Power and water are the two threats to Irish competitiveness that no one is talking about

Attracting big investors to Ireland is typically framed by a discussion on skills, tax and access to the European Union marketplace. But more prosaic things are also vital — and if you want to set up a big factory in parts of the Republic, finding somewhere with access to energy and water is not now a straightforward task.

This is part of a wider story and the result in large part from basing the State’s investment plans on forecasts that underestimated population and jobs growth. The 2040 estimate of the number of people at work, underpinning the Republic’s current National Planning Framework dating from 2018, has already been pretty much met. Inward migration — even before the arrivals from Ukraine — has already far surpassed expectations. Add in the collapse in State-led and private-sector investment in the wake of the financial crash and the result is a State short of capacity in housing, hospitals, school places and many other areas. A key challenge of politics is the national “catch-up” that is required.

A vital area of underinvestment is power and water, areas requiring large long-term planning and investment. Overseas multinationals, mainly from the United States, have flooded into the Republic in recent years despite the State’s faltering offering in these areas. Pharma and biotech investment remain very strong — witness the large Dexcom project in Athenry, promising 1,000 jobs — and the tech sector, while experiencing some losses, also remains healthy. The Industrial Development Agency (IDA) continues to do a good job in challenging circumstances.

But the risk is that the damage to competitiveness, and to plans to attract future foreign direct investment here in the years ahead, is being slowly baked in. A key question for new investors is now the availability of energy and water in their desired location. Already, because of the pressure on the electricity grid, parts of the east coast are close to being off-limits for big, new energy-consuming projects such as large manufacturers or data centres, where special considerations apply. Meanwhile, water supply is also causing complications and will become a big constraint within the next five years or so in the wider Dublin region, unless action is taken. Already the availability of water connection is a key issue housing developers have to consider — and this constraint will intensify, along with the impact on industry.

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As a review of Ireland’s National Planning Framework completed last year by three experts put it, while some progress has been made in recent years, “delays in the financing, planning and delivery of key infrastructures have negatively affected our competitiveness over the past decade, and the benefits of greater sustainability in how we live and work will be key to competitiveness in the future”. In the dry language of these kinds of documents, that is as near to a red flag as you are going to get.

IDA Ireland statements, meanwhile, refer increasingly directly to the problems of the “carrying capacity” of the economy — the ability to provide basic services to its client base. And the glacial approach to addressing some of the key blockages is extraordinary — the Attorney General’s office started a review of planning legislation in late summer 2021 with a view to new legislation. This may finally be enacted in the first half of this year.

With a general election looming, the risk now is that any controversial infrastructure projects … will be put on hold for the rest of this year. And yet more time will be lost

Picking apart what needs to happen on energy is complex, as it involves how to get to the ultimate goal of renewable energy supply, as well as how to keep the lights on in the interim. In an interesting presentation to a recent Oireachtas committee meeting, Mark Foley, the boss of EirGird, which is responsible for developing the electricity network, pointed to the recent failures to attract new gas-powered stations needed to underpin electricity supply, due to what he said were weaknesses in the auction process and the terms offered to potential entrants.

The cracks have been papered over — expensively — by some temporary capacity, but the presentation pointed to “the challenging outlook for Ireland with capacity deficits identified during the ten years to 2023”. This needs to be dealt with. EirGrid needs the planning system and — crucially — political support to deliver on its massively complex investment programme, including the landmark North-South interconnector. Moreover, the State needs a planning system which can allow investment in offshore and onshore wind power to accelerate, which will not be easy with this sector itself in some upheaval. Enterprise Minister Simon Coveney this week posted images to X of offshore floating wind farms in Scotland, saying they were “part of Ireland’s energy future”. Perhaps, along with Government colleagues, he might reflect on how Scotland is years ahead here.

On water, meanwhile, the same mix of short- and longer-term issues arise, complicated by the impact of climate change. Irish Water chips away at the problem of leaky pipes, but most recent estimates show more than 35 per cent of treated water is still lost through leaks and more in urban areas like Dublin and Cork, with many kilometres of old, rusty, iron pipes. Meanwhile, the longer-term strategic issue is that the majority of the population is on the east coast but the water is on the west. This is a problem which has been mulled over for a quarter of a century now. Irish Water’s plan is to pipe water from the Shannon — the Parteen Basin in Tipperary — through the midlands to Dublin. There have been public consultations on the plan, but as yet no planning application. And time ticks on with the water supply in Dublin on a knife-edge and 85 per cent dependent on one river, the Liffey.

Standing in the middle of all this is the Commission for the Regulation of Utilities which oversees the water and energy sectors. The problem in regulated sectors is that the issue of longer-term planning — and particularly of delivery — seems too often to fall between the regulator and the Government. The Republic can have the most skilled workforce and attractive taxes, but if it can’t provide — increasingly clean — energy and abundant water then these won’t count for much in the fight to attract investment. And as well as availability, the cost of power here is already high by international standards.

With a general election looming, the risk now is that any controversial infrastructure projects — and most of them are — will be put on hold for the rest of this year. And yet more time will be lost.