2. GENERAL ENERGY POLICY

Ireland’s energy transition to a low-carbon energy sector and the expected strong demand growth might place stress on the resilience of the electricity system. It is important to carry out regular assessments of the power networks to ensure adequacy of the existing infrastructure to accommodate the growing demand in Ireland, to maintain the SoS.

The decision of the United Kingdom to leave the European Union poses challenges to Ireland’s energy security. It is crucial for Ireland that stable and efficient energy trading takes place between the two countries, particularly for cross-border gas and electricity flows. Ireland should continue working to maintain the beneficial structures and efficiencies of the SEM. Ireland should also try to maintain the most-efficient form of interconnection to facilitate cross-border trading with the United Kingdom and EU member states.

Assessment

Ireland has experienced significant changes in the energy landscape since the last IDR in 2012. In particular, it has made notable progress towards decarbonisation of the electricity sector through the successful deployment of onshore wind. Ireland had the third-highest share of wind generation among IEA countries with almost 25% in 2017. More impressively, the Irish grid is already capable of accommodating up to 65% instantaneous penetration of wind. Hence, Ireland’s reliance on fossil fuels has dropped from 95% in 2012, but remains high compared to other IEA member countries at 90%.

Ireland’s energy system will need to undergo a fundamental transformation to achieve the country’s energy and climate objectives. The Irish government set an ambitious 2050 target in its 2015 White Paper to reduce its GHG emissions by 80-95% below the 1990 level, with fossil fuels replaced by renewable energy.

After the last general election in 2016, responsibilities for climate action and environment were transferred from the DCENR to the newly formed DCCAE. This is a welcome development as it allows maximising synergies among closely related areas for the transition of the Irish economy and society.

Ireland has many policies and plans that are relevant for the energy sector and span different periods. Not all of these include detailed and time-bound action plans. This number of plans is time intensive to prepare and poses challenges in terms of maintaining overall consistency and monitoring progress. The draft NECP for the period 2021-30, published for public consultation in December 2018, will result in a simplified policy framework and allow for easier monitoring.

Having set the policy landscape and defined the expected outcomes, it is now opportune to shift attention to implementation and close monitoring of the progress made. A simple, consistent and transparent monitoring system will enable early corrective measures, if needed. There is potential benefit in simplifying the number of financial support programmes, for example in energy efficiency, to encourage greater uptake.

Ireland’s GDP has increased significantly since the 2012 IDR, and the country now has the fastest-growing economy in the European Union. This has had an adverse effect on Ireland’s emissions performance. Ireland is forecast to miss both its GHG emissions reduction target in the non-ETS sector and its renewable energy target for 2020. The

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2. GENERAL ENERGY POLICY

latest projections show that Ireland will likely achieve only a 1% reduction of its non-ETS emissions compared with a 20% reduction target for 2020 below the 2005 level. Ireland is forecast to reach 12.7-13.9% of energy consumption from renewable sources in 2020 compared with a 16% target, up from a base of 3.2% in 2005.

Ireland’s population is expected to grow by 1 million by 2040, requiring 500 000 new homes. Coupled with electricity demand from economic growth and electrification of heat and transport, this makes continuous action to decouple energy usage and emissions from economic and population growth imperative. Ireland faces particular issues in meeting these challenges given its dispersed population and small and peripheral energy market.

In 2018, the government of Ireland published its NPF to 2040 to help ensure that anticipated population growth is managed in a sustainable manner. The framework is complemented by a plan for significant investment in renewable energy sources and future technologies, and the promotion of less-energy-intensive/low-carbon heating and transport solutions.

The Irish government, which is committed to diversifying the mix of renewable electricity generation technologies, is developing a new support programme for renewable electricity. This is a welcome and urgent development as the previous support programme closed for new applications in 2015, and the lack of a successor has caused some uncertainty among renewable energy developers. However, energy system transformation must not only occur on the supply side, but it must be complemented by changes on the demand side through increased energy efficiency and investment in future demand-side technologies.

A successful transformation of the energy system requires close and sustained engagement with customers to ensure they are aware and supportive of the ongoing change, and benefit to the maximum extent. The Irish government is keen to ensure that consumers drive the required energy transition including by choosing to use less energy and adopting lower-carbon transport and heating. Incentives to use EVs and to decarbonise heating have been introduced, alongside a planned roll-out of smart meters. Engagement with consumers, including support for those in fuel poverty, will play an important role in meeting Ireland’s energy objectives.

Planning consent remains a significant obstacle to the deployment of the generation and network infrastructure required to meet Ireland’s renewable energy ambitions. This was also mentioned in the 2012 IDR. Delays in energy infrastructure projects make them costlier and can also affect the wider energy system and weaken the SoS. More-effective cross-departmental and cross-agency co-operation and collaboration on agreed policy objectives and early engagement by developers with affected communities and other stakeholders should reduce delays in building critical infrastructure.

Ireland has made impressive progress with the SoS since the last IDR through the sharp increase in domestic gas production, the implementation of new rules for the SEM since 1 October 2018 and better interconnection. Ireland now faces new challenges related to the decision of the United Kingdom to leave the European Union. The gas and electricity regulatory framework of the United Kingdom might diverge from EU regulations, which will continue to be applicable in Ireland. Efficient trading must be maintained on the interconnectors. Ireland is proactively developing additional storage in Ireland in compliance with the EU oil directive with regard to the EU oil stockholding obligation.

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ENERGY INSIGHTS

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3. Oil

Key data

(2017)

Crude oil production: nil since 1973

Net imports of crude oil: 2.9 Mt* (3.2 Mt imported, 0.3 Mt exported), -15% since 2007

Oil products production: 3.2 Mt

Net imports of oil products: 4.1 Mt* (6.0 Mt imported, 1.9 Mt exported), -18% since 2007 Share of oil: 45.7% of TPES and 0.5% electricity generation, -12% and -97% since 2007

Consumption by sector (2016): 6.5 Mtoe** (transport 61.8%, residential 15.7%, industry 12.0%, commercial 6.5%, other energy 2.9%, heat and power generation 1.1%)

*Supply data are presented in volumes (Mt).

**Demand data are presented in energy units (Mtoe) to be comparable over different fuels and sectors.

Overview

Oil remains the most important source in Ireland’s energy system despite its declining shares in supply and demand (Figure 3.1). Ireland ranked fourth highest in the share of oil in total primary energy supply (TPES) among International Energy Agency (IEA) member countries in 2017.

Figure 3.1 Share of oil in Ireland’s energy system, 1977-2017

The share of oil has decreased in the past decade, especially in electricity generation, but oil remains the largest energy source in Ireland’s energy mix.

* The latest data available for total final energy consumption are for 2016. Source: IEA (2018a), World Energy Balances 2018, www.iea.org/statistics/.

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ENERGY SECURITY

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