BusinessEconomyEnergyEnergy & Environment

Smart early moves in energy

Strategic leadership can deliver the energy element of Ireland’s smart economy aspirations, SEAI Chief Operations Officer Brian Motherway tells Owen McQuade.

“The smart economy, and sustainable energy is a fundamental strategic issue for Ireland,” according to Brian Motherway.

“We’re excessively dependent on fossil fuels which are becoming less dependable and more expensive. We have energy costs we need to take out of the system but more than that, we need to identify where the next generation of jobs, enterprise and wealth is going to come from in Ireland. What’s going to drive our export growth?”

Energy, he notes, is ultimately a long-term issue despite the urgent and constantly changing problems clamouring for the attention of policy-makers.

“We’re talking about investments that have decades of horizons, not months or years,” Motherway adds, so investors therefore need a sense that Ireland is a place where they can do business.

SEAI has been “quite successful” in emphasising energy’s importance as a key strategic issue for Ireland.

The authority also views the sector as a major potential employer, especially if Ireland is recognised as an early mover and potential test-bed for technology. “We’re saying: ‘Come and work with us early on proving new things. We have the ability to do business, we can bring people together, we’re relatively small and this is a place to base yourself.’”

Benefits

An economic focus on energy plays to Ireland’s existing strengths. ICT, communications and software will all be “central” in the next generation of energy technology.

Predictive software and algorithms are “already maturing in the energy space” e.g. a company making in-car touchscreen devices is reconfiguring itself to produce in-home displays to turn radiators and lights on and off.

Other growing businesses in the smart energy space show how wide the range is, from companies such as Active Thermal (a family building company which has branched out from conservatories to retrofitting) and Nualight, specialising in accent lighting for food retail displays.

“Ireland can offer two things. One, we’re relatively small and coherent. And secondly, at least in theory, we’re quite fluid.”

Officials, system operators, regulators and contractors can easily be brought around the same table. In the past, IDA Ireland successfully navigated companies “through the bureaucracy” and he thinks this is “something we can get back.”

Motherway remarks: “The race here will be won by those who show they’re able to get things done on the ground.”

Energy is also a very tangible early mover for “pounds, shillings and pence” reasons, whereas other parts of the smart economy “can sound a bit abstract [or] futuristic”.

“If you have a device that decarbonises energy or that lowers people’s energy bills, you have got a huge market here and now, never mind about predicting some trend for the long term. I think that gives energy the potential to be the place to start.”

In Motherway’s opinion, policy signals are “more important than some people give them credit for” in stimulating the sector’s growth. If government stands up, says it is serious about the issue and backs that up with action, it “demonstrates to indigenous firms, investors and financiers that Ireland is serious about this and will enable this.”

Practically, taking action on ocean energy or smart grids would send out the message “that when a new technological area comes along, we can make it happen in Ireland.”

Funding

electric-vehicle-charging At one extreme, revenues from some smart energy technologies will “really start to flow in a decade or more” and the key challenge now is to facilitate funding into a sector that is strategically vital but not yet market-ready.

At the other end, energy efficiency is “a complete no-brainer”. Spending €1 million upgrading a hospital will pay for itself in two years and pay dividends for another 15 years. However, organisations currently cannot obtain the upfront capital for this.

“The funding is very important and there’s no doubt that Ireland, in both the private and the public spheres at the moment, is finding it difficult to get capital or to get it at any reasonable repayable rate,” he comments.

“So I think that one has to play a long game here and create the conditions for when money becomes a little cheaper or a little more available to Ireland and to Irish companies who are ready for it.”

Finance is also an area for innovation, which ties in well with the proposed Green IFSC. New models include pay- as-you-save in retrofit, shared savings contracts, and energy service companies (Escos) in the public sector.

Potential

Although retro-fitting doesn’t have a hi-tech image, he sees it as the sector with most immediate potential in employment and wealth creation. Over the last two years, €250 million was spent on retrofitting homes in Ireland.

“Sometimes people don’t think of it as ‘smart economy’ because it’s people in boiler suits going into homes but right now, retrofitting homes to be more energy-efficient is employing 5,000 people.”

Retro-fitting saves money on fossil fuels and “suits a sector that’s under-employed at the moment.”

Next comes smart grids, which are much wider than electricity as interconnections can be developed between different parts of infrastructure, including water and roads.

By the 2020s and 2030s, he expects to see a “surplus and supply” of clean offshore energy off Ireland when much of Europe has an energy deficit. We have the resource. The key question is: “Can we move early [so] that we’re capturing the benefits of that?”

Motherway believes that Ireland’s apparent energy weakness can be turned into a strength.

“One of the advantages Ireland has, paradoxically, is that it needs to tackle these issues earlier than some countries because it faces greater problems,” he says.

For example, high comparative energy costs a few years ago forced Irish energy users to improve their energy efficiency performance, and resulted in considerable expertise being developed in that field. Ireland’s National Standard IS393 is now the European standard 16001 and will, shortly, be a global ISO15001. Ireland now has a global reputation in this area.

Another example is smart grid. Intermittent wind is the island’s fastest growing energy resource and projected growth means that it has to “get good” at the smart grid (integrating large amounts of wind by controlling supply and demand together) before 2020. An American company with an energy interest will “go somewhere that has to by definition, move earlier.”

SEAI launched a report, ‘Ireland – Your Smart Grid Opportunity’, at a Washington conference last year to encourage that interest and show Irish organisations can work together. Motherway’s message is:

“Look, we’re moving early and you can be convinced we’re moving early
because we have to.”

There are huge opportunities. An Irish engineer who designs a control system to integrate electric vehicle charging and intermittent wind will automatically have a global market.

Asked for one change he wants to see, Motherway replies: “It’s all about moving from what is sometimes seen as rhetoric into real tangible delivery.” For example, he suggests bringing down the public sector’s energy bill from €600 million to €400 million.

“We’ve got the right skills, we’ve got the resources and we can have the early mover advantage. That takes strategic leadership,” he states. A narrow focus says: “If I can’t draw it on a graph, we shouldn’t do it.” Short-term thinking is common in crises.

For example, high comparative energy costs a few years ago forced Irish energy users to improve their energy efficiency

In contrast, it’s essential for Ireland to take a broader and long-term view “It would be unfortunate if we made decisions now that were either too narrow or too short-term.”

Key success factors

Political leadership: Getting the right level and giving business and enterprise a sense that Ireland is very serious about energy.

Skills: Technical and business skills to keep up with the sector’s demands. The right configuration in everything from plumbing apprenticeships to engineering degrees and PhDs.

Funding: Unlocking new ways of funding and finding solutions.

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