Energy security concerns – Government responds with a new Policy Statement

The challenges facing Ireland’s energy supply can be summarised in four key points: 

(1) lower than expected availability from some existing power stations; 

(2) anticipated new power stations not being developed as planned; 

(3) expected growth in electricity demand, including from data centres; and 

(4) expected closure of some power stations in the coming years that make up almost 25% of conventional electricity generation capacity.

Meanwhile, EirGrid noted in its Winter Outlook for 2021 that it expected Ireland’s electricity system to enter a state of “alert” at times over the coming Winter, which is most likely to occur at periods of low wind and low interconnector imports. Ireland currently faces elevated risk to its system entering an “emergency state” due to insufficient generation to meet demand, at least in contrast to previous winters. 

Minister for the Environment, Climate and Communications, Eamon Ryan has acknowledged the extent of the risks, and has acknowledged the “real issues with data centres”, noting that if “increased demand […] were to continue unabated, it would present real difficulties”. While Ireland’s Commission for Regulation of Utilities has decided against a moratorium on data centres, it too has acknowledged the need for rigorous assessment of applications from new data centres to gain access to the grid. Indeed, concerns regarding energy security stem beyond the energy usage of data centres.

In response to energy concerns, the Department of the Environment, Climate and Communications have commissioned a long-term review of the Security of Energy Supply (Electricity & Natural Gas) that will focus from now to 2030 in the context of ensuring sustainable pathways to meet net zero targets by 2050, while considering options to address longer-term risks such as increased dependence on imported natural gas from Scotland’s Moffat terminal. 

While this review will be conducted with a long-term perspective, Minister Ryan last week published his Department’s new Government Policy Statement to Guarantee Security of Electricity Supply throughout Ireland. As per this new Policy Statement, the Government has committed to:

1.     Supporting and permitting the development of new conventional generation (including gas-fired and gasoil/distillate-fired generation) given its being a national priority.

a.     It is envisioned that this will not only ensure energy supply security but will also facilitate meeting renewable energy targets by 2030.

2.     Retaining existing conventional electricity generation capacity until new conventional electricity generation capacity is developed.

3.     Considering the connection of large energy users, such as data centres for example, on the basis of their potential impact on energy supply security and wider needs to decarbonise the electricity grid.

4.     Noting the importance for additional electricity transmission and distribution grid infrastructure, electricity interconnection, and electricity storage to be permitted and developed with a view to supporting the growth of renewable energy.

Speaking in relation to the Policy Statement, Minister Ryan stated: “secure supplies of electricity are vital for our economy and society as we increase the share of renewable electricity to up to 80% by 2030. They are also vital to attract new investment into Ireland and for people and businesses to have complete confidence when purchasing electric vehicles and installing heat pumps. This new gas-fired capacity will be flexible enough to balance our national grid as we expand solar energy and onshore and offshore wind, and will be more efficient than our older oil and coal-fired power stations”.

It remains to be seen of course if the Government’s direction as outlined in this Policy Statement will allow for a seamless dual-track approach to securing Ireland’s energy supply while simultaneously helping Ireland meet its ambitious targets pertaining to reducing Ireland’s greenhouse gas emissions by 51% by 2030, and to net zero by 2050. It is, however, symptomatic of what will be a bumpy journey as part of an overall energy transition and attempt to fight climate change.