I would like to thank the organisers for inviting me today. The programme covers a broad range of topics reflecting the complexity and the highly integrated nature of energy systems from oil exploration and use, renewable energy deployment, the potential to become an exporter of renewable energy and leveraging our experience in the ICT sector to sustainably manage our energy demand.
Oil and Gas
While ultimately, we have the ambition to dramatically reduce our reliance on fossil fuels, oil and gas will continue to play an important role in meeting our energy requirements for the foreseeable future. In 2012, although we had reduced the amount we import, we still imported 85% of our energy requirements.
It is the Government’s underlying objective in respect of oil and gas exploration to ensure that the State’s natural resources are managed in a way that will maximise the benefits accruing to the people of Ireland.
There have been four commercial discoveries of gas in the Irish offshore since exploration began, the last of which was the discovery of the Corrib gas field in 1996. There have been no commercial discoveries of oil to date.
While the level of exploration in Irish waters has ebbed and flowed over the years there is evidence that exploration in the Irish offshore is moving in the right direction.
Today, Ireland has the highest number of exploration authorisations in place, since exploration began in our offshore four decades ago. With new company entrants in 2013 including companies such as Cairn Energy, Kosmos Energy and Woodside Energy, together with existing companies such as Eni, ExxonMobil, Petronas, RPS, and Shell, it is evident that that there is significant capacity in the sector.
The level of new seismic acquisition is another important indicator of activity. In 2012 there was only one seismic survey in the Irish offshore. However, in 2013 there were five seismic surveys, including the first phase of the largest ever 2D long-offset Regional Seismic Survey Project. This major seismic survey is being undertaken by ENI Ireland BV in conjunction with my Department and will advance our understanding of the oil and gas potential of Ireland’s Atlantic Margin.
Another key indicator of activity is drilling levels. Drilling levels have been regrettably low over the past decade with only one well drilled in 2013. That is set to change over the next two to five years, as drilling commitments now in place are delivered and as new drilling commitments are entered.
To continue the momentum, I recently announced the outline of the next licensing round, which aims to build on the success of the Atlantic Margin 2011 Round.
The new round will offer two year licensing options, affording companies of varying scale the opportunity to participate in the round and will include all of Ireland’s major Atlantic basins.
A formal launch is anticipated for the second quarter this year. I hope that by providing this level of information now in relation to the next licensing round, that this will help the industry to prepare in an effective manner.
In the context of general public and parliamentary debate regarding the current fiscal terms for oil and gas exploration, and the fact that it is almost seven years since the last review; my colleague Minister Rabbitte and I have announced that we are seeking further independent expert advice on the “fitness-for-purpose” of Ireland’s fiscal terms. Such expert advice will focus on what level of fiscal gain is achievable for the State and its citizens and, also on the mechanisms best suited to produce such a gain.
It is intended to bring consideration of this matter to a conclusion in the coming months. This will ensure that the next licensing round can be launched against a backdrop of regulatory certainty and encourage new investment in exploration.
But we must ultimately reduce our reliance on fossil fuels both in terms of reducing the carbon intensity of our economy and for the economic benefits that can be achieved including the potential to support economic activity and jobs. Managing Ireland’s energy demand is, therefore, a key priority for this Government. We need make smarter use of our electricity resources and continue to increase our energy efficiency
Through the schemes administered by SEAI under the Better Energy Programme, more than 250,000 homes have received some form of Government support to upgrade their dwellings. Government has provided €277million for energy efficiency upgrades in our homes and in our communities with a further €57 million in funding available this year. This represents about one sixth of all homes in Ireland and a total investment of over €550 million. I understand also that work is well advanced on the creation of an Energy Efficiency Fund to stimulate economic activity in retrofitting public and commercial buildings.
Energy suppliers have their part to play in assisting us to become more energy efficient and helping us meet our ambitious 2020 national efficiency savings target. Minister Rabbitte will soon be placing obligations upon all energy suppliers above a certain size to deliver specific energy saving targets every year from 2014 to 2020. The targets will be ambitious but, we believe, achievable. The need to deliver challenging energy efficiency savings will incentivise these energy suppliers to engage meaningfully with homeowners, businesses and stakeholders to identify any potential measures that can reduce energy consumption and will provide a significant boost to activity in the sector.
The desire to improve energy efficiency and to improve the experience of energy customers is also driving the development and adaption of smart metering and smart grids and new technologies across Europe. It is also a key element in the achievement of the Internal Energy and is a priority area in the Commissions Communication on the European Industrial Renaissance.
A major programme of technology and user trials showed that a national rollout of Smart Meters could lead to reductions in overall electricity and gas consumption, as well as reductions in peak-time electricity consumption. A national roll-out of Smart Meters, to begin in 2016, would therefore lead to lower customer bills, greater customer information and choice, lower CO2 emissions and provide environmental benefits for Ireland.
The first of the Smart Meters are anticipated to be installed in Irish homes and businesses in 2016, with all rolled out by 2019. They will include an In-home Display device that will give customers more real-time information on both their cost and usage of electricity and gas.
The Programme is a central component of a strategy to radically enhance management of energy demand through the use of cutting-edge technology.
The smart grid provides the infrastructure, policy and market conditions that will efficiently and intelligently integrate the behaviour and actions of all users connected to it. Smart Grids comprise a broad and evolving range of advanced technologies that can be applied along the full electricity supply chain – from generator, through transmission, distribution and metering, to end users. Together, these technologies, which include advanced sensors, two-way communications and distributed computing, can increase the deployment of variable renewable energy generation, enable dynamic demand/pricing response and energy storage, improve the overall efficiency, reliability and safety of power delivery improve energy end use efficiency and cost in buildings, facilities and electric transport.
Ireland has distinct advantages as a centre of excellence for the research, innovative development, trialling and deployment of these technologies. These advantages include a high penetration of variable renewable energy, the market size and design, strong academic research and a well-developed ICT sector. A successful national trial, led by the regulator and completed in 2011, assessed communications technology, variable tariff and other consumer behaviour change options, has quantified the national energy and cost saving benefits and confirmed the business case for a full scale national rollout of this key enabling technology.
Additionally, a national Smart Grids Road Map has been prepared, listing the various policy and other actions necessary to enable achievement of our 2020 targets; this also shows the timeline for these actions and the contribution they will make towards meeting our targets. This is currently being reviewed, and will be reissued later this year.
Ireland fully supports Europe’s ambition to radically increase the share of renewable energy in the energy system as articulated and legislated for in the 2009 Renewable Energy Directive.
Ireland’s target was set at 16% of all energy consumption to be from renewable sources by 2020 and in order to meet this overall target, renewable electricity will account for 40% of our electricity consumption by 2020.
We are making good progress towards achieving this and at the end of 2012, 7.1% of Ireland’s overall energy demand was met by renewables. Of this, renewable electricity accounted for 19.6% of our electricity generation, most of which came from wind energy. 2013 saw a significant pick-up in terms of wind connections with approximately 240MW added during the year so that as of the end of last year there was a total of 2,300 MW connected.
Ireland has wind resources in abundance and the capability to achieve its national targets for renewable electricity from onshore renewable generation alone, with capacity to spare. This means that there is potential for projects of scale onshore that are aimed at export markets. It also means that our offshore wind resource can be developed as an export opportunity. In this regard, work is progressing on signing an Inter-Governmental Agreement between Ireland and the United Kingdom in the coming months.
There are very clear and significant potential economic benefits arising from the export opportunity. Firstly, significant employment can be created. For example, employment creation arising from a 3 Gigawatt project would be expected to be in the order of 3,000 to 6,000 job years in the construction phase, with the actual number dependent on the construction schedule to 2020. I understand, also, that analysis suggests that there would be about €1 billion of construction spending on civil engineering works over 2 to 3 years. This would mean additional jobs created in the on-going maintenance of turbines over a 20-year operating life. Further employment opportunities would arise if turbines or components were manufactured in Ireland.
Another area in which we are well resourced and which we are keen to develop is that of Blue Energy, more specifically wave and tidal energy technologies. A Communication from the European Commission last week gives a very clear assessment of the enormous potential of ocean energy, identifying the Atlantic seaboard as the area of highest potential in the EU. The Communication estimates the sector creating 40,000 jobs in the EU by 2035.
In this regard, my colleague, Pat Rabbitte, will shortly be publishing the Offshore Renewable Energy Development Plan (OREDP). The OREDP will be the mechanism through which a fully coordinated Government approach will be taken across the environmental, energy and economic development sectors to ensure that Ireland realises the commercial development of our abundant offshore energy potential, which are among the best in the world.
Commission’s communication on 2030
2020 targets and ambitions are firmly in the short-to-medium term category and Europe and Ireland’s focus will now be on what can be achieved in terms of 2030 and 2050. You will be aware that the EU Commission last week set out its ambition for a 2030 Energy and Climate Framework. The proposals include a reduction in greenhouse gas emissions by 40% below the 1990 level, an EU-wide binding target for renewable energy of at least 27% and renewed ambitions for energy efficiency policies.
The Government will be working closely with European partners to establish the scale of the contribution Ireland should make to the achievement of the proposed EU target. However, analysis of the Commission’s proposals will be required to ensure that the framework allows for action that is cost effective and does not place a disproportionate burden on energy consumers.
However, we can welcome the inclusion of a target for renewables in addition to a greenhouse gas target. Minister Rabbitte, along with Ministers from seven other Member States had specifically called for this. Given the long lead in and asset life for energy developments, clear investment signals are critical for the renewable energy sector if it is to be in a position to make a contribution to 2030 goals.
Not only is the renewable energy sector of key importance in the context of 2030, it also provides a real, and sustainable, economic opportunity for Ireland, both in terms of providing a secure, indigenous source of energy and job creation and potentially as a valuable clean export.
The breadth and complexities of issues of importance to the evolving nature of the Irish energy sector is reflected in today’s programme and I hope it leads to constructive discussion on the issues.