Emergency electricity generation will only cover 60% of possible gap

Harry McGee and Jack Horgan-Jones

The emergency generation being procured by the State to prevent power outages in the winter of 2023 will cover only about 60 per cent of the ‘generation gap’ that might arise. This shortfall is partly because of significant increases in energy use by data centres.

Analysis conducted by Eirgrid has identified that there could be a gap of about 700 Megawatts (MW) — enough to power 350,000 homes ― over the winter of 2023/2024, due to a move away from reliance on high-emitting older generators, as well as forecast demand growth, some of which will come from data centres.

The gap would arise in an ‘in extremis’ situation where there was no wind to generate power from wind turbines and one of the larger power stations experienced a shutdown. The emergency power would then be utilised.

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The Government on Tuesday approved the procurement of 450 MW of emergency generators to help close the gap ― in a statement on Tuesday ― at a cost of €350 million.

The Commission for the Regulation of Utilities (CRU) said the procurement of this energy was “one of a number of complementary measures to address this potential generation gap”.

However, it also warned that the gap might be even bigger than 700MW if Eirgrid has underestimated the power requirements of data centres over the next few years.

In a statement, CRU said: “There remains a risk that increased data centre demand, above that estimated by Eirgrid, could further increase the 2023/24 gap currently advised by Eirgrid.

“The CRU considers that all potential demand side mitigation measures should be pursued, alongside those on the supply side.”

Among its suggestions for mitigation are a temporary deferral of data centre ramping up next winter, and particularly, during the winter of 2023/2024.

However the cost impact of the extra 450MW which Cabinet approved on Tuesday will not land on households.

The Public Service Obligation (PSO) levy, charged to all electricity customers, will be turned into a credit rather than a charge under the terms of a separate Government decision on Tuesday. This is enabled by the fact that renewable electricity, which is funded by the charge, is currently cheaper than the wholesale fossil fuel rate ― a situation the Coalition expects to continue for some time.

Minister for Energy Eamon Ryan had already received Government approval to bring the charge down to zero, leading to an annual saving of €52 on household bills. But the persistently high prices for fossil fuels mean the negative PSO levy will give an indicative annual saving of €75 for householders and consumers, the Government said in a statement after Cabinet. “This was done in recognition of the rising cost of living and of the impact on households and businesses of increasing energy bills.”

The total saving to households, annually, from changes to the PSO is €127, excluding VAT, across 2022 and 2023. The rebates are due to begin in October.

The Government also approved the final results of the second auction scheme for renewable energy, the process by which developers of wind farms and other green energy projects gain access to the grid for schemes that are currently in development.

Ministers also approved plans to increase borrowing for Eirgrid to €3 billion in order to invest in the grid and pay for the construction of an interconnector to France ― the Celtic Interconnector. The borrowing limit for Bórd na Mona has also been increased to allow them invest in more renewable projects.

Cabinet also gave approval to a €55 million package of supports for fodder farmers, brought by Minister for Agriculture Charlie McConalogue ― bringing to €90 million the total funding related to the war in Ukraine provided by the Government since March, spread across five different schemes.

Mr Ryan also received approval for legislation underpinning Transport Infrastructure Ireland’s use of the system that provides for varied speed limits on the M50 ring route around Dublin, and potentially other roads. The amendments also provide for the capture, use and sharing of vehicular and other data for traffic management and road safety on the public road network.