Issues

A decisive moment in time: Towards a net zero future

A leading thinker in the Irish energy sector and Managing Director of Bord Gáis Energy, Dave Kirwan talks to Owen McQuade about how the transition to a net zero-carbon future will require a new approach to how we produce and consume energy.

Reflecting on the huge challenge ahead for the energy sector, Dave Kirwan considers the fundamental principles behind such a change: “The transformation the economy must undergo is an adaptive transformation. It’s not a technical transformation, it’s not about more of the same – bigger, better or faster. It’s adjusting to a different way of doing things.”

The transformation of the energy sector cannot be pursued “with a central edict”, he says. Rather, it must ultimately be “owned by all of our citizens”. The outworking of this change process is that “we are going to create a platform for the energy sector in Ireland where customers become active participants of a net zero energy system. We all have a role to play in that because no part of the value chain will stay the same”.

Such a future will be difficult for infrastructure providers and how they develop their networks over the next 20 years. “What will they allow onto the grid? What is the right generation mix? What role will demand side management play? And the big question: What will this mean for customers and will they get onboard with the choices they will have to make?” asks Kirwan.

The Managing Director believes that these changes are quite different to those made to Ireland’s energy system in the past and recalls a quote from John Maynard Keynes: “The difficulty lies not so much in developing new ideas as in escaping from old ones.”

“The scale of ambition is right, but we must be alert to how we approach it. It has to involve the energy customer in a way that they have not seen up to now,” the Bord Gáis Energy Managing Director adds.

For Kirwan the central challenge is knowing, in absolute terms, what is required to achieve our net zero ambition. “The reality is that we don’t know. We are going to have to experiment and learn to adjust our thinking along the way,” he remarks.

“Large, sophisticated energy users are already procuring their own low carbon solutions. We are offering our commercial customers sophisticated demand side products so that they can become active participants in the energy system benefiting their bottom line and the system overall.”

The Government’s five-year carbon budget lends itself to this type of approach. As each five-year cycle evolves, the energy sector will get a better sense of what energy mix is required to serve customers’ needs. Bord Gáis Energy is already seeing this with business customers. “Large, sophisticated energy users are already procuring their own low carbon solutions. We are offering our commercial customers sophisticated demand side products so that they can become active participants in the energy system benefiting their bottom line and the system overall.”

Kirwan reiterates his assertion that this transformation will be different from the changes of the past: “Those who have worked in the industry for many years will have to be very open as to how we meet customer needs in the future. Looking to that future, no one technology will be enough, and we will require a mix of renewable gas and electrification.”

The customer

Bord Gáis Energy’s strategy to date has been to be the ‘helpful energy brand’. That approach has worked well over the last six years, but Kirwan says that it is now changing. “We looked after customers’ energy needs for them, and they were happy with that. Now, we need to engage customers and let them make a number of decisions: how do I insulate my home? Or should I spend the money on a new patio?”

To this end, the energy company has offered customers a number of innovative products including ‘free energy Saturdays’, which was essentially a peak shifting product. It has also formed a partnership with Energlaze to install solar panels and offer deep retrofits to customers, simultaneously putting itself forward as a one-stop-shop for the National Retrofit Scheme.

As the offerings to customers evolve, Bord Gáis Energy is upgrading its engineering capabilities. At present it services around 60,000 boilers each year and Kirwan has asked his senior management team: “Why shouldn’t we be in 200,000 homes by 2025 and not just servicing boilers but replacing them with heat pumps or upgrading their insulation?”

The energy company will also be extending its ‘local heroes’ network of trusted tradespersons nationwide. Additionally, it will be offering energy assessments in order to reach more homes. “We don’t know what will work but we need to offer a lot of options and to understand what the customer needs. We are going to have to take some risks and invest to decarbonise Irish homes. There is not a clear commercial return on all these options, but we have to try them.”

“The energy industry’s commitment to a net zero carbon future is no longer qualified… We realise that this has to happen and Bord Gáis Energy wants to be at the forefront of that transition.”

Kirwan was particularly impressed by the SEAI’s ambition in decarbonising Irish homes and their innovative approach. The SEAI has employed behavioural economists to understand the nudges that will encourage customers to move towards low carbon investments and services. In turn, Kirwan says that Bord Gáis Energy needs to provide customers with competitive services and solutions that reflect those behaviours.

“The scale of the ambition is huge, and we will not achieve it through one technology. The cost of improving Building Energy Ratings across Ireland’s housing stock, adequate enough to allow heat pumps to replace fossil fuel heating systems, is huge. Therefore, I believe we should look to a hybrid solution of more insulation and renewable,” he explains.

Digital

Bord Gáis Energy’s Hive Active Heating was the first smart energy offering to Irish domestic customers. Kirwan says that with the experience garnered to date, it is now becoming apparent how the Hive technology could play a part in any transition to low carbon energy use. “Initially, Hive was just about getting customer data and offering remote control, with customers engaged via an app. Looking to the not too distant future, where the customer has an electric vehicle, a smart meter and an in-home battery, it will be possible to combine these technologies on the Hive platform.

“It will be possible to automate the optimum use of the appliances and interface with the electricity market at a scale level. Therefore, the platform will effectively be a virtual power plant. That’s the evolution of our investment in the Hive platform. This ‘home energy management’ approach is pulling all the pieces of the jigsaw together to give benefits to both the system and customers.”

Kirwan highlights parent company, Centrica’s Cornwall project as a pilot for this approach, whereby smart local economies are dispatched to optimise demand side and upstream supply. “That is what we are trying to unlock with our Hive platform,” he indicates.

“The scale of ambition is right, but we must be alert to how we approach it. It has to involve the energy customer in a way that they have not seen up to now.”

Whitegate

A key aspect of the energy transition is security of supply, particularly as we move towards ever higher levels of intermitted renewable energy. In this aspect the company’s Whitegate gas-fired power plant is a useful asset and a very efficient technology. However, the company’s ambition is to be net carbon zero. Bord Gáis Energy is looking at Whitegate in the context of its net zero transition and has engaged with Ervia on carbon capture and storage (CCS) and hydrogen as a fuel. This fits well with Centrica’s interest in using the depleted Rough Gas Field in the North Sea for CCS as part of a wider hydrogen solution. Kirwan sees a potential role for Whitegate in a hydrogen hub in the Cork area.

Inclusivity

When asked if there is a danger that poorer households might be left behind in this transition, Kirwan is clear that all households need to move forward: “We need wholesale adoption and scale. Subsidies need to be targeted towards customers that cannot afford these first steps. We cannot create a new generation of fuel-poor households.”

In recent years, Bord Gáis Energy’s focus on the energy needs of the home led the company to partner with Focus Ireland. The partnership has subsequently produced €2.4 million of funding to combat homelessness and has assisted 4,000 families. Likewise, this year’s Shine a Light campaign was the biggest to date and Focus Ireland has now called for a new national strategy to end homelessness. “I’m proud to be part of an industry that is challenging itself to be net zero carbon by 2050. I agree with Focus Ireland, we should have an ambition and plan to achieve zero homelessness in Ireland.”

Kirwan is committed to the challenge of alleviating homelessness and observes that the Covid-19 pandemic has disrupted the prevailing approach to homelessness. “Post-pandemic we should not resort back to the old approach. Focus Ireland has the ambition to alleviate all homelessness and to pursue a new approach post-pandemic. Our relationship with Focus Ireland has made us a better company and a better group of people,” he insists.

Future

Stepping back and looking strategically at Ireland’s climate ambitions, Kirwan believes that “we are at a decisive moment in time”. The Covid crisis, he suggests, has interrupted orthodoxy and forced each sector of the economy and society to think differently. He also acknowledges Ireland’s ambitious Programme for Government and vision around climate action. “The energy industry’s commitment to a net zero carbon future is no longer qualified. We now need to work out how to deliver that. We realise that this has to happen and Bord Gáis Energy wants to be at the forefront of that transition. Maybe for the first time ever, most of the actors are aligned on the scale of the transition and are not paying lip service to it. We will make mistakes but we have to get on with it and learn along the way,” he concludes.

Profile: Dave Kirwan

Dave Kirwan is the Managing Director of Bord Gáis Energy. He returned to the role in 2020 having completed a successful term as Managing Director of the UK Home business at Centrica and in addition to his role at Bord Gáis Energy, he serves on the Centrica Group Executive Committee. Prior to joining Bord Gáis Energy in 1999, Kirwan worked for ESB and ESBI in power generation in Ireland and abroad.

From Tullow, County Carlow, Kirwan is an electronic engineering graduate from UCD and he has an MBA from UCC and completed his doctorate in Business Economics from the university.

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