| 15.9°C Dublin

Take note of which way the wind is blowing – cheap gas is how we gain competitive edge

INVESTMENT in Ireland's wind-energy sector is escalating at pace with €300m due to be spent this year on developing wind-power infrastructure – an increase of 45pc year on year.

Our wind-energy penetration is already among the highest in Europe and within a few years, Eirgrid believes we will have a penetration of wind- power usage which will be among the highest in the world.

So why isn't everyone else doing it?

Some say we've got it wrong – firstly that our recent head- first dive into wind-energy investment is being spurred by spurious deadlines rather than practical considerations – namely Ireland's need to achieve its target of producing 40pc of energy through renewables by 2020.

And wind-energy generation is indeed the only plausible method by which we can achieve renewables targets in the allotted time frame.

Secondly, wind critics, like the economist Colm McCarthy, claim our national wind-energy policies were founded in times of radically different energy circumstances.

That things have changed dramatically since the mid 2000s when wind seemed to offer a perfect hedge against fossil-fuel prices which, at that time, seemed destined to increase indefinitely.

In the mid noughties, "peak oil" was every nation's greatest nightmare. The price of gas – the energy source on which Ireland is most reliant – was spiking and Europe seemed forever at the mercy of the dastardly Russian energy giant Gazprom – forever threatening to turn us off. Ireland's fossil-fuel supply seemed ever more precarious at the end of a very long and ever threatened pipeline.

While few dispute that wind energy should make up a necessary component of any sovereign state's power portfolio mix, the critics like McCarthy (in his Bord Snip Nua report of 2011) asserted that the big turnaround in the world supply and price of gas, caused largely by rapidly emerging technological breakthroughs and new discoveries, meant it was time to re-assess the level of our commitment.

Gas prices

It was 2009 when gas prices, always linked to oil, first broke away from crude and became cheaper thanks to revolutionary developments in technology for shale extraction/fracking, coal sands and deep-sea exploration, what some are calling the "gas revolution".

While this is undoubtedly bad news for the environment, it does means that the "peak oil" fossil-fuel famine we feared in 2006 is now irrelevant – in contrast it is now estimated that the world has enough gas to last 250 years.

This is why two years on from An Bord Snip Nua, McCarthy still argues that we need to put the brakes on our wind strategy and the way renewables are subsidised. "Why is the Government still in the wind-energy business with four different outfits? They shouldn't be in the business of generating power at all.

"Times have changed – as we highlighted in the Bord Snip Nua report. We're not living in fear of Gazprom turning off the taps anymore. Gas will be relatively plentiful and affordable in the years ahead.

"New gas should be coming on stream from the Corrib next year and there are moves afoot to develop LMG and liquid gas. Meantime, the old Kinsale Field is now being used to store gas.

"Aside from retaining control of the national grid, there is otherwise no reason for the State to be involved in any aspect of power generation, be it wind or otherwise. We should sell off power generation to the private sector as soon as possible.

"Then there's the business of providing incentives for renewables – surely we're doing this the wrong way around?

"We shouldn't be giving incentives to anybody. Instead we should be heaping carbon taxes on the use of dirtier fuels like oil and coal and to a lesser extent, gas.

Technologies

"Then we stand back and let the various industries fight it out between themselves to come up with the best technologies they can manage."

But perhaps it is some other ignored energy recommendations of McCarthy's 2011 Bord Snip Nua report which could come back to bite us hardest – the clauses that urged Ireland to invest hard and fast in increasing its gas-storage facilities and that we should urgently develop import lines for storable liquid gas.

While the old Kinsale Field now permits some amount of gas storage and new gas from Corrib is coming soon, Ireland's energy-security situation may have actually worsened since 2011 if the latest report just published from the Irish Academy of Engineering on oil-and- gas policy explains.

In a country where 60pc of electricity is gas-generated, it points out that Ireland is not only still 90pc reliant for its gas on a single pipeline from Scotland but this year, for the first time ever, the UK (from whom we get our gas) is set to import more gas than it generates.

The UK must thus prioritise its own gas supply.

To see just how badly off we are, consider some figures contained in the Irish Academy of Engineering's gas-and-oil report – Denmark, a nation which uses a comparable amount of gas to Ireland, can store enough gas for 85 days supply.

Ireland, in contrast, can manage just 17 days, with no immediate prospects of improvement. Ironically, all in an environment when gas supply should be more plentiful going forward.

Opportunity costs

Lastly, there's the economic- opportunity costs to Ireland for dropping the ball on gas importation and storage at the expense of subsidised wind harvesting.

While Europe struggles with its environmentally friendly renewables, industry in the USA is now surging ahead with a competitive edge almost entirely built on cheap gas – to the degree that big German companies are now wailing that they can't compete.

Based on its new gas the US is estimated to be heading for fuel self sufficiency within 20 years while Europe still runs coal and oil stations in tandem with wind farms.

As a result Colm McCarthy thinks his Bord Snip recommendations are just as relevant today in 2013: "It's very simple, we should avail of gas and spend the other money better insulating our buildings so we use less of the stuff. Cut carbon emissions that way."

Irish Independent