ELECTRICITY GENERATION FUEL MIX (%)

States and Norway. While the former two countries will continue to invest in gas production, gas faces increasing hostility in both North America and Norway.

Meanwhile, BP, Shell, ExxonMobil, Total, etc. are being encouraged by financial markets to invest in renewables, even if they offer lower returns. For example, BP recently spent $1bn acquiring an interest in US offshore wind projects, almost certainly at internal returns below 10%. At the same time, the company is pledging to divest $25bn in fossil fuel assets by 2025.

In Ireland and across Europe, huge investment is being made in renewable energy, such as wind turbines. Renewables will help over time, but they still account for only 10% of primary energy in Ireland and are highly variable, according to the weather. In August 2021, gas fuelled 55% of electricity generation, compared to 22% for wind and 11% for coal. At the August peak, gas provided 82% of electricity, with a low of 23%. Wind varied from less than 1% to just over 69%.

Consumption of natural gas in Ireland is specific to electricity generation, industry, and domestic cooking and heating, with minor usage in transport. The current trend is for natural gas to replace oil and coal for domestic heating and electricity generation. Gas supply must meet this challenge in the context of a significant increase in power demand, primarily driven by the new economy – data centres, chip fabrication labs, constantly charging devices, electric cars, etc. Even looking further ahead, it seems that natural gas will have a central role to play in the fuels of the future, particularly hydrogen.

So, the requirement for natural gas is increasing, but what about the supply? Ireland has two main sources of natural gas: domestic offshore production, and supply from the UK, via the Moffat interconnector in Scotland.

Following the cessation of production from Kinsale in 2020, the sole domestic gas field is Corrib, off the coast of Mayo. Its production peaked in 2017 and is expected to be

Fossil Fuels (Total)

Natural Gas

Oil

Coal

Peat

Renewables (Total)

Wind

Other Renewables

Hydro 2005 93.0 40.0 15.5 27.8 9.7 3.5 1.9 0.6 1.1 2019 71.1 56.2 1.8 3.4 9.7 25.7 19.2 4.8 1.7 depleted by 2030. A new gas field coming on stream in future years is unlikely, as current government policy is not to issue fossil fuel offshore exploration licences. That will leave Ireland almost completely dependent on the UK for this crucial commodity.

How does the UK, an island like Ireland, with a very strong carbon emissions reduction agenda, handle its energy security issues?

Cambo, a new oil field development project west of Shetland, is currently the subject of a political tussle between Boris Johnson (in favour) and Nicola Sturgeon (against).

The UK’s gas pipeline connections are to Norway and the Netherlands, where there is a major European gas hub. The UK also has three liquefied natural gas import terminals, where natural gas can be shipped in from Qatar, the Gulf of Mexico, and elsewhere.

Britain also has a number of facilities where gas can be stored during low-demand periods, for use in winter, to manage supply and prices.

In Ireland, Liquified Natural Gas is politically problematic. An American firm recently applied to An Bord Pleanála for planning permission to build an LNG plant and power station at Ballylongford, on the Shannon Estuary. This project was previously shot down by the High Court on environmental grounds, and it is vigorously opposed by large swathes of the Green Party.

Environment minister Eamon Ryan has signalled his preference that Ballylongford should be long-fingered until completion of an energy security review by his department next year. If LNG is not to be part of Ireland’s gas supply options, by the end of the decade, the country will be totally dependent on the Moffat interconnector with the UK.

In the short term, EirGrid, which runs the electricity transmission network, warned recently that power demand is likely to exceed supply. The organisation’s winter 2021 sensitivity study points out that if two gaspowered electricity generators remain out of service, there will be a deficit of 280MW on the network this winter.

EirGrid also notes that at times when wind generation is low, there is a higher risk that electricity supply will not meet demand in the coming three years. EirGrid estimates that the additional generation capacity required will be 260MW by October 2022, increasing to 1,050MW by October 2023, and 1,850MW by October 2024.

“We expect system alerts to be a feature of the system over the coming winters, and this winter is likely to be challenging,” said chief executive Mark Foley. “It is clear that new, cleaner gasfired generation plants are required now to address this issue, especially for when wind and solar generation is low. Appropriate volumes of flexible gas generation are critical to support the transition to a low-carbon power system into the next decade.

“It is very important that the market gets a clear signal that new, clean gas generation has a key role to play in the all-island power system over the next decade and beyond, and that market participants can feel confident to invest and participate in the market.”

‘In Ireland, Liquefied Natural Gas is politically problematic’