Irish Electricity Sector Sets Out Major Policy and Investment Pathway for Decarbonisation of Society and Economy

The Electricity Association of Ireland (EAI) has published a comprehensive strategic roadmap to decarbonise the electricity sector, economy and society. This marks the shared view of the all-island electricity sector, from generation through to retail, of the critical role of electricity in achieving Ireland’s climate goals.

• Ireland must increase electrification of industry, heating and transport in tandem with our accelerated renewables adoption as the key to our zero emissions future.
• Electrification of industry has stagnated in Ireland, increased ambition in this area is required so that excess renewables can be consumed in Ireland giving Irish industry a distinct advantage in greener industrial outputs.
• Investment of close to €2bn annually in electricity grid reinforcement, renewal and resilience is needed to drive this transformation. This is a level not previously seen on the island but necessary to avoid fines of over €8 billion.
• All-island policy, investment strategies and frameworks must be clear and cohesive to attract the necessary capital for post-2030 technologies.
• An investment framework that supports the decarbonisation of the All-island Electricity System and aligns with the scale of capital commitment and projected revenue streams is required.

Presented at “Ireland’s Zero e-Mission Future,” a major all-island energy conference in Dublin yesterday organised by EAI, the roadmap envisions the electricity sector decarbonising ahead of society, paving the way for an emission-free future. By fostering greater investment and policy alignment, Ireland can lead the way in delivering a clean, reliable and affordable energy system for all.

Keynote speakers Declan Hughes, Secretary General of the Department of Enterprise, Trade and Employment (ROI), and Ian Snowden, Permanent Secretary of the Department for the Economy (NI) addressed industry leaders including energy company CEOs and senior level stakeholders.

Ireland’s path to a low-carbon future relies on accelerating renewable energy adoption in tandem with increasing electrification across Industry, heating and transport. However, there has been slow progress in these areas after an initially positive start. Electrification of Industry has stagnated in; this roadmap calls for increased ambition so that excess renewables can be consumed in Ireland, giving Irish industry a distinct advantage in greener industrial outputs.

The Climate Change Advisory Council has recently stated that Ireland could face EU fines of over €8bn after 2030 if the country stays on its current trajectory and misses climate targets. The Electricity Association is urging policymakers to revamp the current investment framework, ensuring it aligns with the scale of capital commitment to deploy new technologies and the projected revenue streams associated with them.  In addition, close to €2bn annually will be required for future grid reinforcement, renewal and resilience to enable a 60% reduction in emissions from the sector by 2030.

The roadmap outlines key actions, including a comprehensive review of the Capacity Remuneration Market (CRM) (which ensures sufficient generating capacity, especially during peak times) and the assessment of Investment options to support low-carbon technologies.

Commenting on the report, Dara Lynott, CEO of the Electricity Association of Ireland, said:

“The electricity sector has led the way in reducing carbon emissions while providing a safe and secure energy supply and is ambitious in its goal to power a decarbonised society. This roadmap sets out how, with the right investment signals and greater ambition, this can be achieved.

“The electricity sector must decarbonise in advance of society, but the potential technology options that will help us achieve this goal all carry high levels of uncertainty.  They share a requirement for significant capital, long construction times, decades-long lifespans, and a critical need for investment decisions to be made well in advance of 2030.

“Having assessed the technologies needed, it is clear that expected revenue streams will change dramatically over the next 15-20 years. Ireland must adjust its investment strategies and frameworks to attract the necessary capital for post-2030 technologies. This could include new financial incentives, restructured revenue models and supportive policies for large-scale renewable and low-carbon investments.

“The aim is to ensure that Ireland can secure the funding necessary to meet its ambitious decarbonisation targets. This will require a level of investment that has not been previously seen on the island. A comprehensive overhaul of how energy, system services, and capacity markets interrelate is needed. Prioritising short-term cost savings over long-term capacity needs could hinder decarbonisation goals and ultimately increase costs for consumers,” said Dara Lynott.

Summary

The actions Ireland needs to implement are:

1. Set a target of 35% electrification in industrial demand by 2030 and support industry to make the investment decision to electrify.
2. Early and significant investment in grid reinforcement, renewal and resilience.
3. All-island policy, investment strategies and frameworks must be clear and cohesive to attract the necessary capital for post-2030 technologies.
4. Develop a strategic approach to the upcoming CRM State Aid applications to consider the most appropriate vehicle for investment in low-carbon technologies.
5. Complete a comprehensive review of the Capacity Remuneration Market (CRM) implementation to ensure that there is not an increased risk of inefficient exit while also meeting ambitious climate targets.
6. Complete a cost-benefit analysis of technology options to decarbonise dispatchable generation beyond 2030 to ensure investment and action can be taken in a timely manner.
7. Set up a dedicated working group on the investment framework required for the low-carbon generation assets that are needed for the future.
8. Expedite a comprehensive review of projected electricity fixed costs which are to be met to 2040 and provide targeted support to customers most exposed to future electricity costs.
9. Introduce flexibility to the implementation of the recast Energy Efficiency Directive to reflect customer preference and affordability and counterbalance current skills shortages.
10. Include electricity under the Renewable Heat Obligation (RHO) Scheme and the Renewable Transport Fuel Obligation (RTFO) Scheme.