Press notice: 13/008 Dublin

The UK Secretary for Energy and Climate Change, Edward Davey and the Irish Minister for Communications Energy & Natural Resources, Pat Rabbitte, TD, will today commit to working closely together to secure economic benefits for both countries through trade in renewable energy.

Announcing the agreement Minister Rabbitte will say:

“Ireland has the potential to generate far more wind energy than we could consume domestically. The opportunity to export this green power presents an opportunity for employment growth and export earnings which we must seize if we can. Today the two Governments are committing themselves to a programme of work.

“We will work closely with the UK government so we are in a position to move towards a formal agreement on energy trading.

We will tease out the very complex engineering and market issues so that, subject to their successful resolution and a decision by UK and Irish Ministers to proceed, in a year’s time, we will be in a position to make an intergovernmental agreement providing a formal basis for energy trading.”

UK Secretary of State for Energy and Climate Change, Edward Davey, will say:

“Trading power with Ireland could increase the amount of green power in our energy mix and potentially bring down costs for UK consumers.

“Making the most of the natural renewable resource available around our islands could benefit the economies of both countries. The Memorandum of Understanding marks the continuation of close working between our Governments on the potential for energy trading.”

Marking the occasion the two Ministers will sign a Memorandum of Understanding at a ceremony during a conference in Dublin hosted by the British Irish Chamber of Commerce.

The Memorandum of Understanding affirms the two States’ commitment to:

maintaining a strong partnership on energy issues;

achieve closer integration of electricity markets, and

maximise the sustainable use of low carbon renewable energy resources.

The MOU will trigger detailed analysis of how Irish renewable energy resources, onshore and offshore, might be developed to the mutual benefit of Ireland and the United Kingdom. Any such trading of renewable energy between the two States will seek to achieve more cost efficient uses of resources, drive down deployment costs, be sustainable in the long term, and reduce dependence on fossil fuels.

If analysis shows that renewables trading would be to mutual benefit, the next stage would be to develop an inter-governmental agreement for signing in 2014. A tight timeline is essential if potential projects, which would be selected through an open competitive process, are to commence exporting wind energy from Ireland to the United Kingdom by 2020.

Notes for Editors

Significant employment opportunities could arise if an Inter-Governmental Agreement is entered into. Employment creation arising from a 3,000MW project would be expected to be in the order of 3,000 to 6,000 jobs in the construction phase, with the actual number dependent on the construction schedule to 2020. There would also be additional jobs created in the on-going maintenance of turbines over a 20-year operating life. Further employment opportunities could also arise in both countries from the manufacture of turbines, cables, and other technology. All relevant state agencies, particularly in the enterprise area, would have to co-ordinate their activities early in the process to ensure employment potential of export projects is maximised. This opportunity has already been identified by the Industrial Development Authority of Ireland and Enterprise Ireland in their clean technology growth strategies. Under Directive 2009/28/EC (the “Renewables Directive”), each Member State of the EU has been assigned a legally binding individual target for the development of renewable energy that they must achieve by 2020. The Directive provides a mechanism whereby renewable energy produced in one country can be counted towards the target of another, although this cannot be to the detriment of the producing country not achieving its own target. Up to this point, while there had been physical flow of electricity across borders, the renewable value of the electricity remained in the country where it was produced and could not be traded or counted towards another country’s target. Under the Directive, a formal agreement between two or more Member States is required - an Inter-Governmental Agreement - whereby the Governments agree that a certain proportion of renewable energy produced in one country is counted or shared with the other and both countries notify the European Commission of this. An Inter-Governmental Agreement will also need to ensure an appropriate return to the Exchequer. As a next step, officials from both the Department of Communications, Energy and Natural Resources (Ireland) and the Department of Energy and Climate Change (United Kingdom) will complete in 2013 the programme of work set out in the annex to the Memorandum of Understanding which will cover, inter alia, costs and benefits of the planned export, low carbon support mechanisms, connecting to the United Kingdom and regulation.

Memorandum of Understanding between the Minister for Communications, Energy and Natural Resources of Ireland and the Department of Energy and Climate Change of the United Kingdom On cooperation in the energy sector

The Minister for Communications, Energy and Natural Resources of Ireland and the Department of Energy and Climate Change in the UK, (hereinafter referred to as “the Participants”),

Affirming their commitment to maintaining a strong partnership between the two states on energy issues,

Recalling their shared vision to achieve closer integration of electricity markets and to maximise the sustainable use of low carbon renewable energy resources,

Acknowledging the importance of meeting renewable energy targets in the most cost-efficient way and at least cost to consumers, while maintaining security of energy supply and promoting competition,

Building on the valuable experience gained through working together in the British Irish Council energy work-streams, in the North Seas Countries Offshore Grid Initiative and in European Union energy policy formations,

Desiring to promote energy cooperation to their mutual benefit and to further strengthen friendly relations between Ireland and the UK in the field of energy, and

Taking into account these common goals and the progress achieved to date,

Have reached the following understanding:

The Participants will complete their consideration of how Irish renewable energy resources, onshore and offshore, might be developed to the mutual benefit of Ireland and the UK. Any such trading of renewable energy between the two states must lead to a more cost efficient use of resources, drive down deployment costs, be sustainable in the long term and reduce dependence on fossil fuels;

The Participants will explore the opportunities for such renewable energy trading to create larger markets for Irish and UK investment in goods and services connected to the exploitation of renewable resources at scale, resulting in economic growth and increased investment and employment opportunities on both islands. In doing so, they will also take care to avoid unintended impacts on the development of supply chains already under way;

To achieve the above aims, the Participants will continue to exchange information and to cooperate with each other and their respective energy regulators and system operators in order to identify and understand the issues raised and develop solutions. The issues to be covered include the respective costs of renewable energy development, renewables and low carbon support mechanisms and the regulation of the connecting electricity lines;

The tasks to be jointly progressed in the course of 2013, as set out in the annex to this Memorandum of Understanding, will underpin consideration of an intergovernmental agreement between the Participants;

The Participants agree to establish a steering group, comprising representatives of the Governments and any other appropriate parties from both countries, to guide and monitor the work programme set out in the annex to this Memorandum of Understanding.

Signed at Dublin, in duplicate, this 24th day of January, 2013

For the Department of Energy &Climate Change of the United Kingdom & the Minister for Communications, Energy and Natural Resources

Annex List of issues to be considered include