Ireland’s energy transition: breaking the gridlock

The changing energy landscape

Global energy trends are reshaping market fundamentals faster than most analyses can capture. The world is moving toward energy abundance rather than scarcity, with renewable deployment outpacing forecasts and traditional energy demand plateauing — driven primarily by economics, not just environmental policy.

Electric vehicles in Ireland are already cheaper to operate than internal combustion alternatives despite high electricity prices. In industrial settings, electric processes increasingly outperform gas-based systems in efficiency and cost-effectiveness, explaining China's aggressive electrification strategy.

Technology driving this transition continues to improve at rates that confound expert projections. Solar prices are expected to decrease by another 25% this year, while battery innovations transform energy storage possibilities. Meanwhile, digitalisation enables sophisticated grid management that was impossible just years ago.

Countries adapting quickly are capturing economic benefits and competitive advantages. Those moving slowly risk higher transition costs and missed opportunities. The question is whether Ireland can overcome its implementation challenges to harness this technological revolution.

Key challenges

Ireland faces several significant hurdles in its energy transition journey. Grid capacity constraints are perhaps the most pressing issue — particularly in Dublin, where data centres already consume 21% of the country’s power, exceeding all urban homes combined. This limitation has led to connection moratoriums, potentially deterring future investment.

The planning and permitting process remains a significant bottleneck. Offshore wind projects, crucial to Ireland’s renewable targets, can face multiple judicial reviews before even submitting planning applications, creating considerable uncertainty around project timelines.

Recent storms exposed critical vulnerabilities in Ireland’s distribution infrastructure, with some areas experiencing power outages lasting weeks. This raises serious questions about grid resilience in the face of increasingly severe climate events.

From a market perspective, Ireland’s renewable auctions have delivered significantly higher prices than European counterparts, reflecting the higher developer risk profile and longer development timelines. This premium ultimately increases costs for consumers and businesses, affecting Ireland’s economic competitiveness.

Investment trends

Despite challenges, investment capital for energy transition projects remains abundant globally. However, this capital is increasingly selective about where and how it deploys.

Energy transition investments are considered more complex than other sectors due to multiple external dependencies. Investor sentiment toward Ireland is mixed. For technologies like battery storage, Ireland’s clear regulatory framework initially attracted significant investment, but subsequent policy changes regarding market mechanisms have created uncertainty.

Current investment preferences show a strong appetite for established technologies with predictable returns, particularly grid-scale renewables and storage. There’s growing interest in behind-the-meter solutions and energy efficiency. Notably, hydrogen has fallen from favour among financial investors, remaining primarily a corporate-driven sector.

Price expectations are a key obstacle, with nearly 30% of investors citing misalignment between perceived risks and seller valuations. Political uncertainty and unpredictable project economics further dampen transaction activity.

Opportunities and solutions

Despite the challenges, Ireland possesses significant advantages that can be leveraged to accelerate its energy transition. The country’s exceptional wind resources, particularly offshore, position it favourably for renewable energy development once planning and grid barriers are addressed.

Several practical solutions have emerged. First, adopting an energy security framework at national level could streamline permitting processes, as demonstrated by Germany’s rapid LNG terminal deployment following the Ukraine crisis.

Grid modernisation presents another significant opportunity. The deployment of smart metering infrastructure (with 1.8 million units already installed) creates a foundation for demand-side flexibility. Developing microgrids with storage capabilities in vulnerable areas could enhance system resilience while supporting renewable integration.

Innovative collaboration models are showing promise. Dublin’s Infrastructure Forum has successfully brought utilities together to coordinate development, reducing disruption and improving project economics.

For offshore wind, standardising planning requirements and providing greater certainty around decision timelines would significantly improve project bankability, even if the absolute duration remains unchanged.

Technology-specific perspectives

Different renewable technologies face distinct challenges in the Irish market, requiring tailored approaches to accelerate deployment.

For solar developers, Ireland presents a difficult proposition despite falling global equipment costs. The Irish market offers among the highest developer risk profiles and longest development timelines of any territory. This is reflected in auction prices around €104/MWh — significantly higher than European averages of €60-70/MWh.

Battery storage developers initially found Ireland’s clear regulatory framework attractive, with companies like Hanwha Energy Corporation investing over €300 million. However, recent changes to market support mechanisms have created uncertainty around revenue streams, challenging project bankability.

Offshore wind projects face extended timelines to financial close, with planning uncertainty and judicial reviews creating significant challenges. High global supply chain costs compound these issues, though recent positive court judgments signal improving conditions.

For electric vehicle infrastructure, Ireland can learn from other markets where focused investment in rapid charging has outpaced residential infrastructure, creating imbalances that affect adoption rates.

The path forward

Ireland’s energy transition requires urgent, coordinated action across multiple fronts. The following priorities have emerged:

• For policymakers, adopting a national energy security framework would enable more streamlined permitting while maintaining appropriate environmental safeguards. The recent Coolglass Wind Farm Ltd. judgment affirms that ‘business as usual’ approaches cannot continue if Ireland is to meet its climate obligations.
• For grid operators, accelerating modernisation efforts is critical. Implementing advanced management systems would enable better integration of distributed resources and improve system flexibility. Enhancing distribution network resilience in vulnerable areas should be prioritised.
• Developers should engage earlier and more comprehensively with communities and stakeholders. The Dublin Infrastructure Forum demonstrates how coordinated planning can reduce conflicts and improve outcomes.
• Financial institutions need innovative approaches to assess project risks, particularly for newer technologies where track records are limited. Blended finance models combining public and private capital could help bridge financing gaps until markets mature.

Conclusion

The challenges facing Ireland’s energy transition are substantial but not insurmountable. The country stands at a pivotal moment where decisions made today will determine whether Ireland becomes a leader or laggard in the global energy revolution.

Energy security, economic competitiveness and Ireland’s position in emerging industries like AI all depend on building a resilient, affordable and clean energy system. The recent storms have underscored the urgency of adaptation alongside transition.

Success will require a fundamental shift in approach — from adversarial to collaborative, from sequential to parallel processes, and from risk aversion to managed innovation. This means acknowledging that perfect solutions may not be possible in the timeframes required.

Ireland possesses remarkable natural resources, technical expertise and investment appetite. What’s needed now is the collective will to overcome institutional inertia and embrace the unprecedented pace of change reshaping global energy systems.

This analysis was prepared by PwC Ireland’s Capital Projects & Infrastructure team, based on discussions at a recent energy transition event held in partnership with Philip Lee LLP. Thank you to Alice Whittaker, Partner; Niall Donnelly, Partner; and Alison Hardiman, Consultant, with Philip Lee LLP for their insight and participation (www.philiplee.ie).