Northern Ireland Affairs Committee
Oral evidence: Renewable Energy and Net Zero in Northern Ireland, HC 428
Wednesday 17 January 2024
Ordered by the House of Commons to be published on 17 January 2024.
Members present: Sir Robert Buckland (Chair); Stephen Farry; Mary Kelly Foy; Sir Robert Goodwill; Claire Hanna; Carla Lockhart; Jim Shannon.
Questions 1 - 30
Witnesses
I: Peter McClenaghan, Director, Consumer Council for Northern Ireland; Derek Scully, Head of Corporate Affairs, Energia Group; Steven Agnew, Director, RenewableNI.
Written evidence from witnesses:
– [REN0003] – Consumer Council for Northern Ireland
Examination of witnesses
Witnesses: Peter McClenaghan, Derek Scully and Steven Agnew.
Chair: This is a meeting of the Northern Ireland Affairs Select Committee. I am grateful today that the Committee is joined, as we start our inquiry into renewable energy and net zero in Northern Ireland, by two panels. Our first panel is, in person, Peter McClenaghan, the director of the Consumer Council for Northern Ireland, and Derek Scully, who is head of corporate affairs for Energia Group. Then online is Steven Agnew, director of RenewableNI. Welcome.
Q1 Sir Robert Goodwill: My question sets the scene a little bit. I would like to ask how your various organisations fit into the energy system in Northern Ireland at large and how, in some ways, you may interact with each other.
Steven Agnew: I am delighted to be able to give evidence to the Committee. RenewableNI is the voice of the renewable electricity industry in Northern Ireland. Our members are engaged in wind, solar, tidal and storage, onshore and offshore, large scale and small scale. We comprise not just the developers but investors, consultants across planning, grid, ecology et cetera, and a surprising number of lawyers as well, who are lovely people when they are on your side and you are not paying for their time.
Q2 Sir Robert Goodwill: I am guessing that the lawyers are looking back at the mistakes of the past and you are hoping to have a much more optimistic future if we can move forward in a more positive way.
Steven Agnew: Absolutely, the opportunities are there. Climate change of course presents a challenge, but it creates huge opportunities for investment across these islands, particularly in Northern Ireland, where we have some of the best wind resources in the world. Policy is a barrier to exploiting those resources and maximising the benefits they can bring.
Q3 Sir Robert Goodwill: What is the headcount in your organisation, just to give us a feel of how big you are?
Steven Agnew: Fully resourced, we are four people, but we represent 60 member companies. In total, they have about 2,000 staff.
Sir Robert Goodwill: Derek, I will ask the same question to you.
Derek Scully: Energia Group is an all‑island‑of‑Ireland energy company. We focus exclusively there. We have, though, 90 years of experience in Northern Ireland. Through our retail company, Power NI, we have approximately 500,000 customers in Northern Ireland. Within Northern Ireland, we also have 12 operating windfarms. We have recently made a number of investments in the energy transition in Northern Ireland around hydrogen and battery storage. We are a company that is focused on the energy transition right the way from our flexible generation assets that will support additional renewables and a strong pipeline of renewable projects, through onshore wind, solar, offshore wind and the other sorts of technologies I mentioned, right the way through to providing those benefits, new products and agile services, to all of our customers, whether they are in the home or in business.
Q4 Sir Robert Goodwill: You say that you are an all-Ireland organisation. What sort of percentage of energy crosses the border, just to give a rough perspective?
Derek Scully: I would probably also commend the Committee for taking on this task, because, as we will get through today, there are a number of terms, acronyms and things that you will become familiar with. At a wholesale level, so where electricity is generated, traded and moved around, the market is an all-Ireland market. There are operational constraints. There are limitations on the amount of that that can flow, but overall the market, at a wholesale level, is treated as one single market.
Q5 Sir Robert Goodwill: What proportion crosses, or is it not even seen as that? It is just one market.
Derek Scully: At the market level, absolutely, yes.
Sir Robert Goodwill: Okay, that is understood.
Peter McClenaghan: I represent the Consumer Council for Northern Ireland. The Consumer Council for Northern Ireland represents all consumers in Northern Ireland. Essentially, at our widest, we represent the 1.9 million people who live in Northern Ireland. The organisation has significant statutory obligations in relation to energy, transport and water. The Energy (Northern Ireland) Order 2003 requires us to do a number of things. It requires us to understand consumers through research and to educate and empower consumers. It requires us to undertake consumer protection, so we engage closely with companies in the industry in relation to complaints. It also then requires us to represent consumers with public authorities.
In doing so, we are very active in the energy market in Northern Ireland. We will engage with the regulator and through the regulatory framework on behalf of consumers in relation to price control decision-making, so the investment decisions that are made on behalf of consumers by the energy companies in relation to pricing and tariff reviews. Then also, as I say, we will engage in relation to individual complaints and work with companies to improve their customer service outcomes for consumers.
Our detailed research gives a really good picture of consumers in Northern Ireland. We have begun to undertake annual research as well as some specific research about consumer views on the energy transition. At a high level, we found that, broadly, consumers support the move to net zero but have pockets of understanding and some limited understanding in some terminology and where we are looking to go. There is also justified scepticism about the direction of travel and concern from consumers about affordability and protections in relation to net zero.
Q6 Sir Robert Goodwill: How would you balance those two objectives? I am guessing from what you are saying that moving to more renewable energy means more expensive energy, maybe not necessarily so. How can you meet those two objectives of your consumers, who want to make progress towards net zero but also do not want to be paying more than they have to for their energy, particularly if they are business users who are in competition with other jurisdictions where energy may be priced differently?
Peter McClenaghan: Yes, all our research indicates that consumers’ prime concern is not net zero. One of the biggest things that people have been concerned about understandably in the last couple of years is energy prices and energy affordability. When we talk to people about the decarbonisation transition, they tell us that they are concerned about affordability and what it is going to mean for them if they are being asked to transition to new technology, for example, and how much that might cost.
Ideally, if we focus on energy demand reduction, all the modelling that comes across from the Department for the Economy, DAERA and others suggests that we will need to reduce our energy demand. If we reduce energy demand by better insulating homes, undertaking more active travel and people using more public transport, those measures could all help us reduce and save money. Moving to a decarbonised landscape where we are generating our energy on the island also provides us energy security that we do not have and prevents the damaging price spikes that consumers faced in the last couple of years. There is also going to be a requirement to be honest with people that, yes, there could be significant costs as a result of this transition.
Q7 Sir Robert Goodwill: Given the mistakes of the past, would you say that consumers in Northern Ireland maybe have a more cynical attitude to renewables and some of the subsidies and contracts that have been available or will be available in the future? Do they have a jaded view of the sector?
Peter McClenaghan: That is not something we have asked people directly. We see that there are varying levels of trust within different parts of the sector. We see trust, for example, in the regulated space, in electricity and gas, being higher. In order to engender better public trust, we would advocate for strong regulatory protection for consumers across the board. Wherever they are engaging in the energy market, be that off-grid heat for homes, or gas or electricity provision, they should have the same regulatory standards. That will engender trust and, I hope, encourage people to engage in the market and have trust when they are taking on new technologies in their homes, for example.
Q8 Mary Kelly Foy: Good morning. Peter, you have already touched on this. I wanted to ask what the current main priorities of your organisations are. Steven or Derek, or Peter actually, you might want to come back in.
Peter McClenaghan: I can do. At the present time we are running a number of programmes on behalf of consumers. We are working in partnership with the Department for the Economy, undertaking an energy efficiency campaign. We ran the same campaign last winter to guide consumers in relation to how they can reduce their energy demand and become more energy efficient. As I mentioned, we also have our complaints and research functions.
As we see it, there is a significant job of work to be done to encourage people to better understand the energy sector and then understand how they can play their part in reducing energy demand or making change in their lifestyles. Our concern is that actually that support is not adequate at the current time. While we are going out and giving out basic energy efficiency messaging, we are at pains not to patronise people. Most people are actually doing a lot of things to reduce their electricity and gas demand, given the prices that there have been in the last couple of years.
Also, we cannot yet signpost people to support for assistance in changing to new technology, so upgrading their oil boiler to a heat pump, for example. There is no direct support or guidance that we could give in that regard. One thing that the Department for the Economy has done is consulted on what it describes as a one-stop shop. That would be a portal for consumers to engage with and get that type of advice. That organisation has not yet been formed, so at this stage the level of energy efficiency information we can give to consumers is relatively light touch. Quite quickly, we need to improve that service provision to consumers.
Q9 Mary Kelly Foy: You are saying that that provision is not there yet. Is that something you will be doing or is it up to another organisation?
Peter McClenaghan: That is a decision that would be outwith the Consumer Council. The Consumer Council has statutory powers and obligations in relation to consumer education. It may be that part of the one-stop shop function could fall within our remit, but it is likely that an organisation such as that would have to be a collaborative partnership in order to have the really deep technical understanding of technologies that can provide consumers with that aspect of the support they would need.
Q10 Mary Kelly Foy: There is a cost of living crisis as well. Consumers try to understand, but they will have so many other things on their mind as well. For a lot of your consumers it will be difficult to then have to deal with an extra pressure. Any guidance and help would be very welcome for that particular cohort.
Peter McClenaghan: We were told by 97% of people in a recent survey that they are significantly worried about energy prices. When we were running our energy campaign last winter, when people engaged with our campaign one of the major things they engaged on was “How do I read my electricity meter?”, so consumer understanding of the energy sector is relatively limited. The technical aspects that Derek and Steven can talk to vastly better than I can are well above the head of most consumers.
Q11 Mary Kelly Foy: I could do with that one-stop shop for reading the electricity meter actually. What about you, Derek? What are the main priorities for your organisation?
Derek Scully: I can maybe pick up where Peter left off on the customer side first. As you mentioned, it has been a difficult period for customers in terms of general energy prices and the huge supply-side shock that we saw a couple of years ago, so managing through that, and Government supports and everything that were put in place. There has been a huge focus within Power NI on our vulnerable customers and supporting them, but also looking to the future with that net zero in mind. What new products and services can we start to roll out, such as EV tariffs for customers with electric vehicles? It is very much at both ends of the spectrum, but there is a lot of support there, including for business as well.
I fully support what Peter said on the education side. Given the scale of the transition that we need to make, which is societal and economy wide, not limited to the energy space, education is going to be key. People need to understand and have access to the information that tells them what they are consuming. How much does it take to boil a kettle? What does that cost? Understanding that will help you take further decisions around when and how to use electricity. The market can also evolve in terms of offering the right incentives to people to move demand around and different things. Focusing on that area is a real priority of the business.
Another main priority is obviously in renewables. As I mentioned at the outset, we have recently built a 50 MW battery storage facility just outside of Belfast. That is, in our view, key to the energy transition, in that it allows, at times when there is not demand for all the renewables being produced, it to be stored, taken out later and used by customers. Hydrogen is another example where, if we are unable to get wind off one of our wind farms just outside Ballymena, it can now be diverted into hydrogen. That hydrogen, in turn, goes down into Belfast and powers buses around the city. There are lots of positive things on that side.
Without a route to market in Northern Ireland, though, at present, it means our focus on onshore renewables like wind and solar has been on activity in the Republic of Ireland. We are currently building two wind farms in counties across Ireland. These are new, leading-edge technologies, 6‑megawatt turbines, which probably five or six years ago would have only been located offshore, but they are now capable of coming onshore. There are fewer turbines and a lot more power. That is an area we are obviously investing in right now. We have a strong solar pipeline. We have been looking at offshore wind, and have two strong projects developed off the south-east coast of the island.
I suppose that we are looking at and being guided by the targets that have been set for 2030 and the overall transition. It has really focused the business as a strategy on the energy transition to ensure that we play our part in delivering all those targets and linking everything from the generation of the electrons through to the services that we can ultimately offer customers.
Q12 Mary Kelly Foy: That is great. Members of this group actually visited the company with the hydrogen buses in Ballymena. It was fantastic. As ever, more investment was needed, but things like that are super. Brilliant, those are great priorities. I hope you will get the investment to roll those out quicker and further, so thank you for that, Derek. Steven, what about your organisation?
Steven Agnew: Derek mentioned that we operate in a single electricity market on the island of Ireland, so we work very closely with Wind Energy Ireland. We have an overarching objective between the two of us to create a zero-carbon electricity system on the island of Ireland by 2035. To always bring politics into things, we work north-south and east-west. The UK Government have set a target for zero-carbon electricity by 2035. Something that I think is key to get across to the Committee today is that the UK includes Northern Ireland and we do not have that same target written in Northern Ireland policy for zero-carbon electricity by 2035.
For example, SONI, which you will hear from later, when it published its “Tomorrow’s Energy Scenarios” said that the earliest it envisages us getting to zero-carbon electricity is by 2040. We need that clear direction in policy in Northern Ireland. In getting to that point, getting to 2035, by bringing on more renewables and moving to zero-carbon, we also seek to bring down the cost for consumers. NIE, which you will also hear from, published a report, “Networks for Net Zero”. It showed that, by going to 70% renewables—we are roughly between 45% and 50% in Northern Ireland—you would reduce consumer bills by 1%. That is despite the fact that we are making huge investments in grid infrastructure, for example. We are still overall reducing the cost for consumers, which is obviously vital.
Peter talked of a number of impacts that there will be on consumers in terms of making the transition. Electrifying heating and transport, moving to electric cars, for example, will be a personal cost. In terms of a system perspective, renewables, as the cheapest form of new generation, can bring down the cost. For example, last year renewables displaced £243 million of imported costly fossil gas. Instead, we produced clean local renewable electricity. That is the objective.
I know that your focus will likely and rightly be on the Climate Act target, because it is required in law, of 80% renewables by 2030. I would say that it has to be just a staging post to 2035 and zero-carbon electricity. The reason why I highlight that is that we made the mistake in the past when we had a target for 2020. We met it early and stopped. Northern Ireland risks going from leaders to laggards in terms of renewables, because we have had a policy vacuum now for effectively 10 years. Where we connected 400 MW of new renewables in 2016, in the past five years we have connected only 86 MW. While the rest of the world is accelerating the renewables roll-out, Northern Ireland has taken its foot off the accelerator and we have seen a downturn in investment.
Mary Kelly Foy: That is all very interesting.
Q13 Jim Shannon: It is very nice to see the three of you, Derek, Peter and, in particular, Steven; it is nice to see you again, Steven. We have had some discussions. I have a specific question to all three and then a singular question to each of you, if you do not mind. The first one is just to get an idea of where we are. How would each of you individually characterise Northern Ireland’s progress towards renewables and net zero? Do you think we are meeting the targets? I know, Steven, you have indicated that we met the original one; we are not meeting the second one. Maybe you have answered that, but just give your thoughts on where we are and what we need to do, please, first.
Derek Scully: In terms of where we are, it is important we recognise that, in a global context, Northern Ireland’s achievement is exceptional in terms of where we have got to today. Some 40% to 50% of electricity in Northern Ireland is from renewables. We can look anywhere else in the world and you will find higher renewable numbers, but you will not find it where it has been almost exclusively onshore wind. Things like hydro and other renewable technologies dominate in other countries and play an important role, but they are just not open to us here. It is important that we recognise that. Getting to that point, as Steven said, through the incentives that were previously in place, is a very strong performance.
The challenge, and this is not just an investment or engineering challenge but a system-wide challenge, of getting to 80% is going to be challenging. The 80% target by 2030, as I say, is going to be a real challenge. It will be an extraordinary effort for us to get there but we need to set a target. We need to have something to work towards. We need policy that is coherent in terms of the overall achievement of that target. That one is challenging.
The other is the net zero target and this is an important distinction. I think that it has been called out, even in the call for evidence. An important distinction is on that whole net zero side. Net zero is not just about renewable electricity. It is so much wider. We are talking heat, transport and buildings. That is where the real fundamental societal change is going to have to happen. I am sure you are aware that the Climate Change Committee report has highlighted the challenges Northern Ireland is going to face in getting on track.
In respect of both targets, irrespective of how far we get, we need to start now. We really need to ensure that the barriers, I think as this inquiry will identify, are removed, we accelerate progress towards the achievement of both 80% and net zero and we do that in a very co-ordinated way.
Peter McClenaghan: I concur with a lot of what Derek has said. Derek and Steven’s organisations and the members they represent have made absolutely fantastic strides in relation to renewable electricity generation. That is to be commended. There are probably lessons that can be taken from there to apply to other issues, because, as Derek says, the move to net zero is wider than just renewable electricity generation. I would categorise three areas that we need to consider: the generation of renewable electricity; heat in homes and how we heat our homes in future; and behavioural change in a wider sense in relation to transport, as Derek mentioned.
When it comes to heat in homes, consumers in Northern Ireland are still lacking guidance and direction in relation to what will be required of them in that space. There is potential for real movement and fast-paced change in relation to how we heat our homes, given what some of our gas network companies are undertaking in relation to biomethane innovation and the potential for using agricultural waste to heat our homes. That is something that is unique to Northern Ireland and could be a real game changer for consumers, because it may well mean a lack of disruption for households. If you could continue to heat your home in a less carbon-intensive way without having to change the technology you are using, that would be fantastic.
I mentioned behavioural change and transport, for example. I think that there is work ongoing within the Department for Infrastructure around a transport strategy. We have been encouraging them to be ambitious in relation to that strategy, because in our research we see, even year on year, consumers becoming more sceptical around electric vehicles, use of public transport, willingness to reduce their flying miles and willingness to undertake more active travel. We need a strong transport strategy around public transport and active travel, and then we need to fund that appropriately. I know, for example, that Translink is having funding pressures at the minute itself. If we want to encourage people out of their cars and to use more public transport to reduce energy demand, whether that be petrol and diesel or electricity demand, it is essential that we increase public transport.
Steven Agnew: It is really good to see you again, Jim. Thank you for your continuing interest in this area. As I said before, Northern Ireland risks going from leader to laggard. When we hit 51% renewable generation in 2022, that was a tremendous achievement and up there with some of the best countries in the world in terms of our proportion of renewables, but it has been a figure that is stagnant. It is sitting between 45% and 51%. It vacillates with the waves, so that is why it varies, but we are not seeing a consistent trend upwards. Indeed, unless we electrify more of our system and if we do not bring new renewables on, we will actually see that figure go down.
It is maybe worth at this point raising what the challenges are. Northern Ireland faces a number of competitive disadvantages. We commissioned KPMG to produce a report called “Accelerating Renewables”. It showed that business as usual will mean that we do not just miss our 2030 target but miss it by a mile, by a significant distance. The reason for that is the lack of market support, which, to be fair, is coming. As I said before, we are about 10 years behind everyone else in that regard.
Planning is a huge issue in Northern Ireland. We see, on average, timelines of three years to get a wind farm decision made. We are increasingly seeing them being refused as we have taken all the low-hanging fruit, so to speak, in terms of the best and least controversial sites. Now that we are maybe in areas where planners do not want us to go, they are not willing to give approvals in what are more visually sensitive areas.
The bizarre thing we are seeing is actually increased community support for renewables. We have seen projects that have had no objections, or very few objections, but the planners are turning them down. They are almost stepping in and, regardless of what the community wants, the planners are refusing these applications. Planning is a huge issue for us and probably the No. 1 issue in terms of our work. The market piece is equally significant, but it feels like the market support is coming.
Finally, we need grid connections. We are seeing consented projects getting grid connection offers as late as 2030. They are being consented today and they are saying, “You will not be connected until 2030, no matter how quickly you can build it”. If that is projects today, what about the projects of tomorrow? Are they going to be connected in time for the 2030 target? Those are the concerns. Those are the reasons why, at the minute, we feel that we are going to miss the 80% target. The “Accelerating Renewables” report highlights that, with policy interventions, we can still achieve the targets not too late, but we really need that acceleration and a prioritisation of renewables, particularly when it comes to our planning system.
Q14 Jim Shannon: I agree with all three of you and your comments. You are right, Peter and Derek in particular, that one thing is to do with bringing people with you and the commitment we all have to make. The Government can set targets when it comes to net zero but people have to participate in that as well. For instance, the Ulster Farmers Union, which I am a member of—I declare an interest—has a very clear strategy to achieve net zero for the farming community. It has to be realistic of course. Some things that some people are suggesting that the farmers would do are not possible. They are very difficult physically to achieve.
I have a question for each of you individually. I am conscious of time. Peter, I ask my constituents all the time where they are with renewables and net zero targets et cetera. Everyone will say, “Yes, I support that”. I have never had anybody who does not acknowledge the importance of the issue, but the energy from renewables comes at a high price. To be quite honest with you, in this day and age energy prices have to be either subsidised or brought down to a level. As a question to you specifically, Peter, how and when will the prices become competitive where everyone who wishes to buy into green energy and to net zero can actually do it?
Peter McClenaghan: To comment in relation to agriculture, I am a townie, but one of my colleagues is a wife of a farmer who would report a real fear in that community around some of the changes that are being asked of people. We see that people really do not like the idea of punitive measures, extra taxes or being forced into doing things. We really need, as we are looking towards behaviour change, to provide proactive opportunities for people. Biomethane is maybe one of those.
In relation to pricing, the regulator, John, when he joins us later, may be able to give a better update on that. It is my understanding that we are now, in relation to fuel prices, in a higher-price environment. We are living in an environment where prices will continue to be higher in the medium term than they were pre-Covid pandemic. We have to plan in that environment, understand the additional requirements for consumers, who have, at times, very limited additional discretionary income, and focus on providing adequate support for people if we are asking them to change technology.
For example, if you are a rural dweller who will never be on the gas grid and has been asked to move to a heat pump, it is imperative that, if you are on a lower income, you are provided a grant to do so and, if you are not, you are provided access to low-interest loans so that you can affordably take on that technology, and that you have protections around that finance regime, so that you are not taking on a technology or a financial package that will come back to bite you a number of years in the future. Consumers are concerned about that aspect of this transition.
Q15 Jim Shannon: Derek, thank you for what your company has done over the last 90 years. I think you said that that was the timescale. I am also aware that, over the next number of years, I think by 2030 actually, you hope to invest a further £3 billion in the market. I suppose the question to ask you is how you develop the next step. You have 12 wind farms at the moment. Do you hope to have another 12 or maybe more, whatever the case may be?
It is important that we understand that, to progress the green energy and meet the net zero targets that we are all trying to achieve, that cannot be done by your company alone. That has to be done with Government support, which has got you to where you are. When it comes to public-private partnerships and the way forward, Government in the past have made support packages available. How critical for the next five or six years, whatever it may be, is it to have those public-private partnerships and to have an input from Government?
Derek Scully: It is critical. Starting maybe where Peter left off on the price piece, it is probably important to recognise at the outset that, the more renewables on the system we use, the lower the wholesale price. This is because of the way the market works. The more renewables we can add to the system, the cheaper the cost of electricity will be on the market. This is an important point for us to take forward.
Because of the scale of these investments, the importance of a support regime is to provide that certainty, I suppose, to investors when it comes to making these investments. We are seeing an evolution in the type of support scheme that is being offered in most markets, whereby they refer to it as a two-way CfD. It is a contract for difference. That means that the project gets a minimum income and any amount of moneys earned by the project in excess of the agreed fee goes back to customers. This is the model that is being deployed. We can see, with a model like that, that we can build out large volumes of renewables, ensuring a lower wholesale price for customers. In examples such as the current situation we are in, if wholesale prices were to go up significantly, the projects would be returning moneys over and above that agreed price.
Renewables are going to be critical to us on the route to net zero. We cannot really incentivise people to use more electricity unless it is green electricity, so we need to get to that. That 80% is very important for us to get to first. The overall societal change that needs to happen, to the sorts of points Peter was making around transport and heat, can only be achieved, and the right incentives can only be designed, where there is closer collaboration between public and private. It is about us all working together. We all have the same endpoint so it is about working together to try to achieve the overall ambition that has been set.
Q16 Jim Shannon: Steven, you and I spoke about the issue of the contracts for difference in the past. We have had some long discussions. You will also be aware—all three of you are probably aware—that I have brought this to the attention of the relevant Minister on a number of occasions. I would be keen, Steven, to get your thoughts on how the CfD scheme can work and go ahead even without a sitting Northern Ireland Assembly, because it is possible, I believe. I explained that to the Minister in some of my questions, which I know, in fairness, the Chair of the Committee is also aware of. I am keen to get your thoughts.
For instance, there is SeaGen in my constituency, or in my constituency and the South Down constituency, I should say, because the Narrows at Portaferry is what separates the two constituencies. There was a pilot scheme in 2008. It could not go ahead on the back of the pilot scheme, which was successful, because the energy was too expensive. Today that SeaGen pilot scheme would probably be financially viable, but we cannot get it moving in the system, even though we have contractors who are keen to do so. For the Committee’s knowledge, and for Hansard as well, could you perhaps tell us how important it is to have the contract for difference scheme in Northern Ireland and what advantages it will bring to everyone? It can happen.
Steven Agnew: It is essential. When I mentioned the drop-off in investment in Northern Ireland renewables, it is no surprise that, when the market support was pulled away—Great Britain set up its contracts for difference, later the Republic of Ireland developed the RESS scheme that works in a very similar model and Northern Ireland had nothing—we started seeing investment go to Great Britain and the Republic of Ireland and not come to Northern Ireland. It is that crucial.
You mentioned SeaGen. We also nearly had, off the coast of County Down, First Flight wind, which would have been one of the first offshore wind developments in the UK, but it did not proceed because there were no contracts for difference in Northern Ireland. When that decision was made that Northern Ireland would not join the GB CfD, that project went to the wall. Now we are going to be the last region on these islands to have offshore wind. It will likely be at least 2030 before we see that happen. That is the effect that policy has.
You mentioned public and private partnerships. That is where we need the public and the public sector, the Government, to facilitate us. Without getting too much into “with or without an Assembly”, there should be enough political direction from what we have. The Northern Ireland energy strategy was agreed by the Executive. The Northern Ireland climate Act, which set the 80% target, was agreed by the Assembly. I believe that there is enough political cover that, if we have no Assembly to put through the legislation that is needed to create the CfD, Westminster needs to step in. Otherwise we will fail not only Northern Ireland’s targets but the UK’s wider target for zero-carbon electricity. The overall net zero requirement by 2050 is UK-wide. The zero-carbon electricity by 2035 is UK-wide. It would be right for the UK Government to bring legislation for Northern Ireland in an area where the politicians of Northern Ireland have already agreed the policy.
Q17 Claire Hanna: It is clear from this morning and the submissions that there is not much disagreement among the stakeholders. That is very unusual, by the way, for the work that we do, so it is useful for the inquiry to focus on the barriers. While there is a policy direction, there are barriers to achieving our ambitious but necessary targets. I wanted to ask you about the single electricity market. How should any renewable scheme interact with that and with the markets in the Republic and in Britain? Also, is the governance and co-ordination where it needs to be to allow us to take full advantage of that? Steven, I might start with you. It is good to see you.
Steven Agnew: It is good to see you. In terms of the market support coming in, we have a single electricity market, but at the minute it is operating at two speeds. We have support for renewables in the Republic of Ireland, but not in Northern Ireland. We have longer planning timelines in Northern Ireland and higher grid connection costs, so we are seeing the investment flowing south. Again in that KPMG “Accelerating Renewables” report, it was 20 times as much renewables developed in the Republic of Ireland in a single year compared with Northern Ireland.
I do not think that there has been enough protection of the single electricity market at a political and a governance level. As an outworking of that, we had a consultation by the SEM Committee, which is supposed to be the guarantor of the single electricity market that sets the policy for the single electricity market. There was a consultation on firm access policy in the Republic of Ireland only. The fact that our Single Electricity Market Committee is consulting in ROI only shows that there are problems in the system.
Anecdotally, it appears to me that there is a good working relationship between Northern Ireland’s Department for the Economy and DESNZ, as we refer to it, in Westminster. There are not regular meetings, as I understand it, between DfE—the Department for the Economy—in Northern Ireland and DECC in the Republic of Ireland. When we have a single electricity market, I think that the two main policymakers not meeting on a regular basis shows that we have a failure there.
It is worth noting, despite the politics of Northern Ireland, that there was nothing controversial about having a single electricity market in the island. It was pragmatic, when you are in a single island, the grid connects and the electricity flows north and south, that we have a single market. That was uncontroversial, but we do not have the systems coming in behind it to protect that. There is not great enough collaboration between the two Departments. There is not great enough collaboration between the two regulators.
Q18 Claire Hanna: Derek, what are you finding and what would you like to see in future renewables schemes?
Derek Scully: First off, on the single electricity market, it is probably worth recognising—I think that Steven alluded to it as well—the benefit it has brought in terms of scale. Also, if we are looking at designing new renewable support schemes, I suppose that that scale helps us to deliver a more stable price in many ways. There are not as many fluctuations as there would be if operating independently. The single electricity market is an overwhelming success at the outset. Of course, that does not mean that you therefore need to align every policy measure and support that goes around that that delivers other policies.
For Northern Ireland, there are options to look south. There are options for us to look east. In actual fact, the right answer is, “Let us look at Northern Ireland and focus on the issues that we have and what we are trying to incentivise”. We touched on it. Again, Steven has touched on it. The CfD is, I suppose, the leader in terms of global markets and what other countries are doing. They are doing that for good reasons. We touched on some of those already. It is important that we start to go that way.
With that, the single electricity market gives you that reference price that you bench those supports off. That reference price is an important one. Again, the less that moves around, the more stable it is, the easier it is to forecast, the less risk that therefore goes into investments and the less risk that is put on customers ultimately. Again, the single electricity market plays a key role.
The support scheme can absolutely be a Northern Ireland-only support scheme. That is obviously currently what we are all working towards, but we need to see it sooner rather than later.
Claire Hanna: Peter, did you have anything you wanted to add on that?
Peter McClenaghan: To be honest, the SEM and the single electricity market is something that is outwith my competence.
Q19 Claire Hanna: That is fine. I briefly wanted to ask whether we are doing enough to plan. By “plan”, I do not mean planning, which I appreciate is one of the very major stumbling blocks, but scanning the horizon to see what potential is there in terms of energy, what our assets are, what the demand is, and trying to match those things up, including with where the connections are best happening. I suppose I am thinking about how, for example, in the Republic I understand they are trying to locate data centres in the west, where they can more readily use some of the maybe surplus energy there from wind.
Whose job is it to tie all that together? I appreciate that it is not something where we currently urgently need a Minister, but clearly a Minister would be able to accelerate all these things. Are we doing enough to tie those things up? Specifically, are we doing enough to realise the potential of offshore? Do we have a legislative gap there in making that work and getting it connected?
Steven Agnew: To pick up where you left off on offshore, we need new legislation. Again, this is something that cannot proceed without it. The Crown Estate is responsible for leasing the seabed. In the last leasing round the Crown Estate judged Northern Ireland not to be ready policy‑wise.
Q20 Claire Hanna: Could you just clarify?
Steven Agnew: I am probably getting a wee bit technical, but, for example, we do not have a decommissioning regime in Northern Ireland. I apologise for the double meaning; I was not even thinking of that. In terms of decommissioning offshore wind turbines, without getting into historic issues, the Treasury would underwrite the decommissioning of turbines. For example, for offshore developers, I think that they would have bonds in place to make sure that, if the company goes to the wall, they can decommission those turbines. Worst comes to worst, the Treasury steps in and decommissions those turbines where necessary. There is no such provision in Northern Ireland at the minute. There is consultation out on that but, again, we need legislation. That consultation needs to be followed up by legislation.
Q21 Claire Hanna: It sounds like we are really missing a trick there if offshore is an increasing part of the mix in other places. That is one we quite urgently need to fill.
Steven Agnew: Yes. To be fair to the Department for the Economy, we met with the Crown Estate maybe two or two and a half years ago and it said, “We are not looking at Northern Ireland. It is not ready and it needs to do a number of things”. Market support was another factor, so there was kind of X, Y and Z put out, “You need to get to here”, and the Department for the Economy has made progress on all the issues that the Crown Estate suggested.
The Government target—draft target at least; it has not been confirmed—is 1 GW from 2030. RenewableNI wants to see projects in the water by 2030 because we are already significantly behind. We cannot slip much further. To do that, we need a Crown Estate leasing round by 2026 at the latest. We need this legislation in place to give the Crown Estate the comfort that, if it leases the seabed, it is not doing so in an irresponsible way. Those policies are being worked on, but they will require legislation.
Q22 Claire Hanna: It is hard to see how we get to 80% without that component. Derek, there is that question about the co-ordination and scanning. Are we a little bit developer-led in general? We have to respond to an investor and all the calculations they will make. We have to respond to what suits an interest, rather than maybe mapping out those opportunities, or does that happen organically?
Derek Scully: In some ways, it is the broadening out of a renewable electricity target to now a much broader net zero target that behoves us to start to look at how this works economy-wide. As your question sort of alluded to, are we missing the trick on maybe some industrial or enterprise policy here? The future is that businesses are going to want to be powered by green electricity. Unless we do that, we are at risk of missing out on investment. If we miss out on investment, we cannot promote jobs. I do not mean investment on our side, but genuine investment, from outside of Northern Ireland or wherever, in growing sectors of the economy.
This is critical and it means a much more joined-up approach. We obviously and very clearly have to understand the costs associated with this transition, but we also need to ensure that we capitalise on the opportunities. If, as Steven has mentioned, we end up as laggards, it is not just in relation to a renewable electricity target. It will be broader and will have implications for the attractiveness, for investment, for jobs and for young people wanting to stay and work. There is a whole myriad of different effects that it will give rise to. We need to work together collaboratively on what the future looks like, the opportunities we are going to go after and how that translates to both opportunities and benefits for Northern Ireland as a whole.
Claire Hanna: It is a point well made that we need to broaden it out after energy.
Q23 Stephen Farry: I wanted to narrow back down and follow up on the point made by Steven in relation to planning. Steven, you mentioned that there are issues around planning decisions not being favourable, but also then the planning process. I will just maybe ask you and Derek, and Peter as well if he wishes to, to comment on it in terms of how you think the planning issue can be fixed and to give a sense of how big on the scale of issues the planning policy is, as a current challenge to be overcome. Are there issues around how statutory consultees engage, planning policy issues and how planning policy is interpreted, all those types of things?
Steven Agnew: It is good to see you, Stephen. It is a huge issue. For those who are developing in Northern Ireland, that is the No.1 issue. The lack of market support is the reason why others are not developing. The planning issue is the biggest for those who are in Northern Ireland. Again, it is in that KPMG “Accelerating Renewables” report.
There are two aspects: planning policy and process. In terms of policy, it is clear that the policy coming from the Department for Infrastructure is not giving sufficient direction to planners to approve renewable applications to move, for example, to larger turbines. That is the reality of where we are. Larger turbines generate cheaper electricity because they are more efficient and you have fewer turbines delivering more power. It is clearly that the planning system is saying no to that.
We have an issue of separation distances, so how far you have to be away from dwellings. It is currently 10 times the rotor diameter, which is outwith any other region of these islands. It would mean with modern turbines that you are maybe talking about 1.5 km away from any homes. We already have noise restrictions that ensure that residents are protected, so we do not need this additional barrier that does not exist elsewhere.
As I say, what is happening in total in that is that we are increasingly seeing refusals on new developments. We had one last week. Again, as I alluded to earlier, there are very few community objections but the planners are saying no. We have heard anecdotally from engaging with planners that they do not want more onshore wind. I have been told things by planners like, “Are you not just moving to offshore now? Why do you want more onshore wind? Can you not just do solar?” We have one of the best wind resources in the world. Yes, we can do more solar than we have.
Q24 Stephen Farry: Solar is not great.
Steven Agnew: Without getting too much into it, the sun tends to shine when the wind is not blowing, so we need both, but it is currently 85% wind in Northern Ireland. That is not going to change massively. To have planners saying that you need to stop doing onshore wind is really concerning. That is the policy.
The process takes too long. The NI Chamber came out with a report last week saying that it takes, on average, more than six years for a regionally significant application to get a planning decision. Going forward, because of larger projects, most large-scale renewables will be regionally significant. We cannot wait six years. To get to the 2030 target we need planning consent by 2027. If we are putting in an application today, we are not necessarily going to get a decision until 2030 and then it is going to take 18 months to two years to build out.
We need to do something in terms of those timelines. We have been told very clearly that planners do not have sufficient comfort to prioritise renewables but that is what needs to happen because we cannot wait six years for a decision. If we do, those 2030 targets are no longer credible.
Derek Scully: As a point of context, we should recognise that we are actually in a quiet time for renewable planning applications. Steven has voiced a lot of the issues and concerns that are being seen today. Without that route to market support scheme, there are not a large number of applications being made, yet the applications that are going through the system are still taking three years approximately. We can only imagine that, when the support scheme is finalised and people, investors, really start to focus in on the renewable energy opportunity in Northern Ireland, that problem is just going to get worse and worse. Steven has mentioned the NI Chamber and Turley report that was published last week.
Q25 Stephen Farry: For the record, that is the Northern Ireland Chamber of Commerce and Industry.
Derek Scully: Steven’s own report—he mentioned “Accelerating Renewables” with KPMG—highlighted about a three-year timeline around planning for these projects. It is resourcing. We need to be very clear on that. It is strict timelines. You mentioned the statutory consultees. The open-ended nature of some of those replies is not helpful. Then, overall, I suppose, there is a level of accountability. Back to that joined-up thinking piece, we need to recognise, and this is true of the vires of all the statutory bodies, that it is not the status quo. We are trying to achieve a fundamental change in this energy transformation so the vires of the respective bodies all need to reflect that.
The other point is that, while planning for Steven’s members and our organisation is problematic when you are looking at getting investors in, we could look to routes to market other than a support scheme, such as a corporate power purchase agreement, a model used in other countries. It is very difficult for corporates to get their head around the fact that this is very much an open-ended question as to how long this will take. When they want to commit to something, they want to see a clear timeline and then delivery towards that. If that is going to affect the project, given the amount of grid we will require to make this transition, and new investment in grid, one would have to expect the grid applications to also get mired in the current issues.
We really have a window now to make progress and deal with the issues. Between Steven and the NI Chamber report, there are plenty of good recommendations there, so it would be great. Again, we have no time to waste on these.
Peter McClenaghan: In relation to the NI Chamber report, it is a very well-thought-through document. As Derek says, we are not in a status quo position here. The proposals within that report to prioritise renewables within the planning system, I think, would have broad consumer support. We see through our research that consumers support renewables. We also see, though, a drop year on year in support levels for renewable infrastructure, so we have to take care in relation to planning renewable projects.
One of the really important things mentioned in the NI Chamber of Commerce report is its suggestion around enhancing guidance for meaningful engagement with the public who may be living near infrastructure development. That is really important.
For consumers, it is not the length of a consultation that is important; it is the quality and depth of that consultation. If we are to look to reduce timelines around planning applications, it is really important that the organisations undertaking those planning applications are engaging meaningfully with the public who are impacted.
Q26 Carla Lockhart: Can I thank the panellists today? It has been a really encouraging session. If we could bottle your enthusiasm, we would go far on this. I was particularly taken with your remarks, Derek, around Northern Ireland’s achievements. You used the word “exceptional”. It is important that this Committee reflect on the fact that Northern Ireland is exceptional. Quite often we get kicked around the room for underperforming, but on this occasion we are overperforming so that has to be noted.
We always do focus on the negatives and the barriers, and I suppose that is what this investigation and inquiry is really about. It is about crystallising the barriers and trying to move this forward. You also said, Derek, that there is no time to waste. That is a point well made.
There are a couple of things that I want to touch on: protection for consumers in terms of that ongoing price hike and the potential for investment into all these really good things around renewables. Peter, how would you see that protection for consumers and businesses? How do we spread it out so that there is not a real hard impact in terms of price increases?
Peter McClenaghan: I have touched on a lot of this already. There are three strands to protecting consumers. There is the requirement for a strong regulatory regime, regardless of the fuel type you are on. As we develop a heat network policy in Northern Ireland or as we move to using new technologies, it is really important that consumers have the same protections.
People who are being asked to use new technologies tell us that they want guarantees that the heat pump, if that is what they are installing in their home, has been installed correctly, that it has a long shelf life, that they will be able to go back and get support if things go wrong, and that they can complain to someone if they do have difficulties in relation to that type of technology.
I have touched on affordability. It is really important that we provide grants for those who really cannot afford to make the transition otherwise and loans for everyone else and, in doing so, ensure that there are strong regulatory protections around any finance regime that comes behind encouraging people to make the transition to renewables.
To be honest, when consumers engage with our research, regulatory protections are not the first thing that jump out to people. That is because people see that as an absolutely essential bottom line. When you engage with people on specifics, they say, “Protection as we move forward is an essential”. They simply will not engage in the energy transition if they do not feel like they can trust the people who are giving the messages and the technologies that they are being asked to take on.
Q27 Carla Lockhart: Derek, how do we give businesses, particularly those that are quite energy intensive, such as agri-food and manufacturing, confidence going forward? I know this was touched on earlier. Should we be looking very much towards Government to help the transition through grants?
I firmly believe grants are a great enabler and will assist in that transition, but how do we give comfort to those types of businesses going forward? They are the backbone of our economy in Northern Ireland. They are really important to jobs and making sure the wheels keep turning. How do we start to give them confidence?
Derek Scully: They are also critical to our business. We thrive when business thrives. The more the economy grows, the more demand there is for electricity and the more opportunity it creates for a company like ours. There is very much a symbiotic relationship there.
I understand that there is a challenging environment for a lot of businesses at the moment. As I said, the wholesale market and overall retail prices are at levels that we probably have not really seen before, owing to the impacts from a global market spike in gas.
It is going to be really important to bring business on this journey. If we look back at the ROC scheme that operated in Northern Ireland—Steven mentioned the previous support scheme—it was very effective in getting businesses and domestic consumers to invest in renewable technology, whether that is solar panels on the roof or whatever. The incentives work. It is about designing them correctly, helping businesses to understand how to apply and install, and, as Peter said, giving them that confidence that what happens will ultimately be to their benefit.
We can definitely help. As you mentioned, there are any number of possible support measures, grants being one of them. It is important that the policy we design is coherent in what it is trying to achieve and that we stitch this net zero commitment into the policies that we are making now.
If we are providing grant funding for a net zero objective, we need to be very clear that that is what it is for. If we are providing grant funding for businesses in order to deal with a supply-side shock like we are experiencing, that is perhaps a slightly different consideration and calculation that would need to be looked at. Overall, one can help the other. Having that longer-term focus and that coherent position on where we are trying to move the economy and aid customers in terms of making informed choices will certainly be part of this solution.
It arguably becomes more acute as we start to widen out the decarbonisation discussion. If we go beyond just helping them with renewable electricity and we talk about decarbonising the heat load that they use, the heat in their buildings, or their buildings themselves, again, it will be very important. We need a very considered approach to how we do that.
Q28 Carla Lockhart: Would you say that we have all the strategies we need? We have a good energy strategy, which was signed off by the Executive before their collapse. All parties bought into it. As an industry or as stakeholders, are you guys fairly content that the direction has been set and the Department needs to keep going and move on with delivery?
Derek Scully: Yes. It is potentially not just about the Department for the Economy; what we are trying to do is broader than that. You are right. In terms of the policy framework, there is a net zero commitment. There is the energy strategy, as you said, which was signed off and agreed to by all parties in the Executive and the Assembly.
It is a really strong position to build from, but it is now about delivery. The key barriers that we have identified, which Stephen has highlighted as well, are grid, planning and route to market, if we are going to get renewable electricity accelerated in the time that remains available.
That wider net zero piece is all mapped out in the strategy. Importantly, the strategy has continued to evolve. Every year since 2021, when “The Path to Net Zero Energy” was published, we have had an update. We had an update in 2022 and more recently we had the 2023 update on actions that are to be delivered and changes that are to be made. The policy context is continuing to move, but we need to get out of the strategy and into delivery as quickly as possible.
Q29 Carla Lockhart: For this Committee, it would be important to get the Department before the Committee potentially as a follow-up. That is maybe already in hand. That would be a useful exercise because ultimately they are going to have to be the driver of it.
Very quickly—I know time is tight—Stephen, you laboured the barriers with planning. If you had a blank sheet, what would you do? Does the Department still deal with the planning around this or is there a bit of muddy water between councils and the Department? Have they genuinely just not bought into the overall strategy? Maybe they are not part of the strategy.
Steven Agnew: There are a number of factors. On the policy point, you asked whether they have bought into it. Since the Department took on planning powers in 2016, there has not been a renewable planning application that went into the Department for Infrastructure that has had a positive outcome. I could be corrected on that, but certainly the majority have had negative outcomes. It does not feel to me like there is support there for renewables, despite the conversations we have had and what the policy documents say.
On timelines, we really need to resource the system. One of the biggest issues for RenewableNI and our members is statutory consultees, particularly within NIEA and its natural environment division. It has typically taken a year to get a statutory consultee response, when the target is three weeks. The gap between three weeks and a year is huge. We need to see that reduced.
In their defence, they would say they are under-resourced. They do not get any of the planning fee. We probably pay the highest planning fees in these islands. One of our members gave an example of an ROI project and an NI project of similar sizes. The planning fee in NI was 10 times the cost and we are getting much longer timelines. We need to see the system being resourced. We need to see that money being spread to statutory consultees to make sure that those who are responsible for delivering on timelines can achieve the targets.
Ultimately, what we need is a “use it or lose it” policy. If you do not respond within a certain timeframe, we will assume you are content. Again, planners would say they do not feel they have the cover in terms of protection from judicial review, for example. We need that policy, or perhaps the legislation, to say, “If you do not respond within the timeframe, the system moves on”.
I can understand it. At the minute, if I am sitting as the DAERA Minister, who is responsible for NIEA, planning is not my priority. If I am given extra budget somewhere, it is probably not to the planning part of my Department because that is not its overall responsibility. We need to put the accountability on statutory consultees by saying, “You do not get your say”. All of a sudden, that will become a greater priority.
It is key. In the Republic of Ireland, for example, we are seeing proper statutory timelines that have to be adhered to. There are penalties, as I understand it, if they are not. We have targets in Northern Ireland that are regularly exceeded. As I said, taking that three-week example, we are seeing one year on average. That is not just missing a target; that is ignoring it.
Q30 Carla Lockhart: Yes, Steven. If you are asked for a response, you are normally given 10 days to respond. If you do not get it in, your application is nearly thrown out. I agree with you on that.
Steven Agnew: Derek alluded to this earlier, but we need some certainty for developers and investors that, if you put in a planning application, you can reasonably expect to see a decision made, we would argue, within a year. It is currently three years on average. We need to see those measures put in place. That is resourcing, but it is also hard policy that says, “These are the timelines. These must be met. They are not nice-to-haves; they are required”.
Chair: Thank you very much. Time is ticking on. I am going to thank the first panel for their evidence. Thank you, Steven, Derek and Peter. We are going to move on to panel two. I will ask that they come forward. They are all here in person.