NETWORKS FOR NET ZERO - Delivering a sustainable energy system for all

 
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NETWORKS FOR NET ZERO - Delivering a sustainable energy system for all
NETWORKS FOR NET ZERO
Delivering a sustainable
energy system for all
NETWORKS FOR NET ZERO - Delivering a sustainable energy system for all
CONTENTS

ACKNOWLEDGEMENTS                                                             1.    Executive Summary                               3   7.    Network Cost Impact                         83
                                                                             1.1   NIE Networks – An Overview                      4   7.1   Distribution Costs                          85
We wish to show our appreciation to those who assisted and supported
the development of this publication.                                         1.2   Northern Ireland’s Climate Change               4   7.2   Transmission Costs                         86
                                                                                   Commitment
We wish to offer our thanks to Element Energy Consultants who                                                                          7.3   Impact of Investment on Price              86
developed a set of scenarios for the uptake of LCTs informing our            1.3   Customer at the Centre                          5
pathways.
                                                                             1.4   Networks for Net Zero                           6
                                                                                                                                       8.    Sustainability and NIE Networks             89
A special thanks to Dr Patrick Keatley, Centre of Sustainable Technologies
                                                                             1.5   Sectoral Challenges                             6
at Ulster University and the Ulster University’s SPIRE 2 Project, for                                                                  8.1   What Is Sustainability                      91
facilitating our ongoing joint research, including the RULET project         1.6   Delivering the Future                           7
                                                                                                                                       8.2   Our Sustainability Action Plan 2021-2024    92
highlighted in Chapter 3. We also acknowledge the Northern Ireland
                                                                             1.7   Evolution of NIE Networks Role                  8
Housing Executive (NIHE) as a key collaborator on the project and in                                                                   8.3   Our Commitment                              95
facilitating the trail sites.                                                1.8   In Summary                                      8
We would also like to extend our gratitude to Queen’s University Belfast,
                                                                                                                                       9.    Delivering the Future                       97
Professor John Morrow, Dr Robert Best, Arijit Bagchi and Ahmed A.Raouf
                                                                             2.    Introduction                                   11
Mohamed of School of Electronics, Electrical Engineering and Computer                                                                  9.1   Creating Economic Opportunity              101
Science, for our collaborative investigation into battery energy storage     2.1   Climate Change Challenge                       13
                                                                                                                                       9.2   Supporting the Customer                    102
systems. In addition, thanks go to Dr Teresa McGrath of QUB for her work
                                                                             2.2   The Challenge for Northern Ireland             16
and insights into decarbonisation of heat and transport.                                                                               9.3   Integrated Energy System                   102
                                                                             2.3	NIE Networks and Northern Ireland               23         with Energy Efficiency First
We also thank University College Cork and specifically Dr Paul Deane for

                                                                                                                                                                                              CONTENTS - 1
                                                                                  Energy Strategy
his assistance and insights to the Climate change challenges.                                                                          9.4   Commitment to Net Zero                     103
                                                                             2.4   Looking Forward                                24
Thank you also to SONI Ltd, for our collaboration within the Joint Working                                                             9.5   Power                                      103
Group, results of which have featured within this document. Finally, we
wish to show our appreciation to ESB, in particular Clive Bowers, for his                                                              9.6   Heat                                       105
research and insights into an integrated energy system.                      3.    The Customer                                   27
                                                                                                                                       9.7   Transport                                  105
                                                                             3.1   What It Means for Customers                    29
                                                                                                                                       9.8   Opportunity for Jobs and Skills            106
                                                                             3.2   What Customers of the Future Might
                                                                                                                                       9.9   Challenges for A Green Recovery            107
                                                                                   Look Like                                      30
                                                                                                                                       9.10 Conclusions                                 110
                                                                             3.3	Future Technologies, Customer Choices and       33
                                                                                  Behaviours
                                                                                                                                       10.   Feedback                                   113
                                                                             4.    The Journey to Decarbonisation                 37         Your Opinion                               114
                                                                             4.1   Pathways to Decarbonisation                    39
                                                                             4.2   Energy Efficiency First                        45   11.   Appendix                                   117
                                                                             4.3   Pathways                                       47   11.1 RULET (Rural-Led Energy Transition)         118
                                                                                                                                            - Ulster University Case Study
                                                                             4.4   Modelling Findings                             55
                                                                                                                                       11.2 Sustainability Roadmap                      119
                                                                                                                                       11.3 FLEX                                        120
                                                                             5.    An Integrated Energy System                    59
                                                                                                                                       11.4 Solving Congestion Management Using         121
                                                                             5.1	Role of Electrification in Northern Ireland’s   61
                                                                                                                                            Battery Energy Storage Systems
                                                                                  Decarbonisation Strategy
                                                                                                                                            – QUB Case Study
                                                                             5.2	The Role of Non-Direct Electrification          64
                                                                             5.3   The Benefits of Energy Strategy                66   12.   Glossary                                   127

                                                                             6.    Embracing the Future                           68         References                                 131
                                                                             6.1   The Changing Network                           71
                                                                             6.2   DSO Transition                                 72
                                                                             6.3   Customer Benefits                              81
NETWORKS FOR NET ZERO - Delivering a sustainable energy system for all
1. EXECUTIVE SUMMARY

                 FOREWORD
                 The twin challenges of re-building our economy after           We set out how we can facilitate increased renewables
                 the Covid-19 pandemic, and transforming our society to         on the network, how we can enable an increasing uptake
                 achieve Net Zero carbon by 2050 provide the context            of low carbon technologies such as electric vehicles,
                 for a unique period of change and opportunity in how           solar photovoltaics, electric heat pumps, and how we will
                 we provide and consume energy in Northern Ireland.             support new technologies such as hydrogen electrolysis
                 The Department for the Economy is currently leading            and battery storage, as well as the development and
                 the development of a new Energy Strategy for Northern          operation of new services and markets. We further set
                 Ireland and recently published a Consultation which            out how the role of NIE Networks as an organisation will
                 seeks views on a comprehensive range of proposals              change as a result - a journey to being a ‘Distribution
                 under consideration to achieve a Vision of ‘Net Zero           System Operator’ that we have already commenced.
                 Carbon and Affordable Energy’. In tandem with that,
                                                                                The specific pathway for Net Zero is complex and
                 the Northern Ireland Assembly and the Executive are
                                                                                uncertain with many potential scenarios that may
2 - FOR EWOR D

                 progressing consideration of Northern Ireland’s first ever
                                                                                develop. What is certain is that it needs a coordinated
                 Climate Change Act.
                                                                                approach from the Northern Ireland Executive, the Utility
                 The electricity network plays a critical role in making sure   Regulator, energy industry participants, local councils,
                 our economy and society has access to safe, secure             businesses, academia and consumer bodies to develop
                 and reliable energy in our homes, our farms, our schools       and deliver the most effective policies and solutions
                 and hospitals, and our businesses and other institutions.      which minimise costs to customers. It is also clear that
                 The electricity network has an equally important role to       we need to move forward with greater resolve and make
                 play in delivering the transition to Net Zero carbon by        progress with existing proven technologies in those areas
                 enabling more energy from renewable sources accessing          where this is most appropriate and commence projects
                 the network and by enabling that energy being used by          on the ground which can also stimulate the economy in a
                 customers to replace fossil fuels in transport and heating.    post-pandemic ‘Green Recovery’.
                 This opportunity to replace our dependency on imported
                                                                                NIE Networks has a crucial role to play but we do not
                 fossil fuels with indigenous renewable energy supporting
                                                                                have all the answers. We are seeking your views and
                 investment and jobs in Northern Ireland, is key to both
                                                                                inputs to help inform how we progress on this journey
                 economic recovery and to longer term climate action.
                                                                                and your feedback will assist us in our business planning
                 It is within that context that I am pleased to present         process for our next Regulatory Price Control period
                 Northern Ireland Electricity Networks’ strategy                which commences in 2024. So please engage and
                 report ‘Networks for Net Zero’. This report sets out           respond to the feedback section at the conclusion of the
                 our considered views on the options and pathways               Report.
                 for decarbonisation in Northern Ireland and how
                                                                                In presenting this strategy report, I hope that you find it
                 electrification can play a significant role in a flexible
                                                                                informative and that it will assist and contribute to the
                 and integrated decarbonised energy system. It has
                                                                                wider debate on energy stimulated by the Department for
                 customers at the core and assesses how customers will
                                                                                the Economy’s Energy Strategy Consultation.
                 have increased opportunities for managing their energy
                 demands more efficiently through adoption of new
                 technologies and will have the ability to engage with new
                 energy markets.
                                                                                Paul Stapleton
                 The report presents independent modelling that has
                                                                                Managing Director, NIE Networks
                 been undertaken to examine the potential pathways to
                 decarbonisation and presents inputs from academia who
                 are engaged with studies and trials into many aspects
                 of the low carbon transition. I would like to acknowledge
                 the significant contributions from SONI Ltd, Queens
                 University Belfast, Ulster University, University College
                 Cork and Element Energy.
NETWORKS FOR NET ZERO - Delivering a sustainable energy system for all
1.1 N
                                IE NETWORKS                                               1.2 N
                                                                                                ORTHERN IRELAND’S                                        smart metering will empower customers to make more
                                                                                                                                                          efficient decisions on energy usage. Northern Ireland
                                                                                                                                                                                                                          use of hydrogen in the existing gas infrastructure is more
                                                                                                                                                                                                                          uncertain and requires to be fully appraised. Until these
                               – AN OVERVIEW                                                   CLIMATE CHANGE                                             requires to catch up with other developed countries in          detailed assessments are complete, further expansion of

                           NIE Networks is owned by ESB Group but operates                     COMMITMENT                                                 rolling out smart metering, as outlined in Chapter 9.           the gas grid should be viewed with caution and should
                                                                                                                                                                                                                          be subject to detailed review as to whether it is in the
                           as an independent organisation with its own Board and                                                                          Secondly, direct electrification must be the next go-to
                                                                                           The 2015 Paris Agreement2 has an objective of “holding                                                                         best interests of the Northern Ireland customer in the
                           management teams and separate regulation via the                                                                               strategy. With electricity consumption in Northern Ireland
                                                                                           the increase in the global average temperature to well                                                                         long term.
                           Northern Ireland Authority for Utility Regulation (or the                                                                      already 49.2% from renewable sources and a likely
                                                                                           below 2 °C above pre-industrial levels and pursuing
                           Utility Regulator, as it is more commonly known).                                                                              target of 70% for 2030, electrification is on a well-tested,
                                                                                           efforts to limit the temperature increase to 1.5 °C above
                                                                                                                                                          proven technology pathway to fully decarbonising prior
                           •	We own the electricity transmission and                      pre-industrial levels”. In 2019, the European Green Deal3
                                                                                                                                                          to 2050. There are unique opportunities for Northern
                              distribution networks in Northern Ireland, and               set out ambitious reduction levels for the European
                              operate the distribution system, transporting                Union (EU) as a whole and aims to deliver Net Zero
                                                                                                                                                          Ireland to advance this strategy. The lesser reach of
                                                                                                                                                          the gas network in Northern Ireland compared to Great
                                                                                                                                                                                                                          1.3 C
                                                                                                                                                                                                                               USTOMER
                              electricity to 895,000 customers;                            greenhouse gas4 (GHG) emissions by 2050. In June
                                                                                           2019, the UK government announced a target of Net
                                                                                                                                                          Britain (GB) means electrification of heat should be a              AT THE CENTRE
                           •	We invest over £100 million annually in                                                                                     primary solution for well insulated new buildings and
                                                                                           Zero GHG emissions by 20505 and in December 2020                                                                               The climate change challenge will drive decarbonisation
                              maintaining and upgrading the electricity                                                                                   off gas grid customers. A strategy can be developed
                                                                                           the Committee on Climate Change (CCC) presented its                                                                            of society and the impacts of this will be profound
                              transmission and distribution infrastructure in                                                                             where electrifying heat in parallel with a rollout of an
                                                                                           6th Carbon Budget on how the UK can deliver on this                                                                            and far reaching. The changes that are underway are
                              Northern Ireland to ensure it remains in a safe and                                                                         energy efficiency programme can be commenced as a
                                                                                           commitment.                                                                                                                    already impacting on how customers are engaging with
                              reliable condition;                                                                                                         matter of priority to make early progress and stimulate
                                                                                                                                                          an emerging heat pump industry delivered with skill sets        the electricity network with the past decade seeing an
4 - EXECUTIVE S U M MARY

                                                                                                                                                                                                                                                                                       EXECUTIVE S U M MARY - 5
                                                                                           Within the 6th Carbon Budget, the CCC has specifically
                           •	We contribute over £150 million annually to the                                                                             that exist within the region. In terms of the transport         unprecedented uptake in customers installing renewable
                                                                                           outlined how Northern Ireland can meet its obligations
                              Northern Ireland local economy;                                                                                             sector, with developments in battery technology and             generation, a significant uptake of roof top solar photo-
                                                                                           as part of the UK effort and has recommended Northern
                                                                                           Ireland reach an 82% reduction in GHG emissions by             considering the geographic size of Northern Ireland,            voltaic (PV) and the commencement of a switch to
                           •	We directly employ over 1,200 highly skilled
                                                                                           2050 compared to 1990 levels excluding engineered              range anxiety is rapidly becoming less of a concern when        electric vehicles (EVs).
                              individuals and sustain hundreds of further jobs
                              through our supply chain;                                    greenhouse gas removals. In addition, Northern Ireland         making the decision to switch away from petrol or diesel        Customers now have the opportunity to engage with
                                                                                           would be targeted to achieve Net Zero carbon dioxide           vehicles. There has however, been limited progress in           LCTs and emerging energy markets to more efficiently
                           •	We have delivered approximately 30% real price               (CO2) emissions by 2050.                                       developing the necessary electric vehicle (EV) charging         manage their energy needs. This will further evolve over
                              reduction in our network costs since privatisation;                                                                         infrastructure and the remaining barriers to market
                                                                                           Northern Ireland’s Executive has reinforced its climate                                                                        time and NIE Networks recognises that the needs of
                              and                                                                                                                         entrants should be removed as a matter of priority.
                                                                                           change commitment in its ‘New Decade, New Approach’                                                                            customers are wide ranging and different customers will
                           •	We maintain a consistently strong financial                  agreement stating; “the Executive will introduce               Thirdly, utilisation of other low carbon technologies           seek to engage with the network and markets in different
                              performance managing an asset base of £1.6bn                 legislation and targets for reducing carbon emissions          such as hydrogen, carbon capture and storage (CCS)              ways. Some will become active participants in the new
                                                                                           in line with the Paris Climate Change Accord”. The             and biogas should be progressed where technically and           world and others will remain passive relying on the
                           Our role in the energy transition is to enable and facilitate
                                                                                           Department for Agriculture, Environment and Rural              economically viable. Some of these technologies are             network for meeting their electricity demands. Customers
                           the decarbonisation of energy production through
                                                                                           Affairs (DAERA) is developing and consulting on a              less advanced in terms of commercial development and            must be encouraged to engage with the energy markets
                           accommodation of renewable generation, facilitate the
                                                                                           Climate Change bill for Northern Ireland. NIE Networks’        less proven from a technical and economic business              through advice and information on options available to
                           uptake of low carbon technologies (LCTs) and through
                                                                                           considered opinion is that the bill should set interim         perspective. There is a wide acceptance that there              them and empowered to make the right decisions on how
                           digitalisation develop and operate the network in an
                                                                                           emission reduction targets and a long-term target for          are specific sectoral uses for such low / zero carbon           best to optimise their energy requirements. NIE Networks
                           open and more efficient manner enabling customers to
                                                                                           Northern Ireland by 2050, where the long-term target           alternatives, for example the use of hydrogen in industrial     supports the formation of an independent advisory
                           participate in new emerging markets. We don’t produce
                                                                                           represents an equitable contribution to achieving UK-          processes, heavy transport and maritime applications,           body to which we can contribute, to ensure relevant
                           or sell electricity, but are required to provide a connection
                                                                                           wide Net Zero by 2050 as recommended in the CCC’s              however a cautious approach should be adopted to fully          information is made available including how customers
                           for all sources of electricity, whether traditional or
                                                                                           6th Carbon Budget.                                             understand the full costs and benefits of production and        can avail of emerging flexibility services.
                           renewable generation and demand customers where
                           requested. We are required to design and provide a                                                                             deployment. Hydrogen production and end use cases               It is vital that the energy transition is fair in terms
                                                                                           NIE Networks advocates strongly for a strategy for             should be fully explored for Northern Ireland however we
                           network fit for purpose to enable this to happen and to         Northern Ireland which aligns with the UK and European                                                                         of sharing of benefits and costs and that the most
                           achieve a zero-carbon society. In doing so we ensure that                                                                      should recognise that in GB, the 2020s are expected             vulnerable in society (perhaps less able to actively
                                                                                           transitions. The first pillar of this must be energy           to be a significant period of trial to fully understand the
                           we continue to provide a safe and reliable network, whilst      efficiency as the most valuable unit of energy is the one                                                                      participate) benefit and are not unduly burdened with
                           facilitating the delivery of this zero-carbon ambition in the                                                                  costs, risks and benefits from a production and end use         costs. NIE Networks is committed to ensuring information
                                                                                           not used. The challenge on energy efficiency for Northern      perspective. Hydrogen is not yet a market-ready solution
                           most cost-effective way.                                        Ireland cannot be underestimated with 90% of our homes                                                                         is available to the public, that network investments
                                                                                                                                                          of scale, but it has the potential to play a significant role   are incurred as efficiently as possible and tariffing
                           We welcome the commitments in the ‘New Decade,                  being Energy Performance Certificate (EPC) Grade C             in decarbonisation in the longer term. Hydrogen should
                                                                                           or less. It is incumbent on policy makers to ensure our                                                                        arrangements are reviewed to ensure network costs are
                           New Approach1’ Agreement to develop a strategy to                                                                              not be perceived as an alternative to, or in competition
                                                                                           homes and premises are as energy efficient as possible                                                                         charged in a manner that is fair to all customers.
                           tackle climate change, central to which is a new Northern                                                                      with, renewable electricity as a low carbon solution.
                           Ireland energy strategy. In that regard we are also grateful    and put the necessary financing mechanisms in place to         Rather, both can be inter-dependent elements of an
                           for the opportunity to proactively engage in and support        address and support a comprehensive retrofit programme         overall integrated clean energy strategy. In particular the
                           the Department for the Economy’s (DfE) energy strategy          for Northern Ireland that stands the test of time. This will   longer-term potential for the production of hydrogen from
                           process through engagement with other stakeholders              not be an insignificant amount of expenditure but it will      renewable power, and its storage and use for industrial
                           in four of the Thematic Working Groups (Power, Heat,            have major positive impacts on home comfort and energy         processes, transport and indeed power generation may
                           Transport and Consumer) assessing the options for               usage, especially in lower income housing. Coupled with        be a significant element of the 2050 Net Zero energy
                           a new energy strategy and the new Strategic Energy              this, better information on energy consumption through         system. However, scope for the safe and economic end
                           Framework for Northern Ireland for 2020-2030.
NETWORKS FOR NET ZERO - Delivering a sustainable energy system for all
1.4 N
                                ETWORKS FOR                                              bill composition, NIE Networks estimate that by 2025
                                                                                          and 2030 the charge to domestic customers relating to
                                                                                                                                                        such as grants and low-cost finance. This would be
                                                                                                                                                        a one-off investment which will have enduring energy
                                                                                                                                                                                                                      the economy by unlocking investment in low carbon
                                                                                                                                                                                                                      infrastructure and fast-tracking decarbonisation of heat
                               NET ZERO                                                   network costs will result in a 1% reduction in the overall    efficiency improvements into the future. The adoption of      and transport:
                                                                                          cost they pay per unit of electricity consumed. The           hybrid heat pumps should also be progressed as they
                           NIE Networks would concur with the widely adopted                                                                                                                                          1.	Joining up policy and regulation to
                                                                                          cost is dependent predominantly on the degree that off        enable a very significant reduction in CO2 emissions from
                           strategy in the UK, Europe and Ireland that electrification                                                                                                                                    encourage investment
                                                                                          shore wind plays in the generation profile. NIE Networks      home heating without the same level of investment in
                           has a lead role to play in decarbonising key sectors           would advocate the development of offshore wind as            retrofit being required.                                      	NIE Networks considers that the mandate of the
                           which contribute to our GHG emissions. Central to              a solution given the opportunities Northern Ireland has                                                                       Utility Regulator should be broadened to support
                           facilitating this transition over the next three decades                                                                     These measures would also have the effect of stimulating        decarbonisation and economic development. This
                                                                                          for deployment of this technology to add to the diversity
                           are the electricity networks and the role of the network                                                                     the local supply chain, which will be essential if Northern     would provide an opportunity to create a forward-
                                                                                          of generation mix. This would reduce the impact of
                           owners and operators to ensure the transition can be met                                                                     Ireland is going to meet its obligations in this sector and     looking regulatory framework that supports
                                                                                          accommodating this generation capacity on shore and
                           both technically and economically at minimal cost to the                                                                     address the large number of customers who will be off           innovation and strategic investment, stimulating
                                                                                          the significant reinforcements to the distribution network
                           Northern Ireland customer.                                                                                                   gas grid or opt not to choose hydrogen (if it proves to         new employment opportunities and a more
                                                                                          this would necessitate.
                                                                                                                                                        be an economic option and becomes available to them).           prosperous economy. NIE Networks additionally
                           The development of the electricity network needs to take                                                                     Progressing an electrification strategy immediately can
                           account of the decarbonisation pathways for generation                                                                                                                                       advocates a review of connection charging
                                                                                                                                                        proceed in parallel with trialling alternatives to natural      policies and regulations to align Northern Ireland
                           and demand, much of which is uncertain. To examine this                                                                      gas.
                           uncertainty, NIE Networks engaged Element Energy to                                                                                                                                          with other neighbouring regions, making it an
                           undertake an analysis into a range of possible scenarios       1.5 S
                                                                                               ECTORAL                                                 Northern Ireland should adopt the UK date for banning           attractive and competitive place to invest. This
                                                                                                                                                                                                                        review should ensure an appropriate method of
                           across all sectors which could impact electricity                  CHALLENGES                                                sales of new internal combustion engines in cars and
6 - EXECUTIVE S U M MARY

                                                                                                                                                                                                                                                                                 EXECUTIVE S U M MARY - 7
                           production and consumption. On the generation side,                                                                          vans and address the remaining barriers to the uptake of        charging is implemented and that connection
                           a range of future renewable electricity consumption                                                                          EVs by creating the right market conditions for electric        costs are apportioned appropriately between the
                                                                                          For the power sector, NIE Networks would support the
                           (RES-E) targets have been modelled (60%, 70%                                                                                 vehicle charger providers. NIE Networks has advocated           connectee and socialised costs whilst also taking
                                                                                          Economy Minister’s assessment that the 2030 target
                           and 80%) together with ranges for uptake of solar PV                                                                         for the formation of a cross departmental taskforce             into consideration customer willingness to pay
                                                                                          for RES-E should be a minimum of 70% building on
                           and battery storage. On the demand side, ranges of                                                                           including other stakeholders such as local councils, car        and vulnerable customers.
                                                                                          the significant progress achieved in Northern Ireland to
                           uptake scenarios for transport through assessment of           date and exceeding the previous 2020 target of 40%            suppliers and EV user groups to determine the most            2.     Accelerating investment in renewables
                           electric vehicle projections and domestic / commercial         ahead of schedule (by 2019). In achieving the current         appropriate strategy for EV charger deployment between
                                                                                                                                                                                                                      	A new target of minimum 70% renewable
                           heating for high electrification and conversely high gas       level of 49.2%, investment was required to create             home, workplace and destination charging locations.
                                                                                                                                                                                                                        electricity consumption will require a doubling
                           penetration scenarios were modelled. This work dove-           additional capacity over the previously existing headroom     Local government should also pursue all available funding
                                                                                                                                                                                                                        of the current connected renewable capacity.
                           tailed with the Transmission System Operator’s (SONI)          and we are now at a point where the network is at             routes from the UK Government to support provision of a
                                                                                                                                                                                                                        Development of clear funding mechanisms will
                           ‘Tomorrows Energy Scenarios’ to assess potential               capacity in many locations. Achieving 70% cannot be           local public charging infrastructure.
                                                                                                                                                                                                                        provide some certainty around market access and
                           pathways on emissions reductions and impact on                 delivered with the same incremental approach previously                                                                       income streams to enable the investments to be
                           network costs.                                                 adopted but will require significant strategic grid                                                                           economic for developers.
                                                                                          development to accommodate the predicted doubling of
                           These studies confirmed that with the right policy                                                                                                                                         3.	Bringing forward network infrastructure
                                                                                          renewables required. Delivery of the second North South
                           decisions, Northern Ireland can achieve its Net Zero
                           commitments as outlined in the CCC’s 6th Carbon
                                                                                          Interconnector will be a key enabler for the integration of   1.6 DELIVERING                                                   investment
                           Budget. Indeed, the power sector is capable of
                                                                                          additional renewable generation, addressing constraints           THE FUTURE                                                	If the regulatory mandate permitted building
                                                                                          on the transmission network, improving security of                                                                            network infrastructure ahead of need, this would
                           decarbonising ahead of 2050. The electrification of
                                                                                          supply and allowing the grid to operate more effectively      The delivery of the emerging targets for Northern Ireland       enable advancement of least regret infrastructure
                           demand and moving away from fossil fuels in generation,
                                                                                          as part of an all-island Single Electricity Market (SEM).     will be challenging and will require a collective will and      projects. A new fast track approach would be
                           heating and transport could reduce the demand on
                                                                                          Offshore wind can play a significant role in the generation   determination to remove all possible barriers. There is         required from the Utility Regulator and planning
                           primary energy sources by as much as 48% by 2050
                                                                                          mix and any planning barriers to its development              now a real sense of urgency to act on areas of least            authorities to ensure projects can be delivered
                           compared to today. This is because of the much greater
                                                                                          should be addressed. Greater system flexibility and in        regret and make progress towards the 2030 ambitions.            efficiently. Much of this investment will be
                           energy efficiency of electricity compared with fossil
                                                                                          particular demand side management through flexibility         For NIE Networks, it is critical that the network cannot        regionally focused and will have a significant
                           fuels in areas such as transport and heat. It could also
                                                                                          arrangements for the Distribution System Operator             be a blocker to the transition but capacity must be             positive economic stimulus across all council
                           increase overall electricity consumption by between 50%
                                                                                          (DSO) and Transmission System Operator (TSO) will             available ahead of need. A change of thinking is required       areas in Northern Ireland.
                           and 70% by 2050.
                                                                                          enable greater efficiency of the electricity system to the    to make this happen through a fully coordinated joined
                           The estimated combined distribution and transmission           benefit of all customers.                                                                                                   4.     Improving the planning process
                                                                                                                                                        up approach with collective action from the Northern
                           direct network costs over historic ‘business as usual’                                                                       Ireland Executive and Government Departments, the             	NIE Networks advocates a consistent and
                                                                                          For the heat and building sectors, energy efficiency                                                                          fast-tracked planning process implemented for
                           network costs are assessed in the range of £525m                                                                             UK Government, Utility Regulator, and all industry
                                                                                          and low carbon heating options are inextricably                                                                               ‘green development’ projects which prioritises
                           - £700m by 2030 to achieve a renewable electricity                                                                           participants.
                                                                                          linked. An early and immediate action is to align our                                                                         the efficient delivery of low carbon and renewable
                           target of at least 70%. NIE Networks has performed
                                                                                          Building Regulations for new homes to the Future              The Northern Ireland Executive’s Medium-Term Recovery           projects with appropriate targets, timeframes and
                           some high-level modelling to assess the impact of this
                                                                                          Homes Standard in GB thereby ensuring a standard of           Strategy published by the DfE in June 2020 recognises           accountabilities.
                           increased investment on the cost of electricity given the
                                                                                          construction which would facilitate the adoption of the       the “substantial economic recovery opportunity …
                           expected increased usage of electricity arising from the
                                                                                          most efficient low carbon heating option i.e. heat pumps.     to build a more competitive, inclusive and greener            5.     Low carbon transport
                           electrification of heat and transport, estimated to be circa
                                                                                          Alongside this, a comprehensive programme of building         economy”, and highlighted Clean Energy as one of              	In the immediate term, developing an ultra-rapid
                           19% by 2030. On average, network costs comprise
                                                                                          retrofits is required for Northern Ireland’s poor housing     the potential areas for growth. NIE Networks has                charging hub infrastructure across Northern
                           25% of domestic customers bills, assuming no other
                                                                                          stock, supported with appropriate funding mechanisms          identified eight tangible areas of opportunity to support       Ireland would have a significant impact in terms
                           changes in pricing structure and taking this average
NETWORKS FOR NET ZERO - Delivering a sustainable energy system for all
of economic stimulus, due to the high upfront              The roles and responsibilities for distribution network        of clarity. The emerging strategy for Northern Ireland                   decarbonisation and economic development,
                                  investment costs and promotion of the electric             owners / operators across the UK and Europe are                requires to address:                                                     ensuring a consistent framework to enable
                                  vehicle sector. NIE Networks has offered to kick           evolving reflecting the most significant change on the                                                                                  financeable and efficient regulated investment
                                                                                                                                                            •	Coordination across government departments
                                  start this infrastructure delivery if there is no viable   distribution network in decades. NIE Networks will be                                                                                   and promotion of appropriate market
                                                                                                                                                               with timely complementary policies against a set
                                  market alternative.                                        required to manage a more complex, active distribution                                                                                  structures to attract capital in unregulated
                                                                                                                                                               of targets which align with our contribution to
                                                                                             system which will have more dynamic generation, loading                                                                                 markets.
                           6.     Digitalisation of the Energy System                                                                                          UK’s Net Zero goals by 2050.
                                                                                             demands and flexible distributed energy resources. NIE
                           	NIE Networks advocates for the DfE to update                                                                                          o    82% reduction in GHG by 2050;                     •	Develop the skills and employment base in
                                                                                             Networks role is to act as a neutral facilitator to enable
                             the business case for implementation of smart                                                                                                                                                   Northern Ireland
                                                                                             competitive access to markets and optimal use of                      o    Net Zero CO2 Emissions by 2050;
                             metering and to initiate a trial of significant                 energy resources on the network and provide the ability                                                                             o   through STEM education programmes;
                             scale for smart meters as part of an integrated                 to maintain and operate the distribution system in the                o	Net Zero power sector by 2050 with an aim
                                                                                                                                                                                                                                 o   support for significant reskilling opportunities.
                             solution for customers using LCTs. In addition,                 best possible way for all customers. The DSO pathway                     to decarbonise earlier;
                             NIE Networks advocates for further digital                      we have outlined to 2050 is NIE Networks assessment                                                                          The next decade will be a time of change and adjustment
                                                                                                                                                                   o	Set a minimum of 70% consumption of
                             investment in the Northern Ireland electricity                  of the changes required to both the network and the                                                                          as low carbon technologies become more commonplace.
                                                                                                                                                                      electricity from renewable energy by 2030
                             network and supporting infrastructure to enhance                organisation to facilitate this transition. This pathway                                                                     The way that people consider their energy demands will
                                                                                                                                                                      and promote a wide range of diverse
                             network visibility and controllability. Provision of            presents a view on a range of enablers, namely network                                                                       evolve as they move away from fossil fuel dependency
                                                                                                                                                                      renewable technologies including off shore
                             data to customers, network operators and the                    visibility, network controllability, customer and commercial                                                                 for their heating and transport needs and develop the
                                                                                                                                                                      wind.
                             wider market will provide greater empowerment                   development, market operability and systems and data                                                                         knowledge to become more energy efficient. There will
                             and opportunity for more efficient operation of                 development. The pathway to DSO will deliver whole             •	Progressing now where possible particularly in             be considerable opportunities to more actively engage
8 - EXECUTIVE S U M MARY

                                                                                                                                                                                                                                                                                         EXECUTIVE S U M MARY - 9
                             the network and more efficient management of                    system benefits and the success will be measured by the           areas with proven technologies.                            with energy markets and utilise energy assets in a
                             customer demand.                                                benefits it brings for customers.                                                                                            more efficient manner. Building on the considerable
                                                                                                                                                            •	Placing the customer at the forefront of the
                                                                                                                                                                                                                          success to date with renewable generation, Northern
                           7.     Building regulations                                       NIE Networks is committed to playing its part in                  strategy in providing education, support to
                                                                                                                                                                                                                          Ireland will continue to increase its overall consumption
                           	Supporting energy efficiency through the                        facilitating this energy transition on the pathway to a Net       educate, enable and empower them to make
                                                                                                                                                                                                                          from renewable sources as the power sector aims to
                             modernisation of building regulations is essential              Zero future. As custodians of the electricity infrastructure      the transition in as seamless and cost-effective
                                                                                                                                                                                                                          decarbonise ahead of 2050. The network will require to
                             to align Northern Ireland’s building regulations                we will build on our track record of efficient and                way possible and provide protections for the
                                                                                                                                                                                                                          be developed further to ensure adequate capacity for the
                             with those in GB and the RoI where progress                     successful delivery to ensure the network is developed in         vulnerable and fuel poor against unfair costs or
                                                                                                                                                                                                                          increasing diverse mix of renewable technologies that will
                             towards near-zero carbon buildings has been                     the safest, most efficient and cost reflective way as part        lack of access to benefits of the transition.
                                                                                                                                                                                                                          emerge.
                             made.                                                           of an overarching integrated energy strategy for Northern      •	Energy efficiency first
                                                                                             Ireland. We will ensure customers are at the centre of our                                                                   NIE Networks has commenced its journey as a DSO
                           8.     Innovation                                                                                                                       o	promote energy efficiency and demand                and considers the pathway outlined in this report will
                                                                                             strategy through engagement for information, education
                           	It is essential that we build on existing innovation            and consultation; through enablement ensuring the                        reduction through customer education and            ensure that the transmission and distribution networks
                             activities in low carbon energy through increased               transition is open, transparent and as simple as possible;               advice programmes;                                  and NIE Networks as an organisation are best positioned
                             government investment in areas such as large-                   and through empowerment to ensure customers are                       o	consolidate the positive behaviours from the        to facilitate the changes that will ensue over the next
                             scale trials of heat pumps, hybrid heating                      confident to make real and informed choices and realise                  pandemic;                                           thirty years. We are embarking on what will be the most
                             schemes, hydrogen electrolysis, smart metering,                 the benefits of a low carbon society.                                                                                        significant change to network design, management and
                             smart network technologies, energy storage and                                                                                        o    building retrofit programmes;                     operation since rural electrification in the 1960s and NIE
                             flexibility.                                                    NIE Networks does not have all the answers nor can it                                                                        Networks will evolve and enhance its capabilities and
                                                                                             or should it operate in isolation. We are committed to                o    shift to public transport.
                                                                                                                                                                                                                          skills to facilitate this new world.
                                                                                             ensuring our plans are part of a wider integrated ‘whole       •      Decarbonising heat
                                                                                             system’ approach and will continue to engage with                                                                            The transition to a DSO will deliver whole system and
                                                                                                                                                                   o	setting end dates for fossil fuel boilers in new    considerable customer benefits. NIE Networks intends
                                                                                             local government, the Utility Regulator, electricity sector
                                                                                                                                                                      homes;
                           1.7 EVOLUTION OF NIE                                             businesses, the other utility sectors, industry, commercial,
                                                                                             retail and domestic customers to further the development              o	promotion of low carbon heating (heat
                                                                                                                                                                                                                          to ensure that customers are at the centre of this
                                                                                                                                                                                                                          transition and has engaged with stakeholders throughout
                                NETWORKS’ ROLE                                               of Northern Ireland’s strategy.                                          pumps) in new and off gas grid dwellings and        this journey. The transition will not only benefit active
                                                                                                                                                                      commence this work now;                             customers through the facilitation of access to markets,
                           Through our four Sustainability pillars of ‘Community’,                                                                                                                                        but will also benefit all customers through minimising
                           ‘Environment’, ‘Workforce’ and ‘Future proofing’ and                                                                                    o	continue to investigate and trial alternatives      future network costs in the delivery of a low carbon
                           being a signatory to the European Distribution System                                                                                      to fossil fuels to fully understand the technical   economy.
                           Operators (E.DSO) Sustainable Grid Charter, NIE
                           Networks has committed to addressing its own business
                                                                                             1.8 IN SUMMARY                                                          and economic case for deployment.
                                                                                                                                                            •      Decarbonising transport
                           carbon footprint, ensuring the business has a minimal             The decisions and actions we take over the next decade
                           or positive impact on the local, national and global                                                                                    o	setting end dates for new petrol and diesel
                                                                                             will fundamentally determine the progress Northern
                           environment, community and economy. We will continue                                                                                       sales in Northern Ireland;
                                                                                             Ireland will make towards becoming a carbon free
                           to support and facilitate the UK Net Zero targets, deliver        society. A Climate Change Bill for Northern Ireland and          o	 kick start the electric charging infrastructure
                           our Sustainability Action Plan to achieve a business              a new complementary Strategic Energy Framework                 		    industry that is urgently needed.
                           carbon footprint reduction of 12.5% (against our 2019             to 2030 are long overdue but are essential to setting
                           baseline) and embed sustainable practices within our                                                                             •      Enhancing the regulatory framework
                                                                                             policy and direction for the various sectors against which
                           everyday business operations.                                     integrated plans can be advanced with some degree                     o	Broader remit for Utility Regulator to promote
NETWORKS FOR NET ZERO - Delivering a sustainable energy system for all
2. INTRODUCTION
NETWORKS FOR NET ZERO - Delivering a sustainable energy system for all
CHAPTER 2 – INTRODUCTION

                     •	Climate Change Challenge – This introduction summarises the Paris Agreement targets and legislative
                        commitments to Net Zero in the United Kingdom and EU. The Committee on Climate Change’s 6th Carbon
                                                                                                                                                2.1 CLIMATE CHANGE                                              forecast global emissions to well below 2°C and
                                                                                                                                                                                                                 that they can be achieved efficiently.
                        Budget outlines the expectation for Northern Ireland to reach an 82% reduction in GHGs by 2050 compared to                   CHALLENGE                                            	A new European Commission introduced the
                        1990 levels and to achieve Net Zero of CO2 emissions by 2050. This should be reflected in the new Northern
                                                                                                                                                2.1.1 The Global Policy Context                             European Green Deal at the end of 2019, clearly
                        Ireland Climate Change Bill.
                                                                                                                                                	It is now well understood that climate change             setting out more ambitious reduction levels for
                     •	The Challenge for Northern Ireland – The Power sector has led the way in decarbonisation in Northern Ireland              is a global problem requiring a global response.          the EU as a whole and aiming to deliver Net Zero
                        with 49.2% of electricity consumption derived from indigenous renewable sources and exceeding the previous                The Intergovernmental Panel on Climate Change             GHG emissions by 2050 and to increase the
                        SEF target of 40% by 2020 one year early. NIE Networks considers that the Power sector could be one of the                (IPCC) concluded that it was unequivocal that             GHG emissions reduction target from 40% to
                        first to decarbonise and that targets should consider a renewable consumption figure of minimum 70% and a                 humans were influencing the climate. The 2015             55% by 203014.
                        diverse primary energy source mix including offshore wind production.                                                     Paris Agreement has an objective of “holding the        	In November 2019, the Sustainable Grid Charter
                     •	NIE Networks supports the need for delivery of the second North South Interconnector. This investment is of               increase in the global average temperature to             was published. The purpose of the charter is to
                        strategic importance to Northern Ireland and will: (a) support economic growth and (b) facilitate the connection of       well below 2 °C above pre-industrial levels and           encourage policymakers and investors as well as
                        more renewable generation.                                                                                                pursuing efforts to limit the temperature increase        DSOs to pursue sustainability in all its forms in
                                                                                                                                                  to 1.5 °C above pre-industrial levels”7. It aims          the electricity distribution industry.
                     •	Electricity demand is expected to almost double but demand shifting techniques and flexibility services are               to achieve this objective by requiring bottom-up
                        expected to provide the ability to optimise infrastructure reinforcement.                                                 nationally determined contributions from each           	The E.DSO and its members (including
                                                                                                                                                  country that reflect their particular circumstances       NIE Networks) stated their commitment to
                     •	Heat – Government must produce a Heat and Buildings strategy which addresses the phase-out of fossil fuel
                                                                                                                                                  and capabilities.                                         sustainability with regard not only to climate
                        heating and the rebalancing of policy costs between electricity and gas. Consideration must be given to updating
                                                                                                                                                                                                            and environmental issues but also to social and
                        the Building Regulations and the promotion of low carbon alternatives. There is potential for repurposing the gas       	The increase in global temperature is determined         governmental issues both now and in the future.
12 - I NTRODUCTION

                                                                                                                                                                                                                                                                    I NTRODUCTION - 13
                        network away from natural gas. However, the technology and economics for a mass heat rollout application need              mainly by total CO2 emissions over time, which
                        to be trialled and developed through the 2020s. Electrification through developed products such as heat pumps              must fall to near zero in order to limit global        	The World Energy Investment Outlook (2014)
                        can provide an extremely efficient heating solution albeit the industry in Northern Ireland is not as developed as         warming. The UK CCC states8 that today’s level           Report has estimated that between 2014 and
                        elsewhere in GB and RoI.                                                                                                   of warming is already having significant impacts         2035, the EU will need to invest a total of 650
                                                                                                                                                   around the world. The frequency of heatwaves             billion USD into electricity grids to meet its
                     •	Transport – The uptake of electric vehicles in Northern Ireland to date has been slow and somewhat hindered by
                                                                                                                                                   has increased in most land regions9. There are           decarbonisation targets, 75% of this expenditure
                        the lack of an extensive charging network and lack of market entrants. An overall charging infrastructure strategy is
                                                                                                                                                   demonstrable impacts on heat-related mortality           is in distribution networks to which the majority
                        required which will attract new entrants and encourage the switch to EVs.
                                                                                                                                                   particularly for elderly and vulnerable people10.        of Renewable Energy Sources (RES) are
                     •	Energy Strategy – NIE Networks has been proactively engaging with stakeholders in the development of energy                Patterns of water availability are changing due to       connected. Without appropriate investments in
                        strategy and believes a customer centric approach is essential. The outworking of policy must consider the impact          melting land-ice and shifting rainfall in some parts     electricity networks the energy transition will not
                        on costs and be balanced across current and future generations. It is vital that vulnerable customers are protected        of the world. Flooding is also increasing in coastal     happen15.
                        from unequal cost burden but must also share in the benefits of a zero-carbon society.                                     areas as climate change pushes up sea-levels.
                                                                                                                                                                                                          2.1.3 United Kingdom Context
                     •	Green Recovery – The required investment for Net Zero could support the UK’s and Northern Ireland’s economic               Climate change is being increasingly linked with
                                                                                                                                                   making the conditions for wildfires more likely11      	In June 2019, the UK government announced a
                        recovery post-pandemic by ‘building back better’ using green technologies.
                                                                                                                                                   and has also affected crop yields, with more             UK target of Net Zero GHG emissions by 2050
                     •	Sense of Urgency – Many steps can be taken with confidence in the next decade and should begin immediately.                negative than positive effects12.                        following recommendations made by the CCC16.
                        There are policy, regulatory and strategy directions that require urgent resolution but key is a coordinated approach                                                               This change to legislation came into force on 27
                        from policy makers.                                                                                                     	Rapid and sustained reductions in GHG                     June 2019 and amended the Climate Change
                                                                                                                                                  emissions will be needed over several decades             Act 2008 target of an 80% reduction in GHG
                                                                                                                                                  to keep additional warming within the limits of the       emissions compared with the 1990 levels.
                                                                                                                                                  Paris Agreement.
                                                                                                                                                                                                          	In the last three decades, UK GHG emissions
                                                                                                                                                2.1.2 European Context                                       have fallen at an average rate of 13 MtCO2e
                                                                                                                                                	EU legislation generally takes a long-term view            (Metric tons of carbon dioxide equivalent) per
                                                                                                                                                  on climate and energy policy. As early as 2011,            year which equates to a 40% reduction. Outside
                                                                                                                                                  the 2050 Low Carbon Economy Roadmap                        of the electricity supply sector, emissions have
                                                                                                                                                  demonstrated that it was feasible and affordable           fallen at an average rate of just 7 MtCO2e per
                                                                                                                                                  for the EU to reduce domestic emissions by 80%             year. Progress has been quicker in recent years,
                                                                                                                                                  by 2050 compared to 1990 with a milestone of a             primarily led by the UK’s transition from coal-fired
                                                                                                                                                  40% reduction by 2030 which is reflected in the            power generation towards low-carbon generation.
                                                                                                                                                  current UK Climate Change Act requirement.                 Although in the last five years emissions have
                                                                                                                                                                                                             fallen by 16 MtCO2e on average, they must fall
                                                                                                                                                	On 28 November 2018, the EU Commission                     at a faster rate to meet the 6th Carbon Budget
                                                                                                                                                  presented its strategic long-term vision for a             (by around 21 MtCO2e per year). However, the
                                                                                                                                                  prosperous, modern, competitive and climate-               power sector can no longer be relied upon to
                                                                                                                                                  neutral economy by 2050. Within the Strategy,              deliver the majority of these reductions; progress
                                                                                                                                                  the EU confirmed that a minimum reduction of               must extend to all sectors of the economy17.
                                                                                                                                                  80% of GHG emissions13 would be consistent
                                                                                                                                                  with the Paris Agreement objectives of reducing         	Momentum in the UK is building towards the
                                                                                                                                                                                                            UK’s Net Zero objective. 80% of the public are
NETWORKS FOR NET ZERO - Delivering a sustainable energy system for all
Glide Path to Northern Ireland Net Zero CO2 Emissions by 2050
                                                                                                                                                                                                                  110

                                                                                                                                                          GHG & Carbon Emissions (Percentage of 1990 Emissions)

                                                                                                                                                                                                                                                                                                                    6th Carbon Budget
                                                                                                                                                                                                                  100

                                                                                                                                                                                                                   90

                                                                                                                                                                                                                   80

                                                                                                                                                                                                                   70
                                                                                                                                                                                                                                  5th Carbon Budget Target for 2030 (GHG)

                                                                                                                                                                                                                   60
                           concerned about climate change and 66% of             2.1.5 Northern Ireland Context                                                                                                                   6th Carbon Budget Target for 2030 (GHG)
                                                                                                                                                                                                                   50
                           people are now aware of Net Zero specifically, up     	Northern Ireland does not currently have climate
                           from around 50% earlier in 202018.                      change legislation separate to the UK, however                                                                                  40

                     	The CCC has created and analysed five different             its New Decade, New Approach agreement
                                                                                                                                                                                                                   30
                       scenarios within the 6th Carbon Budget. These               announced in January 2020 states; ‘the Executive
                       options are to confirm the level of ambition                will introduce legislation and targets for reducing                                                                             20

                       required across different sectors and are listed            carbon emissions in line with the Paris Climate
                                                                                                                                                                                                                   10
                       below:                                                      Change Accord’22. GHG emissions from
                                                                                   Northern Ireland contribute to the UK total under                                                                                0
                           • Headwinds Pathway;                                    the Climate Change Act 2008, meaning deep                                                                                            1990      1995       2000        2005         2010       2015     2020   2025    2030       2035                2040    2045    2050

                                                                                   emissions reductions in Northern Ireland are                                                                                          Year
                           • Widespread Engagement Pathway;
                                                                                   crucial if the UK is to meet its obligations under                                                                                       GHG Emissions               CO2 Emissions
                           • Widespread Innovation Pathway;                        the Paris Agreement.
                           • Tailwinds Pathway;                                                                                                                      Figure 1 – Glide Path for Northern Ireland GHG & CO2 Emissions by 2050
                                                                                 	Northern Ireland has devolved responsibility
                           • Balanced Net Zero Pathway.                            for energy policy, excluding nuclear energy and
                                                                                   carbon capture and storage (CCS) which are                    to 27% in Northern Ireland26. There is no purely              Northern Ireland by 2050, that will represent an
                     	Each of the pathways can be studied further                 covered at a national level. Since November                   technical reason why Net Zero is not possible                 equitable contribution to achieving UK-wide Net
                       in the CCC’s 6th Carbon Report. However,                    2007, the electricity industry has been operating             in Northern Ireland. However, Net Zero GHGs                   Zero by 2050 as recommended in the CCC’s 6th
                       the report concludes that due to the relatively             in the Single Electricity Market (SEM) – a single             in Northern Ireland would mean a substantial                  Carbon Budget.
                       balanced mix of contributions from demand-                  wholesale market across the Island of Ireland.                reduction in output from Northern Ireland’s
14 - I NTRODUCTION

                                                                                                                                                                                                                                                                                                                                                                            I NTRODUCTION - 15
                                                                                                                                                                                                         	Northern Ireland accounted for 4.3% of UK GHG
                       side action, electrification, hydrogen and GHG              Northern Ireland is a joint member of the all-island          livestock farming sector or (possibly and) much
                                                                                                                                                                                                               emissions in 201829 and its GHG emissions
                       removals, the ‘Balanced Net Zero Pathway’                   Integrated Single Electricity Market (I-SEM)                  greater than equal share of all UK GHG removals
                                                                                                                                                                                                               have been reducing, with the latest emission
                       provides the best balance between level of                  shared with the RoI which went live in October                being located in Northern Ireland compared to
                                                                                                                                                                                                               statistics published in June 2020 confirming
                       ambition and meeting the Net Zero target. This              201823. The primary aims of the market are to:                its current emissions, population or economic
                                                                                                                                                                                                               a decrease of 2.5% in 2018 compared with
                       pathway places the UK in line with the most                                                                               output27. The CCC suggests it is therefore fair
                                                                                        •	integrate the all-island market with the European                                                                   2017 to 19.4 MtCO2e. The longer-term trend
                       ambitious commitments for 2030 compared                                                                                   that, as well as taking the right actions to reduce
                                                                                           Internal Energy Market;                                                                                             indicates a decrease of 20% in Northern Ireland’s
                       to similar countries also targeting Net Zero by                                                                           emissions from agriculture, some of these
                                                                                                                                                                                                               greenhouse gas emissions compared to the
                       205019 and leaves the UK well-placed to support                  •	increase opportunities to trade in different time     emissions should be offset by ‘sinks’ that are
                                                                                                                                                                                                               base year (1990). The largest sectors in terms
                       raising international ambition as the host of                       frames; and                                           located elsewhere in the UK28.                 Sectoral Breakdown         of Northern Ireland
                                                                                                                                                                                                               of emissions in 2018 were agriculture (27%);
                                                                                                                                               	DAERA is presently consulting on a ClimateGHG Emissions
                       COP2620 and President of the G721.
                                                                                        •	to increase the efficiency of cross-border                                                                          transport (23%) and energy supply (15%) as
                     2.1.4 Ireland Context                                                 interconnectors.                                      Change Bill for Northern Ireland. NIE Networks                shown in Figure 2 below. Most sectors showed a
                                                                                                                                                                                                         Waste          Other*
                                                                                                                                                 would support the bill setting interim emission               decreasing trend since the base year.
                     	As a member of the EU, the Irish Government               	The nature of the all-island market means that                                                                        Management
                                                                                                                                                 reduction targets and a long-term target for
                       developed its National Energy and Climate Plan              any energy policies in Northern Ireland that affect                                                                              Sectoral Breakdown of Northern Ireland 4%
                       (NECP) required by Article 15 of EU Regulation              the supply-side of energy must be compatible                                                                                     GHG Emissions                       4%
                       (EU) 2018/1999, then subsequently published                 with RoI policy, and vice-versa, in order to avoid                                                                                                                                             Business       12%                                           27%        Agriculture
                       its Climate Action Plan in 2019.                            market distortions that incentivise inefficient                                                                                                          Waste                     Other*

                                                                                                                                                                                                                                                                                                           19.4
                                                                                   generation.                                                                                                                                              Management
                           The key features of the plan include:
                                                                                 	In the CCC’s ‘Balanced Net Zero’ Pathway,
                                                                                                                                                                                                                                                                            4%
                           •	a five-year Carbon Budget and sectoral targets                                                                                                                                                                                     4%
                              with a detailed plan of actions to deliver them;     Northern Ireland is expected to reach an 82%                                                                                                                                                                           million tonnes
                                                                                   reduction in GHGs by 2050 compared to 1990                                                                                                   Business            12%                     Residential      27%
                                                                                                                                                                                                                                                                                             14%        of carbon dioxide
                                                                                                                                                                                                                                                                                                         Agriculture
                           •	formation of a Climate Action Delivery Board                                                                                                                                                                                                                                   equivalent
                                                                                                                                                                                                                                                                   19.4
                                                                                   levels, excluding engineered greenhouse gas
                              overseen by the Department of the Taoiseach to       removals24. As a sub category of all GHG’s,                                                                                                                                                                                  (CO2e)
                              ensure delivery;                                     Northern Ireland is expected to achieve Net
                           •	formation of an independent Climate Action           Zero of CO2 emissions by 2050 due to the long                                                                                                                              million tonnes                                                                   23%        Transport
                              Council to recommend the Carbon Budget and           lasting impacts this gas creates25. This glide path                                                                                  Residential         14%             of carbon dioxide           15%
                              evaluate policy with strong accountability to an     to meet these targets is visualised in Figure 1.                                                                                                                             equivalent
                                                                                                                                                                                                                                                                          Energy Supply
                              Oireachtas Climate Action Committee; and           	The CCC 6th Carbon Budget expects that some                                                                                                                                     (CO2e)
                           •	carbon proofing all Government decisions and         parts of the UK will be ‘net sources’ of GHGs by
                              major investments.                                   2050 with emissions offset in other parts of the                                                                                                                                                         23%         Transport                       *Other consists of the following:
                                                                                   UK that are ‘net sinks’.                                                                                                                                                 15%                                                                         Land Use Change             3%
                     	The 2019 Climate Action Plan is presently                                                                                                                                                                                                                                                                        Public                      1%
                                                                                 	Northern Ireland is a significant net exporter                                                                                                 Energy Supply                                                                                         Industrial Process          1%
                       under review to reflect higher commitments by
                       significantly increasing or advancing original              of agri-food products with nearly 50% of all
                       targets.                                                    agri-food products produced in Northern Ireland
                                                                                                                                                                                                                                                                *Other consists of the following:
                                                                                   consumed in the rest of the UK. Around 10% of                                                                                                                                Land Use Change             3%
                                                                                   all UK emissions are from agriculture, compared                                                                                Figure 2 –Sectoral Breakdown of Northern Ireland’s 2018 Greenhouse Gas
                                                                                                                                                                                                                                                                Public                      1%Emissions
                                                                                                                                                                                                                                                                Industrial Process          1%
NETWORKS FOR NET ZERO - Delivering a sustainable energy system for all
2.2 T
                          HE CHALLENGE FOR                                                                                                                                                                                                                                                   	Since the publication of the SEF 2010-2020, the volume of renewable generation grew from approximately
                                                                                                                                                                                                                                                                                                450MW to 1,700MW.
                         NORTHERN IRELAND                                                                                                                                                                                                                                                     	The technology mix of connected renewable generation in Northern Ireland as of end Q4 2020 is shown in
                     Table 1 below summarises the suggested targets set out in Section 2.1.5 above for Northern Ireland:30                                                                                                                                                                      Figure 4 below, with wind being the major contributor of 1280MW. There is also a further 343MW of renewable
                                                                                                                                                                                                                                                                                                generation technology committed to be connected to the network.

                       Time Period                                                                                 Reduction in all GHG Emissions                                                                         Reduction in CO2 Emissions
                      		                                                                                             Compared to 1990 Levels                                                                               Compared to 1990 Levels                                                   Committed and Connected Generation

                                                                2030                                                                                   48%                                                                                                56%                                           Other/Mixed Schemes18     Biogas                                       Other/Mixed Schemes19    Biogas

                          Average over UK 6th Carbon                                                                                                   60%                                                                                                70%                                                                   110
                                                                                                                                                                                                                                                                                                                                                 PV                                                    141
                          Budget Period (2033-2037)                                                                                                                                                                                                                                                                                                                                                                    PV
                                                                                                                                                                                                                                                                                                                                           268                                                                   289
                                                                2040                                                                                   69%                                                                                                83%                                                                                         Hydro/Tidal                                                           Hydro/Tidal
                                                                                                                                                                                                                                                                                                                         Total c.                     8                                                                     8
                                                                                                                                                                                                                                                                                                                                                                                                Total c.
                                                                2050                                                                                   82%                                                                                         Net Zero
                                                                                                                                                                                                                                                                                                                   1684MW                                      + 343 MW
                                                                                                                                                                                                                                                                                                                                                               to Connect
                                                                                                                                                                                                                                                                                                                                                                                          2027MW
                     Table 1 - Intermediate Emissions Reduction Targets for Northern Ireland                                                                                                                                                                                                        Wind   1280                                                             Wind   1570
16 - I NTRODUCTION

                                                                                                                                                                                                                                                                                                                                                                                                                                          I NTRODUCTION - 17
                     2.2.1 Power Sector
                     	In 2010 the Strategic Energy Framework (SEF)                                                                                                                         The percentage of total electricity consumption                                                             NI Connected Renewable Generation                                      NI Connected and Committed Renewable
                       for Northern Ireland set an ambitious target                                                                                                                         generated from indigenous renewable sources,                                                                          Technology Mix                                                     Generation Technology Mix
                       for 40% of demand to be met by Renewable                                                                                                                             as a twelve-month rolling average, is illustrated
                       Energy Sources for Electricity (RES-E). Northern                                                                                                                     below. For the 12-month period January 2020
                       Ireland was successful in achieving this target                                                                                                                      to December 202031 this totalled 49.2% of total                                                         Figure 4 – Northern Ireland Connected Renewable Generation Technology Mix
                       objective one year in advance of the 2020 target.                                                                                                                    electricity consumption.

                             Renewable Electricity Consumption                                                                                                                                                                                                                                	The DfE which is responsible for energy policy is                              Generation
                                                                                                                                                                                                                                                                                                in the process of developing the next SEF 2020-                      	The National Infrastructure Strategy (NIS)
                                                                                                                                                                                                                                                                                                2030, with the Energy Strategy consultation                            states that the UK has committed to ending coal
                                                                60%
                             Renewable Energy Generated as
                                       % of Total Electricity

                                                                                                                                                                                                                                                                                                released on the 31st March 2021 and the                                electricity generation no later than 2025. The
                                                                                                                                                                                                                                                                                                final SEF due in November 2021. This policy                            CCC’s ‘Balanced Net Zero’ Pathway proposes to
                                                                50%
                                                                                                                                                                                                                                                                                                will create a roadmap to the 2030 ambitions                            decarbonise electricity generation completely by
                                                                40%
                                                                                                                                                                                                                                                                                                and will require a transformational change to                          2035, with action thereafter focused on meeting
                                                                                                                                                                                                                                                                                                the transmission and distribution systems in a                         new demands in a low-carbon way33. This would
                                                                30%                                                                                                                                                                                                                             number of different policy areas. Promising levels                     mean no new unabated34 gas plants should be
                                                                                                                                                                                                                                                                                                of ambition for this new SEF are emerging, as                          built after 2030, and the burning of unabated
                                                                20%                                                                                                                                                                                                                             the Economy Minister has recently stated that a                        natural gas for electricity generation should aim
                                                                                                                                                                                                                                                                                                supportive policy environment is needed to deliver                     to be phased out entirely by 2035. Any gas plant
                                                                10%                                                                                                                                                                                                                             these Net Zero investments and that whilst work                        built before 2030 should be made ready for a
                                                                                                                                                                                                                                                                                                is ongoing, evidence should be gathered to set                         switch to CCS.
                                                                0%                                                                                                                                                                                                                              the new target. Initial considerations are that the
                                                                                                                                                                                                                                                                                                                                                                     	For Northern Ireland, NIE Networks considers
                                                                      Dec-10
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                                                                                                                                                                                                                                                                                                2030 target should not be below 70 per cent32.
                                                                                                                                                                                                                                                                                                This would be consistent with ambition levels in                       that the Power sector could be one of the first to
                                                                                                                                                                                                                                                                                                the RoI.                                                               decarbonise. Targets in the SEF should consider
                                                                      Rolling 12 Month Average For Period Ending                                                                                                                                                                                                                                                       not just a renewable consumption figure but also
                                                                                                                                                                                                                                                                                                                                                                       an assessment of the primary energy source
                                                                                                                                                                                                                                                                                                                                                                       mix most optimal for Northern Ireland including
                             Figure 3 - Rolling 12 Month Average from December 2010 to December 2020
                                                                                                                                                                                                                                                                                                                                                                       offshore wind production.
Figure 535 below provides an overview of the technology options and potential mix based on the assumptions derived                                                           Interconnection                                    	Customers, or aggregators operating on their
                     from the Element Energy and TSO’s Tomorrows Energy Scenario Northern Ireland (TESNI) processes. There is a broad                                                      	Northern Ireland currently has interconnection            behalf, will be scheduled or signalled to flex
                     range of technologies that can be offered into the market including offshore wind, marine tidal energy, carbon capture and                                              with the RoI and Scotland. The interconnection            their assets so that NIE Networks can analyse
                     storage.     Generation Mix By Year                                                                                                                                     with the Irish transmission system enables the            the response and network impact in Flexibility
                                                                                                                                                                                             power system to be operated on an all-island              Trial Zones (FTZs). The FTZs in this tender are
                                                                                                                                                                                             basis. The Greenlink Interconnector between RoI           distributed across Northern Ireland covering 15%
                                                                                 10,000                                                                                                                                                                of all customers.
                                                      Generation Capacity (MW)

                                                                                            MP: Modest Progress ACC: Addressing Climate Change AA: Accelerated Ambition
                                                                                                                                                                                             and Wales and the development of the Celtic
                                                                                  9,000                                                                                                      interconnector between France and RoI (due to           	If the trial is successful, Flexibility could be
                                                                                                                                                                                             energise in 2026) will provide market participants        used to manage emerging network congestion
                                                                                  8,000                                                                                                      greater access to the wider European market,              in future regulatory periods41. To enable further
                                                                                                                                                                                             helping to suppress wholesale electricity prices,         development of such techniques, digitalisation
                                                                                  7,000                                                                                                      reducing renewable electricity constraints and            of current electricity meters and a review of tariff
                                                                                                                                                                                             enhancing security of supply. For Northern Ireland        structure is required. This is outlined further in
                                                                                  6,000
                                                                                                                                                                                             customers to benefit from the increasing levels           Chapter 6.
                                                                                  5,000                                                                                                      of interconnection into Ireland, it is essential
                                                                                                                                                                                             that the second North South Interconnector is                  Storage
                                                                                  4,000                                                                                                      constructed and commissioned.                           	Storage that will capture surplus energy when
                                                                                  3,000                                                                                                    	This investment is of strategic importance to             demand is low and provide backup generation
                                                                                                                                                                                             Northern Ireland and in addition to the benefits          when demand is particularly high will be required
                                                                                  2,000
                                                                                                                                                                                             set out above will support economic growth in             to extract maximum benefit from the ever-
18 - I NTRODUCTION

                                                                                                                                                                                                                                                                                                              I NTRODUCTION - 19
                                                                                                                                                                                             Northern Ireland and will facilitate the connection       increasing share of variable renewables.
                                                                                  1,000
                                                                                                                                                                                             of more renewable generation to the network.            	The CCC’s Balanced Pathway scenario expects
                                                                                     0                                                                                                                                                                 batteries to provide within-day flexibility to offer
                                                                                          Year      MP   ACC AA             MP   ACC AA          MP   ACC AA            MP   ACC AA        	The project is needed because at present
                                                                                          2020           2025                    2030                 2040                   2050            although the electricity transmission network             services to the energy system at short notice
                                                                                                                                                                                             operates on an all-island basis, there is currently       and assumes 18 Gigawatt of battery storage
                                                                                            Coal   Oil    Gas      CC Gas        Wind   Solar     Marine      Biomass    Interconnector                                                                capacity across the UK by 2035, highlighting its
                                                                                                                                                                                             only one 275kV interconnector linking North and
                                                                                                                                                                                             South. This restricts the amount of electricity that      importance in the future energy system42.
                                                        Figure 5 – Possible Generation Mix by Year depending on Progress
                                                                                                                                                                                             can flow between the two networks.                      	The CCC’s Balanced Pathway scenario uses
                                                                                                                                                                                                                                                       hydrogen as the primary source of storage for
                                                                                                                                                                                                  Demand
                     	Figure 6 below illustrates the levelised cost estimates for generation projects commissioning in 2025, 2030, 2035                                                                                                               power generation. Surplus electricity generation
                       and 204036. In line with Figure 5, which highlights a significant increase in renewable technology out to 2050, the                                                 	Electricity consumption in Northern Ireland peaks         could potentially be used for electrolysers
                       commissioning of new renewable generation will become economically advantageous, as the cost of renewable                                                             during the winter months and is at its lowest             to produce hydrogen subject to favourable
                       generation is projected to continually decrease. In comparison, alternative generation methods such as Combined                                                       during the summer months. Total consumption               economic appraisal. In the Balanced Pathway
                      Levelised      Energy
                       Cycle Gas Turbines         Coststofor
                                            are projected         Projects
                                                              increase            in 2025,
                                                                       in cost, reaching a 47% increase from 2025 to 2040.                                                                   in 2020 was 8.9 Terawatt hours (TWh)37 and is             scenario, 25% of hydrogen supply comes from
                                                                                                                                                                                             forecast to potentially reach 15.7TWh by 2050.
                             2030, 2035 and 2040 in Real 2018 Prices                                                                                                                         This increase in demand is expected as other
                                                                                                                                                                                                                                                       electrolysis in 2035, increasing to 45% by 2050.

                                                                                                                                                                                             sectors transform to low carbon alternatives            	The UK Government’s Hydrogen Strategy is due
                                                    140                                                                                                                                                                                                to be published in spring 2021. It will set out a
                         £/MWh (Central Scenario)

                                                                                                                                                                                             such as EVs and low carbon electric heating
                                                                                                                                                                                             such as heat pumps38. The potential for green             vision for hydrogen’s role in meeting Net Zero
                                                    120                                                                                                                                                                                                in the longer term, together with the actions,
                                                                                                                                                                                             hydrogen production in Northern Ireland through
                                                                                                                                                                                             electrolysis could create a further increase in           regulations and incentives across end-use
                                                    100
                                                                                                                                                                                             electrical demand.                                        applications and supply to develop hydrogen’s
                                                     80
                                                                                                                                                                                                                                                       role over the next decade43. Regardless of the
                                                                                                                                                                                           	Even though the demand is expected to almost              outcome of this strategy it should not restrict the
                                                                                                                                                                                             double, demand shifting techniques such as                general direction of travel of increasing RES-E
                                                     60
                                                                                                                                                                                             pre-heating in buildings, storage availability, smart     and in preparing for the associated infrastructure
                                                     40                                                                                                                                      vehicle charging and decision making informed             investment now.
                                                                                                                                                                                             by smart metering39 are expected to provide
                                                     20                                                                                                                                      flexibility and ensure optimisation of infrastructure          Regulatory Issues
                                                                                                                                                                                             reinforcement40.                                        	Overall, policy must tackle both the demand-side
                                                      0                                                                                                                                                                                                and supply-side for low carbon products and
                                                                                            2025                       2030                            2035                         2040   	One such example of a demand shift technique
                                                                                                                                                                                                                                                       ensure relevant infrastructure is available when
                                                                                                                                                                                             is NIE Networks’ first ever Flexibility tender. This
                                                                    Commissioning Year                                                                                                                                                                 needed. This will require network infrastructure
                                                                                                                                                                                             tender offers customers opportunities to support
                                                                                                                                                                                                                                                       to be built ahead of the time of need so it can act
                                                                                 CCGT H Class      Offshore Wind    Onshore Wind        Large Scale Solar     CCGT & CSS Post Combustion     their local distribution networks by being flexible
                                                                                                                                                                                                                                                       as an enabler to the decarbonisation targets. It is
                                                                                                                                                                                             with their electricity consumption or generation,
                                                                                                                                                                                                                                                       vitally important that network constraints should
                                                                                                                                                                                             earning revenues in return.
                                                                                                                                                                                                                                                       not become a blocker to the transition. The cost
                         Figure 6 - Comparison Between Generation Technologies Over Time
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