Here we are in the latest global energy crisis, or energy shock as these events are often labelled. In reality, there should be nothing shocking about them.
Whenever there’s disruption to global oil and gas markets, driven by events and decisions outside our control, Ireland’s energy costs go up. We are simply too reliant on foreign fossil fuels. And, as demonstrated acutely in recent weeks, the impacts are felt in every corner of our economy.
The solution is obvious to those in Government, those of us in the industry, and all of us using energy in our homes and businesses. We need a power system that is rooted in home-grown, clean electricity, not expensive imports.
In large part the answer, as Bob Dylan told us 60-odd years ago, is “blowin’ in the wind”. Indeed, wind power is already playing a major role on the Irish system, accounting for more than 40 per cent of electricity generated in March.
Combined with other sources of renewable energy, including solar, the figure rises to nearly 50 per cent. This increasing share of cleaner, cheaper power is making a difference, but we have a long way to go.
The good news, or the intensely frustrating bit, depending on how full or empty you see your glass, is that we have a staggering amount of untapped potential. For starters, we have a first phase of offshore wind projects currently in the planning process and waiting to be built in the Irish Sea.
This crisis is yet another reminder that the time to deliver our first major offshore wind farms was yesterday. The next best time is now.
We can see the benefits of a more diverse energy mix just across the water. UK energy bills are significantly lower on average than those in Ireland, with its offshore wind sector, the largest in Europe, playing an important role. Meanwhile, as covered recently in The Irish Times, our EU neighbours in Spain have fared even better, avoiding the worst of the current volatility, with wholesale prices as much as 70 per cent lower than Ireland at times.
Their 104GW of installed renewable capacity – more than 10 times that of Ireland’s – is doing the heavy lifting and reducing their reliance on expensive natural gas.
Sceptics question the wisdom of investing in renewables because the wind doesn’t always blow when and where we want it to. While that variability is real, the system-wide approach needed for the energy transition is well understood. While the system will be led by renewables, we need to continue to invest in our flexible generation fleet, as well as ramping up battery storage capacity, ready to respond when needed.
Crucially, we need an electricity network capable of making the most of our wind resource and catering for demand in the most efficient, cost-effective way possible. As things stand, in some months we’re forfeiting nearly a fifth of the wind power available because the grid can’t handle it. This is untenable.
The grid underpins the whole electricity system, and therefore our future economy, and it must be upgraded and expanded with an urgency reflecting that. We can’t afford the types of delays we’ve seen with the North-South Interconnector for instance. No single project on the island would do more to alleviate grid constraints and help integrate renewables – and yet, 20 years after it was first proposed, construction still hasn’t begun in the Republic.
Clearly, delivering the energy transition requires capital. But it’s an investment that will pay the country back. It puts us in control, reducing costs, improving energy security and providing long-term certainty. The alternative is remaining at the mercy of the market and geopolitics, hoping for the best as we brace for the next crisis, and the one after that.
Given our geography, our skills, and our resources, we’re capable of being a genuine leader at a European level – and as with all things, timing can be everything. As we prepare to take on the EU Council presidency from July, Ireland is uniquely placed to drive forward the EU’s newly announced commitments to accelerate clean power and electrification, bolstering cross-bloc collaboration to deliver energy independence and security while protecting consumer value at home.
While there’s been no shortage of ambition, pace has been our big challenge in Ireland. But it feels like there’s genuine intent from Government right now, with the current global context further fuelling the urgency. There are approved investment programmes to upgrade the grid, an action plan to accelerate infrastructure, and a clearing house to speed up offshore wind delivery. Now is the time to make it all happen.
As and when we emerge from this latest crisis, we can’t let the lessons fade into the background. We simply need to double down on what we already know.
Clean, home-grown electricity. We have the answer. The only question is whether we can move fast enough before we’re shocked again.
Barry O’Regan is chief financial officer at SSE plc