Ireland does not usually loom large as a major market for energy storage asset investors and owners. Compared to markets such as Australia, China or the US, its total potential is limited.
But there are at least five reasons why, on a per-capita basis, Ireland is arguably the best battery storage market in the world.
1. It’s an affluent country
From very low levels in the last century, the Republic of Ireland’s gross domestic product (GDP) has soared in the last 20 years, growing almost fourfold from $99.9 billion in 2000 to $382.5 billion in 2018.
It is now fourth in the world in GDP per capita, according to International Monetary Fund and World Bank rankings, thanks to a highly developed knowledge economy and a focus on service industries such as finance, technology and agribusiness.
It is also the world’s sixth most open economy, according to the Index of Economic Freedom, and as a eurozone member is part of one of the largest economies and trading blocs on the globe.
Add this to the fact that it is one of the most stable and progressive democracies worldwide and it is clear that Ireland has all the conditions to favour infrastructure investment, including investments in stationary energy storage.
2. It has growing energy requirements
“The All-Island demand is increasing and is forecast to increase significantly, largely due to the expected expansion of large energy users such as data centres,” says an all-island generation capacity statement issued last year by EirGrid and the System Operator for Northern Ireland (SONI).
At the moment, says the statement, there is enough capacity to service demand. However, the burden on the grid is forecast to grow between 18% and 41% over the coming decade.
This, along with the retirement of thermal plants from the system, means that “at a median demand level there is not adequate generation capacity to meet demand from 2026 on an All-Island basis,” the capacity statement says. SONI’s capacity should run out from 2025, it adds.
And the economic growth powering increases in demand does not seem to have suffered much from the coronavirus pandemic. In September, Reuters reported that Irish GDP was set to fall by just 2.5% this year, much less than the 10.5% that economists predicted in April.
All this points to an imminent and growing need for grid flexibility that can in large part be served through large-scale battery storage.
3. It has ambitious decarbonisation targets
As of 2018, EirGrid and SONI both relied mostly on fossil fuels for electricity generation. The Republic’s fuel mix included 52% gas and roughly 15% coal, peat and other non-renewables. North of the border, roughly 61% of generation was from fossil fuels, predominantly gas and coal.
However, both territories have ambitious plans to reduce carbon emissions. In the Republic, the government introduced a Climate Action and Low Carbon Development Amendment Bill in October that aims to cut greenhouse gas emissions by an average 7% a year over the coming decade.
The plan, which includes successive five-year, economy-wide carbon budgets starting in 2021, is intended to get Ireland to carbon neutrality by 2050, in line with European Union targets.
Northern Ireland, meanwhile, has been told by the UK’s Committee on Climate Change that it needs to cut its carbon emissions by at least 82% if it is to help the UK achieve net-zero emissions by 2050.
In both territories, this will mean retiring large amounts of thermal power and largely replacing it with intermittent generation, mostly from onshore and offshore wind. Battery storage will be key in making sure this intermittent generation can be smoothed to meet demand.
4. It has low interconnection capacity
Countries can often accommodate large volumes of intermittent renewables if they have plenty of interconnection capacity to trade it with neighbours.
Northern Germany, for example, was able to admit up to almost 43% of renewables on the grid in 2019, but only largely because it had the option of shipping surpluses to neighbouring markets such as Denmark.
Conversely, thanks to one of Europe’s most highly interconnected grids, Germany was also able to import almost 34 TWh of energy to meet local demand. Northern Ireland and the Republic, in contrast, share one of the most isolated grids in Europe.
The island has just two interconnectors: the 500 MW East West Interconnector linking the Republic to Wales and the Moyle Interconnector, also of 500MW, connecting Northern Ireland to Scotland.
EirGrid is planning to build a 700 MW link to France, called the Celtic Interconnector, but it is not likely to go live before 2025. As a consequence, the Irish grid will need more storage capacity than most to deal with intermittent renewables as these replace thermal generation in the years to come.
5. It is dependent on a single intermittent renewable resource
A further challenge for EirGrid and SONI is that Ireland’s renewable resources are skewed towards a single source: wind.
This is good for providing low-cost electricity at scale but is problematic in terms of the generation profile: Ireland’s small size in relation to weather fronts means turbines will all be turning, or stopped, at the same time.
Regulators are concerned about what will happen to the energy system during prolonged calm periods, and a series of energy scenarios published by EirGrid last year proposed retaining substantial amounts of gas generation to deal with such situations.
On a day-to-day basis, however, batteries are likely to be the technology of choice for evening out wind energy generation and delivering electricity when it is needed for the grid.
A booming market
Given the above, it’s hardly surprising that the island’s battery storage market pipeline was judged to be 2.5 GW in April. That’s not bad for a region that has a population of less than 7 million.
And now is the time to investigate investment opportunities, since grid connection points could soon become congested.