Risks to Ireland’s energy supply could have ‘chilling effect’ on inward investment, Ibec warns

Flaws in Ireland’s system for ensuring an adequate electricity supply and issues with planning and the power grid could have a “chilling effect” on inward investment if they are not “swiftly resolved”, Ibec has warned.

The business lobby group’s remarks came in its contribution to the Government’s ongoing review of energy security which is taking place against a backdrop of pressure on Ireland’s power system and the energy crisis sparked by Russia’s war on Ukraine.

Hundreds of submissions have been made during the public consultation phase of the Review of the Security of Energy Supply of Ireland’s Electricity and Natural Gas Systems.

A report compiled by independent experts Cambridge Economic Policy Associates (Cepa) shortlisted a series of mitigation options as responses to potential shocks to Irish energy supply between now and 2030.

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Among the options are non-commercial onshore gas storage facilities and floating liquefied natural gas (LNG) terminals.

A public consultation phase of the review ended last week and ultimately Minister for the Environment Eamon Ryan will make recommendations to Cabinet on how Ireland’s energy needs can be secured in the coming years.

Ibec’s submission raised concern about the risk of delays to significant energy infrastructure projects saying there is a “cumbersome planning system”. It also said a “key barrier” to developing energy projects was uncertainty about when they would receive access to the grid.

It said: “These planning, licensing and grid issues are compounded by flaws in the capacity market system [the mechanism for ensuring future electricity supply] which has seen expected capacity withdrawn.

“If these issues are not swiftly resolved, they could have a chilling effect on inward investment over the coming years.”

Ibec said it supported the national climate targets for reducing greenhouse gas emissions and achieving carbon neutrality by 2050.

However, on the mitigation options set out in the Cepa report, Ibec noted the “omission” of the further development of Ireland’s own indigenous gas supplies.

It said this “indicates a continued national policy preference for other countries to carry out the exploration, development and production necessary for serving our medium-term national gas demand”.

[ What are floating LNG terminals, and are there plans to bring any to Ireland? ]

Ibec said internationally piped gas and LNG had a higher carbon footprint than domestically produced gas.

It said of the shortlisted options “Ibec believes that LNG, gas storage for emergency use, gas decarbonisation through biomethane and hydrogen, and gas demand reduction incentives could all play a role in a secure energy transition [to renewables].”

The use of LNG has been a contentious issue within Government.

The Green Party has been resisting its use on the basis of continued fossil-fuel dependency and the likely use of fracked gas.

In contrast, some TDs in Fine Gael and Fianna Fáil have strongly backed a proposed permanent commercial LNG facility for the Shannon Estuary.

Ibec argued that there could be controls in place to address concerns that fracked gas could be imported.

A separate submission from the American Chamber of Commerce Ireland (AmCham) – which represents US multinational companies here – said it had raised the “lack of energy capacity” for many years.

It said the current energy crisis must be approached with “urgency and thoroughness” while keeping in mind the need to reduce emissions.

AmCham also said: “It is important that Ireland retains its reputation as a destination that encourages and facilitates inward investment.

“This reputation has been maintained by Ireland’s ability to effectively guarantee the generation of sufficient energy for such FDI [foreign direct investment] projects and this is needed for the future.”

AmCham said that before offshore wind power and hydrogen-based energy comes on stream, the development of transitional power sources was needed, including gas infrastructure that could pivot to green hydrogen in the future.