy in the EU and across OECD countries.Ireland has had an independent energy regulator in place since 1999. Market opening has allowed new actors to enter energy markets, ensuring greater competition and morechoiceforconsumers.LargelydrivenbyEUpolicy,thelegislativeandregulatoryenvironment has expanded in recent years to include additional energy policy areas, suchasenhancingsecurityofsupply, facilitating the integrationof renewableenergyandencouragingenergyefficiency.

LikemostEUMemberStates, Ireland’sregulatory framework forenergycontributes intwomainwaystoenergypolicy:regulationfacilitatestheachievementofnationalenergypolicy goals, and it provides stable, transparent, evidence-based regulation, therebyincreasingchoice,enhancingquality,ensuringcontinuedinvestmentandensuringnetworkcosts that are as low as possible, commensurate with Ireland’s energy circumstances and investment needs. Over the last decade, the EU has become increasingly involved in shaping both the scope and nature of the regulatory framework in energy, and inparticular,determiningappropriateroles,powersandfunctionsforregulators.

Commissioner for Energy Regulation – Independent Energy Price Regulation in Ireland

The Commission for Energy Regulation (CER), which regulates Ireland’s gas andelectricity markets, is an independent statutory body established under the Electricity RegulationAct,1999,asamendedwhichprovidesthatitisindependentinitsdecision-making. Member States are obliged under EU law to guarantee the independence oftheirenergyregulators.CERis fundedbymeansofa levyontheenergy industryandisaccountabletoanOireachtasCommitteefortheperformanceofitsfunctions.The Minister appoints the Chair and Commissioners to the CER and may issue policy directions toensure theproperandeffective regulationof theelectricitymarkets. Incarryingoutitsfunctions,theCERisrequiredtoprotecttheinterestsoffinalcustomersofelectricityorgas.


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Prices regulation

CERhadresponsibilityforregulatingtheretailpriceschargedbytheESBandBGÉonly.TheregulationofESB’sretailelectricityprices forhouseholdsandsmall tomedium-sizebusinessendedin2011;pricesforlargeusershadpreviouslybeenderegulated.During electricity price regulation, CER did not always allow the increases sought and on occasion reduced prices (e.g. in January and May 2009). As regards gas, CERcontinuestoregulateBGÉ’sretailpricesforhouseholds;(itsregulationofthesepricesmayendthisyear);BGÉ’s tariffs forallbusinessconsumershavebeeneitherderegulated or were never regulated.

CERcontinuestoregulatethenetworkcomponentthatfeedsintotheelectricityandgas retail prices. Every five years it undertakes a review in order to put in place arevenue controls setting the transmission and distribution revenue that can be collectedfromconsumers.Thisrevenueissetatalevelthatwouldallowanefficientbusinesstofinance itsactivities; it isdeterminedbyacombinationofbenchmarkingagainstorganisationsinothercountriesandexaminingthespecificunderlyingcostsofthe Transmission System Operator (TSO) and Transmission Asset Owner (TAO). CER rigorouslyscrutinisespastperformanceandfuturecostingsinthisexercise.

Inthemostrecentelectricitynetworkcostreview,fortheperiod2010to2015,CERrequireda€146.4millionor11.9%reductioninoperationalspendfortheforthcomingfiveyearsrelativetothatrequestedbyESBNetworks.Ontopofreductionssoughtinbothcurrentandcapitalspend,CERalsorequiredESBNetworkstodeliveradditionalefficiency savings in operating and capital expenditure. Its regulation of networkexpenditure has not automatically allowed all costs sought by the electricity and gas networkoperatorstobefundedthroughtheirfullimpositionontheconsumer.

The policy framework for energy regulation in Ireland, as expressed in the relevantstatutory provisions, clearly provides for CER’s independence of the Minister andGovernment in its regulatory decisions and for its accountability otherwise, to theOireachtas. CER’s practical implementation of regulatory decision-making anddeterminations on regulatory issues within its remit clearly demonstrates both its independenceandprotectionofconsumerinterest.

2.2 Energy Prices: Secure, Sustainable, Affordable

Energy Prices in Ireland

EnergypricesinIrelandareinfluencedbyseveralfactors,including:

n Highdependenceonimportedgas,forheatingandelectricity,

n absenceofconventionalenergysources,

n widely dispersed population resulting in higher network charges [1],

n internationalcostofcapital,

n requirement to pay for investment in existing energy infrastructure and forsignificantadditionalinvestment,and

n geographicalisolationofIreland’sislandmarket.


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Asfossilfuelpricesaresubjecttoglobalmarketforces,andarenotunderIrishcontrol,Irelandiseffectivelyapricetakerforinternationallysourcedimportedfossilfuelsandalsovulnerabletoexchangeratemovements.Becauseoftheextentofourdependenceongas in power generation, the international gas price trends outside our control inevitably impactonIrishelectricityprices.Energypolicychoicestomovetowardsrenewablesforsustainabilityandsecurity reasonsalso influencecostsandpricesand increasinguseofwindforpowergenerationwouldbeexpectedtohaveadepressing impactonthesystem marginal price in the wholesale electricity market. Energy market integration has thepotentialtoreducetheimpactofourisolation.Priceregulationinenergymarketshasbeenvirtuallyended,inlinewiththerequirementsofthevariousEUenergypackages,so that competitive forceswill place downward pressure on prices, in line.However,effective competition also necessitates proactive consumer behaviour in comparingpricesandavailingofcheaperdealsonofferfromsuppliersinelectricityandgasmarkets.

Theconstituentpartsofelectricitypricesarelistedbelow[2]:

Figure 5: Domestic Electricity Price, Relative Share of Component, 2011 (Band DC)

Wholesale Price[3] 46%Balancing costs 3%

PSO 4%

Distribution 29%

Retail Margin 13%

Transmission 5%

[1] ‘Ireland has 82metres of distribution per customer on average (Commission for EnergyRegulation2010).ForGreatBritainthenetworkwiththelongestpercapitadistributionisNorthernScotlandat63metrespercustomer.ElaborationofdatainOfgem(2012)showsthattheBritishaveragewas27metrespercustomer’ESRIIrishandBritishelectricityprices:whatrecenthistoryimpliesforfutureprices,2014.

[2] Source:Data for 2011 taken from Irish andBritish electricity prices:what recent history implies forfutureprices,ESRI2014.

[3] Wholesalepricecompriseapproximately80%fuelcostand20%capacitypayment(Capacitypaymentsarepaymentstogeneratorswhichcontributetowardstheirfixedcosts,iftheyareavailabletogenerate).

Thecostofenergy isan important factor forbusinessesandhouseholdsalike,withsignificantimplicationsforbudgetsandbalancesheetsbutIrishenergypricesinIrelandareinfluencedbyseveralfactorssetoutintheboxaboveonenergypricesinIreland.Asnotedearlier,Irelandiseffectivelyaprice-takerforinternationallysourcedimportedfossilfuelsandenergypolicychoicestomovetowardsrenewablesandimproveenergyefficiencyforsustainabilityandsecurityreasonsalsoinfluencecostsandprices.

Governmentpolicyhasbeentocreatetheconditionsforcompetitioninbothelectricityand gas, wholesale and retail, by means of market opening and regulatory action,so that consumers can avail of its benefits. Competition has been a success;moreplayers have entered the market, offering competing products, services and prices.Retail price deregulation has been implemented in Ireland’s electricity market and largely


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implementedforthegasmarket,inlinewithEUrequirements.Competitioningenerationandsupplyhasbenefitedbusinessanddomesticconsumers,whocannoweasilyavailofcompetingproducts,servicesandpriceoffers,iftheywishto.Regulatoryscrutinyofthenetworkcostcomponent in the reviewsoffive-year investmentperiodshasbeenrigorous. Governmental and regulatory action has been directed at areas within the limited scopeforaction,but,giventheenergyrealitiesoutlinedaboveandtheimplementationofderegulation,theGovernmenthaslimitedremainingscopetoinfluenceenergyprices.

Despite the constraints concerning energy prices, the Government is committed to exploring all appropriate options available to keep costs competitive, moderate any price growth to the greatest extent possible, and underpin a regulatory frameworkthat robustly scrutinises network costs and promotes competition. The Government seekstoaddressthequestionofcostsspecificallybyencouragingtheuseofenergyefficiencymeasures,whichhelpkeepcostsdown.

2.3 Market Integration and Regional Initiatives

One of the key objectives of EU energy policy is the establishment of the InternalEnergyMarket (IEM). The objectives of the EU IEM are the achievement of betteroutcomes for EU citizens through contributing to economic growth, jobs, secureenergyataffordableprices,andsustainabilityinenergyuse.TheIEMoffersbenefitsto Member States through potentially lower wholesale prices than would otherwise be thecase,andenhancedsecurityofsupply.ImplementedinthemostsuitablewayforIrishconditionsand,incertaincircumstances,theIEMhasthepotentialtodosoforIreland.TheESRIhighlightedina2011reportthebenefitsofintensifyingcompetitionin Ireland,assuppliers fromGreatBritainandbeyondcouldenter the Irishmarket,spurring efficiency and increasing consumer choice. The ESRI also stated thatsecurityofsupplywouldincreasethroughaccesstoagreaterdiversityoffuelsandthat therewouldbe lessneed formaintainingexpensive reservecapacity to insureagainstsupplyinterruption.TheEUinternalenergymarketobjectiveisembracedbyIreland as a key European goal, with a view towards implementing it in a manner that ensuresoptimalbenefitsrelativetocostsforIreland,includingthoserelatingtoonceoffimplementation.

In order to secure the free flow of electricity and gas across borders in line withtheIEM,MemberStatesmustharmonisecertainarrangementsgoverningthecross-borderoperationoftheirelectricityandgassystems.Thisrequirestheadoptionandimplementationofcommoncodesorbusinessrulesenablingcross-bordertradeinbothelectricityandgas,greateruseofexistingcross-borderinterconnectors,constructionofmanyadditionalcross-borderinterconnectors,andgreaterco-operationbetweenMemberStatesinarangeofdifferentregionalconfigurations.RealisingintegrationatleastcostandmaximumbenefittotheIrishconsumerposescomplexchallengesintheIrishelectricityandgassystems.TheCERisinvolvedinvariousindividualprojectsto further Ireland’s compliance with the IEM, both on an all-island and individualMember State basis.

The design and implementation of the new Europe-wide electricity and gas codesand Ireland’sparticipation in various regional initiatives is acurrent areaof focus forGovernment, regulators, network operators and the energy industry. The negotiation


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andimplementationofthesenewcodesinparticularisahugepracticalchallengeforall concerned.

The implicationsofgasandelectricitymarket integration requirements, including theimpactofthenewcodes,intheIrishcontextarenecessarilydifferentfromoneanother,partly because the rate of progress in all-island co-operation has been different ineach,andbecauseofthevarying influenceofEUcodes.Sincethe lastWhitePaper,wholesale electricity market arrangements in Ireland and Northern Ireland have been transformedwiththeestablishmentoftheSEM,whichoperatesandisregulatedonall-islandbasis.TheSEMprojectisnowundergoingaredesign,scheduledforcompletionaround end 2016, to ensure compliance with the new European electricity codes, as they are being developed to enable the practical realisation of the EU IEM, and tofacilitatedeepermarket integrationof theSEMwiththe IEM.NewlegislationmayberequiredtoimplementtheredesignedmarketarrangementsfortheSEM.

European gas codes have been developed, also for the purpose of enabling thepracticalrealisationoftheEUIEM,andarebeingimplementedmorequicklythanthecorrespondingelectricitycodes.Themanneroftheirimplementationhasthepotentialto deepen regional gas integrationon the island andbetween the islandsof IrelandandGreatBritain. In2008,theIrishandNorthernIrishgovernmentsbeganeffortstocreateCommonArrangementsforGas(CAG),allowinggastobetraded,transportedanddevelopedinanall-islandmarket,buttheCAGprojectisstronglyinterlinkedwithongoing EU gas code negotiations and their implementation on these islands.

Aside fromthecurrent initiativeson this front relating toEUgasandelectricitycodeimplementation in Ireland, includingtheSEMproject, therearebroader,post-internalmarket implementation issues for Ireland:howmarket integrationwilldevelop furtherafter2016,howsuchastructurecanbestbeshapedintheinterestsofIrishelectricityand gas consumers, and what the appropriate governance arrangements should be.

Inboththeelectricityandgassectors,investmentininfrastructureconnectingMemberStates’ systems will be a critical complement to the new EU trading rules and codes. Thenewcodesarenotenough in themselvesto facilitate tradingandtohelprealisetheEU IEM if thenecessary infrastructure isnotavailable to transportelectricityandgas.TheIrishenergysystemmustbeequippedwiththeinterconnectionandphysicalcapacity necessary for energy trading in both directions, as well as the regulatoryframeworktoregulatethisinfrastructuretobesteffectfortheIrishconsumer,inorderfor Ireland toachieve thebenefitsof theEU’s internalenergymarket.Thesebenefitsinclude greater security of supply and lower prices than they would otherwise be.Interconnectionofitselfisdesirableonmanyfrontsand,ifofsufficientscale,will,intheright circumstances, allow Ireland to export surplus renewable energy to Great Britain andtherestofEurope.

2.4 The Role of the Regulator: Certainty, Stability, Flexibility

Theregulatoryframework,aswellasdeliveringenergypolicy,mustbestable,certainand predictable. New investors and existing participants alike require regulatorystability. Perceptions of regulatory uncertainty, or of irrational or ad hoc behaviour,


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willdeter investorsandnewplayers fromenteringamarket,depriving thesystemofpotentialcostandefficiencygains.Astable, relativelycertain regulatoryenvironmentwill help to create a climate for investment and ensure that the cost of capital fornewandexistinginvestorsiskeptaslowaspossible,includingfornetworkinvestors.Todemonstratethepotential impactofanyperceptionsofregulatoryuncertainty,theCERhasprovidedapproximateestimatesof the impactof changes in theweightedaveragecostofcapital(orWACC)fortheelectricityandgasnetworks,assumingthatsuchuncertaintyincreasesthenetworkcostofcapital.Each1%fall intheWACCfortheelectricitynetwork isestimated to lead toa fallofabout1.9% inelectricity retailprices,andslightlyless(about1.4%)forlargeenergyusers(LEUs).Forgas,a1%fallinWACCisestimatedtoleadtoafallinretailpricesofabout2.9%.Thisisalargerfallthanwithelectricityduetothenetworksbeingalargercomponentofgasretailprices,someofwhichisduetothegasinterconnectors.TheseCERestimatesareonlybroadlyaccurateifeverythingelseintheelectricityandgaspriceequationstaysthesame;e.g.if international fuelpricesorothercosts suddenlydoubled, thena1% fall inWACCwouldonlyresultinelectricitypricesfallingbyabout1.5%.

An energy regulatormust also be strong, independent and sufficiently resourced todeliveron itsmandateandprovideevidence-based,transparentregulatorydecisionsand comprehensive consultation processes. The EU’s 2009 Third Energy Package obligesMemberStatestoensurethattheirenergyregulatorsarefullyindependentandresourced.Thesestrongrequirementsonregulators,intheseareasofindependence,resourcesanddecision-making,areconsistentwiththecurrentIrishsystem.TheCERwas established as an independent regulator in 1999 and continues to deliver a stable regulatoryregime,inalignmentwithEUandnationalpolicyrequirements.

Complexity of CER mandate

TheCER’sindependentstatutoryfunctionsanddutiescontinuetoevolveinachangingandchallengingenvironment.Since the2007WhitePaper, theCER’s functionsandpowers have been enhanced on many occasions in accordance with EU energy legislation. In addition, Irish legislation has assignednew regulatory functions to theCERthatextendbeyondastrictremitofenergymarketregulation,suchasmonitoring,andregulating,forsecurityofsupply,upstreamgasandoilpetroleumsafetyandwatersupply. CER also has responsibility for, the certification of highly efficient CHP, theadministration of thePublicServiceObligation (PSO) and the implementation of thesmart-metersproject.Inaddition,CERischargedwithregulatingsafetyforonshoreoilandgasoperations,thegasnetwork,liquefiedpetroleumgas(LPG),andelectricityandgascontractors in thehome.Theresulting legislative frameworkcontainsacomplexset of objectives,which theCERmust execute in a balanced, evidence-based andjustifiablemanner.

There have also been areas where the regulator has exited regulation and related activities,suchasdeterminingtheelectricitypricesoftheESB(fromwhichitwithdrewin April 2011) and setting the gas prices charged by BGÉ to business consumers(which ended in October 2012). This has released resources, but to a certain extent redundantfunctionshavebeenreplacedbynewEUobligations,suchasmonitoringtheoperationofthederegulatedmarkets.CERhashadtobeflexibletoaccommodatethe


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growingdemandslistedabove,adapttonewrequirementsand,totheextentpossible,reallocateresourcesfromareasitisnolongerregulating.

Review of regulatory framework for energy

The2007WhitePapercalledforacomprehensivereviewoftheIrishenergyregulatoryframework to be undertaken after the completion of the Single Electricity Market(SEM), in order “to ensure the optimum regulatory environment to meet the energy challengesupto2020 inrelationtosecurityofsupply,sustainabilityandcompetitivemarkets”. As noted above, the SEMwas successfully established in 2007 and hasbeenoperational forsixyears.Neither the Irishenergy regulatory frameworknor theCERhas undergone a comprehensive review since the frameworkwasput in placeand CERwas established in 1999, although the breadth and depth of its role andfunctions have expanded considerably. These developments have increased thecomplexity of the regulatory system and its underpinning legislative framework.However, the 2012 International Energy Agency review of Ireland’s energy policyincluded recommendations on the extent and efficacy of CER’s sanctions and onthe relative rigidity of SEM regulation. More generally, the Government 2013 PolicyStatement on Sectoral Economic Regulation has addressed the overall question ofsectoral economic regulation in the economy as a whole, and particularly whether it couldcontributemoretorecoveryandcompetitiveness.ItsetoutcertainrequirementsofregulatorsandtheirassociatedDepartmentsunderthefollowingheadings:principlesunderpinning regulation; prioritisation of objectives; the need for mandate reviews;greater efficiencies; cost reductions; effectiveness; performance; accountability andappealsmechanisms;complianceandenforcement;aregulatoryforum;andmonitoringand review. The previous 2009 Government Statement made similar recommendations. Thenewstatementhighlightstheimportanceofreviewsoftherolesandmandatesofregulators every seven years. Prior to the 2013 statement, stakeholders had already referredtothefactthatthe2009requirementforsucharevieweveryfiveyearshadnotbeenimplementedinthecaseofCER.

TheActionPlan for Jobscommits to the inclusionof a regulatorymandate reviewaspartoftheGreenPaperprocess.11 The Government 2013 Policy Statement on Sectoral EconomicRegulationalsospecifiedthattheenergypolicyWhitePaperbeingdevelopedduring2014shouldincludearegulatorymandatereviewofCER.However,givenlimitedregulatoryanddepartmentalresourcesandEUmandatorycompliancerequirements, itis arguable that such a review may distract the regulator, and Government and market participants,fromthehugechallengesinvolvedinnegotiatingandimplementingtheIEMincludingtheSEMprojectanditsassociatedcodes.AnydelayinachievingfullcompliancecouldexposeIrelandtotheriskofinfringementproceedingsfrom2014onwards.

The optimal approach to a CER mandate review needs to be considered in the overall context outlinedabove. TheGreenPaper affords an ideal opportunity to consult onthe review and on issues such as content, approach and scope. One approach might betoconductamorelimitedreview,perhapsfocusingonconsumerengagementandempowerment and/or theextentof regulatoryobjectives,whilemarket integration is

11 Action 107: http://www.djei.ie/publications/2014APJ_Table_of_Actions.pdf.


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being implemented up to 2016. A more detailed review would at that stage be more efficient and effective, given that it would address themore integratedmarket, anditsdifferentchallenges, includingregulatorygovernance,atthattime.Atpresent, theDepartmenthasbegunascopingexercise for thepurposeofconductingan internaldesk-basedmandate reviewofCER, even if limited as above. Itmight assist betterpublicunderstandingofthenatureofenergyregulationifthisreviewweretodescribethe EU requirements on energy regulators as regards energy regulatory objectivesand functions; for example, independence fromGovernment and industry, the needfor consumer engagement and protection, and the requirement to end retail priceregulation. It could also consider existing cross-country comparisons of how thoseregulatoryobjectivesaresetoutinthevariouslegislativemandatesforregulators.TheviewsofindustryandotherstakeholdersonthenatureandtimingofaCERmandatereviewareaccordinglybeingsoughtaspartofthisGreenPaperconsultation.

CER’s financial and human resources

Againstthebackdropofincreasingdemandsandexpansionof itsremit,CERmustbesufficientlyresourcedtodeliveronitsexistingandgrowingmandate.TheCERisfundedbyalevyonindustry,amountingin2013to€8.6millioninelectricity,€5millioningasand€2.9millioninpetroleumsafety.CER’soverallspendisgovernedbyitsfinancialresources,while its staffing is directly controlled as part of the public service-wide EmploymentControlFramework(ECF),whichstrictlycontrolsstaffnumbersinthepublicsector.

TheelectricityandgassectorsthatCERregulateshaveacombinedannualturnoverofover€5billion,withcapitalspendingprojectionsofupto€8billioninthenextfiveyears.Thisequatestoasmuchas3-4%ofIreland’stotalGDP.CERhasshownitcanflexiblyreallocate and adapt resources as its roles andobjectives change, but it is an openquestionastowhetheritisadequatelyresourcedandpositionedforregulatorystabilityandoptimalenergyregulationanddecision-makingwhencomparedwithotherequivalentEU regulators, especially considering its additional functions and responsibilitiesoverandabove‘traditional’energymarketregulation.DatafromastudycurrentlyunderwayattheleveloftheAgencyfortheCo-operationofEnergyRegulators(ACER)onregulatorresourcingmayshedfurtherlightonCER’scomparativeposition,butanycomparisonsfor the years up to and including 2007would not be representative because of theconsiderablehumanresourceinputinvolvedatregulatorlevelforSEMimplementation.

TheCERis,ofcourse, legallywholly independent intheperformanceof itsfunctionsand therefore none of its individual decisions nor its organisational performance isunder consideration here. However, this Green Paper consultation process presents a usefulopportunityforinterestedpartiestoconsultonanumberofassociatedthemesandissuesrelatingtotheregulatoryframeworkandhowitcontributestoenergypolicygoals and regulatory certainty.

2.5 Market Transformation and Industry Structure

In line with EU policy, the Irish electricity and gas markets, at wholesale and retail levels, have opened incrementally since 2000. Over the last decade many new players have entered the Irish energy market, in areas such as power generation and gas and electricity retail.


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AsregardsthestructureofownershipandoperationoftheIrishelectricitytransmissionsystem,theEuropeanCommissioncertifiedthearrangementsinplaceinIrelandundertherelevantprovisionsofDirective2009/72/ECof13July2009,initsdecisionof12thApril 2013. The Government had decided in September 2011 that existing arrangements fortransmissionownershipandoperationinIrelandwouldcontinue(e.g.withESBasowner of the electricity transmission assets and EirGrid as the transmission systemoperator),andthat IrelandwouldthereforeapplyforcertificationunderArticle99.ofthe Directive. The application was submitted to the regulators and SEM Committee. ItwasapprovedbytheCommitteesubjecttotheimplementationofcertainproposedimprovements, and then submitted to the EU Commission. The improvements relate to theInfrastructureAgreementbetweenESBandEirGrid,ESBfinancingandadditionalring-fencingofESBNetworksLtd.withintheESBGroup.ItisnotedintheCommittee’sdecisionthattheimplementationoftheproposedimprovementscanbemadebytheCERwithin the existing legislative and regulatory framework. Accordingly, these aremattersforCERtoaddressandprogressfurther.

Government policy on Ireland’s transmission asset ownership regime has been settled for a number of years now, and EU certification was obtained. The Commissioncertification decision mentioned three areas which Ireland will now consider, as towhetherchangingormodifyingtheIrisharrangementswouldimprovethepositionasregards effective transmissionoperation. The three areas relate to (a) EirGrid havingcertainrightstoownnewtransmissionlinesifthereisdelayordefaultoftheInfrastructureAgreement between ESB and EirGrid, (b) separating the ownership regime between EirGrid and ESB, and (c) ensuring that ESB’s transmission roles are in a single, separate entity.Avarietyoffinancial, legal,economicandtechnicalconsiderationsneedtobeexamined to assess whether and when these suggested changes could or should be implemented.TheCommission’sdecisionnotesthattherearefinancialfactorsatplayin regard to the effective implementation of its changes and legislative changemaybe needed. TheGreenPaper processwill facilitate consultation on these proposalsfor change, on the nature of the benefits and costs associatedwith them and howtheymightbeachieved,particularlyfortheIrishelectricityconsumer.TheviewsofallstakeholdersarethereforebeingsoughtaspartofthisGreenPaperconsultation.

Turning to the structure of the Irish gas transmission system, in July 2013, BGÉ’sapplication for the Independent TransmissionOperator (ITO)model was certified bythe CER, taking utmost account of the Commission’s opinion, in accordance withthe relevant provisions of Directive 2009/73/EC of 13 July 2009. This opinion waseffectivelyfavourable.WhileCER’sdecisionreferredtocertainoutstandingITO-relatedrequirements,both theopinionandCER’sdecision looked forward toa subsequentapplication for the FullOwnershipUnbundling (FOU)model in respect ofBGÉ’s gastransmissionsystem,oncompletionofthetransactionsellingBGÉ’senergybusiness,currently under way. The Government decided in 2012 on that sale, and on retaining the gas networks and interconnectors in state ownership.


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Priority 2 – Markets, Regulations and Prices: Questions and Policy Options

9. Given the success of Government policy on increasing competition to createdownwardpressureonprices,are theextentandeffectivenessofcompetitionandofcompetitivebehaviour,inboththeelectricityandgasmarkets(wholesaleand retail), sufficient, and are there any strengthening measures required, atregulatoryand/orGovernmentlevel?

10.Is the regulator strongly enoughpositioned and resourced – financially and intermsofhumanresources–todeliveritsregulatorydecision-makingandadviceroles as set in its legislation, and thereby to contribute to the achievement ofenergypolicyoutcomesandregulatorycertaintyandstabilityintheIrishmarket?

11.IsCER’slegislativeremitappropriateforthepurposeofregulatorycertaintyandstability?

12.Asidefromthemarketintegrationinitiativesassetoutaboveandcurrentlybeingworkedon(theSEM2016projectandEUelectricityandgascodedevelopmentand implementation), what should be Ireland’s long-term approach to, andstrategy for, electricity and gas market integration for the period after 2016,and how can appropriate governance at regulator and Member State level be provided for in the post-2016market?What further actions can be taken atGovernmentorregulatorleveltoensurethatIrelandbenefitsfromtheEUinternalenergymarketingasandelectricity?

13.GiventhelengthoftimesincetheestablishmentoftheregulatoryframeworkforCER,andtheextentofadditionstotheCERfunctionssincethen,howshouldareviewoftheregulatoryframeworkand/orCER’smandatebestbeconducted?TheActionPlanforJobscommitstotheinclusionofaregulatorymandatereviewaspartoftheGreenPaperprocess.12 In lightoftheimplicationsofthemarketintegrationchallengeforallplayersintheperiodupto2016,shouldthisreviewbepartialorfull?Ifapartialreviewisenvisaged,shoulditbelimitedtohowtheregulatory frameworkand/orCERenableconsumerunderstandingandcitizenempowerment?

14. Current Government policy on Ireland’s transmission asset ownership regime is settledandtheSEMCommittee’srequirementsasregardscertificationmustbeprogressed by both companies involved (EirGrid and ESB). What are the likely costandbenefit impactsforendconsumersassociatedwiththeCommission’srecommendedchangesinitscertificationdecision?Assuminganoverallsufficientlypositiveimpactforconsumers,howmightthesechangesbebestimplemented?

15. Given that Government policy has sought to increase competition to create downward pressure on prices, are there unrealised opportunities in the pricing and regulatory framework for ensuring further price improvements, and if so,whatarethey?

12 Action 107: http://www.djei.ie/publications/2014APJ_Table_of_Actions.pdf


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Priority 3: Planning and Implementing Essential EnergyInfrastructureIreland must continue to maintain and develop integrated energy infrastructuresystems,whichdeliversecure,reliableandcompetitiveenergysuppliestofamiliesandbusinesses and support the transition to a low carbon economy.


Economic prosperity and social progress demand advanced infrastructure thatcan deliver secure, reliable, affordable power. Ireland’s generation, transmission,interconnection and distribution systems will continue to expand to support balanced regional development, attract and sustain indigenous and foreign direct investment,and enable job creation and economic growth. After a prolonged period of under-investment, the 1990s saw the expansion of grid development and reinforcementin order to meet Ireland’s growing population and economic activity. In a marked improvementfrompastconditions,Irishenergynetworksnowcomparefavourablywithother countries in offering safety and resilience, and in recent years they havemetthe testof severeweather episodesand recordpeakdemands.However, emergingtechnologiesandnewpowersourcesrequirecontinueddevelopmentandrenewaltoensurethatIreland’senergysystemissafe,secureandreadytomeetincreaseddemandas economic conditions improve. With modern energy systems becoming increasingly interlinked and interdependent, the development of future energy infrastructure willneedtotargetthestrengtheningofenergysystemsintegrationaswellastheresilienceofindividualenergynetworks.

To enable the quick, successful deployment of such investments, public authoritiesmust continue to streamlineplanningprocesses,with support from industry leadersand in close partnership with stakeholders and the wider community. In 2012, the Governmentissuedapolicystatementonthestrategicimportanceoftransmissionandenergyinfrastructure.13Thestatementreaffirmedtheneedfordevelopmentandrenewalofourenergynetworks inorder tomeeteconomicandsocialgoals. Itendorsedthestrategicprogrammesoftheenergyinfrastructureproviders,subjecttotheiradherencetonationalandinternationalstandardsfordesignandconstructionandtothembeingplanned and executed with appropriate community consultation.

3.2 Electrical Infrastructure

The 2007White Paper identified reliable, secure and competitively priced electricitysupplyasvitaltothecompetitivenessofIrishindustryandtoIreland’slong-termeconomicand social development. In the coming years, the Irish grid will need to meet growing demandforelectricity,andincorporatehigherpenetrationofrenewableenergysources.This combination of requirements presents new network management challenges.

13 DepartmentofCommunications,EnergyandNaturalResources (2012), ‘GovernmentPolicyStatementon theStrategicImportanceofTransmissionandOtherEnergyInfrastructure’.


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EirGridestimatesthat,tofacilitatetheexpectedincreaseinrenewablegenerationandtoadequatelymeetelectricitydemand, thecapacityof Ireland’s transmissionsystemwouldneedtodoubleby2025.Toensurethattheseobjectivesaremet,EirGridin2008launchedGrid25,acomprehensivestrategyforessential infrastructureupgradesthatwill invest€3.2billioninmajorgridreinforcementsandtransmissionprojectsoverthecoming decade.

In recent years, EirGrid has successfully constructed and commissioned the 500megawattEast-Westinterconnector(EWIC),whichlinkstheelectricitygridsofIrelandandGreatBritain. This both increases security of electricity supply andprovides anincreased opportunity for market participants to trade electricity in a larger marketcontextthanpreviouslypossible.FullcommercialoperationofEWICbeganin2013.

AspartoftheGrid25strategy,EirGridandESBNetworkscontinuetoworkinpartnershipwith Northern Ireland Electricity (NIE) and the System Operator Northern Ireland (SONI) tostrengthencross-bordertransmissioncapabilitybywayoftheplannedsecondNorth-SouthInterconnector,ahigh-capacitytransmissionlinethatwillrunbetweenCountiesMeathandTyrone.ImplementationofthisprojectisnecessarytoreducetransmissionflowconstraintsbetweenNorthandSouth,andimprovebothoverallsystemoperatingefficiencyandmarketliquidity.

Tocomplementthisinfrastructuredevelopment,EirGridandSONI,thetwoTransmissionSystemOperators(TSOs)ontheisland,areimplementingaprogrammefor‘Deliveringa Secure, ‘Sustainable Energy System’ (DS3). This is aimed at ensuring that theinfrastructure can be securely operated with increasing amounts of variable, non-synchronousrenewablegenerationinthefuture.Thisprogrammeisaimedatdeliveringwhatwas identifiedas feasible in theAll-IslandGridStudy,published in2008bytheDepartmentofCommunications,EnergyandNaturalResourcesandtheDepartmentofEnterprise,Tradeand Investment (Northern Ireland)andsubsequentlyadoptedasa target of 40% for renewable electricity. DS3 involves the development of financialincentives for better generator plant performance, togetherwith operational policiesand system tools to enable generation plant, and the system as a whole, to operate in an optimal manner.

The question ofwhether or not energy storage, andwhat forms of energy storage,shouldbeinvestigatedinordertooptimiseelectricitysystemoperationinthefutureisunder study by Government, CER, the TSO and DSO (Distribution System Operator), by research institutions, and by industry. Taken together, these developments are resulting in the technical boundary between the transmission and distribution systems becoming lessdistinct.Existingpolicieshavefacilitatedprojectssuchasintelligentstorageheatertechnology, involving data communication between domestic customer loads and the transmission system operator, and the electricity network utilities. In addition, plans for a Smart Grid project in the North-West, involving transmission and distribution-leveloperationsaswellas loadmanagement,havebeenfacilitatedbycurrentpolicy.TherecentMemorandumofUnderstandingbetweenESBNetworksandEirGridgivesinstitutionalsupportforoperationalco-operation.Futurepolicymustcontinuetofosterinnovative technological and organisational collaboration.


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3.3 Oil Infrastructure

Oil continues to play a major role in the national energy system, despite its virtualdisappearance as a fuel for electricity generation. In 2011, oil represented 59% ofprimary energy use in Ireland, dominating the transport sector and serving as the primaryfuelforhomeheatingnationally.ModellingbytheSustainableEnergyAuthorityof Ireland (SEAI)predicts thatoildemand is likely to remainsteady to2020,andwillplayastrongroleinthefuelmixinthemediumterm.14Therefore,portinfrastructure,shippingcapacity,oilportterminals,tankstoragefacilities,themotorwaynetwork,andoildistributionfacilitieswillremainimportantcomponentsinthenationalenergysupplyinfrastructure.

Whitegate,CoCork,Ireland’sonlyoilrefinery,currentlysuppliesapproximately25-30%of the transport and liquid heat fuels in the domestic oilmarket. In advance of theexpiryofWhitegateRefinery’s refiningobligation in2016, theGovernmentpublisheda reportexamining the futureofoil refiningon the islandof Ireland.15 The study was carriedoutatatimeofongoingrationalisationintheEUrefiningsectorand,togetherwith the analysis undertaken by the International Energy Agency (IEA) and the EU OilRefiningForumandRoundtables, thestudyhashelped inform theGovernment’sposition.TheGovernmentconcluded that thepresenceofanoperational refineryontheislandofIrelandprovidesflexibility,enhancingtheoptionsavailabletotheStateintheeventofanoilsupplydisruptionbyprovidinganalternativesourceofproductandavoidingacompleterelianceonproductimports.Inlightofthosefindings,Governmentis liaising with the Irish oil industry and appropriate public bodies to determine available policyoptionsthatmayfacilitatethecommercialfutureofrefininginIreland.IrelandwillcontinuetoparticipateinthedebateonrefiningatEUandIEAlevel,andsupportstheEU refining ‘fitnesscheck’16process.Arising from the fitnesscheck,wewill engagewiththeEUonthescopeforacoordinatedEUapproach.

Anotherkeyfindingof the2013study is that theoil import facilitieson the islandofIrelandtakenasawholeofferarobust infrastructurethatwouldprovidecomfortablealternativesintheeventofseriousdisruptionatanyofIreland’ssixprincipaloilports.In this context, andgiven that Irelandhas nooil pipelines, the study found that theupgradingoftheIrishmotorwaynetworkinrecentyearshadcontributedtooilsecurityof supply, improving the speed, distance and efficiency of transporting oil by road,particularly from the major ports. The current system is able to meet total Irish oildemand,regardlessofanyfuturedecisionsontheoperationoftheWhitegatefacilityas either a refineryor as a terminal for refinedproduct.Wewill seek todeepenourco-operation with our counterparts in Northern Ireland with regard to ensuring thecontinuedrobustnessofoilsupplyinfrastructureontheislandandthedevelopmentofcontingency measures to mitigate risks to oil supplies.

14 DepartmentofCommunications,EnergyandNaturalResources (2012), ‘GovernmentPolicyStatementon theStrategicImportanceofTransmissionandOtherInfrastructure’.

15 Ibid.

16 TheEuropeanCommissionannouncedinApril2013thatitplannedtocompletea“fitnesscheck”fortheregion’s€500billionrefiningindustry,assessingEUpoliciesandlaws,includingissuessuchastaxationandcarbonemissionsrequirementsthataffectcompetitivenessversuscompaniesoperatinginotherregions.


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Ireland is followingapolicyofmaintainingmoreof its90daysof requiredoil stockson the island of Ireland than has been the case in the past. This has implicationsfor oil tankageand related infrastructure. TheNationalOilReservesAgency (NORA)has commissioned additional storage in Ireland. These developments are discussed in furtherdetailinPriority4:EnsuringaSecureEnergyMix.

3.4 Gas Infrastructure

Intheperiodfrom1990to2010,naturalgasmorethandoubledasashareofIreland’sprimary energy requirement, mainly as a result of its increasing use for electricitygenerationandhomeheatingwhereithasprovidedacleaneralternativetosolidfuels.Naturalgasnowcomprisesaboutone-thirdoftotalenergy.WiththedeclineinoutputfromIreland’sonlyindigenousoperationalgasfieldatKinsale,IrelandcurrentlyimportsalmostallofitsgassupplythroughtwointerconnectorswithGreatBritain.WhilePriority4 specifically addresses the need to maintain a secure energy mix, infrastructureimprovementscouldbe required inorder for Ireland to improve thediversificationofitsenergysupplysourcesandof the routes for importedenergy.Naturalgas isnowavailable in over 160 population centres in 19 counties throughout the country, and the numberofgasuserscontinuesto increase,mainlyduetonewtownsconnections.17 Bord Gáis Networks has been granted approval by the CER to extend the natural gas networktotownsinCountiesWexfordandTipperary,andhasplansforadditionalnewconnectionsandpipelinerefurbishmentincomingyears.18Futureenergypolicymustalsoensure theoptimum levelofgas interconnection tounderpinsecurityofsupply.Over the long term the two existing gas interconnectors with Great Britain will also remainofstrategicimportance,includingtheonshoresectionoftheIrishgaspipelinein Scotland, which connects to the British gas system.

ItisalsoimportantthatIrelandavailofadditionalgassupplysources,suchasindigenousnaturalgas fromtheCorribGasField,and from liquefiednaturalgas (LNG) fromtheproposedShannonLNGproject.Bothofthesewouldgreatlyenhancesupplysecurity.Inthemostrecentpolicyperiod,Governmenthasactivelyfacilitatedbothdevelopments.

3.5 Planning and Public Engagement

In recent years, regulators, planning authorities and industry leaders have made progress instreamliningprocessesforprojectsdesignatedas‘strategicinfrastructure’, leadingto quicker, less cumbersome project approvals. The same actors could usefully beencouragedtoapplythosepracticesandexplorenewapproachestoallinfrastructureprojectstoremoveregulatoryandprocess-drivenbarriers,whilemaintainingasteadfastcommitment to safety, partnership and transparency for the broader community.Bywayofexample,theMaritimeAreaandForeshore(Amendment)Billisalreadypilotingthis approach.

17 DepartmentofCommunications,EnergyandNaturalResources (2012), ‘GovernmentPolicyStatementon theStrategicImportanceofTransmissionandOtherEnergyInfrastructure’.

18 Ibid.


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Sincethe2007PolicyFramework,theEUhasadoptedGuidelinesforTrans-EuropeanEnergy Infrastructure which established a process for the selection of Europeancross-borderProjects ofCommon Interest (PCIs) in ninepriority corridors and threepriority areas, relating to electricity, gas, smart grids, carbon capture and storage and oilacross theEU.ThePCIdesignation forenergyprojectscarriescertainconditionsand entitlements, including more streamlined planning and regulatory processes and eligibility to apply for EU funding, provided the project qualifies. PCIs may also beeligible forEU fundingunder theConnectingEuropeFacility2014-2020 (CEF)whichwas established under a separate Regulation, also in 2013.

Fifteen projects with cross-border impacts involving the island of Ireland (either onthe islandor enhancing its energy connectionswithGreatBritain)were selected fordesignation as PCIs. They variously concern electricity transmission and storage, gas transmission, liquefiednaturalgas (LNG)storage,gasstorage,andsmartgrids.PCIregulations requireMemberStates toaccordpriority toconsiderationofapplicationsfor applicable projects in their national development planning and energy regulatoryconsenting processes. An Bord Pleanála has been designated Ireland’s competent authorityandwillnowhaveasignificantroleintheplanningandpermittingprocessforIreland’sPCIs.Thenextstep in theprocesswillbe for thoseprojectpromoterswhodonotyethaveplanningpermissions toprepare theirapplicationsand/or, ifeligible,engagewiththeprocessoffundingcallsforCEFfunding.TheEuropeanCommissionisworkingcloselywithpromoterstoensuretheyarekeptinformedabouttheprocess.

Astheenergysystemevolvestotakeaccountofchangingdemographicsandpolicypriorities,infrastructureneedstobebuiltoutinordertoprovidereliableenergyservicesto homes and business. Greater public awareness and, ultimately, acceptance ofcriticalenergyinfrastructure,suchastheEast-WestInterconnectorortheNorth-Southtransmissionline,iscentraltotherolloutofnewgenerationinfrastructure,whetherintheformofnewwindturbinesorfossil-fuelpowerstations.AsIrelandstrivestodecarbonisetheenergysystemby2050,theneedforgridstrengtheningandreinforcementbecomesincreasingly important.However, such infrastructure hasproveddivisive in the past,with communities and developers finding themselves in opposition. A new way isrequired,onethatplacesthecitizenattheheartoftheplanninganddecision-makingprocess,andensuresthatpublicandprivateactorseffectivelycommunicatetherisksandbenefitsassociatedwithenergyprojectsinbothalocalandnationalcontext.

Localauthoritiesplayakeyroleinidentifyingandzoningareassuitableforrenewableandotherenergyprojectsand infrastructureand in implementingappropriateprojectpermitting processes. A Local Authority Renewable Energy Strategies (LARES) methodologypublishedbySEAIin2013willassistthisfunctionandfacilitateconsistentapproaches.Itwillhelplocalauthoritiesindevelopingco-ordinatedrenewableenergystrategies in accordance with national and European obligations, and addresses many commonissuesregardingrenewableenergytechnologiesandprojects.

The reforms of local government under the Local Government Reform Act 2014,including the enhanced role for local authorities in promoting sustainable economicdevelopmentatthelocal level,andthedevelopmentoftheroleof localauthorities infostering citizen engagement, may provide elements of the way forward. There aremodalitiesandprinciplesforcitizenandcommunityengagementbeingdevelopedhere


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thatwillneedtobereflectedintheprocessesforengagementwithcommunitiesanddevelopersinrelationtoenergyprojects.

AReportfromtheNESCentitled“Wind Energy in Ireland: The Challenges of Community Engagement and Social Support” together with two connected consultancy studies is scheduledtobepublishedinthecomingweeksandmaybeofinteresttocitizensandstakeholders who wish to make submissions in relation to community engagement. Inaddition, in lightof the feedbackEirgrid receivedaspartofextensiveconsultationprocess over thepast 20months on itsGrid25projects, it has initiated an externalreviewof itsconsultationprocesses. In the interestsof independenceandobjectivityEirgrid has requested the Chartered Institute of Arbitrators to provide experiencedprofessionalstoundertakethereview.


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Priority 3 – Planning and Implementing Essential Energy Infrastructure: Questions and Policy Options

16.Whatimprovementstoenergyinfrastructurearerequiredtofacilitatethetransitiontofutureintegratedenergysystems?

17.Howcouldthepermittingandlicensingprocessesformajorenergyinfrastructureprojects provide for greater collaboration and engagement with communitystakeholders?

18.Following the ‘Government Policy Statement on the Strategic Importance ofTransmissionandOther Infrastructure’ in 2012,what additional improvementscouldbemadetothepermittingandlicensingprocessesforenergyinfrastructureprojects to make them clearer and more efficient for project developers, thepublic,andotherstakeholders?

19. How can Ireland better collaborate with Northern Ireland and neighbouring EU Member States on a shared approach to supporting potential investment in building and accessing energy storage capacity in order to better use oil and gas fuel supplies and to facilitate further exploitation of variable renewable energysources?

20.Is Ireland’s electricity and gas infrastructure – including, but not limited to,interconnection – sufficiently developed for Ireland to be able to achieve thebenefits of European market integration at least cost? How should Irelandcontinue to improveelectricity andgas interconnections in the context of thisintegration and its security of supply policy objectives?What additional stepscouldbetakentofacilitatethisimprovement?

21. Does the existing regulatory regime underpin and incentivise appropriately investment in existing and potential future electricity and gas interconnectioninfrastructure and/or full consideration of its alternatives, on a cost-effectivebasis?

22.Inlightofcontinuedrelianceonoilto2030andbeyond,whatisthebestapproachtomonitoringandensuringthecapacityofIrishoilinfrastructure?WhatmeasuresshouldbetakentofacilitatethecommercialfutureofoilrefininginIreland?


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Priority 4: Ensuring a Balanced and Secure Energy MixAs Irelandmakes the transition to a low-carboneconomy, the countrywill require abalancedandsecureenergymixthatcreatestheframeworkandmarketconditionsforinvestment, stability and growth.


Awell-balanced fuelmix thatprovides reliableenergy,minimisescostsandprotectsagainst supply disruptions and significant price spikes is an essential foundation forIrish enterprise and consumers.Our choices on the nature, type and origin of fuelsweusetoprovideheating, facilitate transportandgenerateelectricityareprofoundlyimportanttoourenergyanddecarbonisationpolicyobjectives.Irelandhasmadegoodprogress towards achieving our legally binding target of 16% renewable energy by2020,withoverallrenewablepenetrationat7%in2012.Furtherworkwillbenecessaryto realise the2020objective.Alongsideour renewable targets,oilandgas remainacriticalpartofourenergymix,providing76%ofprimaryenergyrequirementin2012.

In January 2014 theCommission published its proposals for the 2030Climate andEnergyFramework.Theframeworkincludesaproposalforareductioningreenhouse-gas emissions by 40% below the 1990 level and an EU-wide binding target forrenewableenergyofatleast27%.Unlikeinthecurrentframeworkto2020,thetargetof27%forrenewableenergysources(RES)isnotbindingonindividualMemberStates.TheCommission considers that this “EU-wide binding target” givesMember Statesgreater flexibility to take advantage of themost cost-effectivemeans of achieving amore sustainable, secure and competitive energy system.

Figure6isamodelledscenariothatprojectsannualprimaryfuelrequirementthrough2020, assuming that Irelandmeets current renewable energy and energy efficiencytargetssetbytheEU.Asthegraphillustrates,wewillremaindependentonfossilfuelsin the medium term. Oil and gas will remain central to the economy, particularly in the heatingandtransportsectors,untilaffordable,secureandviablealternativesbecomeavailable.Intheinterveningperiod,certainfuels,includinggas,willenablethetransitiontoalow-carboneconomy.


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Figure 6: Forecast primary energy requirement 1990–2020 (NEEAP/NREAP)

■ Coal ■ Oil ■ Gas ■ Peat ■ Non-Renewable Waste ■ Renewables ■ Electricity (net import/export)

2

4

6

8

10

12

14

16

18

1990199119921993199419951996199719981999200020012002200320042005200620072008200920102011201220132014201520162017201820192020

Mtoe

Source: SEAI

Basedonrigorouseconomicmodelling,decisionsarerequiredontheoptimalfuelmix within each sector (heating, transport and electricity), bearing in mind the need to decarbonise,todiversifyfuelsandsupplyroutes,andtominimiseenergycoststotheeconomyasfaraspossible.

4.2 Fuel Diversity and Indigenous Resources

Irelandcurrentlyimports95%ofitsnaturalgasand100%ofitsoil,leavingthecountryparticularly vulnerable to supply disruptions and to volatility in prices, which are determined by globalmarkets.Wemust reduce our reliance on imported fuels anddevelop cost-effective, indigenous sources of energy in order to provide protectionfrominstabilityandenjoygreatercommandoverourenergysecurity.Thepotentialtodeveloplarge-scalerenewableenergyorhydrocarbonprojectsforenergyexportcouldprovideadditionaleconomicbenefits.

TheGovernment’sunderlyingobjectiveinrespectofoilandgasexplorationistoensurethattheState’snaturalresourcesaremanagedinawaythatwillmaximisethebenefitsaccruing to thepeopleof Ireland. It isacentral tenetof theState’sstrategy for thissector thatprivate industry rather than theExchequer isbestplaced toassume thehigh exploration investment cost and high financial risks associated with offshoreexploration. Ireland competes for mobile exploration investment in the same way itcompetes for foreign direct investment in already established onshore sectors. TheGovernment’sstrategyfortheexploitationoftheState’snaturalhydrocarbonresourcesaimstomaximisethelevelofexplorationactivityandincreasethelevelofproductionactivity,whileensuringafairreturntotheStatefromtheseactivities.Mobileinternational


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exploration investment is encouraged to locate in Ireland through an active and targeted promotioncampaign,regularlicensingrounds,supportforpetroleumresearchprojectsthatdeepenknowledgeofthepetroleumpotentialoftheIrishoffshore,andmaintenanceofanappropriatefiscalregime.

The number of exploration authorisations in place is currently the highest ever, and2013witnessed both new company entrants and amarked increase in the level ofacquisition of new seismic data. The level of exploration drilling, however, remainedlow.Withoutasignificantincreaseindrillinglevels,thepotentialoftheIrishoffshorewillnot be realised.

Robustregulatoryprocessesarecritical.TheywerereformedbytheenactmentoftheStrategicInfrastructureAct2006andthePetroleum(ExplorationandExtraction)SafetyAct2010,which resulted in theCommission forEnergyRegulationgoing liveas theupstreampetroleumsafetyregulatorinDecember2013.AMaritimeAreaDevelopmentandForeshore(Amendment)BillisbeingprogressedbytheMinisterfortheEnvironmenttofurtherstreamlineregulatoryprocesses.

Inrelationtopotentialexplorationforunconventionalhydrocarbonresourcesonshore,the EPA has initiated a process to produce a comprehensive study on the environmental impactsofunconventionalgasexplorationandextractioninIreland.Nodecisionwillbemadeonproposalsfortheuseofhydraulicfracturinginunconventionalgasexplorationuntil the results of this EPA research,which is projected to conclude in the secondquarterof2016,havebeenconsidered.

Based on current understanding of the oil and gas prospective of Ireland’s offshorearea,successfulexplorationandproductionofourindigenoushydrocarbonresourceshasthepotentialtodeliversignificantandsustainedeconomicbenefitstothecountryat both a national and local level, over an extended period of years. Unlockingthis potential is an important focus for the Government and a promising source ofopportunity formany regions throughout the country.While this potential is the keydriverof theGovernment’shydrocarbonstrategy, the focusof thischapter ison theadditional benefits that indigenous resourcescoulddeliver in termsof strengtheningthe security anddiversity of Ireland’s energy supply. In that regard, production fromtheCorribGasField,which isprojected tocommence in2015,will enhanceenergysecurity, and reduce dependence on the gas interconnectors with the UK.

4.3 Electricity

Thefiguresshown inFigure7 (basedondataprovidedbySEAI)settingout the fuelmixforgrosselectricityconsumptionfor2011and2012paintapictureofadynamicmarket,withfuelmixchanginginresponsetoanumberofmarketsignals.


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Figure 7: Electricity generation fuel mix 2011-2012 (gross electricity consumption)

Oil 1%

Electricity Imports 2%

Peat 8%

Natural Gas 53%

Coal 17%

Renewables (Wind, Hydro,Landfill Gas etc) 19%

2011

Oil 1%

Electricity Imports 2%

Peat 9%

Natural Gas 49%

Coal 20%

Renewables (Wind, Hydro,Landfill Gas etc) 19%

2012

Anumberofpolicyandregulatory instrumentsthat influencefuelmixarecurrently inplace, including:

n Public Service Obligation (PSO) schemes to support renewable and indigenous generationandsecurityofsupply,includingtheRenewableEnergyFeed-InTariff(REFIT)andpeatPSOschemes,

n mandatoryprioritydispatchforrenewables,theEast-WestInterconnector,high-efficiencycombinedheatandpower(CHP)andpeatgeneration,

n theEUEmissionsTradingSystem (ETS),which is intended to incentivise low-carbon generation, and

n SingleEnergyMarket(SEM)rules,whicharedesignedtoincentivisethelowest-cost generation mix.

Thesepolicy instrumentshaveoperatedeffectivelytoincreaserenewablegeneration.However,in2012thepositivecarbonimpactsofthiswereoffsetbytheincreaseduseofcoalandpeatgeneration,forreasonssetoutbelow.


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4.4 Coal

The unconventional oil and gas revolution in the United States continues to have profound implications forglobalenergymarkets.Cheapergashasprompted theUStoswitchfromcoal-firedtogas-firedgeneration.ThisshifthasfloodedtheEUmarketwith cheap US coal, which, along with the collapse in carbon prices, has dramatically increasedcoal-firedgenerationintheEUasthemarketrespondstopricesignals.

Aside from those entitled to priority dispatch (peat, renewables, and high-efficiencyCHP),generationplantsintheSEMaredispatchedonthebasisofpricesbidin.Ascoalandcarbonpricesfall,theMoneypointcoalplantcanbidinwithlowerprices,allowingittorunbaseload,whilenewer,cleaner,moreefficientandlesscarbon-intensivegas-firedplantsarenotdispatched.It isnotclearwhenor ifeitherETSreformsorachangingpricedifferentialbetweencoalandgaswillreversethistrend.ThisfurtherunderlinestheimportanceofapolicydecisiononthefutureoftheMoneypointplant.

Moneypoint,Ireland’sonlycoalplant,isnearingtheendofitsusefullife,andisexpectedtocloseby2025.Itstotaloutputof915MWsuppliedabout17%ofelectricitydemandin 2013. The decision on how to replace Moneypoint’s power generation will have to be takeninatimelyfashion,toallowadequatetimeforreplacementplanninganddelivery.Coal plants have environmental drawbacks due to high emissions and implications forclimatechange,thoughtheyrunonanabundantfuelsourceatrelativelylowcostand provide useful baseload and fuel diversity in generation. A decision on the roleofcoal in the Irish fuelmixneedstobeseen in thebroadercontextofsustainability,competitivenessandsecurityofsupply.If,considerationisgiventousingMoneypointfor future generation using coal, the issue of carbon capture and storage (CCS) forclimate mitigation would also need to be explored.

4.5 Peat and Biomass

Theincreaseofpeatgenerationinthefuelmixfrom2011to2012waslargelydrivenby forcedoutagesofpeat stations in2011,whichwerenot repeated in2012.PeatgenerationissupportedbyaPSOthatexpiresin2015fortheEdenderrystationand2019 for the West Offaly and Lough Ree peat stations. Extensions to these peatPSOs are not envisaged. In line with Government policy, Bord na Móna has gradually increased theproportionof co-firingwithbiomassat theEdenderryplant, achieving22%co-firingin2012.Marketdynamics,regulatorydecisionsonprioritydispatchforhybrid renewables, as well as policy decisions on REFIT 3 and in the forthcomingBioenergyStrategy,willinfluencethefutureofpeatintheIrishgenerationfuelmixoncethe current peat PSOs have expired.

4.6 Natural Gas

Theshareofnaturalgas intheIrishpowergenerationfuelmixfell from56%in2011to49%in2012,andwasfurtheraffectedbytheoperationoftheEast-WestElectricityInterconnector in 2013.


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ThisshifthasledtoadeclineinoverallconsumptionofnaturalgasintheIrishmarketand consequential increases in gas network charges. However, gas remains a keycomponentofthepower-generationfuelmixandoffersimportantflexibilitytobackupvariable wind generation. While an overreliance on gas in the Irish power generation mix may be undesirable, with Corrib gas due to enter the national gas transmission systemandproposals foranewLNGterminal inShannon, Ireland looksset tohaveamplecapacityandmorediversifiedsupplysourcesfornaturalgas,whichwillenhancesecurityofsupply.

4.7 Nuclear Energy

Irelandhasastronghistoryofengagementonsafetyandnon-proliferation inrelationtonuclearissuesandhasworkedwiththenuclear-powerstatesoverthelastnumberofyearsinrelationtothePowerResolutionattheInternationalAtomicEnergyAgency(IAEA).ThisisofparticularimportancetoIrelandastheimpactsofnuclearaccidentsdonotrespectnationalbordersorterritoriallimits.Irelandrespectstherightsofindividualstates to determine their own energy mix, however, where a state chooses to use nuclear power, it must be done in accordance with the highest international standards with respect tosafetyandenvironmentalprotection. Ireland’spriority is thesafetyofthe Irish people and the protection of the environment, including the sharedmarineenvironmentoftheIrishSea.Therearecurrentlytwostatutoryprohibitionsonnuclear-powergeneration in Ireland.ThePlanningandDevelopment (Strategic Infrastructure)Act 2006prohibits the authorisation of development consisting of an installation forthegenerationofelectricitybynuclearfission,whiletheElectricityRegulationAct1999makessimilarprovisioninrespectofregulatoryauthorisations.

Duringthedebateonthe2007WhitePaperanumberofinterlocutorscalledforgreaterpublicdebateonthenuclearissue,particularlyinthecontextoftheneedtocreatelow-carbon economies in response to climate change. The complete nuclear power plant processproducesmuchlesscarbondioxidethanequivalentfossil-fuelplantshowever,itshouldbeunderstoodthatnuclearisnota“zerocarbon”technology.

Proponentsofnuclearenergyoftenciteitslowcostsandadvancesinreactortechnologyin recent years. Nonetheless, nuclear energy continues to prove expensive to build, as illustratedbytheongoingdevelopmentofanuclearplantinFinlandgreatlyabovebudget,andUKincentivesfornuclearonasimilarbasistorenewableenergy.ConsiderationofnuclearpoweroptionsmustalsotakeaccountofIreland’sexistinggenerationplantandgridsystemsize.Moneypointisabaseloadcoal-firedpowerstationwithlargesetsizes(300MW).Suchstationsarenotsuitedtomid-meritorderrunning,whereregularoutputchangesarerequired.Moreover,muchof thenew largegas-firedgeneratingplant inthe system also prefers to run at constant output. The addition of a relatively largenuclear plant, also designed to run at constant output, would unbalance the system, withtoomuchinflexiblebaseloadandnotenoughflexibleplantforasystemwithlimitedinterconnectiontoothersystems.Ontheotherhand,when‘fourthgeneration’nuclearreactors become commercially available, it is technically possible that smaller reactors could be accommodated on the Irish grid.


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AsIrelandconsidersadditionalinterconnectionwiththeUKandFrance(whichderivesnearly80%ofelectricityfromnucleargeneration),importedpowerfromnuclearsourcesmaybecomeasmallbutincreasingelementoftheall-islandfuelmix.

In light of considerations on the future of the Moneypoint coal plant, it may bequestionedwhetherthetimeisrighttoconsideringreaterdepththepotentialeconomicandtechnical implications,or indeedtotestpublicacceptanceofnucleargenerationlocatedontheislandofIreland.

4.8 Heating

Morethantwo-thirdsofenergyconsumedinIrelandannually isusedinthetransportand heating sectors. While oil’s dominance in both sectors is likely to continue into themediumterm,improvementstofueldiversityinthetwosectorsmustbedelivered.Boostingfueldiversityischallengingandwillrequireintensivecoordinationbetweentheenergy, transport and environment sectors. As Ireland continues to invest in network infrastructure,electricityandgasuseshouldbeoptimisedintheheatingandtransportsectorswheretheycandisplacemorecarbon-intensivefuels.

Some44%ofIrishhouseholdsusedoiltoheattheirhomesin2011,with34%usinggasheating.Solid-fuelheatingremainsasmallbutsignificantcomponentoftheheatingmix.TheCarbonTax,whichwasextended to includesolid fuels in2013,andwhichwillincreaseovertime,willplayapartinincentivisingswitchingtocleaner,lesscarbon-intensiveheatingfuels.

Building retrofits designed to improve insulation and other measures to reduceenergyconsumptionshouldbetheforemostenergygoalforthebuiltenvironment,asdiscussed inothersectionsof thispaper. Irelandhasalreadymadestrides inenergyefficiency;SEAIfiguresshowthatenergyuseperhouseholdfellby18%between2006and2011.Energyefficiencyimprovementtrebledinpaceduringthatfive-yearperiodcomparedwith theprevious10years.The recentpublicationofS.R.54:2014CodeofPractice:MethodologyfortheEnergyEfficientRetrofitofExistingDwellingsbytheNational Standards Authority of Ireland provides detailed technical guidance on theenergyefficientretrofitofdwellingsandwillprovidethebenchmarkforqualityretrofitstothedomestichousingstockgoingforward.

TheuptakeoftheCombinedHeatandPowercapacityunderREFIT3supportschemewillmakeacontributiontoincreasingtheamountofheatingfromrenewablesources,alongwithmigrationtorenewableheatinresponsetomarketforces.Therequirementsof Part L of the Building Regulations are also expected to make a contribution toincreasingtheuptakeofrenewableheat.Thesemeasuresanddevelopmentswillbuildon the increases in renewable heat which were achieved by schemes such as the Greener Homes Scheme, the Renewable Heat Deployment Programme (ReHeat) and the CHP Deployment Programme.

Solar thermal heating for water, shallow geothermal heating, ground-source heatpumpsandbiomasswood-chipboilersareotheroptions thathavebeen installed inIreland in recent years with relative success, providing complementary and alternative heating sources, although their penetration remains low.


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Biomassenergyforheatingdoubledbetween1990and2012,reaching232ktoe.Thegrowthinbiomassismainlyduetoincreaseduseofwoodwastes,othersolidwastesandtherenewableportionofindustrialandmunicipalwastes.MostofthissolidbiomassisusedintheindustrialsectorswhereitiscombusteddirectlyforheatorusedinCHPunits;therestisusedintheresidentialandcommercialsectors.Mostgrowthhasbeenthroughlargerunits,whereeconomiesofscalearebetter.

Tofacilitatetheintegrationofrenewableenergy,severalEUMemberStatesalreadyprovideforthe injectionofbiogasintotheirnaturalgasnetworksandhaveput inplaceregulatoryframeworkswhichaddresscorrespondingsafetyandfuelqualitymatters.UndertheREFIT3supportscheme in Ireland,anaerobicdigestion issupportedthroughtariffsavailable forelectricityexportedtothegrid.OncetheCommissionforEnergyRegulationhasconsultedontheuseofinjectingbiogasintothenaturalgasnetworkandimplementedthenecessaryregulatoryframework,anaerobicdigesterplantsshouldhavetheoptionofinjectingintothenaturalgasgrid,whereappropriateandfeasible.Theavailabilityofsuchanoptionisanticipatedtoimprovethepenetrationofrenewableenergyintheheatingandtransportsectors.

4.9 Energy in Transport

In2011,Irelandwas96%dependentonoilfortransport,withbiofuelsmakingup3.6%.Ireland’sbiofuelpolicyissetinthecontextofthelegallybindingtargetimposedonallMemberStatesunderDirective2009/28/EC(theRenewablesDirective)toensurethatatleast10%ofenergyconsumptioninthetransportsectorisfromrenewablesourcesby2020.AdditionaldiscussionofbiofuelsfollowsunderPriority5:PuttingtheEnergySystem on a Sustainable Pathway.

Transportaccountedforalmost19%ofgreenhouse-gasemissionsin2012inIreland.TheDepartmentofTransportacknowledged theneed foran integratedapproach totransport, combined with spatial planning. By creating compact, accessible urban environments,peoplewillbeinabetterpositiontowalkandcyclefromhometoavailof localeducation,employmentandretailservices.Thiswillhelptoreducetransportand related energy demand. Transport policy is focused on encouraging smartertravel,deliveringalternativetraveloptions,improvingtheoverallefficiencyofmotorisedtransport,andontheprovisionofamoretargetedandefficientpublictransportservice.Investment in public transport reflects this focus. Additionally, current smarter travelinvestment programmesadministeredby theDepartment of Transport aredeliveringhigh-qualitywalkingandcyclinginfrastructureacrossthecountryaswellassupportingbehaviouralchangeinpersonaltraveloptions.Alow-carbonroadmapforthetransportsector, now being developed, will take into account initiatives proposed by the European Commission in its 2011 White Paper on transport.

Wewillalsoneedtoundertakeathoroughexaminationofthemediumandlong-termcosts, benefits and implications of the useof alternative fossil fuels such as naturalgas, includingbiomethane, ingaseous (CompressedNaturalGas–CNG)and liquid(LiquefiedNaturalGas–LNG) formaswellas liquefiedpetroleumgas (LPG) forfleettransport.AproposedEUdirectiveonalternativefuelsinfrastructure(2013/0012(COD)),which is currently under negotiation, sets out requirements for establishing nationalpolicyframeworksforthemarketdevelopmentofalternativefuelthroughinfrastructureprovision,andtheimplementationofcommontechnicalspecifications.


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This proposal also seeks to establish a minimum number of recharging points forelectricvehiclesbyeachMemberState,with10%ofthembeingpubliclyaccessible.ThisproposalseekstoobligeMemberStatestoputinplaceanappropriatenumberofpublicly accessible recharging points by 31st December 2020 to ensure that electric vehicles (EVs) can at least circulate in urban and densely populated areas and then, where appropriate, within networks determined by Member States. A grant scheme to incentiviseelectricvehicleEVtakeupinIrelandhasbeeninoperationforthelastthreeyearsandEVchargingpointsarebeingrolledout.EVsarealsoexemptfromVRT.

TheproposedDirectivealsorequiresthatCNGrefuellingpointsbeprovidedtotheextentrequired toallowcirculationofCNGmotor vehicles in urbananddenselypopulatedareas and, where appropriate, within networks determined by Member States. The deadlinefortheobligationtoputinplaceanappropriatenumberofpubliclyaccessiblerefuellingpointswillbe31stDecember2020assumingtheDirectivebecomeslaw.Theproposeddeadline for installinganappropriatenumberof refuellingpointsalong theTEN-TCoreNetworkis31stDecember2015.CNGfortransportisavailableandused,particularlybyfleettransport,inseveralEUMemberStatesandprovidesaviableandproven alternative to oil. It also provides a natural gas pathway to biomethane given that CNG and biomethane are directly interchangeable.

There is also potential to use Liquefied Natural Gas (LNG) in the transport sector.The proposedDirective seeks that an appropriate number of LNG refuelling points,determined by Member States, shall be built in all maritime and inland waterway ports, and along certain motorways to ensure adequate circulation of heavy duty motorvehicles throughout the Union. In relation to the ports, the Directive allows for thepossibilityofco-operationbetweenneighbouringMemberStatestoensureadequatecoverageofthenetwork.Theproposeddeadlineforinstallingtheinfrastructureis31stDecember2025withtheexceptionofinlandportswherethedeadlineis31stDecember2030.LPG,oftenknownaspropaneorbutane,isanoutputoftheoilrefiningprocessthatisusedasatransportfuelandruralheatingfuelinsomecountriesand,althoughafossilfuel,offerspotentialforfurtherdiversity.

Biofuelsaccountedfor3.8%ofroadandrailtransportfuelsin2012,accordingtothedefinitioninEUDirective2009/28/EC.Biodieselisthemainbiofuel,representing66%ofbiofuelusagein2012,followedbybioethanol(34%)andpureplantoil(0.5%).MostbiofuelinIrelandisimported.Indigenousbiofuelsmakeup21%ofIrishbiofuelssupply.Since2010,undertheBiofuelsObligationAct2010,fuelsuppliersforroadtransportwererequiredtoincludeanaverageof4%biofuelsbyvolumeintheirsales.In2013,this increased to 6.4%. The EU Commission is preparing to amend the Renewable EnergyDirectiveandmaycapthecontributionoffirst-generationbiofuelstoencouragetheproductionofmoreadvancedbiofuels.

Aswithallsectors, Ireland’sdependenceon imported fossil fuelscanalsobegreatlyreduced through improved energy efficiency. Adjustment of VRT andmotor taxationstructures in recent years to reflect vehicles’ CO2 emissions has been central in stimulating a substantial improvement in the energy efficiencyof cars on Irish roads.In2007,theaverageemissionsofIrishcarswere164g/km;in2012theyhadfallento125g/km(SEAI,Energy in Ireland,2012report).Similarly,SEAIprogrammes focusedon improved fuel efficiency of public and commercial fleets have demonstrated thatsignificantefficiencygainsarepossibleinthetransportsectorthroughchangestoenergy


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managementpracticesandtechnology.AshiftfrompetroltodieselfuelledvehicleshasplayedasignificantroleintheenergyefficiencygainsandreductioninCO2 emissions. However,thiscouldpotentiallyhaveimpactsforairquality,asdieselvehicleshavehigheremissionsofairpollutants,fineparticulatematterandnitrogenoxides.

4.10 Storage and Emergency Planning

Astheall-islandmarketishighlydependentonimportedoilandgas,withanincreasingreliance on variable renewable power generation, it is vital to continue building the resilienceofourelectricity,gasandoilsupply,andensurepreparednessforanyenergysupplydisruption.Priority3,dealingwithEssentialEnergyInfrastructure,highlightstheimportance of the ongoing development of key infrastructure to support resilience,particularly interconnection with neighbouring markets. Storage and emergency planning also play a key role.

In 2007, the National Oil Reserves Agency (NORA) held approximately 75 days ofIreland’s total 90-day stockholding obligation, specified under EU and InternationalEnergy Agency (IEA) commitments. NORA was heavily dependent on stock tickets, andmuchof itswhollyownedstockswereheldabroad.FollowingfromGovernmentpolicy and underpinned by an increase in the NORA levy, NORA has maximised the use ofexistingcommercialstorageandrefurbishedandcommissionedthreenewstoragefacilities. At the end of August 2013 NORA held 88 days of Ireland’s stockholdingobligation,with71%heldasphysicalstocksontheislandofIreland,29%asphysicalstocksheldabroadinneighbouringmarkets,andnostockticketrequirement.

TheGovernment’sproposednewlegislativeframeworkfortheforeshoreandmaritimeareawill contain anew regulatory framework for gas storage, followingconsultationconductedduring2011.ThedepletedKinsalegasfieldcurrentlyofferssomepotentialforcommercialoffshorenaturalgasstorage,whiletheproposedShannonLNGterminalcould boost Ireland’s gas security by facilitating the holding of LNG stocks here. Inaddition, a potential commercial salt cavity gas storage project located off Larne inNorthern Ireland is currently being examined. This project has been approved as aProjectofCommonInterest(PCI)underEURegulation347/2013.

Since2007, theobligation fornewgas-firedgenerationstations tomaintainfive-dayback-upofanalternative fuel (usuallyanoildistillate)hasbeen fully implementedbyCER,andissubjecttoregulartesting.Furtheranalysishaspointedtopossibleoptionstoenhancethesearrangementsforholdingoilstocksasaback-uptogas-firedpowergeneration.Governmentwillfurtherexplore,withCER,NORAandotherrelevantbodies,available,cost-effectiveoptions,includingtheircostsandimplicationsforconsumers.Additionally,Governmentwillexplorethepotentialfordevelopingstoragetechnologiesthat capture renewable generation for later use in order to helpmitigate the use ofvariable power sources, such as wind, solar, and marine energy.

Significant work has been undertaken in recent years to enhance gas emergencyplanning, including on an all-island basis and with the UK. Further work has beenundertaken to enhance oil emergency plans, and this must continue and expand.


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Priority 4 – Ensuring a Balanced and Secure Energy Mix: Questions and Policy Options

23. Howcanwereduceourhighdependenceonoilandgas?

24. Howbestshouldweensurethatappropriateframeworkconditionsareinplaceforsecuremarketsandinfrastructurewithsufficientcapacityandinvestmentinthemediumtolongterm?

25. How can we optimise the policy and regulatory environment to enable the market todecideonanappropriatefuelmixfromagrid,marketdesign,carbon,costandenergysecurityperspective?Arecurrentpolicyandregulatoryinstrumentssufficientorareadditionalinterventionsrequired,andwhatshouldthosebe?

26. GiventhatMoneypointwillapproachtheendofitslifeby2025,istherearoleforcoalinthefuturepower-generationfuelmix,takingintoaccountcost,securityof supply and environmental issues? If coal generationdoes not continue atMoneypoint, what are the alternatives? Should options such as biomass ornuclearpowerbeconsidered?

27. Whatstrategyisneededtosupportthecontinuedincreaseofrenewableenergyontheelectricitygrid?Arenewapproachesneeded?

28. What are the security, carbon and cost implications of alternative transportfuels including electricity, biogas, biomethane, LPG, LNG and CNG? Whatsupportsorpolicyinterventionswillberequiredtoachievetheswitchtothesealternatives?

29. Whatoptionsshouldwepursuetoincentiviseswitchingtocleanerlower-carbonheatingfuels?

30. Howbestshouldwefurtherdevelopandimplementstreamlinedandintegratedoil,gasandelectricityemergencyplanningandcontrol frameworkstoensureresiliencetofuel-supplydisruptionsandexternalenergyshocks?

31. What options shouldwepursue to enhance oil, gas and electricity storage?Shouldweexplorefurtherthepotentialforadditionaloilstockstobedeployedas secondary fuel in the event of gas disruptions?What are the costs andbenefitsofdeliveringenergystorage,andaretherealternatives?

32. What further efforts are required to pursue indigenous development ofhydrocarbonsandensuresuitableconditionsfordevelopmentontheislandtoimprove Ireland’s securityof supplyposition?What additional actions shouldwetake?


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Priority 5: Putting the Energy System on a Sustainable PathwayAsustainableenergypathwayisonethatensuresthetransformationofIreland’seconomyfromonepredominantlydependentonimportedfossilfuelstoamoreindigenouslow-carboneconomybasedonrenewableenergy,energyefficiencyandsmartnetworks,whilefullyexploitingthemajoropportunitythispresentsforjobcreationandeconomicgrowth.Thisisrecognisedasacross-cuttingprioritythataffectsalltheothers,butitisdiscussed here separately to highlight it as a priority.


Achievingalow-carboneconomyisafocalpointofIreland’senergypolicy.TheEUhasset abinding target forMemberStates to reducegreenhouse-gas (GHG) emissionsby 20% by 2020, relative to 1990 levels. Consideration of the longer term beyond2020 is well under way. In December 2011, the European Commission published its Communication on an Energy Roadmap 2050. The energy agenda set out in the Communication sought to explore the challenges posed by delivering the EU’s decarbonisationobjective,asalreadysetoutintheMarch2011CommunicationonaRoadmapformovingtoacompetitivelow-carboneconomyin2050,whileatthesametime ensuring security of energy supply and competitiveness. Alongside the Energy2050 Roadmap, the EU published a Green Paper to invite consultation on a new 2030 frameworkforclimateandenergypolicies,whichmustalsoensurethattheEUisontrack tomeet longer-term climate objectives. In January 2014, the EUCommissionpublished its Climate and Energy Framework 2030 which seeks to drive continuedprogresstowardsa low-carboneconomyandbuildacompetitiveandsecureenergysystem that ensures affordable energy for all consumers and increases the securityof theEU’s energy supplies. It proposes to achieve a 40% reduction in greenhousegases (GHG)by2030 relative to 1990, andabindingEU-wide target for renewableenergyofatleast27%in2030.TheEUprocessofdecidingonthe2030frameworkiswellunderwayinparallelwithIreland’sownlow-carbonroadmappingexercise,whichlooks to 2050, with a particular emphasis on the period 2020 to 2030. Coordination ofthese independentyet interrelatedprocesseswillhavetobecarefullymanagedtoensureoptimal coherence in thedevelopmentof Ireland’senergypolicy. For Ireland,aselsewhere,thereductioninemissionsto2020andbeyondcallsforafundamentalshiftinenergyproductionandconsumptionhabits.Thedriversofthisshifthavebeenandwillcontinuetobeastrongemphasisonthepromotionofenergyefficiency, thedevelopmentofrenewableenergyandtheprogressingofsmartgridtechnologies,whilerecognising trade-offsbetween theobjectivesofcompetitiveness,securityofenergysupplyandsustainability.Theoutcomeofthe2030processwillneedtobesustainableforIrelandandotherMemberStates,aswellastheEUasawhole,onenvironmentaland economic grounds, as well as from a secure energy system perspective – theFramework must be affordable and fair, taking account of Member States specificcircumstances and capacities.


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5.2 Making our Use of Energy More Efficient

UnderpinningIreland’sabilitytodeliveronallpartsofitsenergypolicygoalsinacost-effectiveway is thedevelopmentandoptimisationofenergyefficiencyanddemand-sidemanagementtechnologies.Wemustfirstseektoreduceenergyconsumptioninso far aspossibleand tomaximiseenergyefficiency.Weshouldconsiderhowbestto optimise energy use, particularly in the heating and transport sectors, which are highlydependentoncarbon-intensivefossilfuels.Buildingretrofitsdesignedtoimproveinsulationandothermeasurestoreduceenergyconsumptionshouldbetheforemostenergy goal for the built environment, as discussed in other sections of this paper.Irelandhasalreadymadestrides in thisarea,andnowhasoneof the lowestenergyintensities among OECD countries. Between 1995 and 2012, the energy intensity of the economy improved by 18%, or by 21%when behavioural improvements areextracted.19

Thisprogresshasbeendriveninthemainbyimprovingtheenergyefficiencyrequirementin Ireland’s building standards,20andbythesuccessofprogrammestostimulatetheretrofittingofhomestoenhancetheirefficiency.Therehasalsobeengoodprogressonenergyefficiencyinbusinessandthepublicsector.Mostnotably,SEAI’sLargeIndustryEnergyNetwork(LIEN)supportstheenergyefficiencyeffortsofaround160ofIreland’slargestbusiness energyusers, representingnearly 15%of Irish total primary energyrequirementinallsectors.TheLIENhascontinuouslyimproveditsenergyperformancesince itwas formedwithmembercompaniesavoidingenergycostsof€40million in2012alone.Overall,themembercompanieshaveimprovedtheirenergyefficiencybyover20%inthelastdecade,leadingtohundredsofmillionsofeurossaved.TheLIENhasnotonlycontributedstronglytonationalenergyobjectivesbutalsoestablishedIrelandas a global leader in energy management, and many LIEN members have implemented theISO50001standardonenergymanagement.Inaddition,co-operationbetweentheNationalStandardsAuthorityof IrelandandSEAIhas ledtothepublicationofanewIrishstandard,IS399,in2013concerningEnergy-EfficientDesign(EED)Methodology,whichhasbeendeployedinseverallargeindustrialfirms.

Ireland’ssecondNationalEnergyEfficiencyActionPlan (NEEAP),published in2013,reaffirms our commitment to a 20% energy savings target in 2020, complementedby an ambition to reduce energy consumption in the public sector by 33% by 2020. The second Action Plan identified 97 ambitious actions in the public, residential,business,transport,energysupplyandcross-sectoralareas.Theseenergyefficiencymeasures will directly assist and complement the National Renewable Energy Action Plan(NREAP),whichispredicatedonsuccessfullymeetingthetargetsintheNEEAP.If Ireland fallsshortonenergyefficiency, itwillhavea legalobligation todomore toachieveourrenewabletargets.Tomeetthe20%energy-usereductiontargetby2020,all energy-consuming sectors will need tomake strong progress, particularly in thebuildingandtransportsectorswheremorethan60%ofprimaryenergyisconsumed.

19 SustainableEnergyAuthority(2013)EnergyinIreland1990-2012.

20 Department of Environment (2011),BuildingRegulationsPart LAmendment 2011: http://www.environ.ie/en/Legislation/DevelopmentandHousing/BuildingStandards/FileDownLoad,27314,en.pdf.


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http://www.environ.ie/en/Legislation/DevelopmentandHousing/BuildingStandards/FileDownLoad%2C27314%2Cen.pdf

http://www.environ.ie/en/Legislation/DevelopmentandHousing/BuildingStandards/FileDownLoad%2C27314%2Cen.pdf

Since2007, theDepartmentof theEnvironment,CommunityandLocalGovernmenthastwiceupgradedtheenergyperformancestandardsfordwellingsundertheBuildingRegulations.Thisrepresentsanefficiency improvementof60%andpositions Irelandfirmlyonapathtoachievingthe‘nearzero’energystandardrequiredunderDirective2010/31/EUontheEnergyPerformanceofBuildingsbytheendofthedecade.Similarly,a review process was commenced in 2013 towards upgrading the performancestandardsfornon-domesticbuildings.

TheEUEnergyEfficiencyDirectivewilldriveenergyefficiencyactionsandpolicyacrossall sectors in Ireland until 2020. The public sector will have an ambitious and leading role to play in reducing energy consumption in public buildings, while energy providers are nowobligedtocarryoutenergyefficiencymeasurestoreduceenergydemand.SMEswillbesupportedto improveenergyefficiencyandreducetheirenergybills.There ispotentialtodeliverfurthersavingsinenergydemand,butfurtherpolicymeasureswillbe needed.

TheEU2050Roadmappointstofurtherenergyefficiencyimprovementsasakeypartof the “no regrets”options for transforming theEU’senergysystem.21 However, the ongoingeconomiccrisisisaffectingenergyefficiencypolicyinIreland;scarcityofpublicfundingingeneralandalackofprivatecapitalforinvestmentsarepresentingchallengesforimprovingenergyefficiency.Thetransitiontonon-Exchequerfundingmodelssuchaspay-as-you-save (PAYS) isbeinghamperedby thecurrenteconomicclimate.TheBetter Energy programme has shown the important role that retrofitting the energyperformanceofbuildingscanplay;theSEAIestimatesthateachhomeretrofittedundertheprogrammeavoids1.5 tonnesofCO2 emissions on average and overall national CO2savingsfromthisprogrammenowexceed450,000tonnesperannum.TheBetterEnergyCommunitiesprogrammeisgrowingparticularlyquickly,withverywideinterestamong communities across Ireland seeking to reduce their energy bills and their environmentalimpact,andintheprocesscreatelocalemploymentandotherbenefits.Inaddition,thetransportsector,whichisoneofthekeysectorsforimprovingenergyefficiency in Ireland, continues tobe challenging in termsof energy efficiencypolicyimplementation,althoughsomepolicychoices,suchastheintroductionofacarbon-basedvehicletaxationscheme,haveachievedgreaterenergyefficiency.TheaverageCO2emissionsofnewprivatecarsinIrelandfellby22%from2008to2011.

One particular focus of energy efficiency action is to reduce the public sector’sexpenditure on energy. The Department of Communications, Energy and NaturalResources is undertaking a range of actions to help all parts of the public sectorbecomemore energy efficient, and savings of more than €40m have already beenachieved.SEAIworksdirectlywithpublicbodies,andhassignedformalpartnershipswithbodiesandagenciescollectivelyaccountingformorethan60%ofpublicsectorenergyspend.Deliveryofthepublicsector’s2020energyefficiencytargetwillleadtopermanentannualsavingsof€200m.

21 NoregretsoptionsarebydefinitionGHGemissionsreductionoptionsthathavenegativenetcosts,becausetheygeneratedirectorindirectbenefitsthatarelargeenoughtooffsetthecostsofimplementingtheoptions(IPCCwebsite).


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5.3 Renewable Energy

Ireland has excellent renewable energy resources, which will be a critical and growing component of Irish energy supply to 2020 and well beyond. Indigenous renewableenergy plays a vital role in the country’s domestic fuelmix, increasing sustainabilitythrough theuseofcleanpowersourcesandenhancingenergysecurityby reducingIreland’s dependence on imported fuels.Wind, bio-energy and ocean energy couldyieldadditionaleconomicopportunitiesforbothIrishworkersandbusinesses.Underthe2009RenewableEnergyDirective,Irelandiscommittedtoproducefromrenewablesourcesatleast16%ofallenergyconsumedby2020.Thiswillbemetby40%fromrenewableelectricity,12%fromrenewableheat,and10%fromtherenewabletransportsector. The target to have 40%of electricity consumed from renewable sources by2020isoneofthemostdemandingintheworld.

Fromalowbase,Irelandhasmadesignificantprogresswithregardtorenewableenergydeployment.Since2003, installedwindcapacityhasincreasedfrom209MWacross12 counties to over 2,000 MW across 22 counties. In this regard, it should be noted that increased wind energy can reduce energy costs when gas prices are high, and act asahedge to reduceexposure togaspricefluctuations.While focusingonasingleyeartoassesstheeffectofwindenergyonpricesdoesnotcaptureallthelong-termimpacts, analysis shows that wind did not add to consumer prices in the 2011 system. Any assumption that wind energy automatically increases prices must be avoided. The renewable energy contribution to thermal energy rose from 2.5% in 2003 to 5.2%in 2012, resulting in more than 40,000 homes and more than 550 businesses using renewableenergyforheat.Everypassengervehiclenowtravelsanaverageof500kmusingbiofueleveryyearcompared tonobiofuelbeing recordedasbeingconsumedby transport vehicles in 2003.22SEAIanalysisdemonstratesthattheuseofrenewableenergysourcesinelectricityalonehaveledtoareductioninfossil fuel importsworthover€1billionsince1990.

In2012,7.1%ofgrossfinalenergyusecamefromrenewablesources.Betweennowand 2020, there must be a steady, progressive and measurable increase in the amount of renewable energy consumed in the electricity, heat and transport sectors. Withrespecttotheindividualsectors,attheendof2012,Irelandwasat19.6%inrenewableelectricity, 5.2% in renewable heat, and 3.8% in renewable transport. The NationalRenewableEnergyActionPlanto2020,submittedtotheEUCommissionasrequiredunderthe2009RenewableEnergyDirective,istheframeworkwithinwhichIrelandhassetoutthedetailedpolicies,schemesandmeasurestodelivertherequiredtrajectoryofgrowthfromrenewablesources.

Ireland’swindresourcescangeneratepowerwellbeyondnationaltargetsforrenewableelectricity, potentially creating a significant export opportunity. Proper exploitation ofthatopportunitywouldspur jobcreation throughdirectemployment inconstruction,operations and maintenance jobs. Realising energy export potential could alsoencourage economic growth by leveraging ICT capabilities, and by attracting and expandingarobust,efficientsupplychaintosupportfuturewind(offshoreandonshore)wave and tidal power production.

22 Biofuelsarenowblendedwithmuchoftheconventionalpetrolanddieselsupplied.


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TherecentlypublishedOffshoreRenewableEnergyDevelopmentPlansetsoutavisionfor Ireland’s renewable energy resource contributing to our economic developmentandsustainablegrowth,generatingjobsforourcitizens,supportedbycoherentpolicy,planning and regulation, and managed in an integrated manner. Ireland has a sea area around 10 times the size of its landmass, with one of the best offshore renewableenergy(wind,waveandtidal)resourcesintheworld.ThedevelopmentofthisoffshorerenewableenergyresourceiscentraltooverallenergypolicyinIrelandandinthefuturecan enable Ireland to develop an export market in green energy and enhance security ofsupply.Afullydevelopedoceanenergysectorcanmakeasignificantcontributiontoeconomicgrowthandjobcreationoverthelongertermoutto2030andbeyond.

Irelandcontinuestofaceseveralchallengesinherenttosuccessfullyfurtherdeployingrenewable energy in electricity, heat and transport, including predictable and transparent supportframeworks,regulatorycertainty,costefficiencyandeffectiveness,protectionoftheconsumer,andsocietalacceptance.Forexample,withrespecttoonshorewind,we are starting to revise and reduce price supports for new projects over time aswind technology becomes a mature renewable energy technology. There is now an opportunity, with stakeholder consultation, to design a new support scheme that takes accountofthestructureofthetargetmarketthatwilloperateinIrelandfrom2016.

In theareaof transport, it is estimated that 630million litresof biofuel –283millionlitres of bioethanol and 346million litres of biodiesel – are required to achieve theRES-T(renewableenergyintransport)10%target.Increasingtowardsthe10%blendnecessary to enable target achievement comes with challenges that are primarily associatedwith theEUSustainabilityCriteriawhichcouldseverely limitavailabilityofthebio-energycropsneededtoproducebiofuels,especiallybiodiesel.

Bio-energy has historically been the largest contributor to Irish renewable energythroughheatgeneration,andisanticipatedtoplayasignificantroleinfurtherdisplacingfossilfuels,especiallyinthelargerheatusersinthecommercialandindustrialsector,stimulating local economic activity, and improving the country’s net trading position. TheNationalEnergyEfficiencyActionPlanandNationalRenewableEnergyActionPlanscenarioforrenewableheatassumesthatthehistoricrateofdeploymentofbiomassuse forheatcontinuesto2020.Further,additionalbiomassCHP installations,drivenby the feed-in tariff for biomass CHP and the expected contribution from buildingregulationsrequiringsomerenewableheatareassumed.Thesemeasureswillneedtobesupplementedifrenewableheatistocontributetherequiredlevelstoachievingthe2020target.Inthisregard,acentralfocusoftheBioenergyStrategyistheidentificationof the existing and additional bioenergy policies and schemes necessary to cost-effectively contribute to the2020 renewableenergy target andposition Irelandonapathway to further decarbonising the energy system. These challengeswill need tobe addressed for both2020, and the longer-term timehorizons to 2030and2050.The strategy recognises the economic, environmental and energy opportunities that adevelopedbioenergysector,fuelledbyindigenouslysourcedbiomasscandeliver.Itsetsoutthemeasuresrequiredtosupportthemobilisationofhome-grown,renewableandsustainablebiomassfromwastesandresiduesthroughtopurposegrownenergycrops and wood.


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It isworthbearinginmind,inthecontextoftherenewableenergytargetsingeneral,thattheoveralllevelofeffortcanbereducedbyincreasingtheextenttowhichenergyefficiencyaffectsoveralldemand.Improvingtheefficiencyofenergyuseinallsectorswill be an important element in delivering on our renewable energy target.

5.4 Grid Development and Sustainability

Thegrowthofrenewableenergyand,inparticular,windrequiresthemodernisationandexpansionoftheelectricitygrid.Ireland,incommonwithmanyEUMemberStates,isinvestinginthetransmissionsysteminsupportofrenewableenergyaswellasregionaleconomicdevelopment.Significant investmentsareneededtomodernisetheenergysystem,withorwithoutdecarbonisation,whichwillaffectenergyprices intheperiodup to 2030.

Over2,500MWofrenewablegenerationisnowinstalledontheislandofIreland.Withrenewable generation capacity set to reach between 4,800 and 5,300MW tomeetIreland’stargetof40%ofelectricity fromrenewablesourcesby2020,managingthisamountof intermittentgenerationonasmall islandsystempresentsauniquesetofoperational challenges. The ‘Delivering a Secure Sustainable Energy System’ (DS3)programmebeingundertakenbyEirGridandthesystemoperatorforNorthernIreland(SONI)isdesignedtomanagetheachievementofour40%renewableelectricitytargetfromagridperspectiveoverthecomingyears.TheDS3programmewilldevelopsystemoperationssolutions toensure thesecureandsafeoperationof theall-islandpowersystemaswemovetowardsprogressivelyhigherlevelsofnon-synchronousrenewablepenetration.

Inadditiontodevelopingagridoperationstrategyandinvestingin infrastructure,thegridmustalsobeadaptedtooperateina‘smarter’manner,toenablesystemflexiblitiesthatwillallowthepotentialofsmartmeteringinbringingenergyefficiencybenefitstoconsumers, and allow the integration of high volumes of electricity from renewablesourcesintothesystem.Asmartgridwouldalsobetterfacilitateelectricvehicleusage,electricitystorage(utilityanddistributedscale),effectiveenergyefficiencytechnologies,and enhanced consumer control over energy usage. Due to our proven record ofengaging with information and communications technologies (ICTs) and our strongresearchinfrastructure,Irelandhasbecomeaworldleaderinsmartgridresearchanddeployment.

5.5 Job Creation and Economic Growth

The sustainable energy sector (encompassing renewable energy, energy efficiency,and research, development and demonstration) presents a major opportunity for jobcreationandeconomicgrowthinIreland.Underthe2014ActionPlanforJobs,provisionismadefor€57millioninExchequersupportstofurtherstimulateenergy-savingactivityintheresidentialsector.Thisisestimatedtosustainapproximately3,500jobs.Afurther€35million is being invested in the creation of an Energy Efficiency Fund to invest in


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energyefficiencyprojectsinthecommercialandpublicsectors.23 SEAI estimates24 that therenewableandsustainableenergysectorcouldcreateatleast30,000jobsby2020.SEAIiscurrentlyworkingwithEnterpriseIreland,IDAandForfástoexaminewhatsectorsandsub-sectorsinthesupplychainsofenergyefficiencyandrenewableenergyofferthemostopportunitiesforIrishfirmsinordertoinformstrategiestomaximisejobcreation.

Inadditiontoitscriticalcontributiontoenergysupplyontheislandandthemeetingofournational targets in that context, Ireland’s renewable energy resources have rich potential (subjecttoaneconomicallyviablemarketbeinginplace)forthedevelopmentofanexportindustry to the UK in the first instance and to North-West Europe over time. Ourrenewableenergyresources,bothonshoreandoffshore,aresignificantlygreaterthanthenationalenergyrequirement.TheGovernmentiscommittedtoworkingwiththeUKgovernment, under the auspices of theBritish-IrishCouncil, andwith the EuropeanCommissionandMemberStatesinthecontextoftheNorthSeasCountriesOffshoreGridInitiativetocreatetheframeworkandconditionsforrenewableenergyexport.Inthe context of a European Internal Market and greater integration, greater trade inenergy is inevitable in thepost2020scenario.Thedevelopmentofcommercial large-scale electricity storage to deliver on such an export opportunity also merits clear attention at a time when electricity storage is receiving more attention in the EU and InternationalEnergyAgency (IEA) in thecontext of increasing volumesof renewablegenerationbecomingpartofthepowersupply.Electricitystorageonthescaleenvisagedwouldrequiretechnological,logisticalandenvironmentalchallengestobemet.Ifthesechallenges are met, the potential opportunities, over time, could be very considerable forrenewableenergyexport.

Apart from our excellent renewable energy resources, Ireland has a number ofstrengths which it can use to leverage employment opportunities, including strengths in key sectors such as engineering and ICT; a strong research, development anddemonstrationbase;ourfavourablecorporatetaxrate,andawell-educated,adaptableworkforce.Asustainableenergysectorcanbothmaintain jobs in thesesectorsandattract new employment as companies are drawn to locate to Ireland, in part due to its low-carbonenergysupplychain.

5.6 Climate Change

Climate change is recognised as the most serious and threatening global environmental problem. There is scientific consensus that humans are contributing to climatechangethroughtheemissionofsubstantialamountsofgreenhousegases.InIreland,approximately60%ofgreenhouse-gasemissionsderive fromenergy-relateduses inthe residential, transport, energy, industrial and commercial sectors, which remain primarilydependenton fossil fuels. In2012 Irishenergy-relatedCO2 emissions were 20% above 1990 levels.

Ireland is part of the United Nations Framework Convention on Climate Change(UNFCCC) and is a signatory to the Kyoto Protocol, which set binding targets for

23 Action 296: http://www.djei.ie/publications/2014APJ_Table_of_Actions.pdf.

24 http://www.seai.ie/Publications/Statistics_Publications/EPSSU_Publications/The_Case_for_Sustainable_Energy.pdf.


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developed countries to reduce greenhouse-gas emissions by 2012. At the Durbanclimate conference in December 2011, UN negotiations were initiated to develop anew international climate-change agreement that will cover all countries. The newagreementwillbeadoptedin2015,attheParisclimateconference,andimplementedfrom2020. Itwill taketheformofaprotocol,another legal instrumentor“anagreedoutcomewithlegalforce”,andbeapplicabletoallparties.Inthemeantime,theEU,afewotherEuropeancountriesandAustraliahaveagreedtojoinalegallybindingsecondperiodoftheKyotoProtocol,whichrunsuntil2020.

The 2030 policy framework for climate and energy proposed by the EuropeanCommission aims to set a target to reduce EU domestic GHG emissions by 40% below the 1990 level by 2030.25ThiswouldrequirethesectorscoveredbytheEUemissionstrading system (EU ETS) to reduce their emissions by 43% compared to 2005, while emissions from sectors outside the EU ETS would need to be cut by 30% belowthe2005 level.Thiseffortwouldbeshared“equitably”between theMemberStates.ThiswillhaveimplicationsforIreland’spoliciesonenergyefficiencyimprovementandfor renewableenergywhichwill need tobecosteffectiveand reflectanappropriatecontributiontoeffortsharing.

In April 2014, the Government published a National Policy Position on Climate Change, alongwith the final heads of theClimateAction and Low-CarbonDevelopmentBill.ThisBillmandatesthecreationofaNationalLowCarbonRoadmapforIreland,whichwill incorporatesectoral roadmaps from thoseareasof theeconomywithsignificantemissions.TheobjectiveoftheRoadmapistoidentifythechallengesandopportunitiesofthetransitionto low-carbonfuturefromanationalperspectiveandtosetouthowthis transition will be managed and achieved. It is anticipated that there will be an openconsultationonthefirstNationalLow-CarbonRoadmapinthesecondhalfofthisyear.Aconsultationpaperonthesectoralroadmapfortheelectricitygenerationsectorwas published in late 2013 and that paper and the responses to the consultation are available on the Department’s website.

Itshouldalsobenotedthatwhileclimate-changemitigationdrawsa lotofattention,climate-change adaptation is also important. In particular, the resilience of energyinfrastructureinthefaceofclimatechangemayneedexamination,withstepstakentominimiseriskstothesecurityofenergysupply.

5.7 Role of the Sustainable Energy Authority of Ireland (SEAI)

TheSustainableEnergyAuthorityof IrelandwasestablishedbyGovernment in2002to promote and assist the development of sustainable energy in Ireland. SEAI’sstatedmissionistoplayaleadingroleintransformingIrelandintoasocietybasedonsustainable energy structures, technologies and practices. Its roles include: supporting Governmentdecision-makingthroughadvocacy,analysisandadvice;drivingdemandreduction;providingadvice toallusersofenergy,anddriving thedecarbonisationofenergysupply. Itsworkprogramme isstructured in termsofdelivering programmes, informing government and society, and developing markets and sectors.

25 http://ec.europa.eu/clima/policies/2030/index_en.htm.


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SEAIdeliversanumberofenergyprogrammesonbehalfofGovernment.Mostnotably,itadministersallstrandsoftheBetterEnergyprogramme,offeringfinancialsupportforenergy upgrades in buildings. It also administers schemes to help business and the publicsectorbecomemoreenergy-efficient,andhasdirectlyassistedmorethan3,000organisationstoreducetheirenergycosts.Initsinformingrole,itsupportsGovernmentthrough itsstatistics,modellingandanalysis roles,and it informsallpartsofsocietythrougheducation,trainingandinformationactivities.

Asanagency focusedon thedevelopmentof sustainableenergysectors in Ireland,SEAIworkstodevelopenterprise,skillsandquality inordertobuildmarketsfornewtechnologies and services. This function is an important part of delivering on policygoalstoenhancethesustainabilityoftheIrishenergysystem;newpolicyinstrumentsoften require agency support to see them achieve their desired impact. An agencycanhousespecificexpertiseasneedsarise,andcaninteractwithallmarketactorstoprovidesupportanddevelopment.SEAI’spreviousworkinhelpingtofosterthegrowthof Ireland’s renewable energy sector, through market building, demonstration andsupport, isagoodexampleofthis.AsIrelandseekstoaccelerateitstransitionawayfromover-relianceonimportedfossilfuels,workingtodevelopmarketsthroughsupply-anddemand-sideactionswillremainessential.ThiswillincludeexploitingopportunitiesforIrishcompaniestobecomeexportersofnewtechnologiesandservicestothemanyother countries seekingsolutions to their ownenergychallenges.As theprocessofchangeandinnovationinenergyaccelerates,futurerolesforSEAI,andtheresourcesrequiredtofulfilthem,formpartofthediscussionforenergypolicy.


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Priority 5 – Putting the Energy System on a Sustainable Basis: Questions and Policy Options

33. How should cost-effective sustainable energy be promoted and supported?Whataretheappropriatesupportandregulatoryframeworkstodothis,ensuringbothregulatorycertaintyandprotectionofthelong-terminterestofconsumers?Istherearoleforsolar,offshorewind,wave,tidalorothertechnologies?

34. Whatoptionsareavailabletoencourageprivateinvestmentinenergyefficiencyandensurethetransitiontonon-Exchequerfundingmodelsforenergyefficiency?

35. Howmightsupportsforsustainableenergymeasuresbemademorepredictableand transparent, and more effectively attract cost-competitive investment inrenewableelectricity,heatandtransport?

36. HowcanIrelandbestdevelopsustainableenergysolutionsthatmeetourlong-term international climate obligations? Which pieces of energy infrastructureshouldbeourprioritiesforclimateadaptation?

37. Howdoweensurecost-effectiveandtimelyinvestmentinelectricitytransmissionanddistribution,includinginsmartgrids?

38. HowcanweexploitIreland’ssustainableenergystrengthstorealisejobcreationandeconomicgrowthopportunities?

39. Are the optimal structures in place to deliver sustainable energy and realise the associated jobsandgrowthopportunities?Areexistingpolicy interventions forsustainability(e.g.publicserviceobligation,prioritydispatch,efficiencymeasures)consistentandaligned?


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Priority 6: Realising Economic OpportunityIrish energy policy will continue to achieve energy security, energy sustainability and competitiveness,andinsodoingwill facilitate investment, jobcreation,researchanddevelopment, exports and economic growth.


Continuing the theme adopted by the Government during the 2013 Irish Presidency of the Council of the European Union, economic and energy policy will focus ongrowthandjobs.Whilecompetitivenessconsiderationsemphasisetheimportanceofminimisingthecostofenergytobusinesses,itisalsoimportanttoexploitthepotentialof the energy sector itself to create jobs, attract investment, facilitate research anddevelopment, and enhance economic growth.

It is abundantly clear that economic opportunity exists in every facet of the energyindustry,andthatamodern,robustenergysystemisakeyenablerforfutureeconomicgrowth. In addition to promoting policies to realise that opportunity, Government will consider supportingpolicyareas that areessential to the frameworkof Ireland’senergy economy, including a well-equipped energy workforce, strong investment inresearch and development, strategic partnership between industry and academia, and a collaborative governmental approach.

6.2 Contribution by Commercial State Energy Companies, and Government Support Programmes to the Overall Economy: Investments, Employment and Training

Priority6examinesmanykeyissuessuchasskillsrequirements,andthepotentialofinvestments in the energy sector to stimulate economic growth in the wider economy. ThescaleofthecommercialStateenergycompanies’contributiontotheeconomyissignificantintermsofinvestment,employmentandjobcreationand,assuch,illustratesthe energy sector’s potential to support economic growth.

AnumberofthemajorcommercialStateenergycompanies, includingESB,BordnaMónaandBGÉ,envisageinvestmenttotallingover€3billionbetween2014and2016.This will have a positive impact on employment, particularly in the construction sector. ESBcontributed€1.8billiontotheIrisheconomyin2012andemployed8,000people.EirGridemployedover370peopleduring2012,witha further55engaged incapitalprogrammes; theGrid25 investmentprogramme isexpected tosustainnearly3,000directandindirectjobsupto2025.BordnaMónaemployedover2,000staffin2013,along with over 650 seasonal workers.

BGÉisundergoingunprecedentedtransformationforanIrishStatecompany;includingcompletingthesaleofitsBordGáisEnergybusinessaspartoftheStateassetsdisposalprocess,thedividendsfromwhichwillprovideExchequerfundingforinvestmentsinjobsandgrowth.Inaddition,BordGáisNetworks’rollingcapitalrefurbishmentprogrammeswillsustaininexcessof600jobsdirectlyintheNetworksbusinessandthroughthird-partycontractors,andanestimatedadditional100jobsduringdesignandconstruction.


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While BordGáis Energy’swind farm business is being sold, its ongoing investmentprogramme is expected to create approximately 200 construction jobs across fourprojectsinconstruction.TheStatecompaniesalsohaveanumberofimportanttrainingprogrammesinplaceforapprenticesandgraduates.Inaddition,privatesectorenergycompanieshavealso invested insignificantnewfossil fuelandrenewablegenerationcapacity, which has contributed to security, sustainability and competitiveness, as well asunderpinningjobcreation.

TheBetterEnergyProgramme,since its inception in2009,hasprovidedExchequersupporttoover250,000homes,realisingenergysavingstohomeownersof€76million.Ithassupportedonaverage4,000jobsperannumduringitslifetime.In2014,afurther€57millionwillbespentundertheBetterEnergyProgramme,supporting3,100jobs.Inaddition,there-spendingeffectsfromsavingsincitizens’energybillsseesadditionalmoney spent in local economies.

6.3 Skills and Training: Tomorrow’s Energy Workforce

Ireland’shigh-qualityeducationandtrainingenvironmenthasproventobeaninvaluableassetinitssuccessfulhistoryofattractingworld-classmultinationalcompanies.Aswebringnewenergysourcesonlineandleadthedevelopmentofthefuturegrid,industry,academia and government will work together to recruit and prepare the next generation ofenergyprofessionals.

Special attention will be paid to strengthening the linkages between academia and industry. The former National Board for Science and Technology published variousInventoriesofEnergyResearch,DevelopmentandDemonstrationProjects since the1980sthathaveshowntheincreasingshareofindustryfundingintheresearchsupportportfolio.26Therearegoodcasestudiesofindustrialengagementwithenergyresearchcentres, such as the UCD Electricity Research Centre (ERC). Business is represented ontheERCboard,andthecentrehasspunoffincubatorcompanieswhichhavegoneon to become internationally trading businesses, such as Cylon Controls Ltd. However, mostenergyresearchisstillconductedwithoutvisibilityto,orsupportfrom,theprivatesector. Experience from the biotechnology, ICT and food and drink sectors couldusefullybebroughttobearonthisissue.

A problem that has emerged in recent years has been a shortage of appropriatelytrainedtechnicians.Whilethecollapseoftheconstructionsectorhasresultedinmanycraftsmenandtechniciansbeingavailable,theyoftenlackthespecificskillsnecessaryforenergy-sectorwork.Therehavebeenasmallnumberofpilotprojectstoretrainandupskilltechnicians,suchastheINTERREG-fundedInstallersAcademy,butthereis,asyet,nolarge-scaleactivitydevotedtosolvingthisproblem.Thisisacasewheremore‘joined-upgovernment’couldimprovethesituation.

26 TheSEAIhasanEnergyResearchPortalwherecurrentresearchprojectsareavailable.Seehttp://www.seai.ie/Renewables/Energy_Research_Portal/.


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http://www.seai.ie/Renewables/Energy_Research_Portal/

http://www.seai.ie/Renewables/Energy_Research_Portal/

The STEPS Programme led by Engineers Ireland has helped to raise awareness amongschoolstudentsoftheexcitingcareeropportunitiesinscienceandtechnologygenerally;however,relatively little impacthasyetbeenfelt intheenergysector.Morework needs to be undertaken at primary and secondary school levels to increase the effectiveteachingofmathematicsandscience.

AsthefindingsfromBuildUpSkillsIreland(BUSI)projectdemonstrate,awell-trainedenergyworkforceisessentialtodeliveringthe2020energyandclimategoals.Yetthetrainingprovision for theconstructionworkforce is largelycomprisedofskillsgainedthrough learningonsite, formalapprenticeship for themainconstruction tradesandadd-ontrainingprogrammesforsystemspecialistsorinstallers.Neitherapproachhassufficientlyevolved toassist in the transition toa low-carboneconomy;aconcertedeffortisneededtoupskillthetrainersinthissector.WhiletheBUSIreportprovidedagoodanalysisofthetypeandnumberoftradesrequiredthroughto2020,anationalapproach to identify and inventory the specific skills and certifications that industryrequiresisneeded.Authoritiesmustalsoleverageeducationalnetworksandinstitutions,especially those that provide training in the electrical, mechanical, engineering, and information technology fields in order to facilitate the provision of interactive onlinetraining, apprenticeships, classroom engagement and hands-on work experience inrelevant areas.

6.4 Procurement: Spending Strategically

PublicprocurementinIrelandrepresentsabout€15billioninexpenditureonsupplies,services and construction works each year. With the economic climate demanding that every sector domorewith less, targeted procurement reforms hold the potential todeliver savings to taxpayers while stimulating industry growth. Adding additional rigour to procurement processes, particularly in the execution of energy and infrastructureprojects,couldachievegreaterefficiencywithoutcurtailingquality.

GreenTenderssetsaclearvisionforhowthepublicsectorcanspendmorestrategicallyonenergyandenergy-relateditemsorequipment.Broadlyspeaking,suchprocurementgenerallyfallsintotheprocurementofenergy-usingproducts,energyservicesorcapitalprojects.Byunderstandingwhatisbeingprocured,theenergyimplications,andhowtoselectthemosteffectiveprocurementmethod,public-sectorbodieshavehugepowertodrive themarket towardsmoreefficientproductsandservices.More recently, theDepartmentpublishedaNationalEnergyServicesContractingFrameworkwhichaimstostandardiseprocurementforenergyservicescontracting,energyperformance-relatedpaymentsandlocalenergysupplycontracts.Thisframeworkwillbecomplementedinlater years with additional methodologies.

IrelandledthewayinEuropeindevelopinganIrishstandardforenergymanagement,which specifically included a focus on energy-conscious procurement. The globalstandard, ISO 50001, was based on the Irish standards, with the result that Ireland has thehighestuptakeofISO50001intheworldrelativetoitssize.Irelandwilltakeactionto ensure that the principles enshrined in the global standards are adopted in public procurement practice.


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6.5 Research, Technological Development and Innovation

Sincethe2007EnergyWhitePaper,approximately€273millionwasinvestedinIrelandin relation to energy research, technological development and innovation. This has beendoneinamannerthatfollowedboththecommitmentsmadeinthepreviousWhitePaper,andtherecommendationsofthe2012IEACountryReview.

Other notable developments in Irish energy research include Science FoundationIreland’s addition of Energy and Environment to its priority support themes, andUniversityCollegeDublin’s Electricity ResearchCentre achievement of SFI StrategicResearch Cluster status.

The Irish research community, home to several world-class, world-scale centres ofenergyresearchexcellence,hasseensignificantexpansion inrecentyears, includingtheestablishmentoftheBeaufortCentreinHaulbowline,Cork,incorporatingtheNavalService facilities there, and theHydraulic andMarine ResearchCentre at UniversityCollege Cork. United Technologies launched an International Energy Research Centre at the Tyndall Institute in Cork.

Onanationallevel,Forfáshasbeenleadinganationalresearchprioritisationexerciseand has identified priority areas for energy research funding: in Smart Grids/SmartCitiesandMarineEnergy.Nationalstrategiesfortheseareasarenowbeingdevelopedbycross-agencygroupschairedbySEAI.

SEAImaintainsanenergyresearchportalthatprovidesanoverviewofallresearchbeingundertaken in Ireland on energy topics (www.seai.ie/Renewables/Energy_Research_Portal/).

AtEuropeanlevel,theStrategicEnergyTechnologyPlan(SET-Plan)hassetthehigh-levelenergytechnologypolicyforEurope,andaspartofitsimplementing,theEuropeanCommission has issued a Communication on Energy Technology and Innovation. The statement articulates various potential modalities for ensuring greater convergencebetween national and EU research support programmes. It has also shaped the recent callforproposalsundertheHorizon2020andLIFEresearchprogrammes,thesuccessortotheFrameworkProgrammesforResearchandTechnologicalDevelopment.

Since the 2007 Energy White Paper, significant effort, led by Department ofCommunications, Energy and Natural Resources, has gone into integrating various research, development and commercialisation support activities into one coherent energy innovation process. Inter-agency and, to a lesser extent, inter-departmental,co-operationhasbeenachievedintheenergyspace.ThechangeofScienceFoundationIreland(SFI)policytorecogniserelevancetonationalpolicyasacriterionforsupportingbasicresearchwasamajorfactorinprogressingthispolicyobjective.Itwillbeimportanttomaintainmomentuminsecuringtheintegrityofthe‘innovationchain’.

Thepriorityforfuturenationalworkwillbetoensurecontinuityofappropriateworkassupportmechanismschange,andtoleverageHorizon2020fundingforpriorityareas.


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www.seai.ie/Renewables/Energy_Research_Portal/

www.seai.ie/Renewables/Energy_Research_Portal/

6.6 Modelling

Consistent, dependable policy is key to mobilising energy investment, providing the certaintythatinvestorsneed.WithintheEU,nationalauthoritiesmustensureauniformapproach to evidence-supported decision-making. In addition, tracking of climatetargetsandEUenergyframeworkcompliancewillbecomemorecriticaloverthenextdecade. Energy price comparison and analysis must be nuanced to reflect local,national and regional circumstances and characteristics.

The 2012 International Energy Agency Review of Ireland’s Energy Policy urged theGovernment to undertake more energy modelling and energy systems analysis, and to become more involved with relevant international work. As a result, Ireland has rampedupitsenergymodellingwork,anddevelopedasuiteof‘top-down’economicmodelsand ‘bottom-up’ technicalmodels,whichhave theability toexaminea largenumberofpotentialenergyscenariosup to2050.Thequalityof thisworkhasbeeninternationally recognised, and Ireland now chairs the IEA Energy Technology Systems AnalysisProject.

SEAI’s energy modelling group was established to provide analysis and modelling supporttopolicydecision-makers,investorsandthemarket.ThegrouphasdevelopedasuiteofmodelsoftheIrishenergysystem,andusesthesetoprovideannualupdateson Ireland’s progress towards key targets in both the supply of and demand forenergy.Thegroupalsoundertakescost-benefit analysesandevaluations in supportof Department’s own expertise and policy development. The SEAI co-funds energymodellinginanumberofotherresearchgroupsintheuniversities.

There is increasing recognition that this work can provide solid evidence for policydecisions;ithelpstoinformclimate-changepolicyaswellasenergypolicy.Thereisaneedtofostermorecollaborationandprovideforongoingstructuredinteractionbetweenresearchers,modellersandpolicymakers, inatwo-wayprocessofengagement.Thiswould ensure that such research work addresses the real energy problems, their impacts on citizens and challenges for policy makers in resolving such issues. Inaddition,publicationshaverelevanceandcanunderpinamoreinformedpolicydebate.

While the situation is much improved since 2007, a sustained, consistent approach toenergymodelling is required to improvedecision-makingandconsensus-building.To achieve this, the Government will encourage the development of a sustained,consistent national level framework for integrated energy modelling and encouragethestandardisationof informationanddefinitions.Suchaframeworkshould leverageexistingenergymodelsatinternationalandnationallevelsintermsofinputsandoutputsin critical modelling domains (e.g. energy system, economic, social, environmental impact)andwith regard todemand/supplyscenarios.Governmentwillalsoconsiderusingnational-levelenergymodellingstructuresasahubornationalclearinghouse,particularlyinordertoenhanceNorth-Southco-operationandregionalenergyplanning.


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6.7 Energy Data as an Enabler of Innovation

The sharing of energy data and intellectual property has the potential to unleashinnovation and creativity in the energy sector, and nowhere more so than in reducing unnecessary energy usage. As an example, the national Building Energy Rating dataset is being made available, on an anonymised basis, to researchers who wish to examine the patterns of energy performance in Irish homes and buildings. Also,SEAIhaspublished interactivedigitalmapsof renewableenergy resources, suchaswind and bioenergy that can be used by researchers, businesses and energy users. The introduction of digital, individualised, postcodeswill providemany opportunitiesto collaborate across government departments and agencies, in order to generate information on the geography of energy supply and demand, and on the energyperformanceofbuildingsinIreland,subjecttotheappropriatedataprotection.Linkingthebuildingenergyratings(BER)databasetoCSOdataviapostcodes,will,forexample,greatlyenrichinformationonenergyaffordabilityandhowbesttotackletheissueandtargetsupports.Toenhancethepossibilitiesoffindingnewandexcitingopportunities,thefollowingpossibilitieswillbeexplored:

n provisionoffreeaccesstoenergysystemandmodellingdataatanationallevel,withadequatecontrolstructures(establishaforumtocompleteareportwithin6months),

n forexistinginformationanddata-sharingprotocols,considerhowbesttoallowwiderdisseminationofdata (includingasharedapproachwithSEAIandotheragenciesifnecessary),and

n anyfutureIGAscouldincludedata-sharingagreementsatminimalcost.

6.8 People and Process: Cross-Government Collaboration

Ireland has many opportunities that could be exploited when seeking to facilitateemployment creation through energy policy. In addition to abundant renewable energysources,IrelandhasaproventrackrecordinICTsoftwaredevelopment,andaresponsive,flexibleadministrativesystemwhichcanquicklysolvechallengespreventingprogress.Tomaximisethepotentialbenefitsofthesecharacteristics,theDepartmentofCommunications,EnergyandNaturalResourcesproposestoestablishaninformalad-hoc group that wouldmeet from time to time to consider, and seek to resolve,issuesthatmaybepreventingenergyrelatedprojectsthatcouldgiverisetoinvestmentandemployment.GovernmentDepartments(e.g.theDepartmentofCommunications,EnergyandNaturalResources,DepartmentoftheEnvironment,CommunityandLocalGovernmentandtheDepartmentofJobs,EnterpriseandInnovation)andagencies(e.g.IndustrialAuthorityofIreland,EnterpriseIreland,Forfás,SustainableEnergyAuthorityof Irelandand theCommission forEnergyRegulation)will seek tobeasflexibleandadaptable as possible, while respecting the regulatory and statutory remits of allbodies,intheirpursuitofsolutionstoremovebarrierstoinvestment.TheDepartmentofCommunications,EnergyandNaturalResourcesproposesthatthead-hocgroupofcivil and public servants would work collaboratively to overcome obstacles and explore new opportunities in the energy sector.


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Thegroupwillbeguidedbytwokeyprinciples:(i)aspiritofflexibilityandadaptability,and (ii) the need to execute, maintain momentum and progress.

Climate action and energy policy are cross-cutting issues that will affect nearly allDepartments.Theramificationsofenergyandclimatepolicywillbefeltastheytranslateintoeconomicopportunityandactivityandthepotentialwelfaregainstosociety. Inthecoming years, the energy sector will become more central to the Irish economy and more Government Departments, such as Agriculture, Health and Social Protection, will be affectedandcanbeexpectedtobecomemoreengagedinenergypolicydecision-making.


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Priority 6 – Driving Economic Opportunity: Questions and Policy Options

40. What skills and training are required to underpin the energy system in 2020?Howshouldtrainingfortheenergysectorbeorganised?

41. How can energy policy be designed to maximise and grow Irish employment in thesectorinthelongterm?

42. HowcanGovernment funding forR&D in theenergy fieldbebest targeted tomaximisethepotentialforthecommercialisationofIPemergingfromsuchR&D?

43. Howshouldresearchfundingorganisationsmodifytheirsupportprogrammes?

44. How should Ireland best position itself to maximise the benefit from Horizon2020?

45. What else should be done to maintain and improve the integrated innovation supportprocess,frombasicresearchtocommercialisation?

46. How can there be more collaboration and ongoing structured interaction between researchers, modellers and policymakers to ensure that energy research and modelling address the real energy policy problems including impacts on citizens, and challenges as policymakers perceive them, and that the resulting analysis andpublicationshavepolicyrelevance?

47. Do any other areas within the energy/enterprise policy space need to beaddressedintheforthcomingEnergyWhitePaper?


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Appendix 1: GlossaryAD Anaerobic digestion

ACER AgencyfortheCo-operationofEnergyRegulators

BER Building Energy Rating

BGÉ BordGáisÉireann

BUSI Build Up Skills Ireland

CO2 Carbon dioxide

CACM Capacity allocation and congestion management

CAG CommonArrangementsforGas

CCGT Combined-cyclegasturbine

CEF ConnectingEuropeFacility

CER CommissionforEnergyRegulation

CHP Combined heat and power

CNG Compressed natural gas

DCENR DepartmentofCommunications,EnergyandNaturalResources

DELG DepartmentofEnvironment,CommunityandLocalGovernment

DETINI DepartmentofEnterprise,TradeandInvestmentNorthernIreland

DJEI DepartmentofJobs,EnterpriseandInnovation

DSO Distribution systems operator

DS3 Delivering a Secure Sustainable Energy System

ENSREG EuropeanNuclearSafetyRegulatorsGroup

EPA Environmental Protection Agency

ERC Electricity Research Council

ESB Electricity Supply Board

EU/IMF EuropeanUnion/InternationalMonetaryFund

EVs Electric vehicles

EWIC East-WestInterconnector

ESRI Economic and Social Research Institute

ETS Emissions Trading Scheme

FOU Fullownershipunbundling

GDP Gross Domestic Product

GHG Greenhouse gas

GWh Gigawatt hour

IAEA International Atomic Energy Agency

ICT Informationandcommunicationtechnologies


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IEA International Energy Agency

IEM International Energy Market

IGA Intergovernmental Agreement

ITO Independent transmission operator

IMP Integrated Marine Plan

LEU Large Energy Users

LNG Liquefiednaturalgas

LPG Liquefiedpetroleumgas

MWh Megawatt hour

NEEAP NationalEnergyEfficiencyActionPlan

NESC National Economic and Social Council

NIE Northern Ireland Electricity

NPP Nuclear power plant

NRA National Regulatory Authority

NREAP National Renewable Energy Action Plan

NORA National Oil Reserves Agency

OECD OrganisationforEconomicCo-operationandDevelopment

OJEU OfficialJournaloftheEuropeanUnion

PAYS Pay-as-you-save

PCI ProjectsofCommonInterest

PSO Public Service Obligation

R&D Research and development

REFIT RenewableEnergyFeed-InTariff

REMIT EU Regulation No 1227/2011 on wholesale energymarket integrityand transparency

RES-E Renewable Energy Sources in Electricity

RES-T Renewable Energy Sources in Transport

SEAI SustainableEnergyAuthorityofIreland

SEM Single Electricity Market

SEMC Single Electricity Market Committee

SET-Plan European Strategic Energy Technology Plan

SFI ScienceFoundationIreland

SONI SystemOperatorforNorthernIreland

TPER TotalPrimaryEnergyRequirement

TSO Transmission system operator

UCD University College Dublin

VRT Vehicle Registration Tax

WACC WeightedAverageCostofCapital


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Appendix 2: Key Department Publications since 2007TheFirstNationalEnergyEfficiencyActionPlan(NEEAP)

TheSecondNationalEnergyEfficiencyActionPlan(NEEAP2)

‘WarmerHomes’–AStrategyforAffordableEnergyinIreland

OffshoreRenewableEnergyDevelopmentPlan

National Renewable Energy Action Pan

FirstProgressReportontheNationalRenewableEnergyActionPlan

Second Progress Report on the National Renewable Energy Action Plan

StrategyforRenewableEnergy2012-2020

StudyoftheStrategicCaseforOilRefiningRequirementsontheIslandofIreland

ReviewoftheSecurityofIreland’sAccesstoCommercialOilSupplies

DepartmentofCommunications,EnergyandNaturalResources,‘GovernmentPolicyStatementontheStrategicImportanceofTransmissionandOtherEnergyInfrastructure’,July2012

FrontierEconomicsTransmissionAssetsAnalysis,2011

StudyonCommonApproachtoNaturalGasStorageandLiquefiedNaturalGasonanAll-IslandBasis, 2007

All Island Electricity Grid Study, January 2008. (Published jointly by the Department ofCommunications,EnergyandNaturalResourcesandtheDepartmentofEnterprise,TradeandInvestmentofNorthernIreland)


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Appendix 3:27 Other Relevant PublicationsIreland

SustainableEnergyAuthorityofIreland,2014,‘RenewableEnergyinIreland’

SustainableEnergyAuthorityofIreland,2013,‘EnergyinIreland1990-2012’

SustainableEnergyAuthorityofIreland,2013,‘EnergyintheResidentialSector–2013Report’

SustainableEnergyAuthorityofIreland,2012,‘LargeIndustryEnergyNetworkAnnualReport2011’

SustainableEnergyAuthorityofIreland,2012,‘BetterEnergyHomesSchemeImpactReport–BillingAnalysis’

SustainableEnergyAuthorityofIreland,2011,‘EnergyForecastsforIrelandto2020’

ESRI,‘AReviewofIrishEnergyPolicy,2011’

ForthcomingNESCReport‘WindEnergyinIreland:TheChallengeofCommunityEngagementandSocialSupport’

OurSustainableFuture–AFrameworkforSustainableDevelopmentforIreland,2012

EU

CommissionCommunication,‘EnergyRoadmap2050’[COM(2011)885–15.12.2011]

CommissionCommunication,‘MakingtheInternalEnergyMarketWork’[COM(2012)663–15.12.2012]

Commission Communication, ‘Delivering the Internal Electricity Market and making the most of publicinterventions’ [C(2013)7243 – 5.11.2013]

CommissionCommunication,‘APolicyFrameworkforClimateandEnergyintheperiodfrom2020to2030’[COM(2014)15 – 22.1.2014]

CommissionCommunication,‘EnergyPricesandCostsinEurope’[COM(2014)21–22.1.2014]

CommissionReport,‘EnergyEconomicDevelopmentsinEurope’[EuropeanEconomy1/2014]

CommissionCommunication,‘ForaEuropeanIndustrialRenaissance’[COM(2014)14/2–22.1.2014]

CommissionCommunication,‘Theexplorationandproductionofhydrocarbons(suchasshalegas)usinghighvolumehydraulicfracturingintheEU’[COM(2014)23–22.1.2014]

CommissionCommunication,‘EnergyTechnologiesandInnovation’[COM(2013)253final,2.5.2013]

International

InternationalEnergyAgency,‘EnergyPoliciesofIEACountries–Ireland2012Review’.

FifthAssessmentReportbytheUnitedNations’IntergovernmentalPanelonClimateChange(IPCC)28

27 Thelistofpublicationsisindicativebutnotexhaustive.

28 TheIPCCFifthReportiscomprisedofaseriesofdocumentspublishedbythreeWorkingPartiesandaSynthesisReporttobefinalised inOctober2014.WorkingGroup Iof the IPCCreleased theSummary forPolicymakersof its report,on thePhysicalScienceBasisofClimateChange, inSeptember2013,andpublished the full report inJanuary2014.WorkingGroup II released its report on Impacts, Adaptation and Vulnerability, on 31st March 2014. Working Group III, which assesses optionsfortheMitigationofClimateChange,publisheditsreporton13thApril2014.


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