Renewable sector needs help to safely navigate winds of change
Stephen Kelly says the abrupt end of government support for the green energy industry has prompted a crisis that must be urgently resolved without sacrificing the positive steps taken by previous administrations.
A report issued last week on the cost of doing business in Northern Ireland showed that in 2013 almost half of local businesses took steps to cut their energy bills by reducing demand. This took the form of improving processes, reducing waste, changing lighting and the like.
It has also meant that many businesses have opted to take control of their own energy generation in order to reduce what they take from the single electricity market, which is regulated, yet is also the third most expensive electricity supply in Europe for business.
On-site generation, which is carried out almost exclusively through small-scale renewable sources, helps reduce individual bills, as well as contributing to de-carbonisation.
It also secures supply and provides work to a raft of small manufacturers, building, civil engineering and service companies, which provide the bulk of sustainable rural employment from our fledgling and still relatively small renewable energy industry.
Do renewables cut electricity prices? Who knows? There's not a day that passes without claim and counter-claim about how large-scale renewables impact wholesale electricity prices and grid costs.
What isn't in dispute is the contribution small-scale renewables make to jobs and reducing bills on an individual basis for families, factories and farms.
NI firms are building, installing and servicing an array of renewable technologies, creating and sustaining jobs in the local community, but - and this is important - despite being small scale, they still pay the full connection and grid strengthening costs set by the NIE monopoly and have little or no negative impact on the end electricity price for consumers.
Apart from the unfortunate loss of the offshore wind opportunity, the growth of renewables has been one of the less heralded successes of Stormont policy. Targets have been set and met, admittedly on the back of better than the already very attractive UK-wide incentives. But, with a new Conservative government installed, the ground upon which this success was built has been quickly and aggressively disturbed, with a decision to close down, a year early the support mechanisms which the renewables industry have used to drive their growth. This abrupt, unscheduled decision has led to a crisis, particularly for small-scale renewable customers and small local providers.
However, our energy minister Jonathan Bell has done a remarkable job in securing a good deal for NI consumers. Ensuring grace periods for non-wind renewable technologies and large-scale onshore wind projects connecting into planned clusters has meant that consumers here are shielded from a huge bill for each of the next 20 years as costs are 'socialised' across all UK electricity consumers.
What's left, however, is huge uncertainty and potential financial loss for those small-scale wind projects in the pipeline. Planning problems, difficulties with NIE on connections and now the early closure of the necessary Northern Ireland support mechanism (with no access to alternative UK schemes nor any planned NI equivalent), has the prospect of putting local companies under and destroying rural livelihoods. This needs to be fixed.
The large on-shore (and off-shore) wind developers should be challenged to secure an effectively structured market aimed at cutting electricity prices, rather than appearing to just track carbon-based generation. However, determination, commitment and pace is needed to secure a future for the small scale wind sector.
Action over this past summer has essentially decoupled different renewable technologies at different scales. This presents an opportunity to create a Northern Ireland incentive scheme for wind power which is based on a sensible, contemporary analysis of development and opportunity costs. A local solution for this local problem would be welcomed by consumers and the local renewables industry alike.
- Stephen Kelly is the chief executive of Manufacturing NI