The serious threat of blackouts, not just this winter but potentially a decade before that, is a massive self-inflicted economic wound. Eirgrid, which manages the electricity transmission grid, released its latest generation capacity statement on Thursday. It contains the strongest warnings yet about the gap between Ireland’s electricity needs and potential supply in the coming years.
Don’t panic is the government’s message, as Energy Secretary Eamon Ryan said should a problem arise it would be a bit like “storm power outages” which are regular enough. They don’t last long.
There’s a world of difference between a decade of lack of electricity and parts of the country being hit by a storm.
Let’s face it, Eirgrid’s explanation of generation capacity isn’t exactly blockbuster reading. The annual warnings of potential power outages were there, but until this year they weren’t exactly in the spotlight.
As early as 2016, it warned of higher demand forecasts in the coming years, but categorically stated: “The only new generation that we confidently expect to be connected in the next decade is renewable, mainly wind and also biomass/waste”.
The company clearly felt that switching to renewable energy would be enough. Not so two years later in 2018, when it said: “Although there is currently a significant asset surplus, the surplus is expected to be increased by demand growth and some announced plant closures, e.g. due to emission restrictions, is being undermined.”
In the event that the north-south connection line is not in operation by 2024, additional capacities would be required, it said. “Should another plant close (e.g. due to lack of capacity payments), this would result in earlier deficits,” she added back in 2018.
If there was ever a moment of concern about this slowly evolving car crash, it was in 2019, when the report laid out its usual forecasts for future power demand and supply using eight different high, medium, or low power demand scenarios.
The report concludes on page 15 that “a capacity deficit is projected through 2026 in all scenarios except the low demand forecast”. This also applied in the event that the north-south interconnector should go into operation.
Eirgrid chief executive Mark Foley expressed frustration while speaking on RTÉ radio
So as of 2019 we were in trouble unless something changed. In 2019, an auction for new generation capacity took place. Incredibly, of the 2,007 MW offered, only 709 MW were successfully bid. Out of 1,303 MW offered, only 526 MW were successfully bid for Greater Dublin.
This week, Eirgrid said 630MW of promised capacity from new plants has not materialized. The projects were abandoned. A further 590 MW of existing power generation was shut down due to technical problems. That’s a total of 1,220 MW that should be available that’s gone out of the system.
To put it in perspective, that’s about 30 per cent of the total wind power capacity in the Republic of Ireland gone and no one seems to understand how that happened.
Eirgrid Chief Executive Mark Foley expressed frustration when speaking on RTÉ radio Tomorrow Ireland on Thursday. He pointed to the need to change the way the electricity auction system works. Somewhat cryptically, he referred to the need for incentives.
He seems to conclude that the 2019 auction process did not provide sufficient incentives for power producers to deliver. The current plan calls for temporary generators and that is in the pipeline, but Mr Foley also suggested more needs to be done to ensure these new temporary capacity auctions work better.
He said the regulator (CRU) and government were “listening” “now” but still needed more improvement.
Who is to blame for this situation? Could it be that the regulator’s auctions should be better structured to encourage more producers to actually go ahead, build and meet their commitments?
Could it be that Eirgrid recognized the potential shortfall a few years ago but believed the state would meet its renewable energy targets and therefore hasn’t articulated concerns strongly enough since 2018?
Could it be that from 2018 governments are only listening to the renewable energy story and failing to consider the underlying systemic issues emerging in electricity generation in Ireland?
Maybe it’s all just an extraordinary coincidence of events.
The Russian invasion of Ukraine did an excellent job of covering up and confusing this whole debacle. The public is being prepared for electricity price increases as a result of the conflict.
The public is also now being conditioned to the possibility of blackouts or power rationing having nothing to do with the Ukraine war or Vladimir Putin, unless Europe and Britain actually run out of gas.
Impending power failures are also economically damaging. Businesses and households deserve clear answers.
The economic slowdown will not solve the real estate crisis
What’s the worst that could happen to house prices right now?
If you own a home, prices would fall sharply. If you want to buy one, it would be so that prices do not fall but continue to rise
Unfortunately, the market could be headed for an intermediate scenario, which isn’t good news for anyone. Rising interest rates are likely to pull home prices lower as mortgage applicants are stress-tested on their options.
Lower prices could make homes more affordable. But rising construction costs are likely to reduce the number of homes being built, which in turn would support or bolster prices for those who can still afford to mortgage and buy a home.
This is not a good result at a time when the government is under intense pressure to allow tens of thousands more new homes to be built. This implies that the housing market will not collapse but will drift in a direction where fewer homes will be built.
A planning expert told the Construction Industry Federation conference during the week that of the 64,000 building permits granted in Dublin between 2017 and 2021, only 26,000 were activated. This means that builders have started work on just four out of 10 new homes approved by Dublin City Councils. John Downey said construction costs were to blame. Higher costs could further affect this figure. Rising construction costs and flattening or even falling real estate prices are not a recipe for solving the real estate crisis.
The incredible rise in real estate prices over the last few years is extremely problematic for those trying to buy a home. Having this ease should be a welcome development, but it can have its own side effects on the number of homes that are built.
As long as there are enough people who either have the money or are able to withstand the stress tests of higher interest rates by the banks, there will be support for house prices. There is still a lot of demand. When it stalls, it looks like the supply will be cut as well.
Don’t expect an economic slowdown to help solve the housing crisis.
https://www.independent.ie/opinion/comment/we-deserve-answers-about-how-we-ended-up-in-this-energy-supply-mess-42049363.html We deserve answers as to how we got into this energy supply chaos