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Exciting times in Northern Ireland's energy industry

By Andrew Ryan Partner at TLT Solicitors

Published 19/07/2016

The energy market in Northern Ireland is almost unrecognisable compared to 10 years ago
The energy market in Northern Ireland is almost unrecognisable compared to 10 years ago

The energy market in Northern Ireland is almost unrecognisable compared to 10 years ago. A major factor in that change has been the huge increase in renewable generation, but so has the liberalisation of the energy market within an all-island framework.

With the end of subsidies and impending Brexit, there is much uncertainty in how that market will change and adapt over the next few years, however rapid advances in technology such as energy storage will bring about a real revolution in energy generation and Northern Ireland is in an ideal position to capitalise upon these opportunities.

The changes in the way electricity is generated in Northern Ireland are clear when travelling within the region, with the proliferation of wind turbines - both small and large - across the countryside.

There has also been a huge increase in other renewable technologies, such as both on-farm and industrial anaerobic digestion plants. Evermore Energy's new 15MW biomass plant on the banks of the Foyle was the first of its kind in Northern Ireland and Full Circle Power's 15MW energy from waste plant is under construction to supply the Bombardier factory in Belfast. Lightsource Renewables also recently started generation from its 5MW solar plant near to (and supplying) Belfast International Airport - another first for Northern Ireland.

Other changes are perhaps less apparent but equally significant. Since 2007, the island of Ireland has operated under a single electricity market (the SEM) which has allowed generators across the island to access a larger market and this has undoubtedly benefited both generators and users. With a unified market there has also been an increase in suppliers, with the large players, NIE and ESB, seeing market share carved up as new entrants such as SSE Airtricity, Electric Ireland and Budget Energy have appeared and rapidly attracted both business and household users. Although electricity prices remain high in NI compared to the rest of the UK, this welcome competition has at least helped to mitigate the costs.

Energy supply and generation are now at a crossroads. The financial support that many renewables projects relied upon is being withdrawn and the industry is entering a period of cold turkey. Subsidies for new wind generation under the NI Renewables Obligation have all but ended for new projects and the scheme will close to all other technologies by March 31, 2017. The all island energy market was to change next year to the "i-SEM" in response to European Directives requiring greater cross-EU interconnectivity, but how this will play out in the wake of Brexit is unclear at this time. The fall in the value of sterling could also hamper new projects, considering that much of the technology relied upon is manufactured in Europe and thus projects' costs may increase.

However, amid these seismic changes new opportunities are arising and the longer term outlook is more positive. While still in its comparative infancy, energy storage will become a hugely important part of the energy mix, both at domestic and industrial levels. Plans are well under way for Gaelectric's Compressed Air Storage project on (and under) Islandmagee which will allow wind energy to be stored at times of high output and released to the grid at times of high demand. As costs come down, the use of domestic solar coupled with home battery storage will become a viable option and massively democratise the generation of energy. Given the excellent wind regime (for renewables at least) in NI, new wind farms are likely to be viable in a post-subsidy world and co-location with solar to maximise use of available grid capacity is already underway.

Much of the above relies upon significant upgrades and reinforcement of the existing electricity grid. The most important element of this is undoubtedly the controversial North-South Interconnector. Even optimistically, this would be unlikely to be online much before 2020 and if the Northern Ireland grid is to be able to accommodate substantial new generation without constraint, this infrastructure is absolutely vital. This is a project that must go ahead to ensure the viability of future large-scale renewables.

These are still exciting times to be working in the energy industry in Northern Ireland.

With our experience in all aspects of renewables development and energy generation across the UK, TLT remains at the forefront of developments in this sector and we look forward to what the next few years will bring.

Belfast Telegraph

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