Exporting Electrons, Ireland and Cleantech

This article first appeared in The Green Economy: An Irish Director Report, published to coincide with The Green Economy briefing on May 31, 2011
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As divisional manager of clean technologies for IDA Ireland, George Bennett sees a bright future for the sector both from an indigenous and FDI perspective, but there are processes that must be accelerated if we are to catch our competitors, he tells Ann O’Dea

As the UK, the US, China and the world look to become leaders in the clean technology space, can Ireland compete on the global stage and become world players?

“Absolutely we can,” says George Bennett, who heads up the clean technology division at IDA Ireland. “And we really are starting to show some impact in that. At the IDA, we see it as our becoming a nation that will be exporting electrons. Now that’s a pretty grand statement but it’s quite real and, to my mind, very likely and achievable in the near future.”

In the past, companies have come to Ireland to create a manufacturing or services base, and then export the service electronically, or the product by sea or air,” he continues. “In the future we believe we’re going to see the export of electrons. Ireland has the most significant wind availability on the globe. When people look at global wind maps, they say Ireland is up there in terms of speed and consistency, and that has already attracted onshore wind, and some offshore.

“The IDA knows, from having discussions with the industry associations here and with various stakeholders, that Ireland will install about 5,000 megawatts of wind capacity over the period 2011 to about 2020. We currently have about 1,500 megawatts installed, virtually all onshore, so there will be a quantum increase in that. Indeed, we believe that that could go to as high as 15,000 megawatts over a longer period.

“So this is mega-capacity, way more than Ireland would need. But it is what our European partners need. We already have one major interconnector, the second one will be coming on stream in the middle of next year, about 500 megawatts connecting Ireland and the UK. This is starting to become a reality.”

While not yet finalised, there are plans for a further two interconnectors, Bennett points out. “This will form part of a northern European electricity highway, effectively a northern European supergrid under the seas, connecting ourselves and the UK, the Nordics and the northern European countries. 

“From an Irish perspective, we have what everybody wants, and for the first time ever we have a significant natural resource advantage. We’ve always been disadvantaged location-wise and yet we’ve performed superbly in the world. Here we have a huge advantage and now, let’s go leverage that. We’re doing it somewhat, but this can be substantially increased.”

Bennett says that the IDA’s vision is to attract in significant deployers of wind farms onshore, and from 2014 onwards offshore too. “They will produce large quantities of electricity from the sustainable resources, but going into our near neighbours, the UK, and then on into continental Europe.”

The UK poses a major opportunity, he believes. “Coincidentally and fortunately, we have a very significant market need right beside us because the UK has a significant energy deficit problem that’s about 10–12 years wide. Their legacy nuclear plants are in decline, they have many older fossil fuel plants. Plus they cannot build large quantities of onshore wind because of population density and conservation areas. As a result the UK has had to jump very aggressively to offshore wind. That’s going well for them in terms of deployment but these projects are long-term, and because of the huge cost, some are unlikely to be built in the current economic environment. 

Not alone is there a need for energy in the UK, but for renewable energy. “So we have a tremendous market, and an interconnector to Wales which will be opened the middle of next year,” says Bennett. “In the medium to long-term there are fantastic opportunities just in the wind industry itself. The concept of exporting electrons is being discussed by everybody from the industry, and these views have been expressed to the current Government, which is very positive towards that view of the world.”

With all this going for us, why are we not further advanced? “We’re coming from behind,” he replies. “Competitors like the UK, in terms of joined-up thinking for large wind deployment, are much more advanced than Ireland.

“What is needed here is a kind of one-stop shop, cliché and all as it is, which makes it easy for the complex permitting, planning permission and grid connections to be co-ordinated in a much more meaningful way.” 

While most of the government departments and agencies associated with this are conscious of that, progress needs to be significantly accelerated, Bennett maintains.

“When the IDA talks to potential investors in this space they talk about the UK. The UK has a brand advantage because it’s moved into the space more quickly and right now is attracting quite a large amount of attention. I think some of that will balance out in the near term as Ireland comes up – plus the UK may be not able to implement as quickly as it had indicated.”

So what’s in it for Ireland? “Well, one is very significant capital investment in Ireland for these large wind farms. We do not think it will be primarily Irish investors. Some will be from state entities such as ESB, Bord Gáis and Bord na Móna, but there will be substantial external investment in deployment.

“Then there will be substantial external investment in the deployment of wind turbines themselves and the long-term maintenance contracts associated with those, and long-term jobs are the legacy of that.

According to Bennett, the IDA clean tech team has been aggressively pursuing industry players around the world in this space. When we speak he has just returned from China, while other members of his team have been in India. “We are talking to all of the large wind turbine manufacturers in the world. We are in discussions with all existing suppliers in Asia, Europe and North America.”

Smart power

Beyond wind, there are other potential wins for Ireland, Bennett says. “We believe you have to look at things which have a resonance with our own national competencies. One of the big areas would be what I call smart power. That’s everything that involves smart grids, smart distribution and smart consumption. That whole space is evolving very rapidly, and it builds on Ireland’s substantial ICT competencies.

“All of that space is actually underpinned by communication, software, customer relationship management, and we have companies here who are involved in that – like IBM, Microsoft, Google in terms of customer interface, PayPal for payments, Vodafone on the telecoms side of it, and social medias such as Facebook and LinkedIn.

“Those players are all going to be part of this, because the consumer will take, in the very near future, a device such as an app on their mobile phones or small control panels inside their door, where they will make buy decisions. Companies such as those I’ve mentioned, and perhaps others we don’t yet know of, will become intermediaries, and they will offer power at any given time from possibly two or three suppliers at particular costs. It will be a bit like buying a mobile phone package.

“All of the PowerGen companies we’ve spoken to understand that,” says Bennett. “There’s going to be a morphing together of PowerGen companies, grid companies and right down to the customer side of it. So we are very active in that space, talking to all of the companies who I mentioned there, but also to a range of new smart grid companies coming out of, particularly, the west coast of the US. Some of those companies are already engaged in small trials in Ireland, so we see that as a whole new emerging space.”

According to Bennett, another space the IDA is very active in is that of demand and supply management. “This is about companies which act as services intermediaries between the large consumers – hospitals, universities, industrial sites – and the PowerGen companies. They take ownership effectively of the flow of energy across the grid.

“A number of leading companies in the US are very active in that space, and IDA is very close to a number of those organisations, so all of that smart power space is one that we believe represents great opportunities for us, because it sits with our existing national competencies.  In contrast, we’re not very active with the solar companies because self-evidently Ireland is not exactly a solar deployment zone. It’s about aligning Ireland’s national ability now to where we think the business is going to come from.”

R&D infrastructure

A key strength will be our national infrastructure of research and development in this area, says Bennett. “Just look at what’s going on in the Marine Institute in Galway and the Maritime group in Ringaskiddy in Cork. Then you’ve got some outstanding research groups such as the newly formed IERC (International Energy Research Centre) in Cork and the ERC with UCD. They’re part of the thing that attracts companies.

“So, for example, you have last year’s announcement by UTC (United Technologies Corporation) to have only its third research site in the world in the energy space in Cork. There’s going to be 40 people there, an investment by UTC of about €20m, and a major commitment by them. They’ve one research centre in their headquarters in Connecticut, one in China and now one in Cork!”

These are all positive signs, Bennett stresses. “I think the challenge for us as a nation is to recognise some delivery in clean tech will be immediate, some will be more medium term, and then there be more longer term investments.”

As for the challenges faced by the IDA, while Bennet concedes that there has been reputational damage to Ireland, he does not believe this is as serious as some might think.

“I think the green brand stands very much to us still. Yes, there has been reputational damage in the marketplace, but when you get right down to a company level, it is actually not as significant as you might think,” he says.

“The large corporations are able to see through the current repuational damage because the underlying principles which drive FDI remain really strong. And the truth of it is the decrease in the cost of doing business is benefiting the FDI community – we have seen labour costs down by 20pc, the cost of property down by up to 40pc, and the overall cost of doing business in Ireland continues to fall, so therefore our competitiveness increases significantly.”

As for the future, Bennett is extremely positive. “I’m very optimistic for the future, because for the first time ever Ireland has some strategic advantages both in wind and wave that will never change. With the underlying technology competency which we have proven in the past with the world tech companies here, and with the skill sets which we’ve demonstrated, I’m very optimistic. Add to that a huge market right beside us, and an interconnector, and I think we tick all the boxes.

“The impatience of the IDA and others like us will be to accelerate that, to just have a better planning system, a better grid connection system, a smoother process to catch up with some of our competitors. Once we do that – which I believe we will do – I think there are many thousands of jobs to be generated in this sector from both the FDI investors and on the indigenous side.”