With an expected doubling of electricity demand by 2030, renewable energy is the key to ensuring the decarbonisation of the energy and electricity sector in Ireland, says Laragh Musselwhite, Analyst at KPMG Sustainable Futures.
Decarbonisation of the Irish electricity system has been one of Ireland’s real success stories. Emissions from electricity generation in Ireland have decreased by 51.4% between 2001 and 2020. This decrease reflects the improvement in energy efficiency of modern gas fired power plants and an increased share of renewables on the Irish electricity system. While the Government has set ambitious targets for the ongoing roll-out of renewable energy generating capacity, including 5GW of offshore wind by 2030, with the expected increase of 19 – 50% in total electricity demand over the next 10 years, decoupling economic growth from energy emissions will be crucial.
Electricity in the Climate Action Plan
The Climate Action Plan identifies the energy and electricity sector as a key area of focus for Ireland to meet its 2050 net-zero target. The Plan sets out an overall target of reducing CO2eq emissions from the sector to a range of 2 to 4 MtCO2 eq by 2030. However, the most significant challenge is the rapidly increasing demand for electricity across Ireland. In a high demand scenario, electricity demand is expected to double by 2030, at the same time as electricity emissions are to be reduced by 60 – 80%. Drivers for demand include:
- Data centres are forecast to continue to grow by up to 9 TWh in 2020, representing 23% of total electricity demand.
- Transport electricity demand is forecast to grow by 23% p.a. due to the fast uptake of EV charging.
- Electrical heating industry will increase by 2.5 times by 2030 (from 2017 levels).
- Building energy efficiency improvement from an extensive retrofit programme will moderate the growth in electricity demand from new heat pumps in buildings.
To support this increasing demand and to ensure the decarbonisation of the sector, the Climate Action Plan sets out a key target:
- Increase the share of electricity demand generated from renewable sources to up to 80% by 2030
Renewable energy is the key to decarbonising this sector. In 2020, electricity generated from renewable sources accounted for 42.1% of all electricity generated in Ireland (an increase from 33.3% in 2018). Ireland has significant renewable energy resources, with wind energy accounting for 36% of the country’s electricity in 2020. Ireland currently has an installed wind capacity of 4.2 MW and The Climate Action Plan commits to increasing this to 13 GW (combined onshore and offshore wind) by 2030. In support of achieving large scale renewable generation the following measures will be undertaken:
- A new Offshore Renewable Energy Development Plan (OREDP II) will be completed to quantify the offshore renewable energy potential in Ireland’s maritime area. The OREDP II will also provide an evidence base for the assessment of areas suitable for deployment of offshore renewable energy.
- The Maritime Area Planning (MAP) Bill, which has since been enacted, has put in place a comprehensive and coherent marine planning regime for the development of offshore renewable energy in the maritime area.
- The roll out of regular competitive auctions under the Renewable Electricity Support Scheme (RESS) to deliver targets and ensure a steady supply pipeline of projects and efficient use of the network.
- 500 MW of renewables generated through local community-based projects by 2030.
The Generation Opportunity
Alongside large-scale renewables, microgeneration and small-scale generation have an important role to play in empowering and driving engagement and participation. It creates opportunities for domestic, community, farming, and small commercial customers to take the first steps towards investment in renewable technologies, which can play a role in shaping electricity demand and decarbonising homes and businesses. Under the Climate Action Plan a Microgeneration Support Scheme (MSS), which supports deployment of an expected 260 MW of new micro renewable generation by 2030, will be put in place. Furthermore, a Small-scale Generation Scheme, to support the deployment of rooftop and ground-mounted solar PV in cohorts that are not suited to other support measures, will also come into effect.
Other key targets include:
- Deliver circa 2 GW of new flexible gas-fired power stations in support of a high variable renewable electricity system.
- Delivery of three new transmission grid connections or interconnectors to Northern Ireland, Great Britain, and the EU.
- Explore further interconnection, including hybrid interconnectors (combined cross border transmission network with offshore renewable generation), to other countries.
- Expand and reinforce the grid – through the addition of lines, substations, and new technologies.
- Complete the phase-out of coal and peat-fired electricity generation.
- Ensure that 20-30% of system demand is flexible by 2030.
In order to achieve these targets, the CAP sets out 28 supporting actions which cover topics such as policy development, technology and innovation, community engagement and financial incentives.
What Does This Mean for Businesses?
While large-scale renewables deployment will facilitate the decarbonisation of the national energy system, individual businesses are also increasingly seeking to decarbonise their own operations, through a range of measures including energy efficiency investment, entering into renewable energy corporate power purchase agreements, and small-scale renewable asset deployment.
As a first step businesses should calculate, monitor, and report on their scope 2 emissions. Scope 2 emissions refer to the indirect emissions of a business (i.e., purchased electricity, steam, heating & cooling). Calculating one’s scope 2 emissions allows for opportunities in reduction to be identified.
Improving the energy efficiency of property portfolios and business operations is vital for businesses to cut scope 2 emissions. Measures that can be taken include securing direct renewable energy contracts, upgrading current electric systems (e.g., lighting), potential on-site renewable energy generation and the optimising of manufacturing and production facilities. By improving their overall efficiency, businesses will save money, in turn, making their products and services more competitive and ultimately improve the bottom line. Moreover, such measures will reduce their carbon footprint, subsequently reducing their environmental impact, and will show a commitment to sustainability, which proves as a brand asset. Given the current energy price volatility, the economic case for such investment has never been stronger.
Overall, the pursuit of decarbonising Ireland’s electricity system presents an opportunity for businesses. Although this will involve a shift from normal business management and operations, those that show initiative and make the change will benefit from lower operating costs, reduced price volatility, improved brand perception, stakeholder alignment and regulatory compliance.
Source: KPMG Ireland