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There is more pain to come

The author is a senior executive working in the energy sector in Ireland whose identity is known to Gript. We have agreed to provide him anonymity so that he can speak freely.

“The first lesson in economics is scarcity: there is never enough of anything to fully satisfy all those who want it. The first lesson of politics is to disregard the first lesson of economics”. Thomas Sowell

Eirgrid’s latest report on capacity outlook out to 2030 released this month speaks more to politics than economics and makes for very grim reading for electricity users. In the document Eirgrid have skilfully evaded any accountability for the mess our electricity system currently finds itself in now and for the foreseeable future. In a particularly sobering line it predicts “a challenging outlook for Ireland with capacity deficits identified during the 10 years to 2031”. i.e. blackouts.

Last year I wrote about the supply deficit for winter 2021 and how its leading to disaster for consumers in Ireland as well as a blame game between Government, Energy Regulator and Eirgrid. Thanks to a relatively benign but sufficiently windy winter in 2021 we escaped any major loss of power as we enjoyed our Christmas pudding in relative comfort (and light).

Last year Eirgrid assumed the capacity shortfall to be about 280MW on an 8000MW system of which about half is unreliable/non dispatchable wind. This year according to the report its closer to 380MW and this figure is expected to grow to closer to 2000MW by the end of the decade. Without reliable baseload power to backfill that capacity gap the risk of regular blackouts becomes a certainty as the years move on. In a country where permitting large capital projects is not straightforward or quick this is a frightening thought. What does all this mean for long suffering citizens as we approach winter 2022? Pray to the wind gods and don’t put the candles away just yet.

So where do we go from here and how much is it all going to cost? Currently wholesale electricity prices are up fivefold on 2021 so there is more pain to come as unit rates on our bills climb upwards steadily to catch up. Irish electricity prices are pegged to gas prices so the global shock this year is hitting on our wholesale prices, as it is for most of Europe to varying degrees. At the recent Oireachtas hearing Eamon Ryan tried to conflate the war in Ukraine with the capacity issues that our electricity system is facing. If the gas was free, we would still not be able to keep the lights on into the medium term such is the atrocious lack of planning and all wind strategy that government have adopted over the last 2 decades. The bad news is the government are doubling down on the demonstrable failures of energy policy for the next decade and beyond.

And what sort of costs am I talking about? To little fanfare the IMF announced last year that for Ireland to get to 2030 Climate Action Bill targets it would cost €20 billion per annum (about €10,000 per household not including recent inflation). A recent report in the UK put the cost closer to £500,000 per household to get to net zero by 2050 which is close to double the Irish figure when annualised. Sure people care about climate action, but do they care that much? If you ask a random sample of people from the “squeezed middle” I suspect the answer would be no.

Our current strategy is moving headlong from a fuel intensive electricity supply to material intensive one as we continue to be hypnotised by wind and solar and very short duration battery storage. To give a real world example the energy intensity of nuclear vs wind is almost a trillion fold when you take power generated per kg of material needed in totality. Like it or not wind farms are material hungry between the steel, concrete and new wires needed for a pitiful return in megawatt terms and at that only at times when there is the wind blowing. If we are to fully electrify our transport and heat infrastructure, we will effectively have to double the size of our grid at high and low voltages. Whatever about the societal impact of more wires the cost of it is eye watering when you consider the 1000s of kms of cabling and new substations and transformers needed. Back of the envelope calculations put the figure somewhere approaching €100 billion for electricity upgrades alone.

With recent policy signals the Irish government is clearly putting all its chips in offshore wind to solve our generation problems. This technology is loaded with huge costs to build the generators, get the power ashore and plugged into the grid. Recent figures from the Kincardine floating offshore wind farm in the UK revealed a staggering capital cost of £8million per Megawatt installed, a full ten times that of gas fired power and can only generate at about half the efficiency i.e. when the wind is blowing. Getting the consumers to cover this business case is undoubtedly going to force more people into fuel poverty. The absolute antithesis of “sustainability” in the purest sense of the word as more misery is heaped on those who can least afford it.

The energy transition looks to be speeding ahead but it is clear from my experience no cost benefit analysis from cradle to grave has been done and ordinary people have no idea how bad it is likely to get. All this in the name of chasing a green ideology rather than effective policy. One must ask why are Ireland pursuing such self-destructive measures, is it to be the best child in the class or some other political gain? China emits as much CO2 in 36 hours as we do in an entire year, we must start asking ourselves is it all worth it? Worst case scenarios from the IPCC predict about 1m in sea level rise by 2100 – shouldn’t we perhaps look at spending fractions of the cost of the energy transition to mitigate any negative effects of climate change that may or may not happen in the next 80 years? I know what Dr Sowell would think.

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