REPORT ON THE ENERGY INQUIRY – VOLUME 1

SESSION 2001/2002 THIRD REPORT

Ordered by The Committee for Enterprise, Trade and Investment to be printed 13 February 2002

Report: 03/01 R (Enterprise, Trade and Investment)

COMMITTEE FOR ENTERPRISE, TRADE AND INVESTMENT

VOLUME 1 – REPORT

The Committee for Enterprise, Trade and Investment is a Statutory Departmental Committee established in accordance with paragraphs 8 and 9 of Strand One of the Belfast Agreement and under Assembly Standing Order No 46. The Committee has a scrutiny, policy development and consultation role with respect to the Department of Enterprise, Trade and Investment and has a role in the initiation of legislation. The Committee has 11 members including a Chairperson and Deputy Chairperson and a quorum of 5.

The Committee has power:

• to consider and advise on Departmental budgets and Annual Plans in the context of the overall budget allocation;
• to approve relevant secondary legislation and take the Committee Stage of relevant primary legislation;
• to call for person and papers;
• to initiate enquiries and make reports;
• to consider and advise on matters brought to the Committee by the Minister of Enterprise, Trade and Investment.

The membership of the Committee since its establishment on 29 November 1999 has been as follows:

Mr Pat Doherty (Chairperson)
Mr Sean Neeson (Deputy Chairperson)
Mr Billy Armstrong*
Dr Alasdair McDonnell
Mr Alex Attwood
Ms Jane Morrice
Mr Wilson Clyde
Dr Dara O’Hagan
Mrs Annie Courtney*
Mr Jim Wells*
Mr David McClarty

*Mr Campbell was replaced by Mr Wells on 3 October 2000.
*Ms Lewsley was replaced by Mrs Courtney on 29 January 2001.
*Mr Shipley Dalton was replaced by Mr Armstrong on 24 September 2001

List of abbreviations used in the Report

Executive Summary

Summary of Recommendations

Introduction

Electricity Costs

Improving Energy Efficiency

Renewable Energy

Gas Network Extensions

All-Island Energy Market

Issues Identified

Analysis of Issues and Themes

References

Committee’s Report on Electricity and Gas Consumer Representation

Committee’s Reports on Case Study Visits –

Denmark & Brussels 11-14 September 2001

Kilroot Power Station, Elliotts Hill Wind Farm & The ECOS Millennium Environmental
Centre 24 October 2001

Brook Hall Estate, 7 November 2001

Assembly Research Papers

Orimulsion

Renewable Energy

Wave Energy

Minutes of Proceedings of the Committee relating to the Report

List of Witnesses who gave Oral Evidence to the Committee

List of Memoranda Submitted to the Committee

Minutes of Evidence along with addenda

Written Submissions

AES Applied Energy Services

ESB Electricity Supply Board

EU European Union

OFREG Office for the Regulation of Electricity and Gas

OFGEM Office of Gas and Electricity Markets

NIE Northern Ireland Electricity plc

R&D Research and Development

ROC Renewable Obligation Certificates

T&D Transmission and Distribution

TOP

1. In pursuit of this inquiry the Committee read and assessed 32 written submissions, took oral evidence from 29 organisations and made a number of visits.

2. A total of thirty broadly defined issues were identified within the submissions, as detailed in Table 1: privatisation of electricity, methods of buying-out generators contracts, safeguarding domestic consumers, gas network extension to north-west and south-east, gas network connection with Republic of Ireland, competition in electricity supply distribution, market regulation, wind energy, employment and economic development, access of renewable electricity to GB market, security and diversity of supply, energy efficiency and demand reduction, all-island energy market, greenhouse gas emission reduction targets, local environmental impact, indigenous lignite and gas resources, fuel poverty, emissions trading, combined heat and power, climate change levy, postalisation of costs, grant aid, renewable energy obligation, passive solar and low energy buildings, hydro power, regulation, biomass and biogas, Orimulsion, transport and urban planning.

3. The above issues were grouped into five themes, as detailed in Table 2: electricity costs, improving energy efficiency, renewable energy, gas network extensions and all-island energy market.

4. A synthesis and critique of encompassed issues was produced for each theme and appropriate recommendations made.

5. Under the Kyoto Protocol the UK Government has a commitment to reduce the emissions of a basket of greenhouse gases, including carbon dioxide, by 12.5% of the 1990 level by 2008-2010. In addition the UK has a domestic target to reduce carbon dioxide emissions by 20% of the 1990 levels by 2010. Over 60% of Northern Irelands greenhouse gas emissions arise from the production and use of energy, with 36% arising from electricity generation. Greenhouse gas emissions can be reduced by a combination of the use of modern gas-fired electricity generating plant, the use of judicious mix of diverse renewable forms of energy to generate electricity and/or heat and the reduction of demand by more efficient use of energy.

6. With hindsight it may be observed that abnormally high electricity prices in Northern Ireland result from an absence of full and frank political debate with the robust representation of consumer interests at the time of electricity privatisation rather than the consequences of location and geography on the commercial trading relatively small (and, at the time of privatisation, self-contained) electricity system. Decisions now are constrained by inequitable long-term contracts placed at the time of privatisation in 1992 that remain effective until 2010-2012. In marked contrast to Great Britain, those contracts have enabled financial gains from improved efficiency to accrue mostly to shareholders rather than consumers. If a low-interest rate "consumer bond" were to be taken out to reduce electricity prices in the short-term, legislation would be required both to oblige electricity consumers to contribute to its repayment and to ensure that a low rate of interest could be secured. A consumer bond would reduce present prices but increase those that would otherwise prevail from 2010 to 2030. It should be noted that whether or not a bond is introduced, prices after 2010 would likely to be lower, in real terms, than at present. Without strong regulatory intervention also being part of the enabling legislation, the ultimate principal beneficiaries of the introduction of a consumer bond could be electricity industry shareholders rather than consumers. Most of the former reside outside Northern Ireland. As susceptibility to manipulation is an inherent characteristic of markets for electricity generation with a limited number of suppliers, any new legislation should provide OFREG with powers to introduce price control and fines on generators if there is evidence of market abuse. If a consumer bond were introduced its costs should be met across all electricity consumers both in the contracted and open markets.

7. The conversion of Kilroot to burn Orimulsion may offer the prospect of significantly lower generation costs, a reduction in greenhouse gas emissions and physical and price diversification from natural gas. There is concern however that the burning of Orimulsion could have a significant environmental impact and questions have been raised about the economic viability of the use of this fuel. It has also been stated that Orimulsion firing could inhibit the growth in the use of renewable sources of energy. The conversion of Kilroot should be retained as an option but before its use is authorised it must be subjected to rigorous public scrutiny including a full environmental impact assessment and economic appraisal. Both these studies should be carried out in public and the final decision taken by the Northern Ireland Assembly.

8. Cross-subsidy of commercial and industrial customers by domestic consumers highlights the need for accountable and transparent decision-making processes with the emphasis on consumer protection. The present arrangements are insufficiently independent and assertive. Strong independent consumer advocacy by the General Consumer Council for Northern Ireland, where appropriate jointly with appropriate bodies in the Republic of Ireland, should ensure that the interests of consumers are considered fully both locally and in the development of an all-island energy market.

9. 170,000 Northern Ireland households experience fuel poverty owing to low incomes, high fuel prices, little fuel choice and an inability to afford energy efficiency measures. The present average of £2 per customer invested each year in energy efficiency projects overseen by the Energy Saving Trust, if increased to an average of £5 per customer per annum would provide £3.25 million that should be earmarked for the removal of fuel poverty. A level at which with adequate numbers of well-trained personnel for building remediation work, it would be possible to eradicate fuel poverty in Northern Ireland in ten to fourteen years. If this fund were matched by the UK Treasury in recognition of the reduction in costs to the health service, fuel poverty in Northern Ireland could be eliminated in five to seven years.

10. The minimum amount of energy used to heat a home is determined by building regulations. Building regulations in Northern Ireland have tended to follow with an unwarranted time delay those of England and Wales. An estimated 145,000 new dwellings needed in Northern Ireland by 2010 will require the same amount of energy and produce the corresponding amount of greenhouse gas emissions per annum 40-80 years after their construction. It is thus essential that building regulations include enhanced provisions for energy conservation. An energy service regulatory framework that gives incentives to install energy efficiency measures is to be encouraged as it allows that same end-use amenity to be achieved at a lower cost to the consumer with less detrimental environmental impact and reduces the need for new energy supply capacity.

11. There is a large and growing potential for the use of renewable energy both directly and in the generation of electricity in Northern Ireland. Appropriate measures need to be put in place as discussed in detail in section 4 to both provide conducive market conditions and remove barriers to the exploitation of the broadest range of renewable sources of energy. This should be underpinned by local plans for harnessing renewable energy. Specific support is also required to facilitate the development of a local renewable energy equipment manufacture and supply industry.

12. Extending gas pipelines to the north-west and the south-east underpins equitable social and economic development across Northern Ireland and is essential infrastructure no different from roads or, indeed, electricity supply. Benefits include reducing fuel poverty, improving health and the environment and promoting economic development. The gas pipeline from Scotland to Northern Ireland and its subsequent extension to Belfast received 35% of their costs from the European Union. The provision of similar strategic infrastructure funding support from the European Union for gas pipeline extensions to the north-west and south-east would follow this precedent. Additionally, as a fully developed gas network will save carbon dioxide emissions, consideration needs to be given to mechanisms that render such environmental benefits tangible price reductions to customers. If the gas pipeline to the north-west is to be paid for by postalisation of some of the costs then, to be consistent with present practice, this must be borne equally by all commercial as well as domestic consumers. There is sufficient capacity in the Scotland-Northern Ireland Gas Pipeline to supply an extension from Belfast to the north-west. The supply to the south-east is likely to be met by a South-North pipeline for which higher gas prices may apply owing to the relatively lower volumes likely to be conveyed. If this were to be the case, appropriate measures would need to be taken to ensure that gas prices were comparable with those in the Belfast area. As the gas pipeline to the north-west is supported as constituting basic infrastructure investment, if this renders a gas-fired Coolkeeragh power plant viable then it should go ahead.

13. A well-regulated all-island energy market would have the potential to bring significant benefits to consumers. For it to operate successfully there would need to be adequate electricity and gas interconnector capacity and common approaches both to applicable fiscal regimes and charging policies. Effective regulation with strong consumer protection would be essential and consideration needs to be given as to setting up a single transmission system operator across the all-island market.

1. The Committee recommends that the island should remain a nuclear free zone and the Committee calls for the closure of those nuclear power and reprocessing plants on the western seaboard of Great Britain. We would like to see the eventual replacement of nuclear energy by sustainable renewable energy. The Committee further recommends that the substantial Government subsidies to the nuclear energy industry should be redirected to the renewable energy industry.

2. The Committee are content to await the outcome of the Department of Enterprise, Trade and Investment’s consultation on the paper titled "Towards a New Energy Market Strategy for Northern Ireland" before arriving at any conclusions on the different options which could be employed to help reduce the high electricity prices in Northern Ireland. The Committee urges the Minister to ensure that all different options are vigorously examined to ensure the best outcome for consumers.

3. Responsibility for consumer protection with respect to utility-supplied energy supplies should be returned to the General Consumers Council. It should be adequately resourced with expertise to be able to be an effective challenger across the full breadth of the complex issues involved and, liasing with others, in the context of an all-island energy market. Public scrutiny and stewardship of consumer interests would be provided by adoption of measures similar to those of the England and Wales Utility Act.

4. No cross-subsidy of large energy users by domestic customers should be allowed.

5. Future fossil-fuel power generation in Northern Ireland should not be underwritten by long-term contracts.

6. A complete separation of Transmission System Operation and Power Procurement is recommended.

7. There should also be a high ratio of interconnector capacity to market size to ensure effective competition in the market.

8. The Committee believes that because of the potential reduction in electricity prices and greenhouse gas emissions the use of Orimulsion should be retained as an option for electricity generation in Northern Ireland. Any proposal to convert Kilroot should be the subject of a rigorous environmental impact assessment and economic appraisal. Both these studies should be carried out in public and the final decision taken by the Northern Ireland Assembly.

9. The Committee agree with the Assembly recommendation that the Energy Efficiency Levy be increased to an average of £5 per customer per annum. The funds thus generated together with a matching Treasury contribution should be earmarked primarily to concerted action to eradicate fuel poverty entirely. The Committee further recommends that the outcomes of the Energy Efficiency Levy should be accurately measured to ensure maximum benefit to the fuel poor.

10. The establishment of a Northern Ireland Cross Departmental Ministerial taskforce on fuel poverty which should be time limited and include all relevant bodies. They would prepare a strategy which would assess fuel poverty, draw-up an action plan and work towards co-operation on action, funding and identify and promote best practice from around the world and locally. In this respect the Committee acknowledges the work carried out by Northern Ireland National Energy Action and Armagh and Dungannon Health Action Zone’s Energy Efficiency Zone Project.

11. The Committee recommends greater transparency with regard to any funding made available for the purpose of price reduction.

12. No specific measures should be introduced to encourage the exploitation of either indigenous lignite or peat resources.

13. OFREG should undertake a detailed examination of whether there has been cross-subsidy of Viridian plc subsidiaries by NIE and take appropriate action if unwarranted profits have been taken from transmission and distribution activities.

14. The Coolkeeragh Combined Cycle Gas Turbine electricity generation project should proceed.

15. The five-year derogation on the climate change levy for natural gas in Northern Ireland should be extended to ten years. Companies who have met energy efficient targets should be given a rebate on the climate change levy.

16. The Executive, the Assembly and Local Authorities should continue to audit rigorously their own energy consumption and take the lead in radically reducing energy consumption and striving to be powered entirely by renewable energy.

17. Northern Ireland Building Regulations should be amended to include major improvements and minimum standards in the provisions for energy conservation.

18. Joint financial mechanisms between builders, utilities and lending institutions should be developed which encourage energy efficient design and construction.

19. Energy rating should be linked with the rateable value of the property with a threshold property value to avoid penalising the fuel poor.

20. Concerted action should be taken to both raise public awareness of appliance energy labelling and to ensure that this is underpinned by appropriately competitive retail prices for "A" labelled appliances.

21. The use of domestic waste should be given further consideration as a fuel source for combined heat and power.

22. Waste minimalisation and energy reduction in business should continue to be encouraged in start-up programmes.

23. All new gas-fired power stations should be combined heat and power stations. A presumption in favour of combined heat and power plants when awarding contracts would help achieve this. Combined heat and power plants should also be a condition for planning approval for large developments, hospitals, industrial estates etc.

24. An implementation plan should be set underway to meet targets of 15% and 35% of electricity in Northern Ireland from a range of renewable sources by 2010 and 2020 respectively.

25. Long-term contracts should be let to renewable energy electricity generators. Such contracts would give low priced electricity and should have clauses that allow prices to be reduced further and permit full scrutiny of the generators detailed accounts.

26. The Committee is aware that current pricing regimes are inappropriate to encourage the renewable energy industry. The Committee recommends that OFREG consider the forthcoming findings of the Trading Renewables Implementation Group and ensure that pricing regimes facilitate supplies of renewable energy and are tailored to modern supply needs.

27. A requirement should be introduced in the guidelines for local area development plans to detail the location and development of renewable sources of energy.

28. Planning and building control bodies should be proactive in the encouragement of low energy buildings and renewable energy.

29. Northern Ireland should adopt the recommendations of the Department of Trade and Industry’s Embedded Generation Working Group Report.

30. A Renewable Energy Obligation should be introduced in Northern Ireland and consideration should be given to the potential of ongoing programmes for Non Fossil Fuel Obligation until all the targets for the use of renewable energy sources have been met.

31. Arrangements between OFREG and OFGEM should enable renewable energy plants in Northern Ireland to trade Renewable Energy Obligation Certificates in satisfaction of the Great Britain Renewables Obligation.

32. The Utilities Act 2000 covering England and Wales (and its parallel in Scotland) must be amended so that Northern Ireland renewable energy suppliers can qualify for Renewables Obligation Certificates with their counterparts in Great Britain.

33. Greater encouragement and information should be provided to both the take-up of grid supplied renewable energy generated electricity and greater decentralised direct use of all forms of renewable energy.

34. Specific support should also be provided to facilitate the development of a Northern Ireland renewable energy equipment manufacture and supply industry.

35. Greater attention should be paid to public information campaigns and marketing to encourage the use of green electricity.

36. Grant-aid should be provided to domestic consumers seeking to obtain energy from renewable sources and tax breaks should be offered to investors to encourage the use of green electricity with the aim of eventually reducing the cost of green electricity in comparison to fossil fuel generated electricity.

37. There should be greater partnership between councils, relevant agencies, Government Departments and the private sector in order to promote and encourage the use of renewable energy.

38. The Committee recommends the consideration of the establishment of a Renewable Energy Agency.

39. The Committee supports the provision of a gas pipeline to the north-west and the conversion of Coolkeeragh Power Station to a combined cycle gas turbine.

40. Any postalisation of both gas and electricity costs must be borne equally and equitably by all commercial and domestic consumers.

41. Support should be sought from the European Union and other sources to meet the costs of current and future gas pipeline extensions.

42. To ensure that an all-island energy market would have the potential to bring significant benefits to consumers there would need to be adequate electricity and gas interconnector capacity, common approaches both to the applicable fiscal regimes and charging policies and effective regulation with strong consumer protection.

43. Active consideration should be given to establishing a single transmission system operator across the all-island market.

44. Charging mechanisms for use of interconnectors should ensure that all users pay an equitable share of costs, including the original costs of construction.

45. The Executive should investigate the possibility of abolishing the Government royalty tax and reducing the differences in corporation tax between the Republic of Ireland and Northern Ireland to enable companies to trade in a fair and equitable all-island energy market.

1.1 The original terms of reference for the inquiry were as follows.

• Assess the energy market in Northern Ireland and examine its role in the growth of the economy as described in Vision 2010 and the programme for government and the potential for supply and co-operation beyond the region.
• Particular attention should be paid to:

(i) options available to the Department to reduce energy costs; and

(ii) progress for the provision of gas throughout Northern Ireland.

• Assess the potential for the renewable energy market both domestically and in terms of capturing the emerging export market with particular reference to the potential for renewable indigenous energy industries.
• To report to the Assembly making recommendations to the Department and/or others on actions which would improve the current energy market and the potential for the renewable energy market in Northern Ireland.

1.2 Following a public call for written submissions early in 2001, the Committee received 32 written submissions from a variety of firms, agencies, voluntary groups and individuals. The Committee heard 29 oral submissions between February and June 2001 from groups encompassing non-renewable and renewable energy supply and/or distribution companies, the Department of Enterprise, Trade and Investment, regulatory and consumer bodies, individuals as well as interested non-governmental organisations. The groups were from all parts of Northern Ireland, the Republic of Ireland, Great Britain, USA and Venezuela, each with diverse and pertinent issues, interests and viewpoints relating to energy in Northern Ireland and the terms of reference of this inquiry. In September through to November 2001, the Committee visited a number of installations in Northern Ireland, Denmark and with European Commission Officials in Brussels.

1.3 The Committee reviewed the submissions from those groups that were not called to make oral presentations to ensure that their views were covered by the other groups and individuals called before the Committee.

1.4 Although the Committee did not receive any evidence in respect of nuclear energy the Committee is of the opinion that the production of energy from nuclear power plants in Great Britain is a major issue which impacts adversely on this region. The disadvantages in relation to the disposal of hazardous waste, security of operation, health and environmental issues absolutely negates the possible reductions of CO2 and greenhouse gas emissions.

1.5 The Committee read and assessed all written submissions including the document Vision 2010 and reflected on its earlier inquiry regarding that. The Committee also read a number of other reports compiled by the Research Department of the Northern Ireland Assembly (see Appendix 3 of this report), and took appropriate specialist advice.

1.6 The Committee recommends that the island remains a nuclear free zone and calls for the closure of those nuclear power and reprocessing plants on the western seaboard of Great Britain. We would like to see the eventual replacement of nuclear energy by sustainable renewable energy. The Committee further recommends that the substantial Government subsidies to nuclear energy industry be redirected to the renewable energy industry.

2.1 Electricity costs, the reasons for their high levels and how they can be reduced formed part of every submission to the inquiry. This reflected not only the prominence of energy prices in the terms of reference for the inquiry but the high public and policy profile associated with this issue.

2.2 The particular challenges of energy supply given the small size and peripherality of Northern Ireland are real. However, the Committee strongly believes the absence of proper consultation with the public at large and sidelining the views of local political parties contributed significantly to the problems created by the privatisation process of the electricity industry in Northern Ireland. In essence the Conservative Government of the day imposed a party political principle of privatisation on Northern Ireland without due regard to the long-term implications for consumers here. There was an absence in Northern Ireland of either direct local public input to, and general awareness of the likely longer implications of, policies made during the critical period in which both electricity supply and distribution were privatised and the natural gas industry was established.

2.3 Northern Ireland has the highest prevalent electricity prices in Europe. These are a direct consequence of fixed inflation-proof long-term contracts, placed at the time of privatisation in 1992 that remain effective until 2010-2012. These contracts formed the collateral that allowed the successful purchasers of power stations to service the high finance costs anticipated to arise from the high privatisation price received by the UK Government. This was 23% higher than the Government’s own benchmark and about twice that, per MW of capacity, secured from electricity privatisation in England and Wales. The Northern Ireland assets were older and ostensibly more expensive to operate. However, their high operating costs turned-out to be neither inherent nor irredeemable, as subsequently the generation companies have reduced their labour costs markedly. The average output per generation worker, for example, has increased by 306% since privatisation. However only about a 15% productivity gain, related to the cost dilution associated with electricity demand growth, has been passed to consumers. All other savings have been passed to shareholders. As a result overall cost efficiencies remain low.

2.4 So, notwithstanding their high initial asset costs, they have become highly profitable enterprises, largely insulated by their contracts from market pressures, providing a low-risk high return to shareholders residing mostly outside Northern Ireland. Consumers have paid for the costs of a generator’s availability to supply electricity whether it is needed or not and generators have been able to pass on whatever price they have paid for fuel. Electricity customers have also had to meet the cost of a high cost contract for gas for Ballylumford as well as a high cost arrangement for the gas interconnector between Northern Ireland and Scotland.

2.5 Generation costs are estimated to form 60% and 80% of electricity prices for domestic and large industrial customers respectively. Electricity generation in Northern Ireland is 30% cost-efficient; this is some 15% lower than Great Britain. However transmission and distribution cost efficiencies are much more expensive. According to OFREG, in 1992 such costs were 15% more than the UK average. In 2001, those costs were 44% higher (Ofreg NIE T&D Price Control November 2001). If NIE’s transmission and distribution business matched the efficiencies achieved in Great Britain, Northern Ireland consumers would pay £30 million less per year (Ofreg NIE T&D Price Control November 2001).

2.6 The Department of Enterprise, Trade and Investment have held £60million for compensating Northern Ireland electricity customers following the abolition of the nuclear levy in Great Britain (Anon, 1999a). Evidence from OFREG to this enquiry stated that of this sum, £5 million has been allocated with a total expenditure to date of £1.35 million on domestic energy efficiency to alleviate fuel poverty and £15 million has been used as a direct subsidy to consumers. The remaining £40million fund has been allocated to buy-out stranded generating capacity currently under contract to NIE.

2.7 £10million was used to successfully buy out of Ballylumford Power Station’s availability costs and has allowed its conversion to modern combined cycle gas turbine technology. The consequent fuel efficiency savings should be passed to consumers in the form of lower electricity prices, though not until the present contract runs out in 2012. The use of more efficient combined cycle plant at Ballylumford does serve to reduce the impact of gas price increases on consumer’s electricity prices.

2.8 The £30million earmarked has not yet been used to buy down the existing availability payments to the Kilroot Power Station. Though AES, the stations owner, is prepared to agree a change in the contract, according to OFREG, NIE has not agreed. NIE apparently wish to avoid the possibility of having to meet stranded costs. In reality, if such costs arose they could be absorbed readily by greater efficiency in transmission and distribution. It is noted that the regulator achieved a 25% reduction in costs from Coolkeeragh by extending that contract from November 2000 to at least March 2001 without making an up-front payment.

2.9 It has been proposed that electricity prices could be reduced by the introduction of a "consumer bond" to refinance the original privatisation of the generation contracts. It has been estimated that if financed over thirty years a consumer bond would reduce the total cost of electricity by £40-50 million.

2.10 In order to maximise the price reduction obtained, legislation would be required which would oblige consumers to repay the bond. This would ensure a high credit rating and lower interest costs.

2.11 A consumer bond would initially reduce current electricity costs by about 20% but prices would increase from 2010 to 2030. It should be noted however that if a bond is not introduced prices in 2010 will be lower in real terms than at present.

2.12 Even with bond interest payments prices could still be lower after 2010 if the regulatory regime then ensured that generation, transmission and distribution cost savings were passed on to consumers rather than to shareholders in the form of increased dividends.

2.13 Without strong regulatory intervention also being part of the enabling legislation, the main beneficiaries of the introduction of a consumer bond would be shareholders in the electricity industry; most of whom live outside Northern Ireland.

2.14 Electricity is not easily stored on a large scale and the lead-time for new facilities (whether power stations or interconnectors) is long. The market for electricity generation is thus potentially susceptible to manipulation via the protection of service inefficiencies and/or the blocking of new arrangements to the benefit of consumers. The refusal of NIE to be a party to the buying out of the existing contract for Kilroot Power Station may be an example of these traits. In a future competitive market, with only limited interconnection capacity, an unscrupulous generator could reduce capacity to drive up prices and thereby accrue very substantial profits. New legislation should provide OFREG with powers to introduce price control and fines on generators if there is evidence of market abuse.

2.15 Implementation of the EU Directive on Electricity Market Opening opened up 35% of the market by 1st April 2001, two years earlier than required. Over 420 large industrial and commercial electricity customers have secured around 10% lower electricity prices. This however was accomplished so that no benefit accrued to domestic consumers and, with the withdrawal of Powergen from the supply market has left effectively only NIE and a small participation of ESB in the "open" electricity market. If there is further open-market expansion with the present long-term contracts in place, as the "open" market would only be available for large and/or commercial customers, the costs of the long-term contracts will fall on those domestic customers least able to pay. This would inevitably exacerbate fuel poverty.

2.16 To avoid this, a levy of all customers to meet a further increase in "stranded costs" of long-term contracts arising from market opening has been suggested by the Department of Enterprise Trade and Investment. A levy to oblige consumers to repay a bond would require legislation. To avoid a subsidy by all electricity customers to those benefiting from market opening, such legislation should share the costs of repaying a consumer bond across all electricity consumers both in the contracted and open markets. Removing the need for taxpayers to finance the industry was the fundamental original rationale for electricity privatisation. However, as OFREG noted in its evidence to this enquiry, taxpayers and electricity consumers are in reality largely one and the same. So the same people have continued to finance the industry but at the higher rates of return sought by holders of equity. The costs of consumers meeting the rates of return sought by equity investors in the Northern Ireland electricity industry is 6% to 7% in real terms. However, according to OFREG, this capital intensive industry with £1 billion of assets is a low-risk investment that could be debt financed at 4% (as would be the case with a consumer bond) in real terms.

2.17 The Department of Enterprise, Trade and Investment have recently issued a consultation paper titled "Towards a New Energy Market Strategy for Northern Ireland". The aim of the consultation paper is to produce an Energy Strategy and a Northern Ireland Energy Bill and will be examining a number of issues including the long-term generator contracts and the possibility of using consumer bonds to reduce electricity prices. The Committee has therefore decided that they should await the outcome of the consultation period before arriving at any conclusions on the different options, which could be employed to help reduce the high electricity prices in Northern Ireland.

2.18 It has been proposed that a new 400MW combined cycle gas turbine electricity generating plant be built at Coolkeeragh. Such a plant is anticipated to be twice as efficient as the current coal-fired current plant at Coolkeeragh. A prerequisite for this plant is a piped supply of gas to the north-west and indeed this has been advocated as the principal raison d’etre for such a pipeline. Such a plant would reduce the overall carbon dioxide emissions, and as it would be selling its output competitively, could also provide low electricity costs. The cost of both the power station and gas pipeline has been estimated to be in the region of £200million. (It is a useful comparison to note that £40million has been allocated to the buying-out of stranded costs, an "investment" that will not produce the similar broader benefits of natural gas to the north-west.) The recently announced construction of a natural gas pipeline to the north-west is supported on the basis of the public policy goal of securing equitable economic and social development. If this renders the Coolkeeragh proposal viable, then it should go ahead.

2.19 Construction has now been completed on the 500MW Moyle interconnector linking Northern Ireland with Scotland. Surplus low-cost capacity from the Scottish Power transmission system is now available (but, due to present contractual constraints, only to larger non-domestic customers) in Northern Ireland. The regulation of access to, and charging for use of, the Moyle interconnector needs to be fair and transparent.

2.20 Transmission and distribution constitute some 38% of electricity prices for domestic consumers (Ofreg NIE T&D Price Control November 2001). Since privatisation these costs have risen consistently and are now over 44% higher than in Great Britain (Ofreg NIE T&D Price Control November 2001). NIE claim this is because they have had to spend some £650million to redress previous under-investment in their infrastructure. However such capital investment in infrastructure investment is not unusual and the firms underlying recurrent costs are lower as the number of employees has decreased. It is possible that some effective cross-subsidy of other Viridian plc subsidiaries by NIE may have also taken place.

2.21 In the context of an increasingly competitive market, fair and open competition may only be achieved by a complete separation of Transmission System Operation and Power Procurement. Separating these activities could incur legal and facilitation costs that may be of the order of £500,000. It is estimated that this would be paid back in lower costs to consumers within two years. The NIE Power Procurement Business’s role as provider of wholesale electricity to both licensed suppliers and to the NIE franchise supply business are incompatible. The avoidance of (or a perception of) a conflict of interest would require a Transmission System Operator Business clearly independent of NIE and of Viridian plc (NIE’s owner) and a Power Procurement Business prohibited from competing with "second tier" suppliers in the market. The market is more likely to operate properly if the Power Procurement Business trades the contracts it holds in the public interest.

2.22 The Transmission System Operator Business should be responsible for market facilitation so as to avoid uncompetitive access to grid and interconnector capacity. There should also be a high ratio of interconnector capacity to peak-demand market size to ensure that interconnection is sufficient to provide true competition in the market. As system security and fuel diversity in electricity supply are public policy goals that are unlikely to be satisfied solely by the mechanisms of the market, ensuring diversity and security objectives set by OFREG are met should be a responsibility of the Transmission System Operator. Such a body may be best set up as not-for-profit trust operating in the public interest. The Northern Ireland market, of itself, could not support a Nordpool type arrangement (OFREG, 2001) however this may be a feasible option for a longer- term all-island market interconnected to wider European markets.

2.23 A proposal has been presented to OFREG for the conversion of Kilroot Power Station to generate electricity from Orimulsion, a fuel from Venezuela compromised of bitumen mixed with 30% water and a small amount of surfactant. Two UK power stations, Richborough in Kent and Ince in Cheshire have used Orimulsion but neither had modern pollution abatement technology. As upgrading was not considered commercially viable both stations closed down.

2.24 The Kilroot proposal would safeguard the jobs of those employed at the plant until 2024 and provide both physical and price diversification from natural gas. This will promote a competitive market which, if appropriately regulated should result in lower electricity prices for consumers.

2.25 This proposal presents environmental and economic challenges. The conversion to Kilroot will require the installation of a flue gas desulphurisation plant. This will require an estimated 150,000 tonnes of limestone per annum which will have environmental impacts both in quarrying this material and its transportation to Kilroot.

2.26 It is accepted that the use of Orimulsion combined with a desulphuristion plant will lead to a significant reduction in the level of greenhouse gas emissions. Concern remains however that current abatement technology may be inadequate to deal with fine particulate emissions such as Vanadium and Nickel. As Orimulsion will be delivered to Kilroot by tanker some environmentalists have expressed concerns about the impact of any leakage of the fuel into Belfast Lough.

2.27 The potential economic viability of Orimulsion firing at Kilroot must be the subject of a full and public scrutiny. The Orimulsion proposal to OFREG included the continuation of the generation contract to 2024 and the passing on of potentially higher Orimulsion costs to the consumer. There is also a concern about the impact of the use of this fuel on the growth of green sources of energy such as wind and wave power. Any potential use of Orimulsion as a fuel should not be allowed to curtail the development of renewable energy sources.

2.28 Any proposal to convert Kilroot should be the subject of a rigorous environmental impact assessment and economic appraisal. Both these studies should be carried out in public and the final decision taken by the Northern Ireland Assembly.

2.29 In the implementation of the EU Directive on Electricity Market Opening in Northern Ireland, the "opened" share of the market relates to large commercial and industrial electricity users and does not bring any immediate benefits to domestic customers. In Northern Ireland, in order to free up an initial 32% of the 35% generation required by the EU Directive, and to concurrently reduce the price of this percentage for large users, the generation cost difference (i.e. the cost below the power procurer’s contract price at which the electricity was sold on) was re-allocated across domestic customer tariffs. This prevented any reduction in domestic consumer prices. At the time this was not declared publicly. Such cross-subsidy should not have been permitted and represents a serious failure of regulatory processes.

2.30 This failure was due to the under resourcing of bodies like the Northern Ireland Consumer Committee for Electricity which had only 2 days paid time per week for its complete remit. It should be noted that the failure of the regulatory process to protect domestic electricity consumers in Northern Ireland is not OFREG’s fault (and indeed OFREG has pursued the NIE price control issue with remarkable tenacity) but rather an inevitable consequence of iniquitous initial price control set at the time of privatisation.

2.31 There is nevertheless a need for strong consumer advocacy independent of OFREG in order to ensure that the process of regulation is itself subject to challenge. Energy forms part of the remit of the General Consumer Council and legislation is being prepared to add electricity to its remit. However there needs to be a very serious upgrading of capacity in order to achieve the level of scrutiny required to protect consumers. The General Consumer Council should also act jointly with appropriate bodies in the Republic of Ireland to ensure that interests of consumers are considered fully in the development of an all-island energy market.

2.32 Introducing provisions similar to those in the Utilities Act introduced in England and Wales in 2000 would provide customers with added protection. The Utilities Act requires accountable and transparent decision- making processes with the emphasis on consumer protection. The adoption of similar legislation in Northern Ireland would prevent the cross-subsidy of commercial and industrial customers by domestic consumers. Legislation to introduce such an act would strengthen the proposed role for the General Consumer council for Northern Ireland.

2.33 In Northern Ireland, incomes are smaller (than in Great Britain) and consumers spend a greater proportion of their income on fuel. An estimated 170,000 or 28% of households in Northern Ireland are in fuel poverty (Anon, 2001). This is caused by low incomes (often arising from low pensions, unemployment and/or a dependency on social security benefits), higher fuel prices, little or no fuel choice and the inability to afford energy efficiency measures. The fuel-poor need well-insulated homes with efficient heating systems. In the latter respect the introduction of natural gas has had significant benefits for those who have been able to avail of it. It has been indicated that householders previously paying £17 per week in winter for coal, have with the introduction of natural gas central heating, now been paying only £6 per week to have their whole house heated. The Committee recommends the establishment of a Ministerial taskforce on fuel poverty. The introduction of provisions similar to those in the Utilities Act (in England and Wales) would require OFREG, the General Consumer Council and energy suppliers to have due regard to the needs of those living on low incomes.

2.34 The Domestic Energy Efficiency Scheme has since 1995 provided loft insulation, draught-proofing and energy-use advice to households in receipt of means-tested or disability benefits or occupied by people over sixty years of age. 15,000 homes have received Domestic Energy Efficiency Scheme grants each year costing a total of £2.6million. The Department for Social Development issued a consultation paper on the future scope of the scheme in July 2000. At present NIE is required to collect an average £2 per customer each year to invest in energy efficiency projects overseen by the Energy Saving Trust. The amount collected is proportional on electricity usage and is collected from all domestic and business consumers. In 2000-2001 about £1.3 million was thus collected, of this about £1.05million was used to address fuel poverty. The new version of the Domestic Energy Efficiency Scheme will be supported by £600,000 of the £1.05million which was previously allocated entirely to the alleviation of fuel poverty. The remaining £450,000 will remain for specific fuel poverty projects. Many fuel poor are also beneficiaries of the Domestic Energy Efficiency Scheme, however careful evaluation of this change needs to be made to ensure that its effect is not reduce funds specifically to households in fuel poverty.

2.35 The Committee wish to draw the Assembly’s attention to the submissions made by the General Consumer Council and the Northern Ireland Consumer Committee for Electricity (see Volume 3). The Committee sees great merit in these proposals and would recommend that the Department seriously consider the recommendations made.

2.36 Collecting an average of £5 per customer per annum as recommended by the Northern Ireland Assembly would increase this fund to £3.25 million each year. It is estimated that with these resources available, it would be possible to achieve the desirable goal of eradicating fuel poverty in Northern Ireland in ten to fourteen years. A major benefit of this would be lower costs incurred by the health service in treating illnesses arising from poor living conditions. As reducing these costs sooner would reduce health service costs, the UK Treasury should give consideration to matching the £3.25million per year so that fuel poverty is eliminated in five to seven years. In tandem with moving to the £5 level, it is important that action is taken by the Construction Industry Training Board to ensure that adequate numbers of well-trained personnel are available to carry-out building remediation to consistently high standards.

2.37 There are proposals that seek to develop lignite deposits near Ballymoney and near Crumlin. The advocates of both projects highlight that the available reserves of low sulphur lignite could provide a price-stable diversification of the fuel mix for electricity generation in Northern Ireland. Though modern "clean-coal" electricity generating plants emit fewer emissions than past coal-fired plants, they still produce far higher carbon dioxide emissions when compared with gas or renewables (Norton, 1999). Neither project is beyond initial planning and, if progressed, would not produce power for at least three years. The destruction of plant and bird habitats by surface strip mining of peat or lignite could incur major adverse environmental impacts. These would need careful evaluation as part of an open and thorough public examination of all aspects of specific detailed proposals. There is no case for any distinctive market intervention measures to provide particular support for these initiatives. The proposers should be required to demonstrate both commercial and environmental viability and support from the local community.

2.38 Licenses were granted in 1996-99 for natural gas exploration in the Mullaghmore and Dowra (where gas was first discovered 38 years ago) tight gas sands underlying Fermanagh in Northern Ireland and Leitrim in the Republic of Ireland. Eighteen years ago four wells, two each in Fermanagh and Leitrim, produced gas finds. For technical, logistic and market-price reasons, the gas field was not then considered to be viable commercially. The present US-based co-licensee owns and operates natural gas production fields located in similar tight gas sands in Kansas and Utah in the United States. They are of the view that they have the experience and technology to exploit successfully such low-volume but longer-term marginal gas fields. Either a gas pipeline or a local gas fired power station would be required if the volumes of gas available were viable.

2.39 The 7.5% royalty and higher corporation tax levied in Northern Ireland would have the effect of making otherwise comparable gas volumes found in the Republic of Ireland more attractive to exploit first. It is estimated that it would require at least ten years to develop a network of well bores and gas systems sufficient to operate a 110MW electricity generating plant. As all drilling is deep underground and requires relatively small permanent installations, the environmental impact could be kept to a minimum. Again there is no case for any distinctive market intervention measures to provide particular support for these initiatives. The proposers should be encouraged to proceed to see whether they can demonstrate commercial and environmental viability and support from the local community.

2.40 The Committee are content to await the outcome of the Department of Enterprise, Trade and Investment’s consultation on the paper titled "Towards a New Energy Market Strategy for Northern Ireland" before arriving at any conclusions on the different options which could be employed to help reduce the high electricity prices in Northern Ireland. The Committee urges the Minister to ensure that all different options are vigorously examined to ensure the best outcome for consumers.

2.41 Responsibility for consumer protection with respect to utility-supplied energy supplies should be returned to the General Consumers Council. It should be adequately resourced with expertise to be able to be an effective challenger across the full breadth of the complex issues involved and, liasing with others, in the context of an all-island energy market. Public scrutiny and stewardship of consumer interests would be provided by adoption of measures similar to those of the England and Wales Utility Act.

2.42 No cross-subsidy of large energy users by domestic customers should be allowed.

2.43 Future fossil-fuel power generation in Northern Ireland should not be underwritten by long-term contracts.

2.44 A complete separation of Transmission System Operation and Power Procurement is recommended.

2.45 There should also be a high ratio of interconnector capacity to market size to ensure effective competition in the market.

2.46 The Committee believes that because of the potential reduction in electricity prices and greenhouse gas emissions the use of Orimulsion should be retained as an option for electricity generation in Northern Ireland. Any proposal to convert Kilroot should be the subject of a rigorous environmental impact assessment and economic appraisal. Both these studies should be carried out in public and the final decision taken by the Northern Ireland Assembly.

2.47 The Committee agree with the Assembly recommendation that the Energy Efficiency Levy be increased to an average of £5 per customer per annum. The funds thus generated together with a matching Treasury contribution should be earmarked primarily to concerted action to eradicate fuel poverty entirely. The Committee further recommends that the outcomes of the Energy Efficiency Levy should be accurately measured to ensure maximum benefit to the fuel poor.

2.48 The establishment of a Northern Ireland Cross Departmental Ministerial taskforce on fuel poverty which should be time limited and include all relevant bodies. They would prepare a strategy which would assess fuel poverty, draw-up an action plan, work towards co-operation on action, funding and identify and promote best practice from around the world and locally. In this respect the Committee acknowledges the work carried out by Northern Ireland National Energy Action and Armagh and Dungannon Health Action Zone’s Energy Efficiency Zone Project.

2.49 The Committee recommends greater transparency with regard to any funding made available for the purpose of price reduction.

2.50 No specific measures should be introduced to encourage the exploitation of either indigenous lignite or peat resources.

2.51 OFREG should undertake a detailed examination of whether there has been cross-subsidy of Viridian plc subsidiaries by NIE and take appropriate action if unwarranted profits have been taken from transmission and distribution activities.

2.52 The Coolkeeragh Combined Cycle Gas Turbine electricity generation project should proceed.

3.1 Energy costs to an end-user are the product of the price paid and the amount of energy used. The latter can be reduced by more efficient end-use or substitution by demand-led renewable and ambient energy sources. Though it is estimated that energy consumption can be reduced by over 20% by economically viable measures. Both domestic and commercial consumers have limited energy choices and incomplete knowledge with which to consider seriously capital investment that would reduce recurrent expenditure on energy. Decisions are thus made without consideration of long-term costs. Consumers do not pay for negative impacts on natural and urban environments and are largely unaware of the taxation costs incurred in meeting other externalities of present energy use. Equally, where for economically viable energy-saving products the initial cost is high, consumers continue to make imperfect economic choices. Consequential high-energy consumption levels are not the least-cost option economically or environmentally.

3.2 The minimum possible energy required in most domestic and commercial contexts is a consequence of prior decisions made regarding building form and specification, urban planning, energy supply infrastructures and the specification and operation of appliances and industrial processes. A builder acting within building regulations, for example, determines the minimum amount of energy required to heat a home. The developer decides usually how well insulated, beyond the needs of regulatory compliance, the home will be and often what type of heating equipment will be installed. The estimated up-to 145,000 new dwellings needed in Northern Ireland by 2010 (Anon, 2000a) will require the same amount of energy and produce the corresponding amount of greenhouse gases per annum every year for the 40-80 years they will be in use after their construction.

3.3 Building regulations in Northern Ireland have tended to follow with an unwarranted delay in time those of England and Wales. In view of the particular energy price context in Northern Ireland, it is thus essential that building regulations include enhanced provisions (beyond those for England and Wales) for energy conservation. This together with a less-conservative design and construction client culture would enable many innovative energy saving or solar energy harnessing building fabric components to find widespread use. Joint financial mechanisms between builders, utilities and lending institutions should be developed which encourage energy efficient design and construction, for example, "energy saver mortgages" in which the energy cost savings are included when determining mortgage terms. An alternative could be for the cost of equipment and upgraded building fabric to be paid as part of subsequent energy bills. Energy rating should be linked with the rateable value of the property with a threshold property value to avoid penalising the fuel poor.

3.4 A producer’s view of energy is at variance with how the use of energy is seen by most consumers. For example, when hot water is drawn from a tap, the user is usually not actively aware of which fuel has been used to heat the water. The consumer is concerned with the end-product, that is the ultimate "energy service" required. An energy service approach lowers energy consumption because it considers complete energy conversion systems, not just fuels and electricity. Despite the higher profile given to supply-side regulation, OFREG has been aiming to create an "energy service" regulatory framework for NIE that gives it incentives to install energy efficiency measures for consumers. This is to be encouraged, as it allows that same end-use amenity to be achieved at a lower cost to the consumer, with less detrimental environmental impact and reduces the need for new energy supply capacity. Existing buildings contribute 30% of total energy use and there is a plethora of measures that can be adopted now without changing building design. Such measures are also critical to the alleviation of fuel poverty.

3.5 "A" labelled fridges, freezers, washing machines and tumble dryers incur 50% of the energy use of comparable "G" labelled appliances. Similarly condensing boilers produce heat and hot water more efficiently than comparable conventional boilers. When the initial cost of energy-efficient appliances is comparable to their less-efficient counterparts the operational savings may be sufficient to stimulate consumer demand for such systems. If that initial cost is higher this is often sufficient to inhibit initial purchase even if overall financial savings still accrue. As a result it is estimated that energy-efficient appliances constitute less than 20% of the Northern Ireland market. It is therefore essential that concerted action is taken by the Department of Enterprise, Trade and Investment to both raise public awareness of appliance energy labelling and to ensure that this is underpinned by appropriately competitive retail prices for "A" labelled appliances.

3.6 Combined heat and power can achieve a 35% reduction in primary energy usage compared to conventional power stations and heat only boilers. All new gas-fired power stations should be combined heat and power stations. In situations where there is an appropriate balance that can be achieved (often by projects extending beyond the traditional physical boundary and business scope of a single enterprise or organisation) between the heat and electricity loads, substantial savings can be made on energy costs. Evidence from Phoenix Natural Gas indicated that the "Minigen" domestic combined heat and power system should be available in 2003. This system, no larger than a conventional domestic boiler, produces electricity, heat and hot water from a domestic gas supply. Progress in the adoption of combined heat and power should be encouraged with the introduction of the Climate Change Levy.

3.7 The use of domestic waste should be given further consideration as a fuel source for combined heat and power. In Denmark, where a district heating infrastructure exists, relatively small municipal waste incinerators, such as that at Knudmosevaerket, which treats 39 kT of waste per annum, operate economically. Strategic process issues are also important, for example the efficient transport of waste to an incinerator and domestic waste pre-sorting. Danish experience with the latter can improve the energy content of municipal waste from 9.4 GJ/T to 12.5 GJ/T (Ortenblad, 2000). Given the extensive international experience with this mode of waste disposal, it may be possible for this process with optimised heat sales to be both economically viable (particularly given the high and rising costs of landfill) and also provide environmentally-acceptable waste transport and combustion products emissions impacts. At present 15MW is produced from a sewage sludge incinerator in Belfast.

3.8 Industrial energy efficiency measures that can be implemented include more efficient lighting, boilers, furnaces and motors, improving the controls on these, the installation of heat recovery systems to industrial plant and the use of combined heat and power. Interest-free loans are available from the Department for Enterprise Trade and Investment’s Industrial Research and Technology Unit of up to £30,000 for manufacturing companies and £25,000 for non-manufacturing companies to support the implementation of energy efficiency measures with simple payback periods of up to five years. A further £0.9million of Carbon Trust funds will be available in Northern Ireland to conduct relevant research and development and promote energy efficiency. Though electricity consumption per unit gross domestic product in Northern Ireland decreased by 2% in the period 1990 to 1998, it is unclear whether this is due to more efficient end-use, changes in industrial processes, a shift to less energy-intensive industries or switching from electricity to other fuels.

3.9 Improving energy efficiency needs to be holistic and address energy used in transport. Transport accounts for over 22% of Northern Ireland energy consumption. All conventional transport fuels are non-renewable. The non-sustainable combustion of transportation fuels accounts for a large proportion of emissions of carbon dioxide and nitrous oxide. Measures should be taken to move people to less energy-intensive modes of transport. Urban and suburban growth has turned away from compact mixed use, towards lower density with a separation of commercial and residential areas. Rethinking development is fundamental in achieving energy efficient transportation.

3.10 This also would have positive implications for air quality, greenhouse gas emissions and land use. By encouraging mixed use and higher density, the necessity for many car trips may be shortened or eliminated. More emphasis on public transport use would then be feasible.

3.11 Building more roads and bridges does not, in the longer term, reduce overall congestion - in fact it leads to increased demand that, in turn, leads to increased congestion. Specific measures to promote more energy efficient modes of transport include encouraging developers to make better use of inner city sites, more bus lanes, more facilities for cyclists and the feasibility of charging tolls for roads and bridges. The use of renewable energy is also applicable to transport. Wind generated electricity has been used to power a small number of electric vehicles in Northern Ireland under the Energy Saving Trust’s "Powershift" initiative and successful trials have taken place with Translink involving a bus powered by bio-diesel manufactured from used vegetable oil.

3.12 Under the Kyoto Protocol the UK Government has a commitment to reduce the emissions of a basket of greenhouse gases, including carbon dioxide, by 12.5% of the 1990 level by 2008-2010. In addition the UK has a domestic target to reduce carbon dioxide emissions by 20% of the 1990 levels by 2010. Over 60% of Northern Irelands greenhouse gas emissions arise from the production and use of energy, with 36% arising from electricity generation. Greenhouse gas emissions can be reduced by a combination of the use of modern gas fired electricity generating plant, the use of renewable forms of energy directly and to generate electricity and the reduction of demand by more efficient use of energy. The need for high profile role models is crucial to stimulate public awareness and enthusiasm. In this respect the Executive and the Assembly should continue to audit rigorously its own energy consumption and take the lead in radically reducing energy consumption and striving to be powered entirely by renewables. This would continue the commendable initiatives already underway.

3.13 Part of the problem of raising awareness of energy efficiency is that environmental damage has not been included in energy costs. The Climate Change Levy provides the means to grant-aid supporting initiatives in which levy and grant-aid, form a closed-loop that returns grant aid to those levied in a way that selectively encourages conservation, sustainable supply and reduces energy costs. The introduction of the climate change levy on the 1st April 2001 increased the price of electricity for industrial users in Northern Ireland by 0.43p per kilowatt-hour. This is approximately a 5% to 10% increase depending on applicable tariffs. This levy is offset by a 0.3% reduction in employers’ National Insurance Contributions and is thus fiscally neutral. This does not mean that it is financially neutral to any particular employer as the cost of energy per employee varies widely. Intensive energy users can obtain up to 80% discounts on the levy. There is a five-year derogation on the levy for natural gas in Northern Ireland to facilitate the expansion of its use. Even this five years derogation would not however benefit consumers outside the present gas licence area as construction of any extensions to the network would not be complete by then.

3.14 A period of derogation of ten years would be an appropriate market development measure. Companies who sign up to energy efficiency agreements should be given a rebate on the climate change levy. As renewable energy generated electricity is exempt from the levy it constitutes a modest incentive for businesses to contract for green electricity supplies, such as the eco-energy tariff offered by NIE. The price of energy from modern wind energy electricity generators is competitive with tariffs for fossil fuel generated electricity that include the Climate Change Levy. There are approximately 50,000 small to medium-sized enterprises that could avoid paying the Climate Change Levy by taking their supply on the eco-energy tariff or directly from a renewable energy generator. The latter case, with appropriate load-to-supply matching (as is planned, for example for the Fivemiletown biogas scheme) could lead to lower overall energy costs. Any domestic or non-domestic electricity customer can purchase renewable electricity from any renewable generator anywhere on the whole island. A lack of the introduction of a similar levy in the Republic of Ireland inhibits the creation of an equitable all-island energy market.

3.15 Between 1991 and 1996 there was a growth from 24% to 42% in houses centrally heated using oil (Anon, 1997a). This change coincided with a period of low oil prices. Oil prices are however prone to sudden volatility owing to international variations in supply and demand compounded by changes in the sterling to dollar exchange rate. In February 2001 900 litres of heating oil cost typically £190, in February 1999 it was only £93. Oil represents useful diversification in the present Northern Ireland fuel mix however an over-reliance on oil is to be avoided.

3.16 While the committee recognises that we do not have any influence or control over the international oil market, we believe that serious consideration should be given to the regulation or other form of control on domestic oil distributors. Both electricity and gas providers have obligations to meet in respect of low income, vulnerable and other customers, and the supply, billing, range of payment methods, energy efficiency etc of these fuels is regulated. This is not the case for oil, and it would be beneficial to see a range of measures developed for the oil industry to ensure that low income households and other vulnerable households are not disadvantaged in putting oil into fuel poor dwellings.

3.17 As with renewable energy, highly publicised role models are essential to demonstrate the practicality and benefits of energy demand reduction. Good examples already exist. It is noted that Banbridge District Council, for example, between 1994 and 2000, reduced its energy consumption by 15% producing a 9% reduction in energy costs.

3.18 The five-year derogation on the climate change levy for natural gas in Northern Ireland should be extended to ten years. Companies who have met energy efficiency targets should be given a rebate on the climate change levy.

3.19 The Executive, the Assembly and Local Authorities should continue to audit rigorously their own energy consumption and takes the lead in radically reducing energy consumption and striving to be powered entirely by renewable energy.

3.20 Northern Ireland Building Regulations should be amended to include major improvements and minimum standards in the provisions for energy conservation.

3.21 Joint financial mechanisms between builders, utilities and lending institutions should be developed which encourage energy efficient design and construction.

3.22 Energy rating should be linked with the rateable value of the property with a threshold property value to avoid penalising the fuel poor.

3.23 Concerted action should be taken to both raise public awareness of appliance energy labelling and to ensure that this is underpinned by appropriately competitive retail prices for "A" labelled appliances.

3.24 The use of domestic waste should be given further consideration as a fuel source for combined heat and power.

3.25 Waste minimalisation and energy reduction in business should continue to be encouraged in start-up programmes.

3.26 All new gas-fired power stations should be combined heat and power stations. A presumption in favour of combined heat and power plants when awarding contracts would help achieve this. Combined heat and power plants should also be a condition for planning approval for large developments, hospitals, industrial estates etc.

4.1 Renewable energy may be supplied to the end user by: supplying complementary distributed demand-side energy services (e.g. solar water heating), supplying thermal energy and electricity services to those not connected to the electricity grid or natural gas distribution system, producing energy for vehicles, and supplying to the electricity grid. Complementary energy services, such as solar energy, are effective in the form of passive solar heating, providing daylight and ventilation of buildings, active solar water heating and via photovoltaic technology to provide electricity. Renewable energy can also be supplied to the grid by wind energy, wood biomass, hydro electricity and photovoltaics.

(a) The need to distribute energy reduces when energy production is located near the point of use and matched in scale to the end-use. This increases efficiency and reduces environmental impact. Finding appropriate matches means planning from the bottom-up rather than, at present, the top-down. For example: building energy use is small scale and, in rural areas, is dispersed; solar energy is also dispersed and well-suited to building applications. Distributed renewable energy technologies (for example, a solar water heater) have generally high initial capital costs that are offset by low operating costs.

(b) The cost of borrowing is high to small developers and homeowners. Without price guarantees contracts, or other incentives (for example "cash-back" schemes for solar water heater installations) the high cost of capital would inhibit private investment in renewable energy even when the total cost over the life of the system is less than fossil-fuelled sources. The rapid pace of the technical development and commercial exploitation of renewable energies continues to reduce costs and increase the number of equipment suppliers and plant operators. The strong evidence is that these trends will continue rendering available assessments of the renewable energy potential in Northern Ireland (Anon, 1999b) that were conservative when originally produced, now largely out-of-date. The long-term and profitable electricity generator contracts have rendered the Northern Ireland electricity industry largely unable to grasp willingly the opportunities that renewable energy presents for greater fuel diversity, security and geographical dispersion of supply.

4.2 It has been estimated that 182% of the predicted electricity consumption by 2005 could be met technically by offshore wind generation (Anon, 2000b). Even a more conservative projection, more mindful of likely economic viability, estimates that 32% of the electricity consumption of the whole island could be met by offshore wind energy (Anon, 2000). Given these possibilities it is essential that rapid progress be made with the development of the offshore wind resource. In this context it is practicable that, at the very least, 10% (i.e., 130 MW of electricity could be provided readily by renewable energy source by 2010. When introduced in Great Britain, the Utilities Bill will place a requirement on all electricity suppliers to contract to provide at least 10% of their electricity from renewable sources by 2010. Similar legislation should be adopted in Northern Ireland. Wind has become a means of electricity generation competitive commercially with all but large gas-fired power stations in Northern Ireland. In addition wind energy has no carbon dioxide emissions associated with electric power generation (and only minor emissions are incurred in their manufacture and installation (Norton 1999)) and thus has an important role in reducing overall emissions as part of a diversified generation mix.

4.3 The cost of renewable energy electricity generation in Northern Ireland has decreased significantly. Successful tenders (six wind and nine small-scale hydro totalling 12.664 MW and 2.374 MW respectively) to provide the non-fossil fuel obligation in 1993 secured an average price of 6p/kWh. In 1996 the price paid to successful tenderers (for 15MW comprising wind, small-scale hydro, waste incineration, landfill gas, biogas and biomass) has reduced to 4p/kWh. The trend is for renewable energy electricity prices in Northern Ireland to reach the 3p/kWh paid for electricity generated from fossil fuels. The price of energy from modern wind energy electricity generators is competitive with tariffs for fossil fuel generated electricity that include the Climate Change Levy. Appropriate measures need to be adopted that publicise and encourage the take-up of renewable energy generated electricity by commercial customers.

4.4 At present some 60% of electricity is produced from gas in Northern Ireland whereas only 38% was for the United Kingdom as a whole. It has been suggested that the UK is likely to become a net importer of natural gas by 2005. In that eventuality increased price volatility and less assured security of supply become probable. In this context a strong renewable energy electricity capacity would be a prudent strategic underpinning for economic development. To meet overall carbon dioxide emissions reduction targets, the carbon content of electricity needs by 2020 to be nearly half present levels. To achieve this, clear plans must be put in place to achieve a target of at least 35% of electricity from a range of renewable sources by 2020. An intermediate goal of 15% by 2010 would be challenging yet achievable. Whist wind generation has been the foremost form of renewable energy employed to date to produce electricity, if peak loads are to be met with certainty when wind speeds are low then energy from biomass would need to be a significant proportion of the mix (Bryans, 2001).

4.5 The fundamental economics of most renewable sources of energy are different from those of the use of fossil fuels. For the latter there is an initial outlay for the generating plant and then regular subsequent outlays for the cost of fuel and labour. These costs are more than offset by the income received from supplying electricity. The surplus goes to service the initial cost of the generating plant and to profit. For wind, photovoltaic, solar thermal and hydropower energy systems there is a much higher initial cost, far lower running costs and, of course, no fuel cost. The length of time over which the initial capital cost can be serviced is a dominant determinant of renewable energy costs. For example wind energy electricity costs are lower if for a plant with, say, a thirty-year initial life, the cost could be spread over those thirty years rather than, say, fifteen. For these reasons wind energy electricity generators prefer long-term supply contracts.

4.6 High price contracts for fossil fuelled electricity generation have created a wariness of any form of long-term generating contract in Northern Ireland. However, because of technological fundamentals, it is only with long-term contacts that low-cost renewable energy generated electricity supply can develop in Northern Ireland. Indeed long-term contracts themselves reduce the cost of renewable electricity as they lower the cost of capital. With rising fossil fuel prices, contracted renewable energy electricity capacity represents a hedge against inflation. In return for such commercial security for renewable generators and to ensure that there is not a repetition of the mistakes of electricity privatisation, if long-term contracts are to be let that they should be (i) low price (by 30 year contracts, covering a greater part of the envisaged system life), (ii) allow prices to be reduced further (probably by some profit-limiting clause) and (iii) allow full scrutiny of detailed accounts. Low-interest loans should also be provided to renewable energy electricity generators. It is noted that mechanisms for the latter have been the subject of discussions between OFREG and the European Investment Bank.

4.7 In Great Britain, DTI announced grant support programmes for renewable energy projects, including £39 million for offshore wind. The New Opportunities Fund also identified £50 million for renewable energy projects including offshore wind, energy crops and biomas. Department for Environment, Food and Rural Affairs is the lead Great Britain Department on energy crops and biomas. The extension of these market stimulation mechanisms to renewable energy in Northern Ireland is highly desirable.

4.8 OFREG proposed in September 2000 (OFREG, 2000), a Renewables Obligation (similar to that introduced in Great Britain by the Utilities Act) is a sensible approach for ensuring that adequate supplies of renewable energy are developed to achieve the targets of 5% of supply by 2005 and 10% by 2010. A Renewables Obligation provides a support framework in which market forces determine the price and demand is stimulated by government. A fixed price will be established, at which suppliers can buy out their Obligation in the form of tradable "renewable energy obligation certificates" (ROCs). ROCs are also referred to as green energy certificates.

4.9 It is noted that the Department of Enterprise, Trade and Investment have consulted regarding the introduction of a Renewables obligation in Northern Ireland. Although a Renewables Obligation could form an important mechanism to develop the renewable energy market careful implementation and regulation is required to ensure that it does not have precisely the opposite effect. Renewable energy capacity is at present small and most technologies have yet to gain the operational and market scale efficiencies in Northern Ireland that have enabled on-shore wind generators to reduce so significantly the price at which they generate electricity.

4.10 If only such currently low cost providers were able to take advantage of a renewables obligation further adoption of equally promising but less mature technologies (e.g., off-shore wind and biogas) could be stymied. This could result in potentially higher renewable energy generated electricity prices in the long-term and sub-optimal exploitation of the diversity and geographical spread of available renewable energy resources in Northern Ireland. Similarly a large take up of renewable energy generated electricity capacity by a renewables obligation could prevent the ambitious target for take up of the Eco-energy tariff from being achieved. As noted frequently in this report, to prevent such distortion of the market against the long-term public good requires a strong interventionist regulatory body.

4.11 To allow electricity supply companies in Great Britain to source the lowest cost renewable energy with which to meet their renewable energy obligation they will be able to trade ROCs. It would aid the development of Northern Ireland renewable energy electricity generators if they were able to sell their electricity to the Northern Ireland system but trade the ROC to a supplier in Great Britain, thereby allowing the latter to meet its renewable obligation.

4.12 Fossil-fuelled electricity generation is developed on an intensive scale at a small number of locations by a limited number of companies. In contrast renewable energy generation is, and will be even more increasingly, distributed widely over a large number of locations. It is also likely, and indeed desirable, that many companies will be involved. These attributes are likely to be beneficial to local economic development in rural areas, offering particular opportunities for the much-needed diversification of local small-scale agricultural engineers. However coherent land-use planning with local involvement based on local renewable energy targets need to be in place if both these local benefits and a significant overall renewable energy contribution are to be achieved. Agreed local land-use plans should define opportunities for developers to construct installations that collectively satisfy locally-specific renewable energy targets set for all parts of Northern Ireland by the Department of Enterprise, Trade and Investment in cooperation with the Department of Regional Development.

4.13 In structure plans, appropriate sites for renewable energy, particularly wind energy, development, should be earmarked. Planning and building control bodies should be pro-active in the encouragement of low energy buildings and demand-side renewable energy systems (such as solar water heating and small-scale photovoltaics) and of supply-side systems (such as larger-scale building integrated photovoltaics) located in buildings. There are some encouraging developments, for example, a project by the Northern Ireland Housing Executive, NIE and the University of Ulster on a block of flats in east Belfast will provide the first practical experience in Northern Ireland of large-scale grid-connected building integrated photovoltaics.

4.14 The NIE eco-energy tariff enables customers who wish to purchase electricity from renewable sources to do so at a small additional cost. This forms part of the UK-wide development of "green energy" tariffs (Lipp, 2001). The NIE eco-energy tariff, introduced on 20th November 1998 allows renewable generated electricity to be purchased and sold through the NIE supply business. Customers can elect to have 10%, 50% or all their electricity supplied under the eco-energy tariff. NIE matches the consumption of eco-energy tariff payers with an equivalent new renewable energy generated electricity capacity. To date 19.7GWh of new wind energy generated electricity capacity has been contracted. Under the terms of the NIE control mechanism, NIE has been committed to increase by tenfold in the next five years the sales of renewable energy generated electricity under the eco-energy tariff.

4.15 The Committee would encourage price conversion between renewable and non-renewable energy supplies over this period. This target may ironically come under pressure from the imperative that is likely to arise on suppliers to meet a renewables obligation. In the absence of a renewables obligation the NIE eco-energy tariff is the only renewable energy generation market stimulation mechanism. Scottish and Southern Energy in association with the Royal Society for the Protection of Birds has devised a similar eco-energy tariff available in Great Britain that does not involve extra charges on the customer. The take up of this has been poor, which may be due to the introduction of the Renewables Obligation.

4.16 The Renewable Energy Company, also in Great Britain, provides green energy at prices competitive with fossil-fuelled generators through an embedded supply approach. They thus avoid grid distribution costs but their customers need to be near the generation. Though little exploited, at present any domestic or non-domestic electricity customer can purchase renewable electricity from any renewable generator from anywhere on the whole island. It is noted that Airtricity supply electricity generated from wind in the Republic of Ireland at a lower price than fossil fuel generated electricity. On a trial basis NIE sold a portion of its contracted non-fossil fuel obligation to a renewable energy supplier in the Republic of Ireland.

4.17 The Department of Agriculture and Rural Development has drafted a scheme for grants to promote the establishment of willow coppices. Willow, which grows well in the Northern Ireland climate, forms a feedstock of the production of electricity from biomass. A willow gasifier at Brook Hall Estate with over 13,000 operational hours behind it is the first on-farm generation plant to come on stream under the Non-fossil Fuel Obligation and will from this year use exclusively as fuel 50 ha of short rotation coppice willow plants on adjacent setaside land (Dawson and McCracken, 2001). This development should be encouraged as it aids rural development as well as further diversifying the energy mix.

4.18 Similarly the production of biogas from agricultural and biogas wastes should be encouraged. The viability of such projects depends on the waste production streams available and would be best developed as an integral feature of new plants. The Department of Agriculture and Rural Development should take steps to ensure that those responsible for such investment decisions are kept well informed as to the availability and viability of the technology and where to go for practical advice.

4.19 A demonstration of the establishment of efficient reliable smaller-scale on-farm bio-gas use in Northern Ireland is also required as a spur to the development of this, potentially viable, activity. A 1MW electricity combined heat and power biogas plant proposal for a farmers’ cooperative in Fivemiletown is in the latter stages of development. This £5.2million scheme, based on successful Danish experience, would use 88,000 tonne of animal and food wastes. The proposed plant would supply local businesses and schools.

4.20 It has been estimated that an additional job is created directly by each £50,000 invested in domestic energy efficiency (Anon, 1997b) and 15-19 jobs, from manufacturing the turbines through to operation of the wind turbines, are created for each 1MW of wind energy installed. The spending of those in the new jobs also creates further employment. Investment in energy efficiency and renewable energy are thus likely to create employment.

4.21 The global market for environmental goods and services is currently estimated at 335 billion dollars – comparable with world markets for either pharmaceuticals or aerospace – and is forecast to grow to 640 billion dollars by 2010. The UK renewable energy industry has a potential market worth of up to £1 billion per year by 2010 (Byers, 2000).

4.22 In marked contrast, the electricity supply, transmission and generation industries have been shedding jobs. Northern Ireland’s indigenous substantive renewable energy industries are limited to one manufacturer of solar water heaters and several suppliers and operators of wind and biomass systems. The world market for renewable energy is growing substantially and given Northern Ireland’s universities recognised R&D record in the field and consequently the availability of local expertise, there are certainly opportunities for the development of a renewable energy product industry in Northern Ireland. Many Northern Ireland firms have capabilities and production capacities cognate with various renewable energy products (e.g. glass processing, building product manufacture, airfoil sections, off-shore platforms, semi-conductors). There is a need for a pro-active approach to make relevant firms aware of the business opportunities and support for market-focussed new product development.

4.23 As with improving energy efficiency there is a need for role models to stimulate public awareness and enthusiasm. The Executive and the Assembly should continue to audit rigorously its own energy consumption and take the lead in radically reducing energy consumption and striving to be powered entirely by renewables. The offices of OFREG are 100% renewable powered. Local authorities have recognised the important role they can play, as evidenced by the use of wind energy at the Civic Centre in Craigavon and the more general take-up by local authorities of the Eco-energy tariff.

4.24 Not all renewable energy is consistent with environmental sustainability. For large or storage hydroelectric projects, the land and other resources flooded and irretrievably lost often presents an unacceptable environmental impact. The environmental impact of a hydro project is also not a direct function of its size, as small diversions of rivers and of associated eco-systems can have disproportionately adverse impacts. Particular concern has been expressed with respect to the impact on recreational fisheries of the extraction of energy from river currents. It is unlikely that exploitation of the large tidal energy resource at the Strangford Narrows would be possible without unacceptable damage to marine and bird life in Strangford Lough. Including in the urban and rural plans provision for harnessing renewable energy is advocated in this report. It is essential that environmental impacts are included fully in the development of such plans.

4.25 There needs to be a greater emphasis on publicity and incentives to encourage the production and take-up of renewable energy. We need to get to a position in which green electricity is cheaper than brown electricity. For renewable energy to work there will have to be a partnership between councils, agencies and Government Departments.

4.26 An implementation plan should be set underway to meet targets of 15% and 35% of electricity in Northern Ireland from a range of renewable sources by 2010 and 2020 respectively.

4.27 Long-term contracts should be let to renewable energy electricity generators. Such contracts would give low priced electricity and should have clauses that allow prices to be reduced further and permit full scrutiny of the generators detailed accounts.

4.28 The Committee is aware that current pricing regimes are inappropriate to encourage the renewable energy industry. The Committee recommends that OFREG consider the forthcoming findings of the Trading Renewables Implementation Group and ensure that pricing regimes facilitate supplies of renewable energy and are tailored to modern supply needs.

4.29 A requirement should be introduced in the guidelines for local area development plans to detail the location and development of renewable sources of energy.

4.30 Planning and building control bodies should be proactive in the encouragement of low energy buildings and renewable energy.

4.31 Northern Ireland should adopt the recommendations of the Department of Trade and Industry’s Embedded Generation Working Group Report.

4.32 A Renewable Energy Obligation should be introduced in Northern Ireland and consideration should be given to the potential of ongoing programmes for Non Fossil Fuel Obligation until all the targets for the use of renewable energy sources have been met.

4.33 Arrangements between OFREG and OFGEM should enable renewable energy plants in Northern Ireland to trade Renewable Energy Obligation Certificates in satisfaction of the Great Britain Renewables Obligation.

4.34 The Utilities Act 2000 covering England and Wales (and its parallel in Scotland) must be amended so that Northern Ireland renewal energy suppliers can qualify for Renewables Obligation Certificates with their counterparts in Great Britain.

4.35 Greater encouragement and information should be provided to both the take-up of grid supplied renewable energy generated electricity and greater decentralised direct use of all forms of renewable energy.

4.36 Specific support should also be provided to facilitate the development of a Northern Ireland renewable energy equipment manufacture and supply industry.

4.37 Greater attention should be paid to public information campaigns and marketing to encourage the use of green electricity.

4.38 Grant-aid should be provided to domestic consumers seeking to obtain energy from renewable sources and tax breaks should be offered to investors to encourage the use of green electricity with the aim of eventually reducing the cost of green electricity in comparison to fossil fuel generated electricity.

4.39 There should be greater partnership between councils, relevant agencies, Government Departments and the private sector in order to promote and encourage the use of renewable energy.

4.40 The Committee recommends the consideration of the establishment of a Renewable Energy Agency.

5.1 The justification for a gas extension to the north-west and the south-east is that of underpinning the conditions for social and economic development as equitably as practicable across Northern Ireland. New industrial investment may prefer to locate where natural gas is available. Average annual domestic savings are estimated at £100 per household. The full development of the existing gas licence area should provide a saving in energy costs of £20million at present prices; extension to the north-west and south-east would result in savings of at least £26million per annum. Additional benefits also accrue in reducing fuel poverty (as some of the most deprived areas of Northern Ireland could be served by natural gas), health and the environment: a fully developed natural gas network should save, excluding generation 760,000 tonnes of carbon dioxide emissions per annum. The cost of the introduction of natural gas in Belfast was reduced by rehabilitation of the old town gas network: similar networks exist in the south-east towns of Lurgan, Portadown and Newry.

5.2 The provision of piped natural gas to domestic and commercial users in the north-west and the south-east is seen as essential infrastructure no different from roads or, indeed, electricity supply. There is sufficient capacity in the Scotland-Northern Ireland Gas Pipeline to supply an extension to the north-west. The supply to the south-east is likely to be met by a South-North pipeline. The Committee therefore welcomes the Department of Enterprise, Trade and Investment’s decision to support a £60 million project proposed by Bord Gais to construct a gas pipeline from Meath to Donegal providing the first supply of natural gas to many parts of Northern Ireland. Owing to the relatively lower volumes conveyed higher prices may apply to gas provided by such a pipeline. If this were to be the case appropriate measures would need to be taken to ensure that gas prices were comparable with those in the Belfast area. The developers of the gas pipeline from Scotland to Northern Ireland and its subsequent extension to Belfast received 35% of their costs (about £59million) from the European Union. The provision of similar infrastructure funding support from the European Union for gas pipeline extensions to the north-west and south-east would follow this precedent.

5.3 A 400 MW gas-fired power station at Coolkeeragh would be likely to provide electricity at prices lower than the high levels prevailing in Northern Ireland at present, but probably only for large non-domestic users. Such a power station would also reduce present greenhouse gas emissions per unit power generated. A gas pipeline to the north-west is supported as being basic infrastructure investment, if the presence of the Bord Gais pipeline renders gas-firing the Coolkeeragh Power Station viable, then that project should go ahead.

5.4 Postalisation is a charging mechanism (similar to a single national postage rate irrespective of destination) in which all customers pay the same for energy irrespective of location. Given the low (in comparison with many parts of the European Union) population densities in Northern Ireland, unless costs are postalised, energy cost would rise in all areas except broadly Greater Belfast with consequent adverse effects on economic and social development. Although electricity tariffs vary depending on the amount and timing of use, the same tariffs prevail regardless of location. Electricity charges are thus postalised. The principal beneficiaries of a 400 MW gas-fired power station at Coolkeeragh would be industrial and commercial users. If this power station and the gas pipeline to the north-west is to be paid for by postalisation of costs then to be consistent with present practice this must be borne equally by all commercial as well as domestic consumers.

5.5 The current natural gas licence area comprises 50% of the Northern Ireland population. Pipeline extensions to the north-west and south-east would increase the availability of natural gas to 65% of the population. To finance this development grant-aid is legitimate use of public funds and approaches should be made, perhaps in common purpose with other energy-emergent peripheral regions, for such structural European Union support. Additionally, as a fully developed gas network will save at least 760,000 tonnes of carbon dioxide per annum in Northern Ireland, consideration needs to be given to setting up mechanisms that render such environmental benefits tangible as price reductions to customers.

5.6 The Committee supports the provision of a gas pipeline to the north-west and the conversion of Coolkeeragh Power Station to a combined cycle gas turbine.

5.7 Any postalisation of both gas and electricity costs must be borne equally and equitably by all commercial and domestic consumers.

5.8 Support should be sought from the European Union and other sources to meet the costs of current and future gas pipeline extensions.

6.1 When it was privatised in 1992, the NIE transmission system was self-contained. This is no longer the case, 110kV connections with the ESB transmission system have been constructed providing links between Strabane and Letterkenny and from Enniskillen to Flagford. Both links are being converted to full interconnectors. In addition in 1995 the 275kV interconnector from Tandragee to Louth was restored and work is underway to double its capacity. Taken together these three links will provide 940MW of interconnection capacity between the NIE and ESB systems. The European Union has part-funded studies for further 110kV links between the NIE and ESB networks. Overall £7million of European Union funding has been allocated to North-South electricity interconnection (Anon, 1999a). Significant constraints however remain on south-to-north power flow interconnection capacity due to weaknesses in the ESB transmission system.

6.2 Interconnectors will enable the rapid development of an all-island Electricity Market. To ensure that competitive pressures prevail to keep prices low it is essential that access arrangements for both the North-South and 500MW Moyle (linking Northern Ireland with Scotland) electricity interconnectors are completely transparent to ensure that incumbent suppliers do not secure preferential access to the available capacity. Charging mechanisms for use of interconnectors need to ensure that all users pay an equitable share of costs, including the original costs of construction. There is anxiety that under proposed charging mechanisms there could be power flowing through the Moyle interconnector to the Republic of Ireland whose cost is effectively subsidised by Northern Ireland consumers. An open consultation on the charging mechanism has taken place however continuous scrutiny may be necessary to ensure that charging mechanisms do not place further unfair burdens on Northern Ireland electricity consumers. It has been suggested that if an interconnector were to be developed between Dublin and North Wales, a market similar to Nordpool could be developed. The Nordpool market, which includes Norway, Sweden, Finland and Denmark is characterised by active supply competition, in Finland alone there are two hundred suppliers for a population of 5 million. It provides low but relatively volatile electricity prices. Participating in a similar electricity trading pool could allow generators to reduce costs by eliminating unused availability.

6.3 The second Scotland to Ireland gas pipeline makes its landfall at Gormanstown in Co. Meath. This means that if a pipeline from Gormanstown to Belfast were constructed, the predominant gas flow in the pipeline will be from south to north (counter to the recommendation in Vision 2010 (Anon, 1999a)). Such a pipeline would supply Newry, Banbridge, Portadown, Craigavon and Lurgan. The South-North pipeline would provide another point of entry of natural gas into Northern Ireland. This reduces the potential for very substantial disruption now present from dependence on a single Scotland-NI pipeline. Similarly an all-island "loop" pipeline could link the Corrib gas field, off the coast of Mayo, and aid exploitation if viable gas volumes were found to be extractable in Fermanagh and Leitrim. In February 2001, the Department of Public Enterprise announced that a gas pipeline would be built to Mayo thereby bringing the possibility of an all-island loop closer to practicality. The economic viability of both the South-North pipeline and an all-island loop may be affected adversely if there are relatively low throughput volumes. Earlier proposals for a North-to-South gas interconnector were abandoned, as they were reliant on a large gas-fired power station user in Dublin.

6.4 The Department of Enterprise, Trade and Investment in partnership with the Department of Public Enterprise have initiated a report on the energy sectors in Northern Ireland and the Republic of Ireland. A specific emphasis of this study is to determine the opportunities and benefits of an all-island energy market. The emergence of an all-island market may provide lower costs to consumers. However the successful realisation of the goal requires close alignment of market regulatory regimes. In addition there would need to be appropriately regulated open and transparent joint planning and co-ordinated investment in, and apportionment of costs of (whether by postalisation or other means), both electricity and gas transmission infrastructures across the whole island. There needs to be a strong champion to ensure that consumer interests are represented vigorously. The potential benefits and practicalities of a single all-island Transmission System Operator would be worthy of detailed examination.

6.5 The integration of Northern Ireland into larger electricity and gas markets does not guarantee lower energy costs. Experience to date with the existing gas interconnector illustrates this. Northern Ireland electricity prices rose in 2000 because of increases in the price of gas which in-turn resulted from UK gas, which prior to market regulation changes, could only be sold in the UK, now being sold for higher prices to continental Europe. Similar effects on electricity prices could arise from an over-dependence on the Moyle interconnector.

6.6 If otherwise comparable gas volumes were found in the same gas field that underlies Leitrim in Republic of Ireland and Fermanagh in Northern Ireland, the 7.5% royalty and higher corporation tax levied in Northern Ireland would be likely to make it more attractive to invest in the Leitrim field. Similarly the lack of a climate change levy in the Republic of Ireland also presents differing market signals and incentives. Whilst the effect of these may be hypothetical and, in reality, may be overwhelmed by many other factors, it is important that appropriate joint regulation seeks to ensure a fair and equitable all-island energy-trading environment.

6.7 To ensure that an all-island energy market would have the potential to bring significant benefits to consumers there would need to be adequate electricity and gas interconnector capacity, common approaches both to the applicable fiscal regimes and charging policies and effective regulation with strong consumer protection.

6.8 Active consideration should be given to establishing a single transmission system operator across the all-island market.

6.9 Charging mechanisms for use of interconnectors should ensure that all users pay an equitable share of share of costs, including the original costs of construction.

6.10 The Executive should investigate the possibility of abolishing the Government royalty tax and reducing the differences in corporation tax between the Republic of Ireland and Northern Ireland to enable companies to trade in a fair and equitable all-island energy market.

Anon, The 1996 House Condition Survey, Northern Ireland Housing Executive, 1997a.

Anon, Warm Homes and Energy Conservation – A Costed Strategy, Association for the Conservation of Energy, Spring 1997b.

Anon, Vision 2010 – Energy Action Plan. A consultative document. Department of Economic Development, July 1999.

Anon, Renewable Energy in the Millennium, the Northern Ireland Potential, Department of Economic Development and Northern Ireland Electricity, June 1999b.

Anon, Shaping Our Future. Draft Regional Strategic Framework, Department of Regional Development, 2000a.

Anon, Assessment of Offshore Wind Energy Resources in the Republic of Ireland and Northern Ireland, Department of Enterprise, Trade and Investment and Department of Public Enterprise, October 2000b.

Anon, The UK Fuel Poverty Strategy. Consultation Draft. Department of Environment, Transport and the Regions, February 2001.

Bryans, L., Embedded Generation Issues for NIE, Proceedings of Conference "Renewable Energy for Maritime and Island Climates", Belfast, September 2001, 67-72.

Byers, S., Speech by the Secretary of State for Trade and Industry. Greenpeace Business Conference, London, October 2000.

Dawson, W.M. and McCracken, A.R., The Opportunities Offered by Short Rotation Coppice Willow in Northern Ireland, Proceedings of Conference "Renewable Energy for Maritime and Island Climates", Belfast, September 2001, 80-84.

Lipp, J., Policy Considerations for a Sprouting Green Electricity Market, Renewable Energy, Vol. 24, pp31-44, 2001.

Norton, B., Renewable Energy, What is the true cost? IEE Power Engineering Journal, Vol. 13, pp6-12, 1999.

OFREG, Stimulating the Renewable Generation in Northern Ireland September 2000.

OFREG, Electricity Market Opening – The time to win, 2001

Ortenblad, H., Waste Combustion in Denmark, Herning Municipal Utilities, September 2000.

Sir Reg Empey MLA
Minister for Enterprise, Trade and Investment
DETI
Netherleigh
Massey Avenue
BELFAST

26 April 2001

Dear

You wrote to Pat on 3 March seeking the views of the Committee on the above proposals.

The Committee considered your paper setting out the various options under consideration. These options included maintaining the status quo; establishing a merged electricity and gas committee within the General Consumer Council for Northern Ireland (GCCNI); or setting up a separate independent Electricity and Gas Consumer Committee. The Committee heard evidence on 21 March from the GCCNI and from the Northern Ireland Consumer Committee for Electricity (NICCE). The Committee also received written evidence from Ofreg.

This was an extremely difficult judgement for the Committee to make. After much deliberation the Committee agreed that there should be a merged energy body within GCCNI. However, as the Committee recognises that energy is a complex area and one that is subject to constant change, it recommends that GCCNI should therefore have a dedicated energy division which is properly resourced in terms of staff, time, and money. It should be headed by an individual who is employed on a full time basis. It should have the potential for vast research and focus on driving policy, not simply reacting to problems.

The Committee, in its deliberations, first of all, considered that certain principles were essential in any new energy body –

• It must be an energy watchdog with teeth.
• It must cover all areas of energy (not just consumer issues), including electricity, gas, fuels – new and renewables, energy efficiency, fuel poverty and all islands energy issues. It should count the cost to the consumer in monetary terms and in terms of the cost to the environment.
• It must be properly resourced and funded, with vast research potential.
• It must have a high profile, and easy access.
• It must have autonomy and independence.

The Committee accepted that there was no strong argument for two separate committees dealing with energy issues and concluded that maintaining the status quo was not a realistic option. The Committee accepted that there was a need for one body dealing with energy but the question that needed to be considered was whether that body should be located within the GCCNI or whether there should be a separate body dealing with all energy issues.

The NICCE and Ofreg both made a strong case for a separate body which included the following points –

• There is a greater need for strong consumer representation in electricity and gas in Northern Ireland than in GB due to higher electricity prices, less access to natural gas, and less choice about electricity suppliers. Consumers in Northern Ireland are more disadvantaged and therefore require more effective representation.
• Energy is a complex issue. Consumers need a body with strong expertise in the energy field and should not be diverted by the generality of consumer issues.
• A consumer group must be independent and immune from any danger of being "leaned on".

However, the Committee was persuaded, on balance, that any new energy body should be merged within the GCCNI. The Committee was impressed with the following points made by the GCCNI –

• It has extensive and unrivalled experience in representing customers, and they already have a high profile.
• In view of the size of the population in Northern Ireland, it makes more sense to have a single strong consumer body – having different consumer bodies might only cause confusion for the consumer.
• There will not be the additional infrastructure costs of setting up a new body.
• GCCNI already have a dedicated energy group dealing with coal, gas, oil and fuel poverty issues.

To conclude, the Committee believes, given the points made immediately above, that a single energy body should be established as part of the GCCNI. The Committee wishes to stress that the GCCNI should have a dedicated energy division which is properly resourced in terms of staff, time and money. This might help address some of the concerns presented by NICCE and Ofreg.

Yours sincerely

SEAN NEESON
Deputy Chairperson
Enterprise, Trade and Investment Committee

1. As part of their inquiry into Energy, eight members of the Committee went on a fact-finding visit to Denmark and Brussels and met with various organisations. There was a strong emphasis on the use of renewable energy (see Annex A for list of attendees).

2. Denmark is recognised internationally for its development of sources of renewable energy. The Danes are also considered to be very progressive in driving measures for energy efficiency.

3. Denmark’s natural resources include petroleum and natural gas and is at present self sufficient in oil and natural gas produced from the Danish part of the North Sea.

4. Denmark has undergone a successful restructuring of their energy system over the last twenty years. They have adopted and are gradually implementing a very ambitious national energy policy.

5. Danish wind turbine production has sextupled in five years, corresponding to an annual growth rate of 44 per cent per year. The main reason for this remarkable development is that wind power has been an important element of Danish energy policy for more than twenty years.

6. Significant market reform has taken place. Deregulation has been a key issue in Denmark as well as internationally. The energy reforms currently being implemented aim at reaping the economic benefit of increased competition and free supplier choice while at the same time supporting environmental objectives. The energy sector is now operating on the basis of a completely renewed legislation. The challenge has been to transform a monopoly under tight governmental control into companies able to face international competition and at the same time retain the possibility for the government to pursue its environmental goals. For that purpose new measures in conformity with market conditions have been introduced.

7. Denmark was the first nation in the world to introduce domestic emissions trading.

8. Danish CO₂ emissions have been reduced to below 1988 levels due to the implementation of comprehensive policies and measures. Reduction has been achieved with continued economic growth (Gross Domestic Product (GDP) has increased by 50% since 1973 while energy consumption has remained stable).

9. Denmark has the lowest energy consumption per unit of GDP among the OECD countries.

10. Use of renewable energy has doubled in the last ten years to 10 per cent of total energy consumption.

11. More than 50 per cent of domestic electricity consumption is produced by Combined Heat and Power (CHP) plants.

12. Half of total heat demand is covered by CHP plants and district heating units based on waste or biomass.

13. Denmark has one of the most energy-efficient heat supply systems in the world due to their development of CHP technology.

14. To investigate good practice in energy policy in another European country. The Committee were particularly concerned with the potential development of renewable energy technologies for three reasons:

• a means of fuel diversification;
• a strategic challenge to the inequitable generation contracts negotiated at the time of privatisation; and
• the renewable energy industry has a potential global market worth of up to £1 billion per year by 2010.

15. To help inform a vision for the energy market in Northern Ireland and investigate realistic energy market opportunities.

16. To establish contacts with leading energy market specialists in Denmark.

17. To help inform future debate and highlight the potential that a more competitive energy market may have on economic development.

18. To investigate the challenges of moving to a more open energy market.

19. To gain an understanding of the technologies associated with renewable energy generation.

20. To investigate the experience of burning Orimulsion in Asnæs Power Station in Denmark.

21. Over 25 years ago the Danish Government recognised the need for restructuring the energy system. The environmental impact from energy consumption needed to be reduced and a stable supply of energy at reasonable prices had to be secured – challenges that continue to face us in Northern Ireland today. The Danish Energy Agency was established in 1976 with a remit to focus on the production, supply and consumption of energy in Denmark. It also ensures, on behalf of the State, the responsible development of energy in Denmark from the perspectives of society, the environment and security of supply. Up until 1976 Denmark was 98% oil dependent. The agency drafts and administers Danish energy legislation and implements analyses and assessments of development in the energy field.

22. Denmark has adopted and is gradually implementing a very ambitious national energy policy. At the same time they have assisted developing countries and Eastern European countries in building more sustainable energy systems by means of technical assistance, investment support and foreign direct investment. Every other wind turbine in the world is made in Denmark. Denmark’s share of the world market is close to 65 per cent (including foreign joint ventures).

23. The Committee members met with the following representatives of the Danish Energy Agency:

Mr Peter Helmer Steen, Deputy Director-General, who gave an overview of the establishment, and current role and responsibilities of the Danish Energy Agency.

Mr Steffen Nielsen, Head of Section, briefed the Committee on the, energy planning, electricity reform, green certificate market and the regulatory framework for offshore wind turbines in Denmark.

Mr Søren Tafdrup, Head of Section, spoke on the Danish Biogas programme.

A number of points were made as follows:

• Denmark uses the same amount of energy now as it used in the 1970’s due to the development of Combined Heat and Power plants and an education programme in energy efficiency. More than 50 per cent of all electricity generated for domestic supply is produced as CHP. An increasing part of the electricity is based on natural gas. A comprehensive planning process through the 1980s and 90s featured an increase in the share of co-generated heat in the district heating supply system and the promotion of natural gas, especially in bigger cities. Since the beginning of the 1980s new power plants have only been allowed as CHP plants connected with district heating.
• District heating has played a major role in increasing overall energy and economic efficiency. Around 60% of the Danish heating demand is currently met by district heating. Some 70% of this is produced in CHP plants. District heating is normally delivered to satisfy heat requirements in cities for heating and hot water in residential, commercial and public buildings. District heating systems have mainly been developed during times of high energy prices and the driving force has been the possibility of achieving higher overall energy efficiency.
• District Heating - Each of Denmark’s largest cities combines heat and power production and waste incineration for district heating purposes. District heating refers to the infrastructure of pipes buried in the ground and filled with warm water to satisfy concentrated heat requirements on local heat markets. Heat is normally supplied to the pipes by retrieving and refining heat that other entities have no further use for and by using fuels or natural heat that end-users cannot use easily. Examples of such heat sources are heat retrieved from thermal power processes (also known as combined heat and power); industrial processes and refuse incineration plants as well as geothermal heat and wood waste.
• 13% of Denmark’s electricity is now produced through the use of renewables. The Agency’s target for 2003 is 20%.
• All consumers must purchase at least 20% of their energy from renewable sources and this is demonstrated by purchasing green certificates. Denmark has a CO₂ taxation that is returned to the industry.
• Denmark spends £20 million on energy research and development.
• Denmark have more than 6000 wind turbines in operation and have a target to have 30% of their energy produced from renewable sources by 2030.
• The Danish Energy Agency is responsible for climate change negotiations, oil and gas exploration, research programmes, bilateral programmes with Eastern European countries.
• Denmark produced their first energy plan in 1976.
• The main challenges the Agency has faced have been security of supply, reduce costs (1970s and 1980s); reduce CO₂ 1990s. The challenge to reduce CO₂ has been the main issue in Danish energy policy since 1990 and has contributed directly to the development in renewables.

24. Committee members met with the Director, Mr Poul Bach Olsen. The waste incineration plant is used to generate electricity and hot water for the Copenhagen area. The process was explained in detail with a video presentation and a guided tour of the plant.

A number of points were made as follows:

• In Copenhagen 60% of waste is recycled, 25% is incinerated and 14% is deposited.
• Ammonia and carbon monoxide are emitted with the flue gas and are monitored continuously by Amagerforbrænding. Continuous measurement of total organic carbon will be implemented in the beginning of 2002. Reports on environmental performance are sent each month to the environmental authorities.
• The incineration process produces clinker, approximately 20% of the original waste. The clinker is then left in a slagheap for at least one month to ensure that the mineralisation process, the reaction processes with water and carbon dioxide, are complete and that the concentration of heavy metals in the leaching water is within acceptable limits. The clinker is screened to remove iron and oversized particles greater than 50mm. The remaining ash is used in land fill and road construction.

25. Energi E2 operate the Asnæs power station, the largest in Denmark. Asnæs has a total capacity of 1,307 MW electricity and produces 452 MJ of heat. The first production unit was put into operation in 1959 and since then another four units were added in the period up until 1981. In addition to electricity production Asnæs supplies district heating to Kalundborg Council and process steam to neighbouring firms.

26. The power station uses primarily Orimulsion and coal as fuel, but can also use oil. At the beginning of 1995 a unit was converted for the use of Orimulsion instead of coal, and as a result emits 16-18 percent less CO₂ and 30-40 percent less nitrogen oxides (NOx) than coal.

27. Orimulsion is the brand name given to a fossil fuel produced from natural bitumen (70%) mixed with water (30%) and is sourced and shipped from Venezuela.

28. During the visit to Asnæs power station the Committee members met with Mr Per Holmgaard, Power Plant Manager and Mr Henrik Vej Petersen Deputy Plant Manager. After a short presentation on the issues surrounding the burning of Orimulsion at the power plant, members were given the opportunity to ask questions; this was followed by a guided tour of the power plant, during which the safety and environmental aspects of the plant were discussed in more detail.

29. The power plant representatives reported a generally positive experience on the burning of Orimulsion fuel. The Committee were specifically concerned with the emissions from the burning of Orimulsion and in particular the very fine particulate emissions of Nickel and Vanadium. The power station advised that they do not measure these emissions in particular but consider they are of insufficient quantity to cause concern.

30. Gypsum is produced as a by-product of the abatement process. Some of this product, but not all, is sold to a gypsum factory located near-by, the remainder goes to landfill.

31. An evening reception was organised at the British Embassy hosted by Philip Astley, British Ambassador to Denmark and his wife. A number of representatives from a wide variety of organisations with interests in energy were invited to the reception. A complete list of the guests is provided below:

Mr Niels O Gram & Mrs Birgit Falck-Andersen
Head of Energy Department, Confederation of Danish Industries (Dansk Industri)

Mr Jens Bo Holm Nielsen & Mrs Lis Ingemann
Head of Bioenergy Department, University of Southern Denmark

Marianne Bender
Chairman, Organisation for Renewable Energy

Mr Sebastian Løck & Mrs Susanne Wetterup Andersen
Energy Consultant, Noah - Friends of the Earth Denmark

Unfortunately the following guests who had accepted, did not turn up because of attendance at a memorial service for the 11th September victims:

Mrs Anne Grete Holmsgaard & Mr Kjeld Ammundsen
Chairman, Council for Sustainable Energy (Miljøraadet)

Ms Vibeke Peschardt
Member of Folketing and Energy Policy Committee (Social Liberal party)

32. Mr Bruno Sander Nielsen met with the Committee members and gave a presentation on the work of the Danish Biogas Association Secretariat after which members of the Committee were given an opportunity to ask questions.

33. The Danish Biogas Association was established in 1997 and currently has a membership of 35 organisations. The aim of the association is to increase the production of biogas on an economically sound and environmentally sustainable basis in Denmark and other countries. The advisory group was given the responsibility of implementing the special cross-ministerial biogas programme during the period 1998-2001. The total budget for the period is DKK 12 million.

34. Biogas is a renewable energy source based on various domestic organic waste resources for example manure, organic waste, sewage sludge and landfills. The major biomass resource for anaerobic digestion in Denmark is animal manure. Approximately 75% of the biomass treated in Danish plants is manure. In addition, around 25% of the biomass is waste that mainly originates from food processing industries. A few plants treat sewage sludge as a supplement to animal manure. Four plants are capable of treating source separated household waste. In the biogas plant manure and organic waste are mixed and digested in anaerobic digestion tanks for 12 to 25 days. From the digestion process biogas emerges which is cleaned and normally utilised in combined heat and power production plants. Heat is usually distributed in district heating systems and electricity sold to the power grid.

35. Denmark currently has 20 joint biogas plants, 30 farm scale biogas plants (especially pig producers), and utilises 1.2million tonnes of manure (51% pig manure, 44% cattle manure, 4% mixed pig and cattle manure and 1% was mink or poultry manure and crop residuals), 325,000 tonnes of organic waste from industry, households and waste treatment facilities. It is expected that the Danish biogas production will increase by 8% in the next 3 years.

36. When it leaves the digestion tanks the biomass, now called digested manure, is returned to slurry storage tanks to be used as a fertiliser. The anaerobic digestion process helps reduce odour nuisances.

A number of points were made as follows:

• There are a number of advantages for stakeholders in biogas production:
• In respect of agriculture there is the utilisation of the nutrients, less odours in relation to neighbours and the spreading of slurry and a market for waste and by-products.
• In respect of the environment there is a reduction in green house gas emissions, less leaching of nutrients and resource management.
• In respect of the local community there is the recycling of organic waste and co-operation between citizens, farmers, industry and the energy sector.
• Finally the energy is produced from renewables using local resources to co-produce power and heat.
• There are 20 joint biogas plants using 550 tonnes of manure per day, 30 farmer scale plants using 1.2 million tonnes of manure per day and 200,000 tonnes of organic waste from industry, households and waste water treatment facilities.
• There is the facility to recycle animal by-products.
• Biogas production will have increased by a factor of 8 by 2030.

37. The Committee members had a meeting with Mr Gerald O’Connor, First Secretary of the Irish Embassy. During the meeting the Chairperson explained the background to the Committee’s visit to Copenhagen. A discussion on energy issues in Denmark and the island of Ireland took place.

38. The Danish Wind Industry Association is a non-profit association whose purpose is to promote wind energy at home and abroad. Founded in 1981 the association today represents 99.9 per cent of Danish wind turbine manufacturing measured in MW.

39. The Danish Wind Industry Association’s Director Mr Søren Krohn hosted the Committee on a boat trip visiting the Middelgrunden Offshore Wind farm in the Port of Copenhagen, the world’s largest offshore wind farm.

40. The wind farm, which was built in November 2000, consists of 20 2MW wind turbines situated just 3km outside the Port of Copenhagen. The expected annual electricity production is 90,000 MWh, which equals electricity consumption of 20,000 Danish households, approximately 3% of Copenhagen’s power consumption. Ten of the wind turbines are owned by a wind co-operative made up of 8300 members with the other 10 wind turbines owned by Københavns Energi energy distribution company. The twenty turbines are placed 180 metres apart in a curve 3.4km in length. The turbines are equipped with a modified corrosion protection, internal climate control, high-grade external paint and built-in service cranes.

41. According to an agreement with the Government, Danish power companies must establish 750MW of wind power offshore from 2001 to 2008. The 750MW will be installed in five large-scale demonstration offshore wind farms.

42. The Hashøj biogas plant is owned by an independent co-operative with 17 members, all farmers and slurry suppliers. The aim of the co-operative was to build and operate a biogas plant to facilitate redistribution of animal slurry in the area and to provide investment grants for the establishment of slurry storage capacities. The plant is part of a demonstration programme for Danish biogas plants, aiming to demonstrate combined biogas-natural gas fuelled CHP plant.

43. The Committee met with Mr Erik Lundsgaard, Plant Manager. Mr Lundsgaard gave a guided tour of the biogas plant during which the stage by stage process was explained fully. Afterwards the Committee went to visit the CHP plant adjacent to the biogas plant where two biogas and natural gas fuelled engines supply approximately 380 consumers in the Dalmose and Flakkebjery areas with electricity and heat.

44. The Directorate General for Energy is based in Brussels.

45. The Northern Ireland Executive’s Office is based in Brussels.

46. The Chairman of the European Council on Energy is based in Brussels.

47. For the Committee to become more familiar with European Energy policy within the Commission and meet some individuals responsible for developing policy.

48. The Committee wanted to take the opportunity to share their experience of the visit to Denmark with policy makers in the European Commission.

49. The Committee wanted to discuss and raise awareness of the unique difficulties for the Northern Ireland energy market.

50. For the Committee to seek advice/opinions on the consideration of particular European policy issues with respect to Northern Ireland’s energy market.

51. The Committee met with Mr Ian Holt, UKRep (First Secretary with responsibility for Energy) at the Northern Ireland Executive Offices in Brussels for a briefing on energy matters. The Committee took the opportunity to put questions to Mr Holt.

The main issues discussed were as follows:

• Energy liberalisation and the single market. The electricity commercial sector will be opened by 2004 with the gas market opened 18 months later.
• The European Commission (EC) has set non binding targets for the production of electricity from renewable energy sources with no legal sanctions being imposed on member states. However, the EC will issue very soon a Directive that will have to be implemented within 2 years. The Directive states that Member States should be required to set national indicative targets for the consumption of electricity produced from renewable sources.
• Energy efficiency ratings of public buildings. The intention is that every time a building is re-let or re-sold the owner will have to produce an energy efficiency statement which is dated not longer than 5 years previous.
• The EC are to carry out a study into the problems associated with liberalisation.
• The possibility of providing incentives to make renewable production of electricity more economic was discussed.

52. The Committee met with Mr Gunther Hanreich, Director with responsibility for new sources of energy and demand management. Mr Hanreich was assisted by Mr Bill Gillett and Mr William Webster (Heads of the Electricity and Gas divisions respectively).

53. During the meeting Mr Hanriech briefed the Committee on some of the current issues.

54.. Liberalisation of the market/market opening - which should enable all commercial electricity consumers to choose their supplier by 2003, and the same principle extending to commercial gas consumers by 2004. By the end of 2005 all gas and electricity markets should open in all of the member states. Such a system would lead to cost effective transmission tariffs i.e. companies would not pay for their electricity passing through numerous countries. The new gas Directive will prevent companies from having a monopoly on a pipeline. At present Phoenix Natural Gas have sole gas supplier rights but this will change because of the new Directive.

55. Renewables – In December 2000 the European Commission adopted guidelines on environmental state aid. By 2010 60% of renewable energy production will be from the biomass sector. By 2010 10% of electricity generation will come from renewable energy sources, 3% by 2003 and 35% by 2020. The EC has done very little in the regulatory sector but has done a lot of work in research and support. The new renewables Directive tries to deal with the barriers to using renewable technology to produce electricity e.g. access to the grid. Member States are allowed to give state-aid to renewable energy companies to give them the same competitive start as conventional energy produced by coal, oil etc. However, the state must clearly define why state-aid is to be provided.

56. Demonstration Programmes – A Member State may give modest funds for demonstration programmes. The EC would review the programme and in turn that would give confidence to investors.

57. Wave Energy – Portugal has one wave demonstration project. Wave energy needs further developed at the present time a lot of investment is required at the beginning before a return is made.

58. After the presentation on the role and responsibility of DG TREN (Directorate General for Energy and Transport) a general discussion took place on EC policies for energy issues, specifically with regard to Northern Ireland.

59. The Committee met with Mr Oliver Deleuze, Secretary of State for Energy and Sustainable Development of the Belgian Government and Chair of the European Energy Council .

60. Mr Deleuze briefed the Committee on the current work of the Belgian Government in regard to renewable energy.

The main issues discussed were as follows:

• There is a need to find ways to take forward renewables that are more expensive. Denmark currently uses green certificates to do this. The supplier must produce a specific amount of green electricity by a specified date.
• There is a proposal to build a 700-800MW offshore wind farm in Belgium. In the future wind farms will be built further out to sea and we should see floating wind farms.
• In the future we should be able to use hydrogen cells to generate energy.
• In Belgium waste is incinerated and some plants produce electricity.
• The Belgium government has introduced an ecotax for the production of products that cannot be recycled to encourage waste competence of regions. Therefore recyclable products cost less.

Mr Pat Doherty (Chairperson)
Mr Sean Neeson (Deputy Chairperson)
Mrs A Courtney
Mr D Shipley Dalton*
Mr D McClarty
Dr A McDonnell
Ms J Morrice
Dr D O’Hagan

*Denmark only

1. This series of visits was organised to assist the Committee in it’s deliberation on the inquiry into energy. It follows a similar fact-finding visit to Denmark. The Committee wanted to see a sample of various renewable energy sites and projects within Northern Ireland. The Committee also wanted to visit Kilroot Power Station to discuss with senior management their proposals for the use of Orimulsion and natural gas and to see the current generator plant and control room.

2. The objectives for the visit were:

• To gain a better understanding of the proposals for generating electricity at Kilroot Power Station.
• To see, at first hand, an electricity-generating wind farm, and to better appreciate the practical issues surrounding the installation and running of such a facility.
• To learn more about the practical application of renewable energy in public buildings.

3. The Committee met with Mr Shane Lynch and several of his management team. Kilroot Power Station is owned and operated by AES Kilroot Power Ltd – a subsidiary of the AES Corporation, an international company in the power generation business. It has two oil/coal fired generators with a total capacity of 450MW of electricity (380MW if using coal).

4. The plant was originally to have four 200MW generators but the oil price increase in the 1970’s coupled with the level of demand not meeting original expectations made this proposal uneconomical. AES Kilroot is currently considering two separate proposals. The first proposal is to make changes to the present generators to allow them to burn Orimulsion (Orimulsion is the brand name given to a fossil fuel produced from natural bitumen (70%) mixed with water (30%) – and is sourced and shipped from Venezuela). The second proposal is to install a new combined cycle gas turbine (CCGT).

5. During the visit AES Kilroot Power Ltd management team made the following points for the Committee to consider:

• The financing of the natural gas pipeline to the North West is a crucial issue. The main beneficiary of the pipeline is ESB/Coolkeeragh who will use 80% of the gas being piped. However, a large portion of the electricity being produced will be sold to the Republic of Ireland. It is the opinion of AES Kilroot Power Ltd that ESB/Coolkeeragh should be expected to pay a large portion of the costs of the pipeline’s construction.
• A CCGT generator at Kilroot Power Station would be able to produce electricity at a significantly lower cost than the present generators. The natural gas pipeline runs very close to Kilroot and thus it makes good business sense for AES Kilroot Power Ltd to use this resource. The costs/risks of installing this generator would be borne entirely by AES Kilroot Power Ltd.
• The burning of Orimulsion at Kilroot Power Station would require the removal of the early cancellation clause of the current contract. The contract runs to 2024 but has a clause allowing it to be cancelled in 2010. AES Kilroot Power Ltd would not be able to finance the necessary technical changes to the generator if the contract was cancelled in 2010.
• Orimulsion would provide cheaper electricity than that being produced currently and would provide the diversity of fuel desired by the Minister. It would also ‘uprate’ the capacity for each generator from 190MW to 260MW.

6. The wind farm, commissioned in March 1995, at Elliott’s Hill, Co Antrim is operated by B9 Energy Services Ltd on behalf of Scottish Power. The wind turbines are built on land rented for a percentage (2%) of gross annual income from the sale of electricity (approximately £2k per turbine per year) – providing the land owners with an income approximately equivalent to the anticipated income from sheep farming.

7. Each turbine cost £500,000 to buy and will produce ½MW of electricity. There are 10 turbines at this site producing a total of 5MW of electricity for connection to the main grid. The electricity produced is sold at 7p per kilowatt hour (originally this was 6p per kilowatt hour but has increased with index linking). If the same project were to be developed now the price of electricity sold to the Grid would be only 3.5p per kilowatt hour. This change is due in large part, to better financing arrangements as lenders do not expect such a high rate of return on their investment. The capital outlay can be recovered in 5-10 years depending on how the repayments are structured.

8. When Elliott’s Hill Wind Farm was being constructed NIE would only allow 5MW of electricity to be connected to the grid at any one location. Since then, however, NIE has increased this limit to 20MW thus allowing for bigger wind farms (i.e. more turbines at a site). The technology has also improved in this period so that turbines producing 1MW of electricity can be built. These cost in the region of £1-1.2m to construct.

9. The ECOS Centre in Ballymena was opened in August 2000. It was a jointly funded project between Ballymena Borough Council and the Millennium Commission, with each organisation contributing £5m each. It has been constructed using environmentally friendly materials and has a "minimalist" appearance (walls are not painted, pipes are uncovered etc.). This was done to eliminate all unnecessary use of materials which would have a detrimental effect on the environment – either during manufacture or at a later stage during disposal.

10. The ECOS Centre is situated on an artificial island within 150 acres of wetland on the edge of Ballymena town. It has an important environmental role to play offering a suitable reserve for a variety of wildlife.

11. The ECOS Centre uses 3 different renewable energy sources to generate electricity – wind, sun and sustainable wood. The original target was for the centre to obtain between 60 and 70% of its annual energy requirement from renewable sources.

12. The centre uses a wind turbine (which was not in use at the time of the visit) producing 25kW of electricity contributing 15-20% of the centre’s annual electricity needs.

13. The willow coppice, which covers 22½ acres, provides a sustainable wood resource for the biomass process. This process uses the wood in a gasification plant. The wood is first cut into blocks then dried using the exhaust heat from the turbine. It is burnt in the gasifier producing a gas which is then cleaned and then used to drive a gas turbine. The turbine can produce up to 50kW (net) of electricity – at least 20% of the centre’s annual requirements. Water is also heated in this process and used to heat the building by under-floor piping.

14. Solar cells provide a third source of energy. The cells make up a photovoltaic array which converts solar energy into electrical energy – photo (light), voltaic (electricity) while also being used to heat water. The ECOS centre has a 12.5kW grid-connected Siemens Solar array located on its roof. The array cost £150,000 to install and a 119m² represents the largest on the island of Ireland. It can provide over 5% of the centre’s annual electricity needs. During the Summer months the array provides nearly all the centre’s hot water requirements.

15. The main issues arising from the Committee’s visit to the ECOS Centre were:

• It is economically feasible to use renewable energy on a fairly small scale for public buildings.
• More research needs to be done into photovoltaic technology to make them cheaper to buy and install.
• Photovoltaics are viable in a climate such as Northern Ireland’s (the ECOS Centre has produced 11.5MW of electricity since July 2000).
• Willow coppicing can provide a valuable alternative income for farmers.

1. The Brook Hall Estate was identified as a visit destination because it is considered a European leader in the development of small scale gasifiers and in the use of willow coppice. The estate is situated in the north-west and covers some 650 acres. The estate grows willow coppice on 110 acres and uses the biomass process to produce heat and for use within the estate and produces some 600,000 kWh of electricity per annum for sale to NIE. The renewable energy business at Brook Hall is managed by Rural Generation Ltd.

2. This visit was arranged to provide an opportunity for Members of the Committee to:

• obtain a better understanding of the biomass process;
• hear about recent developments in combined heat and power (CHP) technologies;
• learn about the potential economic benefits of willow coppice for the farmer; and,
• learn of the environmental benefits of using willow coppice as a bio-filter.

3. Willow is grown as a short rotation crop on 110 acres of land. Each year one third of the crop is harvested to be used as a fuel in a CHP plant which produces both heat and electricity. The wood is firstly chipped and then dried before being fed into a gasifier. In the gasifier the wood is converted into a combustible gas before being used to power a diesel engine (which uses 80% wood gas with the addition of 15% diesel fuel) in order to generate electricity. A bi-product of the process is hot water which can be used to heat the estate buildings.

4. In addition to willow a biomass generator system can use other forms of combustible material such as paper, cardboard, household waste and straw, and offers potential for employment creation. People will be required in the growing and harvesting of willow and for the collection of biomass, the processing of the raw material and in the building and maintenance of the technology required. The Biomass method also has many environmental benefits, e.g. there is less waste going to landfill sites, willow coppicing is a valuable habitat for wildlife and fewer CO₂, SO₂ and NO_x (the so-called greenhouse gases) emissions than from coal/oil generators.

5. The technology is sufficiently developed to allow heat-only plants to be installed, however, this is not the case with CHP plants which need further development to be commercially viable – currently the CHP systems need to be shut down for 5-8% of their time for maintenance. Rural Generation Ltd is selling the heat-only systems to generate enough cash to allow for the further development of their CHP technology. The CHP installed at Brook Hall cost £55,000 but allows for up to £10,000 of profits per annum. Generally, such plants will be profitable within 5-6 years of installation.

6. Willow coppicing offers the rural community great potential on various levels. It gives farmers an alternative source of income, it allows rural communities the opportunity to develop more efficient heating systems, European funds are now more focused on developing rural communities rather than being available to individual farms and willow can be used as a bio-filter which will help farmers deal with the problems associated with the spreading of slurry.

7. A minimum of 45 acres is needed in order to sustain a biomass project using willow coppicing. The land is divided into 3 plots of 15 acres, with one plot being harvested every 3 years. A collective of farmers could easily set aside land for such a project if a suitable end user could be identified (e.g. a local school, housing development, factory or hotel).

8. Willow coppice has a very useful alternative use as a bio-filter. Willow coppice can be irrigated using ‘dirty water’, for example slurry or water from a water treatment plant, this has the benefit of acting as a fertiliser for the willow, but more importantly, the willow will extract 95% of the phosphates and other pollutants (heavy metals) from the water before the water is fed into the local water courses. In a site close to the Brook Hall estate, 50 million litres per hectare of water from a water treatment plant are ‘cleansed’ each year using this method before it is discharged into the Foyle River. Such usage could be of great benefit to the farming community if willow coppice was to be grown along water courses and rivers filtering the water run-off from the fields where slurry has been applied.

9. The small amounts of semi-charcoal ash which are a bi-product of the gasification process can also be used as a fertiliser.

10. A new small scale gas turbine generator is being developed in co-operation with Queen’s University, Belfast (QUB). Funding for this research project comes from various sources. The project has the potential to be a major boost to renewable energy suppliers as it would be more efficient and cheaper to run than current generator systems.

11. The Committee was impressed with the work being carried out by Rural Generation Ltd at the Brook Hall estate. During the visit the following key points were made to the Committee:

• The woodland grant scheme, available to farmers for the conversion of farmland to woodland, is £600 per hectare for non-set-aside land and £400 per hectare for set-aside land. In England and Wales the grant is worth up to £1,600 per hectare.
• The market for renewable energy needs to be developed before encouragement is given to suppliers.
• Local biomass projects need ‘drivers’ committed to the concept. Partnership with government is also crucial to any project’s success.
• Farmers need to be encouraged to diversify their crop production.
• EC funds (Agenda 2000) is available for rural community development projects.
• Climate Change Levy funds collected in Northern Ireland should be returned to the local economy to stimulate the renewable energy sector.
• Government departments need to be more supportive of groups attempting to supply ‘green’ electricity and power.
• Greater support needs to be given to innovation (research and development) projects which will assist in the growth of the renewable energy sector.

APPENDIX 3

ASSEMBLY RESEARCH PAPERS

ORIMULSION

SUMMARY

The electricity regulator has backed a proposal by Nigen, former operators of Kilroot Power Station, to convert from coal and oil to Orimulsion to facilitate a significant reduction in generation costs.

Orimulsion is made by mixing bitumen, extracted from Venezuela’s Orinoco Belt, with 30% fresh water. The fuel was previously burnt for limited periods at two power stations in the UK. An application to burn the fuel at a third power station was rejected in 1997.

The primary concerns with the use of Orimulsion are the risks associated with transportation and air pollution associated with its combustion. This paper discusses these issues, and in particular emissions from combustion, in some detail. Other potential environmental impacts are also considered.

The argument concerning the proposed burning of Orimulsion at Kilroot will develop around two key points.

1.         The design of measures for abatement can ensure that the Northern Ireland emission standards are safely met. However, is this specification adequate in monitoring very fine particulate levels as stipulated in the US Air Quality Standards? Is this standard an adequate assessment of the potential toxicological hazard?

2.            Particulate matter from the combustion of Orimulsion contains large quantities of vanadium and carcinogenic nickel. There is insufficient epidemiological data to conclude that these materials have a safe minimum level.

Detailed studies of the impact of combustion of Orimulsion are necessary. Given the geographical location of the Kilroot plant this is a matter of special anxiety not just in Northern Ireland but also in Scotland.

To remove the potential threat of harmful emissions completely would require the introduction of a gasification plant. Such a plant could be guaranteed to burn not only Orimulsion but also, significantly, waste products could also be handled safely and effectively. However this option is currently not considered to be cost effective.

INTRODUCTION

The paper considers the proposed burning of Orimulsion at Kilroot Power Station. Orimulsion, an emulsified bitumen- based fuel was originally proposed by Nigen, former operators of Kilroot Power Station, as a cheaper alternative to coal and oil.

Orimulsion is used as a fuel in several power stations around the world. However concerns have been expressed about the potential environmental impact associated with the burning of the fuel. This paper provides further information on the proposal for Northern Ireland and elucidates some of the debate concerning the burning of Orimulsion.

Kilroot Power Station, based in Carrickfergus, is Northern Ireland’s largest power station. The station was operated by Nigen until June 2000 when the AES Corporation bought the controlling interest in Nigen from Tractebel SA.

The paper is split into two parts. Part A provides an overview of the main areas of environmental concern including details of emissions from the combustion of Orimulsion. Part B considers the proposal for Northern Ireland and highlights issues that should be considered further.

PART A           Emissions from the Combustion of Orimulsion and the Environmental Impact

Background

Orimulsion^® is a registered trademark of Bitumens Orinoco S.A. (Bitor). It is a bitumen-based fuel developed for industrial use by BP and Petroles de Venezuela SA, (PDVSA). Bitumen is a naturally occurring hydrocarbon that exists in the semi-solid or solid phase in natural deposits. The bitumen reserves of Venezuela’s Orinoco Belt are the largest in the world with an estimated 1.2 trillion barrels, an amount greater than 50% of the worlds estimated oil reserves. Although the existence of this bitumen field has been known of for fifty years, only recently has technological development allowed cost competitive and environmentally safe extraction. Other major reserves are in Canada (Alberta), Russia and the US. Economically recoverable reserves are now estimated at 267 billion barrels.

Orimulsion is made by mixing the bitumen with about 30% fresh water and a small amount of surfactant, (an agent used to give a stable emulsion). The resulting product behaves similarly to fuel oil.

Worldwide Use of Orimulsion

Bitor literature reveals that there are several power plants using Orimulsion as fuel, Table 1 [i] .

Table 1: Current Plants using Orimulsion

Use of Orimulsion in Britain

Two UK power stations burned Orimulsion on a trial basis between 1989 and 1997. The trials were designed to examine the technical, commercial and environmental factors arising from the use of the new fuel and were approved by the appropriate regulator for a limited period.

The Trials began in Richborough power station in Kent. Richborough was originally designed for coal firing but converted to oil firing during the 1960s. It needed relatively minor changes to the fuel handling and combustion systems and minor modifications to the existing electrostatic precipitators before Orimulsion was introduced for a five-year trial period.

The power station at Ince in Cheshire was specifically designed for heavy fuel oil. One of the two 500MW (mega watt) units was converted, including the installation of electrostatic precipitators, to burn Orimulsion for a similar five-year trial period.

There are conflicting reports on the performance of the two power stations. Environmental groups maintain that the power stations were closed down for environmental reasons [ii] . The Electricity Association claims that the stations were closed down for commercial reasons [iii] . Both claims are true in that neither station employed suitable abatement technology and to upgrade them was not considered commercially viable.

In 1993 the 2000MW Pembroke power station in Wales had an application to burn Orimulsion, without abatement, rejected. The application was resubmitted in 1994 and included the installation of electrostatic precipitators, flue-gas desulphurisation and low NO_x burners. In principal the application was considered likely to be suitable for authorisation by the Environment Agency [iv] . However in the run up to the 1997 General Election Labour promised a public enquiry to satisfy local environmental campaigners. National Power withdrew their application without the public enquiry taking place. The power station was subsequently closed down.

ENVIRONMENTAL CONCERNS

There appear to be two primary environmental concerns ie., the risks associated with transportation of the fuel and air pollution associated with its combustion. The following discussion will also elucidate the issues concerning other potential environmental impacts including the requirement for cooling water, operation of the flue-gas desulphurisation (FGD) plant and extraction of naturally occurring bitumen.

TRANSPORTATION OF ORIMULSION

In February 1996 the Sea Empress lost 70,000 tonnes of crude oil in Milford Haven Bay. The resulting public campaign was a contributing factor in forcing Pembroke Power Station to abandon plans to import Orimulsion [v] .

The risks of transporting this fuel are more difficult to assess because of differences in the types of vessel and the fuel handling procedures. In the proposal for Pembroke Power Station it was agreed that only double-hulled tankers would be used [vi] , so significantly reducing the potential for accidental spill. Tests to predict the consequences of a spillage under a range of weather conditions have been conducted in the North Sea and Liverpool Docks [vii] . According to Bitor company literature if a spillage were to occur the water phase (30% fresh water) will quickly dilute into the surrounding water and the bitumen particles will disperse. This scenario, although possible, is considered by some observers to be unlikely [viii] . The behaviour of these particles will be driven by the salinity/ temperature and dynamic conditions of the receiving water. A major surface slick will not form following a spill of Orimulsion [ix] but bitumen will concentrate in the water column [x] . The exposure of aquatic resources must be carefully evaluated to assess the potential risk. A spillage of Orimulsion is widely considered to have profound ecological consequences. Bitor cites the Danish Water Quality Institute and the University of Miami in determining that Orimulsion posses no greater environmental hazard in a spillage incident than heavy fuel oils.

While surfactant in the Orimulsion is considered to preclude sticking to aquatic organisms and seagrasses the dispersion in the water column and possible sinking is irreversible and could bring it into closer contact with marine life. Concern has been expressed about a nonylphenolethoxylate (chemicals that can mimic the hormone oestrogen) surfactant present in early Orimulsion formulas [xi] . However Bitor are believed to have addressed this issue with an alcohol based surfactant.

Orimulsion would probably be imported into Belfast Lough in 100,000 tonne, double-hulled oil tankers, with 12 deliveries annually [xii] . There are around 350 oil tanker movements in Belfast Lough each year so Orimulsion could increase traffic by approximately 3.5%.

Evidence submitted to the inquiry into the proposed use of Orimulsion in Juno Beach, Florida stated that a spill was almost inevitable (discussed later in the paper) [xiii] . While oil spillages in Belfast Lough have been negligible in recent years [xiv] , there appears to be no code of practice for dealing with a major spillage of Orimulsion [xv] . Bitor are currently evaluating the exposure and potential impacts of possible spills as part of the Spill Contingency Planning process for Kilroot.

Air Pollution

Bitor company literature on Orimulsion advise that the emissions from modern Orimulsion plants are less than for low sulphur coal or oil burning plant [xvi] . Figures provided by the Electricity Association support this [xvii] . Figure 1 shows the comparative emissions from burning Orimulsion, coal, oil and gas (in a modern combined cycle plant). The comparison is on the basis of emissions per unit of electricity produced relative to good practice coal firing, with particulate emissions control only, which is given the value of 1.0 (for ease of comparison).

Figure 1: Comparative Emissions³

Carbon Dioxide (CO₂)

The combustion of fossil fuels contributes to the production of CO₂. Carbon dioxide is partly responsible for the atmospheric greenhouse effect - 50% may be attributable to CO₂. [xviii]

Nearly all the carbon in the Orimulsion fuel is converted to carbon dioxide on combustion. Emissions are similar to that of oil but less than for coal. Combined cycle gas plant has the lowest levels of CO₂ emissions.

Sulphur Dioxide (SO₂)

Sulphur dioxide which occurs predominantly through the combustion of fuels, is usually concentrated in industrial and domestic areas and can severely affect health during smog conditions. Removal of sulphur dioxide from the atmosphere is usually accomplished in the form of acid rain [xix] .

The properties of a fuel determine the amount of SO₂ it produces. Gas contains essentially no sulphur. Orimulsion contains approximately 3%, comparable to heavy fuel oil [xx] and greater than UK coal (1.6%) and imported coal (1%). It is for this reason environmentalists often refer to Orimulsion as ‘dirty’ fuel. Because of Orimulsion’s water content it has a lower calorific value (heat produced per unit mass of fuel) and hence approximately 42% more Orimulsion needs to be burned to generate the same amount of electricity [xxi] . Consequently, without abatement, more SO₂ would be generated with Orimulsion than with heavy fuel oil [xxii] . FGD equipment will ‘scrub’ over 90% of the sulphur dioxide out of the flue gases. Its use helps reduce particulate emissions but reduces efficiency by 1-1.5% and hence increases CO_{2 emissions by a similar amount} [xxiii] _{. To meet the present European Large Combustio}n Plants Directive (LCP) [xxiv] with Orimulsion would require FGD removing around 94% of SO₂. The proposed revision would require FGD with a removal efficiency of around 97% [xxv] .

Oxides of Nitrogen (NO_x)

According to the Royal Commission on Environmental Pollution transportation accounts for 57% of all UK emissions. The remaining 43% emanate from power stations and boiler plants [xxvi] .

The amount of NO_x produced is dependent on the conditions of combustion especially the flame temperature and the air/fuel ratio. The physical configuration of the boiler is very important but experience in other power plants has been that the levels of NO_{x produced by Orimulsion burning are lower than that produced by coal or oil burning.} In Denmark it was found that the combustion of Orimulsion resulted in a reduction in emissions of 20% compared to heavy fuel oils and 45% compared to coal. Emissions from combined cycle gas plant are even lower [xxvii] .

Particulate Matter

Particulate matter refers to fine solids or liquid droplets suspended in the air. The solids often provide extended surfaces due to their irregularities and therefore other pollutants can be carried along. For example smoke particles and sulphur dioxide have greater effects on health when in combination than when emitted separately. It is postulated that the smoke particles, especially the PM10s (less than 10 microns in size) are carried deeper into the respiratory tract with the sulphur dioxide ‘attached’ (absorbed) and thus the medical effects are compounded [xxviii] .

Orimulsion contains approximately 0.1% incombustible matter which is more than is found in oil but much less than in coal. It has been suggested that as part of any proposed contract at Kilroot, the fuel supplier will remove all ash from the site and transport it to South East England for commercial metal recovery (mainly vanadium and nickel) [xxix] .

Power stations worldwide that are currently burning Orimulsion are fitted with electrostatic precipitators in addition to FGD as abatement. Their emissions for particulates are within the limits required of new plant in the UK and EU countries [xxx] .

Table 2 shows the relative contribution of power stations to particulate emissions in the UK while Table 3 compares particulate levels between Belfast and other UK cities. The amount of ash produced depends on the amount of incombustible material in the fuel.

Table 2:               National Inventory of PM10 Emissions (UK, 1993) [xxxi]
(PM10 - PARTICULATE MATTER DIAMETER LESS THAN 10 MICRONS)

Source	Particulate as a % of total emission PM10
Combustion Sources
Road Transport	25%
Domestic	14%
Power Stations	15%
Iron and Steel	8%
Refineries	3%
Other industrial combustion	7%
Commercial/Public	2%
Other Transport	3%
Non-Combustion Sources
Industrial	11%
Mining/Quarrying	11%
Construction	2%

Table 3: UK PM10 Levels [xxxii]

Site	PM10 (mg/m3) Exceedances
	Annual Average	Maximum Hourly	No. of days>50(mg/m3)
Belfast Centre	26	490	32
Birmingham Centre	23	311	23
Birmingham East	21	319	19
Bristol Centre	24	612	30
Cardiff Centre	34	564	91
Edinburgh Centre	20	307	3
Hull Centre	26	264	30
Leeds Centre	26	310	44
Leicester Centre	21	203	17
Liverpool Centre	25	257	34
London Bexley	25	140	18
London Bloomsbury	27	307	39
Newcastle Centre	26	297	39
Southampton Centre	23	291	16
Greenwich	23	253	26
Kensington/Chelsea	26	176	25
Westminster	40	397	68

Emissions of Trace Impurities

According to the US Environmental Protection Agency there are 188 hazardous air pollutants, both organic and inorganic [xxxiii] . Typical ranges of emissions of trace impurities when combusting fossil fuels are shown in Table 4.

Table 4: Emissions of Trace Impurities in Fuels (prior to air pollution control) [xxxiv]

Pollutant	Orimulsion**	Oil [xxxv]	Coal
Arsenic*	2.9	2.6 – 12	78 – 850
Beryllium*	0.3	0.1 – 0.6	54 – 96
Chromium*	16	3 – 9	99 – 210
Lead*	0.9	3 – 14	161 – 362
Mercury*	<0.2	0.2 – 1	5.2 – 15.9
Nickel*	3,500	460 – 1,140	61 – 121
Selenium*	12	0.7 – 6	30 – 400
Vanadium	18,000	100 – 5,500	121 – 275
Fluoride	150	245	5,000 – 9,800
Hydrogen Chloride*	1,975	1,900 – 3,100	10,000 – 200,000

*Hazardous Air Pollutants; ** Typical Values

For most trace elements, emissions from burning Orimulsion without air pollution control equipment appear similar to no.6 fuel oil (type of oil used for industrial purposes) and much lower than coal. Emissions from nickel and vanadium when burning Orimulsion are reported to be controllable through suitable control technologies. Research by National Power suggests that at most deposition of arsenic, nickel and vanadium over 30 years would be less than 1% to the existing background concentrations near the power station. The Environment Agency looked at the experience of burning Orimulsion at the Asnaes power station in Denmark and found that particulate controls have reduced the concentration of metals in the stack gases to very low levels [xxxvi] . Uncertainties do remain over how well they can remove ultra fine particles that are implicated in respiratory disease. This will be discussed later in the paper.

Cooling Water

Power stations are only 35–40% thermally efficient [xxxvii] , regardless of the type of fuel employed. This means that there is a potential loss of 65% of heat generated. This is often discharged, through the cooling water, into estuaries at a temperature up to 10^oC above the ambient temperature. Warm water contains less oxygen than cold water and may be considered a pollutant. Attempts have been made in other countries to recover some of this heat for applications such as piping under roads or for agricultural purposes (greenhouses).

Flue Gas Desulphurisation (FGD)

FGD would require approximately 150,000 tonnes [xxxviii] of limestone each year. This not only raises concerns on the environmental impact of quarrying but also the transportation of limestone to the power station. The FGD plant would also generate approximately ¼ million tonnes [xxxix] of gypsum. Gypsum can be sold on for wallboard manufacture, road construction, soil amelioration and cement manufacture. If market demand was low or customer specifications could not be met gypsum would have to be disposed to landfill.

Extraction

While extraction of any mineral resource has an impact on the ecology of the area Bitor claims that the new drilling technology it employs reduces the surface area affected [xl] . The Venezuelan government has also planted a large man-made forest to offset, in part, the carbon dioxide emissions from current Orimulsion use. The absorption of carbon dioxide by the forest is estimated at approximately two million tonnes per annum, comparable to the emissions from a 500MW Orimulsion-fuelled power station [xli] .

Birdlife International has identified two endemic bird areas (EBAs) that may be affected by mining in the Orinoco Belt of Venezuela, namely Tepuis EBA and Orinoco-Negro White-sand Forests EBA (an endemic species is one that is confined to a very small area and not just reduced to it by hunting or loss of habitat). The Tepuis (or table top mountains), is estimated to have 36 restricted-range species (there are only 2 restricted range species in Europe and no EBAs) [xlii] .

The United Nations Agenda 21 Agreement [xliii] places a moral obligation on UK companies to minimise the ‘global footprint’ of their commercial activities. The operators of Kilroot power station may be obliged to secure assurances regarding the environmental impact of bitumen extraction in Venezuela.

PART B           The Proposal for Northern Ireland and Potential Implications

THE PROPOSAL FOR Northern Ireland

In order to cut the cost of electricity the Office for the Regulation of Electricity and Gas (Ofreg) has endorsed the proposal by Nigen (former operators of Kilroot Power Station recently taken over by AES) to burn Orimulsion at Kilroot power station with a capacity contracted at 520MW (mega watts). It is proposed to fit the station with appropriate pollution abatement equipment. If AES Horizons, the operators of Kilroot Power Station, apply for a license to burn Orimulsion the Environment and Heritage Service will assess the application. A proposal has been made on the basis that the plant will be fitted with upgraded particulate removal equipment and FGD, in anticipation of the Large Combustion Plants Directive [xliv] . To meet the anticipated flue gas emission limit for SO₂ would mean 97% SO_{2 removal at Kilroot. Table 5 (from Bitor company literature} [xlv] _{) shows typical emission levels for Orimulsion} combustion with air pollution control equipment. Table 6 shows the various technologies used in controlling air emissions from plants currently burning Orimulsion. Figure 2 shows a schematic diagram of the proposed controls.

Table 5: Control Technologies and Emissions

Pollutant	Control Type [xlvi]	Efficiency	Orimulsion	Coal (BACT) [xlvii]	Fuel Oil [xlviii]
Particulate	ESP	94+%	<0.02	<0.02	0.06 – 0.08
SO2	FGD	95%	<0.25	<0.3	1.1 – 2.75
NOx	LNB/Reburn	60+%	<0.15	<0.17	0.77

Table 6: Control Technologies currently employed in generating plants

	Boiler Rating	Control Technology [xlix]												Emissions (Limit) [l] (Values in brackets represent emission limits in the Country of operation)
	Operation Date	LNB	SCR	ESP	FGD								NOx			PM	SO2
NB Power Canada	320 MW 1994	l	l	n	n								440 (460)			17 (120)	560 (700)
SK Power Asnaes, Denmark	640MW 1995	n	l	n	n								408 (450)			7 (50)	340 (400)
ENEL Brindisi, Italy	660MW 1998	n	n	n	n								143 (200)			26 (50)	292 (400)
ENEL Fiume Santo, Italy	320MW 1999	n	l	n	n								<200 (200)			<25 (50)	<400 (400)
Kansei Electric Osaka, Japan	156MW 1994	n	n	n	n								82 (570)			20 (30)	115 (370)
World Bank															(460)	(50)	(1,001)

Figure 2: Schematic Diagram of Proposed Controls

HEALTH IMPLICATIONS AND LOCAL IMPACT

The major concerns of campaigners opposing the Pembroke Power Station conversion to Orimulsion related to the incidence of respiratory disease in Pembrokeshire. It was claimed that the Environment Agency did not monitor the very fine particles that cause asthma, heart deaths and cancers by not installing PM2.5 monitor heads. Campaigners were concerned that extremely fine particulates from Orimulsion penetrate through FGD systems and could accumulate in humans by inhalation and the food chain. Nickel in particular (cf. Table 4) contributes to the development of lung and nasal cancer [li] . In 1996 a representative group of approximately forty GPs in Pembrokeshire wrote to the Chairman of Pembrokeshire Council, the Environment Agency and several MPs expressing their concern about the health impacts of burning Orimulsion fuel [lii] . Their specific concerns are given below [liii] :

n     The detrimental effect on health caused by significant emissions of PM10 and ultrafine (<0.2microns) dust particles from the new power station.

n     The effect on local ozone levels of the increased emission of NO₂ interacting with emissions from nearby refineries.

n     The quantity of carcinogenic heavy metals that escape the filters at the proposed burn rate.

n     The effect on health of the definite increase in local air pollution.

The US Environmental Protection Agency has stated that combustion of Orimulsion appears to result in particle size distributions similar to those measured from the combustion of heavy fuel oil, with the large majority of particles being less than PM1 (Particulate Matter less than one micron) [liv] . However the high quantities of vanadium, nickel, other heavy metals and polycyclic aromatic hydrocarbons present in Orimulsion distinguishes it from other fossil fuels.

Another major concern for local impact is the acid deposition resulting from the emission of sulphur and nitrogen oxides. With FGD and low NO_x burners full operation might emit approximately 4000 tonnes of SO₂ annually [lv] . Research by Friends of the Earth assert that the flue gas from the FGD will be cooler and wetter than from other stations and this, combined with the moist local conditions, may cause more of the acidity to fall locally [lvi] .

Bitor Europe, the suppliers of Orimulsion, argue that the interpretation of emissions data is misleading and that the use of Orimulsion, with appropriate abatement, is more environmentally efficient than coal. They cite emissions data for Orimulsion combustion from several power stations operating worldwide as evidence of the benefits of the fuel [lvii] .

Particulate Matter (PM)

Short-term exposure to PM has been associated with increased rates of cardio respiratory morbidity and mortality in a large number of studies in the United States, Europe and other locations worldwide [lviii] . Associations between inhalable particles (PM10) and daily mortality have been consistently observed and the effects of the fine particle fraction (PM2.5) appear in some studies to be greater than the effects of the course fraction ie., those with diameters between 2.5 and 10 microns [lix] . Over the past decade, two US studies have found that low levels of PM2.5 or sulphate were associated with reduced survival among residents of more polluted areas due to increases in mortality from cardiovascular and respiratory disease, including lung cancer [lx] . Researchers at the Harvard School of Public Health have estimated that power plants are responsible for approximately 15,000 deaths per year (one quarter of an assumed 60,000 fine particle related deaths per year) [lxi] .

Exposure to PM2.5 is estimated to lead to a reduction in lifespan of 1.5 years. English Partnerships promoted a study of air pollution levels in Derbyshire in 1999. It was found that ambient PM2.5 were consistent with at least 3 years reduction in lifespan. At one particular school PM levels were as high as 137µg/m^{3 in 1999 rising to 156µg/m3} in 2000. When analysed cadmium levels were equivalent to smoking 300 cigarettes a day [lxii] .

However these measures relate specifically to ground level particulate matter concentration, not the stack emissions. Bitor maintain that by using the latest information on the sources and mechanisms of formation of ground level particulates and the latest measured performance data on Orimulsion, it has been demonstrated that there is no increase in the ground level concentration of particles and trace elements associated with health issues. ‘The high level of dispersion of the reduced levels of PM10 (compared to coal) from a 200m stack will not increase ground level concentrations’ [lxiii] .

Inherently Fine Particulate Matter

According to Bitor literature [lxiv] Orimulsion ash is inherently fine (85% less than PM1 (Particulate Matter less than 1micron). There is concern that abatement measures will not remove the fine particulate, especially as the measure of emissions standard is PM10.

Ground Level Particulate Matter Concentrations and Health Implications

Table 7 shows the expected health effects of a small increase (10µg/m³) in PM10 (measured at ground level – not stack emissions).

Studies have measured daily levels of particulates at ground level and related increases in disease, particular asthma, and death with incremental increases in PM10 emissions. Tables 1 and 2 in annex 1 summarise some studies on the impact of particulate emissions on health.

Table 7: [lxv] Summary of results show health effects with incremental rise (10µg/m³) in PM10.

Health Effect	% Change in Health Effect per Incremental Rise in PM10
Mortality
Total mortality	1.0%
Respiratory mortality	3.4%
Cardiovascular mortality	1.4%
Hospital Admissions
Asthma	1.9%
All respiratory conditions	0.8%
Exacerbation Of Asthma
Bronchodilator use	2.9%
Asthma attacks	3.0%
Measures of Lung Function
Forced expired volume	0.15%
Peak expiratory flow	0.08%

This table, along with those presented in the appendices, would appear to indicate that small increases in particulate matter are related to increases in morbidity and mortality.

It must be noted that it is necessary to make a distinction between stack emissions and percentage increases in ground level PM in epidemiological data as indicated in these tables. The effect of a change in power station emissions cannot be related to local ground level concentrations without knowledge of the plant contribution to ground levels and dispersion modelling. The contribution of PM mixtures from all sources needs to be considered [lxvi] .

Bitor Europe consider that plant emissions of all PM fractions, as well as NO_X and SO_X, the important precursors to the majority of fine PMs from power stations, will be reduced through the combustion of Orimulsion [lxvii] . Bitor Europe plant data shows less PM2.5 emitted from an Orimulsion fired power station than for a modern coal fired power station meeting EU New Plant Standards. It is argued that the greatest contribution from power stations to the ground level fine fraction PM2.5 is from secondary particles formed by the reaction of NO_X and SO_X emissions with ammonia in the air [lxviii] .

Particulate Matter Size Distribution

It is important to consider that while the mass of a 1ìm particle of unit density is equivalent to the mass of one thousand 0.1ìm particles, the surface area of one thousand 0.1ìm is ten times greater than the single 1ìm particle. Therefore a 10% increase in PM10 could represent a very large percentage increase of both the number of particles and the surface area of particles, and hence toxicant, presented to the bronchial, pulmonary and alveolar regions of the lung [lxix] .

The electrostatic precipitators employed as abatement for power stations measure emissions by mass. For this reason some experts [lxx] argue for a full classification of PM10 mixtures in terms of measures of particle count and surface area, as well as mass.

The Department of Health Committee on the Medical Effects of Air Pollutants [lxxi] concluded that measures of PM10 or even PM2.5 are inadequate measures upon which to base the assessment of toxicological hazard of inhaled particulate pollutants to the respiratory tract. As measures are those of mass they do not indicate the change in particle size and number distribution within the atmosphere. There is evidence to indicate that the number of submicron particles increases significantly in pollution incidents and these will have a significant influence on the surface area available for the sorption of other gaseous pollutants and condensates. This may provoke a mechanism for the increased delivery of vapours and gases, normally removed in the upper respiratory tract, to the deep lung.

The Chairman of the UK Government’s Expert Panel on Air Quality Standards (EPAQS) Professor Anthony Seaton recently concluded that both these measures (particle number concentration or surface area) were undermined by a lack of data with almost no evidence with respect to particle numbers and sparse evidence with respect to surface area. The current standard of measurement using PM10 was recommended for continued control and monitoring of ground level air quality [lxxii] . This would not appear to be consistent with the overall trend in the development of standards in Europe and USA as indicated below.

Emission Regulations

The recent Daughter Directive put forward by the European Commission [lxxiii] proposed new limit values for PM measured as PM10 of 50 µg/m³ (24 hours) and 20 µg/m³ (annual) [lxxiv] , to be met by 1 January 2010. In proposing a limit value for PM10 the Commission expressed interest in establishing limit value for fractions smaller than PM10 and noted the emerging evidence of stronger associations with health effects at smaller fractions. Member States are required to collect data on PM2.5 emissions. The Directive dealt with this limitation in part by proposing a review of new scientific information (in 2003) about the effects of particles, particularly the fraction below PM10, to help inform a consideration of whether a limit value should be established at this size.

In the United States the Environmental Protection Agency (EPA) is required by the National Clean Air Act to review the health and environmental effects of the criteria pollutants (SO₂, NO₂, PM, CO and ozone) every five years in consultation with its Clean Air Scientific Advisory Committee (CASAC). The CASAC is a group of experts from a range of relevant scientific disciplines who are charged with advising the EPA Administrator about the current state of the science to be used as the basis for establishing national ambient air quality standards (NAAQS). The entire CASAC process is open to public participation and comment [lxxv] .

In 1997, based on a comprehensive assessment of the science, the United States EPA established a slightly modified PM10 standard of 50 µg/m3 (annual) and 150 µg/m3 (24 hours) and also established a new PM2.5 standard of 15 µg/m³ (annual) and 65 µg/m³ (24 hours) [lxxvi] .

The EPA’s decision on the fine particle standard (PM2.5) was based on epidemiology reporting an association between health effects and direct measurement of fine particles. Embedded in the EPA’s Regulatory Impact Analysis for the PM2.5 fine particle health standard was the power sector’s contribution to death and disease from particles in our air [lxxvii] . The EPA also felt that course particles (PM10) still posed health concerns, including aggravation of asthma and increased respiratory illness, especially among children, and cited these effects as the basis for retaining its PM10 standard [lxxviii] .

In the UK the DETR’s Expert Panel on Air Quality Standards (EPAQS) recommended a PM10 air quality standard of 50 µg/m³ measured as a 24 hour running average.

Ash

Nickel (Ni) and Vanadium (V) have been measured at elevated levels in the fly ash and flue gas of units operating with Orimulsion. While Orimulsion has higher levels of Ni and V than many other fossil fuels, it is within the range of heavy fuel oils often used in industrial boilers [lxxix] . The ash produced at the Danish power plant currently burning Orimulsion is exported to England. It is then necessary to treat the ash for the removal of metals.

SOME INTERNATIONAL EXPERIENCE OF ORIMULSION

Dalhousie, New Brunswick, Canada.

The Dalhousie power plant in Canada has been burning Orimulsion since 1994. One difficulty that has arisen is that of plume visibility. Under certain daylight conditions, a slight brown colour has been present in the plume from the facility. The brown colour is especially noticeable shortly after sunrise and shortly before sunset. Fine particulate matter, bromine and nitrogen dioxide are possible causes.

The power station has dismissed the presence of fine particulate matter, bromine and nitrogen dioxide as possible causes stating that, in late 1998, it was determined that the brown colour in the plume was mainly due to the presence of low levels of sulphur trioxide (SO₃) in the flue gas [lxxx] . The facility’s wet scrubber is effective at removing sulphur dioxide, but largely ineffective at controlling sulphur trioxide, since SO₃ does not readily react with limestone to form gypsum, despite being water-soluble. To address this problem, a wet electrostatic precipitator was installed last year within the top of the scrubber tower, to remove sulphur trioxide. Early results indicate limited success, but further optimisation is ongoing [lxxxi] .

Juno Beach, Florida

Orimulsion is not used as a fuel in any power stations in the United States. A recent application to burn Orimulsion at the Manatee power plant in Juno Beach, West Florida was rejected in June 1998. The Florida Power and Light Company spent almost five years demonstrating the benefits of this fuel through expert testimony, third-party research, evaluation by 13 federal, state and local agencies and two formal public hearings [lxxxii] . The governor and Cabinet rejected the proposals based on health evidence and the threat of spillage. An independent report [lxxxiii] for the inquiry found that the potential for accidental Orimulsion spills still exists. The report stated that “spills are likely to occur during dockside Orimulsion transfer operations, as well as in transit, and the potential effects of accidental spills should be thoroughly appreciated”.

Bitor argue however that the application met all the legislative requirements of both the local and Federal authorities including the US EPA as well as two judicial reviews “The state board of politicians overruled these legislative bodies due to the local perception of the project and unanswered concerns outside of the legislative requirements”. [lxxxiv]

Asnaes, Denmark

Orimulsion was introduced in 1994 with high levels of emissions control. No adverse environmental or health incidents have been reported.

CONCLUSION

Provided emissions standards can be met, generators are free to choose whichever fuel they like. However, more effective environmental controls are likely to be required when using Orimulsion than when using heavy fuel oil. A plant that converts to Orimulsion is likely to face more stringent emission limits, since units that repower may be required to meet new source performance standards or controls for prevention of significant deterioration [lxxxv] . A comprehensive, open and wholly accountable impact assessment of the potential for burning Orimulsion at Kilroot will preclude many of the problems experienced by National Power at the Pembroke Power Station. In a review of the literature surrounding that debate confusion and contradiction appear to abound. While the expeditious introduction of lower electricity prices would be welcome (although not necessarily guaranteed) the potential for controversy should be minimised and the longer-term environmental and health impacts should not be compromised.

Despite the relative wealth of PM epidemiology, there are aspects of the problem that are still not understood. Exposure assessment, the effects of multiple pollutants, and the impact of long-term exposure to PM are important areas where scientific uncertainty exists [lxxxvi] . These uncertainties affect the interpretation of the available evidence, and limit, to varying degrees, its use in policy making [lxxxvii] .

A recent Harvard School of Public Health study of two coal-fired power plants in Massachusetts found that the fine particle pollution from these plants may be associated with over 100 deaths annually [lxxxviii] . Given that American emission standards are higher than those in Northern Ireland this might indicate a problem that is already present without introducing a contentious new fossil fuel.

While the introduction of abatement technology associated with the Orimulsion proposal for Kilroot power station would undoubtedly improve air quality, as determined by the current standards, there may be grounds for concern regarding the very fine particulate emissions associated with Orimulsion combustion that are not measured, particularly with respect to local geographic characteristics. According to recent comparative figures for air quality Belfast is the most polluted city in the UK [lxxxix] .

The argument concerning the proposed burning of Orimulsion at Kilroot will develop around two key points:

1.         The design of measures for abatement can ensure that the standard for PM10 emissions will be safely met. However, is this specification adequate in monitoring very fine particulate levels as stipulated in the US Air Quality Standards? Is this standard an adequate assessment of the potential toxicological hazard?

2.            Particulate Matter from the combustion of Orimulsion contains large quantities of vanadium and nickel. There is sufficient epidemiological data to conclude that these materials have safe minimum levels.

ANNEX 1

Table 1: Studies of acute effects of particles on daily mortality [xc] .

Location and Period	Particulate Measure	Mean PM10 (µg/m3)	% Change in daily mortality for each 10µg/m3 increase in PM10
Total Mortality
St Louis, MO 1985-86	PM10 (previous day)	28	1.5%
Kingston, TN, 1985-86	PM10 (previous day)	30	1.6%
Utah Valley, UT, 1985-89	PM10 (5-day mean)	47	1.5%
Birmingham, AL, 1985-88	PM10 (3-day mean)	48	1.0%
Respiratory
Utah Valley, UT, 1985-89	PM10 (5-day mean)	47	3.7%
Birmingham, AL, 1985-88	PM10 (3-day mean)	48	1.5%
Cardiovascular
Utah Valley, UT, 1985-89	PM10 (5-day mean)	47	1.8%
Birmingham, AL, 1985-88	PM10 (3-day mean)	48	1.6%

Table 2: Studies of acute effects of particles on exacerbation of asthma.

Measure of asthmatic response	Location and period	Particulate measure	Subjects	% Change in daily asthma response for each 10µg/m3 increase in PM10
Bronchodilator use	Utah Valley, UT, Winter 1989-90	Daily mean PM10	School panel	11.2%
			Asthma panel	12.0%
	Two Dutch Cities, Winter 1990-91	Daily mean PM10	School panel	2.3%
Asthmatic attacks	Two Dutch Cities, Winter 1990-91	Daily mean PM10	School panel	1.1%
	Denver CO, 1987-88	PM2.5	Asthma panel	11.5%

 

Renewable Energy

SUMMARY

Traditionally industrial policy has been viewed as being fundamentally opposed to environmental improvement. However the direction of the modern economy facilitates the integration of environmental issues with business success. In the drive for sustainable development and a reduction in greenhouse gas emissions new opportunities are arising for industry. The former Secretary of State for Trade and Industry has referred to these opportunities in terms of the “Green Industrial Revolution”. It is estimated that the value for environmental goods and services will double from its current level of 335 billion dollars by 2010.

The UK government have introduced the Renewables Obligation Scheme in Greta Britain (not Northern Ireland) as part of an ambitious strategy to achieve competitiveness and prepare for the export potential for environmentally sound energy technologies.

The prospects for renewable energy in Northern Ireland are good. The current renewable energy contribution to electricity demand in Northern Ireland of 1.5% compares with the UK average of 1% and a level of 1.93% in the Republic of Ireland. The total maximum estimated renewable energy contribution for Northern Ireland by 2010 is estimated to be 7.6%.

Wind energy is considered the most promising renewable energy source. The DTI estimates that by 2010 wind energy may be supplying 6% of UK electricity. In the Republic of Ireland the Irish Wind Energy Association estimate that wind energy will contribute 10% by 2005.

This paper discusses the potential renewable energy sources in Northern Ireland. It is considered that there is an opportunity to develop these sources further with a commitment to investment and research and development. There is also potential for co-operation and participation with cross-border strategy review groups and associations.

INTRODUCTION

“The global market for environmental goods and services is currently estimated at 335 billion dollars – comparable with the world markets for either pharmaceuticals or aerospace – and is forecast to grow to 640 billion dollars by 2010”. At a recent Greenpeace conference [xci] the former Secretary of State for Trade and Industry, Stephen Byers went on to comment that, “the renewable energy industry has a potential market worth of up to £1 billion per year by 2010”.

The development of sources of renewable energy not only offers a significant opportunity for economic development it is also fundamental to our commitment to reduce the emission of greenhouse gases. The Climate Change Framework Convention agreed at the United Nations Conference on Environment and Development in Rio de Janeiro (1992) succeeded in making the international community address the harmful effects of climate change. In 1997 Governments took a further step and agreed on the Kyoto Protocol that established targets for reduction of the greenhouse gases emitted by industrialised countries.

The Kyoto Protocol has formed the basis for progress with ‘flexibility mechanisms’ that increase the diversity of the methods available for meeting emission reduction targets. A major comprehensive, independent EU study on energy technologies serves as an appropriate reference for policy decisions [xcii] . The White Paper for Renewable Energy adopted by the European Commission (November 1997) commits the EU to reducing emissions by 8%, from 1990 levels, in the period 2008 to 2012. The UK has agreed to cut its emissions by 12.5%. Additionally the Government already has a goal of reducing its domestic levels of greenhouse gases by 20% by 2010. One of the Government’s key aims is to focus efforts on those measures which will bring wider benefits ie., warmer homes, a more sustainable transport system, more energy efficient industry and the opportunities and advantages for jobs and business that will evolve from the development and marketing of new technologies and processes.

Within the UK renewables currently contribute around 1% of energy demand and nearly 3% of the UK electricity supplied. It is expected that 1,500MW of declared net capacity of new electricity generating capacity will be met from renewable sources by 2003, equivalent to about 5% of UK electricity from renewables. The target of 10% of UK electricity from renewables by 2010 is considered to be a realistic goal [xciii] .

CURRENT RENEWABLE ENERGY MARKET IN NORTHERN IRELAND

In 1993 the Department of Economic Development announced its intention to encourage the development of commercially viable renewable energy sources in Northern Ireland. Commercial viability can of course be assisted by political decision-making regarding investment, a commitment to R&D and an acceptance that dividends may not necessarily be financial. Northern Ireland Electricity (NIE) was obliged, under the first non-fossil fuel obligation (NFFO), to initially secure about 16MW DNC (Declared Net Capacity) (approximately 1%) rising through successive NFFOs to 45MW DNC (approximately 2.8%) by 2005 [xciv] . Table 1 details the 20 projects awarded contracts under the first non-fossil fuel obligation (NI-NFFO1)³.

Table 1: Summary of the 20 Projects awarded contracts under NI-NFFO1

Technology	Site Name	Company	Capacity (kW DNC)
HYDRO	Benburb	Mr J Mills	75
	Blackwater	McMullan & O’Donnell	100
	Carrickaness HP	Mr Kenneth Mills	155
	Haperstown	Hillmount Properties (NI) Ltd	250
	Oakland’s WTW	NI Water Service	49
	Park Mills	Park Electrical Services	30
	Randalstown Hydro	Newmills Hydro Generation Ltd.	500
	Silent Valley	NI Water Service	435
	Sion Mills	Herdmands Ltd.	780
SEWAGE [xcv] GAS	Antrim STW	NI Water Service	100
	Armagh STW	NI Water Service	85
	Ballyrickard STW	NI Water Service	140
	Bullay’s Hill STW	NI Water Service	205
	Magherafelt	NI Water Service	30
WIND	Bessy Bell	Colham Energy Ltd	2,098
	Corkey Wind Farm	B9 Energy Services Ltd	2,142
	Elliot’s Hill	B9 Energy Services Ltd	2,142
	Owenreagh Wind Farm	EF Energy Ltd	2,054
	Rigged Hill	B9 Energy Services Ltd	2,142
	Slieve Rushen Phase 1	Sean Quinn Group	2,086

The 6 wind schemes totalled 13MW DNC and the 9 small-scale hydro schemes totalled 2.5MW DNC capacity. The 5 sewage gas projects (total 560kW) have been withdrawn. The average bid price paid to successful generators was approximately 6p/kWh, twice the cost of electricity generated by Northern Ireland power stations. At the end of 1997, 13 schemes were commissioned for 14.5MW DNC.

The second non-fossil fuel obligation, NI-NFFO2, secured 10 successful projects summarised in Table 2^{3. The average} price paid to NI-NFFO2 contractors is 4p/kWh. This lower bid price reflects the improvement in technology between NI-NFFO1 and NI-NFFO2 and in particular wind energy technology. At the end of December 1998 16 schemes were commissioned for 15MW DNC for both NFFO1 and NFFO2. NIE now have contracts for 32MW DNC (2% of peak demand) of renewable power compared to the long-term objective of 45MW DNC (2.8%) by the year 2005.

Table 2: Summary of the 10 Projects awarded contracts under NI-NFFO2

Technology	Site Name	Company	Capacity (kW DNC)
BIOMASS	Benburb Valley – Blackwater Museum	B9 Energy Biomass Ltd.	204
	Brook Hall Estate	Brook Hall Estate	100
	McGuigans Biogass	McGuckian Pig Slurry Bio-Gas	250
HYDRO	Benburb Small Hydro	Benburb Centre	75
	Gilford Mill	TCI Ltd.	176
LANDFILL GAS	BCC Dargan Road	Belfast City Council	4,550
	Cottonmount LFG	UK Waste Management Ltd.	1,699
MUNICIPAL AND INDUSTRIAL WASTE	Duncrue Road	TIRU/SAUR (UK)	6,650
WIND	Lendrum’s Bridge	Renewable Energy Systems Ltd.	2,141
	Slieveahanaghan	B9 Energy Services Ltd	426

The non-fossil fuels obligation has provided £600million of support for renewables to date in the UK. Support for renewables under the NFFO arrangements, which has declined recently, will accelerate again in the next ten years and could rise to around £150 million a year. The programme has been successful in its objective of driving down costs – the cost of generating electricity under NFFO contracts has been halved over the past decade and the more mature renewables technologies are now almost competitive.

In 1999/2000 NFFO added approximately one pence to the final cost of every unit of electricity consumed in Northern Ireland [xcvi] . The NFFO accounts for about 1.5% of the Northern Ireland industry’s electricity bill. This is equivalent to 10% of the price disadvantage which NI companies face compared with their GB competitors and the Republic of Ireland^{6. The UK Government is to replace the non-fossil fuel obligation with a Renewables Obligation} Scheme as part of an ambitious strategy to achieve competitiveness and prepare for the export potential for environmentally sound energy technologies. The Renewables Obligation does not apply to Northern Ireland.

OTHER RENEWABLE ENERGY INITIATIVES IN NORTHERN IRELAND

The Internal Market in Electricity (IME) Directive (July 1999) allows any generator to sell electricity directly to customers regardless of size or location up to a limit of 1MW without trading through the NIE power procurement business. A charge will be made for electricity transported over the electricity network.

In October 1998 NIE introduced an Eco-Energy Tariff which allows renewable-generated electricity to be purchased and sold through the NIE supply company. NIE has pledged to match Eco-Energy users’ consumption with an equivalent amount of ‘new’ renewable energy fed into the grid system. Consumers can choose to have 10%, 50% or 100% of their power supplied by Eco-Energy. Participation in the scheme has been poor with approximately 1000 subscribers. A Scottish Energy Utility in association with the RSPB use a model which involves no extra charge to the customer.

POTENTIAL FOR RENEWABLE ENERGY IN NORTHERN IRELAND

Wind Energy

Wind power is one of the most promising renewable energy resources for electricity generation worldwide. The technology associated with wind energy is well established with nearly 1000 wind turbines in operation around the UK. Over the past six years the average annual growth in sales of wind turbines has been 40%. Typical wind farms in Northern Ireland have about 10 machines each of 500kW installed capacity. These wind farms each operate to produce roughly 16GWh/y of electricity. The average house in Northern Ireland uses 3800kWh of electricity each year, 16GWh/y should therefore provide for the electricity needs of approximately 4200 homes.

A wind farm of about 20 machines will usually extend over 3 to 4 km² of land, although the actual machines occupy only about 1% of this area and the remaining land can be farmed as usual. The ESB in the Republic of Ireland is currently interested in developing wind farms on large sites, typically 100 hectares.

Indications are that costs for onshore wind energy are likely to fall further because of economies of scale in manufacture and technical improvements leading to lower capital costs. The DTI believes that by 2010 wind energy may be supplying 6% of UK electricity.

The technology for offshore deployment is similar to that for onshore but the harsher climate and relative inaccessibility place more stringent requirements on the initial design and subsequent reliability. A recent study commissioned by the Department of Enterprise, Trade and Investment and the Department of Public Enterprise and funded by the EU INTERREG II initiative has assessed the potential of offshore wind energy resources on the island of Ireland [xcvii] . The report found that, assuming a maximum water depth of 20m and minimum distance from land of 5km the island of Ireland has an impressive energy resource. Within these boundary limitations some 32% of the island’s predicted consumption by 2005 could be met by wind energy, (42% of RoI predicted consumption could be met by the resource available off the coast of RoI and 7% of NI predicted consumption could be met by the resource available off the coast of NI).

The ESB in the Republic of Ireland have secured a licence to investigate the feasibility of an offshore wind farm on the Kish Bank, off the Dublin coast. This would be about 40 times bigger than any offshore wind farm in the world today. Harland and Wolff has been granted permits to investigate the suitability of three locations off counties Wicklow and Wexford [xcviii] .

Airtricity, a joint venture between Future Wind Partnership and the National Toll Roads, plans to develop another sea based wind power venture 10km off the coast of Arklow, Co Wicklow. The Arklow Bank is a long (24km), narrow, (1 km) and shallow (10m) stretch that could be used for 200 wind machines at a cost of IRE£450million and lead to a lowering in CO₂ emissions of 1,000,000 tonnes per year.

Biofuels (energy crops)

Energy crops are crops (including wood) grown specifically for use as a fuel. The fuel produced is restorable and capable of meeting baseload or peak electricity generation requirements on demand. It is also significant that they are the only renewable energy resource with the potential to be expanded by man. This crop may also address the critical need for diversification in the agricultural sector.

The most suitable energy crop for Northern Ireland is short rotation coppice. This involves growing willow or poplar on a short rotation cycle of 2 to 4 years, after which it is harvested directly. Willow can be successfully grown on land, which is no longer economically viable for agricultural purposes. The fuel produced can be used in a range of applications from small-scale boilers to power stations. The technology associated with gasification [xcix] of the wood prior to its use as a fuel is currently under development. Studies in the UK show that sustainable yields in excess of 10 oven-dry tonnes per hectare per year can be expected. In Fermanagh and Tyrone there is around 70,000 ha of marginal land available to convert to arable coppice, equivalent to an energy source of 470GWh/y (or the electricity requirement for 125,000 homes). It is estimated that a further 54,000 dry tonnes of wood can be considered available from harvesting residues and sawmill waste combined. This is equivalent to an energy resource of 57GWh/y (electricity for 15,000 homes).

Northern Ireland leads the development of willow coppice and small-scale gasification technology. A gasification plant linked to a 90kW gas engine/electricity generator and a central heating system has been installed at an agricultural college in Enniskillen and has been used since 1993. A 200kW electricity generator fuelled on forest residues using a gasification process, has been installed at the Blackwater Valley Museum in Co. Armagh. Following the success of this demonstration scheme B9 Energy Biomass Ltd is now selling conversion technology for the gasification of wood chips into the European market place. John Gilliland, at the Brook Hall Estate, uses willow coppice grown on the farm as fuel for a small heat and power unit which generates 100kW of electricity through a gasifier, engine and generator. The ARBRE project in Yorkshire is the most advanced project to generate electricity from agricultural and forestry residues [c] .

Another source of fuel is oil seed crops such as rape, which are crushed and processed to produce oil. Starch or sugar crops such as cereals, potatoes or sugar beet can be fermented and distilled to produce an alcohol that can be used as a petrol substitute.

Energy from Waste

Biogas (anaerobic digestion)

In the late 1980s South West Water developed a strategy to meet the problem of sewage sludge treatment and disposal at a treatment works in Devon. Sewage sludge was collected and treated in tanks under oxygen-free conditions and broken down by bacteria in a process known as anaerobic digestion. As well as eating the waste a methane-rich biogas is produced by the process which was used to fuel a combined heat and power (CHP) scheme providing on-site electricity as well as heat to maintain the digestion tanks at the right temperature. In the first 12 months the scheme produced 377,000 kWh of electricity (sufficient for 100 homes) and has now been extended to six other sites. The treated sludge is used as a fertiliser/soil conditioner.

Anaerobic digestion has been used successfully in the treatment of animal slurries and can be adapted for a range of other applications. It could be used to process the organic fraction of household and commercial waste.

In Northern Ireland there are about 17 large treatment plants that incorporate anaerobic digestion. The 50,000 dry tonnes of sewage sludge produced each year could in principal generate about 161GWh/y of biogas from which 31GWh/y of heat [ci] (sufficient for 2000 homes) and 32GWh/y of electricity (8,500 homes) could be generated if combined heat and power is considered for the whole of the biogas source.

About 0.94million dry tonnes of farm wastes are produced each year in Northern Ireland, including farm livestock manures and bedding straw which in principal could yield 389GWh/y of electricity but in practice there would be few applications were the heat could be used.

Poultry litter, which comprises materials such as wood shavings, shredded paper or straw, mixed with droppings, has a calorific value slightly lower than that for wood at 9-15GJ/tonne. Two plants of 12.6MW and 13.6MW have been in operation in England for many years. A third plant is being commissioned at Thetford in Norfolk with a NFFO contract to generate 38.5MW from a mixture of poultry litter and forestry residues. A further plant is under construction in Fife to generate 9.8MW.

Refuse Derived Fuel

In this technique waste can be extensively processed to allow recovery of recycled material and production of a refined, dried densified fuel product. However while still under development, most notably in Dundee, this process has been largely unsuccessful.

Incineration

Recycling, reduction and re-use are much more energy efficient and the energy generated from waste incineration is excluded from the renewables obligation. Nevertheless the heat produced during incineration can be used for electricity production or for combined heat and power, (CHP). In the UK at present around 2.5million tonnes of waste per year is being used to fuel 180MW of power generation, enough for a quarter of a million homes [cii] .

There are about 0.7million tonnes of household waste and 0.55 million tonnes of combustible commercial and industrial waste generated in Northern Ireland each year. Household waste has an energy content of approximately 9GJ/t and commercial waste has around 16GJ/t, (coal has 27GJ/t). The total energy content of the collected waste is therefore equivalent to about 0.6million tonnes of coal per year².

Landfill Gas

Up to 90% of all domestic refuse is landfilled in the UK at almost 10,000 landfill sites. As the waste breaks down as a result of biological action it releases carbon dioxide and methane in roughly equal quantities. It is the methane content that makes this a potential fuel. Gas collection, via a series of wells drilled into the waste, can often complement environmental protection measures in force at landfill sites.

The number of schemes in the UK generating electricity for the grid is expected to rise from the current level of 120 sites as EU directives to control methane emissions are implemented. In the longer term, beyond 2025, the number of schemes is expected to diminish as EU landfill directives will divert organic wastes away from landfill thus reducing the potential for methane generation.

Solar Power

Active Solar Heating

Active solar heating converts solar energy into heat, which can either be stored or converted to electricity. Solar collectors, usually mounted on the roof, are similar in appearance to rooflights. The surface of the collectors absorbs solar energy and the heat generated transfers to a fluid flowing through pipes in the collector. The evacuated tube system can absorb energy from light or solar heat and is therefore more efficient than the conventional flat plate system, which absorbs solar heat only.

The Belfast Energy Agency is currently piloting a scheme, in conjunction with Energy Action in Dublin to assess the efficiency of solar panels in social housing. Evacuated tube systems, 1metre square, were installed in three houses, in Bangor, Holywood and Donegal, in August 2000.

The solar domestic water heating systems cost approximately £3000 each and it is anticipated they will provide 50% of hot water requirement in these homes. This excludes hot water for the central heating system. Progress of the performance of the heating systems is being relayed via the Belfast Energy Action website [ciii] .

Collectors can also be deployed to generate electricity but the climate conditions in Northern Ireland are not considered suitable.

Passive Solar Heating

Passive solar heating is concerned with exploiting architectural design to maximise energy conservation benefits. Buildings can be designed to maximise energy efficiency not only through strategic orientation but also through the choice of materials incorporated in the building fabric.

Additional glazing can often improve internal lighting and reduce the need for electric light switches. Conservatories make use of solar radiation to heat internal space and provide natural convection. Avoiding the positioning of windows on shaded surfaces can reduce heat losses.

A design philosophy sympathetic to energy efficiency can make a significant impact not only on running costs but also on the resulting savings in fossil-fuel energy and reduction in CO2 emissions. For example the thermal capacity of concrete, called thermal mass or fabric energy storage, enables it to store and re-radiate heat provided it is exposed to the heat source. Leaving concrete walls, floors or ceilings plain or painted can facilitate very effective climate control.

Photovoltaics

Photovoltaic technology converts solar energy into electricity using photovoltaic cells, a technology first used for powering satellites. The photvoltaic (PV) material (a solid state semi-conductor) and its electrical contacts are usually referred to as a cell. Cells encapsulated in a sealed unit producing a useable voltage are called a module.

In the UK it is estimated that installed PV rose from 172kW in 1992 to about 400kW in 1996 [civ] . World-wide the market for PV material has been growing and will continue to expand not only because of the evolution of the technology but also because PV can provide power to locations not served by the grid.

There is an average annual solar radiation in Northern Ireland of about 2.5kWh/square metre/year. The efficiency of photovoltaic conversion is currently between 5% and 15% so that a fraction of the radiation can be utilised³. Nevertheless embedded PV systems, in place of traditional roof or wall materials, generating electricity for the building concerned and eliminating transmission losses associated with large-scale generation, can be economically viable.

Hydropower

When the Republic of Ireland’s Electricity Supply Board (ESB) was set up 70 years ago it ran exclusively on hydropower for the first two decades. Now hydro accounts for just 10% of energy generated. Hydroelectric power accounts for about 2% of the UK’s total installed electricity generating capacity. There are 28 small scale sites currently operating in Northern Ireland ranging in capacity from 3kW to 0.8MW. Large scale projects were originally considered for sites on the River Mourne and Lower Bann River in 1948 but were abandoned for environmental reasons.

A scheme at Randalstown, which previously housed a large bleach and dye works with machinery driven by water turbines, is currently being developed to provide a new 500kW scheme to supply electricity directly to the grid. Another scheme in Silent Valley makes use of flows from the water industry to generate 425kW.

There may be an additional total capacity for 10GWh/y of hydropower in Northern Ireland but this would be subject to strict environmental impact assessments particularly concerning fish and wildlife³.

Wave Energy

Queens University Belfast has developed a wave energy device located on the Scottish island of Islay and feeding 2MW of electricity to the local grid. World-wide installed devices are limited to low power experimental plants. The geography of the coastline and the direction of the prevailing waves mean that the shoreline wave energy resource of Northern Ireland is insignificant [cv] .

Geothermal Energy

Geothermal energy is the heat generated in the earth’s molten interior where the temperature can reach 7000^oC. The total geothermal resource is vast, however geothermal energy can only be utilised in regions where it is suitably concentrated. These regions correspond to areas of earthquake and volcanic activity.

Geothermal power plants draw from underground sources of steam. Famous examples are The Geysers in northern California and Yellowstone National Park in Wyoming. As Yellowstone is protected from development the only dry steam plants in the USA are at the Geysers.

Geothermal Direct Use

Geothermal reservoirs of hot water that are found a couple of miles or more beneath the earth’s surface, can also be used to provide heat directly. In modern direct-use systems a well is drilled into a geothermal reservoir to provide a steady stream of hot water. This process is used to heat buildings, dry crops, heat water at fish farms and for industrial processes such as pasteurising milk.

Geothermal Heat Pumps

The upper 10 feet of the Earth’s crust maintains a nearly constant temperature between 10^oC and 16^oC. Geothermal heat pumps exploit this resource to heat and cool buildings. A fluid circulates through pipes, buried to an appropriate depth, to absorb or relinquish heat within the ground. In the winter the heat pump removes heat from the heat exchanger (buried pipes) and pumps it into the indoor air delivery system. In the summer the process is reversed to provide cool air indoors. While this system is common in the USA in is not yet commercially viable for Northern Ireland. Table 3 details examples of projects in the Republic of Ireland.

Table 3: Geothermal Heat Pump Projects in Ireland

Project	Details
Mallow Geothermal Aquifer	A warm spring, temperature 20oC, is used as a heat source to provide heat for a swimming pool and building
Tuam, Co Galway	The temperature of the heat source is 9oC and is used to heat a swimming pool building.
Green Building, Temple Bar, Dublin	The building uses electric heat pump operating on night rate electricity. Heat is transferred from deep within the bedrock under the building to a large water tank acting as a short term thermal reservoir. During the day the heat is distributed to the building via an embedded pipe system.
Trinity College Dublin	Heat is extracted from groundwater at 12oC drawn from gravel aquifers. The energy saving is of the order of 2GWh per annum and the pay back period achieved by savings in running costs for three separate buildings ranged from 1.5 to 4 years.
Churchfield, Cork	Two heat pumps installed to heat a sports stadium. This project will be used to evaluate the financial viability under Irish operating conditions.
Geothermal Heat Pump Test Facility, Cork RTC	Cork Regional Technical College has built a geothermal heat pump test facility with the aim of developing mathematical models to simulate the heat transfer processes. The models will then form the basis of design aids using heat pumps in Irish conditions.
EC THERMIE Project	A trans-national EC funded project began in 1997 to evaluate the heat energy that can be economically recovered from groundwater sources.

POTENTIAL FOR ENERGY EFFICIENCY

Northern Ireland companies waste up to 20% of their energy and the value of savings on many energy efficiency projects has doubled in 2000 [cvi] . There is therefore significant potential to conserve energy in Northern Ireland and consequently contribute to the emissions reduction strategy. The Industrial Research and Technology Unit (IRTU) provides loans for energy efficiency improvements, support for environmental audits, an Environmental Enquiry Point and free advisory visits. An uptake in the use of natural gas over the next decade could provide the basis for Northern Ireland reducing the potential for greenhouse gas emissions. To encourage the use of gas the Chancellor announced in the 2000 Budget that Northern Ireland companies should be exempt from the Climate Change Levy. The charity organisation Bryson House operate the Belfast Energy Efficiency Advice Centre and the Belfast Energy Agency to encourage and develop domestic energy conservation initiatives.

Combined Heat and Power (CHP)

Power stations are extremely thermally inefficient [cvii] . However by providing a method of generating electricity and heat a 35% reduction in primary energy usage can be achieved. This can allow the host organisation to make economic savings where there is a suitable balance between the heat and power loads. Current combined heat and power installations can achieve a reduction of over 30% in CO₂ emissions in comparison with coal-fired power stations and 10% in comparison with gas fired combined cycle gas turbines.

The implementation of the Integrated Pollution Prevention and Control Directive and the climate change levy will encourage regulated sites to use energy efficiently. Consequently combined heat and power will become more significant. The availability of natural gas [cviii] will also provide the opportunity for an increase in the installation of CHP.

There are currently only 22MW of CHP in Northern Ireland. The Brook Hall Estate has a CHP system based on wood gasification which has a capacity of 100kW electrical and 200kW thermal. It is estimated that on a 17 hour daily generation period, this system, although small, saves emissions of 1.4 tonnes of CO₂ daily [cix] . The Blackwater Valley Museum also uses a combined heat and power system with a design capacity of 200kW electrical. As in the case of Brook Hall the electricity generated, currently 100kW, is the subject of a NFFO contract. The co-generated heat is supplied to the on-site Museum.

CONCLUSION

The current renewable energy contribution of 1.5% to electricity demand in Northern Ireland compares with the UK average of 1% and a level of 1.93% in the Republic of Ireland. It is the opinion of the recent NIE/DED report³ that the total maximum estimated renewable energy contribution possible by 2010 is 7.6%. A contribution of 12%, may be possible by 2025. The UK target for renewable energy generation is 10% by 2010 and the figure for the Republic of Ireland is 3.75% by 2005 [cx] .

The Department of Trade and Industry has described the potential development as the Green Industrial Revolution. Climate change means we have to look at ways of reducing greenhouse gas emissions not just up to 2010 but, more importantly, well beyond. This represents a major opportunity. The DTI advised that sustainability and environmental issues were not a threat to businesses rather the key to future prosperity. As an example he quoted the relative performance of companies on the Dow Jones. In the first half of this year, the return on equity of the Dow Jones Sustainability Group Index averaged 15%, compared with just 8% for companies in the regular Dow Jones Index.

The potential for renewable energy is fundamental not only environmentally but also industrially. With appropriate affirmative action Northern Ireland should be challenging strongly to secure a visible presence and market share in the renewable energy industry.

n     Over one year, a monthly generation or energy saving of 800KWh would produce a positive environmental impact equivalent to eliminating the production of 8,709Kg of CO₂, not driving a car for 19,200 miles, planting 4 acres of trees and leaving 9,600Kg of coal in the ground.

n     The largest wind turbine manufacturer in the world, Vestas, had a turnover in 2000 of approximately IRE£600million. The company, which grew from a Danish agricultural machinery factory, has a global growth rate of 35% a year with manufacturing facilities in Germany, Spain, Italy and India. With a significant history in industrial expertise and innovation there is an opportunity for Northern Ireland companies to enter and succeed in this rapidly growing market.

n     The Minister of State at the Department of Public Enterprise in the Republic of Ireland, Mr Joe Jacob has set up a renewable Energy Strategy Review Group to take forward the recommendations of the RoI Green Paper on Renewable Energy (December 1999). A Northern Ireland input into this review group may provide an opportunity to share experiences and develop competitive strategies.

 

WAVE ENERGY

INTRODUCTION

This paper is spilt into two parts. Part A describes the wave energy resource and its potential for development in Ireland and the UK. Part B considers the technologies currently under development to exploit the energy potential.

n     The World Energy Council estimates that 1TW [cxi] (1Terawatt (TW) is equal to one million MW) of energy could be harvested from the world’s oceans, the equivalent of current world electricity production. An assessment of the likely markets indicates that, if wave energy devices perform as predicted their economic contribution would be greater than 2000 TWh per year. This would correspond to an investment of more than £500 billion [cxii] .

n     Because of the direction of the prevailing winds and the size of the Atlantic Ocean, North Western Europe including the UK and Ireland has one of the largest wave energy resources in the world. The total amount of wave power in the sea around the island of Ireland and Great Britain has been estimated at an annual average of 120GW (Kilroot power station has a capacity of 520MW; 1GW = 1000MW). If wave energy devices in the UK achieve their predicted costs and performance they could generate up to 50 TWh/year (approximately 15 % of the total energy resource in the UK), corresponding to an investment of £20billion.

n     The shoreline resource in Northern Ireland will be the North-facing coast between Portrush and Ballycastle. This will have a reasonable wave climate with a realistic potential recoverable resource of 25MW [cxiii] . Moving offshore this recoverable resource could easily increase to 180MW [cxiv] .

PART A - BACKGROUND

Waves, particularly those of large amplitude, contain large amounts of energy. They are formed by the interaction of winds with the surface of the sea. Since winds are themselves caused by a combination of the sun’s heat and the rotation of the earth, wave energy is therefore a transfer of energy from the sun, via the wind to the sea.

Wave power devices absorb this energy. They can be floating, fixed to the seabed offshore, or constructed at the sea’s edge on a suitable shoreline.

Wave energy is a relatively new technology. Research was at its most intense during the 1970s and 1980s under various government and industry-sponsored programmes. Wave energy research is still carried on and has benefited from funding provided by the European Commission. A wide variety of wave energy devices have been proposed over the last three decades with varying degrees of success. Many have been the subject of research and development work and several have been deployed in the sea as prototypes or demonstration schemes.

Wave energy technology has developed to the stage where the first demonstration schemes are being built, so there is only a small market at present. The world’s first commercial wave power station has successfully deployed technology developed at Queen’s University Belfast to feed electricity into the UK’s national grid on the Scottish Island of Islay.

RENEWABLE ENERGY TECHNOLOGIES

Renewable energy technologies for deriving electrical power from the ocean use tidal power, wave power, ocean thermal energy conversion, ocean currents, ocean winds and salinity gradients. Of these the three most highly developed technologies are tidal power, wave power and ocean thermal energy conversion. Tidal power requires large tidal differences for example in regions such as Maine and Alaska in the US. Ocean thermal energy conversion is limited to tropical regions, such as Hawaii and to a portion of the Atlantic coast. Only wave power is appropriate to Ireland and the UK.

Although many wave energy devices have been invented, only a small proportion have been tested and evaluated. Furthermore only a few have been tested at sea, in ocean waves as opposed to artificial wave tanks.

There are currently more than 12 generic types of wave energy systems. Some systems extract energy from surface waves. Others extract energy from pressure fluctuations below the water surface or from the full wave. Systems may be fixed in position and waves pass by them, while others follow the waves and move with them. There are also systems that by concentrating and focusing waves increase their height and their potential for conversion to electrical energy.

WAVE ENERGY RESOURCE POTENTIAL

The wave energy resource in Ireland and the UK can be divided into three categories: near shore, shoreline and offshore. The shoreline resource is very site specific with some areas being unsuitable for wave energy devices. The estimated UK shoreline resource is approximately 2TWh/year (less than 1% of the total energy generation in the UK as a whole) [cxv] . The UK nearshore resource (ie. at 20m water depth) is estimated to be 100-140 TWh/y (approximately 30 % of the total energy resource in the UK)².

The incidence of wave power at deep ocean sites is three to eight times the wave power at adjacent coastal sites, however the cost of electricity transmission from deep ocean sites is very high. Exploitation of the offshore (deep water) resource, estimated at 600-700 TWh/y (approximately twice the UK total energy resource)², would require significant investment in upgrading the transmission system in the north and west of Scotland. Consideration is being given to deploying a HV transmission line from Iceland to the UK (in order to exploit Iceland’s vast renewable energy resources) and from Ireland to the UK. These are likely to be longer term projects (>2010) but if they do take place they would enable not only a large part of this resource to be exploited but they would also allow the much greater resource of the Northern Atlantic to be tapped [cxvi] .

Wave conversion devices positioned in deep water (100m) offshore are projected in the longer term to provide the most likely method of large-scale energy recovery.

Development of shoreline and near shore systems is however relatively further advanced, although considerable demonstration work remains to be done if these are to be considered as reliable sources of electricity. Shoreline devices using oscillating water column and Wells turbine (see Part B) currently have the greatest potential for wave energy conversion. In Ireland only exposed points lying on the Atlantic coast between Waterford and Donegal, where water depths of 10-20m are available close to the shoreline, are considered suitable as wave power resource. Shoreline wave power potential along the east coast is relatively insignificant and the south east coast is also poor due to the prevailing wave climate.

The predominant wave direction is from the west. Ireland’s west facing coastlines have an excellent wave climate. The shoreline resource in Northern Ireland will be the North-facing coast between Portrush and Ballycastle. This will have a reasonable wave climate with a realistic potential recoverable resource of 25MW. Moving offshore this recoverable resource could easily increase to 180MW [cxvii] .

The overall power available in deep water (100m) off the entire Irish coast is about 25GW of which about 12GW might at some stage be theoretically convertible into electricity having an annual resource value of 105TWh/year [cxviii] .

By 2005 there is expected to be no more than one or two shoreline installations in Ireland with output of 0.2–2MW, produced at a cost of approximately 10p/kWh. Assuming reasonable progress is made in ongoing developments in other countries it is possible to project a modest investment in generation by 2020. For strategic locations on the coasts of Kerry, Clare, Mayo, Donegal and Sligo 250MW of installed plant delivering 950GWh/y appears sustainable at a price of 7-10p/kWh.

ENVIRONMENTAL CONSIDERATIONS OF WAVE ENERGY TECHNOLOGIES

There are potential environmental considerations in the deployment of wave energy devices, which may need to be assessed.

n     Could influence the shore and shallow sub-tidal areas and the communities of plants and animals they support.

n     Potential navigational hazard to shipping.

n     Some devices are likely to be noisy, especially in rough conditions.

n     Visual impact of shoreline devices.

n     Potential impact on water sports and recreation.

RESEARCH AND DEVELOPMENT

The biggest disadvantage of renewable energy sources for the generation of electricity is that costs tend to be significantly higher than conventional sources of electricity. Research and development has provided important contributions to the reduction in generating costs and in solving technical issues related to infrastructure and grid considerations. Continued research and development will be required if wave energy technology is to reach its full potential [cxix] . There is also significant potential to provide opportunities for diversification for indigenous industry.

The Situation in the UK

The UK government initially funded research into large-scale offshore wave power. However following reviews in 1983 and 1985 the eleven year, £17 million Wave Energy Programme was no longer considered economically viable compared with other renewable energy technologies. Since 1985 the Department of Trade and Industry (DTI) has been encouraged by the potential of small shoreline wave power systems and has undertaken a detailed economic assessment of the shoreline and near shore wave energy resource.

The DTI reviews the progress of work in other countries such as Japan and Norway.

No support has been given to wave power under the Non-Fossil-Fuel Obligation (NFFO) because the technology is considered to be in research and development stage. Three projects were awarded contracts under the third round of the Scottish Renewables Obligation (SRO-3), one of which was for the LIMPET on Islay.

In March 1999 the UK government launched its new Wave Energy Programme. This will monitor the development of the SRO-3 schemes and is already supporting research and development. The DTI’s budget for wave R&D last financial year, the first full year of the new R&D programme, was £450k. DTI funding contractually committed to projects for 2001/02 is £823k. A further £417k of DTI funding proposals have not yet been formally approved. For 2002/03 there is £125k committed and £60k proposed.

The Situation in Ireland

Wave energy research has been carried out in Ireland since 1980, funded by the government and more recently by the EU through the JOULE programme. There is a high level of internationally recognised expertise in Ireland which is very proactive in the European Wave Energy Research Programme. The Secretariat of the European Wave Energy Research Network is based in Cork.

In 1997 the Department of Marine and Natural Resources invited Harland and Wolff, along with Fred Olsen, to become involved in the research and development of a wave energy device called Wavebob. The Wavebob is an Irish invention and the Intellectual Property Rights are currently owned by Wavebob Limited, an independent privately owned company registered in Dublin. The Department of Marine, Fred Olsen and the inventor William Dick, are shareholders in Wavebob Ltd. It is intended to open Wavebob Northern Ireland Ltd., within the precincts of H&W in the near future. The project was granted Eureka status [cxx] in June 2000 and it is estimated that approximately three further years of research into the Wavebob will be required and a possible further 2 years of prototype development will be necessary before commercial manufacture can be considered. The Electrical Engineering Department of Queens University and Musketeer Engineering from Castlereagh are also involved in the venture. A crude prototype Wavebob has been set up in the Department of Aeronautical Engineering at Queens producing very encouraging results.

The Wavebob has been designed specifically to work in deep water (100m or more) and in large arrays, off the North and West Coast of Ireland in particular. The device floats and is capable of accepting wave energy from any direction. It is some 50metres in depth, of which 40metres are underwater, and has a diameter of 15metres and weighs 550 tonnes. A single wave-farm would typically have an installed capacity of several hundred MW and it is expected to be able to deliver electricity to the shore at prices in the range of 1 - 3 pence (3-5 eurocents) per kilowatt-hour.

CURRENT EUROPEAN RESEARCH AND DEVELOPMENT

The European Commission provides most support in this area. There is limited support from individual governments within the EU (Denmark is the exception).

DENMARK

Testing of a prototype float-pump device in near shore waters in the North Sea is ongoing. The Danish government has initiated a coordinated wave energy programme, in which new designs can be evaluated and supported in a structured manner.

PORTUGAL

Portugal’s main activity centres on the construction and testing of the 500kW European pilot oscillating water column (see part B) plant on the Azores.

SWEDEN

A Swedish company (Technocean) is actively developing the IPS/Hosepump (see Part B) technologies for deployment as demonstration schemes in the near future. There are plans for further prototype testing in Sweden before proceeding with a pilot plant for electricity and fresh water production in the Mediterranean Sea at the island of Amorgos in Greece followed by further semi-commercial demonstration plant for desalination and electricity production.

PART B – WAVE ENERGY TECHNOLOGIES

Wave energy devices can be divided into three categories: shoreline, nearshore and offshore. The technologies associated with these applications are at various stages of development. In general the shoreline devices are the most advanced and are termed ‘first generation’. Nearshore floating devices are classified as ‘second generation’ and the offshore devices with the greatest potential, but the least developed, are termed ‘third generation’.

SHORELINE

The main device employed worldwide for harvesting shoreline wave energy is the Oscillating Water Column (OWC). This consists of a partially submerged, hollow structure that is open to the sea below the water line (Figure 1). This encloses a column of air on top of a column of water. Waves cause the water column to rise and fall, which alternatively compresses and depressurises the air column. This trapped air is allowed to flow to and from the atmosphere via a Wells turbine, which has the ability to rotate in the same direction regardless of the direction of airflow. The rotation of the turbine is used to generate electricity.

Figure 1 Oscillating Water Column [cxxi]

LIMPET

The LIMPET (Land Installed Marine Powered Energy Transformer) is the best known example of an oscillating water column with Wells Turbine power take-off. It was developed by the Department of Civil Engineering at Queen’s University Belfast in partnership with WAVEGEN. The world’s first commercial wave power station has successfully deployed the LIMPET to feed electricity into the UK’s national grid on the Scottish Island of Islay. The station has secured a 15-year power purchase agreement with the major Public Electricity Suppliers in Scotland. The device is rated at 500kw and capable of providing enough electricity for about 400 local homes.

Fixed Generating Devices, mounted on the seabed or shore fixed energy devices, have some significant advantages over floating systems, particularly in the area of maintenance. However the number of suitable sites for fixed devices is limited.

Figure 2 Tapered Channel Device (Tapchan)

TAPCHAN

The Tapered Channel Device (Tapchan) consists of a tapered channel that feeds into a reservoir constructed in a cliff (Figure 2). The narrowing of the channel causes the waves to increase their amplitude (wave height) as they move towards the cliff face. The waves then spill over the walls of the channel and into the reservoir, positioned several metres above the mean sea level. The kinetic energy of the moving wave is converted into potential energy as the water is stored in the reservoir. The stored water is then fed through a Kaplan turbine. The concept of Tapchan is an adaptation of traditional hydroelectric power production.

The potential market for such a device is limited within Europe because the design requires a small tidal range.

NEARSHORE

OSPREY

WAVEGEN, Scottish Hydro-Electric plc and Queen’s University Belfast developed the OSPREY (Ocean Swell Powered Renewable Energy). The OSPREY is an oscillating water column device (OWC). It is designed to operate in 15m of water within 1Km of the shore generating up to 2MW of power. Following extensive technical and commercial evaluation by ETSU (Energy Technology Support Unit) on behalf of the Irish government WAVEGEN is the sole successful bidder for the Alternative Energy Requirement III , (AER III), wave energy tender in the Republic of Ireland. Unfortunately the project failed to get the EU infrastructure support needed to bring the transmission line to the coast.

Figure 3 The Ocean Swell Powered Renewable Energy (OSPREY)

WOSP

The WOSP (Wind and Ocean Swell Power) is an integrated near shore wave and wind powered station. It is designed to operate in much the same way as the OSPREY device generating 3.5MW of power (adding1.5MW of wind generated capacity) and offers major advances in accessing multiple offshore renewable energy resources.

Figure 4 Wind and Ocean Swell Power (WOSP)

OFFSHORE

Offshore devices exploit the more powerful wave regimes available in deep water (>40m depth). Several different types of offshore device have been developed but none has yet been deployed commercially.

The Salter Duck

The Salter Duck, Clam, Archimedes Wave Swing and other floating wave energy devices generate electricity through the harmonic motion of the floating part of the device, as opposed to fixed systems that use a fixed turbine powered by the motion of the wave. In these systems, the devices rise and fall according to the motion of the wave and electricity is generated through their motion.

The Salter Duck is able to produce energy extremely efficiently (Figure 5).

Figure 5 The Salter Duck

The Swedish Hosepump

The Swedish Hosepump The Swedish Hosepump has been under development since 1980. It consists of a specially reinforced elastomeric hose connected to a float that rides the wave. The internal volume of the hose decreases as it stretches. The rise and fall of the float stretches and relaxes the hose thereby pressurising seawater, which is fed, along with the output from other hosepumps, through a non- return valve to a central turbine and generator unit. The McCabe Wave Pump The McCabe Wave Pump consists of three rectangular steel pontoons which move relative to each other in the waves. The damper wave plate attached to the central pontoon ensures that it stays still as the fore and aft pontoons move relative to the central pontoon by pitching about the hinges. Energy is extracted from the rotation about the hinge points by linear hydraulic pumps mounted between the central and two other pontoons near the hinges. The device was developed to supply potable water (by reverse osmosis) but can also be used to generate electricity (via a hydraulic motor and generator). The McCabe Wave Pump is currently being developed in Ireland.

FIGURE 6 THE SWEDISH HOSEPUMP

FIGURE 7 THE MCCABE WAVE PUMP

CONCLUSION

Waves as a source of energy generation have infinite potential provided suitable converting technologies can be developed. Deep-water wave energy is the greatest resource but suitable conversion devices are still in the early stages of development.

Indigenous industries can benefit from the expertise available in wave energy technology development. Queens University have developed the first commercial wave energy conversion device in operation on the island of Islay and Harland and Wolff, along with other Northern Ireland organisations, are currently involved in promising wave energy technology research and development. The government in the Republic of Ireland are reported to have become very proactive in the development of the wave energy resource. Further investment in technology development is necessary to realise the potential for impact for the local economy.

APPENDIX 4

MINUTES OF PROCEEDINGS OF THE COMMITTEE
RELATING TO THE REPORT

LIST OF WITNESSES WHO GAVE ORAL EVIDENCE
TO THE COMMITTEE

LIST OF MEMORANDA SUBMITTED

MINUTES OF PROCEEDINGS OF THE Committee
RELATING TO THE REPORT

WEDNESDAY 9 JANUARY 2002 AT 10.25AM IN
ROOM 144, PARLIAMENT BUILDINGS

Present: Mr P Doherty MP (Chairperson)
Mr B Armstrong
Mr W Clyde
Mr D McClarty
Dr A McDonnell
Ms J Morrice
Dr D O’Hagan
Mr J Wells

Apologies: Mr S Neeson (Deputy Chairperson)
Mr A Attwood
Ms A Courtney

In attendance: Mrs C White (Committee Clerk)
Mr M Anderson (Assistant Committee Clerk)
Mr R Anderson (Clerical Supervisor)
Miss A Fowler (Clerical Officer)
Mr P Gilleece (Assembly Researcher)

The meeting went into private session at 12.44pm.

1. Energy Inquiry

1.1 The Committee carried out the first reading of its draft report.

The meeting closed at 1.25pm.

[EXTRACT]

MINUTES OF PROCEEDINGS OF THE Committee
RELATING TO THE REPORT

TUESDAY 15 JANUARY 2002 AT 10.36AM IN
ROOM 144, Parliament Buildings

Present: Mr P Doherty MP (Chairperson)
Mr B Armstrong
Mr W Clyde
Ms A Courtney
Mr D McClarty
Dr A McDonnell
Ms J Morrice
Dr D O’Hagan
Mr J Wells

Apologies: Mr S Neeson (Deputy Chairperson)

In attendance: Mrs C White (Committee Clerk)
Mr M Anderson (Assistant Committee Clerk)
Mr R Anderson (Clerical Supervisor)
Miss A Fowler (Clerical Officer)
Dr P Gilleece (Assembly Researcher)

The meeting went into private session at 12.27pm.

1. Energy Inquiry

Ms Morrice left the meeting at 11.08am.

1.1 The Committee continued deliberating on its draft Energy inquiry report.

Mr McClarty left the meeting at 2.55pm.

Agreed – to print Volume 1 of the report in hard copy and to publish Volumes 2 onwards on a CD ROM.

Mr McClarty rejoined the meeting at 3.22pm.

The meeting closed at 3.55pm.

[EXTRACT]

MINUTES OF PROCEEDINGS OF THE Committee
RELATING TO THE REPORT

WEDNESDAY 13 FeBRUARY 2002 AT 10.50AM IN
ROOM 144, Parliament Buildings

Present: Mr P Doherty MP MLA (Chairperson)
Mr B Armstrong
Mr W Clyde
Mr D McClarty
Dr A McDonnell
Ms J Morrice
Dr D O’Hagan
Mr J Wells

Apologies: Mr S Neeson (Deputy Chairperson)
Mrs A Courtney

In attendance: Mrs C White (Committee Clerk)
Mr M Anderson (Assistant Committee Clerk)
Mr R Anderson (Clerical Supervisor)
Miss A Fowler (Clerical Officer)
Dr P Gilleece (Assembly Researcher)

The meeting went into private session at 11.45am.

7. Energy Inquiry Report

7.1 The Committee carried out the second reading of Draft 7 of its Energy Inquiry Report.

Mr McClarty left the meeting at 11.50am.

7.2 Section 2 – Paragraphs 2.9 – 2.13 read and agreed.

Section 2 – Paragraphs 2.23 – 2.28 read and agreed without objection.

Section 2 - Paragraph 2.46 read, amended and agreed without objection.

Mr Armstrong left the meeting at 12.05pm.

7.3 Executive summary – Paragraph 7 read, amended and agreed without objection.

7.4 Section 1 – Paragraph 1.4 read, amended and agreed.

Section 1 – Paragraph 1.6 and 1.7 read and agreed to amalgamate.

Section 1 – Paragraph 1.8 read and agreed to delete.

Mr Wells left the meeting at 12.30pm.

Mr Armstrong rejoined the meeting at 12.33pm.

7.5 Executive Summary –

Paragraphs 1 – 6 read and agreed.

Paragraph 8 read and agreed.

Ms Morrice left the meeting at 12.35pm.

Paragraph 9 read, amended and agreed.

Paragraphs 10 – 13 read, amended and agreed.

7.6 Section 1 –

Paragraphs 1.1-1.3 read and agreed.

Paragraph 1.5 read and agreed.

7.7 Section 2 –

Paragraphs 2.1-2.8 read and agreed.

Paragraphs 2.14-2.22 read and agreed.

Paragraphs 2.29 –2.32 read and agreed.

Paragraph 2.33 read, amended and agreed.

Paragraphs 2.34-2.35 read and agreed.

Paragraph 2.36 read, amended and agreed.

Paragraphs 2.37 - 2.45 read and agreed.

Paragraph 2.47 read and agreed.

Ms Morrice rejoined the meeting at 12.45pm.

Mr McClarty rejoined the meeting at 12.50pm.

Paragraph 2.48 read, amended and agreed.

Mr Clyde left the meeting at 1.03pm.

Agreed - to insert a new paragraph between paragraphs 2.48 and 2.49. New paragraph read and agreed.

Paragraphs 2.49 - 2.51 read and agreed.

A brief recess took place at 1.26pm whilst the Committee to move to Room 106.

Mr Clyde rejoined the meeting at 1.30pm.

The meeting continued in private session in Room 106 at 1.46pm.

7.8 Section 3 -

Paragraph 3.1 read, amended and agreed.

Paragraphs 3.2 - 3.8 read and agreed.

Dr O’Hagan rejoined the meeting at 1.50pm.

Paragraph 3.9 read, amended and agreed.

Paragraphs 3.10-3.15 read and agreed.

Agreed – to insert a new paragraph between paragraphs 3.15 and 3.16. New paragraph read and agreed.

Paragraphs 3.16-3.18 read and agreed.

Dr McDonnell left the meeting at 2.01pm.

Paragraph 3.19 read, amended and agreed.

Paragraphs 3.20-3.25 read and agreed.

7.9 Section 4 -

Paragraphs 4.1-4.4 read and agreed.

Paragraph 4.5 read.

Agreed – to divide into two paragraphs.

Paragraphs 4.6-4.26 read and agreed.

Agreed - to insert a new paragraph between paragraphs 4.26 and 4.27. New paragraph read and agreed.

Paragraph 4.27 read, amended and agreed.

Agreed - to insert two new paragraphs between paragraphs 4.27 and 4.28. New paragraphs read and agreed.

Paragraph 4.28 read, amended and agreed.

Paragraph 4.29 read and agreed.

Paragraph 4.30 read, amended and agreed.

Mr McClarty rejoined the meeting at 2.40pm.

Paragraph 4.31-4.32 read and agreed.

Paragraph 4.33-4.35 read, amended and agreed.

Agreed to insert a new paragraph after paragraph 4.35. New paragraph read and agreed.

7.10 Section 5 -

Paragraphs 5.1-5.8 read and agreed.

7.11 Section 6 -

Paragraphs 6.1-6.10 read and agreed.

7.12 Tables 1 and 2, references and list of abbreviations read and agreed.

7.13 The Committee discussed the papers that would be included in the report.

Agreed – to insert all 32 written submissions, minutes of evidence from oral evidence sessions, addendum to minutes of evidence, the Committee’s report on Electricity and Gas Consumer Representation, extracts from the minutes of proceedings relating to the report, all visit reports and case studies and papers prepared by Assembly Research and Library Services on Orimulsion, Wave Energy and Renewables.

7.14 Agreed – that the report should be ordered for printing.

7.15 The Committee discussed press coverage of the report.

Mr McClarty left the meeting at 3.05pm.

7.16 The Committee discussed wording of a Motion for debate in the House.

Agreed – wording of a Motion.

7.17 The Committee formally thanked all the staff who worked on the Energy Inquiry Report.

Agreed - to send a letter of appreciation to the Specialist Adviser on the Energy Inquiry.

The meeting closed at 3.10pm.

[EXTRACT]

LIST OF WITNESSES WHO GAVE oral EVIDENCE TO THE COMMITTEE
(THis EVIDENCE IS PUBLISHED IN VOLUME 2 OF THIS REPORT)

Priority Oil & Gas LLC & S Morrice & Associates Ltd

Banbridge District Council

The Canal Corridor Natural Gas Task Force (CANCO)

Confederation of British Industry (CBI)

Department of Enterprise, Trade and Investment (DETI)

University of Ulster (UU)

Northern Ireland Electricity plc (NIE)

Electricity Supply Board (ESB)

AES Kilroot

Bitor Europe

Coolkeeragh Power Ltd

Mr E Beattie

B9 Energy Services & B9 Energy (Biomass)

Biogas (Ireland)

General Consumer Council NI (GCC)

Northern Ireland Consumer Committee for Electricity (NICCE)

Antrim Coal Company

AuIron Energy Ltd

Energy Saving Trust

Friends of the Earth England, Wales & Northern Ireland

National Energy Action (NEA)

Worldwide Fund for Nature (WWF)

Questar/Bord Gáis Eireann (BGE)

Biofuels Northern Ireland

Royal Institution of Chartered Surveyors Northern Ireland (RICS)

Premier Power Ltd

Phoenix Natural Gas

Premier Transmission Ltd

Office for the Regulation of Electricity & Gas (Ofreg)

LIST OF MEMORANDA SUBMITTED TO THE COMMITTEE
(THIS EVIDENCE IS PUBLISHED IN VOLUME 3 OF THIS REPORT)

Where in any of the following submissions reference is made to graphs, photographs, maps, or extracts from publications which have been omitted, these will be available for viewing by Members in the Assembly Library and by the public in the Committee Office.

Priority Oil & Gas LLC & S Morrice & Associates Ltd

Banbridge District Council

The Canal Corridor Natural Gas Task Force (CANCO)

Confederation of British Industry (CBI)

Department of Enterprise, Trade and Investment (DETI)

University of Ulster (UU)

Northern Ireland Electricity plc (NIE)

Electricity Supply Board (ESB)

AES Kilroot

Bitor Europe

Coolkeeragh Power Ltd

Mr E Beattie

B9 Energy Services & B9 Energy (Biomass)

Biogas (Ireland)

General Consumer Council NI (GCC)

Northern Ireland Consumer Committee for Electricity (NICCE)

Antrim Coal Company

AuIron Energy Ltd

Energy Saving Trust

Friends of the Earth (Northern Ireland)

National Energy Action (NEA)

Worldwide Fund for Nature (WWF)

Questar/Bord Gáis Eireann (BGE)

Biofuels Northern Ireland

Royal Institution of Chartered Surveyors Northern Ireland (RICS)

BG Group & Keyspan Energy Development Corporation

Phoenix Natural Gas

Office for the Regulation of Electricity & Gas (Ofreg)

Western Regional Energy Agency and Network (WREAN)

Energy Committee of the Council for the West

Oil Promotion Federation

The British Wind Energy Association

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[i]   Unless otherwise stated all tables are sourced from Bitor OrimulsionÒ literature.

 

[ii] ‘Powergen decision is death blow for Orimulsion in the UK’, Friends of the Earth press release 25 September 1996.

 

[iii] Electricity Association, Number 12, Revised March 2000, Environmental Briefing, Orimulsion.

 

[iv] Roy Cauhlan, Pollution Inspector, Environment Agency, Wales.

 

[v] ‘Milford Haven Orimulsion Jetty Would be Unlawful Now’, Friends of the Earth press release 10 July 1996.

 

[vi] Orimulsion and Power Stations, POST Note 84, October 1996, (Parliamentary Office of Science and Technology).

 

[vii] Orimulsion and Power Stations, POST Note 84, October 1996, (Parliamentary Office of Science and Technology).

 

[viii] LeGore, S., Pascoe, D.B., Rand, G., Belore, R., ‘An Independent Review of Orimulsion Documentation Concerning Spills at Sea’. Mote Environmental Services Inc., 1600 Ken Thompson Parkway, Sarasota, Florida 34236.

 

[ix] ‘Orimulsion Clean Power for the Future’, www.orimulsionfuel.com

 

[x] LeGore, S., Pascoe, D.B., Rand, G., Belore, R., ‘An Independent Review of Orimulsion Documentation Concerning Spills at Sea’. Mote Environmental Services Inc., 1600 Ken Thompson Parkway, Sarasota, Florida 34236.

 

[xi] ‘2 countries seeking new formula, Sarasota Herald Tribune, August 19, 1997

 

[xii] Estimate based on extrapolation of figures for Pembroke Power Station.

 

[xiii] LeGore, S., Pascoe, D.B., Rand, G., Belore, R., ‘An Independent Review of Orimulsion Documentation Concerning Spills at Sea’. Mote Environmental Services Inc., 1600 Ken Thompson Parkway, Sarasota, Florida 34236.

 

[xiv] Captain Bill Looney, Harbour Master, Port of Belfast.

 

[xv] Orimulsion – Trials and Trepidations, A Report for WWF UK, Prepared by Earth Resources Research

 

[xvi] ‘Orimulsion Clean Power for the Future’, www.orimulsionfuel.com

 

[xvii] Electricity Association, Number 12, Revised March 2000, Environmental Briefing, Orimulsion.

 

[xviii] Porteous, A., ‘Dictionary of Environmental Science and Technology, Third Edition. Wiley.

 

[xix] Porteous, A., ‘Dictionary of Environmental Science and Technology, Third Edition. Wiley.

 

[xx] From 2003 a European Directive will impose a limit of 1% sulphur content on heavy fuel oils in power stations, with derogations for plants achieving low SO₂ emissions through FGD instead.

 

[xxi] Electricity Association, Environmental Briefing Number 12 Revised March 2000.

 

[xxii] Electricity Association, Environmental Briefing Number 12 Revised March 2000.

 

[xxiii] Electricity Association, Environmental Briefing Number 12 Revised March 2000.

 

[xxiv] Council Directive 94/66/EC of 15 December 1994 amending Directive 88/609/EEC on the limitation of emissions of certain pollutants into the air from large combustion plants

 

[xxv] Common Position (EC) No 52/2000 adopted by the Council on 9 Nov 2000 with a view to adopting Directive 2000/…/EC of the European Parliament and of the Council of …on the limitation of emissions of certain pollutants into the air from large combustion plants.

 

[xxvi] Porteous, A., ‘Dictionary of Environmental Science and Technology, Third Edition. Wiley.

 

[xxvii] Electricity Association, Environmental Briefing Number 12 Revised March 2000.

 

[xxviii] Porteous, A., ‘Dictionary of Environmental Science and Technology, Third Edition. Wiley.

 

[xxix] David Bell, Pollution Inspector, Environment and Heritage Service, Belfast.

 

[xxx] Electricity Association, Environmental Briefing Number 12 Revised March 2000.

 

[xxxi] Quality of Urban Air Review Group (QUARG), ‘Airborne Particulate Matter in the UK’ 3^rd Report of QUARG.

 

[xxxii] AEA Technology, 1995, ‘Air Pollution in the UK’, 1994. NATCEN, AEA Technology, Harwell, Oxon.

 

[xxxiii] US Environmental Protection Agency Office of Air Quality Planning and Standards, ‘Taking toxics out of the air.’ September 2001.

 

[xxxiv] Orimulsion Fact Sheet, ‘Air Pollutant Emissions of Trace Elements and Compounds’. Bitor Europe.

 

[xxxv] No. 6 Fuel Oil typically used for industrial purposes

 

[xxxvi] Parliamentary Office of Science and Technology, ‘Orimulsion and Power Stations’, October 1996.

 

[xxxvii] Roy Cauhlan, Pollution Inspector Environmental Agency, Swansea.

 

[xxxviii] Parliamentary Office of Science and Technology, ‘Orimulsion and Power Stations’, October 1996.

 

[xxxix] Parliamentary Office of Science and Technology, ‘Orimulsion and Power Stations’, October 1996.

 

[xl] http://www.orimulsionfuel.com/production.htm

 

[xli] Electricity Association, Environmental Briefing Number 12 Revised March 2000.

 

[xlii] Ralph Sheppard, Irish Rare Birds Committee, Carnowen House, Lifford, Co. Donegal.

 

[xliii] United Nations Conference on Environment and Development, Rio de Janeiro, 1992.

 

[xliv] Common Position (EC) No 52/2000 adopted by the Council on 9 Nov 2000 with a view to adopting Directive 2000/…/EC of the European Parliament and of the Council of …on the limitation of emissions of certain pollutants into the air from large combustion plants.

 

[xlv] Orimulsion Fact Sheet, ‘Air Emissions Overview.’.

 

[xlvi] ESP (Electrostatic Precipitators), FGD (Flue Gas Desulphurisation), LNB (Low NO_x Burners),  SCR (Selective Catalytic Reduction).

 

[xlvii] Best Available Control Technology. Note: Typical efficiency levels for coal are 99.5% for ESP, 90% for FGD and Selective Catalytic Reduction (SCR) for NO_x.

 

[xlviii] Fuel Oil emissions without air pollution control equipment

 

[xlix] ESP (Electrostatic Precipitators), FGD (Flue Gas Desulphurisation), LNB (Low NO_x Burners),  SCR (Selective Catalytic Reduction).

 

[l] Units of measurement   mg/Nm³  and concentration measurement is based on 3% O₂ dry.

 

[li] Casarett and Doull ‘Toxicology’ 5^th edition, page 712.

 

[lii] Information for Industry Ltd. Environment Business July 31 1996.

 

[liii] Europe Information Service, Europe Environment, June 27, 1995 cited Dr Dick van Steenis ‘as a specialist in this field’. Dr van Steenis private communication 12 December 2000.

 

[liv] C.A. Miller, R.K. Srivastava, US Environmental Protection Agency, “The combustion of Orimulsion and its generation of air pollutants”, Progress in Energy and Combustion Science 26 (2000) 131-160.

 

[lv] Extrapolated from data presented in Parliamentary Office of Science and Technology, ‘Orimulsion and Power Stations’, October 1996.

 

[lvi] Orimulsion – Trials and Trepidations. A Report for WWF UK, Prepared by Earth Resources Research.

 

[lvii] Environmental advantages of using Orimulsion at Enel Brindisi Sud and Fuimesanto Power Station (www.orimulsionfuel.com)

 

[lviii] HEI Communication 8, ‘The Health Effects of Fine Particles: Key Questions and the 2003 Review, 14-15 January 1999, Brussels, Belgium.

 

[lix] The Health Effects Institute, HEI Communication 8, “The Health Effects of Fine Particles: Key Questions and the 2003 Review”, January 1999, Belgium.

 

[lx] The Health Effects Institute, HEI Communication 8, “The Health Effects of Fine Particles: Key Questions and the 2003 Review”, January 1999, Belgium.

 

[lxi] Wilson, R. and Spengler, J. editors, ‘Particles in Our Air: Concentrations and Heath Effects (1999) p.212.

 

[lxii] van Steenis, D., ‘Industrial Air Pollution and the Country Doctor’, Country Doctor Journal, 5 April 2000 (updated 23 August 2001).

 

[lxiii] Orimulsion, ‘Particulates and Trace Elements Briefing Paper, April 2001.

 

[lxiv] Orimulsion Material Safety Data Sheet, December 1993.

 

[lxv] Dockery, DW and Pope, CA, 1994, ‘Acute Respiratory Effects of Particulate Air Pollution’, Annual Review of Public Health, 15, 107-132.

 

[lxvi] Bitor Europe written response to questions from the ETI Committee’s energy inquiry, 9 April 2001.

 

[lxvii] Orimulsion Fact Sheets, ‘Air Emissions Overview’ and ‘Fine Particulate Matter Emissions’.

 

[lxviii] Bitor Europe written response to questions from the ETI Committee’s energy inquiry, 9 April 2001.

 

[lxix] Department of Health Committee on the Medical Effects of Air Pollutants, ‘Non-biological particles and health’. HMSO, 1995.

 

[lxx] Thurston GD, Gorczynski JE, Currie JH, He D, Ito K, Lippmann M, Hipfner J, Waldman J, Lioy PJ, ‘The nature and origins of acid summer haze air pollution in metropolitan Toronto, Ontario.’ Environ Res 1994. (cited reference 33)

 

[lxxi] Department of Health Committee on the Medical Effects of Air Pollutants, ‘Non-biological particles and health’. HMSO, 1995.

 

[lxxii] ENDS Report 304, “Prospects for PM2.5 standard up in the air “, May 2000. Cited in Bitor Europe written response to questions from the ETI Committee’s energy inquiry, 9 April 2001.

 

[lxxiii] The European Commission’s Directorate General XI (DG XI) proposed under the terms of the Air Quality Framework Directive 96/62/EC a Daughter Directive establishing limit values for PM (as well as SO₂, NO₂ and lead) in ambient air. The proposed Daughter Directives have recently been adopted as final in Council Directive 1999/30/EC.

 

[lxxiv] A maximum of 50µg/m³ in a single 24-hour period with the annual average figure not exceeding 20µg/m³.

 

[lxxv] The Health Effects Institute, HEI Communication 8, “The Health Effects of Fine Particles: Key Questions and the 2003 Review”, January 1999, Belgium.

 

[lxxvi] The current EU directive requirement for a review of the science of fine particles in 2003 and the US requirement to review the NAAQS in 2002 has resulted in extensive new research in both the European Union and the United States that can be expected to inform these regulatory efforts.

 

[lxxvii] The Health Effects Institute, HEI Communication 8, “The Health Effects of Fine Particles: Key Questions and the 2003 Review”, January 1999, Belgium. (For further information refer to National Ambient Air Quality Standards for Particulate Matter, Final Rule 62 Federal Register 138 (July 18, 1997) (http://www.epa.gov/ttn/oarpg/naaqsfin/))

 

[lxxviii] The Health Effects Institute, HEI Communication 8, “The Health Effects of Fine Particles: Key Questions and the 2003 Review”, January 1999, Belgium.

 

[lxxix] C.A. Miller and R.K. Srivastava, ‘The combustion of Orimulsion and its generation of air pollutants’, Progress in Energy and Combustion Science 26 (2000) 131-160

 

[lxxx] Denis L. Marquis, P.Eng. A/Director, Approvals Branch, NB Department of the Environment and Local Government, P.O. Box 6000, 20 McGloin Street Fredericton, NB  E3B 5H1.

 

[lxxxi] Situation as of 29 May 2001

 

[lxxxii] ‘FPL to Waive Orimulsion Appeal Despite Confidence in Fuel’s Benefits’, Juno Beach, Florida. News Release July 30 1998 http://www.emt.fpl/html/98075.htm

 

[lxxxiii] LeGore, S., Pascoe, D.B., Rand, G., Belore, R., ‘An Independent Review of Orimulsion Documentation Concerning Spills at Sea’. Mote Environmental Services Inc., 1600 Ken Thompson Parkway, Sarasota, Florida 34236.

 

[lxxxiv] Bitor Europe written response to questions from the ETI Committee’s energy inquiry, 9 April 2001.

 

[lxxxv] Khan, S. ‘Orimulsion – viability as a repowering fuel’. Proceedings of the 21^st International Technical Conference on Coal Utilisation and Fuel Systems, Clearwater, Florida, 18-21 March 1996. p619-29.

 

[lxxxvi] The Health Effects Institute, HEI Communication 8, “The Health Effects of Fine Particles: Key Questions and the 2003 Review”, January 1999, Belgium.

 

[lxxxvii] The Health Effects Institute, HEI Communication 8, “The Health Effects of Fine Particles: Key Questions and the 2003 Review”, January 1999, Belgium.

 

[lxxxviii] Levy, J. and Spengler, J., ‘Estimated Health Impacts of Criteria Pollutant Air Emissions from the Salem Harbor and Brayton Point Power Plants’, Harvard School of Public Health (May 2000) (http://www.hsph.harvard.edu).

 

[lxxxix] Sunday Times, 22 July 2001,’Belfast holds title of dirtiest city in Britain’.

 

[xc] Adapted from Dockery, DW and Pope CA, ‘Acute respiratory effects of particulate air pollution’, Annual Review Public Health 1994; 15:107-132 cited in Department of Health Committee on the Medical Effects of Air Pollutants, ‘Non-Biological Particles and Health’, HMSO, 1995.

 

[xci] Greenpeace Business Conference, London, 05 October 2000.

 

[xcii] The ATLAS project carried out an evaluation of 53 innovative energy technology areas across three main sectors of energy supply (renewables, heat and power and oil and gas) and energy demand (industry, buildings and transport). DGXVII, ‘Energy Technology – The Next Steps’, 97/011,  (December 1997).

 

[xciii] NIE and DED, ‘Renewable Energy in the Millennium – the Northern Ireland Potential’, June 1999.

 

[xciv] 1MW of electricity is sufficient to provide power to approximately 700 homes (CADDET Centre for Renewable Energy,  International Energy Agency).

 

[xcv] All sewage gas applications were withdrawn.

 

[xcvi]   OFREG Consultation Paper: “Stimulating Renewable Generation in Northern Ireland”.

 

[xcvii] DETI and Department of Public Enterprise, ‘Assessment of Offshore Wind Energy Resources in the Republic of Ireland and Northern Ireland’,

 

[xcviii] The Irish Times, 4 September 2000.

 

[xcix] Gasification is a thermal process converting dry biomass feedstock into a mixture of gases that can be burnt in internal combustion engines and gas turbines.

 

[c] The Arbre project in Yorkshire is the first commercial plant of its type in Europe. It will generate 10MW of electricity from wood chips from forest and coppice sources – enough electricity for the domestic electricity consumption of 33,500 people.

 

[ci] Energy demand for a semi-detached 3 bedroom house: space heating 13,800kWh/y, domestic hot water 2,500kWh/y giving a total of 16,300kWh/y (Sutherland Comparative Domestic Heating Costs for NI and RoI provided by Northern Ireland Renewable Energy Information Office).

 

[cii] DTI

 

[ciii] www.belfast-energy.demon.co.uk

 

[civ] DTI; www.dti.gov.uk.

 

[cv]   Professor Trevor Whittaker, Department of Civil Engineering, Queens University Belfast.

 

[cvi] Diarmuid McLean, Director of Scientific Services, IRTU.

 

[cvii] 35 – 40% thermally efficient - Roy Cauhlan, Pollution Inspector Environmental Agency, Swansea.

 

[cviii] Under the Gas (Northern Ireland) Order 1996, there is a duty on the Department of Enterprise, Trade and Investment and the Office of the Regulator of Electricity and Gas to promote the development and maintenance of an efficient and co-ordinated gas industry in Northern Ireland.

 

[cix] Department of the Environment, Transport and the Regions, ‘Climate Change – The UK Programme.’ November 2000.

 

[cx] Peter Brabazon, Manager Best Practice, Irish Energy Centre. No decision on a target for 2010 has been set and is likely to be influenced by the EU Electricity Directive.

 

[cxi] TW Thorpe, ‘A Brief Review of Wave Energy’, A report produced for the UK Department of Trade and Industry May 1999.

 

[cxii] TW Thorpe, ‘A Brief Review of Wave Energy’, A report produced for the UK Department of Trade and Industry May 1999.

 

[cxiii] 1MW of electricity is sufficient to provide power to approximately 700 homes (CADDET Centre for Renewable Energy,  International Energy Agency).

 

[cxiv] David Langston, Wavegen, Private Communication May 2001.

 

[cxv] A Brief Review of Wave Energy – A report produced for the UK Department of Trade and Industry. T.W. Thorpe, May 1999.

 

[cxvi] Slater, 1996, ‘Replies to questions on Wave Energy European Commission – DG XV11’ Small Hydro Meeting, 4^th September, 1996, (cited in Thorpe, May 1999, ‘A Brief Review of Wave Energy – A report produced for the UK Department of Trade and Industry’.

 

[cxvii] David Langston, Wavegen, Private Communication May 2001.

 

[cxviii] ‘Total Renewable Energy Resource in Ireland’ European Union ALTENER Programme March 1997.

 

[cxix] Working Paper of the European Commission, ‘Electricity from renewable sources and the internal electricity market’.

 

[cxx] The European Eureka initiative provides mixed public/private sector financing in order to develop research close to the market. This places the initiative in a good position for winning the favours of European industry

 

[cxxi] Image generated by Fujita Research