Your browser is not supported. Please update it.

5 December 2019

Ireland ‘Grid’-locked as it pushes for offshore wind

Ireland announced a new auction scheme this week, which will see 12,500 GWh worth of capacity added to meet the country’s growing energy demand. Many are getting excited over the prospect of exporting electricity generated from offshore wind, but due to a severe lack of infrastructure, Ireland will not be able to go hell-for-leather in adding new capacity. Prioritizing grid development will be the biggest challenge to the country, but large-scale reform, rather than adding infrastructure when necessary, would inevitably make the coming surge in renewables a more sustainable prospect.

Suddenly the idea we floated in last week’s issue from SuperNode of a European Supergrid does not seem so absurd, and Ireland could well provide the first step towards a fully connected Europe.

Renewables currently account for around 30% of electricity generated in the country, which is relatively low considering its population, relative wealth and abundant wind resource. While historical and political issues have been a blockage for growth in renewables, an insufficient electricity grid will not be able to distribute a large amount of new capacity, which is likely to cause the country to continue falling short of its climate targets.

In June, Ireland set the ambitious target to run on 70% renewable-generated electricity by 2030. The new Renewable Electricity Support Scheme (RESS) auction, announced this week, will allow renewable projects to bid for capacity and receive a guaranteed price for electricity fed into the grid, in a 14 or 16.5 year power purchase agreement. In 5 rounds the capacity auctioned will be 1,000 GWh in 2019; 3,000 GWh in 2020 and 2021; 4,000 GWh in 2023; and 2,500 GWh in 2025. While the rounds will consider PV, biomass and onshore wind as sources of power, the industry will hope that this is the renaissance of offshore wind within Ireland – providing a clear pathway to developing a steady pipeline.

With Ireland’s ambitious climate-action targets comes the reality that its electricity demand is actually increasing too quickly for a similar incremental approach to grid development. In recent years, hyperscale data centers have been popping up in the Greater Dublin Area, with Amazon Web Services, Google and Microsoft among players wanting to get in on the action. It’s estimated that by 2027, nearly a third of the country’s energy demand will be derived from these facilities. A report last week by the Irish Academy of Engineering highlights how this expansion of datacenters will require an additional 4.5 GW of renewable power, which will demand approximately €9 billion in funding for necessary grid upgrades.

The source of this funding will be up for debate however, with the government’s intentions to prioritize domestic demand in direct conflict with promoting the economic benefits that data centers may bring. While the owners of these datacenters will likely sign PPA’s directly with developers, keeping the costs of power competitive with Scandinavian countries like Denmark, where data centers are also on the up, will mean that the state will have to foot the bill for at least part of the infrastructure. Ireland will look to avenues like the European Investment Bank for this funding after its recent rebranding as a ‘climate bank’, from where it is already awaiting loan approval for the RESS scheme.

If this grid can be developed, Ireland is an obvious choice for offshore wind. With 421,000 square kilometers of available space there is a theoretical potential to provide 12,000 TWh of electricity per year – enough to power the entirety of Europe four times over. In WindEurope’s latest paper entitled: Our Energy, Our Future, 22.2 GW of capacity is more feasibly identified as an integral part of the 450 GW which the European Commission has stated as necessary for 2050, to limit climate change to 2 degrees. This encourages Ireland to focus more on the Europewide challenges of going carbon-neutral, rather than solely domestic energy supply and security – which would also open up a massive export opportunity for the country.

In our Rethink Energy Offshore Wind Forecast to 2040, to be released in January, we expect Ireland to fall dramatically short of this, despite meeting its own targets of 3.5 GW by 2030. We estimate that only 8.6 GW will be installed by 2040, with any large ‘boom’ in offshore wind likely to occur at a later date, if at all, providing its grid can be developed to cope with the increased capacity.

Geographically, it’s very easy to draw comparisons between Ireland and offshore wind pioneers Denmark. They both have an embedded pedigree in agriculture, similar populations, climates and access to shallow enough waters to make non-floating offshore wind an attractive method of renewable power generation. In 2004, Ireland installed the world largest offshore wind farm, which at the time looked to be a signal of things to come. But since then, a lack of support at the government level has seen offshore wind fall by the wayside. Some 14 years have gone by with precious little offshore wind additions. This is largely due to economic recession, as well as political tensions in the 1990s, with Denmark having a greater amount of wealth to invest in ‘going green’ early on. In today’s climate, it would seem logical for Ireland to take inspiration from its Scandinavian neighbor and go full throttle towards offshore wind – but while Denmark was able to increase its capacity slowly throughout the early 21st Century, updating its grid bit-by-bit to become one of the ‘smartest’ worldwide, Ireland’s grid system leaves a lot to be desired in terms of its ability to facilitate renewables, and so cannot adopt the same approach.

The Irish Wind Energy Association (IWEA) claims that there is little bottleneck in supply chain for offshore wind, with 38% of the development possible through domestic resources. Ireland would hardly have to look far to find experience anyway, with both England and Wales already operating projects in the Irish Sea. The attraction of the Irish market has clearly been noted by major players, with Ireland’s ESB (Electricity Supply Board) partnering with the likes of EDF and Equinor in the past month to develop projects in the UK as well as on home soil. Through this, ESB, which controls Ireland’s transmission and distribution networks, will hope that major players will incubate the growth of the Irish supply chain and workforce, facilitating the growth of the market in the coming decades.

For this, the Irish government will release a Marine Planning and Development Management (MPDM) bill in the coming weeks, with new frameworks and legislation to be finalized next year to streamline the development process.

Ireland has not been great in meeting targets, with authorities acknowledging that the 40% renewables target will not be met by the end of next year as intended. The IWEA has criticized Ireland’s leading provider of renewables, Airtricity, for its reputation of delays, but without the infrastructure to facilitate a renewable-based grid, the industry can only move as quickly as the grid will allow.

Currently IWEA estimates that the grid could accept up to 6.5 GW of new capacity, which does not get close to the figures stated by WindEurope. Transboundary projects are already underway with both the 700 MW Celtic interconnector with France and the 500 MW East-west interconnector with England. Making the most of these – as far as exports are concerned – these can only happen if Ireland’s domestic grid has sufficient capacity to distribute the power from newly installed offshore wind facilities in the next decade.

An exciting option that Ireland is considering is to treat its new offshore wind projects as almost decentralized for the time being, with TSO, EirGrid weighing up its options, especially on the less developed west coast. This could see local energy supply addressed first, before nationwide grid connection is achieved later in the decade. This may seem a bit of a backwards approach, but it would almost certainly be quicker than keeping the offshore wind industry at a standstill while the grid is developed independently.

One of the most exciting possibilities for Ireland, though by-far the most ambitious, is the concept of a ‘SuperGrid’ – as pushed for by Supernode Founder Eddie O’Connor at WindEurope last week. Using a Europewide infrastructure to collect energy from renewable sources, the concept proposes a long-range grid to share power throughout the continent. With interconnectors starting to be seen and proposed globally, O’Connor’s home country of Ireland could potentially provide an ideal starting point to build such a grid, tackling Ireland’s problem in one fell swoop, rather than through step-by-step grid developments, while simultaneously setting a precedent for grid reform throughout Europe.

Such a grid would also help facilitate the growth of solar in Ireland, with the new auctions promising at least 10% of capacity to be awarded to solar projects.