The way ahead for Irish energy
As one of the leading energy providers in Ireland, Bord Gáis Energy is committed to delivering sustainable energy solutions and has been working towards the reduction of energy consumption, more efficient production and investment in future technologies that will help Ireland to reduce its dependency on fossil fuels.
Dave Kirwan, Managing Director, discusses how Bord Gáis Energy adopted renewable energy as part of its commercial strategy, the challenges facing the Irish energy market and his views on the future of Irish energy.
Renewables portfolio
Ten years ago, before entering the electricity market, Bord Gáis developed a strategy to grow its supply business. It recognised that the company’s supply wing had to develop a strategic investments division “charged with delivering an asset portfolio, commensurate with a dual energy business in Ireland.”
He recalls: “Strategically our view was, that to have a retail position and to offer certainty for prices for customers in a short to medium term, we had to have certainty at the production level. That’s why we set about building our assets.”
The first investment was the development of the conventional power station Whitegate. “Whitegate was a key decision for the organisation and it was the pre-cursor for us doing the Big Switch, which was our first move into the residential electricity market.” Operational since November 2010, the Whitegate plant has a capacity of 445MW. “It is a state-of-the-art combine cycle turbine plant based on general electric, 9FB technology. Because of its reliability and efficiency it has also proven to be probably the most flexible CCTG (combined cycle turbine generator) plant on the system today.”
In late 2009, having recognised that there would be increasing influence of wind generation on the market Bord Gáis Energy secured the acquisition of SWS wind energy. “That gave us ready access to three key elements operating wind assets, a near-term growth development pipeline and the skills and competencies of the SWS team combined with our own people to bring these developments to market.”
Currently Bord Gáis Energy has an operating portfolio of 680MW and a near-term development portfolio of about 200MW. It has also recently expanded into tidal energy development.
Tidal Ventures Ltd (a joint venture between Bord Gáis Energy and OpenHydro) was recently awarded exclusive rights to develop a 100MW tidal energy farm off Torr Head on the north coast of Antrim. It will be the first development of its kind on the island of Ireland.
“We had been looking at developing opportunities in tidal energy for about two years,” says Kirwan and winning the rights to develop this project was “a major milestone for the development of tidal resources in Ireland and marks our ongoing commitment to renewable assets.
“This project is very consistent with our overall strategy of investing in the next generation of energy technologies that can provide competitive electricity to Irish consumers.”
Kirwan believes that tidal could potentially make a significant contribution to Ireland’s renewable targets. “The net effect of this project is that it will be a key component of achieving the overall renewable targets for the island. The site that we have exclusive right to develop on is the best in the country, and we have an exclusive right to establish whether we could develop a commercial tidal project there for the next number of years. By the end of 2014 to the middle of 2015, we will have committed in excess of €1billion in investment in renewable energy in Ireland.”
Challenges
European market integration will bring about inevitable changes and a key challenge according to Kirwan will be “how to derive benefit for Irish customers from greater interconnectivity with the European energy market” that is “without losing sight of the three key tenets of energy policy which are: security, competitiveness and sustainability.”
Bord Gáis Energy is well placed to overcome these challenges, in his view. “Harnessing and exploiting Ireland’s wind resources is well understood and is supported by Government policy; the benefits of that are already being derived.
“Whitegate is pretty well positioned in a target model context because it can provide ancillary service support to the Irish system better than previous generation CCTGs.” In addition, Bord Gáis Energy’s wind fleet has been well developed and Kirwan is confident it will deliver high available and high load factor wind to the system.
Ireland’s position in wind and onshore wind represents a hedge, certainly against volatility in the fossil fuel market. “There are times in the year when gas volumes are down and our wind portfolio is performing well and vice versa,” he says. “So, on an EBITDA [earnings before interest, taxes, depreciation and amortisation] line we are seeing the benefits of that diversity.”
On the home energy side, energy efficiency targets are also challenging. “We need to find a way to bridge that gap for us as energy businesses to facilitate reduced use of the product that we sell and clearly the customer has to be complicit in achieving that strategy.” The problem that Bord Gáis Energy and indeed other nations and markets alike have faced has been the access to funds at a household level to invest in energy efficiency. However, Kirwan points out that they are “committed as an energy organisation to engaging with Government on the better energy scheme (the pay as you save initiative) to develop innovative ways of delivering energy efficiency and bringing benefit to Irish energy customers.”
Future of Irish energy
With challenging goals set by the European Union in relation to lowering carbon emissions and increasing output from renewables by 2020, Kirwan believes that as a nation, Ireland is in a good position in terms of meeting our targets, compared to other European countries.
“I think Irish energy policy has worked up to now. In generation terms, Ireland is not short on capacity. It has delivered significant renewable investment and is in a better position than some of our neighbouring countries to fulfil its environmental obligations.”
In relation to engaging with the target model and European market integration, “we should attempt to blend the best of what we have done with the opportunities that change will bring.”
He adds: “Countries like the UK and Germany are still wrestling to discover what will help them achieve their obligations in a manner that doesn’t produce price shock for customers. Over the next 12-18 months we will have greater sight of what direction those markets will take and how that will influence our own strategy here.”
For Kirwan customers are already realising the benefits of Bord Gáis Energy’s investment in renewable energy. “We remain the supplier that offers the lowest standard rate of electricity in the residential market. We are the energy company that brought about residential electricity competition and choice to the Irish energy customer. A key part of that are the investments we have made and will continue to make going forward.”
Profile: Dave Kirwan
With responsibility for the overall business strategy and delivering commercial growth for Bord Gáis Energy, Managing Director, Dave Kirwan has been working with the organisation for over 14 years. He set up Firmus Energy in Northern Ireland, an integrated distribution and retail business, and was responsible for establishing the strategic investments division (latterly the Assets Division) of Bord Gáis Energy. An Electronic Engineer (UCD), Dave also holds an MBA and Doctorate (DBA Business Economics from UCC.
