Despite a severe economic downturn, Ireland has held to its ambitious energy targets to move itself towards a low-carbon economy. But to reach its goals and break its heavy use of imported fossil fuels, Ireland must invest even more in renewable technologies, expand grid integration and improve energy efficiency, the International Energy Agency (IEA) says in a review of Irish energy policies.

“At a time when many governments are shying away from their commitments to clean energy, Ireland has courageously resisted the temptation to scale back its own,” comments IEA executive director Maria van der Hoeven. “A lot has been achieved, yet there is more to do. Now is not the time for complacency.”

Ireland, whose location gives it some of the best wind and ocean energy resources in Europe, plans to produce 40% of its electricity from renewable sources by 2020, one of the highest targets in the world.

The second pillar of Ireland’s decarbonisation strategy relies on the development and optimisation of energy efficiency and research and development into ‘demand-side management’ technologies. The National Energy Efficiency Action Plan outlines 90 measures and actions to be implemented in order to achieve 20% energy savings as of 2020.

Funding of energy-focused research and development is strong, despite Ireland’s recent economic downturn, and the country has become a world leader for smart grid deployment, a key means to reaching ambitious targets in the deployment of clean generation and end-use technologies, such as variable renewable energies and electric vehicles.

Ireland is highly dependent on imported oil and gas. While the push to develop renewable energies is commendable, the report warns, it will result in an increased reliance on natural gas, as gas-fired power plants will be required to provide flexibility in electricity supply when wind power is unavailable. Two-thirds of Ireland’s electricity already comes from gas-fired generation, which adds to energy security concerns, particularly as 93% of its gas supplies come from a single transit point inScotland. The country must successfully develop a range of gas and electricity infrastructure projects and market solutions while continuing to integrate its energy markets with regional neighbours.

Regional integration is an ongoing development, in line with the European Union’s target model. Irelandhas successfully implemented the all-island Single Electricity Market (SEM) with Northern Ireland, fostering genuine competition among suppliers. Increased interconnection with the island of Great Britain is underway.  In the gas market, the governments of Ireland and Northern Ireland are developing a Common Arrangements for Gas (CAG) framework.

Fuel poverty levels could cover 50 per cent of the population within five years and 75 per cent within a decade if a properly co-ordinated energy policy is not developed, according to architect and television presenter Duncan Stewart, when speaking at the recent Energy Action conference in Dublin Castle. He also questions if the €400 million spent each year of fuel allowances is being spent in the right way.

There is no integrated approach between government agencies and departments and the use of coal is particularly wasteful as 80 per cent of the energy generated goes up the chimney and it creates twice as much pollution, through carbon emissions, as gas. He says that the margin for reducing carbon emissions was extremely limited and buildings would have to bear a disproportionate share of the burden for reducing them further, compared with sectors such as transport and agriculture, yet we still lacked an adequate survey of building stock.

He calls for carbon tax to be ring fenced and used for the purpose intended. Some €6 billion a year was spent on oil imports. A similar amount spent on developing alternatives would create 120,000 jobs, as well as helping to address our balance of payments and overall financial problems.

The Irish Wind Energy Association (IWEA) has stated that the ESRI ‘Review of Irish Energy Policy’ is an important reminder that Ireland is far too dependent on importing its energy supply from other nations and needs to accelerate the move towards maximising our own resources. However, responding to the report, IWEA chief executive Dr Michael Walsh says that any reduction in current supports would undermine investment, cost jobs and result in Ireland potentially failing to meet its EU 2020 renewable energy targets.

“A reduction in supports would most definitely be a major setback for a sector that is more than justifying these same supports but is going to deliver savings to the consumer and create export revenue for Ireland in the future as well. A recent study by international energy analysts Redpoint on the Irish market showed that wind energy generation will deliver savings to Irish consumers of Eur100m by 2020. This demonstrates that wind generation does not add cost in today’s market let alone in the future when we can become an exporter of renewable energy,” he points out. “In that regard, any reduction in the current supports will be a set-back. It will deny investment and, therefore, potentially lead to higher prices, higher emissions, continued imported fuel dependence and a missed opportunity to create thousands of new jobs.

He continues: “This ESRI report, if anything, reaffirms that we are way too dependent on external sources of energy, with approximately 89% of our energy requirement being imported, and justifies the need for accelerating our wind energy programme. What we need now is to develop our own unique resources as quickly as possible to reduce this excessive dependency on what are long term unreliable and, from a price perspective, volatile international energy sources.”

Ireland has strong onshore and offshore wind resource yet last year, due to a lack of co-ordination, Ireland saw only 115MW of onshore wind built – approximately a third of what needs to be built annually to meet our targets. The IWEA is calling on the Government to introduce a co-ordinated energy and enterprise implementation plan to ensure we deliver as much capacity as possible and to develop a major income stream for Ireland by becoming a leading European exporter of wind energy.

“Specifically, we can ensure that Irish projects play a part in meeting the UK’s energy needs as we will have the resources to meet over 15% of the UK’s 2020 renewable requirements in a highly cost effective fashion for UK consumers. This would result in additional jobs and investment in Ireland and ongoing export revenues,” says Michael Walsh.

The economic crisis, the evolving EU policy context and recent developments in technology require new approaches to domestic energy policy, according to a new report – A Review of Irish Energy Policy – by the Economic and Social Research Institute (ESRI). While the objectives of policy remain the enhancement of competitiveness, ensuring a secure energy supply, and tackling the problem of climate change, the changing external context requires some new solutions.

According to the ESRI, one of the key successes of Irish energy policy in recent years was the implementation of the Single Electricity Market on the island of Ireland. It has ensured a secure supply of electricity at a competitive price since 2007. However, new developments at the EU level may require a change in the market structure to facilitate trading in electricity across the EU and it will be important to ensure that the enhanced integration of the Irish electricity system with that of North-Western Europe benefits Irish consumers.

Even if oil and gas prices result in higher electricity prices in the future, it is not sensible to use scarce resources to subsidise electricity prices, says the ESRI. Furthermore, any windfall gains from free electricity permits should accrue to the exchequer.

The report also points out that while current policy on promoting renewable electricity may be broadly consistent with the strategic aims of Irish energy policy, there are aspects of market design and of the support scheme for renewable energy (REFIT) which could result in substantial unnecessary costs falling on Irish consumers. The current support scheme for onshore wind is probably too generous – the additional sum payable where prices are high should be dropped for new investors, argues the report.

The ESRI also maintains that incentives for offshore wind and wave and tidal generation are not appropriate as it is premature to incentivise substantial investment in such technologies. This aspect of current policy could prove very expensive for the Irish economy, while bringing little or no environmental benefits. The Irish electricity market may also need to be adjusted to ensure that the level of investment in intermittent renewable generation is appropriate.

The ESRI report urges Ireland to contribute to a review of EU policy on renewables, as current European policy is likely to increase the cost of reducing emissions while providing limited security of supply advantages. While the costs to Ireland from the inappropriate configuration of EU policy may be small, the potential costs to the EU economy as a whole are likely to be significant. Ireland should also contribute to the next stage of EU policymaking to ensure that the approach to managing greenhouse gas emissions from agriculture is efficient from both an economic and an environmental point of view.

EU policy on energy security is developing in the light of changing circumstances. The extension of the current arrangements for cross-country co-operation in the event of a shortage of oil to the gas market is important for Ireland. It is to be welcomed that the EU is also developing clear rules on gas transmission through member states. Domestic security of energy supply requires that the Corrib gas field is brought to production as rapidly as possible, says the ESRI.

Ireland is playing a lead role in Europe in adding wind power and other renewables to our energy supplies, a new report states. Ireland is on target to achieve its target of 40% of electricity from renewable sources by 2020, and in achieving that target, we will have one of highest levels of wind power as a percentage of system demand in Europe, according to the EirGrid Annual Renewable Report.

At the end of 2009 there was 1526 megawatts (MW) of renewable energy installed in Ireland. This figure includes wind power (1260 MW), hydro (236 MW) and other small renewable energy sources (30 MW). By July this year, this had increased by a further 200MW of installed wind capacity. The amount of power generated from renewable sources in 2009 was over 14% and sufficient capacity is in place in Ireland to meet the target of 15% this year.

9 MW of wind generation was added to the power system in Northern Ireland during 2009 bringing the total installed capacity there to 301MW. During 2009, 8.7% of demand was supplied from wind generation. As a result, Northern Ireland has already achieved its renewables obligation of 6.3% by 2012/13. It is anticipated that a further 70 MW of wind generation will be connected in Northern Ireland by the end of 2010.

On the 5th of April, 2010 at 06:00am wind generation provided 50% of Ireland’s system demand. Total overall renewable output reached 55% at the same moment – another new system record,

This first EirGrid Group Annual Renewable Report offers an assessment of the progress made in the renewable energy space over the last 12-18 months and sets these developments in a broader international context. The report examines progress in Ireland and Northern Ireland.

“Every year, Ireland sends €6 billion of public monies out of the country to pay for imported gas, oil and coal. This figure is unsustainable and must be reduced. The sure-fire, guaranteed way of doing this is by developing and using our own indigenous renewable energy,” says Energy Minister Eamon Ryan TD. “With the best resources in Europe, we can afford to be ambitious in our plans. Our overall national target of 40% renewable electricity will be reached and surpassed to the point of export, when Ireland’s wind and waves can bring money back into this country.”

He adds: “Government’s energy policy has set Ireland on a low-carbon path and key to this will be the improvement of our transmission grid. I commend EirGrid for the work it is doing in this regard and I look forward to seeing more renewables coming on stream in the months and years ahead.”

The Confederation of British Industry has called on the UK Government to deliver key energy and planning reforms within six months, or risk undermining emissions targets and energy security. Launching a new report; ‘No time to lose: Deciding Britain’s energy future’, the UK’s leading business group warned that without clarity on Government policy, £150 billion of private sector investment in low-carbon infrastructure would fail to materialise. This investment is essential for the UK to achieve a secure, sustainable and cost-effective energy mix that includes renewable sources, nuclear power and fossil fuels.

The CBI says that uncertainty about the planning regime in particular is making investors wary of committing to new energy projects. The Government has announced it will abolish the Infrastructure Planning Commission (IPC) and replace it with a Major Infrastructure Unit with decision-making powers returned to Ministers.

Among measures the CBI is calling for from the Government by the end of February 2011 are tackling delays in the planning system, speeding up the development of carbon capture and storage (CCS) technology, and providing more detail on electricity market reform, its renewable energy policy, and the implications of the Emissions Performance Standard.

“The Government’s first few months in office have been rightly dominated by sorting out the fiscal deficit, but it must not let the timetable for energy and planning reform slip any further. Energy companies are unable to get the ball rolling on new infrastructure projects when it is unclear how the future planning regime will work,” comments John Cridland, deputy director-general of the CBI. “Uncertainty on plans for electricity market reform, slow progress on clean coal and nuclear power, as well as the cost of renewable energy are adding to the mood of caution among investors. We need investment from companies, not delays from government.”