Powering Northern Ireland

While there is a general awareness of how the electricity market works in Northern Ireland, less is known about the role that some of the key market participants play in enabling and contributing to the local economy.

For this reason, Grant Thornton undertook research in late 2016 to understand the role of the System Operator for Northern Ireland (SONI) within the electricity market and the economy of the region.

While Grant Thornton is fully aware of SONI’s responsibility to provide for the safe, secure and efficient operation of the high voltage electricity system, the report revealed that the important role SONI plays in the Northern Ireland economy is not widely understood, nor appreciated.

SONI plays an important role in the economy of Northern Ireland. Through the provision of a secure electricity supply, SONI is responsible for ensuring that the lights stay on for homes and businesses across the region. However, consistently delivering this can be more challenging than appreciated.

As Northern Ireland is on a journey to reduce its carbon emissions, and to increase generation from renewable sources, some forms of fossil fuel generation are being scaled back or ceased. Although electricity demand in Northern Ireland is expected to see only modest growth in the coming years, the reduction in fossil fuel generation will contribute to a potential generation deficit post-2020.

SONI is proactively responding to this risk to security of supply with the development of a second North-South Interconnector. This connection will allow Northern Ireland more reliable access to electricity generated in the Republic of Ireland, in the scenario where it can’t produce enough to meet demand.

Sustaining a reliable supply of electricity is not just important for existing consumers, it is also crucial to attracting Foreign Direct Investment. SONI enables Northern Ireland to have high quality electricity on a par with Tokyo, Germany and the United States. However, without longer-term security of supply, investors will be cautious about establishing themselves in the region. This further highlights the importance of the additional North-South Interconnector.

SONI’s contribution to the economy of Northern Ireland extends beyond maintaining a reliable supply of electricity. As a key facilitator to the growth of sustainable energy, SONI has helped to expand renewable energy as a component of the electricity fuel mix. SONI will continue to have a role on the journey towards reduced carbon emissions in Northern Ireland.

This presents SONI with a unique challenge. It must balance the need to invest in sustainable energy developments, with the challenge of delivering a secure electricity supply, at prices that consumers can afford. This is a difficult equilibrium to achieve but, as Northern Ireland is more costly for electricity than the EU15 average, the need for affordable electricity is undeniable.

Accounting for just 1 per cent of the total cost of electricity, SONI is not a key component of the energy prices in Northern Ireland but it does contribute to the careful management and minimisation of the total cost of electricity, both directly and indirectly.

As the energy market in Northern Ireland faces a period of great change, an understanding of – and support for – core electricity market participants such as SONI is more important than ever.

This article is based on the report, ‘Powering Northern Ireland’ produced by Grant Thornton Ireland in October 2016. It can be accessed on www.grantthorntonni.com

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