The NI energy industry received an early Christmas present when the NI Executive published the new Energy Strategy (or "Path to Net Zero Energy") in late December last year. Unfortunately as with many Christmas specials it ended on a cliff-hanger with much of the detail still to be worked out.
Most of the big announcements had already been drip fed to industry over the last 12 months or so, and so there were no real surprises, which is perhaps disappointing given the original call for evidence was launched back in 2019. Nevertheless it is good to see firm commitments from the Executive to develop the clean energy industry.
The main headline is a target of 70% of energy consumption from renewable sources by 2030. This target was informally set by the previous minister Diane Dodds last year, so it wasn’t a big surprise. It is however still a very ambitious target. Industry commentators have suggested that NI would need up to 1.4GW of new onshore wind and solar over the next eight years to reach this target, which means we would need to double the amount already installed (coincidentally about 1.4GW).
A target has also been set for energy savings of 25% from buildings and industry by 2030. This is likely to mean higher standards for new buildings, as well as promoting low emissions vehicles and heating from low carbon sources. It also suggests a move to retrofit existing buildings (up to 50,000 per year) to make them more efficient.
Sitting behind these targets are a number of strategic objectives which will require further consultation or discussion with other government departments.
Decarbonising power, heat and transport
The main objective is decarbonising power, heat and transport by encouraging the development of more renewable electricity generation.
Following the closure of the ROC scheme in 2018, NI is the only part of the UK and Ireland with no support for renewables, which has led to a significant slow-down in the development of new projects. The Executive notes that it is currently working with BEIS to extend the GB contracts for difference scheme to NI with a view to inclusion by 2023. If this is not possible then the Executive will look to put its own scheme in place. Whilst encouraging, this does not suggest that entry to the CfD scheme is imminent.
This is concerning as developers need certainty in order to invest in new projects. Given the timelines required to build new wind and solar farms, in order to hit the 2030 target new projects need to be commenced soon.
As any developer will tell you, the most significant time restraint for any new project is planning permission. Helpfully this has been acknowledged and the Executive plans to consult this year on its review of strategic planning policy for renewable energy.
Hydrogen and other technologies
In addition the Executive has prioritised innovation in the hydrogen, transport and carbon capture and storage sectors. This also envisions some form of government support but notes that the Executive plans to engage with BEIS to explore this further, which suggests that market stimulus is not imminent.
The development of offshore wind has not been specifically referenced as a priority, however there is an acknowledgement that it is likely to be one of the cheapest sources of electricity by 2040. This also fits with the Minister's own informal target of 1GW of offshore wind development by 2030. Clearly this will be dependent on the outcome of CfD discussions.
Decarbonising the gas network
Lastly, there is a reference to fully decarbonising the gas network. No detail has been provided on this, and a consultation on decarbonising heat has been planned. Separately we note that the Utility Regulator's recent forward work programme published last month references work to facilitate biomethane injection, with the Executive hoping to facilitate biomethane injection by mid-2022 which suggests that this is becoming a priority.
The injection of hydrogen to the grid appears to be further away, with the Executive only committing to review the legislation by 2025.
Clearly the Executive still has a lot to do if it is to deliver the targets it has set itself. The priority will undoubtedly be concluding discussions around admitting NI to the CfD support scheme, closely followed by concluding the various other consultations. We understand that this is actively underway and those involved have been engaging closely with the renewables industry, which is positive.
The Executive has committed to keeping the strategy under annual review, with a major review every five years and it is hoped that this will ensure that the current momentum is not lost.
For further information in relation to this topic, please contact Mark Stockdale, Partner.