A Strategic Energy Scenario Planning For Northern Ireland

A Strategic Energy Scenario Planning
Model for Northern Ireland

Final Report for the Strategic Investment Board,
Northern Ireland

By Conor Devitt, John Fitz Gerald, Hugh Hennessy, Marie Hyland,
Sen Lyons, Laura Malaguzzi Valeri, Joanne McLaughlin and Richard
S.J. Tol
1

4 November 2011

Economic and Social Research Institute
Whitaker Square
Sir John Rogersons Quay
Dublin 2
Tel.: (01) 863 2000
Fax: (01) 863 2100
Email: Richard.Tol@esri.ie

1
The authors are grateful to Eimear Leahy and Liam Murphy for research assistance, to Johann Gallagher,
Edgar Morgenroth and Martin Spollen for excellent discussions, and to the advisory group for useful
advice.
i
TABLE OF CONTENTS

Executive Summary ........................................................................................................... iii
1 Introduction .................................................................................................................. 4
1.1 Aims and goals ..................................................................................................... 4
1.2 Background .......................................................................................................... 4
1.3 Approach .............................................................................................................. 5
1.4 Structure of the report .......................................................................................... 5
2 Methodology ................................................................................................................ 6
2.1 Introduction .......................................................................................................... 6
2.2 IDEM Irish Dispatch of Electricity Model ....................................................... 7
2.3 Private Car Stock Model ...................................................................................... 7
2.4 Other sectors ........................................................................................................ 7
2.5 Validation ............................................................................................................. 8
3 Data Sources ................................................................................................................ 9
3.1 Energy Use Data ................................................................................................ 12
3.2 Fuel Price Data ................................................................................................... 15
3.3 Greenhouse gas emissions ................................................................................. 17
3.4 Behavioural Parameters ..................................................................................... 17
3.5 Electricity Generation Data................................................................................ 18
3.6 Buildings Data ................................................................................................... 18
3.7 Transport Data ................................................................................................... 19
3.8 Macroeconomic Variables ................................................................................. 20
3.9 Projections Data ................................................................................................. 21
4 Energy Use in Northern Ireland ................................................................................. 23
4.1 Introduction ........................................................................................................ 23
4.2 Energy use and carbon dioxide emissions in Northern Ireland ......................... 23
5 Baseline Forecasts and Alternative Policy Scenarios ................................................ 27
5.1 Introduction ........................................................................................................ 27
5.2 Baseline assumptions ......................................................................................... 28
5.3 Baseline projections to 2025 .............................................................................. 31
5.4 Alternative Policy Scenario # 1: 40% Renewables target ................................. 35
5.5 Alternative Policy Scenario # 2: Rollout of new natural gas pipeline ............... 37
5.6 Alternative Policy Scenario # 3: Increased building insulation ......................... 38
5.7 Alternative Policy Scenario # 4: Move away from private car commuting ...... 39
6 Conclusions ................................................................................................................ 40
References .......................................................................................................................... 42
Annex A: Terms of Reference ........................................................................................... 44
Annex B: Model Description ............................................................................................. 51
Method of projecting fuel use and emissions outside the electricity sector .................. 51
IDEM Irish Dispatch of Electricity Model ................................................................. 53
Private Car Stock Model ................................................................................................ 55
Input-Output Model ....................................................................................................... 57
ii
NIEMo User Guide ........................................................................................................ 59
iii
Executive Summary
This report describes a model of the Northern Ireland energy system that has been
developed by the Economic and Social Research Institute for the Strategic Investment
Board Limited, Northern Ireland. The model is designed for a number of purposes:
- It can be used to project future energy demand and carbon dioxide emissions
arising from energy use;
- It can be used to simulate the likely effects of different policy changes on energy
demand and emissions of carbon dioxide; and
- It can be used as a research tool to develop a better understanding of the drivers of
energy use and greenhouse gas emissions in Northern Ireland.
The Report describes the wide range of data sources used in developing the model. It also
highlights gaps in data availability for Northern Ireland, gaps which have had to be filled
using imputation with relevant data from the United Kingdom, from Great Britain or from
the Republic of Ireland.
The Report describes the resulting model, referred to as NIEMo. The model is made up
of a number of sub-modules. The core model relates economic activity to energy use and
emissions. Separate sub-models handle private car use and the resulting fuel use; and
energy use in the electricity sector. The parameters in the model have, where possible,
been estimated separately for Northern Ireland. Where sufficient data were not available,
appropriate parameters have been drawn from other published research for the UK or
Ireland.
To test the model and show its relevance, it has been applied to energy use projections for
Northern Ireland. The model projects energy use and emissions of carbon dioxide (a key
greenhouse gas) up to 2025. This illustrative baseline is then used to examine the
possible effects of a series of hypothetical policy changes. These policy changes
show how such simulations can be undertaken by the model. They also test that the model
produces realistic results when subjected to such changes in inputs. This model should
provide a useful tool for policy-makers in Northern Ireland.
A separate manual is available describing how the model software is used.

A Strategic Energy Scenario Planning Model for Northern Ireland
4
1 Introduction
The key objective of this project was to develop a model for Northern Ireland relating
relevant economic developments to energy use and carbon dioxide (CO
2
) emissions. The
Terms of Reference are reproduced in Annex A. When looking forward, and combined
with realistic projections for future economic trends, such a tool could help focus the
attention of policy makers on the likely effects of energy policy changes.

1.1 Aims and goals
The goal of this study is to set up an energy model for Northern Ireland. This will allow
policy makers to gauge the likely effect of policy changes on energy demand, carbon
dioxide emissions and the price of electricity. In helping to understand the factors driving
energy demand, it can allow policy makers to better target their instruments and to assess
the needs for additional infrastructure.

1.2 Background
The policy issues facing Northern Ireland in the field of energy fall into three interrelated
areas: as a consequence of the very limited domestic production of fossil fuels on this
island, security of supply issues loom large. Second, the imperative of climate change
policy is a key driver of energy policy. Finally, policy makers will want to ensure that
whatever solution is arrived at to supply Northern Irelands energy needs in the future
minimises the likely future cost to the economy. Current policies aimed at tackling green
house gas emissions in Northern Ireland include the Carbon Reduction Commitment
Energy Efficiency Scheme
2
(known as the CRC scheme); this scheme, which is part of a
UK wide scheme, aims to reduce emissions of carbon dioxide and improve energy
efficiency in large public and private organisations. Other climate projects include the
Strategic Environmental Assessment
3
being undertaken by the Department of Enterprise,
Trade and Investment to understand the impact of offshore wind, wave and tidal energy
on Northern Irelands environment. A third example of climate policy is the Northern
Ireland Renewables Obligation (NIRO)
4
the aim of which is to encourage electricity
generation from renewable sources. A final example is the Northern Ireland Greenhouse
Gas Emissions Reduction Action Plan 2011.
5

A model can provide information on the impact of potential changes in the general
economic environment (for example, higher fuel prices). Northern Ireland, like the rest of
the island, does not have significant indigenous energy sources. Natural gas is imported
through the pipelines connecting Northern Ireland to Scotland. Coal and oil are imported
by ship. Electricity is generated primarily by gas- and coal-fired power plants, although
wind generation is growing in importance. Northern Ireland and the Republic of Ireland
jointly form a Single Electricity Market. A model of energy use can be instrumental in

2
http://www.doeni.gov.uk/index/protect_the_environment/climate_change/crc.htm
3
http://www.offshorenergyni.co.uk/SEAStatement.html
4
http://www.detini.gov.uk/deti-energy-index.htm
5
More information can be found at:
http://www.doeni.gov.uk/northern_ireland_action_plan_on_greenhouse_gas_emissions_reductions.pdf
5
understanding the potential cost of disruption of these supplies and determining the most
advantageous way to provide for energy security.
The model also facilitates the analysis of information on economic behaviour in Northern
Ireland in the sphere of energy. For example, the behaviour of firms in the electricity
generating sector in the face of changing prices will be crucial in determining the
electricity price that consumers in Northern Ireland face in the future, the fuel used in
generating that electricity and, as a result, the greenhouse gas emissions attributable to
that sector in Northern Ireland.
Where possible, the behaviour of households and firms is estimated from information on
past behaviour in Northern Ireland. However, the data requirements for such estimation
tend to be demanding. Initially, data restrictions require the model to be calibrated using
behavioural parameters drawn from Irish and UK research. Such behavioural responses
need to be captured in any well-defined modelling framework. In the future such
parameters could be replaced with local estimates as new and better data become
available.

1.3 Approach
The project was split into three conceptual phases. In phase 1, data were collected to
calibrate the model. In phase 2, a bespoke model, NIEMo, was developed for energy
demand by fuel and by sector for everything but electricity; for electricity a pre-existing
model, IDEM
6
, was used. Because there is a single electricity model on the island of
Ireland, IDEM covers power generation and electricity demand north and south of the
border. The model also includes a module to compute greenhouse gas emissions. In phase
3, the model was used to develop a baseline scenario and to analyse various policy
scenarios.

1.4 Structure of the report
This report is structured as follows. Chapter 2 presents the methodology. Chapter 3 gives
an overview of the data that are available and the data that are needed for the project, it
also points out where there are gaps in the data. Chapter 4 gives an overview of current
patterns of energy use and CO emissions in Northern Ireland. To test the model and to
illustrate how it can be used as a tool for policy making, in chapter 5 we provide baseline
projections for energy use and carbon emissions out to 2025, we also analyse in detail
four illustrative policy scenarios. The scenarios chosen are not directly designed to
contribute to current policy-making but rather to illustrate how the model can be used in
the future as part of the policy-making process in Northern Ireland. Chapter 6 concludes.
Annex A reproduces the terms of reference, Annex B gives the details of the model, and
finally, Annex C has a user guide which shows how to input the data, how to programme
different scenarios, how to control the model and how the output is produced from the
model.

6
For more details on the IDEM, the Irish Dispatch Electricity Model, see Diffney et al (2009)
6
2 Methodology
2.1 Introduction
The key objective of this project was to develop a model relating relevant economic
developments to energy use and CO
2
emissions. When looking forward, and combined
with realistic projections for future economic trends, such a tool could help focus the
attention of policy makers on the likely effects of energy policy changes.
The Northern Ireland Energy Model (NIEMo), implemented in MATLAB, is based on
historic information on energy use in Northern Ireland. Data are input and results are
presented in MS Excel format. The model is built so that energy use can be projected into
the future on a sectoral level. Activity drivers are drawn from historic information on
Gross Value Added by sector and other more specific models. The historic data on energy
use defines a base from which to build projections of future use.
Based on the full range of available data and research, NIEMo has been implemented as a
series of sub models. Figure 2.1 presents the flow chart of the model and shows how
projections of future energy use and emissions are obtained. Macroeconomic influences,
such as the economic growth rate in the economy, world oil prices and demographic
patterns are taken as exogenous. These series are currently provided by Oxford
Economics and the Northern Ireland Statistics and Research Agency (NISRA). In the
future they could also be derived from other sources of consistent data, as determined by
the model user. Each sub model estimates the level of energy use and emissions as a
function of these exogenous variables. The values then feed into an input-output model to
determine the level of energy use and emissions by final demand.

Figure 2.1 Flowchart of NIEMo

7
The main sub models are IDEM and the car stock model. IDEM, which simulates the
behaviour of the All-Island electricity model, calculates how much energy must be used
to meet expected electricity demand (based on expected economic growth). It provides
both energy used in power generation by fuel and the wholesale electricity price. This
price then feeds back into energy demand by sector (together with all other fuel prices
and economic drivers). The car stock model estimates the stock of private cars in
Northern Ireland, by engine size and fuel type, and the average fuel use by private cars. It
can be used to measure the effect of a modal shift away from private cars towards public
transportation, cycling and car sharing.

2.2 IDEM Irish Dispatch of Electricity Model
The Single Electricity Market for Northern Ireland and the Republic of Ireland started in
November 2007. IDEM is a standard dispatch model which represents that market. Each
power generation plant on the island of Ireland is explicitly modelled. For every half hour
in the year, supply meets demand. Supply is determined by a merit order curve, that is,
cheaper options for generating electricity are used first. The model includes a stylised
representation of supply and demand in Great Britain, and interconnection between the
two British Isles. The model includes such features as fuel prices, emission permits,
capacity payments, dispatch regulation, and plant maintenance. For every period,
installed capacity is fixed. For future years, the model is driven by of scenarios
commissioned and decommissioned plants.

2.3 Private Car Stock Model
The model for private cars has a number of components. The number of cars per
household grows with per capita income until it reaches saturation at 0.8 cars per adult.
The market share of different sizes of cars is also driven by income, with richer people
driving larger cars. The split in sales between diesel and petrol is determined from the
differences in fixed and variable costs, and the distance driven. New cars feed into the
stock of cars. Existing cars get older or are scrapped. The stock of cars, by age, engine
size, and fuel, follows. Fuel efficiency and distance driven is specified for each type of
car, so fuel burnt and carbon dioxide emissions follow.

2.4 Other sectors
Future energy use is projected using a relatively simple model. Starting from a historical
base year level, sector-level predictions are derived from assumptions about the economic
output of that sector, the rate of energy efficiency improvement, and the response to
changes in price. Energy use is projected by fuel and by sector, and carbon dioxide
emissions are assumed to be proportional to fuel use. For example, CO emissions from
the residential sector are significant, as fuel use in this sector is high, and because oil, one
of the main fuels used in this sector, has a relatively high carbon content,

8
2.5 Validation
It was not possible to conduct a validation of the model due to a lack of independent data.
All data available at the time were used in the model calibration and the construction of
the base year.
7
The next chapter will discuss data problems in detail. Even though all
available data for Northern Ireland were used in calibrating the model, in a number of
cases it was necessary to use data for the United Kingdom and the Republic of Ireland. In
order to validate the data, where possible, the data used were compared to similar data
from other sources. This is discussed further in Chapter 3 of the report. Result validation
was also undertaken by comparing the results from the model with data from the UK and
the Republic of Ireland. Northern Ireland is a very small and therefore quite unusual
economy; thus, some patterns of energy use emerge which differ from the two
comparison countries.

7
Some time has passed since the preparation of the data and the model. With some effort, one could update
the energy use and greenhouse gas emission accounts to a more recent year, and compare the model
predictions to the observations.
9
3 Data Sources
Chapter 2 presented the methodology used for this project and outlined what data feeds
into the model. The first stepping stone needed to build a useful model is the collection of
high quality data on energy and emissions in Northern Ireland. Here we will give detailed
information on the type of data collected and their sources. Data sources include official
statistics, government departments and relevant stakeholders.
Key data requirements include the collection of historic data on fuel use and prices in
Northern Ireland (NI), disaggregated by fuel type as well as by economic sector. Where
there are data gaps, or the data series are too short to allow us to generate behavioural
parameters, we supplement the NI data with information for the United Kingdom (UK)
(and Great Britain) or for the Republic of Ireland (RoI).
There are fairly accurate measures of the use of natural gas by the residential and non-
residential sectors. The same holds true for electricity, although most of the data are
reported for an April-March year, which causes some compatibility problems. Data on the
use of other fuels, such as those used in transport, are based on estimates carried out by
the Department of Energy and Climate Change (DECC) and published in their Energy
Trends bulletin.
We collate data on electricity generation, buildings stock and efficiency, transport and
commuting patterns, all of which feed into the model.
Other data requirements include a series of historic data and growth projections for key
macroeconomic variables such as output, inflation, employment and population. Table
3.1 gives an overview of the data collected.

10

Table 3.1.: An overview of the data collected
Variable Sources Period Adjustments (origin)
Electricity use NIE 1991-2007 Sectoral split was imputed using relevant data from the RoI
Converted from fiscal to calendar year using UK data as a guide to use patterns
Gas use NIAUR
Phoenix
1996-2006 Sectoral split was imputed using relevant data from the RoI
Impute 2006 residential data using average historic domestic use for 2002-2005
Oil use DECC
NIAAS
2005-2007 Combined DECC data on sectoral gross oil use with NIASS data on level of imports by type of oil product to
estimate the type of oil used in each sector
Transport fuel use DECC 2002-2007 -
Coal use DECC 2005-2008 Sectoral split was imputed using relevant data from the RoI
Renewable energy use DECC 2005-2008 Sectoral split was imputed using relevant data from the RoI
Road transport fuel
use
DECC 2002-2007 -
Electricity price NIE
IEA
1991-2009 -
Gas price NIAUR
IEA
1997-2009 -
Oil prices IEA 1989-2006 -
Petrol price IEA 1989-2006 -
Diesel price NIOF 2006-2009 -
Coal price IEA 1989-2006 -
Peat price ESRI 2006 -
Greenhouse gas
emissions
NAEI 1990, 2003-2007 Sectoral split was imputed using relevant data from the RoI
CO
2
permit price ECX 2005-2009 -
Behavioural
parameters
ESRI, other
sources
- Output, Price and Time elasticities imputed from ESRI model for the RoI. Output and income elasticities for
electricity and scrappage parameters were estimated directly from NI data
Electricity generation
data
All Island Project,
EirGrid, SONI
2006 Allislandproject.org gives details of all plants currently on the system. EirGrid and SONI provide information of
future commissioning and decommissioning in both the Republic and Northern Ireland.
Housing quality HCS 1991-2006 -
Public building quality PSEC 1999-2008 -
Car stock and sales DRD
DVANI
1983-2008
2003-2009
Combined NI information on car stock by fuel with RoI engine size data to impute values for 1992-2002. As NI
data on fuel split unavailable prior to 1992, ROI data were used.
Distance driven CSRB 2006-2008 Data on mileage driven by engine size and fuel type available for period 2006-2008, to generate similarly
11
Variable Sources Period Adjustments (origin)
NITS 1999-2006 disaggregated data for 1999-2006, known proportions from most recent NI Travel Survey were imposed.
Fuel Efficiency ESRI 1990-2008 Used fuel efficiency from the Irish car stock model as no information for NI was available
Commuting NITS 1999-2008 -
Gross value added ONS 1989-2007 -
Consumer price index ONS 1988-2008 No regional measures of inflation exist within the UK, therefore the UK CPI used.
Employment NIQES 1996-2006 -
Population NISRA 1901-2006 -
World oil price
projections
Oxford Economics Forecast -
Gas & coal price
projections
Oxford Economics
PRIMES
Forecast Price of Natural Gas expected to change at same rate as oil price, pre-tax
Coal price changes taken from assumptions used in EU PRIMES
Electricity price
projections
Endogenous Forecast Determined within the model
Taxes HM Treasury 2010 Taxes declared in the 2010 UK budget are applied going forward
Housing Stock Oxford Economics Forecast Housing stock projections applied going forward
Input-output ESRI 2006 Imputed using RoI for intermediate deliveries and UK data for aggregates
12
3.1 Energy Use Data
To develop a suitable energy planning model for Northern Ireland, we ideally needed to
source time series of annual data on energy use in Northern Ireland, split by fuel type
(i.e.: primary energy sources such as coal, oil, peat, natural gas and renewables) and by
sector (i.e.: household, services (excluding transport), industry, transport and agriculture).
Historic energy use data are useful for two reasons. First of all they determine a historic
base level on which expected future changes in use are added. Second, if there is a long
enough time series they can offer a picture of the trends of fuel use over time, which can
help in understanding the fundamental drivers of energy use.
The sectoral disaggregation is required to facilitate the estimation of separate energy
demand equations for each sector of the economy. Each sector has specific energy use
patterns, so measuring the use by sector, and behavioural parameters by fuel and by
sector, allows for more accurate projections of future fuel use.
The data available from UK official sources did not always provide a breakdown of
energy use for Northern Ireland or by sector, so we supplemented official information
with other sources made available to us and imputed data where necessary. For example,
the DECC Sub-National Energy Consumption Statistics provided data from 2005 to 2007
for petrol, diesel and coal for Northern Ireland, but not for electricity and natural gas.
The planned extension of the sub national analysis to Northern Ireland, by DECC
8
, is
welcomed as the data would greatly assist in future updates of this model.

3.1.1 Electricity Use Data
Northern Ireland Energy (NIE) provided aggregate electricity sales data from 1980 to
2010. It also split use data into agriculture, domestic and non-domestic sectors starting
from the fiscal year 1990/1991. The non-domestic use data was used to impute data for
the remaining sectors (excluding electricity generation) using information on sectoral
output (GVA) and estimates of energy intensity per unit of GVA from the Republic of
Ireland
9
. Table 3.2 summarises the available data in this area. Electricity use in the
electricity sector includes transmission and distribution losses and own use (electricity
used to start up the power plants and for plant operation). On the basis of the historic data
for Northern Ireland for 2008, we calculate that transmission and distribution losses and
own use accounts for 13 per cent of final demand (or 11.5 per cent of total generation).
We use this figure in the model. This is in line with information for the Republic of
Ireland, where transmission and distribution losses and own use accounted for about 13.2
to 13.3 per cent of total electricity used in recent years.

8
DECC Guidance Note 10D/1003 is available at
http://www.decc.gov.uk/en/content/cms/statistics/energy_stats/regional/regional.aspx
9
Taken from the Irish model.
13
Table 3.2 Electricity Use Data Availability

Sector

Years
Available

Sector

Years
Available

Domestic

1991-2009
Household

1990/91-2009/10
Agricultural

1990/91-2009/10

Non
Domestic

1991-2007

Electricity

Calculated as 13% of
total demand.

Industry Imputed using non
domestic levels and
sectoral GVA shares
Commercial
(excl. Transport)
Transport

The NIE data were based on financial years (i.e.: April to March) and thus needed to be
converted to calendar year data. This was done using UK quarterly data as a guide to
quarterly use patterns. For the domestic sector this approach is reasonable only if the
share of households that use electricity for heating in Northern Ireland is similar to the
share in the UK as a whole. Households that use electric heating display different use
patterns than other households and use relatively more electricity when the weather is
colder. Table 3.3 shows that the share of households with electricity-powered heating is
similar between England and Northern Ireland (UK-wide data not available) and has been
decreasing at similar rates over time.

Table 3.3 Electric Powered Heating as % of all Residential Heating
England NI
1996 11.9% 11.3%
2001 9.6% 8.7%
2006 8.4% 5.2%
Source: English House Condition Surveys 1996, 2001 and 2006 NI House Condition Surveys 1996, 2001 and 2006

The quarterly weights come from DECCs Energy Trends from 1999 onwards. This
allows us to account, at least partially, for changes in weather over the years. For years
prior to 1999, we use the average weights for the 1999-2009.
The non-agriculture and non-residential use data are reweighted by using the average UK
quarterly shares for non-domestic electricity use. The average share of quarters 2 to 4 in
the administrative year is 0.736 for UK data. The average share of the 1
st
quarter in the
administrative year is 0.264.

14
3.1.2 Gas Use Data
Piped natural gas started in Northern Ireland in 1996, serving both the residential and the
non-residential sectors. The largest users are power plants. Prior to 2005, the only
domestic customers were within the Greater Belfast area, while, since then, there has
been an expansion to ten towns throughout Northern Ireland.
The Northern Ireland Authority for Utility Regulation (NIAUR) provided data on overall
natural gas use on a quarterly basis up to 2006, which was annualised for use in the
model. Further data were provided on use excluding power generation, further split into
domestic and non-domestic use for 2002 to 2005. Phoenix Supply was the only provider
of the residential sector up to 2005. After 2005, Firmus Energy entered the residential
market. We have not been able to obtain domestic use for households served by Firmus.
Therefore, we cannot disaggregate between the domestic and non-domestic sector post
2005. In order to use the available data for 2006, we rely on forecast number of
residential customers for Firmus in 2006. To build use by households, we ascribe to all
households in 2006 the average historic household use between 2002 and 2005.
The DECC Guidance Note 10D/1003 explains that, as with the electricity use dataset,
data for Northern Ireland are not included in the gas use dataset due to the market
structure
10
.
The non-domestic use data were used to impute data for the remaining sectors (excluding
power generation) using information on sectoral output (GVA) and estimates of energy
intensity per unit of GVA from the Republic of Ireland.

3.1.3 Oil Use Data
Data on oil use was sourced from the DECC for the years 2005 to 2007
11
. Data are
available by the following sectors: Industrial, Domestic, Rail, Public Administration,
Commercial and Agriculture. The industrial sector includes use by power plants.
These data aggregate all forms of petroleum (heavy fuel oil, diesel oil, kerosene) and
provide use by thousand tonnes of oil equivalent (KTOE). We build our fuel oil data on
the basis of this Office for National Statistics (ONS) approved data. The Northern Ireland
Annual Abstract of Statistics (NIAAS) reports data on the level of imports of various
types of fuel oil into Northern Ireland and is updated yearly. Comparing this data to the
ONS data allowed us estimate the type of fuel used in each sector (and hence its carbon
content). The share of industrial petroleum used by the power generation sector is
calculated by applying the relevant share for the Republic of Ireland to total industrial use
for Northern Ireland. The rest of the industrial sectors use are calculated on the basis of
each sectors share of GVA and the average energy used per GVA unit in that sector for
the Republic of Ireland.

10
DECC Guidance Note 10D/1003
http://www.decc.gov.uk/en/content/cms/statistics/energy_stats/regional/regional.aspx
11
Estimates of Non Gas, Non Electricity and Non Road Transport Fuels at Regional Level
http://www.decc.gov.uk/en/content/cms/statistics/regional/regional.aspx
15
3.1.4 Use of Other Fuels
Data on Northern Irelands fuel use from 2005 to 2008 comes from the DECCs sub-
national energy use statistics
12
. This source details information for petrol, coal,
manufactured solid fuels and renewables in thousands of tonnes of oil equivalent
(KTOE).
13
It disaggregates use for the domestic and non-domestic sectors (excluding
power generation). We apportion non-domestic use to the industrial and commercial
sectors in Northern Ireland using the coal intensity factors by GVA from the Republic of
Ireland.
The only other source of coal use is the Annual Coal Inquiry by DETI which provides
information on coal shipments (imports) split by usage (domestic and industrial).
Communication with Londonderry Port suggests that for at least some years the level of
re-exports is large (e.g., for 2009 re-exports were larger than the initial imports). We
therefore cannot rely on the data from the Annual Coal Inquiry as an accurate measure of
use for the residential and non-power sector. We use this source as an estimate of coal use
in the power sector.

3.1.5 Road Transport Fuel Use
Data on road transport fuel use comes from DECC
14
and is in thousand tonnes of fuel
15
.
This source estimates use by the following sources: Buses, Diesel cars, Petrol cars,
Motor-cycles, HGV, Diesel LGV, and Petrol LGV. Data are transformed from thousand
tonnes of fuel to thousand tonnes of oil equivalent using the calorific values reported by
DECC in Energy Trends.

3.2 Fuel Price Data
Wherever possible we have used prices specific to Northern Ireland. Typically it has been
easier to source Northern Irish data for the domestic sector than for other sectors in the
economy. Where data for Northern Ireland were not available we used information from
Energy Prices and Taxes, published by the International Energy Agency (IEA). The
IEA has published data on energy prices by fuel and by sector for the UK since 1979.
Price data have been deflated by the UK CPI in the absence of an NI specific deflator.
Fuel price data serve two roles in the model. First of all they determine the base level on
which expected future price changes are added. For this we use the most recent reliable
information by fuel. Second, if there is a long enough time series both on the price of a
fuel and its use, it can be used to estimate the price elasticity of demand for that fuel. At
the moment the time series are not long enough to allow this calculation, so we use
existing parameters estimated for the Republic of Ireland, as explained in the following
chapter.

12
Estimates of Non Gas, Non Electricity and Non Road Transport Fuels at Regional and Local authority
Level http://www.decc.gov.uk/en/content/cms/statistics/regional/regional.aspx
13
As per previous source.
14
Road Transport Energy Consumption at the Regional and Local Authority Level
http://www.decc.gov.uk/en/content/cms/statistics/regional/road_transport/road_transport.aspx
15
To convert the data from tonnes of fuel into KTOE we used the UK-specific calorific values used in the
Digest of United Kingdom Energy Statistics (DUKES).
16

3.2.1 Electricity Prices
Electricity prices for NI households came from NIE and are calculated as the average
domestic price per fiscal year (April to March), pre-tax. The data are available since the
fiscal year 1990/1991. We use the pre-tax domestic price for commercial sectors. We add
the appropriate VAT for the residential sector. Industrial prices are taken from the UK
industrial prices reported by the IEA. IEA disaggregates prices into the pre-tax price and
taxes.

3.2.2 Natural Gas Prices
Domestic gas prices come from NIAUR and are specific to Northern Ireland. There are
many tariffs available for the domestic sector. We assume that the representative tariff is
the Home Energy tariff for households that consume more than 2000kWh/year (and do
not receive the direct debit discount). Price data are available since 1997.
Commercial prices are assumed to be domestic prices minus the VAT. Industrial prices
are taken from the IEA prices for the UK, as are prices for the electricity generation
sector. We add a mark-up of 6 per cent to the UK prices to account for the additional
transport costs to Ireland.

3.2.3 Oil Prices
We used IEA information for all sectors for fuel oil. For comparison, we have price data
from NI Oil Federation which matches the IEAs domestic data closely for the years
2005-2009. The General Consumer Council also provided us with monthly data on the
prices facing consumers for delivery of 900 litres of home heating oil, during the years
1989 to 2006. These figures were based on data provided by an average of 6 large
suppliers to Northern Ireland during each month. Furthermore, Cheapest Oil Ltd
16

furnished us with monthly data for the average price of 900 litres of oil from January
2008 to March 2010. These additional sources are used to validate the IEA data for
Northern Ireland. We choose to use the IEA data since it provides a long and consistent
series both on kerosene and light fuel oil for domestic use and because it unambiguously
disaggregates the taxes for each period.

3.2.4 Petrol Prices
The petrol price comes from the IEA prices and taxes and is the cost for unleaded petrol
with a 95 octane rating.

3.2.5 Diesel Prices
We use the annual average diesel price for diesel fuel, i.e., Diesel Engine Road Vehicle
(DERV), sold in Northern Ireland, as supplied by the Northern Ireland Oil Federation for
the years 2006 to 2009. The price in the base year 2005 is calculated as the price in 2006
minus the change in price in the IEA series for all of the UK.

16
www.cheapestoil.co.uk
17

3.2.6 Coal Prices
The price of coal for industry, electricity generation and households comes from the IEA
prices for the UK as a whole. We compare these UK prices with NI household prices as
recorded by the General Consumer Council data on coal prices (based on 50kg), available
up to 2006. The data display similar levels and trends, so we use the longer IEA series.

3.2.7 Peat Prices
We assume a single price for peat across the economy equal to 12/MWh (net of taxes).

3.3 Greenhouse gas emissions
3.3.1 Emissions
The National Atmospheric Emissions Inventory publishes estimates of emissions of
carbon dioxide, methane, nitrous oxide, and F-gases (aggregated by their global warming
potential) by end user for 1990 and 2003-2007. The data was further downscaled to
match the sectors used here on the basis of each sectors share of GVA and the average
emission per GVA in that sector for the Republic of Ireland.

3.3.2 Carbon Dioxide Emission Permit Prices
Historic carbon emissions prices between 2005 and 2009 come from European Climate
Exchange ECX-EUA indices
17
. The yearly figure is calculated as the average front
settlement date price for the year in question. As this is nominal price data, it is rebased
to 2005 using the CPI data provided by Oxford Economics.

3.4 Behavioural Parameters
In order to estimate reliable parameters, ideally we would want 20 years of time series
data for the regression work. As much of the time series data in Northern Ireland were
too short to estimate many parameters directly, we frequently needed to use RoI
parameters as proxies. The sources of these parameters are detailed in Table 3.4 below.

17
https://www.theice.com/productguide/ProductGroupHierarchy.shtml?groupDetail=&group.groupId=19
18
Table 3.4 Model Parameters and their Sources for NIEMo
Imputed Parameters Source
Output Elasticities by Fuel by Sector Imputed from RoI model, except for electricity
Price Elasticities by Fuel by Sector Imputed from ROI model
Time Elasticities by Fuel by Sector Imputed from ROI model
Estimated Parameters Source
Output & Income Elasticities for Electricity

Estimated directly from NI data
Scrappage Estimated directly from NI data

3.5 Electricity Generation Data
The all island project (allislandproject.org) provides detailed data for all the plants on the
AllIsland electricity system. This includes information on the size of the plants, the type
of fuel they use and their efficiency. Going forward we use assumptions on
commissioning and decommissioning of the data from the two system operators: EirGrid
in the Republic of Ireland and SONI in Northern Ireland.

3.6 Buildings Data
Data were gathered on both private sector and public sector buildings so as to assist us in
calculating the likely energy efficiencies of property under various scenarios.

3.6.1 Housing Quality Data
Data were sourced from the House Condition Survey (HCS) for Northern Ireland from
1974 onwards. This data source provided information on the levels and types of central
heating and insulation in Northern Irelands housing stock. The HCS gave information
on the share of households with central heating present and main fuel types, as well as the
proportion of houses that had the highest recorded levels of insulation, e.g. wall insulation
(full cavity wall), loft insulation (more than 150mm thick) and double glazing (full).

3.6.2 Public Sector Energy Performance Data
Data were sourced from the Public Building Energy Performance Report that included
data for the years 1999/2000 to 2007/08, with gaps for the years 2000/2001 to 2003/2004.
Data came from the PSEC NI report for 2007/8 containing four years of annual data. The
data on energy use are split by 8 fuel types and building and non-building use.
The use of oil products are not consistent with data from DECC on oil use in services.
Specifically, use from the Public Building Energy Performance Report is larger than use
for all services in the DECC data.

19
3.7 Transport Data
Data were gathered to build a car stock model for Northern Ireland that, in turn, fed into
the transport side of NIEMo.

3.7.1 Car Stock and New Registrations Data
Data were sourced from the Department for Regional Development (DRD) on aggregate
private car stock, for the years 1983 to 2008. These data are further split by fuel type
(petrol and diesel) for the years 1992 to 2008. The data for these years were also split by
four engine sizes, but not split by fuel and engine size at the same time. Further data
were sourced from the Driver and Vehicle Agency for Northern Ireland (DVANI) on new
car registrations for 2003 to 2009, which provided detailed disaggregation by both engine
class and by fuel type. Using the information on car stocks for a given year, along with
RoI data on engine size across 9 categories, we were able to impute values for car
registrations for 18 series (i.e. 2 fuels by 9 engine sizes) for 1992 to 2002. Prior to 1992,
data were not available on fuel split, so we used data on the total stock of cars and data
from the RoI in each respective year, to impute the values for both engine class and fuel
type. This is shown in Table 3.5 below.

Table 3.5 Car Stock Data Availability
Data Series Source Description Years available
Car Stock DRD Aggregate data only 19832008
Car Stock DRD Petrol and Diesel 19922008
Car Stock DRD Data split by 4 engine sizes 1992-2008
New Car Regs DVA Data split by 2 fuels and by 9 engine sizes to create 18 series. 2003-2009

3.7.2 Car Distance Data
Data on mean annual distances for cars, split by engine size and fuel type were
constructed from mileage data provided by the Central Statistics and Research Branch
(CSRB) of the Department of the Environment (DOE) and using data from the Northern
Ireland Travel Survey
18
for the years 2006-2008. In order to generate a similar level of
disaggregated data for the years 1999 to 2006, we used the known proportions from the
most recent NI Travel Survey, to apportion the aggregate figures across the various
engine sizes and fuel types.

3.7.3 Fuel Efficiency
Data on fuel efficiency of NI cars was unavailable, hence we used the fuel efficiency data
from the Irish car stock model; a model of the stock of private cars in the Republic of
Ireland This model distinguishes cars by engine size, fuel and age, and combines this

18
http://www.drdni.gov.uk/index/statistics/stats-catagories/stats-catagories-travel_survey.htm
20
information with data on fuel efficiency and distance driven. See Hennessey and Tol
(2010) and Appendix 6.3 of this document for more information on this model.

3.7.4 Commuter Data
Data are available on Northern Ireland commuting patterns for the years 1999 to 2008
from the annual NI Travel Survey. Data are available by means of transport, distance of
journey, modal distance, fraction of journeys attributable to commuting, and the average
length of commute.

3.8 Macroeconomic Variables
Several macroeconomic indicators are required to build the energy scenario planning
model for Northern Ireland. These include data on economic activity, inflation and world
oil prices, population trends and labour.

3.8.1 Economic Activity Levels
A central part of this project was collecting the data necessary to establish robust relations
between energy demand and the factors that drive demand, such as fuel prices and
economic activity levels. The economic activity or output measure available at the
regional level within the UK is Gross Value Added (GVA). Sectoral Gross Value Added
(GVA) for Northern Ireland is available from 1989 until 2007, from the Office for
National Statistics
19
and is disaggregated to a 16-sector level of detail, allowing us to
easily generate the five-sector economic activity data we require up to 2007.

3.8.2 I nflation
The measure of inflation used in the model is the consumer price index (CPI). At present,
no regional measures of CPI exist within the UK, so we have to use the UK CPI
20
as the
nearest possible measure to a CPI for Northern Ireland. Inflation is assumed to be the
same across all sectors.

3.8.3 Employment
Data on employment by economic sector was sourced from the Northern Ireland
Quarterly Employment Survey conducted by DETI
21
.

19
http://www.ons.gov.uk/ons/publications/re-reference-tables.html?edition=tcm%3A77-72123
20
http://www.ons.gov.uk/ons/taxonomy/index.html?nscl=Consumer+Price+Indices
21
Northern Ireland Quarterly Employment Survey http://www.detini.gov.uk/deti-stats-index/stats-
surveys/stats-qes.htm
21
3.8.4 Population and Households
Population figures and the number of households are sourced from the Registrar General
Northern Ireland Annual Report published by NISRA
22
.

3.9 Projections Data

3.9.1 World Oil Price Projections
We use world oil price projections as supplied by Oxford Economics.

3.9.2 Natural Gas prices
The price of natural gas is expected to change at the same rate as the world oil price, pre-
tax.

3.9.3 Coal prices
Coal prices change in line with the assumptions made by the EU PRIMES project
23
.

3.9.4 Electricity prices
Electricity prices going forward are determined endogenously. The model estimates the
wholesale price. Changes in the wholesale price determine the change in electricity prices
in the future. In the industrial sector the wholesale price accounts for about 80 per cent of
the final price, so changes in the wholesale price are weighted by 0.8. In the domestic
sector the wholesale price accounts for about 60 per cent of the final price, so changes in
the wholesale price are weighted by 0.6. The remaining share of the final prices is
assumed to increase at the same rate as the consumer price index.

3.9.5 Taxes
We have taken the level of taxes declared in the 2010 UK budget and applied those going
forward.

3.9.6 Output Projections
Gross Value Added (GVA) projections are sourced from Oxford Economics.

22
http://www.nisra.gov.uk/demography/default.asp50.htm
23
PRIMES is a partial equilibrium model for the EU energy market; it simulates energy demand and supply
within the EU. Further information is available at:
http://ec.europa.eu/environment/air/pollutants/models/primes.htm
22
3.9.7 Population Projections
Northern Ireland Population projections came from NISRA and are based on 2008 data.
The number of households is also projected forward and is based on 2006 data.

3.9.8 Housing Stock Projections
Projections of Northern Ireland housing stock were provided by Oxford Economics.

23
4 Energy Use in Northern Ireland
4.1 Introduction
This chapter presents current patterns of energy use and carbon dioxide emissions for the
Northern Ireland economy. These results provide the basis for the baseline forecast and
additional policy scenario forecasts presented in the subsequent chapter. Before
discussing the future, however, Section 4.2 reviews the situation in 2006, the latest year
for which data are complete.
24

4.2 Energy use and carbon dioxide emissions in Northern Ireland
As discussed in Chapter 3, data are hard to get for Northern Ireland. Particularly, there are
no energy balances and no environmental accounts. We therefore constructed energy
accounts which are consistent with the available data, but which impute data where
necessary. NIEMo calculates energy use, CO emissions from fossil fuel combustion and
from other sources, as well emissions of other greenhouse gases, such as methane and
nitrous oxide, for the Northern Irish economy.
Figure 4.1 shows final energy use by sector
25
. The data underlying Figure 4.1 show that,
excluding power generation, the biggest energy user is the domestic sector (25%),
followed by transport (23%). The manufacturing sector uses 10.7% of final energy
(excluding energy used in power generation) the services sector uses 9.2%, and the
agricultural sector uses 2.4% These results contrast somewhat with those for the Republic
of Ireland where transport sector is the largest energy user accounting for 41.29% per
cent of final energy usage, followed by the residential sector (22.96%), the industrial
sector (20.85%), the commercial services sector (8.02%), the public services sector
(4.42%), and finally the agricultural sector (2.47%). Data for the UK
26
as a whole show a
similar pattern to the Irish data; the transport sector is uses the most energy (35.2%),
followed by the residential sector (26.9%) and industry (19.2%).

24
In the rest of Chapter 4 and Chapter 5, we also show and discuss estimates of the situation in 2008 and
2010.
25
The sectors used are the residential, industrial, commercial and public, transport, and agricultural sectors
26
Digest of UK Energy Statistics 2007. Department for Business, Enterprise and Regulatory Reform.
24
Figure 4.1 Final energy use by sector in 2006

Figure 4.2 shows energy intensity (final energy used per pound value added) by sector.
Transport is the most energy-intensive activity, followed by agriculture and forestry,
power generation, and wood products. Services use the least energy per value added. In
the Republic of Ireland transport is also the most energy intensive sector, followed by
metal production, non-metallic mineral production, and fuel, power and water.

Figure 4.2 Final energy intensity by sector in 2006

Figure 4.3 shows final energy use by fuel. Oil products cover most energy needs with fuel
oil at 35%, diesel at 20% and petrol at 15%. Coal covers 4% of energy demand,
electricity 18%, and gas 7%. Similarly, oil products also dominate the fuel mix in the
Republic of Ireland; however the breakdown by oil type is quite different; in the Republic
0.0 0.2 0.4 0.6 0.8 1.0 1.2
Real Estate, Renting and Business activities
Wholesale and Retail Trade
Financial Intermediation
Hotels and Restaurants
Private Household with Employed Persons
Public Administration and Defence; Compulsory Social
Education
Health and Social Work
Other Community, Social and Personal Service Activities
Pulp, Paper and Paper Products; Publishing and Printing
Electrical and Optical Equipment
Coke, Refined Petroleum and Nuclear Fuels
Chemicals, Chemical Products and Man-made Fibre
Machinery and equipments not elsewhere classified
Manufacture not elsewhere classified
Construction
Fishing
Transport Equipment
Food Products; Beverage and Tobacco
Rubber and Plastic Products
Textiles and Textile Products
Leather and Leather Products
other Non-metallic products
Mining and Quarrying of Energy Producing Materials
Other Mining and Quarrying
Basic Metals and Fabricated Metal Products
Wood and Wood Products
Electricity, Gas and Water Supply
Forestry
Agriculture
Transport, Storage and Communication
kilogramme of oil equivalent per pound Sterling
25
of Ireland fuel oil accounts for only 2.9% of total energy use while diesel accounts for
29.84%. Electricity accounts for 17.05%, gas for 12%, coal for only 3.3%, and
renewables for 1.52%.

Fig. 4.3 Final energy use by fuel (left) and fuels used in electricity generation (right)

Figure 4.4 shows two alternative estimates of carbon dioxide emissions from fossil fuel
combustion. One estimate is by the National Atmospheric Emissions Inventory (NAEI),
the other is derived from our estimates of fuel use. The patterns broadly match. Power
generation is the biggest emitter (34-38%) in both estimates, followed by transport (25-
31%) and households (22-23%). Other sectors are small. However, the NAEI is some 5%
higher than the ESRI estimate; this may be due, at least in part, to inaccuracies in the
NAEI data. Complete sets of fuel use data for England, Scotland, Wales and Northern
Ireland are not available; therefore, to estimate the CO emitted as a result of energy use,
the NAEI make use of supplementary data
27
. In particular they use the sub-national
statistics from the DECCs Energy Trends publication. The NAEI note that these data are
limited in their detail but that they do provide estimates of fuel use for England, Scotland,
Wales and Northern Ireland for the industrial, commercial, agricultural and residential
sectors. The NAEI acknowledge that while these data are improving over time, they are
subject to greater uncertainty and less detail than data from DUKES, which are used to
estimate UK level greenhouse gas emissions. The sub-national energy use statistics are
supplemented with fuel use data from the EU-ETS for large industries. More detail on
uncertainties in the data, and of Monte Carlo simulations carried out to estimate the
uncertainties in the data, can be found in Greenhouse Gas Inventories for England,
Scotland, Wales and Northern Ireland: 1990-2009.
28
NIEMo projections are based upon
the ESRI estimate of historical CO emissions as we have clear data on the fossil fuel use

27
Details are available able in Greenhouse Gas Inventories for England, Scotland, Wales and Northern
Ireland: 1990-2009, a report published by the NAEI in September 2011.
28
Available from the NAEI website: <http://uk-
air.defra.gov.uk/reports/cat07/1109061103_DA_GHGI_report_2009_Main_text_Issue_1.pdf>
Gas
7%
Fuel oil
35%
Petrol
15%
Diesel
20%
Coal
4%
Peat
0%
Renew.
1%
Electricity
18%
Gas
56%
Fuel oil
9%
Petrol
0%
Diesel
0%
Coal
35%
Peat
0%
Renew.
0%
26
driving these emissions, and because it allows us to be consistent with future projections
of emissions which are based on projections of energy use.

Figure 4.4 Carbon dioxide emissions from fossil combustion in 2006 according to two
alternative estimates.

Patterns of CO emissions in the Republic of Ireland are broadly similar to those for
Northern Ireland: fuel, power and water account for 32.24% of CO emissions from fossil
fuels, the transport sector accounts for 30.16% and households 15.75%. According to the
DECC, in the UK power stations accounted for 32% of emissions, followed by industry
(23.5%), transport (23.5%) and the residential sector (14.5%).

0
2000
4000
6000
8000
10000
12000
14000
16000
18000
NAEI ESRI
k
t
C
O

Domestic
Utilities
Tertiary
Secondary
Primary
27
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

28

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.
29
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
Industry 61 4.0% 3.3% 1.8% 95
Domestic 327 511
Fuel Oil, /TOE
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
30

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
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
31
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
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
32
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.

33
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
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

34
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
35
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
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
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
36
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

37
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

Gas pipeline rollout
Oil 1005 1,018
Gas 134 137
CO
2

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.
38

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%.
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
Commuting scenario
Transport
Oil 1,635 1,703
CO
2

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.
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
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.
42
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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):
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
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.

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
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;
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
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.
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.
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
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.
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
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.
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.
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.
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.
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

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.

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.

A Strategic Energy Scenario Planning For Northern Ireland

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A Strategic Energy Scenario Planning For Northern Ireland

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A Strategic Energy Scenario Planning

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