It’s time to shake up the energy market in Ireland.
ompanies need to take direct charge of generating and using their own clean and renewable energy. Expecting traditional utility companies to help in this transition is like asking turkeys to vote for Christmas.
The clean energy revolution has been a long time coming. This country is moving too slowly and too cautiously on the climate change agenda and everybody is expecting someone else to solve the issue.
The problem in the energy market is two-fold: in the first instance, our large energy suppliers are overcharging customers. Some of it is because they don’t need or want to change their existing business model. This is particularly exacerbated by the government allowing them to simply pass on rising costs for regulation to the end user.
Take the example of electricity. Last year, the annual Public Service Obligation (PSO) levy charged to Irish customers, which supports the generation of electricity from sustainable, renewable and indigenous sources, was just under €40 per year. However, this will increase to just under €90 this year. This is a shocking increase of 130pc.
It’s almost like we’ve come to expect being ripped off. When we submitted our current radio ad to a national broadcaster this week, they would not believe there was “absolutely no upfront cost” to our customers. We had to explain our model in detail to show them that we don’t charge customers anything for installation and set-up, just so they’d play the ad.
As if this weren’t enough, customers of ESB – our biggest electricity supplier – will face an increase of 3.4pc in the unit price of their electricity this year. All this while they made profits in 2020 of €616m. Admittedly, this was before exceptional items that were written off last year, such as €188m for a power plant in Manchester. As the ESB is 95pc owned by the Irish government, this means that the Irish taxpayer paid for the write-off of a bad investment in an English power plant. If the ESB are going to make bad investments, shouldn’t they at least be in Ireland?
Indeed, there are a number of large corporates which have made commitments to only buy renewables in Ireland, so are these the same renewables that Irish customers are subsidising through the PSO levy?
All the while, the ESB’s international arm is currently working on projects in 120 countries around the world. But why is more value not being unlocked for Irish customers?
In November last year, the ESB announced they were investing €3bn in a Scottish wind farm on a 50-50 basis with a Chinese firm, yet we can’t seem to meet our own targets at home because we can’t find the money to do it. Looks like the cost of upgrading Ireland to renewable energy is being passed on, in large part, to Irish customers, while the benefits are reaped by foreign investors.
Our problems are amplified by our status as an international climate laggard.
In the last week, analysis from the Environmental Protection Agency (EPA) showed that emissions from Irish power generation and major industrial companies are reducing much slower than is seen by our European neighbours.
Our national Climate Action Plan isn’t without merit.
But all the bets seem to be going on wind; repurposing Moneypoint, building massive windfarms around the coast. Seems like we’re forgetting the sun. The sun has huge advantages; not least the fact that individual companies can use solar energy to make an immediate difference to their own energy consumption without the need for involvement from the Grid.
Solar energy can be provided at up to 30pc less than the costs charged by conventional energy companies. It’s easily adopted and represents a remarkable saving, and it’s quick; businesses can increase their use of clean, renewable electricity without waiting for a wind farm to pop up in their neighbourhood.
Businesses around the country want to embrace the clean energy agenda. They are frustrated, waiting for the energy companies to get moving on the climate agenda. So the widespread adoption of solar energy will have huge appeal.
Right now, the focus is on harvesting (solar) energy from the rooftop of a business and selling it cheaply back to that business. But the same approach can work in lots of different ways. Who is to say that a business customer can’t sell the spare electricity they generate back via the grid so someone else can avail of it? Maybe the company can use the solar energy from their rooftops to charge the electric vehicles of their employees?
The enthusiasm of the market is palpable. The financial models fit this type of enterprise like never before and there is a huge appetite across the business and investment community for companies to be seen to do the right thing on issues like climate action.
If enough businesses do that, then the impact on the broader economy can be striking. That’s what motivates us each day. That and the sunrise of course.
Kevin Maughan is the CEO of affordable clean energy provider UrbanVolt
