How will we keep the lights on?

World industries’demand for power is returning to pre-pandemic levels, while human activity has likewise kicked back into high gear, which is resulting in big price increases for consumers, and a big headache for Government
How will we keep the lights on?

How high or low your gas bill will be depends on the price of the resource on the international markets. 

There are a couple of news strands, opposite sides of the same coin, which have been slowly bubbling up to the surface of the Irish public’s collective consciousness in recent weeks. Probably because they combine two things dear to the population’s hearts — domestic bills and the economy.

Yesterday, families were hit with forking out €9 extra a-month as Electric Ireland increased prices and last week Bord Gáis raised its gas and electricity bills — by 12% and 10% respectively come October 24, which will translate into an increase of €8 and €10 per month per bill.

That move followed hot on the heels from fellow provider Energia raising its own prices for the third time in 2021 alone. They weren’t the only ones (Ireland boasts 14 such suppliers).

Earlier in September, Panda Power increased its prices for the fourth time this year. Two days prior to that, Spanish green energy concern Iberdrola pushed its own prices up for the third time in the last nine months.

It’s been a free-for-all in the suppliers market, but unfortunately that has always been the case. The reason is that each of those providers is buying its energy from the same international wholesale markets, which themselves are supplied by international hubs.

In fact, gas providers raising or lowering their prices in unison is a common trend in recent years, as a quick Google will confirm for you, while Oireachtas energy committees have been busy castigating the larger suppliers for their price hikes since time immemorial.

The reason gas and electricity prices are rising is because the price of wholesale gas has ballooned in the past year by a factor of 2.5. 
The reason gas and electricity prices are rising is because the price of wholesale gas has ballooned in the past year by a factor of 2.5. 

How high or low your gas bill will be depends on the price of the resource on the international markets. 

While some of Ireland’s suppliers may hold out before passing a price change onto the customer for a little longer than others, depending on their size and profitability, they can’t do so forever.

If you’re thinking this makes the suppliers market slightly ludicrous, given the sheer amount of providers offering the same product, you’d be right, although many providers do benefit the consumer to an extent, given they can switch from one to the other with frequency to avail of sign-up deals — the only real way to save money on your utilities in a country like Ireland.

But we digress.

The reason gas and electricity prices are rising is because the price of wholesale gas has ballooned in the past year by a factor of 2.5. 

A decent rule of thumb is that movements on the wholesale markets will generally take about six months to start filtering down to the domestic consumer’s bills. That’s what’s happening now.

Despite Ireland being rich in gas reserves, only about half of the supply we use actually emanates from these shores (prior to 2015 about 96% of the gas used here came from British sources).

The rest comes from the likes of the North Sea gas fields, (especially Norway) and continental Europe, including even a very small amount from as far afield as Russia.

Meanwhile, the main reason gas prices have gone through the roof is due to a supply bottleneck. Basically, after a long period of low demand due to Covid-19, the world’s economies have almost fully reopened.

World industries’ demand for power is returning to pre-pandemic levels, while human activity has likewise kicked back into high gear.

The world needs gas badly, both for ongoing domestic and industrial usage, and to replenish each country’s reserves for times of trouble. 

Unfortunately, turning off the supply chain for a global utility like gas is a lot simpler than restarting it, and right now supplies right across the planet, but particularly in Europe, are lower than they would wish to be.

Ireland’s own problems have been compounded by a summer in which what you might consider to be a reliable resource — wind — has been anything but. In fact June and July in Ireland were two of the mildest months in terms of wind seen since the 1960s.

Wind power has become dominant in an Irish context, with the country now capable of supplying 40% of its energy needs from its catalogue of onshore wind farms.

But electricity cannot be stored on a scale required to power a country. So if the wind doesn’t blow, other ways of powering the national grid need to be found, natural gas being the most prominent.

Other fossil fuels, coal and oil in particular, have similarly rocketed in price in recent months. Oil is currently priced at its highest rate per barrel in three years of roughly $80, having jumped more than 50% in cost over the past number of months alone.

So, if our energy prices are rocketing due to a global bottleneck, when is that blockage likely to ease?

“Hopefully by next February or March,” says Daragh Cassidy, head of communications with price comparison and switching site Bonkers.ie. 

By that rationale, energy prices are going to continue at sky-high levels for at least another year. It may be a winter of discontent in more ways than one.

One option for the Government to appease the struggling masses is to introduce an energy price cap, which would effectively force suppliers to function at a loss should wholesale prices continue to climb at their current levels, though it’s not an avenue Mr Cassidy seems overly enamored with, not least because such a measure would ordinarily be introduced in normal times to aid in managing the market, not extraordinary times like these.

“The UK already has one, but it’s proving quite controversial at the moment. It hadn’t mattered much until recently because prices were hundreds of euro lower than the cap, but now that it’s been breached there are calls, especially from suppliers for it to be scrapped,” he says.

He isn’t wrong — some nine UK suppliers have gone bust since the onset of the cap and the explosion in the markets. Cap or no, it doesn’t take a wild jump of the imagination to see some of Ireland’s congested supplliers market disappearing from the map should things continue as they are — either via consolidation or through simply going out of business.

Transport Minister Eamon Ryan suggested that the country is in for a 'very tight' number of years from an energy point of view.
Transport Minister Eamon Ryan suggested that the country is in for a 'very tight' number of years from an energy point of view.

Leaving domestic woes aside, the other side of the current energy conundrum is the notion that our national energy supplies are under threat.

Recent days have seen a multitude of Government politicians asked about, and pontificating upon, the chance of Ireland facing mass blackouts over the coming winter, a hitherto scarcely credible prospect.

More worryingly, still, none of them have been willing to state unequivocally that such an eventuality simply cannot happen.

“We’ll do our best,” the Taoiseach said on Thursday when asked to state categorically that such blackouts simply cannot happen. Far from reassuring.

Transport minister and Green Party leader Éamon Ryan went one further, suggesting that the country is in for a “very tight” number of years from an energy point of view.

In fact, in recent months alone Ireland’s grid has come under intense pressure, particularly in the aforementioned summer months when wind energy dwindled and the country was forced to rely on oil and coal-generated power, ordinarily responsible for less than 10% of the grid’s output, to meet its demand.

Most of the current issues can be traced back to Covid once more, and especially the forcing offline for crucial maintenance of two of the country’s largest, gas-fired power plants — at Huntstown in northwest Dublin and Whitegate in Cork harbour.

Both have been out of commission since late last year. Both plants’ owners, Energia and Bord Gáis respectively, say the two stations will be back operational by late October or early November, thus freeing up an additional 800 megawatts worth of power for the grid — enough hopefully to see the country through the winter.

They will need to be. Without those two plants the prospect of blackouts, or certainly brownouts (the controlled reduction of supply in certain

areas at certain times), becomes a lot more real.

Meanwhile, Ireland’s seeming obsession with more and more bigger and better data centres has come in for a kicking as the scale of the dilemma facing us has become more clear, with existing connections expected to hoover up 30% of our overall electrical capacity (70% in a worst case scenario) by the end of the decade. Has the Government really sleepwalked us into a data centre-shaped minefield? Yes, seems to be the answer.

“This is a consequence of taking our eye off the ball,” says Paul Deane, senior research fellow in clean energy futures at the UCC-based MaREI centre for energy, climate and marine research. We’re left in a situation where we must hope for the best in terms of the two gas plants coming back online. And hope is a terrible strategy,” he says.

Bottleneck

He explains that the gas bottleneck currently affecting the global markets has an element of “fear, panic factor” about it.

“We’re coming into winter and the buffers are low, and all suppliers are trying to sell as much gas as they can, it’s a competition to get reserves to where they need to be,” Mr Deane says.

He agrees that Ireland’s current, immediate predicament is the product of a “perfect storm” of misfortune.

“The two plants which have gone offline, they were breaking down with unforeseen outages, and a plant that size takes that much longer to repair. These were unforeseen events, but two of them happening in close succession to each other is something that has caught us off guard.

Part of the problem is that we’ve taken the safety of the grid for granted. But the current problems were well-flagged by Eirgrid [the body with operational responsibility for the national grid] four years ago.” 

Last week, Eirgrid made it clear that Ireland’s immediate supply future is far from a certain one.

“With Eirgrid coming out with such serious pronouncements, we really need to listen to them,” says Paul Deane. He adds, however, that he doesn’t expect residential supply to be affected in the near term.

“If it comes to it, brownouts will help. If demand is very high they’ll normally shut off some of the very large industrial users, like a quarry for instance, where they’re breaking rock or pumping water constantly,” he says. “

Or even the data centres. If they’re processing YouTube clips say, that can be done later in the day when demand is less.” 

Short term, the issue is the missing gas plants. Longer term, Ireland has a data centre problem. “Generation has to match demand,” says Mr Deane. 

“Right now we’re not building more generation, but demand is increasing. There’s a reputational risk to building power plants in Ireland. Everyone is thinking about a clean future, but renewables replace the use of fossil fuels, but not the need for them.” 

So what’s to be done?

“There should be a pausing of all big industrial development until we can figure out how it’s to be handled,” he says.

“We’ve done that in the past, in 2002 there was an eight-month moratorium placed on windfarm construction. It was highly unpopular with the industry, but it was the prudent thing to do.

"You can’t experiment with a power system while it’s actually working.”

Which brings us back to wind power itself.

From humble beginnings 20 years ago, there are now more than 300 windfarms in Ireland, capable of delivering about 40% of the country’s power needs, provided the wind blows.

However, Ireland has an EU commitment to deliver 70% of its energy from renewables by the year 2030. 

Arklow bank wind farm energy electricity.
Arklow bank wind farm energy electricity.

That’s a target that’s starting to appear unattainable. The chief reason is offshore wind. More specifically, the reason is that offshore  — wind turbines operating from either fixed or floating farms off the coast — is progressing at a far slower pace than the industry would wish.

Offshore is commonly seen as the future of wind. While still beholden to the same natural wind patterns as its onshore cousin, the power potential is a deal greater. 

More than that even, diversification is a laudable goal with this kind of power-generation — if the wind isn’t blowing on land, it may be at sea. Two bites of the one apple. 

Offshore also has a great capacity factor — the level of actual power output versus the hypothetical maximum - than onshore, 45% versus 35%.

In 2004 Ireland had one offshore wind farm, off Arklow in Co Wicklow. Some 17 years later that is still the case, despite numerous potential farms (six in fact — five off the east coast and one at Sceirde Rocks off Galway) being lost in planning hell.

“There are 25 Megawatts in Arklow,” says Noel Cunniffe, chief executive of Wind Energy Ireland, the representative body for the industry. 

“The Government has set a target to increase offshore output to 5,000 MW. But we don’t have a planning platform in place, we don’t have renewable auctions, we don’t even have the ability to connect to the grid. All three of those things need to be actioned. But the main bottleneck is in planning,” he says.

Noel Cunniffe, CEO of Wind Energy Ireland.
Noel Cunniffe, CEO of Wind Energy Ireland.

One thing which may help is the Maritime Area Planning Bill, which is currently working its way through the Oireachtas. If enacted, it will create a regime for the development of offshore.

“I think the ambition is there,” says Mr Cunniffe. 

“The thing we’ve come up against is a critical underresourcing in certain areas. We need more resources, more expertise in the Departments of Housing and Climate Action, but also within Eirgrid and An Bord Pleanála.

“They’re in the process of settling the legislation, but if the people and skills aren’t there then we won’t be able to match our requirements. 

“One thing I think you need to emphasise,” he says, “is the job opportunities and economic growth that would come with viable offshore, even for marine users and fisheries. It’s quite staggering. You’re looking at 100 to 250 people being employed per project, and thousands more in terms of the farms’ construction.” Power in Ireland is a long-term game, Mr Cunniffe explains.

“We’re in the [the current energy crisis] issue we’re in right now because of a lack of gas capacity,” he says. 

“So those facilities need to be repaired. Fine. Longer term though we need to take carbon off the system. 

We need more onshore wind, we need more solar, and we need offshore. If you’re looking at a 20, 30 year timeframe, offshore is where it’ll come from. Wind was a big problem right across Europe. But countries that have offshore perform better.

“After that, we have to figure out the storage problem. The backup batteries we have at the moment are for 30 minutes, maybe an hour. We need to get that up to eight hours, then days. Then it’ll be hydrogen which will power the backups from 2030 onwards,” he says.

There are a lot of moving parts to Ireland’s energy systems. We need to get a lot of things right in order to allay a future of periodic blackouts, something it’s unlikely the voting public would take kindly to.

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