‘This may be controversial in Ireland but Brexit is good for the energy storage sector’
Brexit Proof Q&A: John Wood, CEO of Infrastrata/Islandmagee Energy
Infrastrata CEO John Wood: ‘It concerns us deeply that we are looking to invest £300 million into Northern Ireland’s utilities framework with limited political interest.’
John Wood is CEO of Infrastrata plc, the company that has agreed to buy Harland & Wolff shipyard out of administration and Islandmagee Energy, the £300 million (€337 million) natural gas storage facility to be installed in Larne Lough.
It employs a small core staff of about 10 plus subcontractors but once the gas project begins next year there will be 400 construction workers for four or five years and then a permanent plant staff of just over 40. And Infrastrata has promised to boost the size of the Harland & Wolff workforce by “several hundred over the next five years”.
What was your reaction when you heard the UK had voted to leave the EU?
I had mixed opinions because I could see advantages and disadvantages. Islandmagee Energy’s gas storage project in Larne Lough was being part-funded by the EU and this would alter as a result of leaving. Also, as a Scotsman living in London and having worked all over the world, my perspective on unions – whether European, British or otherwise – was positive.
Now that we are attracting private funding instead, we are very confident that we will stick to our timetable.
How is your business likely to be affected?
The energy sector is particularly cyclical and can be volatile. But volatility and instability for the gas storage business is a good thing. If you look at how the oil prices have remained stable despite the turmoil in the Strait of Hormuz and the tensions between the West and some oil-producing countries, one has to acknowledge the power of storage as a great stabiliser. Similarly, for the gas storage project in Larne which promises stability of supply for the island of Ireland. This is critical particularly for Ireland as it is at the end of the gas pipeline which originates in Russia.
How much do you rely on exports or the supply of materials across the Border?
We remain largely untouched by the movement of goods across the Irish Border because the project will be largely self-generating.
But this project impacts all of Ireland and part of our aim is to encourage the reversal of interconnector pipelines to make full use of the Irish single energy market and to export.
When did you begin preparing for Brexit and what contingency plans have you put in place so far?
We began preparing the day after the referendum results were broadcast. We planned for each scenario: soft Brexit, hard Brexit and no Brexit. The funding issue fundamentally altered so we drew up plans to draw in private investment to replace the EU funding. This has been going particularly well.
Are you examining new markets/suppliers and, if so, how practical is that?
This may be controversial in Ireland but Brexit is good for the energy storage sector. Leaving the EU, which provided a degree of energy stability through the extensive European network of gas storage facilities, means Britain and therefore Ireland need to create a new energy stability. That’s were Islandmagee Energy’s gas storage facilities and future such projects come in to provide this.
When do you expect to be Brexit-ready?
We are ready now.
What’s your best-/worst-case scenario?
Perversely to the accepted status, the best scenario for Islandmagee Energy is a hard Brexit as this will increase demand for stable sources of energy and therefore storage. This will have the effect of driving up prices at first but I believe these prices will soon be corrected and settle.
The worst-case scenario is continuing uncertainty in which investors start to lose confidence and stop investing.
How might the Irish or British governments, or the EU, help ease the pain of Brexit for your company or sector?
Politicians in Northern Ireland need to get back in the saddle. It concerns us deeply that we are looking to invest £300 million into Northern Ireland’s utilities framework with limited political interest. In the longer term, the British and Irish governments need to overhaul their energy strategies particularly in terms of trading legislation.
How do you think the governments have handled the Brexit negotiations?
It is unfortunate that the Irish Sea seems to have widened and that relations between both countries have become embittered. There have been too many red lines, too much intransigence and not enough common sense shown on both sides to resolve the Border issue.
I foresee the Irish Government walking into a situation where they will have no option but to put up a Border to protect the EU single market and customs union. Whether it likes it or not, the consequences of the vote to leave means Ireland actually does have to change tack, be more accommodating and, difficult as it may seem, roll with some of the punches that are an inevitable consequence of its close neighbour leaving the EU.
Looking out five years, how do you think your business or industry will have changed as a result of Brexit?
I am particularly optimistic. Assuming we can capitalise on the new circumstances and trading opportunities open to us as a third country, I see no reason why we cannot become economically much more vibrant than we are already.
Would you like to see a second referendum on Brexit?