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

Belfast Telegraph - - NEWS -

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

Iain Hoy

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