Electricity Market Reform measures for Northern Ireland

Making the announcement Arlene Foster said: “Electricity market reform proposals are aimed at addressing the challenges of ensuring the supply of reliable, low carbon and affordable electricity across the United Kingdom. I believe that these measures will provide the necessary support and stable revenues to confirm a long term commitment to renewable energy at the least cost to the consumer.”

Electricity Market Reform will see the closure of the main mechanism for incentivising renewable electricity generation in Northern Ireland, the Northern Ireland Renewables Obligation (NIRO), to new generation (and additional capacity) in 2017.

This is part of a UK-wide move to new long-term contracts (Feed-In Tariff with Contracts for Difference) the purpose of which is to provide stable financial incentives for investment in all forms of low-carbon electricity generation. The closure of the NIRO will also necessitate the introduction of a separate Feed-In Tariff for small scale renewable electricity generation as the Feed-In Tariff with Contracts for Difference will only apply to generation above 5MW.

The Minister added: “The success of the Northern Ireland Renewables Obligation can be clearly seen by the increase in the levels of renewable electricity generation, since its introduction in 2005, from 2% to 14% in 2012.

“The decision to move away from the NIRO has not been taken lightly. Northern Ireland consumers currently benefit from having the costs of renewables incentivisation spread across all UK consumers and I have ensured that this will continue to be the case with the new mechanism.

“I am also intending to extend the end date of the NIRO to 2037. Together with a UK-wide Fixed Renewable Obligation Scheme from 2027, this will help to minimise the risk of a hiatus in investment in new renewable generating stations. It will also maintain confidence in the stability of conditions for investment in renewable energy.

“Since Electricity Market Reform was announced in the Coalition Government’s White Paper last year, my Department has been working closely with the Department of Energy and Climate Change to ensure that Northern Ireland’s devolved status is respected as part of any new measures, and I am satisfied that this has been achieved.”

A joint study by DETI and the Utility Regulator, part financed by the European Regional Development Fund under the European Sustainable Competitiveness Programme for Northern Ireland, was undertaken in 2010 to analyse the policy options for Northern Ireland arising from Electricity Market Reform. The study concluded that the proposed Feed-in Tariff with Contracts for Difference would work in Northern Ireland within the Single Electricity Market.

Whilst the Feed-in Tariff with Contracts for Difference will be introduced in Great Britain in 2014/15, introduction in Northern Ireland will not take place until 2016/17 to take account of any changes needed to the Single Electricity Market as a result of European Electricity Market Integration.

Administration of the Feed in Tariff with Contracts for Difference will be undertaken as part of a UK-wide system by National Grid (the GB system operator). The System Operator for Northern Ireland (SONI) will have a role to play in this, particularly in relation to provision of information to help set and check the strike prices for the Northern Ireland contracts.

It is proposed that the enabling powers to introduce a small scale Feed-In Tariff will be introduced in DETI’s forthcoming Energy Bill with an intended implementation date in 2015/16. Electricity Market Reform will also see the introduction of an Emissions Performance Standard for new coal fired plant.

Concluding, Arlene Foster said: “I know that renewable energy will play an ever increasing role in contributing to Northern Ireland’s long term security supply and decarbonisation objectives. Today’s announcement will give investors and renewable energy developers the confidence to invest, bringing crucial supply chain jobs to Northern Ireland over the next 10 years.”