A cold, chilly winter awaits as a potential energy crisis looms in Ireland

A cold, chilly winter awaits as a potential energy crisis looms in Ireland

For generations, keeping the lights on has been almost exclusively a matter of science, regulation and the day-to-day business of operating large systems involved in the generation and transfer of electrons.

But since Russia’s invasion of Ukraine, it’s turned upside down, says Paul Deane, a researcher at University College Cork.

“Energy supply is not just a matter of physics anymore, it’s a matter of politics. And even if physics is predictable, politics is anything but.”

This week, EU Commissioner Mairead McGuinness said energy rationing “can become a reality” across the block this winter.

So far, the drastic shock to the energy market that followed the war has been limited to rapid price growth. But even during the comparatively calm summer, thoughts turn to what winter can hold and the fear grows.

It is, in the words of a decades-old veteran in the power generation industry, “without a shadow of a doubt” the biggest risk their career faces – and the biggest since the country was hit by Opec’s oil crises in the 1970s.

About 40 percent of Irish electricity comes from wind power, but electricity accounts for only one-fifth of the state’s energy needs. For the UCC’s dean, “being good at 40 percent of a fifth of a problem is not very helpful”. The challenge comes from Ireland’s “massive dependence” on gas if it does not blow.

He predicts that Russia will arm its gas exports for the winter – he sees the shadows of it already when Gazprom, the state-subsidized Russian oil major, has refused deliveries in recent weeks and blamed parts caused by sanctions. “I suspect they will always sell some gas to Europe, but the likelihood that Europe and Ireland will face gas rationing in the autumn is very real and that is something we need to prepare for. If there were any serious disruption, Ireland would be “We are seriously exposed because we depend on others for the transit, production and supply of natural gas, and that supports our economy. If we had four to five days of peace, the electricity system would simply not work without natural gas.”

Price pressure

Government sources push back against the idea that Ireland is particularly vulnerable. While acknowledging that price pressure is brutal, Ireland uses virtually no Russian fuel. “There is no immediate threat to our gas supply,” a spokeswoman for the environment ministry said last week.

About 70% of Ireland’s gas needs are met via the UK, via a route that runs from Moffat in Scotland to landing sites north of Dublin, with outcrops supplying the Isle of Man and Northern Ireland. The UK market is well diversified, with liquefied natural gas (LNG) terminals, storage and interconnection to the Netherlands and Belgium. Much of its, and thus Irish, range comes from Norway. Ireland also gets about 30 percent of its needs from Corrib.

But John Mullins, former CEO of Bord Gáis, is worried about the nature of the arrangement with Britain. He and others are concerned that the deals underlying the transfer of gas to the state are untried 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 said. “We have no cast iron security of supply with respect to gas, and as a result it extends to electricity.” In a true supply crisis, the EU can order some Norwegian gas to be sent to markets where Russian gas has been shut down or shut down. This could lead to shortcomings in the UK – which raises concerns that domestic policy considerations there may override obligations towards Ireland. Parallels to other Brexit setbacks are clear – if that happens, Mullins warns, “it [Northern Ireland] protocol will be the least of our concerns ”.

Ireland's gas pipelines - Corrib - Credit: Kevin O'Hare / Irish Times premedia

Government sources accept that the transfer of gas from the UK is governed by commercial arrangements rather than international agreements. But Ireland is not without cards to play: the same line that supplies our market goes to Northern Ireland, while Ireland exports more electricity over the interconnection that extends across the two islands’ electricity systems than it receives. While security of supply was on the agenda for a meeting between Environment Minister Eamon Ryan and his British counterpart last week, coalition sources are adamant that the arrangements are sound. “There are people who are trying to do a lot more of this than it is, but it is certainly not something we are particularly concerned about,” said a senior source.

The government may think that some of that arrangement is unlikely – but sources accepted that supply will be tight across Europe. But predicting what will happen beyond that is more difficult. “There is a difference between losing a little and losing a lot and it is absolutely huge,” said a well-placed coalition source.

An important factor is the weather: a mild versus cold winter can mean a fluctuation of 10-15 percent in the demand for gas. If supply were tightened during a cold snap, the political and social effects would be much more serious.

In the first place, the price would probably rise further. The price clearly affects the economy and society here already – but as a rich country, Ireland is still relatively protected, even if it does not feel that way, because it can afford to pay. Already, the state is taking advantage of the combined capacity of the UK and Irish markets to pay for LNG that would normally go from the Gulf states to poorer countries – with those like Lebanon and Pakistan already suffering from shortages. More price increases would mean greater demand for the government to back up households’ energy bills, something that the coalition is already preparing for this winter.

If gas was rationed here, there is a merit order in who loses access first: homes, hospitals and other parts of vital infrastructure are protected; but quarries, factories and data centers would all be required or urged to limit use, says Deane. The potential financial consequences of this are clear, from lost wages to damaged corporate profits and tax revenues.

Planning for the worst case scenarios is already underway – and of course it extends beyond gas and even to oil-based fuels. The government has already convened an emergency group for energy security (by some called “Nphet for energy”), which has subgroups for gas and oil. The latter has modeled three scenarios during a contingency planning exercise in recent weeks, where between 20-50 percent losses in the supply of oil products were modeled. A dedicated network of petrol stations would only serve important vehicles, such as rescue services or food transport fleets. In more difficult scenarios, all non-essential petrol stations would be closed, which would de facto interrupt private driving, say sources with knowledge of the plans. In the worst-case scenario, where a gas shortage in combination with a major oil shortage, sources said that a choice could be forced between competing energy needs such as food harvesting and energy production. “It’s gloomy, gloomy stuff,” said a source involved in the planning.

Industry figures believe that the mandate to work from home, or days when cars with odd or even number plates are not allowed to drive, have all been planned.

All Irish gas-fired plants can run on “liquid alternatives” – usually diesel, and have 10 full days of delivery on hand – which in reality is probably longer as they would not be shut down for that long in a row. Scenario planning, said sources, revolves around planning how facilities can share their supplies if needed, or how many trucks would be needed to redistribute fuel.

Security of supply

There is some resentment in the industry among those who believe that Eamon Ryan has not raised concerns about security of supply – it is understood that these concerns have been flagged in recent meetings with officials. Asked about McGuinness’ comments on RTÉ on Friday, Ryan acknowledged that it was a “difficult time”, and said that Ireland was in a different situation from other countries due to its lack of connection to Russia. He promised that if there were any disruptions “we would be able to react immediately” and said he did not expect to have to limit supply.

Others are frustrated that delays have hampered investment in the electricity grid that would provide a more resilient system. “The big problem here is that we do not remove the bottlenecks in the system that allow us to deliver that type of infrastructure,” says an industry veteran.

Others in the industry are annoyed that regulatory decisions that can facilitate security of supply in the medium and long term have stuck in the department. Brian O’Cathain, a former Tullow Oil manager who was also involved in the development of the Corrib gas field, is trying to explore a gas prospect – Inishkea – which he claims could continue where Corrib ends when he is exhausted. His company, Europa Oil & Gas, is applying for an extension of its exploration license which expires at the end of July but has no decision from the department. They fear that if it expires, the government’s ban on issuing new licenses will mean that it will never be used. He says Ryan has “a blind spot when it comes to domestic oil and gas exploration” driven by “ideological reasons”. The company believes the return can hold enough gas to meet Irish household needs for 17 years.

“Through a lack of knowledge and understanding, we can turn off the only option we have to extend the life of a large, efficient state gas supply,” he says.

Insiders worry that even if the worst-case scenarios do not materialize, consumer sentiment is likely to be beaten and consumption patterns may change. The feverish atmosphere can lead to unexpected peaks in demand, as was seen in the UK last winter, where people who feared a crisis in supply helped to achieve one by queuing at the pumps.

With global markets rolling in 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.

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