Energy Outlook 2024

As we embark on a new year, the energy landscape is evolving at an unprecedented pace, driven by a confluence of geopolitical unrest, technological advancements, policy shifts, and global imperatives. Colm O'Neill and our Sustainable Futures team explain what could be done to hit Ireland's energy targets.

Ireland has set very ambitious targets and while we have made some progress, now is the time to take action in the Energy Sector. 2024 needs to be a year for delivery and a year for getting back on track in terms of achieving our targets.

Investors and developers are ready and willing to invest in Ireland but need government agencies to enable the delivery of key projects at a quicker rate.

Our comprehensive outlook explores key trends that will shape the energy sector in 2024 and beyond. This year is shaping up to be another record year for renewables and opportunities for renewables growth will need to be consolidated.

We have developed a vibrant energy sector teeming with talent, but the numbers unequivocally show that we have a way to go before our targets are in reach. Secure access to large amounts of clean energy will be the key to unlocking Ireland’s economic potential, and it is critical to clearly understand the gap we need to bridge.

Energy consumption and prosperity are strongly linked

The linkage between GDP and energy consumption is evident both historically and on national scales. World GDP and energy consumption has grown in close concert for as long as we have recorded energy statistics, and the same relationship figures without exception on national scale across the globe, as shown in the figures below.

GDP only started rising once we went beyond biomass and human power

All countries respect the GDP - energy correlation

Ireland’s relationship between energy consumption and GDP growth is no exception to the trend. While there are examples of certain economies starting to decouple parts of their economies from energy consumption, it remains a compelling argument that growing our ability to generate large amounts of clean energy will precipitate significant prosperity.

This could have several implications for the 2024 energy year in Ireland. Opportunities for renewables growth will need to be consolidated with issues like mandates for energy efficiency and accommodating for large energy users. We need to ensure that short-term challenges do not restrict opportunities for long-term growth.

Oil dominates our energy consumption profile...we must convince demographics beyond just enthusiastic early adopters.

Colm O'Neill

Partner, Head of Consulting, Global Head of Power and Utilities

KPMG in Ireland

Ireland’s current energy habits

As a country, Ireland has come a long way in developing renewable energy but is still the one of the worst-performing EU country in terms of overall renewable energy.

Dependence on oil

Oil dominates our energy consumption profile. Due to its importance for transport and heat, oil demand is inflexible and therefore hard to reduce. Technical solutions to reduce oil demand like Electric Vehicles and home upgrades have made good initial process but may face headwinds in 2024 as we must convince demographics beyond just enthusiastic early adopters.

The EV outlook has dimmed due to slow growth and rising prices: Globally CEOs now expect a c. 30% market share in 2030 down from up to 80% only a year ago. Moreover, retrofitting faces challenges with labour supply already under shortage.

Government plays a crucial role

For the energy transition to be successful, it is critical that government engage and support citizens to make sustainable choice. Today, a significant part of the Irish populace remains reluctant to change their energy behaviour as revealed in our recent “Powering tomorrow” report.

For example, only 1 in 5 express an interest in switching to an electric vehicle over the next 5 years with 50% naming price as the main barrier. It is crucial that the Government makes electric vehicles, housing retrofitting investments, and other sustainable choices more attractive for consumers with new and improved incentives. The incentives we implement today will shape our future and consumer behaviour for several decades to come.

Building energy independence

After oil, gas is Ireland’s second most prominent energy source. Gas makes up almost half of our electricity generation and will be required for many years to supply flexibility as renewable generation grows. We are highly dependent on imported gas, which leaves us exposed to growing geopolitical tensions and shifts in the global power balance.

To build our resilience and independence in 2024 and beyond, Ireland must focus on developing renewables and associated infrastructure. Pragmatism is key and we need to consider all practical options for our energy systems ranging from storage to alternative supply.

We need to cover an area the size of Co. Dublin with solar panels and an area like Co. Monaghan with wind farms.

Colm O'Neill

Partner, Head of Consulting, Global Head of Power and Utilities

KPMG in Ireland

Renewables

Reaching the 2030 renewables goals will require a step-change in the rate of renewables deployment. The efforts will be of unprecedented scale with massive engineering projects all requiring planning, permitting, supply chain, and more. We need to cover an area the size of Co. Dublin with solar panels and an area like Co. Monaghan with wind farms. The question is: Will people let us do this?

The industry is gearing up to face the increased volume of renewables with several encouraging developments in recent times:

An Bord Pleanála has received a significant resource increase along with a rebranding to An Coimisiún Pleanála. This will significantly increase the ability to speedily process applications thus reducing risk and shortening development timelines for renewable projects.
The visibility of annual RESS auctions have been a positive development providing predictability and decreased risk. Developers appreciate that learnings and feedback are considered from one auction to the next, exemplified by the inclusion of partial indexation from RESS 2 to RESS 3.
The Designated Maritime Area Plan (DMAP) Proposal for Offshore Renewable Energy has been positively received by the renewable industry. The plan-led approach will ensure the strategic and sustainable development of offshore renewable energy and be coordinated with EirGrid to ensure optimal incorporation to the transmission grid.

Grid

The move from centralised to distributed electricity generation is a key theme of the energy transition. Rather than relying on a handful of thermal generation stations our electricity is increasingly generated in every corner of the country.

This has large impacts on the transmission grid, which now must accommodate a range of remote and intermittent generation sites often located far from demand centres like cities and industrial parks.

To date, the investment in grid has not increased in line with renewable generation in assets. Significant grid reinforcements and upgrades are needed to support continuous renewables deployment, which calls for large capital investments by EirGrid.

Grid infrastructure also requires support of the public and local communities due to their scale and visible nature. However, KPMG analysis shows that only 34% support the required grid infrastructure (HV overhead powerlines) while 76% of people support renewable energy projects, such as wind farms and solar farms.

Increased community engagement from grid operators ESB Networks and EirGrid have recently yielded positive results, though continued efforts are needed to cement public support.

Consumers’ role in the energy transition

The energy transition will not succeed without the backing of the Irish consumers as currently highlighted by widespread reticence to electric vehicles and grid development. We need the support of citizens to make personal investments, change behaviours, and support disruptive construction projects in their localities.

This will only happen if consumers trust that these choices will not only benefit the environment, but also themselves directly. For example, our analysis shows that over 7 in 10 are more likely to support

disruptive infrastructure projects if they create local jobs and support local businesses. Understanding consumers’ attitudes and motivations is crucial to developing the public support required to accelerate the energy transition.

This is addressed in our recent “Powering Tomorrow” report, which surveyed consumer attitudes to all elements of the energy transition. The first-ever of its kind, this report highlights a range of actionable insights that policymakers, energy suppliers, landowners, businesses, and consumers can consider.

Securing Ireland’s energy future

Go to page

Keep an eye out for these emerging energy trends in 2024

Continued focus on grid development and policy

Ireland’s grid requires significant capital investment to ensure we can connect more renewables and utilise more of our renewable resource.
Growing development of biomethane and early hydrogen projects

Ireland is currently developing a National Biomethane Strategy that aims to produce 5.7 TWh of biomethane by 2030.
Carbon Capture and Storage

Carbon Capture and Storage (CCS) developments in Ireland following inclusion in CAP24. CCS will be critical to decarbonising cement manufacturing and incinerators in Ireland.
Nuclear power

Nuclear power’s rehabilitation on the global stage could offer Ireland and Europe Small Modular Reactors in the coming years that might be suitable for a system of Ireland’s scale.
Supply chain

Supply chain concerns with China cornering the market for rare earth elements.
Role of the citizen

Citizen support and cooperation playing an increased role in the energy transition. Public support will be crucial to enabling the level of infrastructure Ireland must build by 2050 to become a net-zero economy.

Act Now

Accelerating onshore renewable development in Ireland

We recently conducted a report on behalf of Wind Energy Ireland. The consultation was carried out with several key stakeholders across the renewable energy industry in Ireland. The report highlights key challenges and recommendations for accelerating Ireland’s onshore renewable development.

Accelerating onshore renewable energy in Ireland

Go to page

The time is now - Get in touch

Do you have any queries on developing energy infrastructure in Ireland, or the impacts and opportunities of such projects for your business?

Our Energy, Utilities and Telecoms team can help you ensure the most efficient capital and tax structures are put in place and implement new operating models in a demanding regulatory environment. Our deep knowledge of what it takes to deliver large engineering projects gives you the confidence to act and succeed.

Contact our team below today; we look forward to hearing from you.