High electricity prices are already affecting Ireland’s ability to attract new investment to energy-intensive sectors, Government officials have warned Ministers.
In briefing documents drawn up for Department of Enterprise, Trade and Employment Minister Peter Burke and junior ministers Niamh Smith and Alan Dillon officials also cautioned that costs would increase further to pay for significant new investment that is required.
“Certainty is needed to enable investment. We cannot allow energy concerns and costs make Ireland a less attractive location for business to invest in compared to other EU jurisdictions.”
The Department of Enterprise briefing material also warned that Ireland was facing increasing competition for foreign direct investment.
Officials said that some European Union (EU) countries are using “considerable sums of State aid to compete”.
“Ireland has to ensure that our competitive offering on skills and talent, tax (research and development tax credit), ease of establishment and so on, are maintained against growing levels of competition. It is vital that the Department [of Enterprise, Trade and Employment] successfully advocates across Government for improving our competitiveness.”
The briefing document highlighted among the competitiveness challenges being faced were the energy grid and costs, water infrastructure, housing supply and the planning process.
The briefing material said that Ireland was one of the most expensive energy markets in the EU “and is already feeling the impact of this competitiveness deficit in Ireland’s ability to attract new investment in energy-intensive sectors”.
“While Ireland’s wholesale prices are only marginally higher (than) other jurisdictions, our cost of grid is multiples of peer locations and looks only set to rise as we undergo a very large investment in energy infrastructure and connection of renewables.”
“The electricity grid needs huge investment to integrate renewables but we must also be aware of its impact on the economy’s competitiveness.”
“To deliver price competitiveness over the medium term, Government needs to deliver a diversified energy system with significant support for energy efficiency alongside independent regulation that protects consumers and delivers efficient competitive energy retail and wholesale markets.”
The briefing documents also maintained that work was ongoing to provide clarity to inform future investment in data centre assets.
Ministers were told that there were about 80 data centres “with a huge variety in size, energy use and ownership in Ireland.
The documents said data centres were “an essential part of Ireland’s digital infrastructure with an economic impacts that extends far beyond the physical assets”
“They also underpin other valuable investment in Ireland by the technology sector.”
“Unlike many other EU member states, Ireland does not have much energy-intensive heavy industry. However, we are the world’s largest exporter of ICT (information communications technology) services underpinned by our data centres.”
“Nonetheless, the economic benefit must be balanced against energy security considerations and our carbon commitments.”
The briefing documents stated that industrial emissions accounted for nearly 10 per cent of Ireland’s total emissions and that the vast majority (93 per cent) were accounted for in the client base of the Industrial Development Aauthority (IDA) and Enterprise Ireland.
“They are concentrated in cement, alumina, food and beverage, pharma and chemicals sector.”
It said the Environmental Protection Agency was projecting that industry sector would exceed its 2026-30 sectoral ceiling by 39 per cent.
