We Need to Create a Drive for Zero Emissions

We Need to Create a Drive for Zero Emissions

John Mullins, Founding CEO, Amarenco Solar, former CEO, Bord Gais

 

I would like to thank the McGill Summer School and Joe Mulholland specifically for the invite to be with you today and am delighted to have the opportunity to speak at one of the foremost annual national policy events in Ireland. I started my life in ESB in 1989 when there was only one electricity company at the time.

I have had the pleasure of working at a senior level at both ESB and Bord Gais in my career and am very much thankful to both companies for the learning I received from my time at both firms.

When I think back to the energy market in 1989, the following comes to mind:

  • ESB dictated the national electricity agenda
  • Bord Gais dictated the national gas agend
  • There was no Regulator
  • The Government controlled energy tariffs
  • Climate change consisted of a night weather report on RTE
  • There were few renewables – some small wind and solar
  • No electrical interconnection with Britain
  • Apple was producing Apple Mac PCs and Google, Facebook, Amazon and the internet did not exist; and
  • The European Union did not dictate energy policy.

Energy in 2015 is very different:

  • The European Union is the prime driver of energy policy
  • Climate change is a universal reality – as Ban Ki Moon commented on his recent visit – “Ireland needs to do more”
  • We have three Energy Regulators with one Chairman
  • ESB and Bord Gais are participants in a broader market with players such as Eirgrid, Energia, Airtricity, Centrica, Vayu and others
  • Renewables dominate electricity investment
  • Four interconnectors with Britain – gas and electricity
  • Gas market has hit its peak
  • Apple, Google, Facebook and Amazon all have renewable plans and insist on 100% supply to their data centres in Ireland. In fact renewable energy is now becoming a siting requirement for IDA companies.

I have had the envious experience of developing conventional and renewable projects internationally. I now lead a company of professionals in Amarenco where we invest in solar energy in France, UK and Ireland. France has one of the largest nuclear installation capacity in the world but yet has one of the most aggressive renewable policies in Europe. France is set to double their auctioned capacity of wind and solar each year until 2030 as part of their Energy Transition. In fact they are at the same point in terms of their renewable percentage of primary energy (8%) as Ireland and if we were in the Premiership we would be relegated.

Energy demand in Ireland is growing once again. Our import dependence is 89% down from a peak of 90% in 2006. In absolute terms, our dependence on imports has increased. This at a time when oil prices have moved from $60 a barrel to $145 at peak around July 11 2008 and now at $51 a barrel. This is a commodity in which we have no control over its price as a small country and we continue to take a view that this energy resource will always be cheaper than alternatives. This is not a sustainable view for a whole number of reasons.

One has to welcome the onset of Corrib which will reduce our foreign dependence but the pricing of gas at Corrib will be based on prices of world markets.

 

We need a ground breaking, radical White Paper

Our renewable energy target for 2020 is 16% of primary sources. We are currently at 8% after a decade and a half of significant investment. We have five years left. We will not meet this target without a ground changing and radical White Paper which will accelerate all forms of renewable technologies on the supply and remove any barriers to implementation of sophisticated ICT based demand management tools on the demand side.

Electricity generated from renewables hit 20.9% of consumption in 2013 – this is one of the best performances across Europe but our performance in heat and transport has been at best dire.

Our targets are also potentially running away from us with the onset of significant economic growth and energy demand growth. Transport and agricultural growth will provide much of this challenge.

It is ironic that over the last number of years, the CO2 emissions of Money point have increased significantly whilst the coal price has become more competitive than gas prices. In fact it could be argued that our electricity emissions could have reduced further if an efficient C02 price was present in the market.

From a renewable energy supply perspective we are a two trick pony in this country – wind and bioenergy to a lesser extent. We are the last in Europe to embrace the realities of the new economic option which is Solar PV and I am glad that the Minister has accepted that the technology finally has a role in Ireland. We finally have plans for tidal, wave and for increased bioenergy capacity.

We need a net metering capability for auto-producers so that enterprises and communities are not hindered in being self-sufficient in energy with the ability to spill excess power at an acceptable tariff into the market. ESB Networks will need to embrace this new reality rather than wait for it to be imposed.

New technologies are being invented every day and these technologies will enable Ireland to democratise energy. The old paradigm of a utility deciding your fuel, your tariff and how your fuel is controlled and delivered is now disappearing. The new paradigm for energy is that the customer will push the utility in what it wants, enable by smart technology rather than accept a utility push of what it thinks the customer needs.

In the perfect economic world in which some renowned Irish economic commentators live, there are no targets set by Europe: “Climate Change is a fad and Ireland will not be fined when we reach 2020”. Well, if you assume that in your thesis then you are right to say that we should not invest in Renewables nor should we collectively support the peat industry as we have for decades.

The reality is that Climate Change is a scientific fact, our targets are binding and our annual fines based on internal Government reports could be as high as €500m per annum. So why complain about an industry that is subsidised to the tune of €83m per year by the market, makes a real Irish contribution towards climate change, creates indigenous employment, mitigates against external commodity price movements and cushions Ireland from geopolitical tensions. The subsidy for a C02 rich fuel, Peat is €113m per annum but I do not hear the same commentators spend as much time on this subject. Renewables account for one quarter of the PSO on your bill and not 100% as some may like you to believe. In fact the total value of the electricity market is over €3bn so €83m is not as material as many would make out. The PSO due to renewables is just more than €40 per customer per year. As the oil price rises this cost reduces – so renewables do provide Ireland with an important geopolitical hedge.

Through investment in renewables we have avoided €240m of imported fuels, created jobs and paid new taxes.

I would contend that this recent commentary has led to a campaign to place a retrospective tax on wind farms in Ireland through the rates process. This sudden but not coincidental movement will increase rates on wind farms and all renewable technologies threefold. We should learn from Spain where renewable investment disappeared when the Spanish Government reduced feed in tariffs on renewables.

I have been involved in wind development in Ireland for many years but planning issues and attitudes towards this clean technology have soured immensely. The Intensification of wind farming in the Midlands as part of the Energy Bridge received significant attention and the many issues with our Citizens have not been addressed satisfactorily by the wind industry. This fact makes the attainment of our 40% target of electricity by 2020 to be a step too far!

Thus is why we now need to add supplemental technologies to the mix – technologies that are more distributed, yes smaller but probably more acceptable.

Solar PV and its potential

Solar PV is the next most effective solution on our planet and in some areas is cheaper than all forms of energy. This has occurred due to the exponential decrease in modules and equipment over the last five years. In fact Solar PV is the number one new source of power worldwide at this time with 40,000 MWs being built each year across the world. The UK has built 7,500MW, Germany 35,000MW both countries with similar irradiation to Ireland.

We in Amarenco, supported by a large international financial house, are developing and intend to build and asset manage ground mounted Solar PV plants in Ireland. Sheep and calves will continue to graze on these sites and they will be the best protected livestock in the country. There will be no pylons and turbines. The plant will be behind hedge rows and only cables will be used at 20kV.

In Amarenco, we expect to build out over €150m of plant over the next three years.

I am very glad to see that Councils such as Dublin City, Tipperary and others are embracing the technology on their rooftops. Three large tenders from public bodies were released last week for solar rooftops. This is very encouraging and this industry is very much ready to take off and create jobs.

 

No Silver Bullet

The truth is that we have no silver bullet for dealing with Ireland’s Energy Crisis. This can only be addressed through successful deployment of a multitude of technologies.

Firstly we need a T K Whitaker moment – what does this country want to look like from an energy perspective when we grow up. The reality is that industry is now increasingly insisting on 100% green supply as Apple and Facebook have announced for their new data centres.

We need to have a vision that is as ambitious as that of Denmark – we need to create a drive for zero emissions. We need to democratise energy and place it in the hands of the customer. Technologies are increasingly giving us the ability to make those choices.

On the supply side we will need to complement wind roll out with Solar PV and biomass. We do not need to go to offshore wind until these two technologies have been exhausted but offshore wind, wave and tidal will contribute to our 2030 targets.

Nuclear is not an option for Ireland because it is more costly than renewables in the first instance and the size of an individual generator on the system would be too large. All form of microgeneration and distributed generation need to be fully enabled by ESB Networks and this must be emphasised in the White Paper.

On the demand side, obligations for demand reductions must become increasingly compulsory for utilities. This will enable new technologies to be monetised on the basis of energy credits gained by the utilities for installation of devices such as Climate heating controls. As Chairman of the International Sustainability Investment Centre (formerly the Green IFSC) I can gladly tell you that our 600 or so members are increasing their spend on smart heating, smart lighting, renewable investments and they are creating jobs.

My final comment is that you create very few jobs in Ireland by buying oil from the Saudis.

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