Renewable energy, political stability, and economic prosperity
The energy transition is well underway in Ireland as well as globally. After a century of reliance on fossil fuels, the future of energy generation is rooted in zero-carbon sources of electricity from wind, solar, nuclear and hydropower. Our COP29 team explain below.
Switching to renewables is not only good for decarbonisation but also beneficial for peace, political stability, and the economy. Fossil fuel resources have been involved in a significant share of conflicts in recent times: The repercussions of the energy crisis spurred by Russia’s invasion of Ukraine still ripple through energy markets and we are unlikely to see pre-invasion prices for several decades.
As strong interdependence ties renewable energy development, peace, and prosperity together. Renewable energy investments are drawn to regions with political stability, clear energy policies, transparent planning processes, and efficient grid operations. Countries that meet these conditions accelerate their energy transition, attracting further investments in a virtuous cycle.
On the other hand, countries where conflict and instability are prevalent are likely to lag behind in the energy transition and miss out on investments. This is bad news for energy security, energy costs, and their economic development as a whole.
Ireland’s energy sector is thriving but faces challenges
Ireland is a standout performer in zero-carbon electricity generation, with renewables accounting for over 40% of its electricity mix. Despite performing poorly on renewable heat and transport, Ireland’s ambitious targets for renewable generation, favourable conditions for wind generation, and state-backed support schemes have attracted large volumes of foreign investment for renewable electricity generation assets.
Successful deployment of these assets in the past have led to doubling down on renewable generation targets from the Government and consequently increased inflow as investment to satisfy the increased demand for renewables. Ireland’s stable and secure economy underpinned by the country’s EU membership is an additional added comfort.
However, challenges remain. Persistent grid constraints, planning inefficiencies, and perceived risks associated grid connections have deterred some investors. These barriers threaten to slow the pace of renewable development, even as Ireland’s potential remains strong. Recent initiatives to address these bottlenecks are promising, but they must be accelerated to maintain Ireland’s momentum in the energy transition.
Insights from COP29
Energy was in focus on day five of this year’s edition of COP in Baku. Accelerating the energy transition was a red thread in virtually all conversations, and, in keeping with the overarching theme of “Finance COP”, the role of energy transition investments and finance was frequently discussed.
Energy storage and grids join generation as key focus points
The COP 29 Global Energy Storage and Grids pledge gained momentum as a range of countries committed to a 6-fold growth in global energy storage by 2030 compared to 2022 levels as well as modernising the grid. Large economies such as US, UK, Brazil, and Saudi Arabia were among the key signatories.
The pledge is also supported by Utilities for Net Zero Alliance (UNEZA) which was founded at COP 28 and this year announced a doubling of members across the globe as well as increased annual investments in grid and renewable generation.
Following similar pledges for generation previous COPs, deployment of wind and solar generation has surged in recent years. Energy storage and grid upgrades are crucial to enabling higher penetration of these intermittent renewables and avoiding “wasting” energy in what is known as “dispatch down”. This issue is very familiar to Ireland where dispatch down levels have surged in recent years due to lacking grid infrastructure and storage. These are now priority areas requiring significant action to support Ireland’s ambitious renewable energy targets.
Cross-border collaboration is on the rise
The day also saw several commitments on regional and continental levels: In a significant development for the region, IRENA and Azerbaijan unveiled a renewable energy partnership for Central Asia. The Accelerated Partnership for Renewable Energy in Central Asia (APRECA), launched by energy ministers from six central Asian countries (Azerbaijan, Kazakhstan, Kyrgyz Republic, Tajikistan, Turkmenistan, and Uzbekistan), aims to accelerate the development of renewable energy and green industry in the region.
Regional cooperation between the countries, supported by a robust framework, leverages their individual strengths, and is hoped to fast-track investments and enhance inter-regional connectivity to support renewable energy trade. Similarly, the Latin America Energy Organization (OLADE) announced a regional target for energy efficiency and the African Energy Commission (AFREC) launched a continental level Energy Efficiency Programme, Strategy and Action Plan. This comes only weeks after seven Mediterranean Countries committed to develop 1 TW terawatt of renewable capacity by 2030 through the TeraMed initiative, which investments could total. close to €700 billion.
These announcements are prime examples of how cross-border collaboration, regional frameworks, and shared visions can accelerate the energy transition. Partnerships such as the ones announced at COP 29 can improve efficiencies in renewable energy deployment, improve regional markets, and provide sense of comfort to investors that one country could not do alone.
As such, regions that have lagged behind in renewable energy generation can boost their energy transitions and create environments that attract further green investment, prosperity, and economic stability down that line.
Some call for changes to climate negotiations
Another key development of today’s talks, albeit not only energy focused, was the claim that the United Nations' COP climate talks are "no longer fit for purpose" and need an urgent overhaul. This was stated by a group of key experts including former UN secretary, Ban-Ki Moon, former UN climate chief Christiana Figueres and former president of Ireland Mary Robinson. The signatories’ key concern lays in the inability of the current structure to deliver change at the exponential speed and scale required to combat climate change.
Supply chain strains on the horizon for Ireland?
The conversations, commitments and pledges at COP 29 are positive for the energy transition but show that acceleration is still needed – particularly for energy infrastructure.
Global concerns about grid, storage, and inefficient processes are mirrored in Ireland through recent strategy and policy announcements show promise for the future. While pledges to increase grid and energy storage are essential to the energy transition, their deployment will put huge pressures on an already strained supply chain.
Ireland will undoubtedly be affected by this and must prepare for an even more competitive supply chain environment in the future. On the other hand, this development also presents large opportunities for new and innovative products to meet the demands of the energy transition.
For more insights and to explore how KPMG can support your business navigate the fast-changing energy landscape get in touch with our team today.
