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Saturday 2 December 2023 Dublin: 2°C
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energy security

Householders to pay 'small charge' on energy bills to pay for new floating gas storage ship

The location for the floating gas storage ship is yet to be decided.

A GAS STORAGE ship is to be bought by government, with a “small charge” to be added to householders bills to pay for it.

The standing charge will be based on metered consumption, with larger industry and businesses paying more than the domestic consumer.

The cost of the floating gas storage ship will be paid for over a ten to 15 year period “through a small charge on either gas or electricity customers”, Energy Minister Eamon Ryan confirmed today.

However, a broad incremental cost could be in the range of 1.5% to 2.5% on customer bills which is in line with current and historic norms of similar levies such as the electricity PSO and NORA levy.

The PSO is a subsidy currently charged to all electricity customers in Ireland. All energy suppliers are legally required to collect this levy from electricity customers. The NORA levy was introduced in 1996 to fund the National Oil Reserve Association (NORA).

Long awaited energy security review 

The plan was revealed in the long awaited ‘Energy Security in Ireland to 2030’ report, which outlines a new strategy to ensure energy security in Ireland for the next decade.

It sets out that a state-operated, rather than a a commercial, gas storage infrastructure, is needed, given the risks posed to energy security.

It sets out that applying a PSO levy across gas and electricity connections could be considered appropriate given the importance of gas in electricity generation and, particularly, gas generation’s ability to address intermittency in renewable energy.

The review states that legislative amendments may be required to provide such an arrangement. 

As reported by The Journal in September, and now confirmed, a state-run gas storage facility for importing liquefied natural gas (LNG) is to be built in a deep water port, with the exact location yet to be decided.

Speaking to reporters today, Ryan said the floating gas reserve will be used in an event of any disruptions to supply.

“It will not be cheap,” said the minister, stating that the nature of such large infrastructures like this means they are expensive.

“But I think we can get a good value. I’d love it to be low cost, but our timing on that will be important in terms of the market for these vessels…

“We’re going to be careful with the public’s money in this,” said Ryan. 

“We will be able to turn to that and we’ll be able to keep the lights on, keep our industries working,” he added. 

Floating storage ship 

The ship is expected to have the capacity for twelve days supply to the nation.

The floating gas storage ship will need to be built quickly, said Ryan. While such infrastructure can often take five to seven years, the minister said: 

We need to do it faster.

He said Gas Networks Ireland will now come up with recommendations on the best place to develop the gas storage unit. 

Ryan defended the decision when questioned about the climate action impacts, stating that gas is needed in the interim as we switch to renewables.

The use of gas as an energy source and the expansion of LNG infrastructure is a point of contention in debates around renewable energy and energy security.

Although it is not as heavy a polluter as oil or coal, gas is a fossil fuel that produces greenhouse gas emissions when it is burned, contributing to the climate crisis.

An Bord Pleanala recently rejected an application for the construction of the Shannon LNG terminal in north Kerry. 

Asked whether this announcement of a new gas storage facility would impact a judicial review case regarding the terminal, Ryan said government can’t set policy on the basis of concern that there might be a judicial review. Policy decisions are taken in the public interest and what are deemed good energy policy, he added.

Many experts argue that gas should be moved away from as quickly as possible in favour of renewable energy sources, while others argue that countries that still rely heavily on other fossil fuels should be able to use gas as a “transition” fuel or as a back-up.

During the course of the government’s energy review, it commissioned a UK-based consultancy firm called CEPA to analyse potential options for improving Ireland’s energy security. 

key option raised was the construction of a floating LNG facility that would operate during periods when there is a risk of disruption to supply. It also put forward the development of strategic gas storage.

It did not recommend the use of a fixed LNG terminal (which would be more permanent than a floating one) or commercial operation of LNG infrastructure, stating that “the introduction of commercial LNG would likely result in the importation of fracked gas to Ireland” and that “this would be in direct contradiction to the Government’s opposition to the use of natural gas produced from fracking”.

Ryan had previously said the government’s review would likely recommend the same measures as the CEPA report.

With reporting by Lauren Boland 

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