We’ve all become accustomed to talking about how energy prices are soaring, but according to Cornwall Insight, we shouldn’t be expecting those prices to drop anytime soon. In fact, in the Irish market, energy prices could remain elevated until at least 2029.
Research from Cornwall Insight looking at the All-Island Power Market outlook to 2030, has shown that gas prices across both Northern Ireland and the Republic of Ireland will vary significantly between the seasons, with the summer months seeing much higher prices, despite the lower demand.
Between 2022 and 2030 modelling shows wind and solar power will rise from 45% of the electricity generation mix to 58%. With solar only making up 12% of this renewable capacity, the summer months, with much heavier reliance on gas, will see prices remain above the historical average until at least 2029, with a significant gap in prices between the seasons continuing to 2030 and beyond.
Both seasons will see a large drop in gas prices as the addition of the North-South Interconnector, linking Northern Ireland and the Republic of Ireland, improves network efficiencies, throughout the year.
With all coal capacity due to close by 2025 and electricity from combined cycle gas turbines (CCGT) slowly becoming a smaller percentage of the mix, the data demonstrates the need for an increase in battery storage capacity to fill in the periods when low carbon power is unavailable, such as when there are low wind speeds or during the overnight period.
Niall Durham, Senior Consultant at Cornwall Insight, noted, “Energy prices are currently at an all-time high with low-capacity margins meaning Ireland is having to run expensive and environmental damaging coal and gas-fired generators to ensure supply, all the while the Russian invasion of Ukraine continues to have a significant impact on gas wholesale prices across Europe.
”As we look over the next eight years, many will be heartened to see our all-Island Power forward curve show a steep drop in energy prices as Ireland moves away from gas towards a renewables led future. However, while lowering the reliance on gas does mean Ireland is less susceptible to economic and geopolitical changes, the unpredictability of renewables such as wind and solar does still leave the market vulnerable to variations in supply. Afterall the wind does have to blow, and the sun does have to shine.
“Large differences in energy supply costs between summer and winter will be a feature of the market until we see more investment in battery storage capacity. If Ireland is to meet its aim of net zero by 2050, while providing an affordable market for consumers and suppliers alike, the ability to cope with periods of low-carbon power availability without resorting to high cost and environmentally damaging gas will be essential.”
