Covid-19 lockdown 'may help Ireland avoid €600m EU fine over carbon target'

The Government may be set to avoid huge EU carbon-emitting fines of as much as €600m this year after the Covid-19 lockdown led to a slump in electricity demand and helped boost the share of power generated on the grid by wind rather than fossil fuels, a senior energy expert has said.

James Goldsmith, senior consultant at Cornwall Insight Ireland, said it was widely anticipated in Government and energy industry circles that Ireland would be fined between €200m and €600m for missing the EU carbon-reduction target in which it pledged to lift the share of power it generates from renewables to 40% of the total power generated.

However, Mr Goldsmith said that “by fluke rather than by design” the Government could now be in touching distance of reaching the 40% target after the Covid-19 emergency led to a 10% slump in demand for power, while an exceptionally late windy winter that boosted the output of wind turbines across the all-Ireland power market in the early part of the year, particularly in February.

The Covid-19 lockdown means that industries that are hungry users such as construction and a number of big manufacturing plants facing depleted global order books are no longer consuming power.

The Republic generated up to a third of its annual power generation from wind and was widely believed to be set to miss the 40% renewables target and therefore trigger the huge EU fines by the end of the year.

The Department of Communications, Climate Action and Environment pointed out in the past that the EU has set binding targets for member states to cut greenhouse gas emissions by significant amounts.

It had said that Ireland was also “committed to meet this national target through 40% renewable electricity, 12% renewable heat, and 10% renewable transport”.

Mr Goldsmith said that demand levels were falling due to the Covid-19 restrictions, while the sunny weather in recent weeks has also helped to lower demand for households in lockdown.

He said that wind volumes for April and May have held up in April and May despite the sunny weather and were in line with generation volumes in 2018.

Wind output in April and May -- the first two full months of the lockdown -- of 1,550-gigawatt hours (GWh) contributed to total generation demand of 5,423 GWh during the two months.

“It’s been reasonably nice weather for May but the wind was actually up on last year for the month as a whole, while demand is down significantly at about 10%, and the shape of usage has changed with the morning peak pushing back by about an hour due to people working from home,” he said.

It is not all good news for wind generators, however, Mr Goldsmith said. A new auction system next month designed to encourage generators to build out more wind capacity will face its first test as demand falls and prices tumble into loss-making territory in the wholesale market.

“Drop on demand is causing pricing challenges for renewable generators as there are sustained periods of negative pricing for long periods of the day, and particularly weekends,” he said, which may discourage the building of new wind capacity.