Published in the Irish Times on 6th August last.
It’s like the start of a low-budget thriller. A growing high tech economy, with software and services representing about 20% of national exports. But then, catastrophically, entire cities are without power; transport and infrastructure are completely disrupted; and safety systems are compromised. Outside on the streets, temperatures soar to 46C. 50% of the population are directly impacted. This all actually happened for two days at the end of July, when substantial parts of the Indian national electricity grid completely failed. While almost every high tech centre in India now runs its own power generation plant as a backup in case the national grid fails, such massive power cuts clearly impact the work force, their general quality of life and even their ability to commute to work. Such incidents may certainly encourage multinationals to reconsider their international investment strategies.
In the same week in California, arguably the world centre not only for high technology (San Francisco area) but also for film and new media (Los Angeles), two reports were published on the current and likely near-term impacts of climate change on the Californian economy. There have been significant increases in wildfires, including around Los Angeles. California is becoming drier, leading to drought, whilst at the same time there is danger of seawater encroachment into coastal ground water supplies caused by rising sea levels. Cross-state electricity transmission corridors are vulnerable to wildfires, and in addition power lines lose about 7%-8% of their energy transmission efficiency at higher air temperatures — just as demand soars from increased air conditioning usage. Californians still recall the summer of 2000 when Pacific Gas & Electric imposed rolling blackouts across the state. It transpired of course that much of the problem was not alone due to shortages but also due to highly questionable practices in trading electricity futures contracts by Enron.
Meanwhile in Japan’s high tech and manufacturing economy, about 84% of its national energy needs are imported. Fifty nuclear reactors generate about 30% of the country’s energy needs, and this was expected to grow to at least 40% by 2017. But after Fukushima, there is intense debate on the future of nuclear energy, with their Government seeking views on what nuclear dependency the country should have by 2030. The overwhelming response, not surprisingly, is zero.
After Fukushima, Chancellor Merkel wavered and then decided to substantially reduce the German nuclear programme which until recently used to generate about 25% of the country’s electricity. Germany’s high tech and manufacturing based economy is now undergoing very substantial change in its energy mix towards 2020 when it is expected that about 30% will come from coal, 35% from natural gas, 35% from renewables (wind and also solar), and none from nuclear.
For high tech multinationals considering an investment in any country, its infrastructure and especially the quality and security of its energy supply are a major consideration. How good are our own ? In terms of our national electricity transmission network, EirGrid is in the middle of its “Grid25” initiative – a 3.2Beuro upgrade of our physical network, with an emphasis on moving to more efficient higher voltage 400kv lines (than our current 220kV system) as appropriate. Our ability to export any surplus generated electricity , and equally our ability to buy in electricity from abroad if we ever temporarily need to do so, are being increased by a link across the Irish Sea to Wales, and a probable new cross-border link to Northern Ireland. A direct link to France is also being evaluated. As an aside but in the context of Ireland’s attraction to tourists for its natural beauty, I recently visited Lanzarote on vacation and saw that almost their entire electricity transmission and telephone cable networks are underground, resulting in a wonderfully visual environment, countryside and towns.
In terms of the security of our energy supply, renewables – and in particular wind energy – continue to grow. The Irish Wind Energy Association reported that 28% of our national capacity was recently met on Global Wind Day last June. Nevertheless, we are still critically dependent on oil (for both electricity generation and transport) and on gas (for both electricity generation and domestic use). About 55% of our national energy use is from oil (100% of which has to be shipped and imported into Ireland), and about 27% of our use is natural gas (of which about 93% is imported). A major disruption – for example regional war, or political pressure from countries with substantial reserves and in particular Russia to central and western Europe, or an Enron-style international futures trading scandal – to our fossil fuel supply would leave us extremely vulnerable.
Concurrent with these recent developments in national energy policies, late July also saw a significant report from the UK’s House of Lords. The Lords are extremely critical of the current administration’s strategy to give the UK the “best superfast broadband network in Europe by 2015”. The Lords observe that the current programme is insufficiently ambitious at a 24Mbps urban and 2Mbps rural target transmission rates. UK industry has appeared confused by the Lords report, observing that mobile 4G networks seem to have been overlooked in policy.
For high value industries generating wealth for an economy, the quality and capacity of infrastructure are critical. I sometimes wonder do many of us overlook and take for granted that the lights work, the heating works, the air conditioners work, our water supplies operate, our transport system runs, our TV and radio stations can broadcast and be heard and seen, our phones work, our computers can power up, and our internet connections flow. Maybe we only notice them when they disappear unannounced. Half the population of India recently lost access to all these facilities for two consecutive days. We should continue to be aware of the need to support national investment in these areas and our requirement for professional engineering. We should also seek reassurance from our political parties and national strategists that their infrastructure policies are intelligent and well considered.