Changes mean consumers face 'price volatility'
Around 20% of Northern Ireland's energy now comes from renewable sources, and that's a real success story, says Meabh Cormacain. But consumers will suffer with industry at a crossroads following a change in government policy
The UK government is bringing forward a new energy bill that is expected, among other things, to close the Renewables Obligation (RO) - the main support scheme for wind energy - in 2016, a year earlier than planned.
The Northern Ireland Executive has yet to decide how to respond to the proposal to close the RO early but recently issued a consultation that proposed falling in behind UK policy.
Renewables are a vital part of the Northern Ireland economy. While onshore wind is cheaper than other renewable sources, its sustainability nevertheless relies on tapered support, so that by 2020 it will become cheaper than new gas generation and therefore cost competitive for consumers and businesses alike. RO closure was intended to align with the opening of a new, competitive Contract for Difference (CfD). The CfD would only allow the most cost-efficient projects to win contracts and indeed the first CfD auction in Great Britain did lead to lower cost wind energy projects.
However, onshore wind may be excluded from the CfD in the future. Cutting off support for the cheapest source of renewable energy is perversely justified by the UK government in terms of lowering costs for consumers. More worryingly for investors wishing to invest in Northern Ireland, the CfD has never been available here and no decision has yet been taken to implement it, or indeed any other support scheme.
This leaves Northern Ireland in the unique position of no support for any new renewable energy after March 2016, with the exception of projects that can avail of a grace period. The lost value of business rates to local councils alone could be £400m.
The importance of government policy on energy cannot be underestimated; 20% of Northern Ireland's electricity now comes from renewables, mostly onshore wind. This is the target that the Executive set for 2015, and reaching it is a real success story.
Reaching our targets has also brought benefits in terms of skilled local jobs and investment. According to a recently-commissioned report from the Northern Ireland Renewables Industry Group (NIRIG), Northern Ireland benefited to the tune of £32m and more than 530 jobs last year through the local onshore wind industry. And £9m of this was invested in the local council area around the wind farm. More than two-thirds of the £2.5m spend per turbine on operation and maintenance is invested locally.
The Executive's own analysis concludes that increasing renewables development will benefit Northern Ireland both economically and environmentally. The benefits include a reduction in fossil fuel use and costs, reduced carbon dioxide emissions, employment opportunities and increased security of supply. Many local companies are reliant on the sustainability of the wind industry to support employment.
Northern Ireland needs to recommit to our target of 40% electricity from renewables by 2020. This will send a strong signal to innovators and investors that we are open for business. We must also set out targets to 2030 in order to allow planning for infrastructure and investment in energy.
Political support for renewables now will lock consumers into a low cost future. Ending support now leads to a future of price volatility. The industry is committed to ensuring that benefits continue to flow into Northern Ireland. Today more than ever, you can stand at the base of a turbine in Northern Ireland and be confident that the majority of investment flows back into the local economy.
Meabh Cormacain is the policy and communications coordinator at the Northern Ireland Renewables Industry Group (NIRIG) and works to strengthen the voice of the renewable electricity industry locally. NIRIG is the voice of the Irish Wind Energy Association and RenewableUK in Northern Ireland