Think Tank: Eco energy can drive a recovery

Ireland must tap into the next big thing: green power.

Cearbhall Ó Dálaigh

Financiers, economists and leaders of industry have all tipped green technology as the next big thing for the world economy. They see it as being on the scale of information technology, the internet and mobile communications — the kind of economic breakthrough that builds industries, generates jobs and creates fortunes. The internet was largely built by Silicon Valley start-ups, not by telecom giants. The green tech industry could be a similar story, making it an ideal sector for innovative Irish companies.
The term “green tech” encompasses businesses that can reduce global warming, such as renewable energy, water purification, waste management and sustainable transport solutions. Green technologies no longer inhabit a niche; they are now becoming mainstream drivers of growth and employment worldwide. It was the third largest venture-capital investment sector last year, behind IT and biotechnology.
Irish entrepreneurs and their financial backers should now be positioning themselves to tap into a new wave of clean technologies. To assist them, one key development is required: a smart-grid electricity network. Basically, this is a software overlay on the existing electricity power lines. It would allow us to apply IT to improve the efficiency of energy consumption.
Today’s electricity distribution grid is a centralised one-way system, built to take power from a small number of large power stations and distribute it. A smart grid is a two-way system that would allow the ESB buy electricity back into the grid from private power generators, so householders and businesses can become energy producers, not just consumers.
At the same time, electricity systems can also transport information. Cisco, whose technology helps run the internet, is building a two-way link into electricity grids. The idea is to send internet protocol data down power lines instead of using the current internet-telecoms channel. John Chambers, its chief executive, has described the smart grid as “an instant replay of the internet; instead of moving zeros and ones, we’re moving electricity”.
A smart grid could be a big driver of wealth and jobs over the next decade. Christian Feisst, the head of business development at Cisco’s smart-grid subsidiary, has said: “The change in energy will be the greatest infrastructure project of the next decade.”
Ireland has set a target of producing 40% of our electricity from renewable sources by 2020. A smart grid is the link that will allow us to tap our enormous renewable energy resources. Because many alternative energy sources tend to be intermittent, they are difficult to integrate into the existing grid network.
Although a smart grid is essential for a lower carbon future, there are still many obstacles to overcome. The ESB will need to be persuaded to change its business model, and we need to update the power distribution infrastructure.
Michael Walsh, the chief executive of the Irish Wind Energy Association, says many wind firms face delays of up to 10 years for a connection to the national grid. A number of wind producers’ planning permissions expired by the time they received the offer of connection, and they will need to apply a second time.
EirGrid, the state-owned electric power transmission operator, has said Ireland needs 1,150km of new electricity circuits and the upgrading of a further 2,300km if we are to meet our 2020 goal. A spokeswoman said that this was “a massive task” but that they were on target to achieve it.
According to its latest annual report, EirGrid has the best-paid staff in the public sector — with its 225 employees receiving an average of €110,000 each — and giving it a target of 2020 is not acceptable. Firms such as IBM and Cisco are introducing smart grids in Miami, Amsterdam and Malta over a much shorter period.
Despite this year’s 10% reduction in electricity prices, Ireland’s remain among the highest in Europe and they are being blamed for our continuing lack of export competitiveness. The Small Firms Association has called for a review of the regulation of the entire energy market.
We also need action on the feed-in rate, the price the ESB pays micro-generators for the power they sell to the grid. Our rates are dismal by international standards, and this should be rectified immediately, otherwise it will stunt the growth of this promising sector.
Cearbhall Ó Dálaigh is the author of Celtic Meltdown: Why Ireland is Broke and How We Can Fix It, Collins Press, €14.80