Transcription
In the Atlantic Ocean, there lies an island, and everybody's wondering what comes next. There have been struggles, and there has been war. But outside of all of that, what's left the largest mark on us is the coast. Our perception of the world, forged from an island. But unfortunately, there's an emerging denial that maybe Ireland isn't an island at all. Has anyone checked?
There are three things happening all at once, driving up the cost of everything to the tune of billions annually, directly and indirectly. And nobody is aware of them. We're disproportionately affected because we're an island. But before I get to the ones that are on the way, let me start with the ones that are already here. My favorite one [music] of these is, if I had to pick, marginal pricing.
More and more, I see these posts on social media, like this one from the Irish Times, which says, "Wholesale electricity prices halved on recent windy days." It gives the impression that our bills should be lower on windy days, but that's not the case. Another post on LinkedIn from a policy manager at ESB, a graph showing solar producing 13% of Ireland's electricity demand on a day in May, noting that a million euros worth of gas imports had been avoided. Now, both of these are true, but how come I don't see any of these savings on my bill? If we're saving like a million here and like a million there, why are my bills only going up?
Ireland's wholesale electricity market stacks generators from cheapest to most expensive and calls on them until the demand level is reached. Our generators are primarily hydro, wind, solar, and gas. And every day, we'll have a mix of those until we meet the demand line. The generators all bid different prices, so wind bids near zero because that's essentially what wind costs. But gas has to bid very high because it's a combustible fuel, and it has to be extracted and processed.
But, the price paid to every generator is the price that's set by the last and most expensive unit needed. That's called the marginal unit. And on most days in Ireland, gas is always the unit that closes the gap. And when gas sets the price, every generator—they all get paid the gas rate. So, despite wind and solar bidding near zero, they're still getting paid a fortune. And we are paying the marginal price for those. And that is why Ireland, from one angle, is one of the most attractive places in Europe to build a wind farm. They love operating here because they can make so much money.
The 1 million euro avoided in gas imports from the solar post is true. Let's look at that same day with all of the other fuels in the mix. So, now here we can see where solar is, but there's still a gigantic portion of fossil fuels needed to meet demand. And solar is getting paid the same as fossil fuel prices. So, sure, we saved 1 million by not importing fossil fuels, but solar still got paid the market price set by fossil fuels. So, that's why we don't see a drop on our bills.
And, you know, on the surface, when I see these newspaper articles online or these posts online, the automatic assumption would be that, gosh, you know, we need more renewables because more renewables are going to lead to lower prices. But, unfortunately, that's simply not true. And so, let's bring that back to us being an island again because it disproportionately affects us here. In Europe, you know, the Eiffel Tower, when gas sets the marginal price, the grid is physically interconnected to its neighbors, so it can pull from other sources, pushing the marginal price back down, but we can't.
The next piece [music] of the puzzle is curtailment payments. And how I like to think of this is, imagine paying for something you'll never use. Well, Irish bill payers paid more than a billion euro last year for energy that was thrown away. There are roughly 2.1 million homes on the island. Averaged, that's 476 euro extra per bill just last year. It shows up as the PSO levy and related network charges.
When a wind turbine generates electricity that the grid can't absorb, and when there's more wind than we have capacity to move it around, the turbine owner gets paid what's called a curtailment fee. So, in that sense, we're paying for electricity we do use, but we're also paying for the electricity that we won't be using. On the continent, curtailment is intermittent, but in Ireland, it is baked in. Continental grids are physically interconnected, so they can move energy across borders where it's needed. But we just don't have the same interconnection, [music] and we can't move energy to where it is needed. So, we just have to pay for it not to be made.
We have two subsea cables, >> [music] >> 500 MW each, one to Scotland and one to Wales. And there's a third on the way from Youghal all the way to France. Now, that >> [music] >> Celtic Interconnector is expected to be operational by the end of—by, sorry, by the start of 2029. >> [music] >> And when it arrives, the total interconnection capacity is going to be 1.7 GW. But an important [music] caveat around that number is that the subsea cables are bidirectional. They flow both ways, meaning that Ireland is a net importer, so on average, more electricity is flowing into Ireland than out, [music] which means a lot of the bandwidth for potentially selling all of that renewable is already taken up.
Now, this is a really slippery slope because more wind farms without the [music] infrastructure to export it means curtailment payments. If the government plans to be producing 37 gigawatts of energy by 2050, which [music] it does, that's six times more than today's peak demand. But, if we're already paying a billion annually, then what are we going to be paying [music] in 2050? If we take the most conservative estimate, and that's that curtailment scales linearly, that would be an extra 5 billion every year onto our bills that we have to pay. And, [music] in all likelihood, it's going to be much more, billions annually.
The Celtic Interconnector took 17 years from proposal to delivery, and we would [music] need dozens of comparable interconnectors to export anything approaching a meaningful share of 37 gigawatts. There's nothing on the road map. The state talks about green hydrogen as a solution, and that's [music] where we convert surplus energy into hydrogen and then export it by ship. Now, it's technically possible in the same way that Ireland having a space program is technically possible. But, green hydrogen requires electrolysis infrastructure at commercial scale that doesn't exist, and it requires [music] port infrastructure that doesn't exist either. And, you know how nimble and agile we are at rolling out new infrastructure, getting that up and running. You know, we have a track record of doing that really well, really quick.
There are emerging plans for a 2 billion euro privately funded underground hydrogen storage facility in Carlow, but they're at the proposal stage and nowhere near the scale required to absorb the volume of generation being discussed. >> [music] >> Nothing on a timeline that aligns with 37 gigawatts by 2050.
And, look, I mean, it's one of the biggest shames, really, because people want to believe that renewable power is the way forward. Clean energy and wind are genuinely one of the most useful natural resources that we have. But the plan is so poorly conceived [music] that there are huge infrastructure gaps, and we have to pay for the gap.
Nowhere is it more visible than on a perfect day, which would be the 15th of September 2025. It's not just a perfect day for Virgos like myself. It is a perfect day for wind generation, 8 m/s all day. Ideal conditions couldn't be better. Here's how it stacked up. The wholesale cost of electricity for the whole country for that day was 1.5 million euro. That's it. That was the cost of generating the electricity. But what did we actually end up paying? Well, if you add on curtailment, if you add on UAEC, which is a mechanism under the RESS scheme, and you add on the cost of the gas we paid for it but didn't burn, we paid over 21 million euro for 1.5 million euros worth of electricity. And I want to bring the word astounding back in vogue. That is astounding. Isn't that astounding? [music] That's just for one day.
The cost of manufacturing, >> [music] >> the cost of food, beverages, they are all inflated to cover these [music] obscene, astounding bill. And it's not just the cost of our electricity. It's the cost of everything. It drives up the price of everything. 20 million in one day, and that's just for like the system.
There's a new European Union [music] mechanism coming in 2028 called ETS2, and it's going to directly increase the cost of everything. I know, I was shocked, too. "Make everything more expensive," you say? What a great plan. But that's the mechanism. That's what it's supposed to do. It covers road transportation fuels and home heating. So, petrol, diesel, gas, and oil. The system is designed to make fossil fuel use prohibitively expensive in a bid to reduce carbon. But, there's a raft of side effects of the policy. And I—maybe side effects are the wrong term, right? So, these are like primary effects.
How will this impact our fishing fleet? There's no electrification pathway for ocean-going fishing trawlers. There's no electrification pathway for farmers. How will this affect our food production? Outside of urban centers, there's no functional public transport. Not in the sense that you can get to an appointment on time. Ireland has a huge amount of forced car ownership. So, I guess what I'm saying is that there aren't any alternatives.
Ireland has zero rail freight. All goods are transported to their final destination by lorries. Europe, on the other hand, has—I will—I say Europe, right? But, Ireland is part of Europe. I mean, the continent, you know, it's first [music] world. It has genuine alternatives to a lot of these things. But, we have none of that. And Ireland is particularly exposed because of our settlement pattern. Up every laneway is another house in the middle of nowhere, another house. And that's actually really unusual. Not everywhere is like that. Here, it's cultural norm, and it's tied into how we lived on the land. It's that cultural relationship with the land. I mean, just ask Phil McCabe, you know, he knows all about it.
Our geospatial dispersal is incompatible with the requirements of ETS2. And at a deeper level, if it works as designed, the predictable result is to accelerate rural depopulation. Rural living just becomes economically unsustainable. So, every consumer good, every medicine, every farm input, it all moves by road. The carbon cost applied to the final distribution leg of 100% of imported goods, we are going to be paying for. The inflationary pressure that this is going to create is just so much stronger than in any other EU member state, right? Because on an island, the tax has nowhere else to go except onto the price of things. >> [music] >> And that carbon cost is set to rise every year. It's designed to phase out the usability of fossil fuels. But for households that can't afford to replace them, it's just a sustained [music] and growing burden.
So, if a retrofit is around 50,000 euro, and it's 20,000 for an EV, where are people getting, you know, 70,000 euro? I still have some of my confirmation money. >> [music] >> If people are wealthy enough, then they can pivot, and then they don't have to pay the tax. But what about the hundreds of thousands of people who don't have that money? They are going to be trapped [music] paying an escalating penalty. Even if you're in the bracket that has the heat pump, you drive the EV, and you can afford all of this stuff, you still don't want to saddle a large portion of the population with increasing penalties and debt, simply because they can't afford to make the same transition [music] you did.
Our awareness is just important so that we can actually catch up and have a discussion about what is coming down the pathway. But I mean, what do they put in the Kool-Aid in Leinster House? Oh, yeah, an increase in inequality. Where do I sign up? It's like it's almost not worth bringing up for some reason, just like food security isn't worth bringing up.
Dairy farms and livestock farms typically burn between 10 and 15,000 L of diesel every year. But farmers can't pay those costs forward. They sell into global commodity markets, and those prices aren't set by farmers; they're set by international supply and demand. So, every additional euro of carbon tax is going to be absorbed entirely as reduced farm income. The horticulture sector in Ireland has already collapsed. We import over a million tons of fruit and veg, a million tons of cereal to feed cattle annually. In a nutshell, we can't feed ourselves. That's the state of farming in Ireland.
I mean, I'm only asking that we think like 10 years [music] into the future. I mean, where is the food going to come from? What industries will we need? Hmm, will we need farmers? Will we need farmers in the future? Yeah, I think so. The fishing sector is also in a similar position because did I miss something? Do they have electrified ocean-going fishing vessels now? No. They don't. So, the only way for a fishing vessel to decarbonize under ETS2 is by fishing less. We are precariously dependent on the stability of global food supply chains, and there's already three concurrent wars happening. Okay, nothing to worry about.
Now, I mean, that is serious. I mean, we can't feed ourselves. We have to have global supply chains working in order to simply eat correctly. And I don't know if that's registered with people at the level that it should. ETS2 is going to be driving up the operating costs of the only two sectors that represent Ireland's only meaningful capacity to feed itself. You know, the only thing we might be eating in the future is a recipe for disaster.
There's one last piece to this puzzle, and it's the data centers. They are pushing our prices up as well. Electricity transmission charges increased by 38% in 2025 explicitly because of the cost of upgrading the grid to handle higher demand from data centers. But, what is specific to Ireland is that data centers are responsible for 88% [music] of all additional electricity demand in the last 10 years. So, we're at a crossroads. Do [music] we call it a day and say, "You know what? 72 data centers in Ireland is more than enough for now. We should probably wait a couple of years before we add more." [music] Let's ask the government. Hello. Mhm. Aha. More. All right. Well, I was wrong.
A government-commissioned report came [music] out recently saying that data centers are good for us. How it arrived at the figure of 72 data centers, though, and not the actual figure, is buried in a footnote if you want to check. But, the general thrust of the report is that data centers are to us what Adam was to Eve. [music] The main takeaway is that they add 104 billion euro annually in economic value >> [music] >> and a staggering 876,000 jobs enabled by data centers. Wow.
Well, the first thing worth knowing about both those figures is that they count any industry that even uses a computer. Finance, health, transport, [music] retail, hospitality. Hello. Mary. Do you use a computer? You do? Oh, great. Well, we'll put you in the data center pile. Now, scholars might one day call this information laundering because if those data centers were located somewhere else, in Frankfurt or in Bristol, would all those industries continue as normal or would they collapse? Because what the report is suggesting is that if the data centers weren't physically here, then 32% of all economic activity on the island would collapse. Tourism, gone. Hospitals, shut. Shops, shuttered. But, of course, that's not the case.
The report finds data centers generated 22 billion euro for the Irish economy between 2010 and 2024. But, 13 billion of that came from building them, which is a one-time contribution. The operating costs, annualized, contribute around 600 million euro per year. And while that's significant, it is small compared to sectors like tourism, agriculture, or construction. What the report has kind of done here is just conflate anyone using digital infrastructure with data centers. So, okay. I mean, fair enough. Also, I just like to point out, I thought the report was very impartial. That really stood out for me. It is the honest cost-benefit analysis that the country needed. >> [laughter] >>
So, I mean, look, spread the word, right? There's a carbon pricing system coming where we don't have any alternatives. We've got curtailment payments for electricity that we don't use. We've got marginal pricing driving up the price for otherwise cheap energy. And each one of these has an explanation, but the problem isn't any one of them; it's all of them bearing on us together at once as an island on a grid that can't export surplus with a renewable strategy that has raced ahead of the infrastructure needed to make it work. And as usual, with an ownership structure that returns no value to Irish people. Nada. Niet, right?
So, I'm having this really slow epiphany throughout my podcast that there is just no adult in the room. Cheap energy is step one because everybody needs it. It's pushing up the price of everything. Businesses that can't afford it are closing. Houses that can't afford it are going into debt. And as we learned today, most of the money we pay on our bills is just for the system. You know, it's not even for electricity, you know, gobble gobble gobble.
So, I want to see a policy debate before the Dáil around having energy bills as detailed as we have food labels. And I want to see that on electricity bills because it's just data, right? The data is already there. It needs to be available to the people paying the bills, so they know how much are they paying for capacity contracts, which we didn't even talk about. How much are they paying for UAEC, for curtailment, right?
There is a version of Ireland where our energy future makes sense. One where the offshore wind is being used to reduce our dependency on imported fossil fuels. But that only works if the infrastructure used to export it is built at the same pace as generation. We need a market structure that is designed so that cheaper wind actually means cheaper bills. There has to be some consumer level ceiling on curtailment payments, and anything beyond that threshold, the state has to pay for. Which isn't ideal because, you know, when the state's paying for something, still that's still us, you know. That is at least a good impetus to create a more sensible system.
Our energy strategy targets six times domestic demand, and we have 4.6% of the export infrastructure ready to move that. Oh, great. We've got a fishing fleet that has no electrification pathway. And we've got a farming sector that must face rising costs, and it can't pass them on. So, look, we're in denial about being an island. We're not being governed like we're an island. Our policies aren't geared towards being an island. But, you know, as Louis Walsh says on the X Factor, you know, "You look like an island, you sound like an island, you are an island." Um, we have to shape our policies and our market structures around that fact. And we can't pretend that we don't have physical and structural constraints because we do, [music] because we're an island. >> [music] [music] [music] [music] [music] >> Mhm.