Green Energy Technology - is the answer blowing in the wind?

Northern Ireland currently has one of the highest non-indigenous energy dependencies in Western Europe, importing a whopping 98% of all energy it uses. The European Union has set the UK a renewable energy target to generate 15% of its energy [meaning power (electricity), heat and fuel] from renewable sources. By 2012, Northern Ireland is committed to sourcing 12% of all electricity consumption from indigenous renewable resources, of which 15% must be from non-wind resources.  The statistics are encouraging showing a growth of 60% in renewable energy consumption since 2005. However we cannot rely solely on wind power to help us achieve the EU targets and in this article I will explore some of the renewable energy technologies currently available and the incentives for developing that sector.

 
REGULATORY INCENTIVES

The 2009 Renewables Obligation which became law on 1 April is designed to encourage and stimulate the development of renewable energy technology. Unlike its predecessor, the law is no longer technology neutral. Each technology is assigned to a particular band and each band enjoys a particular level of support. Previously all technologies were eligible for one renewables obligations certificate (or NIROC) per megawatt hour of electricity generated.  A NIROC is issued to those who generate renewable electricity but can subsequently be bought by and sold to anyone. Currently NIROCs trade at prices between £40 and £50 depending on availability. Now for example off shore wind will receive 1.5 NIROCS per MWh whilst technologies such as wave and tidal generation projects will be awarded 2 per MWh – the highest support level available. Onshore wind will continue to receive 1 NIROC per MWh.   

RENEWABLE TECHNOLOGIES

The various types of renewable energy technologies are at different stages of development and each face unique challenges on the road to commercialisation.

Onshore Wind

This is the most mature of the renewable energy technologies. Planning issues, such as the consent regime and ensuring connection to the electricity grid can lead to significant delay and increase the cost of wind farm projects. Nonetheless investment in wind energy is likely to continue at least in the foreseeable future

Biomass

Biomass projects are yet to take off on a large scale in Northern Ireland but investors are beginning to look with increasing interest at them. The greatest hurdle facing the biomass sector is efficiency. In recognition of this, electricity generated from dedicated biomass with CHP attracts 2 NIROCs in contrast to say co-firing of biomass/energy crops which are eligible for only 1NIROC. 

Tidal

Tidal energy derives energy by using the difference between high and low tide to generate energy or by using the flow of water created by tides and accelerated by coastal topography. A consortium called THETIS Energy, a venture involving Norwegian and local renewable energy companies has identified a provisional site off Torr Head which it claims has the potential to make Northern Ireland one of the best locations in the world for a major tidal energy project. Many will also be familiar with SEAGEN, the tidal power turbine in Strangford Lough which was linked into the national grid last summer.

ECONOMIC BENEFITS

At a time when the economic outlook is bleak, the potential for investment activity in the renewable technology sector provides a chink of light. Northern Ireland is well placed to develop a strong renewable energy technology sector, mirroring the success of the ICT sector. At the first ever Energy Efficiency Fair held in March 2009 in Belfast over 50 exhibitors of renewable energy products were represented. Alistair Darling has pledged £1.4bn of government support in the recent budget for the renewable energy sector, with up a further £4bn from the European Investment Bank for UK renewable energy projects. This coupled with the continued interest in this sector being shown by the private equity and banking communities in mainland Europe in particular may trigger local economic activity and growth at a time when it is badly needed.

Neasa Quigley is a partner and head of energy at Tughans.  Neasa may be contacted on 028 9055 3300 or email neasa.quigley@tughans.com.