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Energy Affordability and Security

Private Members' Business – in the Northern Ireland Assembly at 5:15 pm on 22nd November 2016.

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Photo of Patsy McGlone Patsy McGlone Deputy Speaker 5:15 pm, 22nd November 2016

The Business Committee has agreed to allow up to one hour and 30 minutes for the debate. The proposer of the motion will have 10 minutes to propose and 10 minutes in which to make a winding-up speech. All other Members who wish to speak will have five minutes.

Photo of Steve Aiken Steve Aiken UUP

I beg to move

That this Assembly notes with concern that electricity prices for non-domestic large energy users are almost 60% higher than the EU15 median; further notes the policy vacuum that exists in the Department for the Economy regarding renewable energy following the closure of the Northern Ireland renewables obligation and the collapse of the renewable heat incentive; calls on the Minister for the Economy to clarify the position on future subsidy arrangements for all forms of energy generation in the context of decarbonisation and mitigating the effects of rising costs; and further calls for long-term energy security and affordability to be given a much higher priority in the emerging Programme for Government 2016-2021.

I rise to move the motion on one of the most important issues affecting all of us in Northern Ireland — our energy affordability and security. I welcome the Minister for the Economy's commitment yesterday to having an open discussion. Throughout the debate, I hope that we will be able to find a consensus view on the urgent need for a coherent energy policy that will set the agenda for the next decade and beyond.

Be in no doubt of this: there is no point in pretending that all is well with our energy situation. The report published by the Executive's ministerial energy and manufacturing advisory group, chaired by Dr David Dobbin, in March 2016, states that:

"local energy costs faced by our manufacturing sector are some of the highest in Europe. This is most acute for large energy users (LEUs) who face electricity prices almost 60% higher than the EU-15 median, while for medium and small/medium users, the price differential is over 40%."

In the report's 24 recommendations, there is, in the carefully worded prose, an underlying and clear message that there are issues around cost, security of supply, the avoidance of excessive policy bill being attached to renewable targets and obligations, the need to build the North/South interconnector, the need for a plan to support the grid and future grid requirements, and uncertainty over the delivery of a secure and sustainable electricity system.

I am sure we all agree that, with their recommendation, the Executive should provide long-term policy certainty by developing a clear, consistent, long-term energy and decarbonisation strategy for Northern Ireland by 2030. Although the absence of any actions being taken by the Department and of a stand-alone outcome in the Programme for Government raises obvious concerns.

Before we get into the detail, let us say up front that we need from the Executive an energy policy that delivers three practical things: the integrated single electricity market (I-SEM), the North/South interconnector and an effective delivery mechanism with no more renewable heat scandals.

It is also worth pointing out, for the record, some of the challenges. First, the Minister must acknowledge that his Department has failed spectacularly for every taxpayer in Northern Ireland. We have been witness to the renewable heat incentive scheme debacle, which will cost us £30 million a year and potentially over £1 billion in total. No Minister or civil servant is seemingly responsible for that. We may be about to repeat that debacle. We have a significant energy-from-waste scheme being proposed, the economics of which are, at best, uncertain. It should be a matter of concern that, despite the lessons from the renewable heat incentive scandal, we have the Agriculture Minister offering to recommend the provision of financial support to help offset additional costs potentially over the next quarter-century lifespan of the project. I am sure that we would all be interested in hearing the Minister for the Economy and the Minister of Finance's views on that.

In addition, we have a grid that is at capacity for renewable energy, which stands at 24%, or 846MW, of our energy mix. We are busily installing another 17·8%, 720MW, by the end of March next year, and we are looking to install another 500MW by 2020. That is all very laudable, but, bearing in mind that our total requirement is a maximum of 1,800MW and that our grid can only manage, with very judicious balancing, 55% capacity, many are perplexed by the rush towards wind energy installation and by how we can afford a system of generation that can only deliver just over half of its capacity. How, in view of that, can we help sustain our local renewable industry?

I was heartened to hear the Minister state in the Assembly that all of the renewable capacity that is due to be installed will be connected to the grid and that all its generation would be usable, although he was careful not to imply that it would be connected by 31 March or any other time. As I am sure the Minister is aware, wind energy is not free, and the costs of distribution and capacity baseload matching are significant and are often in considerable excess of the costs of conventional generation. The last thing we want, in addition to the DUP's annual £300 million lack-of-oversight own goal, is our consumers picking up renewable costs for the 45% of the energy that we cannot use. However, without a route to export in order to achieve any form of system balancing across Ireland, that is precisely what our Government will be doing.

That is why we need the 420kV North/South interconnector and the I-SEM to make it effective. That is critical. Indeed, any delays to the North/South interconnector will put at risk our energy supply unless we make an expensive agreement with our conventional coal and gas generators. We have the majority of our conventional generating capacity being decommissioned by 2021, yet there is no urgency to make sure that we do not enter our second century in Northern Ireland with the real possibility that we will be suffering from brownouts or even worse. That is not the message any of us wish to send about Northern Ireland plc, especially to eventual investors, but it is more than an unfortunate or inconvenient truth.

What should be done? No more studies; it is time for action. Given the amount of reports, papers from Committee meetings and Hansard transcripts we have, we could use them as an alternative fuel for all our biomass boilers, incidentally saving us several millions. We know what needs to be done. The Executive must affirm their commitment to the I-SEM and ensure that, post-Brexit, its provisions are maintained and that the model itself is instituted in 2017, as planned.

Secondly, in view of the importance of the I-SEM, and the critical importance of the interconnector, the lack of a clear and unambiguous message from the Minister, and the Minister for Infrastructure, on why the interconnector must be built, and on time, is a major worry — to energy suppliers and distributors as well as our economy. We would welcome from the Executive an early statement committing them to the commissioning of the interconnector by 2020. To echo the view of the Utility Regulator last week, there is no plan B.

Thirdly, the Executive must clearly signal to the regulator that we must drive our energy costs down — down towards the average level of that for all consumers in GB and the Republic of Ireland — and indicate clearly to our generators and renewal providers that we need to drive the cost of subsidy down and then, if possible, out. We need a Northern Ireland energy business that is not dependent on costly subsidy or Horizon 2020 grants or that is being forced to maintain a decarbonisation strategy out of step with the rest of the United Kingdom.

We as an Opposition are for renewables, especially those provided by our excellent local companies, but as part of an energy mix that supports energy efficiency, maintains security and delivers energy at a cost that sustains our economic growth rather than penalises energy users.

Finally, Minister, I do not envy you your task ahead. Above all else, for the future of Northern Ireland, you have to grasp hold of a Department that has proven to be unfit for purpose. You have to persuade your Sinn Féin colleagues that burying the North/South interconnector will kill the project stone dead and, in effect, make the I-SEM unworkable. You need to prevent your colleague the Minister of Agriculture supporting unrealistic economics. You need to avoid carrying the can for blue skies — should I say salty brine? — storage projects. You need to ensure that there are no more examples of colossal renewables negligence. Above all, you need to maintain the security of supply, keep the cost down and provide export routes for our energy providers.

There is no doubt that, from whatever quarter, and from the Minister himself, there is a strong acknowledgement that our energy system is struggling. There is no clear direction, and it is beset by challenges — challenges that we as an Opposition understand that you are seeking to address, despite a lack of Executive unanimity of purpose.

We therefore call on the Assembly to support the motion and encourage the Minister to implement rapidly an energy policy that delivers for Northern Ireland, now and for the next 30 years.

Photo of Mervyn Storey Mervyn Storey DUP

We will not be accepting the motion, and I will quickly set out a reason. In fact, the Member confirmed for us why we should not. In his opening remarks, he was heading in the right direction when he talked about having an opportunity to ensure that we debate and discuss the issues. He welcomed the comments from the Minister yesterday, and it took him all of two minutes to get to the point at which he then said, "However". It was downhill from thereon. It was a blame game. It was a case of, "Our hands are clean. We've never done anything like that. We are completely faultless when it comes to these things. It is all the fault of the Minister and the Executive". Given the negativity of the motion, there is no way that we can come to the House and be able to support what is being said, and that is disappointing.

(Mr Speaker in the Chair)

However, I welcome the opportunity to contribute to the debate for a couple of reasons. The first is the importance of the issue. Let none of us have any doubt that we are talking about an issue that impinges on all our constituents and all our homes. Secondly, since coming on to the Economy Committee, I have found it to be a steep learning curve. I am trying to understand what some try to present as the complexities of the energy market but what others tell you are easily understood. Maybe the complexity is there because it suits some who believe that they can confound us with all the information. It has been a learning curve for me, and I want to understand for my constituents how we ensure that we deliver for them. That is vital.

Before I comment on the lack of detail in the motion, I would appreciate it if the Minister could give the House an update. In moving the motion, the Member made reference to the electricity and manufacturing advisory group report and how its recommendations were being progressed. I have no doubt that the Minister will take the opportunity to update the House and give us his opinion on electricity prices for large energy users, the integrated single electricity market, and security of supply.

I also notice that the motion makes reference to the Programme for Government and it is important that the Member set that out to the House. Before I leave this point, let me quote from one of the companies that the Member referred to as one of the excellent companies that we have in Northern Ireland that provide some of our energy for us. They said that they are:

"confident that the Executive will create a policy environment that supports renewable energy projects in the years ahead, whether this means the review or complete overhaul of the strategic energy framework, we know that policy makers appreciate the role of local renewable energy in supporting business, attracting foreign direct investment and meeting consumer needs. Cost and supply are among the most important issues affecting energy users in Northern Ireland and through the creation of a dedicated indicator for energy in the Programme for Government, the Executive has demonstrated its commitment to addressing local energy challenges during the current Assembly mandate."

Photo of Mike Nesbitt Mike Nesbitt UUP 5:30 pm, 22nd November 2016

I appreciate the Member giving way. Does he dispute the fact that the Programme for Government graphically states that Northern Ireland goes into energy deficit in 2020? If he agrees with that graphic illustration, how does he spin it as a positive?

Photo of Robin Newton Robin Newton Speaker

The Member has an extra minute.

Photo of Mervyn Storey Mervyn Storey DUP

As leader of the Ulster Unionist Party, the Member is the expert in spinning negatives into positives, so I will leave him to be the person who does that rather than him, yet again, trying to undermine what is being said and done.

Let us go to the consumer, because it is vital that we remind ourselves that what we do here is not about building empires — although some tried to do that and failed — it is about delivering for our constituents and consumers. Let us remind ourselves of electricity prices for domestic customers. They are estimated to be 13% lower than in the Republic of Ireland, and Northern Ireland is on course to meet its renewable target of 40% by 2020. We should also welcome the fact that over 900MW of potential renewable electricity generation has now been connected to the grid. Moreover, between 2015-16, almost 26% of our electricity consumption was from renewable sources. I think that that recognises the investment in the interconnection between these islands —

Photo of Robin Newton Robin Newton Speaker

Will the Member conclude his remarks?

Photo of Mervyn Storey Mervyn Storey DUP

— the great infrastructure and the integrated single electricity market. It is disappointing that we do not have more time, because, no doubt, we will hear in the debate today the weasel words of those who claim —

Photo of Robin Newton Robin Newton Speaker

The Member's time is up. The Member's time is up.

Photo of Mervyn Storey Mervyn Storey DUP

— to help, whereas what they do is only cheap political point-scoring —

Photo of Mervyn Storey Mervyn Storey DUP

— That is why they were rejected by the electorate and that is why they are in opposition.

Some Members:

[Interruption.]

Photo of Robin Newton Robin Newton Speaker

I ask the Member —

Some Members:

[Laughter.]

Photo of Conor Murphy Conor Murphy Sinn Féin

I hope to take a bit of heat out of this electricity debate as I go along. I came to the motion earlier with an open mind, and I feel the same. However, the presentation from the Deputy Chair of the Economy Committee has probably ruled out any chance that anybody in these Benches could support the motion, even though it is important that we begin to debate these issues. I want to hear from the Minister about renewables, because it is key that we have a policy on renewables and on bringing down the wholesale cost.

The issues that we hear about time and again in the Committee are cost and security. Security of supply and sustainability are the two big issues. I am keen to hear from the Minister in that regard. Certainly, the evidence that we have received to date in the Committee is clearly that renewables do provide the opportunity to bring down the wholesale costs in the single energy market. I know that the motion mentions large-scale consumers but, in an area with such high levels of fuel poverty, it quite clearly could have done with also mentioning ordinary consumers who struggle through that. I have no difficulty with hearing from the Minister about that.

As I said during a debate last week, I would rather that we learn lessons from these things and get these issues right than say, "The time for action is now". That sounds good in terms of grabbing a headline but I would like to see a proper, thought-out renewable energy policy as part of a broader energy policy that gives us a cheap, affordable, secure and sustainable electricity supply here. It is important that these things are got right, and there are clearly lessons to be learnt from the previous experience of what the British Government did with the NIRO and the renewable heat initiative. We said at the time, and continue to say, that the renewable heat initiative has placed an unacceptable burden on the Executive and we want to see that issue being dealt with by the Executive.

The motion also complains that:

"energy security and affordability to be given a much higher priority in the emerging Programme for Government".

The indicator on energy is the first indicator in the Programme for Government. I know that it is not ranked in priority and is not meant to be ranked in that way, but I am not sure where else you can put it ahead of that to give it a higher priority. It is mentioned there. In the first chapter of the Programme for Government, there is a clear reference to security of supply and affordability in relation to all of that.

I am not quite sure what the motion intends to achieve. I very much welcome the fact that we are having a debate on these issues, but I think that it could have been phrased in such a way that we could all have got on board with the motion, because we do want to see the sort of things that Mr Aiken outlined.

We have debated this, and the Committee will undertake a significant piece of work on this in the new year. It is about the "trilemma" of cost, security of supply and sustainability. That is what we are clearly looking at. We have heard from many stakeholders at the Committee and individually as MLAs, and having sat around that table since June and dealt with this almost on a weekly basis, I have to say that no one around that table is an expert in all these matters. I do not profess to be an expert and none of the people whom we have heard from can have expertise across all the broad range of complex issues that are involved in the energy market. That argues for the fact that, collectively as a Committee and as an Assembly, we need to work with the Department and the Executive to ensure that we have the best energy policy that suits the people on this island and one that is very firmly part of the single energy market.

I expect to hear soon from the Department about the energy delivery plans. There is an argument — I have heard it from many people in the field — that, rather than simply renewing the strategic energy framework, we have an opportunity to go with something bigger and bolder and something that will take us forward for the next 20 to 30 years. That should not be rushed into. It is not an excuse for undue delay, but these things have to be got right. The PAC is dealing with the renewable heat initiative scheme and that is the where it is being analysed at the moment; but we want to hear how that unsustainable burden will be dealt with by the Executive.

I feel somewhat disappointed that I do not feel that I can support the motion. If it were presented better and were not simply about trying to attack the record of the current Executive and previous Executive, of which your party was a member, and instead tried to bring together some solutions, we probably would be in a much better debate in the House and would have had something that produces more value rather than simply leads to slinging insults across the Chamber.

Photo of Sinéad Bradley Sinéad Bradley Social Democratic and Labour Party

As SDLP spokesperson on the economy, I support the motion and thank those who brought it forward for debate. The motion begins by raising concern that electricity prices for non-domestic large energy users are almost 60% higher than the EU-15 median. Along with the proposers of the motion, I would argue that we should all share that concern. Whilst we endeavour to understand the reasoning behind it, we must also look at and aim to fully address it in a realistic fashion. This is an economic burden that we can ill afford to carry at this time of such volatility across Northern Ireland businesses.

It is widely acknowledged that the wholesale fraction of most energy bills is, at roughly 60%, proportionately the most expensive. It is also known that the most significant factor in determining the price of wholesale electricity is the price of fossil fuel used by the conventional fossil fuel generators. Costs are forecast to rise significantly, which is a point that we need to rethink.

In 'Northern Ireland Electricity Price Transparency: Follow-up Paper', the Utility Regulator rightly highlighted that there were no straightforward answers to lower electricity prices for Northern Ireland customers, as energy use can be complex and interwoven. It is important to be clear about the key drivers of price and the levers that can be used to impact on prices in the short and longer term. The paper also highlighted the tensions between the energy policy goals of sustainability, security of supply and keeping cost as low as possible. That is what is known as the "trilemma".

Of course, we need a long-term strategy that details the efficient, sustainable generation of power, identifies an agreed and considered transmission process and delivers a fit-for-purpose and, equally, a reliable distribution network while ensuring a fair and open competitive retail market. We must not lose sight of the renewable targets, which were put in place for very good reasons, such as the reduction in greenhouse gas emissions, while broadening our vision of emerging technologies, such as battery storage, as they come closer to market.

The motion rightly refers to the policy vacuum in the Department following the closure of the Northern Ireland renewables obligation and the dramatic failing of the renewable heat incentive. The cost attributed to the renewable heat incentive — this is without fear of exaggeration — is staggering. The estimated £1 billion bill is a major mistake that the Executive cannot brush aside and dismiss. Budgets for many years to come will carry —

Photo of Steven Agnew Steven Agnew Green

I thank the Member for giving way. Given that the renewable heat incentive was, effectively, set up by the UK Government and all we had to do was administer it, does she agree that the blame for this shambolic situation can be put only on those who were in charge — effectively, the First Minister in her previous role?

Photo of Robin Newton Robin Newton Speaker

The Member has an extra minute.

Photo of Sinéad Bradley Sinéad Bradley Social Democratic and Labour Party

Thank you. I thank the Member for his intervention. There is no place for anybody to hide, and that will become a matter of public record, given that it is with PAC at the moment.

The estimated £1 billion bill is a major mistake that the Executive cannot pretend did not happen. For many years, budgets will carry the scar of RHI, which has been described outside the House as "grossly negligent". Funds to support strategies such as the one we speak of today will inevitably be disadvantaged as RHI claimants are paid off.

I urge the Minister to ensure that a good dose of realism is injected into any scheme that aims to forward the integrated single electricity market. He must consider population growth, the hope of economic growth and the overall rise in demand. As the Minister is no doubt fully aware, serious and legitimate concerns have been raised by residents in close proximity to the proposed North/South interconnector. In that context, in 2001 the Moyle interconnector went into service, an undersea cable between Islandmagee and Ayrshire connecting the Northern Ireland energy market to GB at 500 megawatts. Fifteen years later, we are told that technologies have developed significantly. In that context, does the Minister appreciate the legitimate questions raised by residents about the proposal to build the infrastructure for the North/South interconnector at 600 megawatts?

Photo of Paul Frew Paul Frew DUP

Will the Member give way?

Photo of Paul Frew Paul Frew DUP

I understand what the Member says about the North/South interconnector and the Moyle interconnector, but she is talking about two different things. Does the Member realise how many problems we have had with the Moyle interconnector? When there is a fault, it takes years to fix. It has been running at 50% capacity.

Photo of Robin Newton Robin Newton Speaker

I ask the Member to conclude her remarks.

Photo of Sinéad Bradley Sinéad Bradley Social Democratic and Labour Party 5:45 pm, 22nd November 2016

I accept that intervention, but I also ask the Minister to consider the time period and the developments in technologies that have happened since the original infrastructure was put in place.

Photo of Robin Newton Robin Newton Speaker

The Member's time is up.

Photo of Trevor Lunn Trevor Lunn Alliance

I support the motion. I hope I do not say the wrong thing and cause Mr Storey to light up again.

[Laughter.]

I am not a member of the Committee, but I must say at the outset that it is not clear to me why electricity prices for non-domestic large users are as much as 60% above the European median, because other users' prices are falling. That is for a more expert person than me to figure out. I can see that the pure cost of energy in the UK is amongst the highest in Europe, given our peripheral position and the fact that the UK is a net importer of energy. Our dependence on imported energy is, I believe, now back at levels last seen in the 1970s, although, in fairness, all EU countries are now energy importers. The dependence the UK now has on imported energy from unstable areas of the world — the Middle East and Russia — really is very worrying. There are wars in the Middle East, and our gas and oil pipelines that come from northern Russia somewhere actually run through the Ukraine and Georgia — all these happily contented countries where nothing ever happens that could cause destabilisation.

The ability of our generation system to meet peak demand is still worrying, and I think others referred to that. The consequence of sterling's decline against the dollar following the referendum — it is almost 20% now since 23 June — is worrying. It may be good for retailers along the border, but it is not much good in the long term that sterling is weak. Eventually, if energy is expensive, prices rise, trade becomes more difficult and international investors will look elsewhere.

At that point, I will just say something about the North/South interconnector. It really is the elephant in the room: do we need the North/South interconnector or not? Of course we do. It is the only thing that can give us any long-term stability of supply. It has now been in planning, I believe, since 2009. It has the ability to consolidate the all-Ireland energy market. Most of continental Europe is already interconnected. Somebody mentioned the Moyle interconnector: how many years out of those 15 has the Moyle interconnector worked at full capacity? I think the figure is none. It has been out of commission for some of those years. Even now, it is still not working at its full capacity. We are in trouble here with the electricity supply if we do not do something about it. I look forward to listening to the Minister's comments about the North/South interconnector.

The motion refers to:

"the closure of the ... renewables obligation and the collapse of the renewable heat incentive".

It also refers to the "policy vacuum" that caused. I completely agree with Ms Bradley. We do not disagree with the ending of the renewables obligation, but the discussion about the RHI will soon take place in the House and, frankly, the sooner the better. For the record, it should be said that whoever sanctioned the RHI scheme — there were various stages in the process — which was an arrangement designed in such a way as to ensure profit for overheating commercial premises and effectively legalise fraud, should hang their head in shame and not deny liability by protesting that they could not be concerned with every jot and tittle of major departmental policy. That jot and tittle will cost upwards of £600 million. It may well go to £1 billion. It is an absolute disgrace.

Photo of Steven Agnew Steven Agnew Green

I thank the Member for giving way. Is he aware that, whilst this was a UK-wide scheme, the rest of the UK made a decision to effectively reduce the subsidy as demand increased to make it sustainable? It continues to exist in the rest of the UK. Only in Northern Ireland did we manage to muck it up.

Photo of Robin Newton Robin Newton Speaker

The Member has an extra minute.

Photo of Trevor Lunn Trevor Lunn Alliance

Thank you, Mr Speaker. That is, in a way, the tragedy of the RHI. The rest of the UK was a year and a half ahead of us and had a perfectly good scheme that is still running satisfactorily, and we did not take the best and most prudent aspects of that scheme and run with them, such as the ability to tier payments and degression. I really do not want to spend my time on that, because it is for another day. There will be another day for that in the House, and some sections of the House will have a field day on it. It is a disgrace.

The call for long-term energy security and affordability in the motion is well made. It should be given a high priority in the emerging Programme for Government. I look forward to hearing from the Minister about that and all the other aspects that Members raised. The two Government parties should not, as usual, just dismiss a valid motion that has a lot of merit. It is an important issue. No offence to Mr Storey, but we should not talk it down in the way in which it has been. It is valid. It needs to be discussed. The lights could go out. We could have a brownout: I had never heard that word before; I thought that we had blackouts. Whatever kind of outage it is, it is coming down the track. This place will be in an energy deficit by 2020 or 2021 if we do not do something about it.

I look forward to hearing from the Minister, even though he is not particularly listening to me at the moment.

[Laughter.]

Photo of Thomas Buchanan Thomas Buchanan DUP

I think that the entire House is agreed on one issue: long-term sustainable renewable energy is vital for the continued growth of Northern Ireland's business sector. As that sector has a high dependency on electricity, it stands to face a number of challenges in the next few years. Opportunities for economic growth will be very much dependent on providing an electricity system that provides affordable, secure and sustainable energy for our businesses and consumers right across Northern Ireland.

My constituency is renowned for manufacturing. When it comes to competitiveness, it is dependent on not only energy costs but the totality of costs and overheads faced by businesses. While there is clear evidence to show that Northern Ireland is competitive when it comes to labour costs, property costs and other costs associated with the manufacturing industry, more work needs to be done on the reduction of energy costs. Each one of us around the Chamber tonight will say that more work needs to be done on that, and we need to work together. If some parties continue to point the finger, it will not do much to move the matter forward. The security of our electricity supply is of extreme importance. Perhaps the Minister will give an indication this evening as to the ongoing work between his Department, the Utility Regulator and the System Operator for Northern Ireland (SONI) on how current and future electricity demand will be met.

It is fair to say that, looking back over the past 10 years, the energy market in Northern Ireland is almost unrecognisable due to the increase in renewable energy. Changes in the way in which electricity is generated are clearly evident when travelling throughout Northern Ireland. In west Tyrone, there is a proliferation of wind farms and single wind turbines throughout the countryside. With the increase in wind generation comes the difficult issue in some areas of accessing connection to the grid. There is no doubt that the grid is a scarce and valuable resource. Every effort should be made to ensure that all connections to it maximise the efficient use of the network to the customer's interest. Of course, that is a two-way process; while those seeking grid connections have every right to expect the application and connection process to be transparent, efficient, timely and flexible, landowners' interests must be respected throughout the process.

Little respect has been shown in an ongoing scheme in west Tyrone to a few landowners who have genuine concerns about the direction of the overhead network. Although they have offered alternatives on their land with the support of neighbours in the surrounding area, they have practically been treated with contempt. The issue must be approached with sensitivity and due respect as renewable energy is taken forward. I have heard much about the North/South interconnector this evening. Of course, a lot of landowners are involved across that whole section of ground. It is important that lessons are learned and that people are treated with respect so that pitfalls that cause animosity, bad feeling and delay in schemes going forward are avoided in future.

In conclusion, I will mention the gas network. The Gas to the West project is expected to add some 40,000 to 50,000 additional customers by the end of 2018 when works are completed. This provides a welcome alternative for many businesses feeling the financial pressure of high costs. A number of businesses in west Tyrone are awaiting the arrival. However, with the increase in demand from both domestic and businesses over the next few years, no doubt this will add extra pressure to the gas supply. Again, perhaps the Minister could give the House some indication of the security of the gas network as we move forward to the future.

Photo of Caoimhe Archibald Caoimhe Archibald Sinn Féin

I welcome the opportunity to contribute to the debate on this important issue. I believe that we all share the concern around energy costs. Energy affordability and security of supply are clearly very important aspects of our economic development, both for indigenous companies and also to attract FDI. Indeed, at last week's Economy Committee meeting we heard the Utility Regulator outline the potential for investment in the energy market itself. We need a very serious look at our energy policy. As my party colleague and the Chair of the Economy Committee, Conor, has already highlighted, it is a key issue for the Economy Committee, and we are carrying out an inquiry into energy in the new year.

The closure of the NIRO and the renewable heat incentive (RHI) leaves us with currently no renewable schemes, but the Utility Regulator highlighted last week the fact that these were very successful in incentivising the uptake of, particularly, onshore wind. When I questioned her about the future direction of renewables policy, she indicated that there needs to be a focus on a mix of new technologies around generation and storage. Renewables will obviously have a part to play in that. The regulator indicated that, in her opinion, onshore wind has been maximised in the North, and there needs to be a better use of the renewables that we have to maximise their use on the grid. She stated that, due to the unpredictable nature of wind, there should be a mix which includes both renewable and thermal generation, and that, in her opinion, there is potential for offshore generation of energy and that further scoping of marine sources such as wave or tidal energy is necessary.

Here in the North, we are committed to various targets on greenhouse gas emissions and renewable energy generation, and that requires a policy direction. Under the EU renewable energy directive, there are legally binding targets to reduce greenhouse gas emissions by 2020 through renewable energy generation. The overall target is 16% energy from renewable sources, with a 40% target for electricity. According to various stakeholders, we are on course to meet this target. However, we also have further challenging targets in terms of the 80% reduction in greenhouse gas emission by 2050 and, under the 2015 Paris agreement, to reduce EU greenhouse gas emissions by 40% by 2030. Those will require commitments to a much-lower-carbon economy, and therefore we need to look at how this can be achieved and ensure that the policy and practical basis for this are in place.

In terms of what the motion is calling for, as has already been outlined, the Committee has a focus on the development of energy policy, and I am sure that will inform the Department's future energy policy direction. Specifically with regard to the Programme for Government, it is my understanding that the PFG is based on outcomes and indicators rather than priorities. The PFG process has been a consultative one, and that is a good path to take to ensure that what we are trying to achieve as a Government is relevant to the needs and priorities of those that we legislate for.

The current draft out for consultation has acknowledged responses to the first consultation which called for more inclusion of energy. It specifically states that other respondents call for a strengthening of position in relation to housing, the environment, water and energy. We have taken on board those views in this latest version of the programme. In this draft, there are particular mentions of the importance of secure, sustainable and cost-efficient energy within outcome 1, which is to promote a strong, prosperous and regionally balanced economy. It mentions the opportunities that it provides in employment, innovation, knowledge and skills and the wider economy.

There is also an acknowledgement of the cross-cutting nature of energy through to other outcomes, in particular outcome 2, which is to live and work sustainably, protecting the environment. We have already talked about the various targets that we are committed to meeting. There is also a specific mention of the role of energy in a circular economy model and the need to address energy generation from waste.

In my opinion, the PFG process has been responsive, and there is clearly a focus on energy security and supply, and also on looking at alternative forms of energy generation.

Photo of Steve Aiken Steve Aiken UUP

Will the Member give way?

Photo of Steve Aiken Steve Aiken UUP

I thank the Member for her comments. One of the concerns that we have is that you have mentioned a lot of things about EU directives and directives to look at energy requirements and the rest of it, but your other party in Government is not committed to any of these EU directives going forward.

What is your view, therefore, about being able to keep the necessary requirements to have green energy at the required levels, bearing in mind the potential of Brexit?

Photo of Robin Newton Robin Newton Speaker 6:00 pm, 22nd November 2016

Interventions should be short and focused. The Member has an extra minute.

Photo of Caoimhe Archibald Caoimhe Archibald Sinn Féin

There is an awful lot of work to be done on the policy directions going forward and the entire outworkings of the process of exiting the EU, however that may transpire.

I am encouraged that the new draft of the Programme for Government has taken on board the findings of the initial consultation. I envisage that further responses to the consultation will be reflected in the final version.

Photo of Gordon Dunne Gordon Dunne DUP

I, too, welcome the opportunity to speak on this important issue in the House today, as a member of the Economy Committee. There is no doubt that energy affordability and security of supply are important issues, and we must ensure that they are kept high on the agenda. The cost of electricity to consumers continues to be a real challenge for domestic and non-domestic large energy users in our economy.

We must ensure competitive conditions to retain existing businesses and to attract new foreign direct investment into Northern Ireland. Energy costs continue to be one of the major overheads for any business here, particularly our large manufacturing companies, some of which are proposing to go off the grid to generate their own energy. Companies such as Bombardier have gone down that route or are proposing to do so, as they plan to remain competitive in the aircraft industry.

I welcome the fact that Northern Ireland is on course to meet its renewables target of 40% by 2020 and that over 900 megawatts of potential renewable electricity generation has now been connected to the grid. Between April 2015 and March 2016, 25·4% of our electricity consumption was from renewable sources. There has been considerable investment in renewable energy locally over the past decade. I know that many businesses and domestic users now rely on renewable energy as their main energy source.

The renewable heat incentive scheme, which has already been mentioned, was established to encourage the renewable generation of heat by giving support payments to eligible generators. There were clear risks from the start, with two bodies involved: DETI was responsible for the policy framework, and the Office of Gas and Electricity Markets (Ofgem) managed the applications and installations, including compliance, but did not have any representatives based in Northern Ireland. Lessons must be learned from the scheme and corrective actions put in place to stop the recurrence of such system failures in future.

There is a clear need for the North/South interconnector to be established between the Republic of Ireland and Northern Ireland, allowing interconnection between GB and the Republic of Ireland. I welcome confirmation that the Planning Appeals Commission is to resume its consideration of the North/South interconnector in the next few months — in fact, in February 2017. The ongoing delay costs consumers here around £7 million every year, and progress on the project is vital for future energy provision. The establishment of a community fund by SONI and the other providers is critical in ensuring long-term support for the communities directly affected by the proposed installation.

There is clear evidence that our electricity network needs to be upgraded. It was largely constructed in the 1950s and 1960s and is in need of considerable investment to improve consumer protection. During periods of extreme winter weather, we have seen that there can be particular pressures on our existing network. Investment in our grid and further work to develop the single electricity market are crucial in making our energy sector more competitive and, ultimately, reducing the cost to users.

I trust that the Minister will bring forward a new energy strategy that will address the needs of domestic and business consumers and that work will continue with the Utility Regulator and all other energy stakeholders to ensure that we have sustainable, secure and affordable energy in future.

Photo of Philip Smith Philip Smith UUP

The motion rightly highlights two critical issues, each of which has the potential to derail Northern Ireland's economic policy — namely, energy affordability and security. I want to address the most important issue, which is energy security.

It is rare to get a consensus on any issue, but the potential for the lights to go out in Northern Ireland if we do not secure our supply and develop an energy strategy comes close. The CBI stated in 'Success through Smart Choices' that, even if the second North/South Interconnector was in place before 2021, the Executive would still face potential security of supply and system stability challenges.

Last month in 'The Irish News' Jamie Delargy said:

"There's one clear message coming through about the North South Interconnector. If the power link isn't built, the lights may very well go out."

SONI general manager, Robin McCormick, in this month's 'agendaNiI', stated that Northern Ireland is facing an energy supply crisis, as old, conventional fossil-fuel generators retire. He goes on to say that, over the next five years, we will be at a point where we are in energy deficit and states:

"As the system operator I can’t stand up and speak confidently about keeping the lights on".

I can quote many others, like the economist John Simpson or the NI Utility Regulator, Jenny Pyper, saying similar things, but time is against me.

Photo of Mike Nesbitt Mike Nesbitt UUP

Will the Member give way?

Photo of Mike Nesbitt Mike Nesbitt UUP

At the risk of setting off the Member for Naples, Mr Vesuvius, to my left, I know the Member has seen the graphic in the Programme for Government consultation that says we go into deficit in 2020. Is the Member surprised that in the following pages, under the headline, "What will we do?", there is no mention of fixing the problem?

Photo of Mervyn Storey Mervyn Storey DUP

Is that the Ulster Unionist manifesto?

Photo of Robin Newton Robin Newton Speaker

The Member has an extra minute.

Photo of Mike Nesbitt Mike Nesbitt UUP

No, it is your Programme for Government.

Photo of Philip Smith Philip Smith UUP

I thank the Member for his point. The reality, as he points out, is that we are going from generating a 600 MW surplus last year to a 200 MW surplus this year, and from 2021, as the Member rightly points out, our generating capacity will be in deficit.

While we currently are secure in our electricity supply, a prolonged outage of a large generation plant or of the Moyle interconnector would force us into deficit at any time. All that was recognised in DETI's 2010 strategic energy framework —

Photo of Paul Frew Paul Frew DUP

Will the Member give way?

Photo of Philip Smith Philip Smith UUP

I have already given way, so I want to make progress.

Hence its endorsement of a second North/South interconnector, which was then forecast to be operational in 2013-14. Here we are in late 2016, no further on and keeping our fingers crossed that we have enough capacity to deliver our energy requirements. That may be one of the less newsworthy failures of the Executive but is, possibly, the one with the biggest impact. It is ironic and cold comfort that our low growth and energy demand due to flatlining economic growth may be our saviour.

What are our options? The return, as we have talked about, of the Moyle interconnector to full capacity will be helpful, but its record of faults does not instil great confidence. SONI proposes greatly increasing wind capacity to deliver the double benefit of building local capacity along with meeting our 40% renewables target by 2020. Whatever your views are on doubling or more the number of wind turbines in Northern Ireland, the reality is that wind generation is intermittent and still requires backup capacity. Furthermore, integrating additional large amounts of renewables onto the grid will require significant investment in the transmission and distribution network. While both of those developments will help build capacity, the key action is the building of the second North/South interconnector to secure an integrated single energy market, but, for it to be in place on time, work must get under way now.

I acknowledge that there are concerns about the use of overground rather than underground cabling and the resulting impact on public health as well as the local landscape, and those objections may well hold up progress. The issue of interconnection is closely related to the issue of renewables policy. Where will all the consented renewables go if the interconnector is further delayed? Where is the grid capacity? With the sudden closure of the NIRO and the RHI does the Executive have a policy or a plan for renewable energy? Leaving to one side for a moment the unfolding scandal of RHI currently being investigated by the Public Accounts Committee, the fact is that there is nothing to replace what has gone before. All that remains is a policy vacuum and a massive bill that, as the Audit Office identified, could and should have been avoided.

I hope the Minister can, in his response, provide reassurance that the lights will not go off in Northern Ireland any time soon and that he can detail his plans for securing the additional generating capacity needed to avoid that. If we do not take action now, electricity outages could become a reality by 2021, if not before.

Photo of Gordon Lyons Gordon Lyons DUP

I welcome the opportunity to take part in the debate. I commend the mover of the motion for giving us the opportunity to talk about what is a very important issue, although I do not agree with the tone of the motion or the way in which he proposed it. This is an important debate. We need to have energy affordability and security of supply. If we do not have them, we are going to be in difficulties in the future. Although I do not want to get involved in the doomsday scenarios that some are predicting, it is important that we have energy that is affordable and that it has the security that is necessary for our economy to grow and prosper. I therefore welcome the fact that we can have a debate on what is a complex issue. I think that it was Conor Murphy who said earlier that no one on the Committee pretends to be an expert. Well, perhaps the Deputy Chair does sometimes, but I think that we can all learn more about the issue.

Take first the issue of affordability. There is no doubt that there are challenges out there, especially for our large energy users, but it is wrong of us to send out the message that Northern Ireland is an extremely uncompetitive place in which to do business. We need to be very careful about doing that, because we can move into that territory very easily. Of course we want to see more affordable energy and our large energy users being able to compete with other parts of the European Union, but domestic costs here in Northern Ireland are much lower than those for our neighbours, and our non-domestic energy prices are smaller than those for our neighbour the Republic of Ireland. Even though our large energy users have higher costs when compared with the EU-15 median, as Mr Aiken pointed out in his motion, it is important to note that they are below the UK average.

I take issue with what Mr Lunn said. He said that there has been no difference in energy prices for large users over the past number of years. That is not true at all. In fact, if we look at the figures in front of us, provided by the Utility Regulator and the Assembly Research and Information Service, we can see how, in the past two years in particular, there has been a decrease in the cost. I am not saying that that makes everything rosy in the garden, but at least let us be factual here and say that there has been a decrease in the past number of years and that that should be welcomed. That may be cold comfort to those who are trying to compete with elsewhere in the EU. It is important to note, however, that, for competitiveness, our labour costs, transport costs and property costs — other indicators of competitiveness for the sector — are lower.

Photo of Steve Aiken Steve Aiken UUP

Will the Member give way?

Photo of Gordon Lyons Gordon Lyons DUP

If he is very brief.

Photo of Steve Aiken Steve Aiken UUP

I will be very brief. I ask the Member to reflect on the fact that some of our major energy users, including Michelin, cited high energy costs as one of the reasons for not being in Northern Ireland and on the fact that we now have major concerns about large energy users going off-grid.

Photo of Robin Newton Robin Newton Speaker

The Member has an extra minute.

Photo of Gordon Lyons Gordon Lyons DUP

I do not dispute that that could have been a factor that contributed to it, and that is why we need to look at the issue and why it needs to be addressed.

Photo of Mervyn Storey Mervyn Storey DUP

Will the Member give way?

Photo of Gordon Lyons Gordon Lyons DUP

Yes. He had better be brief.

Photo of Mervyn Storey Mervyn Storey DUP

Following on from that point, it also needs to be remembered that the wholesale price is 70% of the bill. There are issues that we cannot always control, because electricity is a tradable commodity. That fact has to be placed on the record, given that some people would like to make mischief with the issue.

Photo of Gordon Lyons Gordon Lyons DUP

The Member is absolutely correct, and I thank him for that intervention.

I wanted to make a few comments about the North/South interconnector, but I think that the reason that it is so important and why we need to have it in order to secure our energy supply has been well placed on the record by other Members. It is also good for investment and job creation and ensures that we have a more competitive economy.

The Programme for Government is very clear. It is states that we want a:

"Secure, sustainable and cost-efficient energy supply".

That is the headline outcome in the Programme for Government. It is up to the Minister to deliver that, and I know that he will do that through the new energy strategy as well.

In the time that I have left, I want to address the issue of the renewable heat incentive scheme. We know the problems and can see the failures that have taken place. It is obvious that there were officials in the Department who did not bring it to the attention of those higher up or to the Minister. It is worth placing on record that as soon as it was brought to the attention of the then Enterprise, Trade and Investment Minister, Arlene Foster, she took appropriate action, and the investigation of the matter began.

I want to point out one thing. Members are saying that it was the Minister's job to be involved in the scheme and to scrutinise it. What about the members of the Enterprise, Trade and Investment Committee? What about Members from other parties who sat round the Executive table and never made a peep about any of it? In their scrutiny, did they have any problem with it at all? No. What are they doing now? They come here and say, "Not my circus, not my monkeys". That is what they are saying, and that is an abdication —

Photo of Robin Newton Robin Newton Speaker 6:15 pm, 22nd November 2016

I ask the Member to conclude his remarks.

Photo of Gordon Lyons Gordon Lyons DUP

— of responsibility.

[Interruption.]

I will not support the motion; I will oppose it.

[Interruption.]

I urge the Minister to do all that he needs to do to —

Photo of Robin Newton Robin Newton Speaker

The Member's time is up.

Photo of Gordon Lyons Gordon Lyons DUP

— secure it.

[Interruption.]

Photo of Gerry Mullan Gerry Mullan Social Democratic and Labour Party

I thank the House for the crescendo, the very warm introduction, and the accessories.

[Laughter.]

As a Member for East Derry, I too welcome the opportunity to participate in the debate about the future of our energy supply, especially in the renewables sector. It is clear that there is broad consensus that a transformation is needed in our energy system if our society is to meet the challenges of environmental sustainability, security of supply, infrastructural renewal and, as has been reflected this evening, economic sustainability and affordability.

It is concerning, as highlighted in the motion, that energy costs for SMEs in Northern Ireland are among the highest in the European Union, with only Italy being more expensive. Energy prices for large and very large businesses are the third highest in the EU, which led the chief executive of Manufacturing NI, Stephen Kelly, to state that the high rates are:

"damaging economic recovery, impacting on investment and job retention and creation."

We have also seen significant job losses in the manufacturing sector, which is of great concern. Like many others, I do not believe that the Executive have done enough to drive down prices.

There is also great concern that non-domestic customers in the North are paying up to 20% more than those in the South and 10% more than those in GB. That puts us at a competitive disadvantage, especially in relation to attracting foreign direct investment.

In an attempt to drive down prices, we have seen moves to incentivise renewable energy along with moves to have a fully integrated all-Ireland network. However, with the end of many subsidies and Brexit hanging over us, there is great uncertainty over the future of the energy market in Northern Ireland. Energy supply and generation is now in uncharted waters: the financial supports for many renewable projects of the past have been withdrawn and little has been done to replace them. Subsidies for all new wind generation under the Northern Ireland renewables obligation (NIRO) have ended and current beneficiaries will cease to receive subsidies from 31 March 2017.

As the motion highlights, we have also witnessed what has been described — my colleague referred to it extensively — as the biggest scandal since devolution: the renewable heat incentive. Successive Ministers and the Office of Gas and Electricity Markets (Ofgem) have been asleep at the wheel, and that has resulted in a £500 million black hole in the block grant. That is money that could have gone to our health service or been used for educational services or social housing. Instead, it is literally being burned to heat empty sheds. The scheme is a disgrace, and it is also a disgrace that the First Minister failed to ensure that the necessary safeguards were in place to avoid exploitation. Although that has been denied by some Members, nevertheless the facts remain.

Photo of Steven Agnew Steven Agnew Green

I thank the Member for giving way. A couple of people have drawn Ofgem into it when discussing responsibility. Given that Ofgem administered the scheme UK-wide and that it was only in Northern Ireland that the scheme went awry, does he not agree that responsibility is firmly with the former Minister, Arlene Foster, who implemented the scheme?

Photo of Robin Newton Robin Newton Speaker

The Member has an extra minute.

Photo of Gerry Mullan Gerry Mullan Social Democratic and Labour Party

I cannot agree more. We now face a very uncertain future for renewables and I welcome the Minister's comments on how he intends to plug that financial gap without hampering future renewables investment. In addition, there is uncertainty over how EU directives will work, as they require cross-border connectivity, but these directives, like many EU initiatives, face an uncertain future as little to nothing has been done to prepare for Brexit.

An all-island integrated single energy market, which is heavily reliant on EU cross-border funding, should have been up and running this year while we have also consistently witnessed stalling after stalling on the North/South interconnector. We have spoken enough about that this evening.

I welcome the Minister's commitment to the interconnector and I am sure he will agree that the project must be pursued as a matter of urgency in considering the very real risk to the long-term supply of electricity across the North. All these developments are hugely concerning, and the Minister and the Executive have not done enough to militate against growing fears and unrest in the sector as evidenced by stakeholders such as Manufacturing NI, the FSB and others. Of particular concern is the fact that the Executive have done little to secure alternative schemes around renewable energy, which has not only impacted on renewable targets but has caused a spate of job losses across the North. The SDLP supports the motion.

Photo of Robin Newton Robin Newton Speaker

I call Mr Paul Frew. The Member has three minutes.

Photo of Paul Frew Paul Frew DUP

Oh dear. I am aggrieved that I have only three minutes.

[Interruption.]

I commend the Members for bringing this debate. The House will know how passionate I am when it comes to energy and everything around it. I believe that it is one of the most fundamental issues that a Government can tackle or grapple with. So, I was annoyed and disappointed at the wording of the motion, but I will give credit where credit is due. The content of the contributions was very factual. It was very good, but it was all doom and gloom.

Whilst it is very important that we get energy right, it is about the energy mix. It seems that the Ulster Unionist Party has a real worry, nervousness and panic around sustainability. Have lessons not be learnt that when decisions are taken in panic, it costs. That is the most important thing that we should take away from this today. It is the cost of energy to our people and our businesses that is the massive issue.

They talked about the grid, the step change and going into deficit. That is the grid if nothing happens. That is what happens if nothing happens. I take exception to the words "policy vacuum". There is no policy vacuum. Just because we do not have subsidies for renewable energy does not mean that there is a policy vacuum. Interconnection is there. Interconnection needs to happen in the most affordable way and at the most affordable price: that is overground. It has to happen because it will reduce constraint charges on our people — some £30 million in a pot that has £152 million of constraint. That is the prize for interconnection, but it is not the only prize. We should be interconnecting everywhere. We should be connecting with GB more, and we should be connecting with France. Even Iceland is being talked about. That is where the future is with regard to interconnection.

I have very little time, Mr Speaker, but I ask the Minister to look at RP5 and at the fact that NIE was given £459 million in this price control, and it has not spent that money quickly. If it does not spend it, it gets to keep 50% of it because of the price control determination. I ask the Minister to investigate that and see where we are with regard to that spend in RP5.

[Interruption.]

Photo of Simon Hamilton Simon Hamilton DUP

Mr Frew followed that old lesson of leaving them wanting more.

Shortly after taking up post as Minister for the Economy in May, I was introduced to a new phrase, "the energy trilemma". The World Energy Council's definition of energy sustainability is based on three core dimensions: energy security; energy equity, in other words accessibility and affordability; and environmental sustainability. The motion, whilst not using the awful phrase "energy trilemma" does, perhaps unwittingly, touch on each of the issues of affordability, security and sustainability, and it is on each of these three important elements of energy policy that I want to focus my remarks this evening.

The motion notes the high cost of electricity for large business users, and I agree that a perception certainly exists that electricity prices in Northern Ireland across the board are high. That, of course, is not the case for everyone. Earlier this month, the Utility Regulator published a report titled 'Electricity Prices in NI: A Factual Analysis'. The regulator found that Northern Ireland's approximately 800,000 domestic customers pay just below the EU average for electricity and considerably less than their counterparts in the Republic of Ireland, Germany and Denmark. The price paid by our smallest industrial and commercial customers, who account for around two thirds of all the roughly 80,000 business customers, is slightly higher than the EU average.

The issue, as the motion acknowledges, is for large and very large electricity users. The amount that the remaining approximately 34% of all business customers pay for electricity is amongst the highest in the European Union. I am not arguing that that is not an issue, but is worth noting that the prices remain lower than the UK average, lower than places such as Italy and comparable with the Republic of Ireland and Germany. Furthermore, for July to December last year, unit prices on a per kilowatt hour basis were 7·9p in Northern Ireland compared with an EU average of 5·4p, a difference closer to 30% than the 60% more referenced in the motion. It is also worth remembering that the average annual domestic bill in 2016 is approximately £475 compared with nearly £700 in 2008. This represents a 32% decrease and is the lowest in 10 years.

Even for large and very large industrial and commercial customers, electricity prices have dropped considerably in recent years. I am not for a second trying to take away from the genuine concerns that exist, especially amongst some of our biggest energy-consuming businesses. Whilst competitiveness is affected by a range of costs, including property and wages, I accept that, for some of our key companies, electricity costs affect their competitiveness.

Members will recall that the Electricity and Manufacturing Advisory Group was established by my predecessor specifically to review the effect of energy costs on the competitiveness of the manufacturing industry in Northern Ireland. The group was also tasked with offering advice and recommendations on energy cost reduction measures, and I am looking very closely at those recommendations; indeed, I am using them to inform my thinking.

I am committed to doing all that I can. Some Members have acknowledged the limited capacity of any Minister to affect many aspects of electricity prices. Even though the tools at my disposal are limited, I want to ensure that the House is aware of my commitment to keep a downward pressure on electricity prices for business customers. I have been giving careful consideration to any and all options that are presented to me to remove cost from business customers' bills, and I look forward to the support of Members in doing so.

The motion talks about an absence of a renewables policy. Perhaps it will be useful to recap the impact that the Executive's policy of generating electricity from renewable sources has had. The motion points out that the Northern Ireland renewables obligation is now closed to new onshore wind projects and will close to all other technologies on 31 March next year. It is important to note, however, that projects accredited to the NIRO will continue to be supported by Northern Ireland electricity consumers until 2037. When the NIRO was introduced in 2005, electricity consumption from renewable sources stood at just 3%. Since then, over 900 MW of potential renewable electricity generation has been connected. The latest official figures published by NISRA show that, during the 12-month period between April 2015 and March 2016, 25·4% of our electricity consumption was from renewable sources such as wind, solar photovoltaic, combined heat and power, and hydro.

With a further 700 MW of committed projects with accepted grid connection offers, plus around 200 MW of offers still to be made, I am confident that the Executive's 2020 target of 40% can be achieved over the next few years. Furthermore —

Photo of Steven Agnew Steven Agnew Green 6:30 pm, 22nd November 2016

I appreciate the Minister giving way. I appreciate the positive impact the NIRO has had to date, but what options is he considering going forward, for example, through CFD or even negotiating Northern Ireland's inclusion in the refit?

Photo of Simon Hamilton Simon Hamilton DUP

I will come to that later. I thank the Member for his acknowledgement of the success so far, which is highlighted by that jump from 3% to over 25% in a very short period. I am also confident that, when all the renewable projects with offers for connection or those that will receive offers are eventually connected, Northern Ireland will have the capacity to meet 100% of peak electricity demand of around 1,800 MW from renewable sources. In short —

Photo of Steve Aiken Steve Aiken UUP

I thank the Minister for his comments, but, of course, one of the big issues we have is that the grid at the moment can manage only 55% of synchronous electricity. Going forward, we would need to boost that to somewhere close to 75%, and there is no technology globally anywhere that can do that. Could the Minister comment on that?

Photo of Simon Hamilton Simon Hamilton DUP

I will come to that in a moment. What I was going to say was that, in short, the NIRO has successfully helped Northern Ireland to make huge strides forward in generating increasing amounts of electricity from renewables. As I consider the future of renewables policy, I have to contemplate a range of factors. They include the potential of the scarce and precious resource that is the grid — that is how we should view the grid; it is a scarce and precious resource — and its capacity to accommodate more renewables, the absence of significant storage options and the cost of a new support scheme. The motion implicitly, I think, calls for new subsidy arrangements. I am sure that, when penning the motion, the proposers were aware of the impact that a new scheme like the NIRO would have on the large non-domestic electricity customers that the motion also wants me to help reduce prices for.

As regards the renewable heat incentive, which was raised by several Members, I am acutely aware of the enormity of that issue. Members will appreciate not just that the matter is under investigation by the PAC but that, very soon after taking up post, I commenced an independent investigation of the allegations of fraud and abuse of the scheme. I neither want to cut across the PAC's important work nor go into detail about the independent investigation, which is ongoing. What I want to make clear is that I am giving the issue my fullest attention. Lessons are being learnt, and I am carefully considering how we can address the cost that the scheme has for the public purse. The RHI suffered from systemic failures on the part of officials. The important thing now is that decisive action has been taken and a long-term plan is being developed to deal with the problem.

Finally, I turn to the third element of the energy trilemma: security of supply. As I said at Question Time yesterday, with the existing generation capacity at our three conventional power stations at Balylumford, Kilroot and Coolkeeragh, as well as existing interconnection, including the Moyle interconnector being restored to 450 MW transfer capacity, and the additional 250 MW capacity provided by the SONI AES reserve services contract from January, there are no concerns about meeting our electricity demand to 2020. I acknowledge that emissions legislation could further impact on the Kilroot coal-fired plant in particular from 2020.

A key element of securing future electricity supply and creating a more efficient market via the integrated single electricity market will be the second North/South interconnector, which was much mentioned in the debate. Clearly, the interconnector must proceed through the planning process, but I once again wish to put on record my view that it is a critical piece of energy infrastructure for our energy future. As Mr Frew emphasised in his short but important contribution that, coupled with other plans, such as the proposals by Evermore Energy for a new gas-fired power station in Belfast, battery storage by AES, small-scale wind storage options, the Gaelectric compressed air energy storage project, which is a project of common interest status and has the potential to attract huge investment, and the Islandmagee gas storage project, there is a range of ways in which our security of supply could be enhanced in the years ahead. I assure the Assembly that I am working closely with the Utility Regulator and SONI, the system operator, to consider how best to ensure our security of supply after 2020. If it is considered necessary, I will agree further actions to safeguard our electricity supply.

The motion calls for energy security to be given greater priority in the new Programme for Government. I wish to point out to Members — some Members have already done so — that the draft Programme for Government includes an indicator on a secure, sustainable and cost-efficient energy supply, with the measure being a percentage change in the security of energy supply margin. I believe that that emphasises the importance that the Executive attach to the security of our energy supply.

The World Energy Council states that addressing the three goals of the energy trilemma entail:

"complex interwoven links between public and private actors, governments and regulators, economic and social factors, national resources, environmental concerns, and individual behaviours."

I am increasingly aware that not only is energy policy a complex and often technical area but it is massively interlinked. As I consider the issues raised in the motion, I am mindful that movement on one will in all likelihood impact on another. It is for that reason that I intend to address all the issues relating to affordability, sustainability and security of supply in a comprehensive and long-sighted new energy strategy for Northern Ireland that I intend to move forward on in the near future.

Energy policy must take account of the range of complex issues that have been highlighted today: energy costs, the grid, the link between energy infrastructure and the economy, electricity generation and security of supply, and the decarbonisation of the energy sector. That is what I intend to deal with in a new energy strategy, and I look forward to the support of the whole House as we grapple with these considerable challenges, which are of such importance to our economy and to our wider society.

Photo of Robin Newton Robin Newton Speaker

Members, the Question is that the motion — Sorry, my apologies. I call Mr Alan Chambers. My apologies, Mr Chambers.

Photo of Alan Chambers Alan Chambers UUP

Thank you, Mr Speaker. Reports on energy and electricity are not in short supply. We have reports, inquiries and investigations. The ETI Committee had three volumes in its inquiry in the last mandate. Currently, the Northern Ireland Affairs Committee at Westminster is holding an inquiry, and it recently held hearings in Northern Ireland. Despite all the reports and inquiries, it is not at all clear to me what the policy of the Department or the Executive is on generation, security of supply, price control and renewables.

There were recommendations in the ETI Committee reports in November 2013 and February 2014 on the security of supply and electricity prices. More recently, there were 24 recommendations in the Energy and Manufacturing Advisory Group (EMAG) report. I remind Members that that was a report that the former Minister, Mr Bell, commissioned after major job losses last year and in the light of complaints about lack of action to tackle the high energy prices faced by our large industrial users.

How did the Executive respond to an expert report that they had commissioned in such a hurry? Interestingly, the chair of EMAG, Mr David Dobbin of Dale Farm, is reported in the November edition of 'agendaNi' as saying:

"The timing of the report was unfortunate as Purdah had started and the previous minister couldn’t comment on it. We then had the election and then the appointment of a new minister and that was followed by the changes to the departments. I have had some behind the scenes talks with the Department for the Economy but so far their approach hasn’t been announced."

The EMAG report was received by the Department of Enterprise, Trade and Investment on 5 April 2016 — almost eight months ago. In May, my colleague Robbie Butler asked the new Minister for the Economy for his assessment of the recommendations of the Energy and Manufacturing Advisory Group. The answer he received, three months later, on 22 August from the Minister was:

"I am currently considering the recommendations of the Energy And Manufacturing Advisory Group."

My colleague Steve Aiken submitted a question for written answer on 10 October:

"To ask the Minister for the Economy when his Department will respond to the recommendations contained in the Energy and Manufacturing Advisory Group Report."

It remains unanswered.

It is time that the Assembly said that we need and demand answers. We need to know what policy direction the Minister and the Executive want to take us on with renewables and the decarbonisation agenda. We need to know what action the Executive intend to take to tackle the crippling energy costs that our major industrial users have been complaining about for years.

We also need to hear some sort of response to the reports that the previous Enterprise, Trade and Investment Committee compiled, and a response from the Department and Minister for the Economy to the EMAG report, which his predecessor commissioned to try to cover his embarrassment at the major industrial job losses announced last autumn, where the cost of energy was cited as a contributory factor, especially in the case of Michelin.

I turn now to a few of the contributions. My colleague Steve Aiken highlighted the fact that our industrialists have some of the highest prices of electricity supply in Europe. He talked about the North/South interconnector and how important that is. He said that there is no plan B. That is not his rhetoric; those were the words of the Utility Regulator, last Wednesday, to the Economy Committee. There is no plan B.

Mervyn Storey demonstrated that he is a bit touchy about criticism. He acknowledged the seriousness of the situation, but he was unable — or maybe unwilling — to answer the question from my colleague Mr Nesbitt about energy deficit, because it was contained in an Executive —

Photo of Robin Newton Robin Newton Speaker

Mr Chambers, may I ask you to miss the mic with your papers?

Photo of Alan Chambers Alan Chambers UUP

OK, sorry.

The energy deficit claim was contained in an Executive publication. Mr Storey reminded me that the best form of defence is attack, but bluster fools no one.

Mr Murphy put his cards on the table and told us immediately that he was opposed to the motion. He talked about policies that needed to be thought out, and he said that they had got to be got right. That is code for more reports and more prevarication. How much time does he need?

Mr Agnew made a significant intervention in Ms Bradley's contribution, as he did a couple of times during the debate. He added further fuel when he attributed the blame for the developing renewable heat incentive scandal on where the blame lies.

Mr Dunne supported the concerns on electricity prices for our manufacturing industry. I welcome his support for the interconnector.

My colleague Mr Smith highlighted security of supply, which is absolutely important.

Mr Lyons talked about the interconnector being important. It is not enough to acknowledge that we need it; we have to acknowledge that we cannot afford any delay. He demonstrated the concept of spreading the blame. He pointed the finger at the Enterprise, Trade and Investment Committee. I do not know; his attempt to spread the blame would not even fool a monkey, Mr Speaker.

Mr Frew talked about the Ulster Unionist Party showing a characteristic of real panic. I do not accept that assertion, but the actions of this Executive would cause you to have a bit of panic at times.

Photo of Mervyn Storey Mervyn Storey DUP

Will the Member give way?

Photo of Alan Chambers Alan Chambers UUP

No, I will not be giving way. I think I have heard enough bluster from you today.

[Laughter.]

I was delighted to hear the Minister. He has talked about what he is going to deliver. In actual fact, he is going to deliver an awful lot of what is in our motion, but his colleagues do not seem to accept that. It concerns me when I hear Members deride and decry concerns about security of supply. It displays a blasé and complacent attitude which is all too commonplace in the ranks of the Sinn Féin/DUP coalition. I remind them that it is not just members of the official Opposition who have raised concerns. We have heard quotes today from SONI, the Utility Regulator, the CBI and respected commentators like John Simpson and Jamie Delargy. If Members on the Executive Benches do not believe the experts, I refer them to the graph on page 25 of their own draft Programme for Government consultation document. The electricity supply margin is 400MW and currently meets security standards. In terms of generation adequacy, the level is sufficient in Northern Ireland in the medium term. An accompanying graph shows Northern Ireland going into a generation deficit by 2020.

(Madam Principal Deputy Speaker [Ms Ruane] in the Chair)

Our motion has deliberately called upon the Executive to clarify their position on future subsidy arrangements for all forms of energy generation. That is because it has not, as some have alleged, been just the renewable sector that has been the recipient of government subsidy. Generation based on fossil fuels has been a heavy beneficiary over the years.

From engaging with the sector, it is clear to the Ulster Unionist Party that the renewables industry is not asking to be subsidised in perpetuity, but it needs a route to market. There is a crucial need for a mechanism that subsidises the wholesale price to enable investors to invest. At the moment, on wholesale prices alone, no one is willing to invest in any form of new generation. It is in everyone's interests to structure a route to market that is competitive and technology neutral. That way, the market brings forward the least cost generation technologies.

Above all, the Assembly and the general public need reassurance that the Executive have a long-term plan to keep the lights on. I look at what has been going on over the last few years, with the fiasco around the renewable heat incentive scandal. That is a glaring example of a good concept being undermined by maladministration and a lack of ministerial scrutiny, and it leaves me with little confidence that those in charge know what they are doing.

Six months into the new mandate, is it too much to ask the Minister and Executive to give us an indication of what they plan to do on renewable policy? Is the 40% target still achievable? Is the NIRO going to be replaced? Are we looking at the contracts for difference model? How are we going to pay for the renewable heat incentive fiasco, and is anyone going to accept responsibility for it? We have brought this motion to the Assembly in the hope that we will start to get some answers to the questions that we have raised. I commend the motion.

Question put. The Assembly divided:

<SPAN STYLE="font-style:italic;"> Ayes 35; Noes 53

AYES

Mr Agnew, Mr Aiken, Mr Allen, Mr Allister, Ms Armstrong, Mr Attwood, Ms Bailey, Mrs Barton, Mr Beattie, Mr Beggs, Ms S Bradley, Mr Butler, Mr Chambers, Mrs Dobson, Mr Durkan, Mr Eastwood, Dr Farry, Mr Ford, Ms Hanna, Mr Kennedy, Mrs Long, Mr Lunn, Mr E McCann, Mr McCrossan, Mr McGlone, Mr McGrath, Mr McKee, Mr McPhillips, Ms Mallon, Mr Mullan, Mr Nesbitt, Mrs Overend, Mrs Palmer, Mr Smith, Mr Swann

Tellers for the Ayes: Mr Aiken, Mr Chambers

NOES

Mr Anderson, Ms Archibald, Mr Bell, Mr Boylan, Ms Boyle, Mr M Bradley, Ms P Bradley, Mr K Buchanan, Mr T Buchanan, Mrs Cameron, Mr Clarke, Ms Dillon, Mr Dunne, Mr Easton, Ms Fearon, Mr Frew, Ms Gildernew, Mr Girvan, Mr Hamilton, Mr Hazzard, Mr Humphrey, Mr Irwin, Mr Kelly, Ms Lockhart, Mr Logan, Mr Lynch, Mr Lyons, Mr McAleer, Mr F McCann, Ms J McCann, Mr McCartney, Mr McElduff, Mr McGuigan, Miss McIlveen, Mr McQuillan, Mr Maskey, Mr Middleton, Mr Milne, Mr Murphy, Ms Ní Chuilín, Mr Ó Muilleoir, Mr O'Dowd, Mrs O'Neill, Mr Poots, Mr Robinson, Mr Ross, Ms Seeley, Mr Sheehan, Mr Stalford, Mr Storey, Ms Sugden, Mr Weir, Mr Wells

Tellers for the Noes: Mr McQuillan, Mr Robinson

Question accordingly negatived.

Photo of Caitriona Ruane Caitriona Ruane Deputy Speaker 7:00 pm, 22nd November 2016

I will allow time for Members to leave the Chamber so that we can have a good debate.