Ireland’s energy future: lessons from history, challenges ahead

When Joyce wrote of a heavy winter snow falling across Ireland in his 1914 short story The Dead, he used it as a metaphor for the icy paralysis smothering Irish ambitions for change. This paralysis kept the cultural mindset frozen in the past and left the future uncertain. 

Joyce’s portrayal of an Irish identity incubating under British rule was well founded. Two years after The Dead was published, Ireland’s paralysis was broken by the 1916 Easter Rising, an event that upheaved the political landscape and ultimately paved the way for the Republic of Ireland we know today. 

A desire for reform hindered by inertia and adherence to legacy systems is a familiar theme to those in the Irish power market. For every forward-thinking renewable or flexibility asset added to the system, ageing infrastructure or outdated policy seems to freeze its potential in place. 

The Irish power market, or the Integrated Single Electricity Market (I-SEM), spans the whole island of Ireland, encompassing both the Republic of Ireland and Northern Ireland, which is part of the UK. Both jurisdictions operate their power systems in coordination and share the same underlying market.

Like many of its neighbours, I-SEM is undergoing rapid change, with increasing wind and flexibility capacity as part of the push to reach net zero. Even solar generation is becoming more relevant, perhaps to the surprise of those familiar with Ireland’s rain-prone climate.  

On the demand side, Ireland’s low corporate tax rate (12.5%) has attracted global companies like Google, Meta and Amazon. These tech giants have built an array of data centres on the island. This means I-SEM is one of the few European power markets seeing increasing year-on-year demand. It’s also given a substantial boost to the Irish economy – so there’s no sign of data centre buildout slowing soon.

Data centre demand exceeds that of all residential homes combined. This has far-reaching implications for the market and poses both challenges and opportunities.  

There is potential for fundamental change in I-SEM, as rising power demand and renewable generation capacity compete in the race to meet Ireland’s target of net-zero emissions by 2050. However, in many ways the system isn’t built to accommodate these changes. Data centre demand is concentrated around Dublin, widening the gap between urban and rural demand and straining the ageing cable infrastructure that spans the sparsely-populated island. 

Due to the complex political relationship between Northern Ireland and the Republic, building infrastructure to connect the two has historically been challenging. These challenges stem from decades of sectarian conflict that created deep divisions and hindered cross-border cooperation. As a result, only one cross-border power cable of meaningful capacity is operational. 

These limitations contribute to a familiar challenge in the Irish power market: constraints.

Constraints occur when economically viable power cannot reach the grid due to physical system limits. For example, if wind generation in Northern Ireland necessitates export to the Republic, the single cross-border cable may lack sufficient capacity, leading to a downward dispatch of wind power. 

This means that despite continued renewable buildout, green power often isn’t making it onto the system due to transmission bottlenecks preventing it from being transported to demand sites. 

Beyond thermal constraints, issues like reserve requirements and system stability also hinder renewable integration. Conventional power stations are often needed for stability, leaving less room for renewable electricity on the grid. This results in the downward dispatch of wind power, perpetuating a system constrained by its ageing design. 

Yet, as Joyce’s ideas pre-empted foundational political change, could a paradigm shift be coming for I-SEM? 

New cable infrastructure, reinforcing domestic connections and links with neighbouring markets, are already under construction. The Celtic Interconnector, set to connect the Republic of Ireland and France in 2026, will integrate I-SEM into the European energy market. This promises enhanced liquidity, new trading strategies and a reimagining of how the market operates.

Another fundamental change is expected with the launch of the Day-Ahead System Services Auction (DASSA), also planned for 2026. Moving system services procurement to a day-ahead basis, replacing the current DS3 arrangements, will be a radical change in the role of flexibility in the market. 

Energy markets are notoriously complex and inscrutable. A change in one area can have far-reaching and unforeseen consequences elsewhere. To achieve meaningful change, a holistic understanding of the system is essential. Ireland’s ambitions for net zero must align with its physical and political realities. Without this broader thinking, the Irish power market risks being left in a frozen state.

This article originally appeared as a column on montelnews.com