Costs holding back Ireland as a renewables exporter, Nesc warns
renewable
electricity 'risks being undermined unless policymakers act swiftly to address cost competitiveness challenges', the
National Economic and Social Council
(Nesc) has warned the
Government
.
In a report published on Wednesday, the independent think tank highlights Ireland's growing vulnerability due to being 'the most fossil fuel import-dependent countries in Europe ... exposing households and businesses to price volatility on international markets and geopolitical risks'.
This includes having no existing gas reserve. The
Ukraine war
and Middle East conflict underline the need for strategic energy reserves 'to act as a buffer' should a prolonged disruption to international energy supplies occur, it says.
In addition, 'unless reliance on imported fossil fuels is dramatically reduced, Ireland risks worsening climate change and substantial
EU
fines'.
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The report recommends 'redirecting fiscal resources away from inefficient fossil fuel subsidies to accelerate the energy transition and shift economic incentives toward investment in renewables'.
It highlights risks facing Ireland's subsea energy infrastructure, notably
gas
pipelines and electricity interconnectors with the UK, which are 'vulnerable to hybrid warfare attacks such as physical sabotage and cyberattacks'.
This is in a scenario where the
Defence Forces
'have limited access to real-time satellite surveillance'; insufficient maritime patrol capability and has 'consistently operated below their target personnel levels'.
In addition to a State-led strategic gas emergency reserve, it calls for 'a
long-term national plan for strategic clean energy reserves based on zero-carbon fuels such as green hydrogen and biomethane'.
Green hydrogen generated from renewable energy, however, is likely to be prohibitively expensive unless economies of scale are achieved exceeding domestic demand, it concludes, and backed by partnerships with large economies such as
Germany
, the
Netherlands
and
Belgium
.
'Without guaranteed export pathways and demand certainty, green hydrogen risks becoming another stranded asset,' it adds, but 'given our considerable natural endowments in the offshore wind sector ... Ireland could play a strategic role in future as a producer and exporter of hydrogen'.
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In examining how energy trade is likely to evolve as Ireland moves away imported fossil fuels, Nesc outlines challenges within 'a more complex and interdependent European energy system' based on renewables.
'The energy transition will not insulate us from developments beyond our borders,' said Nesc policy analyst Dr David Hallinan. 'Ireland is an island – but we're part of a European energy system. The international trading environment and domestic energy system will remain deeply intertwined. To lead in clean energy, we need to invest strategically, contain costs and work more closely with our neighbours.'
Electricity exports from Ireland have fallen in recent years, while imports have surged mainly due to cheaper electricity from Britain. With the Celtic interconnector with France becoming operational in 2026, availability of cheap electricity imports will increase further, it says.
Ireland's electricity is more expensive due to a combination of factors, including heavy reliance on natural gas; grid bottlenecks, geographic isolation and absence of nuclear power. To counter this, the report calls for strategic focus on maximising domestic use of Ireland's vast renewable energy resources to achieve strategic resilience; industrial decarbonisation, and meet legally-binding emissions reductions.
Dr Hallinan added: 'Ireland must not view itself in isolation. Our energy future is European, and it must be built on shared planning, shared investment and shared ambition. We will remain deeply interdependent through trade in electricity, trade in zero-carbon fuels, transnational infrastructure and trade in renewable energy technologies.'
The race to become a global leader in renewables trade will not be won on policy ambition alone, he said. 'There are real concerns about the slow pace of energy infrastructure delivery. Projects to expand the grid, develop offshore wind farms and upgrade port infrastructure are moving too slowly.'
Future investment decisions, Nesc says, must be supported by European frameworks for joint planning and cost-sharing, backed by partnerships with countries with big demand for renewables.
'These mechanisms are vital to ensuring Ireland's renewable energy exports can be sold into European markets competitively and reliably,' Dr Hallinan said. 'We must address the root causes of high domestic electricity prices. Our ability to export clean energy will depend on how effectively we address these fundamentals.'
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