A Sustainable Energy Future Structuring the Energy Market Douglas McIldoon Chairman NIAER Chief Executive OFREG

Shaping the Debate  The liberalisers  The environmentalists  The traditionalists

The Liberalisers  Competitive markets  Driving down costs  A competitive economy  The environment? Not our problem

The Environmentalists  Reducing C0 2 is paramount  Regulation is how to do it

Environmentalists and Liberalisers set the agenda  Different languages  Different value systems  Different policy objectives

Today: Policy Confusion  Tomorrow: Is policy coherence possible?

Can Markets deliver sustainability ?  Market design  Market failure  Pre-market design intervention

Convergence of Liberalisation and Environmentalism  UK White Paper  EU Emissions Trading Region  Renewable Obligation Will they work in a small market?

Let’s look at NI

Change Drivers in Northern Ireland  New technology  Regulation  Lowering the cost of capital  Competition

Northern Ireland C0 2 Emissions  A story with: A Beginning A Middle An End

Environmental Change Drivers

Delivering Sustainability  Technology: CCGTs Domestic CHP Energy efficient appliances Time of day metering Renewables

Delivering Sustainability  Incentive Regulation: NIE’s T&D price control NIE’s Supply price control

Delivering Sustainability  Cost of Capital: Measures reducing cost of new investment

Delivering Sustainability  Competition: Emissions Trading Renewable Certificates

Conclusion  Environmental objectives are determined outside the market  Should be delivered at least cost to customers  Incentive Regulation and New Technology have hitherto delivered more than competition in Northern Ireland