Lack of Executive is curtailing energy sector’s ability to make vital decisions
Every day this week NI business leaders speak out on the importance of devolved government to our economy
No modern society, or economy, can function effectively without a secure, sustainable and affordable energy system.
When we talk about energy powering an economy, we’re talking about more than megajoules and kilowatts.
A competitive energy sector is the very foundation of economic growth and ensuring its continued good health is vital for all.
However, Northern Ireland’s energy sector is at a crossroads. Key decisions regarding the future of the sector must be taken soon, or consumers, both domestic and commercial, will be left counting the cost.
In theory, we have an ace up our sleeve for dealing with this kind of difficult situation — an Executive that is unique among devolved institutions in having considerable control over energy policy.
The powers devolved to Stormont offer the opportunity for Northern Ireland to chart its own course and take key energy policy decisions in a manner that best suits its specific needs.
There is, however, one clear and significant obstacle to this approach — it requires a fully restored Executive with the ambition to use these powers and make the crucial decisions. Since January, this has been absent.
The result is a policy vacuum, with key decisions being deferred and delayed just when leadership is needed most.
Those involved in the energy sector need certainty — with a clear understanding of the Executive’s priorities for the sector urgently required.
At the very crux of the matter is the fact that the Executive’s current flagship energy policy framework, the Strategic Energy Framework, lapsed in 2015.
To replace it, we urgently need a new holistic decarbonisation and energy strategy that clearly outlines the energy vision and priorities in the years up to at least 2035.
Any new strategy should be developed in partnership with industry, seek to take advantage of future energy trends and conform to the aims of the Executive’s industrial strategy.
The new strategy should address four priority issues.
Firstly, the strategy must decide how Northern Ireland will avoid a potential electricity supply deficit post-2021 — a deficit that will undoubtedly increase cost to the consumer, while also threatening security of supply.
Breathing space can be achieved in the short term by a renewed commitment to delivering the second north/south interconnector, maximising the efficient use of electricity across the island of Ireland.
In the long term, the strategy must consider how it could encourage private investment in new conventional and renewable generation. Delivering long-term policy certainty will be crucial to this goal.
Secondly, we must work towards delivering an affordable energy system for all consumers. In particular, large energy users face uncompetitively high electricity prices.
Uncompetitive energy costs make it harder to attract new business investment to Northern Ireland and makes it much more difficult for energy-intensive companies already based in the region to secure new investment.
There are no quick and easy fixes, so any new strategy must set out a long-term cost-reduction plan.
Encouraging energy efficiency improvements, deployment of innovative technology to maximise renewable generation and improving the comparatively low level of natural gas penetration in both domestic and non-domestic premises will be crucial to achieving this goal.
Thirdly, the strategy must also consider the future of renewables, looking well beyond the current short-term goal of having 40% of Northern Ireland’s annual electricity need delivered through renewables by 2020.
A way forward that maximises the efficiency of the renewable generation that already exists, supports further development, promotes innovation and capitalises on the adoption of new energy storage technologies needs to be implemented swiftly.
Fourthly, any new strategy must address the potentially negative impact of Brexit on the future of the all-island single electricity market (SEM) should the UK leave the EU single market, EU internal energy market and the jurisdiction of the European Court of Justice.
With no palatable alternative to the SEM available, solutions must be swiftly identified.
We need local ministers back in place and working with their counterparts in London, Dublin and Brussels to deliver certainty for the sector by agreeing a clear roadmap on how the SEM — and its successor, the integrated single electricity market — will continue to prosper post-Brexit.
In summary, the energy sector works hard to keep the lights on, our homes warm and our businesses running.
To continue to do so effectively and efficiently, we need real political leadership — sooner rather than later.
Leadership that can only be delivered by establishing a stable, inclusive, devolved government. Iain Hoy is CBI senior policy adviser. He writes here on behalf of the CBI NI Energy Strategy Forum