With less than 50 days until the end of the Brexit transition period, Ireland is on the cusp of an imminent threat to its energy security. Approximately half of Ireland’s gas is imported via the UK and with the UK having now formally left the EU, this leaves it in a precarious position. Furthermore, Ireland has no gas interconnection with any member of the EU and is still reliant on the UK for its gas supply.
It is expected that the current rules for trading gas between the EU and the UK will remain the same. However, in the event of any gas supply emergency disruptions in the future, the UK may no longer be legally bound by EU law to provide Ireland with assistance. This would have a detrimental impact on businesses and the overall local economy in the form of higher gas prices.
The UK itself has a growing energy security problem which is set to exacerbate after its departure from the EU. Less than two per cent of the UK’s annual gas demand is kept in storage – compared with around 25 per cent storage that many EU members enjoy. This leaves little system flexibility for peaks in demand caused by emergency disruptions as witnessed during the “Beast from the East”, such events are likely to become more frequent as a result of increased climate change related weather extremities.
Oxford Analytica recently published a report about the growing risks of energy supply security in Ireland and the UK and highlighting InfraStrata plc’s Islandmagee gas storage project as a viable solution that would also benefit the economy through investment and job creation. Located in Islandmagee, County Antrim, Northern Island, the Islandmagee project is a proposed salt cavern gas storage facility consisting of seven underground caverns, capable of storing up to a total of 500 million cubic metres of gas in Permian salt beds.
InfraStrata plc is a leading strategic infrastructure projects and physical asset lifecycle management company and has begun to ramp up pressure to move its Irish Sea gas storage project forward as 4 December 2020 marks a year since the company submitted its application to be granted a marine licence by the Department of Agriculture, Environment and Rural Affairs (DAERA) of Northern Ireland. The Department, however, has dithered over decision-making in this process at substantial cost to the taxpayer through ongoing bureaucracy associated with an extended review, ultimately leading to an increased risk of blackouts if energy supplies through storage are not developed in time.
As Ireland moves to higher levels of renewable electricity generation and continues its efforts to decarbonise the heating and transport sectors, hydrogen will play an important role in reducing greenhouse gas emissions. However, no progress on hydrogen can be realised until large-scale commercial storage is made available. Storing hydrogen is difficult because of its volatility, however, InfraStrata’s salt caverns are ideally suited to this. Whilst technically viable, hydrogen storage would be subject to further regulatory approvals. Ultimately, the Islandmagee facility will position Ireland at the forefront of the imminent hydrogen revolution.
Two of the main focuses of the report include benefits related to employment as well as the wider economic impact to the UK and Ireland. This comes as it was revealed that the latest Northern Ireland ‘circuit breaker’ lockdown cost the economy around £400 million, alongside the news that around 9,000 jobs have been lost due to COVID-19.
The report highlights that during construction, 400 direct jobs, and between 800 and 1,200 indirect jobs (i.e. within the supply chain) will be created whilst, during operations, 60 direct jobs, and between 120 and 180 indirect jobs will be created. Many of the jobs created will be skilled Science, Technology, Engineering and Mathematics (STEM) jobs as detailed in the Belfast City Region Deal.
In terms of the wider economic benefit, the report notes that during construction, it is estimated that for every £1 million of capital expenditure, a further £2 million will be created in the economy.
With the sheer influx of 400 jobs during construction, it is expected to introduce around £7 million into the local economy. Whilst the 60 permanent jobs during operations are expected to introduce around £1 million into the local economy, a further £2-3 million would be injected into the local economy, if a further 120 to 180 indirect jobs are created.
Dubbed as the cornerstone for future technological innovations in clean and green energy, the Islandmagee facility is unique in being the only gas storage project in North West Europe that was awarded ‘Project of Common Interest’ (PCI) status by the European Union (EU), confirming its strategic importance to the entire continent prior to the UK’s departure from the EU.
John Wood, CEO of InfraStrata commented, “our gas storage project will significantly add to Ireland’s security of energy supply and substantially mitigate against the risk of blackouts during periods of peak system stress.
“Our exciting infrastructure development project would also help the UK transition from natural gas towards the full development and commercialisation of hydrogen and a green energy industry by 2050.
“We have now been in the process of obtaining our final marine licence from DAERA for nearly one year. It is disappointing that, despite our efforts to go over and above what is legally required on several occasions, DAERA has delayed the process. Such indecision not only threatens the security of energy supply in the long run but also destroys much needed short term economic benefit and job creation.”