Cheaper, stable electricity prices: key to economic growth
David Kerr considers the importance of bringing forward investments in electricity infrastructure to facilitate renewables and increase the security of Northern Ireland’s electricity supply.
In the aftermath of PowerNI’s recent 18 per cent price rise, commentators pointed to volatile wholesale generation costs with high oil and gas prices made worse by weakened sterling. It’s well known that our economy has to incur some of the highest electricity prices in the EU so the challenge is to find ways of reducing prices and providing some level of price stability. The solution to this lies with renewables and greater all-island grid interconnection.
The Executive’s target is for Northern Ireland to consume 40 per cent of all electricity from renewable sources by 2020. We’re currently sitting at about
14 per cent. For the 40 per cent target to be achieved we need the North/South Interconnector delivered by 2016, a green light for RP5 investment in the electricity grid and a more streamlined approach to approving and consenting transmission lines.
At present the overall grid in Northern Ireland can handle (at best) 750MW of renewable power. Just over half of this capacity is currently being utilised. According to the Northern Ireland Renewables Industry Group to achieve the 40 per cent headline target, the overall grid would need to support circa 1,450MW. This cannot be achieved without the North/South Interconnector.
The interconnector is a project of vital strategic importance for Northern Ireland. It is arguably the most important ‘live’ planning application under consideration in terms of its economic impact. Yet four years after submission to DoE Planning, the application remains in a public inquiry.
There are those who advocate undergrounding the North/South Interconnector but this will lead to higher costs for consumers. Quite apart from the huge environmental and technical challenges of undergrounding such a vast amount of 400kv cable, the cost would be circa € 500m – at least three times the cost of the proposed overhead lines. These costs will be passed onto the consumer and would make us even more uncompetitive as a region.
The RP5 investment programme has been referred to the Competition Commission following a failure to reach agreement between the regulator and NIE. A decision should be made on this by autumn 2013. Whatever the outcome, the fact remains that substantial amounts of money must be spent on the grid and the longer this is delayed the longer we will have to wait for multiple renewable energy projects to become operational, bringing with them all of their own associated investment spin-offs.
There is no question that stakeholders and landowners along affected transmission line routes deserve to be properly consulted and given their rightful place. However, there is an equal need to reform the processes and procedures involved with electricity transmission line development to allow statutory decisions to be reached quicker.
Whilst decision-makers agonise over these issues, the clock continues to tick towards the critical path deadlines on generation capacity in 2016 and 2021 respectively. For those who are unaware, I refer you to the All Island Generation Capacity Statement 2013-2022 jointly published by SONI and EirGrid in January 2013. The report states that without the North/South Interconnector, we are at risk of regional electricity black-outs in 2016 and definite load shedding and black-outs in 2021.
It may be that the steroid solution or fall-back plan is to negotiate a short-term derogation for existing fossil fuel generating stations in Northern Ireland but this won’t solve fundamental problems, reduce electricity prices or price instability in the future.
DETI has the right energy strategy in place to get a diversified generation mix and our regulatory framework holds providers to account. What we need is renewed focus on delivering the grid infrastructure to make it all happen.
Perhaps it is time to create some form of inter-departmental DETI-led electricity grid task force to coordinate and deal with these core strategic issues over a 2-3 year term?
If we have the right diversified generation mix and better interconnection, we have a far better chance of having stable electricity prices and a more competitive environment to support economic growth.
David Kerr is a public affairs consultant
Twitter: @davidwkerr
www.spscommunications.co.uk
