Electricity has a fundamental role in providing energy services in a decarbonised, sustainable future, in particular through the progressive electrification of transport and heating.
We believe this can be achieved through competitive markets that foster investment and innovation. All technology options for decarbonising our power system share a requirement for significant capital commitment, long lead times for construction, decades-long operational lifetime, and a need for investment decisions to be made well in advance of 2030.
A well-functioning power market and efficient carbon pricing are key tools to deliver the necessary investment signals in a technology-neutral way.
Investors need clear and reliable long-term signals to allocate funds to such capital-intensive projects. Appropriate market arrangements or incentives will be required to encourage investments in technologies that provide system services which ensure the secure and reliable operation of the power system.
Today’s grid is not adequately flexible to deliver the decarbonisation ambition.
Actions that increase the capability of the grid to absorb the greatest amount of renewable generation must be taken as high levels of variable curtailment make financing renewable projects highly challenging. Pricing grid services in the right way for generators, energy consumers, and all new players will be critical to optimize the value of the grid for the benefit of network customers and the societies at large, while ensuring sufficient revenues and the right incentives for grid owners.
Grid infrastructure and development need to keep pace with policy ambition and renewables development.
Eurelectric recently published ‘Connecting the dots’ a study on the distribution grid investment needed to power the energy transition. This study finds that grid investments need to increase by 50-70% in the 2020s compared to the last decade. For Ireland, they estimate a €6.9 billion investment is needed. Much of this investment is needed to electrify buildings, industry, and transport, while modernisation of the grid and the rollout of smart meters also requires significant funding. The right framework conditions and smart tariff design will ensure the annual investment needs will have a moderate impact on electricity prices and grid tariffs. The clean energy transformation will bring about savings in fossil fuel imports and reduce average electricity costs in the long term. In the meantime, 90% of investments could contribute to the economic recovery from Covid-19.