Northern Ireland seeks to join Contract for Difference regime from 2023 to fund offshore wind

Northern Ireland is working with Westminster’s Department for Business, Energy and Industrial Strategy (BEIS) to explore whether the Contracts for Difference scheme currently operating in GB can be extended to Northern Ireland. If so, the aim would be to include the area in the Allocation Round in 2023. If that is not possible, NI says it will consider an alternative support mechanism for investors.
The plan came in an important new policy framework from NI’s Department for the Economy, Energy Strategy – Path to Net Zero. The strategy highlights the need for NI to diversify its renewable technology mix. Along with the correct environment to attract investment opportunities in offshore wind, it wants other marine developments in Northern Ireland waters. For other marine technologies, it said, “Our focus will be facilitating pre-commercial test and demonstration sites in the 2020s which will put us on a clear pathway to commercialisation by the early 2030s or sooner if possible.”
A review of strategic planning policy for renewable and low carbon energy is currently being taken forward to ensure it remains fit for purpose to enable appropriate development in appropriate locations. The Department said it will consult on this in 2022.
The strategy notes that NI has now has 45% of electricity consumption coming from indigenous renewable sources, but the rest comes from fossil fuels. But power accounts for just 14% of total energy consumption. Heat and transport are the biggest drivers of the energy system, it notes, and these are almost entirely fossil fuel dominated.
The strategy plans a major hike in renewable electricity generation. It notes that the new energy system “will be one based around infrastructure and assets rather than commodities”. That will require additional upfront investment but, “unlike our current system, it will leave us with assets that give us ongoing benefits, both in generating clean energy and growing the local economy”. It estimates net additional annual investment cost of around £483 million per annum over the period to 2030, the majority in transport, energy supply and buildings. For industry, the net additional annual investment to 2030 is estimated to be £23 million, due to investment in energy efficiency measures, coupled with the introduction of low carbon fuels. However, by 2040 the document says additional investment will begin to be translated into net savings. Nonetheless, it says, “difficult decisions will need to be made on how costs are distributed to ensure affordability for consumers.”
The document also highlights opportunities, saying that the low carbon and renewable energy sector already generates around £1.06 billion in turnover annually and provides 5,300 full time equivalent jobs. It wants to at least double the size of the sector “by generating local market opportunities, in place of importing fossil fuels, and by ensuring our companies can compete for the substantial UK and global opportunities in low carbon energy and technologies that are already becoming available”. It sees hydrogen “as a substantial opportunity”.
The Energy Strategy will be followed by an action plan, which will set out the key supporting actions planned to March 2023 that will progress and deliver on the Energy Strategy, as well as an outline of expected actions in the following years. The action plan will be overseen and monitored by a new Programme Board.

Download Energy Strategy – Path to Net Zero Energy and supporting documents here

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