Balance of power: Why Ireland’s electricity supply is threatened and what can be done to bolster it?

Nobody understands the emerging fragility of Ireland’s power system better than those whose business it is to keep the lights on.

And that’s why it’s worth paying attention when Enda Gunnell, the chief executive of Pinergy, says he is seriously concerned with the current state of play.

“The first concern is around the security of supply and the threat of blackouts. If we as a country end up in a situation where the power goes out, our international reputation will be ruined,” Gunnell said.

“As a country, the idea of the lights going out is not something we are used to.”

All of us have become reliant on ubiquitous, cheap electricity. It pulses through the economy like an invisible lifeblood, delivering a quality of life to the people of Ireland that is increasingly taken for granted, but is silently becoming ever more fragile.

A data-driven boom in electricity demand has set in just as we have committed to radically transforming our electricity system to a low-carbon model.

And managing both of these challenges at once has brought our electricity grid close to the edge this year, with unexpected outages at just two gas plants leading to increased blackout warnings and startling – though short-lived – plans to import emergency power generators this winter.

“My concern is whether this is an indication that we are going backwards rather than forwards,” Gunnell said. “Electricity is the fuel of the future. We have to move away from fossil fuels and towards more renewable power, but it looks like we are going backwards.”

Gunnell explained that the risk of blackouts wasn’t the only outcome of a tight electricity market, but that the price of power was affected too.

“When demand is low, prices are lower, and when demand is higher, prices are higher,” he said.

“The wholesale price of power in July this year was five times higher than what it was the previous year. Much of that is because gas prices have gone up very significantly, driven by international factors. But in the Irish context, we have had a portion of our power generation fleet not available, and at periods when the wind hasn’t been blowing, that has contributed to very high fuel costs.”

With further electrification of heat and transport needed in the years ahead to achieve our climate targets, the dual goals of decarbonising our electricity grid and ensuring secure power supply are more important than ever.

But both goals now appear threatened by the sheer volume of additional electricity demand coming from data centres, while the government appears committed to the unmitigated expansion of the sector, regardless of its carbon or energy consequences.

The result is that Ireland’s electricity sector, long heralded as our best in class performer on clean energy, is fast becoming yet another seemingly unsolvable problem of the energy transition.

As we face into a winter with the tightest power supply margins in many years, what has gone wrong with our power system, and can it be fixed while still meeting our climate goals?

Unpredictable outages

Last winter, two major gas plants on opposite sides of the country went out of action unexpectedly, laying the foundations for many of the power problems Ireland has experienced this year.

An issue with an electrical transformer at one of the Energia-owned Huntstown gas generators in north Dublin forced the 400 megawatt (MW) station to power down until it could replace the faulty equipment.

Meanwhile, in Cork, a small metal part became loose inside Bord Gais’s 450MW Whitegate gas turbine causing catastrophic damage that required extensive repairs.

But despite these unpredictable outages being the primary cause of our acute power supply issues, other longer-term trends have all contributed significantly to the situation.

Over the last number of years, the retirement of older, higher-carbon fossil fuel generators, the limited build out of new flexible gas generation, and the ever higher integration of intermittent wind power onto the grid has led to a far less stable power picture.

This has been exacerbated by a huge growth in permanent 24/7 power demand from data centres, which in the last four years alone has grown by 600 gigawatt hours (GWh), which is equivalent to the electricity needs of 140,000 homes. Electricity demand from other sectors has remained relatively flat over that same period, highlighting the central role of data centres in putting upward pressure on the electricity grid.

Faced with the prospect of potential energy shortages this winter, driven by all of the above factors, Eirgrid and the Commission for Regulation of Utilities (CRU) requested clearance from Eamon Ryan, the minister with responsibility for energy policy, to import 200MW of emergency power generation at a cost of €130 million. Ryan gave his blessing, describing the entire situation as “deeply concerning”, while ESB was awarded the contract for getting the generators in place.

One senior source with knowledge of the process told the Business Post that the procurement of emergency generation was “never going to be easy” in such a tight time frame. Early on, it was clear that securing the necessary licensing in time was going to be close to impossible, while the credibility of some initial bids to provide the emergency generation was also a concern.

So when a legal challenge to Eirgrid’s awarding of the contract to ESB came in from from EP UK Investments, the parent company of Tynagh Energy in Galway. it was the final straw for those involved in what was already a high-risk strategy. With the possibility that the process would now be delayed by legal hearings, any hopes of securing the new generation in time had evaporated.

Within a week of the challenge being lodged with the High Court, the emergency generation plans were abandoned, leaving Ireland facing a very uncertain period ahead for energy security.

Despite being told as far back as April that both Whitegate and Huntstown could be back up and running for the winter, Eirgrid and the government claimed that the emergency plans had only been abandoned because the outlook for getting the gas plants back online for winter had “greatly improved”.

The ambition now is for the Huntstown generator to be back online by the end of October, while Whitegate is hoping to be back in action by November. But any delays to these timelines, or a particularly cold autumn, could lead to potential blackouts with no emergency back-up plan.

In the background, energy authorities are now working to ensure they have “all hands to the pump” by the autumn, meaning coal generation at Moneypoint will continue to be used this year, as well as any other possible source of power generation, pushing Ireland’s electricity emissions upwards.

Eirgrid is also lining up as much demand response for customers as possible, where large energy users voluntarily sign contracts to be paid to turn down their energy or use their own back-up generators at times when the power market is tight.

Warnings of rolling blackouts

If the changes to our energy system in the last few years have brought us close to blackouts, then it is the scale of change projected in the years ahead that shows just how serious a situation we are in.

In the next five years alone, electricity demand from data centres is expected to double. In a recent letter to the CRU, Bill Thompson, group head of regulation at Eirgrid, the electricity grid operator, said that up to 33 per cent of Ireland’s electricity demand could come from data centres by 2030. Crucially, however, Thompson said that this figure had been arrived at before factoring in an additional 2GW of data centres that recently requested connection.

If that additional 2GW of new data centre power demand is facilitated on top of the 1.8GW already agreed to, then the proportion of Ireland’s electricity going to data centres could be close to 50 per cent by 2030, and that is before even more data centre connection requests are inevitably made in the years ahead.

The CRU considers the situation so serious that it has warned of “rolling blackouts” if the unmitigated expansion of data centres is not addressed, publishing a consultation on how to manage the sector’s power needs into the future.

At the same time, Eirgrid has struggled to secure the necessary new gas power to meet even the more moderate demand growth models for the years ahead, and is having to re-run auctions for gas generators as a result. Ryan has told the CRU to look closely at exactly why the market auctions are not securing the necessary power.

But it doesn’t take a genius to see that the commercial case for building gas generators is becoming less attractive. The political winds have moved firmly against fossil fuels, carbon prices have continued to increase and investors are being told the intention will be to use their gas assets less and less over time as more renewables are brought online.

The paradox is that we now want more gas generators built, to ensure we can meet our growing energy demands when the wind doesn’t blow and the sun doesn’t shine, but the hope is those generators will be used as little as possible.

“Designing a market that gives both the short and long-term signals for the correct energy investment is tricky,” Padraig Lyons, head of the International Energy Research Centre at the Tyndall Institute in Cork, said.

“On the one side you are telling the market that we need gas plants, but in the longer term, we are saying we want a load of renewables on the system which will be much cheaper than gas when they are on.”

Lyons said there was merit in proposals to reform the market to incentivise more gas generators to be built, even if they will run less due to the growing volume of renewables on the grid. However, he also said that tinkering too much with the market was dangerous.

“You are constantly trying to refine the market to deliver the outcome you want, but the paradox is that a market that keeps on changing is very difficult for attracting long-term investment. Where is the certainty and the security?”

Lyons said that it may be time to create a new public body of “energy architects” to plan the entire energy system, across electricity, gas and renewables.

“Such a body would allow us to plot a course for the years ahead. This is done by the Department of Environment to an extent, but an independent organisation that has the technical ability to look at the entire energy system is needed,” he said.

The Irish Academy of Engineering has similarly warned that new gas plants need to be built urgently to both replace ageing plants, and ensure our new variable renewable generation is backed up by “firm” and “dispatchable” gas generation.

“The 2019 Climate Action Plan says we will have 70 per cent electricity from renewables by 2030,” Don Moore, a fellow at the Irish Academy of Engineering and former managing director of ESB International, said.

“What underlies that is never explained, which is that we are going to have to increase gas-fired generation in Ireland to support that 70 per cent goal.”

Moore said that the commercial incentives for building gas-fired generation were questionable, and that he was concerned at the ability to deliver enough generation in time to meet growing demand.

Similarly, Gas Networks Ireland, which runs Ireland gas pipeline network, has warned that a large volume of new gas generators are expected to be seeking connection in the next few years, and it has proposed beginning infrastructure work even before gas grid connection contracts are signed, otherwise it doesn’t believe it will be able to facilitate the new demand.

Moore said the other problem was “building anything in Ireland” and he questioned whether our current planning frameworks would allow for the necessary renewable infrastructural works to take place in the next few years, citing the North-South Interconnector, which has been held up for more than a decade, as a worrying example. The interconnector would do better to connect the electricity systems of Northern and southern Ireland, allowing for easier balancing of power across a wider network of generators and consumers.

“As you know, it is very easy to stop things in Ireland. There is no end to the process. Planning permission can be appealed to the High Court, the Supreme Court and the European courts, and people can play table tennis indefinitely. I wouldn’t be optimistic in relation to many of these renewable projects or other infrastructure being done in the timelines needed,” Moore said.

“We are in a situation whereby people want action on the climate crisis, but they don’t want any of the necessary stuff affecting them in any way.”

On data centres, Moore said he did not think they were paying their fair share in grid reinforcements, considering their predominant role in driving new requirement for power.

“One of the things we will be recommending in our new report to the government is that they all have back-up generation and that should all be dispatchable to the grid if Eirgrid requires it, which means it can supply power directly to the grid when needed” he said.

As part of its new consultation on managing data centre demand growth, the CRU has proposed two possible solutions. One is a moratorium on the building of data centres. The other is to ensure specific conditions are met for building them, such as on-site power generation that can be relied upon during times of tight demand.

However, according to Michael McCarthy, a former Labour TD and now head of Cloud Infrastructure Ireland (CII), a branch of Ibec, the employers’ body, which is representing data centres, none of the options proposed by the CRU are what his members –Google Amazon and Microsoft – want.

McCarthy told the Business Post that the multinational firms were against any moratorium on data centres, that they didn’t support the relocation of the facilities to areas outside the Dublin region; and they didn’t support the condition of building on-site generation to power their own operations.

“We've cautioned about increased use of back-up generation, because the clear ambition of CII members is to use clean, green electricity,” McCarthy said.

“Since 2015, the annual generation capacity statements from Eirgrid have noted the expansion of data centres. So this hasn't just fallen from the sky. When addressing these difficulties, the government needs to be very careful that we don't cut off our economic nose to spite our face.

“We came out of a difficult recession and one of the key economic drivers for us was the location of Ireland as a digital hub and attracting foreign direct investment on that basis. The power constraints issue was something that was well flagged and to respond to that with a policy that sends out the wrong signals to investment is not good enough,” he said.

McCarthy said the preferred option of CII was for Ireland to scale up its renewable energy build out to help meet the additional power demands, and that his members wanted to facilitate that through financing deals and contracts with renewable projects. McCarthy said his members had already proved their seriousness on this front, having acquired 450MW of renewable electricity in recent years.

However, analysis by the MaREI energy research centre in Cork has shown that if all data centres looking to connect to the grid by 2030 are facilitated, the resulting additional carbon emissions will make meeting our 51 per cent emissions reduction target by 2030 impossible.

At a time when that target has just been written into law, the government is now faced with a choice of meeting its climate targets, or continuing with a policy of unprecedented energy expansion.

One government source told the Business Post it was clear that all data centres couldn’t be facilitated if our climate targets were to be met.

‘A green energy opportunity’

But according to Leo Varadkar, the Tánaiste and Minister for Enterprise, data centres are being unfairly scapegoated, and that there were also going to be additional energy demands from the electrification of transport and electric heating systems.

“It’s a mistake, in my view, to see this as a problem of excess demand that needs to be curtailed,” Varadkar told the Busines Post.

“It’s actually a green energy opportunity. The solution is more supply of wind and other renewables supported by better interconnection to France and Britain and using any excess green energy to make hydrogen. We need to accelerate all of this without delay to take advantage of the economic opportunity of climate action.”

The Celtic Interconnector, which will connect the Irish and French electricity systems, submitted a planning application last month to Irish authorities, with construction expected to begin in 2022. The interconnector will allow Ireland and France to trade electricity, allowing the country to further back up its power system with stable power supply from the continent.

Varadkar said companies were increasingly taking account of the environmental concerns of their customers and shareholders when investing. In future, he said they would have to report on the energy they use, the waste they create and the greenhouse gases they emit.

“Companies will be named and shamed and that will affect their bottom line. Chief executives and board rooms know it and are planning ahead,” he said.

“Ireland should position itself as the place to invest due to its abundance of green energy and treated water alongside our traditional offerings of talent, tax and political stability. The benefits go beyond future job creation and include import substitution of renewable energy for oil, coal and gas as well as a potential boost for our public companies like ESB, Eirgrid, Irish Water and Ervia.”

McCarthy said that rather than discussing curtailing data centres at this time, the government needed to form a new policy statement on the sector, expressing its support for the continued policy of data centre expansions and recognising them as an essential part of the economy.

“We need a strong ambitious statement from government about the importance of data centres, and the necessity therefore for other government departments to follow up in terms of their own sectoral delivery of policy around that to ensure that we accommodate them. Data centres are here to stay: they are a very good news story, they are essential terms of the economy and integral to our lives,’ McCarthy said.

Not everyone would share this view, however. Bríd Smith, the People Before Profit TD, has already launched a new bill in the Dáil calling for an end to data centres expansion. Although her previous Climate Emergencies Bill looking to ban oil and gas exploration never garnered enough support to pass, its impact on government policy was obvious, as oil and gas exploration was eventually banned anyway.

She is hoping for similar results with this bill.

“We launched a bill to ban the development of any further data centres. I think that is essential. If we have declared a climate emergency, then you must oblige planning authorities to comply with our climate goals,” she said.

“There are also questions around the usefulness of data centres. What do they actually do? How useful are they for this country and humanity? Obviously it is very useful to have emails and data bases for health and education, but when you look at the growth of the likes of Amazon, you do have to wonder if this is all for the likes of them to develop their profit model.”

A Green Party MEP has objected to a proposed data centre in Ennis, Co Clare, claiming it is counter to Ireland’s climate objectives and is “inappropriate” considering Ireland’s electricity supply issues.

Ciaran Cuffe, an MEP for Dublin, wrote to Clare County Council asking them to “carefully assess” the application by Art Data Centres Ltd for a hyperscale 200 megawatt (MW) data centre, warning that it did not appear to comply with the council or the government’s climate targets.

“The Environmental Protection Agency announced last year that Ireland already overshot its 2018 greenhouse gas emissions ceiling of 60.93 million tonnes of carbon dioxide equivalent (Mt CO2eq) by 5.59Mt. The proposed development’s emissions will be 657,000 tonnes CO2eq per annum. This is too high. We need to lower harmful emissions. Not increase them,” Cuffe said.

Cuffe said the proposals to build out gas generators to help support data centre power needs was “unacceptable”.

“Gas is not a low carbon fuel and is at odds with the low emissions objective stated within the Clare County Development Plan,” he said.

Additionally, Cuffe said the volume of water required for peak summer cooling at the data centre was ”deeply concerning”.

“The proposed development may require up to a million litres of water per day for cooling when temperatures exceed 27 degrees. This is likely to occur when the Ennis water supply is at its lowest and may cause unfair supply difficulties for locals.”

Cuffe said the development should at the very least be planning to use waste heat from the centre to fuel a local district heating scheme for Ennis. District heating is a low-carbon way of using heat from a central source to deliver heated water in insulated pipes to multiple homes across a particular district.

Cuffe asked that if Clare County Council did see fit to grant planning permission for the data centre, then they should put in place strict planning conditions that would “limit the development’s greenhouse gas emissions from the outset, and ensure they reduce over time”.

Clare County Council has received more than 50 submissions on the proposed new data centre, which has garnered stiff resistance from environmentalists in recent weeks.