Tough and Swift Energy Policy Choices Needed in a Volatile World

The energy policy trilemma

Energy policy textbooks have always outlined the “energy policy trilemma”. This is the fine balance in policy and planning between three key pillars:

• the cost of energy,
• security of energy supply,
• the environmental impact of energy production.

Until recently this obscure framework has been the dusty preserve of policy makers and research students. But today the real meaning of these pillars has crashed onto to the global news agenda in high definition.

• There are now genuine concerns about affordability of energy for the most vulnerable in our society. Increasing energy demand as industries recovered from Covid-19 paired with diminished gas storage levels in Europe, and poor reliability from some fossil fuel generators saw increasing power prices in Ireland in the second half of 2021. In 2022, this situation has been exacerbated by the ongoing events in Ukraine with gas and power prices hitting record levels over the last few months. There is no let-up in sight.
• As Europe ramps up financial sanctions against Russia the physical security of our gas (and therefore electricity) supply is in serious question. With 40% of the EU’s gas coming from Russia, the necessity of reducing our reliance on Russian gas has raised concerns about where we are going to source our energy from.
• Finally, we are constantly reminded of the grim realities of accelerating climate change. In the Intergovernmental Panel on Climate Change (IPCC)’s most recent report we heard of the “rapidly closing window to secure a liveable future”, with the opportunity to act drying up at the end of this decade.

Whereas previously we may have had time to be reflective about these issues and the compromises which must be made, the urgency is now clear – tough and swift policy choices are needed.

Doubling Down on Renewables

So, if we are to keep the lights on and ensure that energy is affordable to the average consumer what can we do? The answer is crystal clear, as the Taoiseach (Irish Prime Minister), Micheál Martin, recently told the Dáil (Irish parliament), we must double down on renewables.

Cost of energy

With the rapid roll out of renewable technology around the world, the costs of developing constructing these plants have fallen dramatically with the long term levelized cost of energy produced from a windfarm or solar farm averaging around €50-70/MWh (megawatt hours). This compares favourably with the current cost of producing power from a gas plant of €140-240/MWh.

We already see it, on a windy day in Ireland, the abundance of wind pushes power prices down by a half. The Irish consumer’s pocket directly benefits from an increased level of renewable deployment.

Security of energy supply

Today, Ireland, like much of Europe, is dependent on importing fossil fuels to maintain its energy system. As an island nation on the edge of the Atlantic, we have a rich wind resource, and this indigenous natural resource will allow Ireland to develop its own secure energy supply, unaffected by geopolitical changes.

While previously a lack of understanding about where energy comes from, and a good degree of NIMBY-ism were present in the public debate on the topic, it is increasingly clear to all from the Ukrainian crisis that your “backyard” is by far the best and safest place to source your energy.

Renewables solve a large part of the security of supply objective but not all of it. Grid stability, storage solutions, and interconnection must also play an important part at a technical level to ensure that our supply is reliable day to day. While they will take a little time to mature and deliver, they don’t present an impediment to the rapid and continuous deployment of renewables in the near term.

Environmental impact

Renewables, by their nature, are clean. In 2020, 42% of Ireland’s electricity demand was met by renewable sources and the Irish Climate Action Plan is targeting 80% by 2030 – this is achievable with the right policy framework. But no matter how rapid the deployment of renewables we are still in a process of transition where the rest of the reducing residual demand has to be met by fossil fuels in the near term until the grid and storage solutions develop.

The infeasibility of complete reliance on a networked gas system into which Russia is the biggest supplier is now clear to all. This leaves Ireland with the choice between continued use of Coal or diversifying our gas supply options through Liquified Natural Gas (LNG) facilities. With Coal stations emitting around 3 times as much carbon as gas plants, it would seem, LNG, despite lingering concerns over upstream methane releases, presents Ireland with the least-worst option to meet this residual demand over the transition to 100% renewables. Ireland, unlike many other European countries, has yet to answer this open policy question. The decision to allow planning for our first LNG terminal has been put on the back burner. Initial plans to publish a decision in March 2022 have been delayed.

Renewables Focussed Policy Change Required

While we are aiming for Net Zero in Ireland by 2050, we cannot do the energy transition in the dark. We know that not everyone likes the visual impact of windfarms, but everyone still seems to like having electricity. Now is the time to be pragmatic and put structures in place to allow the increased development of the renewable industry, the grid needed to support it and the fossil fuel infrastructure needed to make the transition as clean and secure as possible.

For example, estimates place Ireland’s offshore wind resources somewhere close to 70GW. The Irish government has set a target of 7GW of offshore wind by 2030. However, most of these projects are stuck at early points of the planning phase with policy remaining stagnant, leaving the sector incapable of keeping up with demand. Technocratic delays and a multitude of avenues for continuous objections and judicial review have blighted development of renewable infrastructure and the grid for too long. While this has spawned a sub-industry in the legal and consulting industries, this is not delivering the rapid green transition our society needs.

Emergency Powers

With Covid-19, Ireland has shown that it can act quickly and effectively, with the entire community coming together to support the extraordinary measures taken during the emergency situation.  We are in a similar emergency situation with energy – the recent actions taken by Russia may be the wake-up call needed to spur forward-thinking countries into action. We may currently be laggards within Europe, but if the right policy decisions are made swiftly, our abundance of renewable resources can allow us to become leaders in the sector.

As this transition happens, we at ElectroRoute plan to remain at the forefront of Irish innovation and future ready. Ready for a renewables-led, net zero, secure future.

This article, authored by Ronan Doherty, CEO of ElectroRoute, appeared in Business & Finance magazine Q2 2022.