Pathway to 2030
09 October 2019
The Integrated Single Electricity Market (I-SEM) recently saw its first birthday on 1 October 2019. A year in and this transition has already had a dramatic shift in the market. The move to I-SEM represents the most drastic change in the electricity market in a generation. Against this backdrop, on Wednesday 2 October, Cornwall Insight Ireland hosted an anniversary event – Pathway to 2030 – to analyse the key moments over the past year and bring clarity to what participants can expect in the SEM going forward.
This event was attended by representatives from some of the key stakeholders in the Irish energy markets. Together, our independent, expert Irish team took attendees on an insight-led tour through the goals and plans for the future. These talks focused on the upcoming trends in the market including Corporate Power Purchase Agreements (CPPAs), the Renewable Electricity Support Schemes (RESS), the evolution of hybrids in the market, an overview of the market a year into I-SEM and a keynote speech from Dr David Connolly (CEO of the Irish Wind Energy Association) on the promising future of wind energy.
Cornwall Insight Pathway to 2030 team
The event was interactive which allowed attendees to get a sense of the mood within the industry regarding the impacts of I-SEM thus far and the goals that have been laid out for the next 10, 20, and even 30 years. The mood was optimistic yet cautious as participants shared their views on what they believe to be the largest opportunities and challenges going forward (grid connections and Brexit). The sense in the room was that Ireland was turning a positive corner with the majority predicting significant growth of renewable energy in the medium term (3-6 years).
Source: Cornwall Insight
The introduction of I-SEM has created new market complexities and as a result, new structures are needed to meet them. It is within this new market that Cornwall Insight is perfectly set up to help provide clarity, insight, and understanding. Our Dublin office is has been working behind the scenes across the industry and the event gave us an opportunity to showcase some of that good work and predict future trends.
The future of energy purchasing: Corporate PPAs
Cornwall Insight’s senior consultant James Goldsmith presented on CPPAs. He discussed not only how CPPAs will be needed and utilised in order to achieve future energy goals, but also why there are many good reasons for CPPAs in the first place. Specifically, James said that in order to achieve the 15% CPPA target that accompanies the 70% renewables target by 2030, 5.8TWh of renewables will be required by CPPAs.
Source: Cornwall Insight
Although an increase from the current 0.4TWh to 5.8TWh may seem like a daunting challenge, James pointed out that there are quite a few incentives for CPPAs such as price stability, cost saving, corporate social responsibility and small capital outlay for corporates. CPPAs not only help businesses save money in both the immediate term and the long run, they also help with corporate social responsibility through green certification supporting their corporate sustainability targets.
Evie Doherty, another senior consultant at Cornwall Insight, presented on the impact of RESS auctions on offshore wind. Evie went over examples of various offshore wind projects but highlighted that it can be difficult to compare offshore wind projects in different jurisdictions. This is because they can have different parameters – for example if grid connections cost are included, supply chain, locations, etc. When considering RESS for offshore wind, Evie outlined supply chain, wholesale price cannibalisation, network access and constraints, and structure of the auction (pay as bid or pay as clear) as factors to consider.
The delivery of offshore wind projects is time sensitive if Ireland is to achieve the 2030 target of 70% renewable generation. From concept to energisation, an offshore wind farm can take upwards of 12 years to implement due to planning hurdles and consenting. If an offshore wind farm were to receive a positive outcome from an auction, it is predicted that it will take at least another six years before that offshore wind farm is installed. The timing of the delivery steps for offshore wind through development (planning, consenting, auctions, etc.) will have an impact on delivery and any delays risk non-delivery of offshore wind in time for our 2030 RES-E targets.
Hybrids, the road forward
Training Consultant, Ruth Young, presented on the role of hybrid sites in delivery system flexibility to achieve the 70% renewables target. Specifically, she talked about some of the ongoing connection, charging and compliance challenges faced by those looking to establish a hybrid connection site.
Source: Cornwall Insight
Ruth discussed some key activities that will enable the transition to more hybrid sites and how a joined up approach to overcoming policy, regulatory and technical barriers is required.
It is evident from Action 18 of the Climate Action Plan that the Irish Government views hybrid connection as crucial for further renewable integration and are seeking to facilitate the operation of hybrid connections (e.g. solar/wind/batteries) in the electricity market. As an extension of Action 18, Ruth also identified the EirGrid FlexTech forum as a welcome initiative to remove the technical barriers to renewable integration.
Although the audience identified regulatory uncertainty and grid connection as concerns, overall it appeared as though most believed that hybrids are vital to achieving 70% renewables by 2030 and that we are likely to see a large-scale roll-out of hybrid connections prior to 2027.
Source: Cornwall Insight
A Windy Future
Finally, we were lucky enough to have Dr. David Connolly, CEO of IWEA, as a keynote speaker at the event. David presented a very hopeful outlook for the future of wind and its prominent role in the future. In support of his optimistic views, David noted that Ireland was number 1 in Europe for onshore wind production in 2018.
David Connolly presenting on the role of wind energy in 70% RES-E goals
Wind energy will play a large role in meeting the 70% target by 2030. Analysis shows that achieving the 70% target will require approximately 5 GW of ‘new’ wind energy by 2030. There is no denying that 5 GW of ‘new’ onshore wind energy is a massive challenge to deliver but, David is confident that the goal is achievable and points to countries like Denmark as examples of countries that should be emulated. Denmark has already achieved a successful Smart Energy System that surpassed 50% wind energy on their grid system as early as 2013. David stated that there is no reason why a similar system wouldn’t work in Ireland citing some of the key work EirGrid has completed with the DS3 implementation.
Can we do it?
Although there are major obstacles still to overcome, it appears as though the industry is cautiously optimistic in its ability to deliver upon targeted goals of 70% renewables by 2030.
Being realistic about the challenges ahead is a good way to come up with solutions to those challenges and to demand the support necessary to properly meet and address them head on. Altogether the room seemed excited about the potential for future opportunities and innovation. Cornwall Insight is proud to count itself a member of that group as we are on the same page and look forward to joining them on the adventures that will come on the pathway to 2030.