Investing in infrastructure is a big deal
INNOVATION TALK:IT’S LIKE THE start of a low-budget thriller: a growing high-tech economy, with software and services representing about 20 per cent of national exports. But then entire cities are without power; transport and infrastructure are disrupted; and safety systems are compromised. On the streets temperatures soar to 46 degrees. Some 50 per cent of the population are directly impacted. This all actually happened for two days at the end of July, when substantial parts of the Indian national electricity grid failed.
While almost every high-tech centre in India now runs its own power generation plant as a back-up, such massive power cuts clearly impact the workforce, their quality of life and even their ability to commute to work. Such incidents may encourage multinationals to reconsider their investment strategies.
In the same week in California, arguably the world centre for high technology (San Francisco area) and film and new media (Los Angeles), two reports were published on the current and likely near-term impacts of climate change on the Californian economy.
There have been significant increases in wildfires, including around LA. California is becoming drier, leading to drought, whilst at the same time there is danger of seawater encroachment into coastal groundwater caused by rising sea levels. Cross-state electricity transmission corridors are vulnerable to wildfires, and power lines lose 7-8 per cent of their energy transmission efficiency at higher temperatures – just as demand soars from increased air conditioning usage. Californians still recall the summer of 2000 when Pacific Gas Electric imposed blackouts across the state. It transpired that much of the problem was not alone due to shortages but also questionable practices in trading electricity futures contracts by Enron.
Meanwhile in Japan’s high tech and manufacturing economy, about 84 per cent of its national energy needs are imported. Fifty nuclear reactors generate about 30 per cent of Japan’s energy needs and this was expected to grow to 40 per cent by 2017. But after Fukushima, there is debate on the future of nuclear energy, with the government seeking views on what nuclear dependency the country should have by 2030. The overwhelming response is zero.
After Fukushima, Chancellor Merkel decided to substantially reduce the German nuclear programme which until recently used to generate about 25 per cent of the country’s electricity. Germany’s high tech and manufacturing-based economy is undergoing substantial change in its energy mix towards 2020 when it is expected that about 30 per cent will come from coal, 35 per cent from natural gas, 35 per cent from renewables (wind and also solar), and none from nuclear.
For high tech multinationals considering an investment in any country, its infrastructure and the quality and security of its energy supply are a major consideration. How good are our own ? In terms of our electricity transmission network, EirGrid is in the middle of its Grid25 initiative – a €3.2bn upgrade of our physical network, with an emphasis on moving to more efficient higher voltage 400kv lines (than our current 220kV system) as appropriate. Our ability to export any surplus generated electricity and our ability to buy in electricity from abroad if we ever need to, are being increased by a link across the Irish Sea to Wales, and a probable new cross-border link to Northern Ireland. A direct link to France is also being evaluated.