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A Strategic Energy Scenario Planning Model for Northern Ireland
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5 Baseline Forecasts and Alternative Policy Scenarios
5.1 Introduction
In this chapter we first present the forecast for the baseline scenario, based on the fuel use
patterns discussed in the previous chapter. The baseline scenario assumes that there will
be no changes to current policies on energy, transport or the climate. In addition to the
baseline, we also analysed four alternative policy scenarios to understand the potential
effect of changes in policy on energy use and carbon dioxide emissions. The scenarios
include a change in the type of plants that produce electricity, the rolling out of a more
extensive natural gas pipeline network, increased building insulation and a reduction in
private car use for commuting.
Other scenarios would have been possible, including alternative scenarios on the
international economy, on UK policy, and on policy in Northern Ireland. With regard to
the international economy, alternative assumptions could have been made on economic
growth, on the cost of capital, on the price of energy, and on the price of carbon dioxide
emission permits. The purpose of such scenarios would be to test the robustness of the
results presented below, as policy makers in Northern Ireland have little influence on
these trends. Alternative assumptions on UK policy could have been made with regard to
taxes and subsidies on energy and transport, as well as different efficiency standards.
Policy makers in Northern Ireland can exert some influence on such decisions, but the
main purpose of such a scenario would be to test for robustness. The policy scenarios
analysed in this chapter are within the remit of policy makers in Northern Ireland: power
generation, provision of energy, energy efficiency of buildings, and transport. These are
the big energy users in Northern Ireland (cf. section 4.2), so policies to reduce emissions
should focus on these activities. However, the scenarios are configured in a specific way,
and different users may consider other options.
The following sections describe the baseline and the alternative policy scenarios and
present the results. The model results corresponding to each scenario (in the Results
folder) are listed in Table 5.1.
Table 5.1 Results files corresponding to scenarios
Result Excel file
Baseline Baseline scenario Results_baseline.xslx
Alternative Policy #1 40% Renewables target Results40%_final.xlsx
Alternative Policy #2 Rollout of new natural gas pipeline ResultsGasRollout_final.xlsx
Alternative Policy #3 Increased building insulation Results_housingefficiency.xlsx
Alternative Policy #4 Move away from private car commuting Results_commuting.xlsx
A Strategic Energy Scenario Planning Model for Northern Ireland
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5.2 Baseline assumptions
5.2.1 Macroeconomic assumptions
The macroeconomic assumptions come from Oxford Economics
29
. Table 5.2 shows the
average growth rates, out to 2025, for total Gross Value Added in Northern Ireland, the
consumer price index and the expected price of oil, in nominal dollars per barrel.
Exchange rates are assumed to stay constant at their 2010 level going forward.
Table 5.2 Macroeconomic assumptions in Baseline
Level Average yearly growth rate Level
2010 2010-2015 2015-2020 2020-2025 2025
GVA(2005 currency) 25,534 mln 2.7% 2.3% 1.9% 35,894 mln
CPI(2005=100) 114 1.8% 2.0% 2.0% 152
Oil($/barrel), nominal $81/barrel 3.9% 5.5% 3.8% $155/barrel
5.2.2 Energy prices
Table 5.2 above shows the expected future crude oil price. We assume that natural gas
prices follow oil prices. Natural gas prices for electricity generation and industry are
taken as the UK price of natural gas plus 6 per cent to account for the additional transport
cost onto the island of Ireland. Domestic natural gas price is the price reported by NIAUR
for users who consume more than 2000kWh/year. Table 5.3 presents all the prices in
2010 (in real value, expressed in 2005 currency), excluding excise, levy and VAT. Coal
prices come from the IEA prices and taxes for the UK. We assume that the 2009 price
continues through 2010. Industrial and domestic prices also come from the IEA
information for the UK. The IEA data for domestic prices are consistent with data on coal
prices for Northern Ireland that we received for 2005, 2006, 2009 and beginning of 2010
from the General Consumer Council for Northern Ireland. After 2010 all coal prices are
assumed to change in line with the trend in coal prices underlying the latest energy
forecast report for the Republic of Ireland (SEI 2009).
29
Oxford Economics provides the Department of Enterprise, Trade and Investment with macroeconomic
forecasts for Northern Ireland.
A Strategic Energy Scenario Planning Model for Northern Ireland
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Table 5.3 Energy prices, in real 2005 prices; excluding excise, levy and VAT taxes
Level Average yearly growth rate Level
2010 2010-2015 2015-2020 2020-2025 2025
Natural Gas, /TOE
Electricity gen. 179 256
Industry 217 2.1% 3.4% 1.8% 311
Domestic 382 547
Coal, /TOE
Electricity gen. 77 120
Industry 61 4.0% 3.3% 1.8% 95
Domestic 327 511
Fuel Oil, /TOE
Electricity gen. 163 233
Industry 337 2.1% 3.4% 1.8% 483
Domestic 400 574
Peat, /TOE 124 0% 0% 0% 124
CO
2
(/tonne) 14 10% 9% 0% 35
The price of heavy fuel oil for electricity generation also comes from the IEA prices and
taxes publication. Domestic fuel oil is assumed to be an equal share of Gas Oil and
Kerosene (burning oil). The prices cited by the IEA publication match the sale prices in
Northern Ireland (from the NI Oil Federation) almost perfectly. We use the IEA prices for
all the sectors. The fuel oil price for industry is the IEA price for gasoil. For the future all
prices (excluding taxes) are assumed to grow at the same rate as the price of oil.
Domestic electricity prices come from NIAUR and NIE. For 2009 the NI domestic
electricity price is 7 per cent higher than the average UK price reported by the IEA. We
assume that this price differential is the same for industry prices and therefore assign to
industry the IEA electricity price for industry increased by 7 per cent. Going forward, the
change in the wholesale price of electricity will be determined by IDEM, the model
component that simulates the All-Island electricity market.
5.2.3 Electricity: Commissioning / Decommissioning Schedule
Plant commissioning and decommissioning has been implemented according to the
timetables announced by SONI in Northern Ireland and EirGrid in the Republic of Ireland
(Tables 5.4 and 5.5). The existence of an all-island market for electricity implies the need
to account for the generation capacity in both Northern Ireland and the Republic of
Ireland.
Table 5.4 Commissioning / Decommissioning Schedule for Northern Ireland
Plant Name Capacity (MW) Commissioned Decommissioned
Ballylumford (NI) 510 2016
Kilroot (CCGT) (NI) 400 2015
Wind (NI) Increases gradually from 242MW in 2008 to 1187MW in 2020
A Strategic Energy Scenario Planning Model for Northern Ireland
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For Northern Ireland we assume that wind generation capacity will increase in line with
the EirGrid Generation Adequacy Report (GAR) 2010-2016 up to 2016, after which
further increases are at the same rate as the Republic. We assume that wind capacity
increases from 242 MW in 2008 to 1187 MW in 2020 and stays constant out to 2025. A
400 MW CCGT plant, located in Kilroot is added to the system in 2015, and 510 MW of
plant at Ballylumford is decommissioned in 2016.
Table 5.5 Commissioning / Decommissioning Schedule for Republic of Ireland
Plant Name Capacity (MW) Commissioned Decommissioned
Poolbeg 1&2 219 2010
Great Island 216 2013
Tarbert 590 2013
Interconnector 500 2012
Interconnector 500 2016
Aghada (CCGT) 432 2010
Whitegate (CCGT) 445 2010
Edenderry (OCGT) 111 2010
Dublin Waste-to-Energy 72 2013
Meath Waste-to-Energy 17 2012
Nore (OCGT) 98 2011
Cuileen (OCGT) 98 2012
Suir (OCGT) 98 2013
Wind (ROI) Increases gradually from 1068MW in 2008 to 4890MW in 2020
In the Republic of Ireland, wind capacity grows from 1068 MW at year end 2008 to
3911 MW in 2016 as in the EirGrid Generation Adequacy Reports 2008 2014 and 2010
- 2016. Capacity then continues to grow to 4890 MW in 2020, with no further increases
after that. We assume the commissioning of Combined-Cycle Gas Turbine plants
(CCGTs) in 2010 (Aghada 432 MW, Whitegate 445 MW), OCGTs in 2010 (Edenderry
111 MW), 2011 (Nore 98 MW), 2012 (Cuileen 98 MW) and 2013 (Suir 98 MW), and
Waste-to-Energy plants in 2013 (Dublin 72 MW) and 2012 (Meath 17 MW). There is 500
MW of new interconnection capacity in 2012 (the East-West interconnector) and another
500MW in 2016. Plant decommissionings confirmed in the GAR 2010-2016 have also
A Strategic Energy Scenario Planning Model for Northern Ireland
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been included, with Poolbeg (219 MW, 2010), Great Island (216MW, 2013) and Tarbert
(590MW, 2013) coming off the system.
In addition, we assume that there will be an increase in interconnection between Ireland
and Great Britain. The 500MW East-West interconnector is scheduled to be
commissioned in 2012. The baseline assumes a further 500MW in 2020 and a third one in
2025. The baseline envisages a large rollout of wind generation. The increased
interconnection is necessary to avoid curtailing wind on a large scale.
5.3 Baseline projections to 2025
On the basis of these assumptions, energy demand is assumed to continue growing after
2010, albeit at a low rate. Table 5.6 shows that the services sector displays the highest
growth rate, followed by growth in the transport sector.
Table 5.6 Final Energy Demand by Sector, kTOE
Level Average annual growth rate Level
2008 2008-2010 2010-2015 2015-2020 2020-2025 2025
Industry 462 -6.4% 1.7% 1.1% 1.3% 498
Services 405 -0.6% 1.6% 1.4% 1.3% 493
Agriculture 141 1.0% 0.1% -0.2% -0.2% 142
Transport 1496 0.1% 0.9% 0.9% 0.8% 1708
Household 1464 -0.6% 0.5% 0.3% 0.4% 1532
Total 3968 -0.9% 0.9% 0.7% 0.7% 4373
Table 5.7 reports final energy demand by fuel and shows that oil is the most important
fuel in Northern Ireland and will continue growing in importance. Electricity demand
continues growing at a steady, albeit relatively low rate, after the end of the recessionary
period. Demand for natural gas grows over the period. Coal use increases because of
effects due to the composition of the industrial sector.
Table 5.7 Final Energy Demand by Fuel, kTOE
Level Average annual growth rate Level
2008 2008-2010 2010-2015 2015-2020 2020-2025 2025
Coal 191 -1.1% 2.7% 2.3% 2.4% 270
Peat 13 -1.1% 0.6% 0.5% 0.4% 14
Oil 2769 -0.5% 0.6% 0.5% 0.5% 2960
Natural Gas 271 -1.0% 1.2% 0.9% 1.0% 311
Renewables 34 -1.2% 0.6% 0.2% 0.1% 34
Electricity 690 -2.7% 1.5% 1.1% 1.1% 785
Total 3968 -0.9% 0.9% 0.7% 0.7% 4373
Electricity generation accounts for a large share of total fuel used in Northern Ireland.
Table 5.8 shows the amount of electricity generated, the amount imported and what type
of fuel (or the level of net imports) used to meet demand. For the future, the main sources
of electricity for Northern Ireland are expected to be natural gas, renewables (mostly
wind) and imports. Coal generation declines quickly due to the growth in the cost of
carbon emission permits and then the closure of the Kilroot plant in 2019. Up until 2012
A Strategic Energy Scenario Planning Model for Northern Ireland
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Northern Ireland is unable to rely heavily on imports, due to limited North-South
interconnection.
30
After 2012 the combination of more interconnection with the South, a
number of new plants commissioned south of the border (Table 5.4) and the new East-
West interconnector linking the Republic of Ireland to Great Britain, will push Northern
Ireland towards being a net importer of electricity.
Table 5.8 Power Generation
2008 2010 2015 2020 2025
Total electricity demand (kTOE) 693 663 724 751 788
Net imports (kTOE) -113 -103 300 138 272
Share of demand by fuel used in generation
Coal
19% 12% 0% 0% 0%
Peat
0% 0% 0% 0% 0%
Oil
0% 0% 0% 0% 0%
Gas
88% 89% 39% 52% 38%
Renewables
7% 12% 23% 32% 31%
Net imports
-14% -14% 37% 16% 31%
Total
100% 100% 100% 100% 100%
Table 5.8 above also shows that by 2020 renewables are expected to meet about 30 per
cent of gross demand (i.e., including the electricity that is lost in the transmission and
distribution systems and the amount needed for own use by power plants). If the impact
of renewables were calculated in terms of net demand (i.e., demand net of transmission
and distribution losses and own use), they would reach 36 per cent of total demand by
2020.
As can been seen in Figure 5.1, in 2012 Northern Ireland switches from being a net
exporter of electricity to a net importer, this is as a result of the extra 500MW of
interconnection which is expected to come on stream. The interconnector causes the
Ballylumford plant, a large but old and relatively inefficient plant, to fall out of the
generation merit order resulting in the large drop in generation by gas plants.
30
In the model this is implemented by constraining on plant in Northern Ireland that would not otherwise
operate if there was unlimited interconnection on the island.
A Strategic Energy Scenario Planning Model for Northern Ireland
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Figure 5.1 Electricity generated by fuel, kTOE
Table 5.9 reports the expected levels of emissions and their expected future growth rates.
Total emissions decrease, mostly due to the patterns shown above in electricity
generation. As electricity imports grow, Northern Ireland is responsible for fewer
emissions at the power generation level. Transport continues being the main contributor
to carbon dioxide emissions and its importance grows over time. About half of the CO
2
emissions in transport in 2008 are due to the use of private cars. Over time the
contribution of private cars is expected to decline, mostly because of a further move away
from petrol towards diesel cars and technological improvement in car engines. The
average size of cars actually increases over time, as shown in Figure 5.2. The fastest
growing category is cars with engine sizes over 1.6 litres.
Table 5.9 CO
2
Emissions, thousand tonnes
Level Average annual growth rate Level
2008
2008-2010 2010-2015 2015-2020 2020-2025
2025
Total (thousand tonnes of CO
2
) 15,414 -3.20% -3.75% 1.59% 0.08% 12,960
Share of CO
2
emissions by selected sectors:
Transport 4,774 0.10% 0.95% 0.90% 0.82% 5,461
Electricity 5,169 -7.98% -20.90% 6.80% -5.35% 1,431
A Strategic Energy Scenario Planning Model for Northern Ireland
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Figure 5.2 Car stock by engine size, thousand cars
The other main contributor to carbon dioxide emissions is the residential sector, mostly
through its use of energy for heating.
Using the input-output table we can allocate emissions to their final use. This allows us to
account for both direct and indirect emissions. Table 5.10 shows that households are
directly and indirectly responsible for the largest share of emissions. Exports are the
second largest driver of carbon dioxide emissions. The relative shares stay roughly
constant over time.
Table 5.10 Shares of carbon dioxide emissions by final use
2008 2010 2015 2020 2025
Households
50% 51% 55% 53% 53%
Non-profit inst. serving Households
1% 1% 1% 1% 1%
Government
12% 12% 9% 10% 10%
Capital formation
5% 4% 4% 4% 5%
Inventories
0% 0% 0% 0% 0%
Exports
32% 31% 30% 31% 31%
Finally, there is an interest in how prices evolve over time. The only price that is
determined endogenously in the model is the price of electricity. The price of electricity
is formed by the wholesale price of electricity, transmission and distribution charges, and
charges for the supply to final consumers (the latter includes metering). In addition, it is
necessary to add any existing taxes.
Table 5.11 reports the electricity price in 2010 and the average yearly change in the price
during the forecast period. The reported changes mirror the changes in the wholesale
price of electricity. They do not include increased costs in transmission and distribution
investment above the increases due to inflation. Additional investment in the electricity
A Strategic Energy Scenario Planning Model for Northern Ireland
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grid might be needed in the future both because the current grid is aging and because a
greater investment in wind farms is likely to require reinforcement of the infrastructure
and of distribution lines in particular.
Table 5.11 Retail electricity prices, pre-tax, in real 2005 /MWh
Level Average annual growth rate Level
2010 2010-2015 2015-2020 2020-2025 2025
Industrial price 73 1.85% 2.80% 0.41% 94
Residential price 126 1.39% 2.10% 0.31% 152
5.4 Alternative Policy Scenario # 1: 40% Renewables target
This scenario is calibrated to ensure that 40 per cent of Northern Irish demand in 2020 is
met by Northern Irish renewable generation. To meet this target we assume that Kilroot is
co-fired with biomass and that some offshore wind and tidal are available on the system,
while other methods may be possible, we believe that this is the most realistic
combination of methods which could allow Northern Ireland to reach the 40 per cent
target by 2020.
The target would be achieved as follows: first, the Kilroot stations ST1 and ST2, and GT1
to GT4, are kept in operation for longer than in the baseline scenario. The
decommissioning date for these stations is pushed back to 2025 from 2019 in the baseline
(see Table 5.12). In order for this to contribute to renewable generation, it is assumed that
stations ST1 and ST2 introduce a level of biomass co-firing with their primary fuel. Co-
firing is introduced in two increments, with 10% of output coming from biomass from
2015, and 20% from 2020.
Second, further renewable capacity is introduced in the form of offshore wind and tidal
generation. These are introduced linearly from 2011, with capacity reaching 100MW of
offshore generation, and 50MW of tidal generation by 2020.
Table 5.12 Commissioning / Decommissioning Schedule for Northern Ireland, high
renewables scenario
Plant Name Capacity (MW) Commissioned Decommissioned
Ballylumford (NI) 510 2016
Kilroot ST 1,2 476 (2 x 238MW) 2025
Kilroot GT1,2,3,4 142 (2 x 29MW, 2 x 42MW) 2025
Kilroot (CCGT) (NI) 400 2015
Onshore Wind (NI) Increases gradually from 242MW in 2008 to 1187MW in 2020
Offshore Wind (NI) Increases gradually from 0MW in 2010 to 100MW in 2020
Tidal (NI)
Increases gradually from 0MW in 2010 to 50MW in 2020
A Strategic Energy Scenario Planning Model for Northern Ireland
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Fuel prices remain the same as in the baseline (see Table 5.3). There is one additional
fuel, biomass, which is assumed to have a price of 9/MWh (measured in 2005 currency).
The price stays constant (in real terms) over the period.
In order to allow the biomass co-firing to run, we must set the coal plant to run at its
minimum stable capacity (it would otherwise not run given the current prices). The result
is a large increase in emissions. This can be seen clearly in Figure .3. There is a larger
capacity of low-emissions renewables in this scenario; they reach 42 per cent of gross
demand by 2020. This brings emissions down. There are however also fewer imports,
which pushes emissions up. Additionally, Kilroot is still in part running on coal, therefore
increasing total emissions. As soon as Kilroot stops being constrained on (in 2025), its
generation is substituted by imports.
Figure 5.3 Electricity generated by fuel, 40% renewable scenario, kTOE
This pattern is also clearly reflected in total CO
2
emissions. Table 5.13 compares
emissions in this scenario to the baseline. There is a larger capacity of low-emissions
renewables in this scenario, which brings emissions down, but there are also fewer
imports and more coal use, which pushes emissions up.
Table 5.13 CO Emissions in 40% Renewables Scenario, thousand tonnes
Baseline 2020 2025
CO
2
emissions (thousand tonnes) whole economy 12,908 12,960
40% renewables scenario
CO
2
emissions (thousand tonnes) whole economy
14,703 12,953
A Strategic Energy Scenario Planning Model for Northern Ireland
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No account has been taken of the additional costs which the offshore technology would
impose on the system in this simulation.
5.5 Alternative Policy Scenario # 2: Rollout of new natural gas pipeline
We assume that there will be an extension of the natural gas pipeline out to five urban
areas that are currently not served: Omagh, Strabane, Dungannon, Enniskillen and
Cookstown. These towns have a total population of about 75,000, with about 30,000
households in 2008. Over time this population increases in line with the profile provided
by NISRA.
We know the take-up rate of natural gas connections in the residential sector between
2002 and 2006. On average, 30 per cent of households that had access to a gas pipeline
during this period were connected. We apply this take-up rate to the households served by
the new pipeline together with the average use of gas per household during the period
2002-2005. During that period, households used 526 therms of natural gas a year on
average. Oil is still the main fuel used in central heating in Northern Ireland. We
therefore assume that natural gas use will displace oil use for heating. Households that
heated with oil had a much larger use of fuel than households heating with natural gas.
This might be in part explained by the average gas boiler being newer (and therefore
more efficient) than the average oil boiler. It is however also true that the highest
penetration of natural gas heating is in urban areas, where houses are smaller and less
likely to be fully detached. It seems appropriate to use the average use of natural gas per
household in this scenario since we focus on a potential extension to urban areas.
We use all the information detailed above to estimate the change in use. Table 5.14 shows
the results for this scenario. It reports household use of natural gas and oil in this scenario
and for convenience replicates the baseline results. It also shows the effect on total carbon
dioxide emissions.
Table 5.14 Household Use of Oil and Gas, kTOE
Baseline 2020 2025
Oil 1,019 1,033
Gas 120 122
CO
2
emissions (thousand tonnes) whole economy 12,908 12,960
Gas pipeline rollout
Oil 1005 1,018
Gas 134 137
CO
2
emissions (thousand tonnes) whole economy 12,896 12,947
The effect in this case is not very large, which is not surprising given the relatively small
number of additional households that we assume will connect to the gas pipeline. Natural
gas use for households increases between 13 and 14 per cent with respect to the baseline
scenario. Oil use decreases by much less since it starts at a much higher level. Carbon
dioxide emissions decrease very slightly, by less than one per cent.
A Strategic Energy Scenario Planning Model for Northern Ireland
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5.6 Alternative Policy Scenario # 3: Increased building insulation
This scenario estimates the effect of increasing building insulation in both residential and
public sector buildings. For the residential sector, the assumption is that all houses are
retrofitted and taken up to standard. This includes insulating the attic, insulating walls and
adding double glazing. Public buildings are assumed to reduce their use of heating fuels.
There is an extensive literature that analyses the effects of improving efficiency in
buildings. Sorrell et al. (2009)
31
provides a useful summary of existing empirical studies.
Most empirical analyses find that the technical decrease in energy use is never reached.
This can be due to several factors, some of which are technical factors, such as the fact
that installation in the field doesnt replicate the laboratory conditions where engineering
measures were taken. Others depend on peoples behaviour. When a house becomes more
energy efficient, households do not take all the improvement in efficiency in a reduction
of energy use, but keep some of it as an increase in comfort levels. On aggregate,
technical and behavioural factors are referred to as rebound effect. Sorrell et al. (2009)
concluded that on average the rebound effect for heating is about 20 per cent. We use this
figure when estimating the effects of more insulation on energy use in this scenario.
We use information from Utley and Shorrock (2008)
32
who find that, over a 20 year
period (between 1970 and 1990), energy efficiency due to insulation increased by 30 per
cent. We use this figure in the calculations below.
33
Note that the 30 per cent energy
savings only holds for houses that do not adhere to the building standards. According to
the Housing Conditions Survey of Northern Ireland, that applies to 26 per cent of houses
in 2006. Assuming that new houses are build to standard, the fraction of houses that
require retrofitting falls to 20 per cent in 2025. Furthermore, retrofitting only affects
heating energy use. Therefore, total household energy use falls by some four per cent (see
Table 5.15).
Table 5.15 Energy use and emissions with increased efficiency in building
2008 2020 2025
Baseline
Services, kTOE 405 463 493
Household, kTOE 1,464 1,505 1,532
CO2 emissions whole economy
15,414 12,908 12,960
Increased efficiency scenario
Services, kTOE 405 458 488
Household, kTOE 1,464 1,442 1,472
CO2 emissions whole economy 15,414 12,714 12,773
31
Sorrell, S., J. Dimitropoulos and M. Sommerville (2009) Empirical estimates of the direct rebound effect:
a review, Energy Policy, 37, 1356-1371
32
Utley, J and L. Shorrock. Domestic Energy Fact File 2008, table 27, BRE
33
Combined with a 20% rebound, the potential energy saved is only 42%.
A Strategic Energy Scenario Planning Model for Northern Ireland
39
For the public sector (i.e., public administration, health and social work, and education)
we assume an increase in heating fuel efficiency leading to a decrease in heating fuel use
of five kTOE.
If we compare the results to the baseline we find that total emissions decrease slightly
(Table 5.15).
5.7 Alternative Policy Scenario # 4: Move away from private car commuting
In this scenario we assume that 10 per cent of the commuting distance travelled by
private cars in the baseline moves to a different mode of transport by 2020. Alternative
modes of commuting include public transport, cycling, walking and car sharing.
The effect of this scenario on emissions in the economy is minimal, as shown in Table
5.16. This is not surprising given that the average distance travelled by Northern Irish
commuters between 1999 and 2008 has been between 8 and 9 miles per trip (Northern
Ireland Travel Survey). Whereas commuting generally accounts for almost half of yearly
distance travelled by people in work, its share of average yearly distance travelled by all
Northern Irish residents is less than 20 per cent. The relatively small importance of
commuting in overall travel in Northern Ireland means that a move away from private car
commuting will have a minimal effect on economy-wide CO emissions.
Table 5.16 Energy used in transport, kTOE
Baseline 2020 2025
Transport
Oil (kTOE) 1,641 1,708
CO
2
emissions (thousand tonnes) whole economy 12,908 12,960
Commuting scenario
Transport
Oil 1,635 1,703
CO
2
emissions (thousand tonnes) whole economy 12,890 12,943
Transport emissions account for a significant proportion of total CO emissions in
Northern Ireland, but these results show that a policy aiming to reduce emissions from
transport would need to look at something other than emissions from commuting.
A Strategic Energy Scenario Planning Model for Northern Ireland
40
6 Conclusions
The project aimed to develop a model to project energy use in Northern Ireland and the
associated carbon dioxide emissions. As a necessary first step, a data set on energy use
and prices by fuel and sector was developed. The use of the model was demonstrated with
a baseline scenario and four alternative policy scenarios.
In undertaking this work many gaps in data for Northern Ireland have been highlighted.
Total energy use by fuel is known, but there is no single source of information. This
report gathers the necessary information. However, a one-off report is no substitute for a
regular publication by an official body.
Data on energy use by sector is incomplete, and the classification of sectors varies by
fuel. This report offers consistent data with a detailed sectoral breakdown, but most of the
numbers were imputed using data from the Republic of Ireland.
Because data for Northern Ireland are incomplete, it is not possible to estimate parameters
that describe the energy using behaviour of Northern Irish households and companies
such as price and income elasticities, and the rate of energy efficiency improvement. For
the purpose of this report, many of the parameters of the model have been drawn from
research for the UK or the Irish economies, and they may not be fully appropriate for
Northern Ireland.
Filling these data gaps in the future would allow the model to be improved in two ways.
First, the reliability of the base-line projections would be significantly improved through
the use of a fully consistent data set for Northern Ireland. Second, the availability of a
fully consistent data set for Northern Ireland would permit future research to estimate
directly the appropriate parameters for Northern Ireland, both at the behavioural and at
the technological level.
Despite all the shortcomings of the data, a credible picture emerges. Households are the
largest users of final energy, followed by transport, manufacturing, services, the public
sector, and agriculture. Liquid fuels are the bulk of final energy, followed by coal,
electricity, and gas. Carbon dioxide emissions primarily arise from power generation,
households, and transport. These are broadly in line with figures for the rest of the UK
and the Republic of Ireland.
The baseline scenario assumes economic growth of over 2 per cent per year. Final energy
use, however, grows by 0.5 per cent per year only. This is primarily because of
technological progress in energy efficiency. Coal and electricity grow faster than the
overall trend in energy use, while the other fuels grow more slowly.
The projected carbon dioxide emissions are volatile. This is because power generation is
a large source and electricity is sold into the all-island Single Electricity Market. Even if
the growth of electricity demand is smooth, supply and the associated emissions shift
freely north and south of the border.
Four policy scenarios were designed to illustrate the power of the model. First, biomass
was assumed to be co-fired with coal, and offshore wind expanded. Although the share of
renewables increases substantially, carbon dioxide emissions go up to because more coal
is burned and less electricity imported. Second, five additional towns were assumed to be
connected to the gas grid. Gas use goes up and oil use goes down as a result, and carbon
dioxide emissions fall. However, although the emissions fall substantially for the affected
households, the number of households affected is small and so is the impact on total
emissions. Fourth, a 10 per cent shift of commuters from car to public transport was
A Strategic Energy Scenario Planning Model for Northern Ireland
41
assumed. This reduces emissions. The effect is small, however, as commuting is only a
small part of total travel distance.
In general, our results have shown that the policy scenarios analysed would have a
minimal impact on CO emissions. In some of the scenarios the decline in CO emissions
is less than one per cent. It is important to bear in mind that, due to data constraints, these
scenarios fall short of a full cost benefit analysis and, as such, there are potential costs
and benefits associated with them that are not accounted for. For example, in the 40 per
cent renewables scenario, account is not taken of the additional cost on the system of
deploying offshore generation technologies. Furthermore, in the absence of micro data, it
is not possible to model how households would adapt their behavioural patterns in the
face of new policies.
The data, model and scenarios together provide useful information to policy makers. The
data identify the activities and sectors that matter most, while the model and scenarios
identify the activities and sectors where policy interventions are most effective. However,
it is important to keep in mind the limitations of the model, and that the scenarios
presented are illustrative.
A Strategic Energy Scenario Planning Model for Northern Ireland
42
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<http://www.cheapestoil.co.uk/>
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Diffney, S., Fitz Gerald, J., Lyons, S., Malaguzzi Valeri, L., 2009. Investment in
Electricity Infrastructure in a Small Isolated Market: the case of Ireland. Oxford Review
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A Strategic Energy Scenario Planning Model for Northern Ireland
44
Annex A: Terms of Reference
SPECIFICATION
STRATEGIC ENERGY SCENARIO PLANNING MODEL
FOR NORTHERN IRELAND
Purpose
The Strategic Investment Board Ltd (SIB) invites suitably qualified organisations or
individual(s) to tender for an assignment to develop a Strategic Energy Scenario Planning
Model for Northern Ireland.
About us
SIB is a small company wholly owned by the Office of the First Minister & Deputy First
Minister (OFMDFM) in Northern Ireland. SIB works at a strategic level across all
government departments and has a core remit to advise Ministers on the best strategy for
infrastructure development in the region. In delivering this role, SIB places an importance
on accessing and utilising high quality research and modelling that can robustly test
policy options using scenario development and evaluation, which in turn supports the
necessary debate and consensus building with multiple stakeholders. This work helps to
support Ministers in making critical decisions about optimal infrastructure investment
within available resources and other constraints.
To learn more about SIB, please see www.sibni.org. To learn more about the NI
Executives long term infrastructure development programme, please see
www.isni.gov.uk
As part of a wider programme of research, SIB now wishes to explore the potential
impact of strategic options to meet future energy needs on the critical infrastructure that
may be required to import/export, generate, store and distribute such energy, mindful
inter alia of legal, financial and operational/technical constraints. This work is supported
by a number of government departments with an interest in energy issues, including the
Department of Enterprise, Trade and Investment (DETI), which has the principal
responsibility for devolved energy matters in Northern Ireland.
Background
Clean, reliable and competitively priced energy is central to the future economic and
social development of Northern Ireland and in enhancing our environment. Without it,
achieving the Executive priority to grow the economy and increase prosperity will be
more difficult. At present, Northern Ireland is heavily dependent on imported fossil fuels,
however renewable power generation levels are increasing, mostly from the development
of on-shore wind generation, though there remain opportunities for other renewable
generation including biomass and tidal options. Debate has commenced involving
government officials, other key stakeholders and SIB to explore options, in light of
overarching strategic policy goals (more detailed indicators/targets can be supplied):
A Strategic Energy Scenario Planning Model for Northern Ireland
45
- Reliability of energy supply and lowering risks of interruption to supply;
- Affordability of energy to government, business and domestic users;
- Lowering harmful emissions (inc waste streams from other sectors); and
- The potential to create high value green collar jobs.
Figure 1 provides a schematic overview of the principal energy system interactions, the
policy drivers/objectives, and the external drivers at work.
Figure 1: Considerations in energy modelling
Coal, Gas, Oil
Other fossils
Wind, Hydro
Biomass
Wave
Nuclear
Transformation
technologies
Fuel Inputs Usage
World
markets
Technological
standards
Economic
cycle
Legal
standards
Collateral Waste
Emissions of
GHGs
Price of
energy
Security of
supply
Green
jobs
Light
Heat
Power
Transport
Industries
Domestic
Public sector
Policy
objectives
External
drivers
Waste
S
u
p
p
l
y
l
i
n
e
s
E
f
f
i
c
i
e
n
c
y
l
o
s
s
e
s
Emissions to
environment
Coal, Gas, Oil
Other fossils
Wind, Hydro
Biomass
Wave
Nuclear
Transformation
technologies
Fuel Inputs Usage
World
markets
Technological
standards
Economic
cycle
Legal
standards
Collateral Waste
Emissions of
GHGs
Price of
energy
Security of
supply
Green
jobs
Light
Heat
Power
Transport
Industries
Domestic
Public sector
Policy
objectives
External
drivers
Waste
S
u
p
p
l
y
l
i
n
e
s
E
f
f
i
c
i
e
n
c
y
l
o
s
s
e
s
Emissions to
environment
A Strategic Energy Scenario Planning Model for Northern Ireland
46
Two related challenges lie ahead for government;
- how to identify the optimal policy responses across Ministerial portfolios to
achieve the policy goals set out above (and in the Programme for Government)
including the need for inter-agency co-ordination and alignment and mindful of
the practical constraints involved?
- how to identify the infrastructure required to deliver this vision of the future,
given the current infrastructure in place and the timescales to procure new assets
(e.g. waste to energy plant, grid upgrades)?
A model to inform policy making
Responsibility for energy-related policies in Northern Ireland rests with a number of
government departments. Whilst the Department for Enterprise, Trade and Investment
(DETI) is responsible for major areas of energy policy, other government departments
and agencies play a role: in transport and regional development policy, in energy
efficiency and setting building standards, in water treatment systems that are major
energy users, in municipal and farm waste management policy, and in monitoring
performance against emissions targets. The Northern Ireland Authority for Utility
Regulation is responsible for the regulation of the natural gas, electricity, and water
industries in Northern Ireland.
A current obstacle to more effective inter-agency collaboration is the current lack of a
strategic energy scenario planning model. Without such a model, it is difficult to explore
the inter-dependencies between various departments policies and/or the opportunities to
achieve desired outcomes sooner or at lower costs by joining up and aligning plans, other
things equal, and/or the impact of changing targets and external factors (e.g. world oil
prices, technological innovation) on the optimal way forward.
Infrastructure implications of energy policy
Taking a long term, holistic view of energy is particularly important given the high cost
of adapting the infrastructure to accommodate policy changes. For example, electricity
grid strengthening to absorb much higher levels of renewable power generation, and
moving from the centralised electricity transmission network to a more decentralised
system that allows renewable sources to connect to the grid will require significant
investment. Equally, decisions to major on energy efficiency measures or adopt new
technologies such as SMART metering all have infrastructure investment implications.
Transport is also a key issue and an area where technological innovation may change the
fuel mix in due course, and could impact on electricity generation and grid requirements.
A further consideration is development of the existing natural gas networks to extend the
availability of natural gas to other areas of Northern Ireland, to offer security and
diversity of energy supply, and reduce harmful emissions by switching from oil use. The
challenge is to consider all these inter-relationships in order to make a more informed
decision of future infrastructure requirements in terms of what, when and who might
pay.
A Strategic Energy Scenario Planning Model for Northern Ireland
47
Study requirements
To ensure our advice to Ministers on future infrastructure priorities is based on robust
evidence, SIB now wishes to appoint technical consultants to develop a total energy
scenario planning model for Northern Ireland. The model will be used as a tool to
examine a variety of scenarios, including the impacts of price changes, energy/carbon
policy options, alternative fuel mixes, improved efficiency on energy expenditure and
thus on economic competitiveness and fuel poverty, improving security of energy supply;
and lowering GHG emissions.
The key requirements of the study are:
PART A: MODEL DEVELOPMENT
- to research, collect and collate the most recent data on energy supply (by fuel
type) and demand across the region (by economic sector) and system efficiency
(generation through to application) from variety of published and grey sources. To
make grounded assumptions to fill gaps in the data where required.
- to collate the most recent data on energy market dynamics including fuel price
trends, technology trends, elasticity of supply and demand, etc. To make grounded
assumptions to fill gaps in the data where required.
- to collate the most recent data on hard energy infrastructure in Northern Ireland
covering the utilities, government, industry and domestic sector (e.g. electricity
generation technology/capacity, electricity grid infrastructure and natural gas
infrastructure, industrial and domestic sector energy performance, building
standards, and levels of energy efficiency). This should be taken from published
sources and key stakeholder consultation and should not be interpreted as a
requirement to undertake extensive primary research/surveys. To make grounded
assumptions to fill gaps in the data where required.
- To review NI government policy documents in order to capture all relevant
policy targets. SIB can help to signpost the selected supplier to key
informants/sources. To review the international/UK policy space in relevant areas
to identify other objectives to include in the model. At a minimum these should
cover targets relating to the demand, supply, transformation/distribution of
energy, the efficiency of its end use and the opportunity to grow new high-value
industries in energy related fields.
- To build a dynamic interactive energy scenario planning model covering the
issues set out above (and in Figure 1). The model MUST be capable of
reconciling observed system dynamics at present, and have extensive functionality
to model system disturbances (point in time and time series) and inform optimal
ways to balance competing objectives. The model should include a more detailed
electricity sub-model, to allow for a fuller analysis of the introduction of
renewable energy sources for electricity production, implications for the electrical
transmission and distribution grids (including use of Smart technologies, and
changes in the transport fuel mix), and for options which will allow for storage of
electricity, as higher levels of renewable generation become established. It should
also encompasses the network links between Northern Ireland and Great Britain
and the Republic of Ireland and the trade in energy between these markets;
- The model should also include consideration of existing and potential natural gas
infrastructure and the wider gas supply chain including potential benefits from gas
A Strategic Energy Scenario Planning Model for Northern Ireland
48
storage in Northern Ireland. Also the impact of the Departments ongoing
considerations in relation to the possible extension of the natural gas network;
- The disturbances will include (but not necessarily limited to):
o the values of policy targets documented from the earlier stage, above;
o the values of material external factors (see Figure 1), including price
forecasts and targeted economic growth;
o the parameter values used in key relationships in the model; and
o the functional form of key relationships in the model.
- The model must be user-friendly, meaning that :
o a dashboard style interface is adopted to enable user defined inputs to be
identified easily and changed to enable running of multiple scenarios;
o scenario outputs are presented in a readily digestible manner, ideally
visually presented with tabular option;
o point in time and time series scenarios are facilitated;
o parameters and functional forms used in the model are easily identified
and updated (and references are included to justify values/forms selected)
o all code must be extensively commented to facilitate later understanding
and updating if needed.
- It is acceptable for the model to be written in a separate software package (e.g.
MatLab, ArcGIS) from the user input and post-processing stages (e.g. Excel). In
this case, the transfer of data to/from the platforms must be macro automated.
- Stress test the model using a variety of scenarios with a small group of industry
professionals identified by SIB. Make any necessary revisions to the model structure,
parameter values and/or usability based on the feedback.
In undertaking the above, the tenderer will consult with key stakeholders, including the
Utility Regulator, the electricity market players and system operators, and principal
government officials.
PART B: USING THE MODEL
On successful completion of the above, use of the model by the tenderer can commence.
- In consultation with the project steering group, develop four set piece scenarios using
the model to identify the impact of alternative futures. These scenarios may differ in
terms of:
o the scale of timing of government policy targets;
o the value of external drivers (e.g. growth, oil prices)
o the behaviour of suppliers and/or consumers (affecting variables and/or
parameters values).
- Present the energy scenarios at a seminar hosted by SIB. The key focus at this seminar
will be:
o the impact of the scenario in terms of economy, society and the environment in
Northern Ireland; and
o the investment in infrastructure relating to energy generation, transmission,
distribution and supply required to support such a future.
- SIBs particular remit concerns the latter aspect.
The model should permit SIB to run an unlimited number of scenarios, as required.
PART C: REPORTING
- Prepare user manual and technical appendix to describe fully the development, operation
and updating of the model and advise SIB staff on its use;
A Strategic Energy Scenario Planning Model for Northern Ireland
49
- Provide references to all publications used in the model to inform key parameter values
and/or functional relationships; and
- Present the work at one conference/seminar to be organised by SIB (the facility and
catering costs of hosting the seminar will be met by SIB).
Intellectual property
The successful tenderer will transfer to SIB all intellectual property rights to the deliverables from
this commission for SIBs sole use at its discretion. This includes copyright to the model structure
and all code developed.
Tenders may propose limitations on this clause (for example, if they intend to modify an
already existing model), but SIB will expect to acquire sole rights to any IP arising from
enhancements or localisations generated through this commission. The successful
tenderer should advise SIB on the use of the model.
Contract Management
The project will be managed by an SIB-led project steering group. The steering group
will comprise senior representatives from relevant government Departments and
agencies, and external experts as deemed appropriate. The successful tenderer will be
required to work closely with SIB and steering group members in qualifying the
robustness of the data, and developing the model and user interface. The successful
tenderer will submit regular updates on progress. The successful tenderer will also be
required to present to the SIB Board, and at a SIB-organised seminar.
If it is necessary to make any substitutions to the nominated team during the period of the
contract, this must be done by prior agreement with SIB.
Deliverables and Assignment Timeframe
The final projects outputs will be:
(a) an energy scenario planning model, developed in a software package agreed by SIB. The
model should have an accompanying user manual. The project team will advise SIB staff
on the operation of the model;
(b) an accompanying report that outlines the methodology, the construction and results for
alternative scenarios, and the key implications for infrastructure provision such as grid
strengthening, interconnection, etc.
(c) a technical appendix setting out list of variables, parameters and referenced material.
The project team will be required to submit interim drafts of the model and report.
Timescale
The appointed consultant should be available to commence work as soon as possible. It is
envisaged that the research will take approximately 16-20 weeks.
Additional work
A Strategic Energy Scenario Planning Model for Northern Ireland
50
Within the applicable procurement thresholds, within the scope of the requirement,
additional related services may be required as part of this contract.
In the event that additional related services are requested by the client, the successful
tenderer will be required to provide an indication of the baseline time and cost for the
completion of the work, and the individuals expected to perform it. This will require the
agreement of the client before any such work is undertaken.
The daily rates inputted in table A2 (Schedule 3.2) will be used for any additional work
commissioned.
A Strategic Energy Scenario Planning Model for Northern Ireland
51
Annex B: Model Description
Method of projecting fuel use and emissions outside the electricity sector
NIEMo predicts future energy use and emissions using a relatively simple model.
Starting from a historical base year level, sector-level predictions for a given fuel or
emission take into account changes in sector output, fuel prices/emission charges and
technological change, with each driver having an effect in proportion to a fixed
parameter. In this sub-section we describe how the model works. Note that electricity-
related fuel use and emissions are modelled separately; this is described in the next sub-
section of the report.
Base year fuel use and emission values for each sector and substance are drawn from the
environmental accounts. The base year for each sector-substance pair is set in the
Parameters workbook, and the base year for each pair may be set independently for every
other pair.
For each year after the base year, fuel use/emissions projections are estimated by
multiplying the previous years value by a growth factor. This factor is calculated by
adding three elements together: an output effect, a price effect and a technology effect.
The output effect is equal to the projected percentage change in real value added for the
sector multiplied by the output elasticity
34
for the relevant sector-substance pair. The
output elasticity measures how sensitive energy consumption in a sector is to increases in
output for that sector. For example, the industry-fuel oil parameter measures how much
fuel oil use in industry will increase if there is a one per cent increase in industrial output,
measured as real Gross Value Added (GVA). For the residential sector, the output
variable is average real disposable income per year. All variables are taken in real prices,
net of inflation.
The price effect is the projected percentage change in the relevant real fuel/emission price
faced by agents in the relevant sector multiplied by the price elasticity of demand for the
relevant sector-substance pair. The price elasticity of demand measures how sensitive
consumption is to changes in prices. Sectors and substances that are very sensitive to
price changes are said to have an elastic demand, measured by a coefficient that is smaller
than minus one.
35
In most cases energy demand is not very elastic to price changes, at
least in the short-term, having elasticities closer to zero.
Finally, the technology effect is the growth rate (positive or negative) for fuel use or
emissions, if output and prices are constant. This parameter is intended to capture the
average effect of a range of technological and demand-side trends. For example, over the
last half century the efficiency of motor vehicle engines has improved dramatically so
that for a car of a given power the energy used today is much less than it was a decade
ago. This rate of technical change is variable across time and across different types of
energy use. However, once technical improvements occur they are seldom forgotten so
that they would result in a trend reduction in energy consumption if economic activity
and prices are held fixed.
34
A given percentage change in a driver variable gives rise to a fixed percentage change in the outcome.
The ratio between these two percentages is termed a fixed elasticity.
35
Price elasticities of demand are generally negative.
A Strategic Energy Scenario Planning Model for Northern Ireland
52
More formally, we assume that each type of fuel use or emission (indexed by i) is
governed by the following equation
(B1)
t
it it it
Q AY P e
o | o
=
where Q is the quantity of fuel used, P is the price and t represents technological change.
The Greek letters are parameters.
What we are really interested in is the effect of changes of prices and economic activity.
We can represent change over time by including the lagged quantity, taking logs and
subtracting lagged quantity from current period quantity
(B2) ( ) ( ) ( )
1 1 1
ln ln ln ln ln ln ln ln 1
it it it it it it
Q Q A A Y Y P P t t o | o o
= + + +
Since the difference in the logs of two variables approximates the percentage difference
between them, we can represent this relationship as:
(B3)
it it it
Q Y P o | o = + +
where X is the percent change in X over the period t-1 to t.
Below we show a simple worked example to better illustrate the model.
Suppose the base year for coal demand from the non-metallic minerals sector is 2007 and
that the relevant parameters are given in Table B1 (made up for illustrative purposes). In
addition, we have a projection for the 2008 gross value added in the sector (1.2 million
compared to 1 million) and an expected change of the price of coal from 1/tonne to
1.1/tonne (in real terms).
Table B1. Example of coal use projection for one year
Data item / projection 2007 2008
Coal use (tonnes) 1,000
Value added () 1,000,000 1,200,000
Price of coal (/tonne) 1 1.1
Output elasticity 0.8
Price elasticity -0.5
Technological change -0.03
To project coal use in 2008, we then use:
(B4)
1, 200, 000 1, 000, 000 1.1 1.0
1, 080* 1 0.8* 0.5* 0.03 1, 080
1, 000, 000 1.0
| |
+ =
|
\ .
This would imply projected coal demand in 2008 of 1,080 tonnes.
In this illustration, the positive effect on fuel use of growing sector output more than
outweighs the negative effects of rising prices and falling emissions intensity in the
A Strategic Energy Scenario Planning Model for Northern Ireland
53
sector. In this example the output elasticity is positive, but relatively low. For every 10
per cent increase in output for the sector, we expect coal consumption in that sector to
increase only by 8 per cent. The price elasticity is negative, but also relatively low. For
every 10 per cent increase in the price of coal, there is a 5 per cent decrease in
consumption in this sector. Finally the time elasticity shows that over time technology is
the non-metallic minerals sector has improved, allowing production to use 3 per cent less
coal per year.
IDEM Irish Dispatch of Electricity Model
IDEM determines projections for energy use in electricity generation. It is a bottom up
model, in the sense that it starts from detailed information on the plants available on the
electricity system on the island of Ireland and in Great Britain
36
, determines the expected
fuel use by plant and aggregates them to define energy used in electricity generation in
each jurisdiction (Northern Ireland and the Republic of Ireland). The All-Island market
was established in November 2007. It is a wholesale market for electricity that is formed
by a compulsory pool system with capacity payments. Any generator with a capacity
greater than 10 MW has to bid their generation in a common pool and all buyers have to
buy from that common pool. Generators are remunerated by the system marginal cost,
determined by supply and demand in each half hour, and by capacity payments. Capacity
payments are designed to cover the capital costs of investing in new generating plants
This model stacks all the plants in the All-Island market according to their bid price in
each half hour of the year, to build a merit order curve, such as the one displayed in
Figure B1, which reflects installed capacity and fuel prices at the end of 2007.
37
The
merit order varies as fuel prices or the cost of carbon change and plants are commissioned
or decommissioned. If coal becomes more expensive there will be a coal price for which
coal plants will be dispatched after natural gas plants and will move to the right in Figure
1. Wind generation is assumed to have a bid price of 0, since wind itself is free. IDEM
takes electricity demand as given for every single year. Electricity demand varies over
time in response to changes in economic growth rates.
36
The level of detail used for GB is somewhat less as plants are grouped by fuel use and efficiency band.
37
At the end of 2007 the price of carbon in the EU Emissions Trading System was essentially 0.
A Strategic Energy Scenario Planning Model for Northern Ireland
54
Figure B1. Merit order dispatch curve for the island of Ireland, end of 2007
IDEM determines the least costly way to meet demand in each half hour. The most
expensive plant needed to meet demand sets the marginal price, which is paid out to all
generators producing electricity during that period. The marginal price essentially reflects
the cost of fuel and carbon needed to generate the most expensive MWh of electricity.
IDEM also calculates the level of capacity payments.
Electricity is provided to final consumers through a grid of regional transmission and
local distribution lines. As electricity flows through the lines there are electricity losses.
In practice this means that more electricity needs to be generated than the sum of
electricity used. In this model transmission and distribution losses are set at 8.3 per cent
of total generation.
Ireland is interconnected to Great Britain by an existing electricity cable between
Northern Ireland and Scotland. A second cable is in its planning phase and will run
between the Republic of Ireland and Wales. In this study we assume that there will be a
third interconnector in place by 2020, bringing the total interconnection between Ireland
and Great Britain to 1400MW. Without further interconnection wind generation would
have to be curtailed in order to allow base-load thermal plants to run and maintain a
reliable electricity system (Diffney et al., 2009).
38
In order to determine the price of
electricity at each node of the interconnector the model also calculates a system marginal
price for Great Britain, assuming that the market in Great Britain is also set up as a
mandatory pool market. The dispatch model for Great Britain is similar to the one for
38
Diffney, S., J. Fitz Gerald, S. Lyons and L. Malaguzzi Valeri (2009) Investment in electricity
infrastructure in a small isolated market: the case of Ireland, Oxford Review of Economic Policy, vol 25(3),
469-487.
0 1000 2000 3000 4000 5000 6000 7000 8000
0
50
100
150
200
250
Capacity (MW)
C
o
s
t
(
/
M
W
h
)
renewables
peak
mid-merit gas
peat
baseload gas
coal
A Strategic Energy Scenario Planning Model for Northern Ireland
55
Ireland, albeit less detailed. Generating plants that use the same type of fuel (e.g. coal or
natural gas) are aggregated into a few large plants.
The model takes into account key features of the electricity system in Ireland. It gives
details of all the plants generating electricity, their size, the type of fuel they use, their
yearly availability (accounting for typical maintenance schedules) and how efficient they
are at converting fuel into electricity. The model abstracts from some more detailed
engineering constraints, such as the time needed (and the costs incurred) to turn a power
plant on or off and to increase or decrease output. IDEM assumes that there are no
transmission constraints within Ireland, which yields a single wholesale price of
electricity within the jurisdiction. (In practise, until the second North-South
interconnector is completed, there are substantial constraints and these are taken account
of as shown below in the Baseline Results.)
Fuel use and electricity prices are aggregated to give yearly fuel use, yearly power
generation by fuel and yearly electricity prices. The price of electricity then affects
demand for electricity in the economy.
Private Car Stock Model
Prevalence of Car Ownership
Countries where average income is growing tend to have a growing car ownership rate.
At some point car ownership rates are bound to stop increasing. This point is defined the
saturation point. At the saturation point, changes in the total car stock are directly
proportional to the changes in the population or its demographic components. In this
model we assume that car ownership saturation is reached at 0.8 cars per adult (where
adults are defined as residents between the ages of 15 and 64), the existing level in
Germany.
39
Car ownership also depends on the number of adults and on the level of
disposable income in the economy.
Taking all these variables into account allows the model to project the stock of private
cars out to 2025. The specific equation used for this is as follows
(B5)
0.8
ln
/ -1
t
t t t
Y
C P P
o | A = +
where Y is the level of disposable income, C is the number of cars and P is the population
between 15 and 64. The parameters o and | are taken from similar estimates done for the
Republic of Ireland (Hennessy and Tol, 2010).
Type of Car
Once the future level of car ownership is defined, we estimate the share of the total stock
by engine size. The engine size of all registered cars in Northern Ireland is documented in
DECC (complete reference). We disaggregate all cars into 9 engine size categories (and
two fuels: petrol and diesel). We then use the income elasticity of demand for each engine
category estimated for the Republic of Ireland in Hennessy and Tol (2010). These income
elasticities, together with information on future disposable income levels (which are
39
Germany has a high rate of car ownership and has been a high-income country for several decades.
A Strategic Energy Scenario Planning Model for Northern Ireland
56
currently provided exogenously by Oxford Economics) are used to project the number of
cars per engine size.
Stock Demographics
The car demographic model distinguishes 9 engine sizes and 25 age classes. The dynamic
equations are
(B6a)
f s t f s t
S C
, , 1 , , , 1 ,
=
(B6b)
25 ,.... 3 , 2 ) 1 (
, , 1 , 1 , , ,
= =
a C C
f s a t a f s a t
where C
t,a,s,f
is the stock of private cars in year t, of age a, of engine size s and of fuel f; S
is the sales, and describes the scrappage rate.
The probability of scrapping a car is constant over time for every car of age a,
independent of engine size and fuel. Cars are assumed to be scrapped at the end of 25
years.
Distance Model
The National Travel Survey (DRDNI, 2008) provides information on average distance
travelled by type of car. For the distance driven per year, we follow Hayashi et al.
(2001), accounting for the impact of change in the composition of the car stock.
Specifically, distance D
t
is given by:
(B7)
|
|
.
|
\
|
|
|
.
|
\
|
+ =
+
+
t
t
t i t
P
P
D
1
, 1
1 1 c
where
i,t
is the price elasticity of distance travelled for engine size i in time period t and
P
t
is the price. The elasticities are similar to those reported in Hayashi et al. (2001).
40
In
theory, this elasticity should be lower for higher engine sizes as the higher incomes
associated with larger cars make the owners more inelastic in the consumption patterns.
Conversely, the elasticity estimates are higher for small cars. This is indeed the case with
elasticities on the 2 largest engine sizes not being statistically different from zero. We
calibrated Equation (B7) against data on distance travelled from the years 2000-2008.
Emissions
To convert distance travelled to emissions, we need to compute how many litres of each
fuel are used. As we have approximated the composition of the car stock and the distance
travelled, all we need is the fuel efficiency for each representative car.
No such data exists for Northern Ireland, so we use the fuel efficiency estimates
calculated by SEAI (Howley et al., 2007) for the Republic of Ireland. Fuel efficiency has
historically increased over time (for each engine size), so we extrapolate the trend out to
40
Hayashi (2007) reports price elasticity estimates of -0.23. This is the value for the entire stock and is not
disaggregated by engine size. It is consistent with other short-run elasticity estimates like Goodwin et al.
(2004) who estimates a mean price elasticity of -0.25.
A Strategic Energy Scenario Planning Model for Northern Ireland
57
2025. This, combined with our earlier data, gives a fuel efficiency estimate of each car by
its engine size, age and fuel type. We also assume that there is no depreciation of cars in
terms of fuel efficiency over their lifetime and that any significant effects of age on
efficiency will result in scrappage. One litre of diesel fuel has greater emissions than one
litre of its petrol substitute. The conversion factors are as in Howley et al. (2007). Note
that diesel cars consume less per kilometre, so emissions per kilometre travelled are lower
for diesel cars (compared to petrol cars of equivalent size).
Commuting patterns
The National Travel Survey provides information on the average distance travelled and
how much of that is spent commuting for residents of Northern Ireland. In recent years
commuting has accounted for about 25 per cent of total distance travelled over the year.
The survey also gives details on the average distance travelled by mode of transport.
Using this information and the car stock model described above, we can estimate the
decrease in energy use that would arise with a shift in mode of commuting from private
car to public transport, cycling or car sharing.
Input-Output Model
An input-output model is used to attribute the emissions that arise during production to
final demand and its constituents. Goods and services are produced either for
consumption or for use in further production. Final demand is split into its six standard
components: household consumption, consumption by non-profit institutions servicing
households, government consumption, consumption for the build-up of inventories,
consumption for investment and export.
An input-output table is needed for every year. There is no input-output table or social
accounting matrix available for Northern Ireland. Therefore, we constructed one using
data from Northern Ireland where available, and from the Republic of Ireland and the
United Kingdom where Northern Ireland data was unavailable.
Specifically, the following assumptions were made for final demand.
- Relative household consumption per sector in Northern Ireland was set equal to
relative consumption in the United Kingdom. That is, we implicitly assumed that
consumer prices are uniform in the UK across sectors and regions, and that
income elasticities are unity.
- Sectoral consumption by governments and charities in Northern Ireland was also
taken from the United Kingdom, and scaled with per capita income.
- The ratio of capital formation and changes in inventories over final consumption
in Northern Ireland was set equal to the ratio in the United Kingdom.
- Exports per sector are as observed.
- The ratio of intermediate demand over final consumption in Northern Ireland was
set equal to the ratio in the United Kingdom.
The following assumptions were made for production.
- Total inputs equal total outputs.
A Strategic Energy Scenario Planning Model for Northern Ireland
58
- Total value added per sector is as observed
- Total consumption at producers prices is the difference between the previous two
items.
- Imports per sectors are as observed.
- The ratio of intermediate consumption and product taxes less subsidies to total
consumption minus imports was set equal to the ratio in the United Kingdom.
The above procedure does not lead to a balanced social accounting matrix. Therefore,
multiplied intermediate demand by =1.55 and government consumption, charitable
consumption, investment, and inventories by 1/ . This factor ensures that total
intermediate demand equals total intermediate consumption.
We used the input-output table of the Republic of Ireland as the basis and sectoral
intermediate demand and consumption as described above as inputs into the RAS
method, and so derived an input-output table for Northern Ireland.
We then use the input-output model to allocate energy use and emissions from production
to the components of final demand, using
(B8)
E R L Y
m d m n n n n d
=
where E is the matrix of m emissions by d components of final demand; R is the matrix of
m emission intensities for n productive sectors; L is the Leontief inverse of an n by n
input-output model; and Y is the matrix of final demand for n goods and services split into
d components.
A Strategic Energy Scenario Planning Model for Northern Ireland
59
Annex C: User Guide
NIEMo User Guide
1. Starting NIEMo
There are three ways of accessing the model.
a. The first is through Matlab. Here one types RunNIEMo at the Matlab prompt
line.
b. The second is to open the file NIEMo.xls. From here one can click on the Run
NIEMo button, and activate the model.
c. The final method is to double click on the compiled version: NIEMo.exe.
In all three cases, starting the model will bring up a box with drop-down menus as
represented in Figure C1.
Figure C1. Drop-down menu in NIEMo
A Strategic Energy Scenario Planning Model for Northern Ireland
60
This menu allows the user to select the appropriate set of input files for the preferred
scenario and to create a name and brief description for the results file that will be created.
The inputs required to run the model are divided into several files. If you wish to change
inputs to create a new scenario, this can be done by changing the relevant parameters or
data inputs and saving them with new file names. These new files should then be
selected when running the relevant scenario.
The Parameters file includes estimates for all the behavioural parameters (price
elasticity of demand, output elasticity of demand, time elasticity).
ParametersNoTech.xlsx assumes that there are no changes in technology over time.
Parameters1.xlsx assumes that there are sector- and fuel-specific changes in technology,
in line with the changes experienced in the Republic of Ireland. This file could be
changed over time if Northern Ireland specific estimates of behavioural parameters
become available. There is also a file of technical assumptions governing the electricity
market module: J:/NIEMo/IDEM/ Datasheets/NIEMo Electricity inputs with
scenarios.xls.
The Environmental Accounts file (default EnvAccNI1.xls) is the file where the historic
data is stored. Some of the data in this file is estimated due to the absence of detailed data
for Northern Ireland. As new data becomes available, this file should be updated. In
addition this is the file where new annual data (both on Gross Value Added and on energy
consumption) should be added as it becomes available.
The Economic Output Projections file (OutputProjections1.xls) includes assumptions
on macroeconomic projections. At the moment these assumptions come from Oxford
Economics. As the projections change, this file needs to be updated.
The Price Projections file (PriceProjections1.xls) is the file that contains the prices of the
fuels and their expected changes over time. As more recent information on historic prices,
taxes and when more Northern Ireland data becomes available, this file should be
updated.
The Emission Adjustments file (EmissionsAdjustments1.xls) allows the user to include
exogenous shocks to emissions. When there are no shocks this is simply a file containing
all 1s (as it is currently). If there is a shock, for example the addition of scrubbers to a
coal-fired plant, the appropriate emissions parameter (sulphur in electricity generation in
this case) should be adjusted.
The Car Model Parameters file (CarsNI.xls) is the file that contains the parameters for
the Car Stock model.
The Input-Output Table file (InputOutput1.xls) is the file that contains the input-output
table.
The Output Sheet sets the file in which the results will be saved. This can be changed to
any file name. If the file already exists it will be overwritten. If the file does not exist, it
will be created.
The user can fill in the Scenario Description line to describe the scenario being run (for
example Baseline with no technological change).
A summary of all the files used is then printed out in the Definitions tab of the Results
file.
A Strategic Energy Scenario Planning Model for Northern Ireland
61
Running scenarios
Having selected the appropriate set of input files, named the results file and added a
description if desired, the model is run by clicking the Ok button. Progress through the
model will be displayed in the dialog box until it is completed. Once the model has been
run, the results may be viewed in the Results folder by opening the file that was named as
the Output sheet when the model was run.
I nstalling the compiled version of the model
To install the compiled version on a PC, run the file NIEMo_pkg.exe.
Troubleshooting
If the Matlab program is interrupted (intentional break of the program or error while
running) it is very likely that the interruption will occur at a time when it is accessing an
Excel file. In that case the Excel file might be constrained open by the program. To close
the Excel file in this case the user should go to Task Manager (press CTRL-ALT-
DELETE to access the Task Manager) and delete all instances of excel.exe in the
Processes tab of Task Manager.