Sunday, 10 July 2016

ESRI Report on Brexit

The ESRI report on Brexit warns about the implications for the All Island Electricity Market. ESRI economic forecasts have being proven wrong before, most famously when they predicted a "soft landing" in 2008. This recent report seems to have flaws as well.

  •  The first point that needs to be noted is the fact that an all-island electricity market has existed since 2007. Interconnection between Ireland and Northern Ireland is particularly important for Northern Ireland which relies on electricity imports from Ireland to make up for insufficient local electricity generation capacity.

Northern Ireland has a capacity shortage. Now that they are outside the EU, they can ignore EU Directives on power stations, reverse the closure of their coal plants, and open a new power station if required. This is an easy solution to their problems, it's also cheaper than building the North South Interconnector, but somehow ESRI failed to spot it.

  • Hence the UK government considered trading in renewable electricity with Ireland, which could have reduced the cost of UK compliance. However, negotiations on this strategy stalled because of a reluctance to pay the necessary subsidy to Irish producers, in spite of the fact that it would have reduced the overall cost of compliance for the UK. 

Cost was only one issue. The UK officials realized that there was a high correlation of wind between the two islands i.e when wind is blowing in the UK, it is blowing in Ireland and vice versa. This reduces the benefits of importing wind from Ireland.

  •  If the UK left the EU it would no longer be subject to EU regulatory measures to deal with a possible crisis situation in the case of a gas or oil shortage. Ireland would then have to consider how best to provide protection from very unlikely, but potentially catastrophic outcomes. Gas supplies are of crucial importance to Ireland because gas plays a central role in electricity generation. Because of this, any interruption to supply could have very serious consequences. 

I thought that Ireland's goal was to be energy independent by building wind farms ? So why will there be a problem if UK can't supply gas to us anymore ? An inherent, but unwritten, assumption in the ESRI report is that investment in wind energy will not make us materially any less dependent on gas imports.  So why are they pushing the wind policy ?

In reality, should a wide gap open up between UK and Ireland in terms of one country pursuing EU energy policy for the next 10-20 years and the other not, then Ireland will become more and more dependent on UK for electricity. EU energy policy may well result in the closure of uneconomical Irish power stations whilst UK will be free to build more.


  1. We could start fracking for gas


  3. Last week's Irish Examiner carried a the opinion of Mary Robinson in which she said in effect that climate change at the hand of man is a foregone conclusion and she bemoaned the effect it will have on African's poor. So it follows she wants Ireland to do its bit to stop burning fossil fuels. Further over in the business section, a business writer bemoaned the possible interruption to Ireland's gas supply from the UK. So we must cry if we burn fuel and we must cry if we have no fuel to burn. The recent trend was to exclude climate from general election campaigns and immediately the polls closed, climate suddenly appeared to take the limelight. The US Republican campaign may change that. Climate is totally absent and burning fuel is firmly on the agenda to grow the economy. I cannot see how Hillary Clinton can avoid discussing it in the debates. The day of politicians bought by lobbyists collaborating with opposing candidates may be over. The day of hiding behind the IPCC appear to be gone. Good riddance if it is.

  4. I just read a report about how Britain's wind energy drive is causing severe environmental destruction in China where rare earths are produced.
    I believe the efforts we have made to fight the greens is paying off. No one believes them any more. I see the British government has halted Hinkley Point Power station. I hope they realise they were been ripped off big time and it would have resulted in exorbitant inescapable electricity prices for 40 years. This is a direct result of Brexit. New government in Britain with more green sceptics in it. Cameron gone too as is Osbourne. Some hope yet