In a new update the energy regulator has warned of a major threat of blackouts in Ireland this winter and is proposing changes that could lead to even higher bills for consumers.
The demand for electricity in Ireland has grown hugely over the past few years. The reasons are manifold:
- Increasing population
- Increase in the number of data centres
- A growing economy
- Increase in the number of electrical cars
- Increase in the number of heat pumps, which run on electricity
- The electrification of our public transport system
At the same time as our demand for electricity has been growing, we’ve struggled to keep up with supply.
Although wind output is growing, it's highly volatile and on some calm days it can provide less than 5% of our electricity generation.
This means we still need to rely heavily on gas, coal and oil-powered generators for when the wind doesn’t blow.
However many of these generators are ageing and are set to close down over the coming years. And some have aged quicker than expected as they have been turned on and off regularly in recent years depending on when the wind is or isn't blowing (which they weren't designed to do).
Meanwhile the closure of the last two peat-operated plants in 2020 restricted supply further.
On top of this the war in Ukraine has pushed gas prices to record highs and placed pressure and uncertainty around its supply.
Realising things were getting tight, the energy regulator (CRU) tried to procure some temporary emergency electricity generation late last year but it wasn't a success. Many developers felt the terms on offer weren't competitive so didn't bother bidding to build new generators, while some of those who did agree to develop new electricity generation facilities pulled out at the last minute due to supply issues.
It means as we head into this autumn and winter when energy demand shoots up, the CRU has major concerns around blackouts as supply struggles to match demand.
As a result it’s proposing several changes to try to avoid this.
There is a significant risk to electricity security of supply in Ireland over the coming years, driven by the closure of large electricity generation units, the failure of contracted generation capacity to deliver, an accelerated degradation of the existing fleet as it responds to intermittent wind generation, and significant demand growth across some sectors of the economy.
The CRU
What is the CRU proposing?
As we can’t ramp up the supply of electricity in a short period of time to fully meet demand, the CRU is aiming to reduce energy demand this winter instead, particularly during the peak hours of 5pm to 7pm on weekdays.
It is proposing that all suppliers introduce a peak tariff or a surcharge to electricity used during these hours. However this can only be done to those who have a smart meter. Smart meters are gradually being rolled out to all homes and premises in Ireland and you can read more about smart meters here.
Those with smart meters and who are on a smart tariff will most likely be paying a peak rate already. However this rate may increase even further.
Those without a smart meter will likely be encouraged to sign up to one by their supplier. However for this to be successful, much cheaper electricity outside of peak-time hours may have to be offered. Some smart tariffs don't offer great value and many households with a night saver meter in particular or who have storage heaters would be better off staying away from smart tariffs. And it's likely households will be reticent to sign up to a smart tariff if they feel it will just be used to penalise them for energy usage at certain times.
A ‘Beat the Peak’ national campaign led by the ESB is also proposed which will encourage households to use their energy outside of peak times. Rewards may also be offered to households which do this.
Suppliers may also send texts and reminders to customers asking them to avoid usage at certain times.
Further measures aimed at reducing demand by extra-large energy users (mainly large businesses and data centres) are also proposed. For example a Decarbonisation Tariff will apply to these users when the level of renewable energy output falls below a proposed level of 25%. This is aimed at reducing electricity demand at times of low wind output, which is when there is usually the most pressure on the grid.
The CRU is also proposing an extra charge on large users when it issues system alerts - which it does when there is a fear supply can not meet demand.
Higher charges
Around one third of the price households pay for their electricity is made up of so-called network charges. These are the charges suppliers pay Eirgrid and ESB for the upkeep and maintenance of the electricity grid and are ultimately passed on to consumers in their bills.
Our network charges are among the highest in Europe and the CRU is proposing to increase them again to help pay for the costs of procuring new temporary emergency generation capacity.
For a domestic customer, the additional network charges will add c. €26 to a typical annual bill. It’s not a huge amount but in light of ever increasing bills is probably the last thing households want to hear.
What next?
The CRU has opened up a two-week consultation period to invite stakeholders to submit feedback. After which it will make a decision on how to proceed to try avoid blackouts this winter.
Once that happens we'll update you on all you need to know on bonkers.ie.
