For generations, keeping the lights on has been almost entirely a matter of science, regulation and the mundane business of running large systems involved in the generation and transmission of electrons.
But since the invasion of Ukraine by Russia, that has been turned on its head, says Paul Deane, a research fellow at University College Cork.
“Energy supply is not just a matter of physics anymore, it’s a matter of politics. And while physics is predictable, politics is anything but.”
This week, European Union commissioner Mairead McGuinness said energy rationing “could be a reality” across the bloc this winter.
So far, the drastic shock to the energy market that followed the war has been confined to rapid growth in prices. But even during the comparative lull of summer, minds are turning to what winter may hold and fears are growing.
It is, in the words of one veteran of decades in the power generation industry, “without a shadow of a doubt” the biggest risk faced in their career — and the biggest since the country was hit with the Opec oil crises of the 1970s.
About 40 per cent of Irish electricity comes from wind power, but electricity only accounts for a fifth of the State’s energy needs. For UCC’s Deane, “being good at 40 per cent of a fifth of a problem isn’t much of a help”. The challenge comes from Ireland’s “massive reliance” on gas if there is no wind.
He predicts that Russia will weaponise its gas exports come winter — seeing shadows of it already as Gazprom, the state-backed Russian oil major, has turned down supplies in recent weeks, blaming parts issues caused by sanctions. “I suspect they will always sell some gas into Europe but the likelihood of Europe and Ireland facing gas rationing over the autumn is very real and it’s something we need to prepare for. If there was any serious interruption Ireland would be seriously exposed because we’re reliant on others for transit, production and supply of natural gas, and that underpins our economy. If we had four to five days of calm, the electricity system would just not function without natural gas.”
Government sources push back against the idea Ireland is especially exposed. While they acknowledge that the price pressures are brutal, Ireland uses basically no Russian fuel. “There is no immediate threat to our gas supplies,” said a spokeswoman for the Department of the Environment last week.
About 70 per cent of Irish gas need is met via the UK, through a route that runs from Moffat in Scotland to landing points the north of Dublin, with spurs supplying the Isle of Man and Northern Ireland. The UK market is well-diversified, with liquified natural gas (LNG) terminals, storage, and interconnection to the Netherlands and Belgium. A lot of its, and therefore Irish, supply comes from Norway. Ireland also gets about 30 per cent of its need from Corrib.
However John Mullins, former chief executive of Bord Gáis, has concerns about the nature of arrangements with the UK. He and others worry that the deals underpinning the transfer of gas into the State are untested in an emergency and in the post-Brexit world.
“We make an assumption that in the event of an emergency the UK will keep the valves open,” he says. “We don’t have a cast-iron security of supply with respect to gas, and as a result, that extends to electricity.” In a true supply crunch, the EU could mandate some Norwegian gas be sent to markets where Russian gas has been turned off or down. That could lead to shortfalls in the UK — raising fears that domestic political considerations there might override obligations to Ireland. Parallels to other Brexit fallouts are clear — if that happens, Mullins warns, “the [Northern Ireland] protocol will be the least of our worries”.
Government sources accept that the transmission of gas from the UK is governed by commercial arrangements rather than international treaties. But Ireland is not without cards to play: the same line that supplies our market runs to Northern Ireland, while Ireland exports more electricity over the interconnector spanning the two islands’ electricity systems than it receives. While security of supply was on the agenda for a meeting between Minister for the Environment Eamon Ryan and his UK counterpart last week, Coalition sources are firm in their belief that the arrangements are solid. “There’s people trying to make a lot more out of this than there is, but certainly it isn’t something we are particularly concerned about,” said one senior source.
The Government may believe something of that order is unlikely — but sources accepted that supply will be tight across Europe. However, predicting what will happen beyond that is more difficult. “There’s a difference between losing a little bit and losing a lot and it is absolutely huge,” said one well-placed Coalition source.
One important factor is the weather: a mild versus cold winter could mean a 10-15 per cent swing in gas demand. If supply tightened during a cold snap, the political and social effects would be much more serious.
In the first instance, the price would likely spike further. Price is clearly affecting the economy and society here already — but as a wealthy country, Ireland is still relatively protected, even if it doesn’t feel like it, because it can afford to pay. Already, the State is benefitting from the combined capacity of the UK and Irish market to pay for LNG that would usually go from Gulf states to poorer countries — with the likes of Lebanon and Pakistan suffering shortages already. More price spikes would mean greater demand for the Government to backstop household energy bills, something the Coalition is already preparing for this winter.
If gas were rationed here, there is a merit order in who loses access first: homes, hospitals and other pieces of vital infrastructure are protected; but quarries, factories and data centres would all be required or asked to restrict usage, Deane says. The potential economic consequences of this are clear, from lost wages to damaged corporate profits and tax revenues.
Worst-case scenario planning is already under way — and of course, it extends beyond gas, and to oil-based fuels as well. The Government has already convened an Energy Security Emergency Group (dubbed a “Nphet for energy” by some), which has subgroups for gas and oil. The latter has modelled three scenarios during an emergency planning exercise in recent weeks, where between 20-50 per cent losses in the availability of oil products were modelled. A dedicated network of petrol stations would serve only essential vehicles, like emergency services or food transport fleets. In more severe scenarios, all non-essential filling stations would close, de facto cancelling private driving, said sources with knowledge of the plans. In the worst-case scenario, where a gas shortage combined with a major oil-products shortfall, sources said choices could be forced between competing energy demands like food harvesting and energy generation. “It’s grim, grim stuff,” said one source involved in the planning.
Industry figures believe work-from-home mandates, or days when cars with odd or even number plates aren’t permitted to drive, have all been planned out.
All Irish gas-fired plants can run on “liquid alternatives” — usually diesel, and keep 10 full days’ supply on hand — which in reality is probably longer as they would not be shut off for this long in a row. Scenario planning, sources said, revolves around planning how plants could share their supplies if needed, or how many trucks would be needed to redeploy fuel.
Security of supply
There is some resentment in the industry among those who believe Eamon Ryan has not addressed concerns about security of supply — it’s understood that these concerns have been flagged in recent meetings with officials. Asked about McGuinness’s comments on RTÉ on Friday, Ryan acknowledged that it was a “difficult time”, saying Ireland was in a different situation to other countries due to its lack of connection to Russia. He promised that if there was any disruption “we would be able to immediately react” and said he did not expect to have to restrict supply.
Others are frustrated that delays have hampered investments in the electricity grid that would make for a more resilient system. “The big problem here is we are not clearing the bottlenecks in the system that will allow us to deliver that kind of infrastructure,” says one industry veteran.
Others in the industry are annoyed that regulatory decisions which could ease security of supply concerns over the medium and long-term are stuck in the department. Brian O’Cathain, a former Tullow Oil executive who was also involved in developing the Corrib gas field, is trying to explore a gas prospect — Inishkea — that he argues could pick up where Corrib leaves off when exhausted. His company, Europa Oil & Gas, is seeking an extension to its exploration licence which runs out at the end of July but has no decision from the department. They fear if it lapses, the Government ban on issuing new licences means it will never be tapped. He says Ryan has “a blind spot about indigenous oil and gas exploration” which is driven by “ideological reasons”. The company believes the yield could hold enough gas to meet Irish household needs for 17 years.
“Through lack of knowledge and understanding we may turn off the only opportunity we have to extend the life of a major, effectively State, gas asset,” he says.
Insiders worry that even if the worst-case scenarios do not materialise, consumer sentiment is likely to be knocked and consumption patterns may change. The febrile atmosphere could lead to unexpected spikes in demand, as was seen in the UK last winter, where people who feared a supply crunch helped bring one about by queuing at pumps.
With global markets rolled by uncertainty and shortened odds on more shocks, the consequences of instability are already clear — and the political fallout from a winter of discontent would be severe.