ISEM Dealing with new market arrangements Dara Lynott

I-SEM – Dealing with new market arrangements Dara Lynott CEO Electricity Association of Ireland A Sustainable Future Powered by Electricity NI Energy Forum 27 th September, 2018 Titanic Centre, Belfast

EAI Members A Sustainable Future Powered by Electricity

“A vibrant, competitive European economy, reliably powered by clean, carbon-neutral energy” 34 full members, representing the electricity industry in 32 European countries. A Sustainable Future Powered by Electricity

A sector in Transition…. . • GHG Emissions Projected to decrease 31% by 2035 to 8. 7 Mt CO 2 eq. • MWhr supplied to grow by 57% out to 2030 • GDP will grow by 3. 5%/yr out to 2035 A Sustainable Future Powered by Electricity 4

Emission from Power have fallen fast… Reducing UK emissions 2018 Progress Report to Parliament June 2018 A Sustainable Future Powered by Electricity

Over half of total GHG emission reductions since 2000 have been by the ROI Electricity Sector A Sustainable Future Powered by Electricity

Other sectors going the wrong Direction! Road transportation % Reduction since 2000 Residential % Reduction since 2000 6462. 60 Agriculture % Reduction since 2000 10369. 53 2016 11750. 89 +13% 6046. 55 -6% 19851. 31 -5% 2020 13808. 83 +33% 6536. 32 +1% 2056. 18 -2% 2035 13753. 53 +33% 6528. 65 +1% 21088. 09 +1% A Sustainable Future Powered by Electricity 20815. 58

Carbon Intensity of Electricity has halved Carbon Intensity in 2016 = 480 g CO 2/k. Wh A Sustainable Future Powered by Electricity Plans to decarbonise UK power generation to below 100 g. CO 2 per k. Wh (2017 = 263 G CO 2/Kw. H) by 2030 rely to high degree on new nuclear build and net imports across interconnectors, both of which have associated risks. These risks should be mitigated by actions aimed at improving the route to market for low-carbon electricity generation, especially low-cost options. (i. e. onshore wind and solar), and by contracting for additional low-carbon generation.

Decoupling from the economy has happened. A Sustainable Future Powered by Electricity

But it is not Good enough……. . Renewables now account for 25. 5% of electricity generated in 2016 (down from 27. 3% in 2015). Ireland exported 2. 4% of electricity generated in 2016. A Sustainable Future Powered by Electricity

Sector MUST transition to……. 1. a decarbonised electricity sector by 2050. 2. Electrification of the heating and transport sector. 3. Efficient and competitive electricity and gas markets that support customer preference and sustainable sector. investment in the 4. Appropriate regulatory governance and effective accountability structures A Sustainable Future Powered by Electricity 11

a decarbonised electricity sector by 2050: emissions are net zero; Requires agriculture, transport and the built environment to do some heavy lifting. Carbon Capture and storage Development of renewable gas when 52% of ROI power sector is powered by natural gas. A Sustainable Future Powered by Electricity 12

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Electrification • Urgency – we are running out of time, the longer we wait • 60% of homeowners do not know what a heat pump is? • Only 1 in 37 cars sold has a socket and it will take over • Over 15 years for the current stock of cars to turn over • the greater risk that these options will play a greater role in 2050 • Capacity • Competency • Supply chain A Sustainable Future Powered by Electricity

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Markets and Investment 1. On the plus side - Ireland rises to 24 th in global renewable investment rankings up from 31 st - Renewable Energy Country Attractiveness Index, May 2018, EY 2. Is the market designed to entice investment, are there enough entry signals to the market? 3. Quantifiable and manageable market risks means long-term certainty (Derisking)particularly where there is 6 -10 year Development pipeline 4. Are there enough aggregated projects to get scale and attract investment A Sustainable Future Powered by Electricity

Governance and Accountability Need a principle based regulatory framework that balances regulatory burden with ability to innovate • • • Clear statement of intent Clear policy direction Transparent Process is set out with Clear cost benefit analysis Constructive communication and engagement Technical competency Accountability (Quis custodiet ipsos custodes? ) SMART metering, Carbon Tax, BREXIT, Consents, MAFA, Rates A Sustainable Future Powered by Electricity

The Transition will be complex and non-linear…. . There is no other energy carrier that can curb GHG emissions in transport and heating sectors to the same extent and scale as Electricity. Switching to electricity in those sectors means significantly reducing their GHG emissions due to: • higher efficiency electricity based technologies • Decarbonisation of electricity generation. A Sustainable Future Powered by Electricity 18

In a complex transition two things are needed 1) engagement and 2) data Alexis de Tocqueville, 19 th century political thinker (Democracy in America) A Sustainable Future Powered by Electricity

Truth isn’t truth Rudy Guiliani, former New York City mayor A Sustainable Future Powered by Electricity

WWW. EAIRELAND. COM A Sustainable Future Powered by Electricity 21