The Economic Impacts for Ireland of High Oil and Gas Prices - Pathways to risk mitigation and a low carbon future
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The Economic Impacts for Ireland of High Oil and Gas Prices Pathways to risk mitigation and a low carbon future A research project commissioned by Siemens Limited
Contents
Table of Contents
Foreword 03
Chapter 1.
Oil and Gas Prices and
their Determinants. 04
Chapter 2.
Baseline Scenario 2025. 07
Chapter 3.
Economic and Social Impacts of
three Oil and Gas Price Scenarios. 09
Chapter 4.
Ireland’s dependence on Oil and Gas. 15
Chapter 5.
Options and actions to reduce
exposure to High Oil and Gas Prices. 18
Chapter 6.
Summary, Conclusions and
Recommendations. 24
Endnotes and References. 27
This publication is a management summary of a more in depth analysis presented by the
researchers. The full report is available on request from Siemens Limited.
Pathways to risk mitigation and a low carbon future THE ECONOMIC IMPACTS FOR IRELAND OF HIGH OIL AND GAS PRICES 01
Foreword
Foreword
O
il and gas prices have been the fuels in order to mitigate the corresponding
subject of considerable interest in level of impacts.
the wake of a particularly volatile
year in 2008 which saw a nominal peak of The report is structured into three core
over $140 per barrel in July of that year, sections:
with a subsequent collapse to just under 1. The development of three high oil
$40 dollars per barrel by December1. The and gas (HOG) price scenarios out
scale of the price swing and the rapidity of to 2025.
the change stand out from real and nominal 2. An estimation of the macroeconomic
price trends over the past two decades and impacts for Ireland for each of the
serve as a timely illustration of the power of three HOG price scenarios as compared
the unexpected. with the most recent national Baseline
As a small open economy, Ireland is from the Economic and Social Research
heavily dependent on world demand for Institute (ESRI).
Irish exports and also on our competitive 3. An outline of strategic options that
position within the global marketplace. could reduce Ireland’s reliance on oil
Any shock to the global economy that has and gas.
a negative impact on global growth will
reduce the demand for Irish exports and Siemens is grateful to Dr Andrew
therefore domestic output. Additionally Kelly of AP EnvEcon Limited for his
Ireland’s dependency on imported oil and contribution to this report. We would also
gas for the operation of the economy and like to acknowledge the support and input
society is particularly high and this adds to of the ESRI. Siemens sees itself in the
the level of national risk exposure. vanguard of the drive for sustainability.
In this report we examine the macro- This report, together with our previous
economic impacts for Ireland of three studies, represents part of our contribution
high oil and gas price scenarios for the and commitment to help stakeholders
period from 2010 to 2025 and consider the take informed decisions – decisions that
challenges Ireland may face in the event of could have economic and environmental
such developments. ramifications for generations to come.
The focus is principally on the economic
exposure Ireland and the world maintain Dr Werner Kruckow
with respect to oil and gas price volatility CEO Siemens Limited
and how and to what extent, we can Dublin, Ireland
influence the rate of dependency on these July 2010
Pathways to risk mitigation and a low carbon future THE ECONOMIC IMPACTS FOR IRELAND OF HIGH OIL AND GAS PRICES 03Oil and Gas Prices and their Determinants
Chapter 1.
Oil and Gas Prices and
their Determinants
T
his opening section of the report ‘events’ are highly influential in the prices of Illinois crude in both real and
deals with oil and gas prices and has evolution of oil price. Some illustrative nominal dollars per barrel from 1970 to
fed directly into the design of the examples4 of such major price driver events 2010. The most striking events are the
three HOG price scenarios tested as part of on both the supply and demand side are 2008 peak and trough where a threefold
the macroeconomic impact analysis. The presented in Table 1 below. change in price was experienced within the
purpose of this review is not to identify same calendar year and the significant and
the most likely path for oil and gas prices. Historical evidence of change extended shock of the late 70’s and early
Shocks, by their nature, are rarely a feature Figure 1 presents the historical free market 80’s during the Iran/Iraq conflict period. The
of such exercises and as a result, such
an endeavour would no doubt yield a Table 1: Examples of oil price influencing events
moderate and steady outlook linked to the
SUPPLY SIDE EVENTS DEMAND SIDE EVENTS
current situation.2 However, the recent and
unprecedented economic crisis serves as International conflicts and terrorism Population growth
an unfortunate and timely reminder of the OPEC production rate adjustments Accelerated growth of developing countries
distinction between the unlikely and the
impossible. As such we choose to highlight Revisions to national reserve
inventories Increased penetration of oil
the unlikely. We identify the principal price
Revisions to internationally viable oil stocks and gas powered technologies
determinants, examine historical evidence
and production rates
of change, and consider long and short run
price outlooks from major international Market efficiency Speculation and exchange rates
analytical sources. In essence we gather Renewable penetration Other technological change
evidence for ‘what could be’ and thereby
Unconventional oil and gas Shifts in demand of energy services
use this information to set boundaries
for our HOG price scenarios without the Natural disasters
constraint of an international consensus on The unknown
‘what seems most likely’.
Figure 1: Annual average crude oil price 1970-2010
Determinants of price Annual Average Crude Oil Price (US $)
Oil is an important global commodity
and its price is broadly determined
$120
by the fundamental principles of supply,
demand and market expectations.3
$100
There are numerous market agents,
however the dominant roles are arguably $80
held by a handful of operators. OPEC
is the most influential player on the supply $60
side while the OECD countries are seen
as the most influential group on the $40
demand side. Additionally, emerging
economies, principally China and India, $20
account for the majority of the increase
in global energy consumption and have $0
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
thereby evolved into important drivers of
demand and price change in the global oil Nominal Price Real Price
market.
These players and a set of possible
04 THE ECONOMIC IMPACTS FOR IRELAND OF HIGH OIL AND GAS PRICES Pathways to risk mitigation and a low carbon futureevidence in this case illustrates quite clearly Figure 2: EIA NYMEX WTI 95% confidence intervals in July 08
that shocks – both acute and protracted
– have occurred in recent history.
350
Short-term price outlook 300 Actual to July 08
In Figures 2 and 3 we present short (1 year)
Historical
price outlook confidence intervals from 250
Lower Bound
the Energy Information Administration
(EIA) with a view to illustrating the 200 Upper Bound
WTI $/BI
perceived volatility in the market price
even on this time horizon. Figure 2 is taken 150
from the time of the oil price peak in July
100
2008 whereas Figure 3 is taken from the
same publication one year later in July
50
2009 (when prices had collapsed and were
comparatively stable). In these figures, 0
the red line represents the upper bound ar 6
ay 6
Ju 06
Se 006
No 06
Ja 06
ar 7
ay 7
Ju 07
Se 007
No 07
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ar 8
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expectation for oil price, whilst the green
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line indicates the lower bound.
Figure 2 gives us a clear indication of
how significant changes in the current
Figure 3: EIA NYMEX WTI 95% confidence intervals in July 09
price can lead to far greater uncertainty
with respect to price outlook. In this
case indicated by the particularly large 250
gap between upper and lower bound
expectations. Figure 3 then moves Actual to July 09
200
the same methodological assessment Historical
forward one year and shows how the fall Lower Bound
and apparent stabilisation in oil prices, 150
Upper Bound
WTI $/BI
along with the shorter price outlook time
frame allow for a much reduced angle of
100
divergence between the upper and lower
bands. It is also of note, that when looking
back at the actual price path in Figure 2, 50
we see that from the July peak of 2008,
prices actually dipped well below the lower
statistical bound over the course of the 0
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following year.
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Whilst this is only one outlook on price,
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it serves to illustrate how outlooks and
expectations for ‘plausible’ energy prices
Figure 4: International energy outlook: world oil ($2007) for reference cases in 2008/2009
can shift dramatically in a short period of
time– in this case because of the financial 140.0
crisis and the following Great Recession
that took almost everybody by surprise. IEO2009
120.0
In the context of our developed HOG price IEO2008
scenarios the point here is to note that
100.0
unforeseen spikes and collapses in price
can occur and they can do so within a very
$($2007) per barrel
short space of time. Additionally, we make 80.0
note of how price volatility can debase
confidence in the stability of future prices 60.0
and can thereby create an environment of
major uncertainty surrounding future price 40.0
evolutions.
20.0
Long-term price outlook
Forecasting long-term oil prices is 0.0
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
2020
2022
2024
challenging and arguably futile. Forecasts
can respond quite dramatically to current
Pathways to risk mitigation and a low carbon future THE ECONOMIC IMPACTS FOR IRELAND OF HIGH OIL AND GAS PRICES 05Oil and Gas Prices and their Determinants
events and changes in expectations. Both Figure 5: Annual energy outlook: Reference, high and low price ($2007) oil scenarios to 2025
can change quickly as illustrated by the
revised EIA International Energy Outlook 200.00
(IEO) for world oil prices presented in
Figure 4.
Reference
The trend lines represent the change
in the ‘reference case’ world oil price($2007) 150.00 High Price
outlook between the IEO 2008 and IEO Low Price
Real $($2007) per barrel
2009 reports. In the space of a year the
price projection – not its confidence
100.00
interval – has altered significantly, with
a near doubling of the real oil price($2007)
in 2025 under more recent analysis5.
Adjusting values to nominal prices would 50.00
result in a nominal price forecast for 2025
of approximately $220 per barrel from the
2009 outlook, as compared with a nominal
0.00
price of over $120 per barrel from the 2008 1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
2020
2022
2024
analysis6.
Figure 5 draws on the associated
literature and presents the EIA high and
low world oil price scenarios which frame approximately $175 in the second peak international outlook on price can change
the reference case. These alternate price of the ‘Camel’ HOG price scenario which is dramatically and quickly for both the short
projections present a real oil price($2007) low presented later. and long-term.
of just $50 and a high of just under $200 Into the future, it seems likely that
in 2025. Conclusion on price outlook sustained pressure on available resources
The boundaries of the high price The primary conclusion on price outlook will ultimately lead to increased price
scenario described here have been used is simply that both moderate change and volatility with implications for the market
in developing the HOG Price scenarios to extreme shifts are possible and changes in price. Therefore, we conclude that there
restrict the impact of ‘events’ in a given price can occur within a very short space is both precedent and growing potential
year to the comparable high price scenario of time. There are numerous factors which for price changes of the scale described in
range. In no case or year do the HOG prices may combine to deliver short and sharp the HOG price scenarios in Chapter 3 over
exceed the EIA high price scenario peak price shocks, as well as more persistent longer time frames.
real value of $200($2007) per barrel. The combinations that could deliver prolonged
highest real oil price($2008) reached being changes in price. Similarly, expert
06 THE ECONOMIC IMPACTS FOR IRELAND OF HIGH OIL AND GAS PRICES Pathways to risk mitigation and a low carbon futureBaseline Scenario 2025
Chapter 2.
Baseline Scenario 2025
T
his study models the economic effect Table 2: World Recovery Scenario Major Aggregates
of a series of high oil and gas price
scenarios on the Irish economy. 2009 2010 2010-15 2015-20 2020-25
However, oil and gas prices are just
Annual % Growth Rate Average Annual Growth Rate
one component of the macroeconomic
modelling exercise and need to be GDP -7.8 -2.3 5.2 3.3 2.6
mapped against a broader perspective GNP -9.0 -1.9 5.5 3.3 2.7
comprising the many different parameters
Total Employment (PES basis) -9.2 -5.8 2.8 1.5 1.0
and assumptions relating to the structure,
interactions and development of the Irish Output, industry -9.2 -3.9 8.3 4.0 2.2
and world economies. For this purpose, we Output, market services -4.6 -1.2 5.2 3.0 3.0
have adopted the ESRI’s Baseline forecast for
Consumer Prices
Ireland out to 20257 as the scenario against (Personal Consumption Deflator) -1.0 -0.2 2.5 2.7 2.2
which the HOG price scenarios are tested.
Non-agricultural Wage Rates -3.2 -1.8 3.1 4.6 3.2
Baseline Scenario description Personal Savings Ratio 9.9 10.4 7.9 6.4 5.4
The ESRI Baseline 2025 scenario (hereafter,
General Government Balance, % GDP -12.3 -11.6 -3.9 -1.2 -1.0
Baseline Scenario) takes a lead from the
Recovery Scenarios for Ireland report that General Government Debt, % GDP 61.0 74.8 81.2 67.8 58.0
was published by the ESRI in May 20098 and Balance of Payments, % GNP -2.2 1.0 5.2 6.7 4.5
specifically the World Recovery Scenario Unemployment Rate (ILO basis) 12.7 16.5 6.6 4.9 4.0
(WRS) described therein9. The principal
assumption is that global economies Net Emigration (thousands) 30.0 40.0 -8.3 -24.7 -18.2
recover from recession by the middle of
2010 and then proceed to grow at rates economic activity over the period 2008- below where it would have been without
nearing potential from 2011 onwards10 with 2010 is expected to lead to significant the global economic crisis.
a corresponding recovery in world demand wage moderation in both the public and On public finances, the lower level
for Irish exports. The forecasts for the key private sectors. The macroeconomic model of economic activity is likely to reduce
macroeconomic aggregates of this WRS suggests that nominal wage rates in the government revenue from a range of
scenario for Ireland are presented in Table economy as a whole could decline by 6.6 taxes while at the same time government
2 with the principal statistic for average per cent in the period 2009-2011. As a result expenditure is expected to rise due to
GNP growth of 3.3 per cent over the period of the world recovery and the improvement increased welfare and national debt
2015 to 2020 and more moderate growth in competitiveness, GNP growth is expected interest payments. As a result the general
averaging 2.7 per cent over the period to resume, averaging 5.5 per cent in government balance as a percentage of
2020-2025. An ESRI ‘storyline’ for this scenario the period 2010-2015 (i.e. the average GDP is expected to remain very high at
is presented under the next heading. growth experienced in each of the five 12 per cent in 2010, taking into account
years 2011-15). the fiscal measures for 2009 and Budget
Scenario Story The high degree of responsiveness 2010 announced to date. The resumption
Weak domestic demand and the recession of the Irish economy to changes in world of economic growth after 2011 would
in the international economy leads to a activity could give rise to a strong recovery bring about an improvement in the general
substantial fall in output in the from 2011 onwards, assuming the economy government balance which on the basis of
manufacturing and market services sectors regains competitiveness. However this this benchmark scenario is forecast to fall to
with overall GNP expected to fall by 9.0 recovery would imply a restoration of only 3.9 per cent of GDP in 2015.
per cent in 2009 and by almost 2 per cent some of the losses sustained over the period The deterioration in the economy
in 2010. The increase in unemployment 2008-2010. As a result of the recession, by is expected to lead to a dramatic rise in
associated with the contraction in 2015 output would be around 15 per cent unemployment and the unemployment
Pathways to risk mitigation and a low carbon future THE ECONOMIC IMPACTS FOR IRELAND OF HIGH OIL AND GAS PRICES 07Baseline Scenario 2025
rate. As a result of lower levels of output Figure 6: Baseline oil price scenario
in the building, manufacturing and market
services sectors total employment is
expected to fall by 9.2 per cent in 2009
and a further 5.8 per cent in 2010. The 300
unemployment rate is expected to peak
at 16.5 per cent in 2010. In line with the 250
anticipated recovery in economic activity
from 2011 onwards, employment growth
200
is expected to resume and average 2.8 per
cent over the period 2010-2015. This is
$/bl
expected to result in some moderation in 150
the unemployment rate which is projected
to fall to 6.6 per cent by 2015.
Emigration is assumed to peak at 50,000 100
in 2012. The cumulative net emigration
of 152,000 over the period 2009 to 2015 50
represents a significant reduction in the
labour force as a result of the recession. Of
course the likely response of migration to 0
the current recession is highly uncertain.
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If migration were not to resume to the
extent assumed here this would lead to a
larger rise in the unemployment rate and a
slower recovery in the labour market than
described. en implemented according to the
The combination of the bursting of the CO2 in 2009 to over €40/tCO2 by 2025. timetables announced by the relevant system
housing bubble and the world financial Figure 6 illustrates the specific oil price for operators.12
crisis has had a substantial impact on the the Baseline Scenario. The price path dips
endowment of labour and capital in Ireland. from 2008-2010 in response to the current Note on alternative scenarios
This has served to permanently reduce the global recession before assuming a steady It is noted that the Baseline Scenario
potential output of the economy. While the linear growth path out to 2025, reaching a is the less ambitious of the two main
Medium-Term Review 2008-2015 published nominal price of $185 dollars per barrel in energy scenarios developed in Ireland
in Spring 2008 suggested that the potential 2025 or just under $100 in $2008 prices. at the end of 2009. The more ambitious
output growth rate for the Irish economy The Baseline oil price scenario therefore scenario is the ‘White Paper plus’ scenario
over the period 2005-2020 was around assumes a steady and moderate increase which incorporates assumptions such as
3.6 per cent a year, today we feel that it in oil price with no price shocks anticipated greater penetration of renewables, higher
is closer to 3.0 per cent a year. Over the over the next 15 years. proportions of electric vehicles and meeting
longer-term we anticipate average GNP Electricity demand in the Baseline all of the targets established within the
growth of 3.3 per cent over the period Scenario has been adjusted to take account National Energy Efficiency Action Plan
2015 to 2020 and more moderate growth of recently implemented measures which (NEEAP)13.
averaging 2.7 per cent over the period have not yet had a substantial impact We believe that the targets of the
2020-2025. (further details in DCENR’s National Energy “White Paper plus” scenario and other
Efficiency Action Plan, 2009-2020)11 but similarly ambitious scenarios will require
Specific scenario assumptions will lead to savings over the period to 2025. concerted national action and investment
Fuel price assumptions in the Baseline Energy demand is reduced by the amounts over the next 15 years and there are
Scenario are as follows: shown in Table 3, and changes linearly many challenges yet with respect to
• Gas prices fall from €25.8 per MWh between the reference years. infrastructure, investment and technology
in 2008 to €17.7/MWh in 2010, then With respect to energy infrastructure, that must be considered. It is in the context
climb steadily to €31.5/MWh in 2025. plant commissioning and decommissioning in of this challenge that this report hopes
• Similarly, oil falls from €56.4/MWh in the modelling exercise has be to support further debate on the risks we
2008 to €44.9/MWh in 2010 before face, the options available and the means
increasing to almost €58.2/MWh by of progression. It is for this reason that
2025. the Baseline Scenario is adopted as our
• Coal prices increase from €8.1/MWh in Table 3: Electricity savings in MWh reference case.14
2008 to €14.0/MWh in 2025.
2010 2016 2020 2025
• We assume no growth in real peat prices
over the period. Baseline 65.5 212.2 401.2 637.4
• Carbon taxes increase from €13.8/tonne
08 THE ECONOMIC IMPACTS FOR IRELAND OF HIGH OIL AND GAS PRICES Pathways to risk mitigation and a low carbon futureEconomic and Social Impacts of three Oil and Gas Price Scenarios
Chapter 3.
Economic and Social Impacts of three
Oil and Gas Price Scenarios
R
elative to the Baseline oil price Figure 7: Accelerated Growth scenario
presented in the last chapter, we have
modelled three alternative oil price 300
scenarios known as – “Accelerated growth”, Accelerated Growth
“Root” and “Camel”15 along with an impact 250
Baseline
assessment for each of the scenarios. In
each impact assessment we interpret the
200
results to explain the outcomes and their
linkage with the oil price variable16.
Nominal $/bl
150
HOG Price Scenario 1: “Accelerated
Growth”
100
The accelerated growth scenario (Figure
7) presents a steady but rapid increase in
global oil prices from the recovery year of 50
2011. The most rapid growth occurs in
the eight years subsequent to the 2011
recovery, with a slowed rate of growth 0
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then from 2019 to 2025, where real prices
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actually fall and level off. The scenario is
illustrative of an aggressive price path where
global demand, supply and associated Figure 8: Accelerated Growth Scenario - Impact on Price Level in International Economies
political constraints combine over the
9
next ten years to drive available resource
prices significantly higher before ultimately 8
moderating somewhat as markets adjust.
Internationally, the impact of a rise in oil 7
prices on output and inflation varies across
% change relative to Baseline
6
countries and depends on the response of
monetary authorities. An oil price shock of 5
this size would have a substantial effect on
inflation. Figure 8 shows the percentage 4
change in the price level compared to the
3
Baseline Scenario for the US, the UK and
the Euro Area. In this simulation monetary 2
authorities react by increasing interest rates
to negate some of the upward pressure on 1
the price level. The results suggest that 0
by 2015 interest rates in the US would be 2010 2012 2014 2016 2018 2020 2022 2024
around 13/4 percentage points above the US Euro Area UK
Baseline Scenario and that interest rates
in the Euro Area and UK would be around
11/5 to 11/4 basis points above the Baseline countries and have a negative effect term, having a negative effect on Euro Area
Scenario. on output. In addition, the Euro would competitiveness. The effect of the oil price
This higher level of interest rates appreciate by around 3 per cent against shock on the levels of GDP for the US, UK
would increase the cost of capital in these both the Dollar and Sterling in the long and Euro Area are shown in Figure 9. The
Pathways to risk mitigation and a low carbon future THE ECONOMIC IMPACTS FOR IRELAND OF HIGH OIL AND GAS PRICES 09Economic and Social Impacts of three Oil and Gas Price Scenarios
results show that by 2019 output in the US Figure 9: Accelerated Growth Scenario - Impact on Output (GDP) in International Economies
would be around 4.5 per cent below the
Baseline Scenario and that output in the 0
Euro Area and UK would be 3.75 and 3.3 2010 2012 2014 2016 2018 2020 2022 2024
-0.5
per cent, respectively, below the Baseline
Scenario. Over the medium to long term, -1
the impact on output is strongest in the
-1.5
US as they have a higher oil intensity of
% change relative to Baseline
production. After that, the decline in output -2
continues but not at the same pace as this
-2.5
scenario assumes that the increase in the
oil price post-2019 is more modest than in -3
earlier years. Overall the adverse effects are
-3.5
less marked in the UK economy as it has
domestic oil reserves. -4
This type of shock would affect Ireland
-4.5
through three main channels. Firstly, the
appreciation of the Euro reduces Irish -5
competitiveness by leading to an adverse US Euro Area UK
movement in our terms of trade and this
results in a loss in income. Secondly, the Figure 10: Accelerated Growth Scenario - Impact on Irish GDP
increase in interest rates would have
a negative effect on investment and
0
therefore output. Finally, the slowdown 2010 2012 2014 2016 2018 2020 2022 2024
in the international economy reduces the -1
demand for Irish exports. The effects of this
shock on the Irish economy are stronger -2
than on the international economy. This
% change relative to Baseline
arises not necessarily because the Irish -3
economy is more sensitive to oil prices but
rather because of its greater sensitivity -4
to a slowdown in international output,
changes in interest rates and changes in its -5
competitive position.
Figure 10 shows that there would be a -6
sharp reduction in the level of Irish GDP as
-7
a result of this oil price scenario. Our model
indicates that the level of output in 2025 -8
would be around 7.5 per cent below the GDP
Baseline Scenario. In terms of the effect
on GDP growth rates, this oil price scenario Figure 11: Accelerated Growth scenario: Impact on Irish Price Level
would knock around 1.4 percentage points
off the average growth rate between 2010 4.50
and 2015. The average growth rate between
4.00
2015 and 2020 would be around 0.6
percentage points lower and the average 3.50
growth rate between 2020 and 2025 would
% change relative to Baseline
be around 0.2 percentage points lower. The 3.00
shock to world output would substantially
2.50
reduce the demand for Irish exports and
consequently reduce output in the industrial 2.00
and market services sector. By 2019, output
in both the industrial and market services 1.50
sector would be around 6 per cent below 1.00
that in the Baseline Scenario.
The impact on the price level in Ireland 0.50
is more muted than on the international
economy. The effect on the consumption 0.00
2010 2012 2014 2016 2018 2020 2022 2024
deflator is shown in Figure 11. The more Consumption Deflator
negative impact on output puts downwards
10 THE ECONOMIC IMPACTS FOR IRELAND OF HIGH OIL AND GAS PRICES Pathways to risk mitigation and a low carbon futureFigure 12: Root scenario pressure on the price level which negates
some of the upward pressure caused
300 by higher oil prices. The impact of
Root
higher consumer prices would lead to a
250 substantial fall in real personal disposable
Baseline
income. This has a marked negative effect
on consumption and, in turn, has a
200
negative impact on sectoral output that
is driven by domestic demand (e.g.
Nominal $/bl
150 distribution). The rise in interest rates would
have a negative effect on investment in
Ireland with total investment being around
100
5.5 per cent below the Baseline Scenario in
the long run.
50 Given the impact on consumer prices,
we would anticipate knock-on effects of
higher inflation on wage rates as employees
0
bargain to protect their real after-tax wage.
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However, the simulation results indicate
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that wage rates could actually be below
Figure 13: Root Scenario - Impact on Price Level in International Economies that of the Baseline over the long term. This
arises because the effect on the demand
8 for Irish exports (due to the slowdown in
the international economy) is so severe
7
that the only way firms can negate
some of this impact and try to regain
% change relative to Baseline
6
some lost competitiveness is to reduce
5 wage growth. The results show that
employment could fall by 2 per cent below
4
the Baseline in the long-run and that the
unemployment rate would be on average
3
around 0.5 percentage points above the
2 Baseline Scenario. These effects are likely to
be stronger if wage rates do not fall below
1
those in the Baseline Scenario.
0
HOG Price Scenario 2:” Root”
-1 In the Root Scenario (Figure 12), the oil
2010 2012 2014 2016 2018 2020 2022 2024
price is low for an extended period of time
US Euro Area UK
before jumping to above $150 per barrel.
Figure 14: Root Scenario - Impact on Output (GDP) in International Economies The price then reaches a bumpy plateau
with no sustained return to sub-$150
0
prices. In real terms, the price by 2025 is
2010 2012 2014 2016 2018 2020 2022 2024 only marginally higher than that of the
-1 Baseline Scenario. The scenario is illustrative
of a major short-term price shock where
-2 revisions to global supply and accessibility
force a rapid increase in oil price to a new
% change relative to Baseline
-3 plateau. This plateau is sustained and the
price mitigates over the years in real terms
-4
as markets adjust and new supply sources
are exploited at the higher costs.
-5
In this Scenario, the impact on the price
level in the international economy is very
-6
strong over the medium term but the effect
-7
begins to diminish in the longer term (see
Figure 13). Over the medium term monetary
-8 authorities respond to the strong increase in
US Euro Area UK the price level by raising interest rates which
has a further negative effect on output.
Pathways to risk mitigation and a low carbon future THE ECONOMIC IMPACTS FOR IRELAND OF HIGH OIL AND GAS PRICES 11Economic and Social Impacts of three Oil and Gas Price Scenarios
Figure 14 shows the effect on output as Figure 15: Root scenario - Impact on Price Level for the Irish Economy
a result of this shock. Output falls steadily
below the Baseline Scenario in the US, the 5.00
UK and the Euro Area until the latter half
of the decade; it then falls by less as the oil 4.00
price moves back closer to where it is in the
Baseline. By 2025, output is between 1.5 to
% change relative to Baseline
3.00
2.5 per cent below the Baseline in the US,
UK and Euro Area.
As before, the results for the Irish 2.00
economy follow a similar pattern to those in
the international economy. The inflationary
1.00
impact of the oil price increase results in
the Irish price level being around 4 per
cent above the Baseline Scenario in the 0.00
medium term (see Figure 15). This effect
weakens over the longer term and prices
-1.00
actually end below the Baseline by 2025. 2010 2012 2014 2016 2018 2020 2022 2024
This seems counter intuitive but in this case Consumption deflator
the downwards pressure on the price level
as a result of the negative effect on output, Figure 16: Root Scenario - Impact on Output (GDP) for the Irish Economy
outweighs the upwards pressure caused by
higher oil prices at the end of the period. 0
2010 2012 2014 2016 2018 2020 2022 2024
As a result of this shock, output in
Ireland falls sharply relative to the Baseline -0.5
out to 2016 (see Figure 16). Despite the
-1
fact that the impact on the international
% change relative to Baseline
economy is slightly more moderate over
-1.5
the longer term, GDP remains around 3.5
per cent below the Baseline as Ireland is -2
more sensitive to shocks in the international
economy. The simulation results indicate -2.5
that output in the industrial sector would
be around 31/2 per cent below the Baseline -3
Scenario in 2025 while output in the
market services sector would be around -3.5
41/2 per cent below the Baseline Scenario.
In this Scenario the effect of higher interest -4.00
rates leads to a fall in investment of around GDP
21/2 per cent in the long run relative to the
Baseline Scenario. Figure 17: Camel Scenario
In terms of labour market impacts,
when the oil price increases sharply 300
(between 2013 and 2016) wage rates
initially increase above the Baseline Camel
Scenario as workers demand higher wages 250
Baseline
to compensate for their loss in purchasing
power. However, as in the Accelerated 200
Growth Scenario, in the long-term firms
try to regain some lost competitiveness so
Nominal $/bl
150
wage rates fall below the Baseline leaving
workers considerably worse off. In this
Scenario, total employment is around 1 per 100
cent below the Baseline in the long run.
HOG Price Scenario 3:”Camel” 50
The “Camel” scenario (Figure 17) incorporates
two major and sustained price shock events 0
one year apart with an ultimate reversion to
8
9
0
1
2
3
4
5
6
7
8
9
0
1
2
3
4
5
0
0
1
1
1
1
1
1
1
1
1
1
2
2
2
2
2
2
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
a trend comparable to that of the Baseline
12 THE ECONOMIC IMPACTS FOR IRELAND OF HIGH OIL AND GAS PRICES Pathways to risk mitigation and a low carbon futureFigure 18: Camel Scenario - Impact on Price Level in International Economies Scenario. In real terms, the second price
shock peak of the camel scenario represents
8
the highest oil price assessed as part of
the study – at a level of $175 in 2019. The
7
scenario is illustrative of a highly uncertain
6
future oil price market where major
sequential and persistent conflicts lead to
% change relative to Baseline
5 dramatic market responses.
In this Scenario there are two transient
4 oil price spikes in 2014-2015 and 2018-
2019. As a result, in the simulation results
3 there will be stronger effects during these
two time periods. Figure 18 shows the
2 impact on the price level in the international
economy. In this Scenario, as oil prices and
1 the price level follow a more unsteady path
and so too do interest rates. Monetary
0
2010 2012 2014 2016 2018 2020 2022 2024 authorities respond to this type of shock by
US Euro Area UK increasing interest rates sharply during the
two price spikes but lowering them when
Figure 19: Camel Scenario - Impact on Output (GDP) in International Economies the price level starts to come down again.
In this scenario there is some appreciation
0 of the Euro against the Dollar and Sterling
2010 2012 2014 2016 2018 2020 2022 2024
but the effect is much smaller than in the
-0.5 Accelerated Growth Scenario and the effects
are strongest when the price spikes occur.
The effect on the level of output in the
-1
international economy is shown in Figure
% change relative to Baseline
19. As mentioned above, the impact on
-1.5 output is not smooth over time because of
the nature of the shock. For each country
the impact on output is considerably smaller
-2
than in the Accelerated Growth Scenario.
Figure 20 shows the impact on the
level of Irish GDP and Figure 21 shows
-2.5
the impacts on domestic price levels. The
impacts reflect the patterns shown for the
-3 international economy. As in the previous
US Euro Area UK Scenario, the effect on Irish output is
stronger than the effect on international
Figure 20: Camel Scenario - Impact on Level of Irish GDP output. In the long run output is around 3.5
per cent below the Baseline Scenario; more
0.00
than half the long run effect reported in
2010 2012 2014 2016 2018 2020 2022 2024 the Accelerated Growth Scenario. By 2025,
-0.50 industrial output is around 3.4 per cent
below the Baseline Scenario and output
-1.00 in the market services sector is around 4.5
per cent below the Baseline Scenario. As
% change relative to Baseline
-1.50 the interest rate differential (compared to
the Baseline) is not smooth, neither is the
-2.00 response of investment to such a shock.
Although the impact on investment is
-2.50
negative, it is more marked during the
periods of the oil price spikes. For example,
-3.00
total investment is around 4 per cent below
-3.50
the Baseline Scenario during the second oil
price spike but is around 2 per cent below
-4.00 the Baseline Scenario in the long run.
GDP Similar to the Root Scenario, wage rates
initially rise above the Baseline Scenario
Pathways to risk mitigation and a low carbon future THE ECONOMIC IMPACTS FOR IRELAND OF HIGH OIL AND GAS PRICES 13Economic and Social Impacts of three Oil and Gas Price Scenarios
values when the spikes in the oil price occur Figure 21: Camel Scenario - Impact on Price Level for the Irish Economy
and then fall below the Baseline Scenario in
the long-term. As a result of the lower level of
activity in the economy, total employment is 5.00
around 1 per cent below the Baseline Scenario
in the long-run and the unemployment rate 4.00
rises by around 0.3 percentage points above
the Baseline values.
% change relative to Baseline
3.00
For each of the prior price scenarios
we have described the modelled economic
impacts. However, whilst these broader 2.00
economic indicators are a core component
of this report, it is important to be aware
1.00
that there are further additional impacts
with associated value that are not explicitly,
or in some cases even implicitly, captured 0.00
within such analytical systems. We identify
six such impacts in this study.
Table 4 presents a qualitative summary -1.00
2010 2012 2014 2016 2018 2020 2022 2024
of these six impact areas to be considered in Consumption deflator
the context of what high oil and gas prices
would mean for Ireland.
Table 4: Summary table of non-modelled impacts
IMPACT DESCRIPTION
Distributional impact Higher energy costs will impose a greater financial burden on the poor relative to the rich. In
this way the exposure to higher energy prices poses a greater potential cost to those least able
to afford the change. This can lead to negative welfare implications.
Energy and fuel poverty Related to the distributional impact, higher fuel and energy costs will push more individuals from
the margins into a position of energy and fuel poverty. This is a situation where a household
spends more than 10% of its income on trying to heat and light a home to an adequate level.
The costs of this shift include reduced welfare, poor health and excess winter mortality.
Mobility reduction Increased fuel prices will add to travel costs and constrain travel decisions. This may lead to
reduced emissions, an outcome similar to that of a carbon tax for transport. However, unlike
a tax which would at least generate revenue for investment, exposure to rising international
oil prices would simply increase costs. Whilst the very poorest may not have access to a car,
the dominance of private transport in the Irish market would suggest the impact would be felt
widely with reduced travel for leisure and additional cost for commuting.
Price volatility Energy price volatility associated with high oil and gas prices creates a situation of market
uncertainty. This makes planning difficult, can generate financial problems for business and
individuals, hinders investment decisions and creates a poor environment for economic growth.
On a positive note however, such volatility can also serve as a strong incentive for alternative
energy sources for those who do choose to invest. The indirect taxes on final energy demand offer
another mechanism to mitigate price volatility, although there are constraints in this regard.
COMPETITIVENESS Within Europe, Ireland already has comparatively high electricity costs and fuel costs. Whilst
Ireland lacks the major energy-intensive industries to have competitiveness severely impacted
by oil and gas prices, the cost of energy and fuel is a factor in relation to the operational costs
of business and associated investment decisions.
ENERGY IMPORT COST The cost nationally of importing oil and gas would be expected to rise under the higher price scenarios.
Whilst demand may drop somewhat, the lack of alternatives and strong energy requirements in
society would likely see the national energy import bill rise. Statements from Minister Ryan suggested
Ireland currently spends approximately €6 billion per annum on imported fossil fuels.
14 THE ECONOMIC IMPACTS FOR IRELAND OF HIGH OIL AND GAS PRICES Pathways to risk mitigation and a low carbon futureIreland‘s dependence on Oil and Gas
Chapter 4.
,
Ireland s dependence on Oil and Gas
T
he previous chapter presents Figure 22: Ireland’s primary energy demand share by fuel, 2008-2025
outcomes of the HOG price analysis
with respect to the potential economic 100%
and social impacts for Ireland. The purpose 90%
of this exercise has been to explore possible
price scenarios, identify the potential risks 80%
and consider national and international 70%
exposure. In this chapter we consider
Ireland’s reliance on energy imports and 60%
the corresponding dependence of specific 50%
sectors and key activities on these imports.
This review incorporates both historical and 40%
baseline scenario forecast values. 30%
Energy security and exposure to price 20%
fluctuations 10%
Energy security of supply and exposure
to price fluctuations are topics of concern 0%
2008 2010 2012 2014 2016 2018 2020 2022 2024
within the European Union. The EU 27 is Peat Renewables Coal Gas Oil
a net importer of energy, importing over
half of its energy needs. Of this share,
approximately 60% are oil imports and 26% Figure 23: Fuel shares in energy imports into Ireland, 1990-2025
are gas. The bulk of oil is imported from 100%
OPEC and Russia, while Norway and Russia
provide the major share of the EU’s gas 90%
requirements. A long term concern lies in 80%
the availability of oil and gas reserves within
the EU 27, which are expected to be severely 70%
depleted by 202517 (unless Europe’s shale 60%
resources can be commercially exploited).
The general ambition of the European 50%
Commission with respect to energy security 40%
is to become more efficient and to diversify
both our energy sources (types) and energy 30%
suppliers (origin). 20%
For Ireland specifically, dependency on
imported oil and gas for the operation of the 10%
economy and society is particularly high. 0%
1990
1995
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
This is shown in Figure 22, which displays
the forecast energy shares out to 2025 Coal Gas Oil
according to the ESRI Baseline Scenario18.
In this chart we see that oil and gas account
for over 80% of primary energy demand19 The overall share of energy imports values are based upon the ESRI Baseline
in Ireland with the remaining fuels (i.e. by fuel type is presented in Figure 23 energy scenario and information from
coal, peat and renewables) accounting for historically from 1990 to 2008 and the Commission for Energy Regulation.
the remainder. forecasted then out to 2025. Forecast It illustrates the historical and expected
Pathways to risk mitigation and a low carbon future THE ECONOMIC IMPACTS FOR IRELAND OF HIGH OIL AND GAS PRICES 15Ireland‘s dependence on Oil and Gas
future dominance of oil and gas in Ireland’s Figure 24: Indigenous energy production shares, 1990-2008
imported fuel mix.
Ireland is part of a handful of EU 27 100%
countries with greater than 80% energy 90%
import dependency. SEI (Energy in Ireland,
80%
2009) state that imported oil and gas
accounted for 81% of energy supply in 70%
2008 and overall import dependency
60%
was running at 89%. This is estimated to
rise to approximately 91% by 2025 under 50%
the ESRI Baseline Scenario. In terms of
40%
individual import rates, both coal and oil
are at 100%. Gas stands at 89% (in 2008) 30%
and although this will fall as Corrib comes
20%
online, we would expect this to rise again
to 95% by 2025 in the absence of any 10%
further significant finds and an increasing 0%
shift towards gas fired power generation. 1990 1995 2000 2001 2002 2003 2004 2005 2006 2007 2008
In short, our indigenous energy use will Renewables Natural Gas Peat
remain dominated by imported fuels in the
Baseline Scenario. Figure 25: Final consumption of oil by sector, 2008-2025
Furthermore, if we examine our
suppliers, we note that Ireland is entirely 100%
dependent on the UK for its gas imports 90%
and similar to many of the EU 27, is entirely
dependent on outside EU imports of oil. 80%
With respect to gas, the Commission for 70%
Energy Regulation suggests potential
scenarios for Irish gas supply (CER, 2009) 60%
involving various assumptions of new 50%
sources and storage capacity. Principally, it
is noted that the Corrib gas field could meet 40%
over 60% of Irish demand in the medium 30%
term. However, the production capacity of
Corrib is expected to decline rapidly to less 20%
than 50% of its peak after 6 years. Liquefied 10%
natural gas (LNG) imports (e.g., from shale
0%
gas) may offer the potential to diversify our 2008 2010 2012 2014 2016 2018 2020 2022 2024
suppliers further over the medium term, Losses Agriculture Services Power Industry Household Transport
however, the price of such imports is likely
to be influenced by transport, extraction
Figure 26: Final consumption of gas by sector, 2008-2025
and environmental costs.
In terms of indigenous production of 100%
energy, Figure 24 presents the growing
90%
shares of peat and renewables and a decline
of natural gas production up to 2008. In 80%
absolute terms, indigenous production
70%
remains small and the relevance of high
import dependency rates become more 60%
apparent when we refer back to the overall
50%
consumption and dependency on oil and
gas in Ireland. Looking forward, growth in 40%
indigenous energy production of significant
30%
scale is only likely to be achieved through
further development of renewable energy 20%
sources.
10%
The breakdown of oil and gas by sector
in the Baseline is displayed in Figures 25 0%
2008 2010 2012 2014 2016 2018 2020 2022 2024
and 26, respectively. For oil, the transport Losses Agriculture Services Power Industry Household Transport
sector remains, by far, the dominant sector
16 THE ECONOMIC IMPACTS FOR IRELAND OF HIGH OIL AND GAS PRICES Pathways to risk mitigation and a low carbon futurewith approximately 63% of the oil use from households and industry reduces impacts. Rather more unfortunately, the share and little change anticipated in the its share. modelling analysis within this report Baseline shares out to 2025. The industry This chapter has illustrated a clear suggests that Ireland is particularly sensitive and household sectors account for much dependency within the economy on to such shocks and their outcomes, and of the balance. With regard to gas, imported oil and gas. Virtually every as a result would suffer more pronounced the power generation sector utilises sector of our economy is to some extent economic impacts and a slower recovery as the greatest share of gas in Ireland, at 63% dependent on oil or gas for its normal compared with other countries. The next in 2008 but this share is expected to drop operation - a common situation in topic addressed in this study is to consider to 51% by 2025. In absolute terms the developed countries. Understandably this broad actions that could be taken to reduce level of gas used in power generation out reliance contributes to the fact that shocks national dependence on oil and gas and to to 2025 changes little under the Baseline to the price of fossil fuels can therefore discuss the drivers and motivators for action Scenario, however an increase in demand have pronounced economic and social in this regard. Pathways to risk mitigation and a low carbon future THE ECONOMIC IMPACTS FOR IRELAND OF HIGH OIL AND GAS PRICES 17
Options and actions to reduce exposure to High Oil and Gas Prices
Chapter 5.
Options and actions to reduce
exposure to High Oil and Gas Prices
T
he previous chapter shows the clear on Ireland and in this regard there remain Pillar 3: Increased energy efficiency and
dependency within the economy on many options which could contribute conservation.
imported oil and gas. As illustrated in towards a reduced exposure toward a Pillar 4: Maximising electricity usage in
the earlier sections, this dependency among number of the identified impacts in the end-use applications.
Ireland and our core trading partners creates report.
an economic exposure to high oil and gas The options for action presented In the following pages we consider
prices. here are extracted from a position paper three “Focus Areas” from these pillars
But what actions can mitigate the entitled Ireland in the New Electricity Age20 and discuss the drivers and motivators
exposure to this risk and these impacts? presented by Siemens Limited. for action in each Focus Area. The Focus
The international dimension of the impacts In this position paper, Siemens proposes Areas addressed are as follows:
would likely require concerted action four ‘pillars’ for a sustainable energy system Focus Area 1: Renewable energy
amongst Ireland and its trading partners in Ireland, as set out in Table 5, namely : generation from wind.
to reduce our collective reliance on oil Pillar 1: Maximising electricity generation Focus Area 2: Improvements in energy
and gas if we seek to mitigate the extent from renewable sources. efficiency and conservation.
of the potential impacts (e.g. trade Pillar 2: Grid upgrade and integration into Focus Area 3: Electrifying the transport
slowdown). However, in this piece we focus the European grid. sector.
Table 5: Four pillars for a sustainable energy system in Ireland
PILLAR DESCRIPTION
Pillar 1: Rapid implementation of the existing pipeline in onshore wind along with fast tracking of offshore
Maximising electricity generation projects. Additionally, in order to maximise the efficiency of wind farms, deploy storage
from renewable sources technologies to capture off-peak renewables energy. Explore the opportunities from ocean energy.
Develop and optimize the national grid for renewable energy, including the:
Pillar 2: • Development of the national grid infrastructure on an all island basis.
Grid upgrade and • Extension of 400 kV and 220 kV network to facilitate transmission from key renewable locations.
integration into the • Implementation of “smart systems” to manage future load-to-generation matching.
European grid
Significantly increase the number and capacity of interconnectors to UK and mainland Europe in
order to be able to export surplus renewable energy and benefit from a European/global super grid.
Apply the technical solutions available today to improve the energy efficiency of, inter alia:
Pillar 3: • Buildings.
Increased energy • Domestic appliances.
efficiency and conservation • Motors and drives in industry.
• Public lighting.
• Expanding the use of e-cars and hybrid cars .
Pillar 4: • Improving the energy efficiency of diesel public buses through hybrid electric drives and
Maximising electricity regenerative braking power.
usage in end-use • Replacement of fossil fuel driven heating by ambient or geothermal heat pumps.
applications • Electrifying the national rail network in Ireland.
18 THE ECONOMIC IMPACTS FOR IRELAND OF HIGH OIL AND GAS PRICES Pathways to risk mitigation and a low carbon futureFor each of the Focus Areas presented, offshore large scale projects. Ambitious by 2020. EWEA figures show that in 2007
we offer a qualitative examination of each plans are in place in this regard21 in Ireland 1,500 people were directly employed by
against four evaluative criteria as presented and in this section we examine some of the wind energy companies in Ireland. EWEA
in Figure 27, namely: reasons to maintain a sustained effort to highlight that 15.1 jobs are created in the
(a) Contribution to the Green Economy: reach these goals, as well as some of the EU for every MW of installed wind capacity.
Creation of green employment, green challenges that must be overcome to be The development of this sector would
business opportunities and a green successful. also support reductions in the national
market place. energy import bill for fossil fuels (estimated
(b) Impact on the Environment: (a) Contribution to the Green Economy at approximately €6bn per annum) and
Contribution to emissions reduction and While Ireland presently does not could stimulate the development of greater
improved international environmental possess an indigenous wind turbine and marketable national expertise for export.
performance. component manufacturing industry, the However, the decision to invest in
(c) Influence on Competitiveness: progressive scaling up of Ireland’s wind renewable energy technology deployment
Impact upon the level of cost energy generation capacity represents an will be heavily influenced by prevailing
competitiveness of Irish businesses important employment opportunity for the market conditions. Significant start up
and the country’s international green economy. Wind energy employment costs, access to capital and the expected
attractiveness for investment. can be broken down into direct and market return for electricity generated are
(d) Mitigation of Energy Risk: indirect employment. Wind turbine and fundamental considerations for investors.
Reduction in energy price volatility and component manufacture are responsible With respect to this issue it is possible for
energy supply risk in the Irish market. for the majority of direct wind energy jobs governments to create the right conditions
(59%, European Wind Energy Association to encourage investment. This can be
This chapter concludes with a quantitative [EWEA] 2009).22 Other direct employment achieved through the introduction of
case study that connects the analysis includes jobs created in the initial phase of policy support mechanisms. One of the
conducted in this report with the business getting a wind energy project operational; most common policy mechanisms used
case for investment in a 101 MW onshore wind farm development, wind turbine and to encourage the adoption of renewable
wind farm in Ireland. This case study component installation, employment of energy sources and increase the use
illustrates how the varied factors of relevant financial and consultant personnel of renewable energy technologies in
inflation, interest rates and fossil fuel and R&D, all employment positions that electricity production is the use of renewable
prices could combine to influence the may be created within Ireland. energy feed in tariffs (REFIT). Renewable
investment return under both the Baseline Other employment from wind farms energy investors and developers support
and Accelerated Growth scenarios. The refers mostly to jobs associated with wind the introduction of such tariffs as they
purpose being to illustrate how a HOG price turbine and wind farm operation and provide a form of investor certainty. Like
scenario may influence the investment maintenance once a wind energy project many other international governments,
decision in one of the ‘options’ for change. has entered its full operational cycle. These the Irish Government has opted for this
are longer term positions that would offer policy support mechanism. In 2006 the
Focus Area 1: Renewable energy further employment creation opportunities Irish government launched the REFIT
generation from wind in Ireland. scheme which has become the main tool
This first option refers to the progressive According to EWEA, the wind energy for promoting RES-E and wind energy
scaling up of Ireland’s wind energy sector employed 154,000 in the EU in 2007. development. The REFIT scheme provides
generation capacity from both on and This figure is forecast to surpass 325,000 support in the form of a fixed feed in tariff
to renewable energy projects over a 15
Figure 27: Four evaluation criteria for actions year period thereby providing renewable
investors with a degree of short to medium-
term market certainty. In the case study
presented later, we will illustrate how the
Accelerated Growth high oil and gas price
Contribution to the Impact on the scenario may be expected to change the
Green Economy Environment investment case for a 101MW on shore wind
Cleantech & Jobs Targets & Legislation farm as fossil fuel prices add upward price
pressure to the market price of electricity.
However, whilst high oil and gas
prices and supports such as REFIT can be
important in the decision to invest, further
Influence on Mitigation challenges persist in terms of access to
Competitiveness Energy Risk start-up finance, the speed of planning
procedures and the characteristics and
Energy Price & Cost Supply, Stability & Price
availability of the overall grid infrastructure.
All these challenges must be addressed if
wind energy is to achieve a greater share of
the electricity generation market and make
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