When Amazon Web Services (AWS) abandoned plans for a new data centre in Ireland, it shed light on the major challenges facing the State’s energy infrastructure. This followed a survey by the American Chamber of Commerce earlier this year, in which every single respondent cited securing the energy grid as critical to maintaining US investment in Ireland.
In short, Ireland needs more power and sooner rather than later.
“Ireland needs to increase its generation capacity to support the level of demand for power that exists on the system,” says Liam McCabe, chairperson of William Fry and head of its projects and construction department. “This increase is happening with the Government’s ambitious renewables targets but needs to be supported by a corollary increase in dispatchable generation capacity.”
Dispatchable capacity – that is, an always-on, ready-to-deliver format – is fundamental to preventing power shortages. It’s an issue the Republic has addressed in part, but gaps remain.
READ MORE
“We have dealt with the risk of power shortage by installing flexible, grid-scale, temporary emergency backup generation. But we need more always-available generation capacity to support the growth plans of all types of large energy users,” says McCabe.
“Without the certainty of energy supply provided by dispatchable power, these industries cannot establish new facilities or expand existing facilities here. This means that the necessary demand will not be here to use the power that will be generated through our very ambitious onshore and offshore renewables buildout.”
It’s essentially a race to have adequate power security, according to McCabe, so that the Republic can maintain competitiveness.
“The power demand is increasing in Ireland and across the globe and predicted to increase exponentially in the coming years with the advent of the AI economy. We need to ensure that we can play at the level to which our economy has become accustomed.”
Prof Paddy Finn, chief executive of Viotas, a smart grid technology business, says that the tools are available to address the issue now.
“Ireland’s energy system doesn’t need to wait for the next wave of large power stations to strengthen. There are steps we can take now that would quickly add resilience and headroom to the grid,” says Finn.
“First, we need to fix the market’s time horizon. Under current rules, capacity auctions require new generation to be delivered within four years. That worked in the past, but it no longer matches reality: global supply chains for turbines and generators are stretched to five-to-seven years due to surging international demand from data centres and other large energy users.”
By extending the auction horizon to eight years, with firm delivery milestones and early-completion rewards, Finn says it would make projects bankable again and ensure new capacity arrives when it’s needed.
“In the meantime, Ireland must make full use of the flexibility that already exists. Across the country, large industrial and commercial users already have or are adding backup generation and electrified heating, expanding the pool of assets that could support the grid,” he says.
“With the right incentives and environmental compliance, these can act as fast-response resources, cutting demand or exporting power during peak periods instead of sitting idle.”
At the heart of the matter is the need to strike the right balance. Niamh McGovern, partner at Arthur Cox, and its energy and renewables sector lead, says a holistic approach is required.
“Striking the right balance starts with seeing the full picture and connecting the dots between policy, infrastructure, and market design. As an island on the western seaboard of Europe, security of energy supply is a key priority for the country, particularly in a volatile geopolitical environment,” she says.
“At the same time, protecting our very valuable FDI regime and attracting energy-intensive industry is critical for our economy. Too often, we get caught up in competing priorities, the rules are unclear, the routes to delivery are fragmented, or the necessary provisions simply don’t exist.”
What’s required, according to Finn, is a system that can adapt to the needs of the economy as it grows.
“Ireland’s challenge is no longer simply keeping the lights on. It’s about building an energy system that can power a rapidly electrifying economy reliably, affordably and sustainably,” he says.
“The next phase demands a new mindset. Renewables, interconnection and battery storage are vital but the flexibility of demand itself will be just as critical. How, when, and where we use electricity will define how efficiently Ireland balances growth with security.”
