The Irish Economy

In December, I blogged about the gas interconnector, the Shannon LNG terminal, and the need for regulatory reform in the wholesale gas market.

Last week, the European Commission chipped in. It is taking Ireland to court over the lack of competition in the market for gas between Scotland and Northern Ireland, and between Ireland north and south. Intriguingly, the UK is sued as well, although most of this is Irish rules on UK soil.

John Fingleton gave a great presentation at last week’s conference on the Irish economy. Among other things, he argued that competition policy in Ireland exists by virtue of the European Union.

(h/t Paul Hunt)

The Examiner has a story on the proposed LNG terminal at Tarbert in the Shannon estuary. This is a privately funded project and a welcome stimulus for North Kerry. As long as the developers play within the rules, public policy analysts should have no opinion on such matters. But as the gas market is so heavily regulated, private actors affect the public good. The LNG terminal would, for instance, improve the security of supply, which is very valuable.

Minister Rabbitte argues that Shannon LNG would increase the price of gas. This is absurd at first sight. Increased competition should reduce the price. The minister is right, though. To see why, we need to consider the gas interconnector from Scotland that lands in Gormanston in Co Meath, or rather the way in which its price is regulated: The annual cost of the pipe is distributed over the gas it carries.

The interconnector is a competitor’s wet dream. If you capture a small part of the gas market, the interconnector will increase its price — because its annual cost is distributed over a smaller volume. You can then increase your price to just below that of the interconnector and gain yet more market share. And the interconnector will raise its price again.

The solution surely is to change the regulation of the interconnector rather than to block the LNG terminal. The current regulation, which may date back to the days of Minister Woods or Fahey, is a neat example of something that makes sense in the short run only.

Note the separation of powers. Minister Rabbitte is the executive branch of government and an influential part of the legislative, he appoints and controls the budget of the regulator, and he is the trustee for the shareholders (us) of the dominant company in the market.

Minister Rabbitte for Energy sketches several reforms of household energy policy in today’s Irish Times. These are plans for the longer term.

There are a range of fuel allowances. Some are means-tested, some are not. None are needs-tested. Houses may be insulated at the exchequer’s expense, but the occupiers are still entitled to fuel allowances. Minister Rabbitte suggests that, in the future, fuel allowances will be directed towards colder homes. That is a welcome improvement.

There are grants for home energy efficiency improvement and micro-renewables. These grants are optimized for administrative convenience rather than emission or fuel poverty reduction. These grants also imperfectly address the core issue: The lack of access to capital to invest in home improvement. Minister Rabbitte suggests that, in the future, grants will be replaced with cheap loans. That is a welcome improvement.

Lack of information is another issue with household energy use. Minister Rabbitte suggest that, in the future, Building Energy Ratings will be mandatory. They are already, but this is not enforced and many prospective buyers/renters seem to be unaware of their legal right to a BER. Reinforcement of this regulation is a welcome improvement.

I had a close look at BERs in England. An English BER is about half the price of an Irish BER, and it contains much more information on heating costs and potential improvements.

Minister Rabbitte also suggests that houses with a poor BER will be taken off the market. I’m not sure that that is wise. It is rather tough on the current owners of such houses. It will also drive up rent particularly in the lower price segments.

UPDATE: 30.9% of houses have a BER of E, F or G.

Three good ideas, so, and one bad one. There is plenty of time to reconsider and refine.

The SEAI has released its cost-benefit analysis of the Home Energy Saving scheme, which concludes that for every euro invested, five euros were earned. More money to the SEAI so, and the economic crisis will soon be over.

Intriguingly, the results for the HES are in sharp contrast to the evaluation of the Warmer Homes Scheme — which found that the subsidies had no statistically significant impact on behaviour — and the evaluation of the Green Homes Scheme — which found net losses.

The evaluation of the HES leaves some things to be desired. For optical reasons, it may be better to commission an independent outsider to do the evaluation. Instead, SEAI staff evaluated an SEAI programme.

The cost is assumed to equal the sum of the public and private expenditure. The HES is a price subsidy. It increases the consumer surplus, by less than the total subsidy. The net cost is the difference. Private expenditure does not enter that calculation.

The study ignores changes in producer surplus. These are probably small, if we assume that investment is displaced.

Benefits are the energy savings and the avoided carbon dioxide, . The study assumes that only 18% of the investment in energy saving would have been made without the subsidy. This is in contrast to the Greener Homes evaluation, which finds that roughly half of the investment would have been made anyway, and the Warmer Homes evaluation, which finds that almost all of the investment would have been made without the subsidy.

Energy saved and CO2 avoided are discounted at 4%. If only that were the opportunity cost of public investment.

The study accounts for the VAT paid on energy. Surprisingly, the carbon tax is omitted from the analysis. The HES subsidy is double regulation: Carbon dioxide emissions are taxed, and emission reductions are subsidized. In other sectors of the economy, there is single regulation (carbon tax, or ETS permit price). The HES subsidy thus introduces a distortion in Ireland’s CO2 abatement policy: We abate too much in home energy use and too little elsewhere. This distortion is not quantified in the study.

In sum, this CBA of the HES does not tell us much that is useful. Its conclusions are not supported.

One can assess the HES based on first principles. It is a second-best intervention: Carbon dioxide emission are regulated already. It is an inefficient intervention: It is a fixed subsidy on investment, unrelated to the emissions avoided. It may well be that the HES addresses some imperfection in the market for home improvement (e.g., constrained access to borrowing) but, if so, it is a second-best intervention in that problem too.

If the SEAI had concluded that there was a benefit of 80 cents for every euro invested, I probably would have believed them.

There’s a peculiar piece in today’s Independent. The reports of the CER’s 18 month smart meter trial were published in May.

The trial found statistically and economically significant changes in consumer behaviour due to the introduction of time-of-day pricing, with cost savings for both producers and consumers that together more than offset the costs of metering (unless the wrong communication network is chosen).

The trial also found that in-house displays further modify electricity use, but insufficiently so to justify the additional cost.

Real-time pricing was not trialed, nor were smart devices, micro-generation, electric vehicles, and micro-storage.

Minister Rabbitte responds to an earlier piece by Fintan O’Toole in today’s Irish Times.

It may well be that there are large amounts of oil and gas off Ireland’s west coast. It may well be that, after rapid advances in exploration and exploitation technology, these fields can be developed commercially. That would boost the Irish economy in 15 years time or so.

None of that is certain. It is clear, however, that oil and gas exploration companies have renewed their interest in the Irish part of the Atlantic. The assessment of the 1970s showed that the Irish resources are hard to develop. 20 years of low oil prices and, more recently, the Corrib controversy did not help. But with the current high oil price, the success off Brazil and the promise off Angola, the Irish Atlantic is back into the picture.

This is good news. However, Mr O’Toole and Mary Lou McDonald TD seem to want to kill the goose before it has laid its first egg, perhaps golden. I agree with the Minister. No oil or gas has been struck and this is not the right time to spook companies with talk of high taxes and nationalization.

Referring to my earlier remarks about an ESRI paper, here’s the verbatim conclusions of the paper.

Seán Diffney, John Fitz Gerald, Seán Lyons, Laura Malaguzzi Valeri, “Investment in electricity infrastructure in a small isolated market: the case of Ireland”, Oxford Review of Economic Policy, Volume 25, Number 3, 2009.

The new All-Island market structure appears to have performed broadly as expected. The rules provide for a transparent and efficient operation of the market, encouraging plant availability. Investors are clearly relying on the capacity payment regime to ensure that electricity is priced at long run marginal cost in the future. Lyons et al. (2007) suggest that the calibration of the capacity payments regime is broadly appropriate. The one area which may need further consideration is the handling of wind generation within the capacity payments regime.

In this article we evaluate the costs and benefits to the Irish system of meeting the government’s target for 2020 for 40 per cent of electricity to be generated by renewables, primarily wind. We find that high wind generation is economic when fuel prices are high and that a high level of wind penetration will occur without further expensive incentives. Unless fuel prices or carbon prices are low in 2020 consumers are likely to benefit from a high level of wind generation on the system. This is consistent with the results in DCENR and DETINI (2008) and CER and NIAUR (2008). The target for a high level of wind generation in the Republic will not adversely affect consumers in Northern Ireland and may actually benefit them in the case of high energy prices. While low fuel or carbon prices could see consumers in both jurisdictions paying a higher electricity price, this premium would be likely to be small. A high level of wind generation would provide a hedge against high fuel prices.

To be sure of the net effects of wind generation it would be important to not only measure its positive externalities, but also its negative externalities. In this study we have internalised part of the negative externalities wind generation imposes on existing thermal plants by curtailing wind generation to limit thermal plant cycling. We have not however attempted to estimate the possible negative environmental externalities of wind farms.

We find that investing in a lot of wind generation is economic only if there is also parallel investment in interconnection. This allows wind to generate whenever it is available instead of being curtailed at times of low demand or imposing additional costs on thermal plants by making them ramp up and down. This implies that the total capital costs associated with an investment in high wind generation will be substantial. Therefore, in order to minimize the cost of the system to the consumer policy should concentrate on minimising the cost of this investment. One measure to achieve this is already in place, regulatory certainty: because the establishment of the new market required co-ordinated legislation in two jurisdictions it will be difficult to change. This should provide additional reassurance to investors.

Second, given the comparative youth of the SEM, avoidance of regulatory risk is at a premium. The regulators should avoid making unnecessary changes to the framework or parameters while market participants gain confidence and knowledge about how the system works.

Third, the financing of the essential network infrastructure, including interconnectors should be done on the basis that it is part of the regulated asset base of the state owned (or in the case of Northern Ireland mutual owned) company. As such it should attract a low cost of capital which will be crucial to ensure that the costs for consumers on the island of Ireland are minimised. In any event, merchant interconnectors would be unlikely to supply the socially optimal level of interconnection, given their higher cost of capital and decreasing returns to investment. It should be noted that these results are based on the assumption that interconnection operates as a perfect arbitrageur, allowing electricity to flow from the low price to the high price jurisdiction when ever there is a price difference. In practice this is unlikely to hold, so studying the specific behaviour of interconnection flow is important to assess the returns to the system. If the interconnector does not operate optimally a much larger infrastructure investment could be needed to obtain the same effect, possibly causing the high wind scenario to become too expensive. This highlights the importance of implementing an appropriate regulatory regime to cover all of the interconnectors between Ireland and Great Britain.

Finally, to facilitate the continued development of competition, the ownership of the transmission system in the Republic should be transferred to EirGrid, the government-owned operator of the electricity system, and the Irish government (as shareholder) should ensure that appropriate pressure is put on operating costs in the ESB.

The video is now online.

Eamon Ryan and Kieran O’Brien both cite an ESRI paper, but O’Brien does so accurately. UPDATE: The abstract of the paper is here.

Minister Ryan argues that the price of electricity falls as more wind power is added. This is true. The price reflects the marginal cost of power generation, which is zero for wind. However, what matters is the total cost of power generation, which may well increase as more wind is added to the system. From the household perspective, the price of electricity goes down with more wind, but the standing charge goes up.

Minister Ryan again extols the virtues of import substitution, despite much evidence to the contrary.

There is an interesting piece in the Irish Times today.

Carbon dioxide emission permits are given away for free (grandparented) to electricity companies. This is a transfer of property from we the people to the shareholders of those companies. This has been going on for a couple of years, but no one protested too loudly.

The government has now introduced a new tax on the value of grandparented permits, and the regulator has ruled that this new tax cannot be passed on to electricity consumers. This is a good approximation to the preferred solution of auctioning permits.

Hat tip to Minister Ryan, so.

Of course, there is the law of unintended consequences. First, there was the PSO levy. Now, private companies argue that what once was a windfall profit, now is part of their regular return to capital.

The verdict will be interesting. Will the judge reason from a 2007 perspective, which has that the companies enjoyed a windfall for three years, which the government now ends? Or will the judge adopt the 2010 perspective, which has that the companies have a reasonable expectation for an income stream (based on the current position of the European Commission and the position of the government until only a few months ago) which the government capriciously removed?

Out now

The Energy and Environment Review 2010 is the third in a series of annual reports published by the Economic and Social Research Institute, discussing trends in resource use and emissions to the environment as well as policies to change those trends. The key findings are as follows:

• While emissions of most persistent organic pollutants are expected to fall between 2010 and 2025, emissions from households of PCBs to air and of dioxins to land and air, and particularly emissions of hexachlorocarbons to air from agriculture are projected to increase. To avoid this, additional policy interventions would be required.
• Our estimates of the amount of methane from landfill differ from the official estimates, suggesting that international emission reduction obligations are less severe than they seem to be.
• On average, firms spend 0.3% of their turnover on environmental protection and 0.7% of their investment is directed towards environmental care. More than three-quarters of firms spend no money at all on environmental care, but some firms spend up to 1.5% of turnover or 7% of investment.
• It is expected that wind power will account for two-fifths of power generation by 2020, replacing coal and peat. After 2020, coal may well return to the fuel mix, with or without technically risky and expensive carbon capture and storage. Carbon dioxide emissions in 2025 would be 2.6 million tonnes higher without carbon capture and storage.
• A large share of electricity is expected to come from renewable energy. The use of biofuels in transport can be expanded but this may face economic and environmental objections. In other sectors, the use of renewable energy seems to have stalled. It is therefore likely that Ireland will have to import renewable obligations in order to meet its targets.
• Recent tax reforms have shifted the balance in favour of diesel cars, so that carbon dioxide emissions and tax revenue are lower than what they would have been without tax reform. In the unlikely event that the government meets the target that 10% of all cars be all-electric vehicles, carbon dioxide emissions from transport and power generation would fall by only 1% as all-electric cars primarily displace small cars driven over short distances.
• Over the last two decades, energy efficiency has rapidly improved in Ireland and the government hopes to accelerate this trend. However, even if current policies are maintained, which seems unlikely given the current fiscal situation, a deceleration is more likely due to sectoral shifts in the economy, less efficient power generation, and export of electricity to Great Britain.
• Ireland will probably meet its emission reduction obligations under the Kyoto Protocol because of the severe recession. However, at this point the EU target for 2020 seems to be out of Ireland’s reach. Subsidies are more likely to fall than rise, and the announced carbon tax is insufficient for the emission reductions required. Ireland will therefore have to import emission permits from other EU Member States.
• Incineration will help Ireland to meet its landfill targets in the medium-term, but in the long-term more reform of waste policy is needed. Weight-based charging and three-bin waste collection would be needed (in urban areas) to make the planned increase in the landfill levy effective.

The Energy and Environment Review presents scenarios that consider actual and probable policies but disregard targets that are not supported by such policies.

The energy part of the review should be compared to the SEAI Energy Forecasts.

The Spirit of Ireland is back. A new glossy was distributed widely by email today. More than one-and-a-half year into the project, there is still no detailed plan, at least not in the public domain.

As before, SoI combines wind power with pumped hydro to create a stable supply of electricity. That would work. Unfortunately, wind power cannot compete without subsidies; and pumped hydro would further add to the costs. SoI is still silent on its cost estimates.

The latest plan is different from what we saw before. SoI aims to export most (all?) of the generated power. The idea is that Great Britain and the Continent are heading for a capacity crunch (likely in Great Britain, less likely elsewhere) and that Irish power would fill the gap. British electricity may well be very expensive around 2020, but it is unlikely that that will last very long. Gas-fired power stations can be built in a matter of years, and shale will keep down the price of gas.

I still fail to understand the business plan of SoI. I would be surprised if this is economically viable, but if others want to invest in it, that’s fine by me as long as they keep the taxpayer out of it. But if this is a commercial venture, then why send a glossy brochure to all and sundry? SoI apparently even visits schools. The glossy lists all sorts of social benefits, but no private ones. This strikes me as a plan to get subsidies.

UPDATE: Graham O’Donnell responds:

Hello Richard,

Thank you for your renewed interest in the project. In fairness to you and to others who have commented, the responsibility now rests with Spirit of Ireland to answer the questions you have raised.

Over the last two years, we have worked through every aspect of the project in great detail. While particular site-specific designs have not yet commenced, we have sufficient detailed costings across a number of locations to complete comprehensive business plans and financial projections. These show a robust technical, commercial and business model.

You were right about several things. Energy independence cannot be achieved in five years. It will take 5 to 6 years to build the first Hydro Storage Reservoir. Based on investor appetite, an additional location could commence approximately every two years thereafter. While be examined very many locations, 4 to 5 appear economically feasible. The smaller scale locations simply do not work.

Secondly, you are correct, it would not make economic sense to damage existing capital investments in thermal power stations. These make a valuable contribution to Ireland’s energy mix, security and exports. We need to optimise their use.

Our initial launch over 18 months ago, was a little flamboyant and in some respects very general, but the principles are sound.

First some basic facts about the project as it now:
1. No state subsidies are assumed to be received
2. Ireland’s energy needs are now being met. Any additional energy produced can be exported provided is done so on competitive terms.
3. Spirit of Ireland is not proposing to build wind farms. This was part of the original plan but there are sufficient number of wind farms in planning that a contracted approach is now the preferred route.
4. the cost of the Hydro Storage Reservoir is approximately 700 million Euro
5. another 700 million is required for substations and bulk power transmission
6. around 200 million is allocated to lower voltage networks
7. the business model is a mix of approximately 50% contracted wind and 50% power purchased from the Irish market at times of excess supply
8. unless required for reasons of security, relatively little power will be fed into the Irish system.
9. a separate capital and purchase envelope is being negotiated, to allow Irish wind farm developers to build additional wind resources. These would be owned by the developers.

About a year ago, following an enormous amount of detailed design, technical and financial analysis, the first draft business plan was produced. It was examined by financial groups in Dublin and London. We iterated this based on expert input, re-costed many aspects and built a succession of additional technical models. The results were very surprising indeed. The interaction between intermittent wind and large scale hydro storage is counterintuitive. Our initial technical models resembled the traditional pumped storage approach. By the time we had finished, a whole new methodology for the operation of storage with wind had evolved. This had very surprising and beneficial commercial results.

One significant mistake that some commentators made was that much energy would be wasted, because we pump all of the wind. This is not the case. In many normal circumstances, the wind simply passes the door. Energy is used only to keep the reservoir at levels sufficient to meet contracted demand.

The hydro storage reservoir produces revenue of between 600 and 800 million Euro per year for the average station. Larger ones produce proportionately more. Take away the costs of the purchased contracted wind power and a more than respectable profit is produced.

The financial assumptions do not include for receipt of the Irish Refit subsidy. Capital costs are kept low by building surface rather than tunneled hydro storage facilities. Framework agreements were negotiated with all the major wind turbine providers, such that significant discounts would apply where many turbines were purchased over a 2 to 3 year period. The keys to success are low capital costs, high wind capacity (33% assumed) and the ability to dispatch power at a time which achieves the highest commercial return.

With respect to ownership, our objective is that these assets are owned to the greatest extent possible by Irish people. The balance of investment can come from external sources. We cannot guarantee at this stage that the project will be funded. However, we can confirm that the level of interest internationally from very large sources of funds is extraordinary. Clearly they will only invest if the numbers and project risk work for them.

The greatest risk to the project is now perceived to be planning rather than technical or financial issues. There are no shortcuts to the planning or environmental processes. These have to be done by the book. It is our responsibility to ensure that we give this project the greatest possible chance of success by conducting a highly professional and consultative environmental and planning process. This has already started with able and generous direction and advice from government officials in Dublin and Brussels.

It is correct to say that wind on its own require subsidies. While wind is a free source of energy, it is not immediately dispatchable and therefore not predictably saleable to large buyers such as the UK power utilities. When combined with low cost storage in a symbiotic operation, wind can participate in any market on a predictable contractible - known price basis.

From a commercial perspective, every major UK power operator wants to buy dispatchable carbon free power. They will buy it from Ireland. They are all required by EU law that a minimum proportion of their generation output comes from renewable resources. The Italians and Germans, all face huge power shortages. The EU Energy Commissioner declared in a report of last month that Europe would need to spend up to EUR1 trillion to secure energy supplies. This Commission report is available on the web.

It is also correct to say that nobody knows the future price of gas. Some think it will follow the price of oil upwards, others that that link with oil will be broken. It is this very commercial uncertainty that means that large UK power buyers do not want to place all of their bets in gas power stations. The lights will not go out in the UK or anywhere else, but there is an extraordinary opportunity available to Ireland to export power to the almost unlimited British and EU market.

Our objectives are:
1. everyone recognise that Ireland has extraordinary wealth in terms of natural energy
2. create a coherent technical, commercial, legal and financial framework, which makes rapid large scale development of these resources possible
3. finalise business and investment plans, acceptable to international investors
4. create a structure which allows all current players to participate - private, semi state and community
5. to the greatest extent possible, ensure that the ownership and resulting profits return to the Irish people - in perpetuity

Some information on our website is out of date. It will be amended shortly.

We are in commercial negotiations with many parties and we cannot discuss all of the details of the project. However, within the constraints of time, we will try to answer any reasonable questions that people may have.

Kindest regards,

Graham O’Donnell

Minister Ryan has come out against the privatisation of state-owned energy companies, for three reasons.

First, the minister states that these companies are investing, and implies that these investments would disappear if the companies would be privatised. That suggests that part of the current investment plans make no commercial sense. It would therefore be good to scrap those investments.

Second, the minister states that the companies paid a 320 mln euro dividend in 2009. The return on capital of ESB and BGE is a respectable 9.4%, but the return to the owner is only 4.3%. Ten year bonds are at 8.1% now, so a sale would be profitable to the Irish taxpayer.

Third, the minister states that splitting the companies would increase their cost of capital. A split is necessary because the network infrastructure is a natural monopoly that should remain in state ownership. Essentially, the minister claims that ESB and BGE use capital cross-subsidies between their activities. The value of the parts is therefore greater than the value of the total.

In sum, the minister has given three excellent reasons why the state-owned energy companies should be privatised.

is here

Paul unsurprisingly focuses on regulation and energy. The piece starts with some common misconceptions about energy prices before arguing the case of vertical disintegration and privatisation.

Sarah Carey is not impressed with the PSO levy. See the earlier discussion here and here.

My piece in yesterday’s Sunday Business Post builds on my post of last week. I also included elements of the discussion (thanks!), particularly expanding the bits on import substitution. Having studied in the Netherlands, import substitution was long ago and far away, so I would understand why the average Dutchie would be oblivious to its drawbacks. In Ireland, on the other hand, this policy was tried in living memory.

One of my recommendations is apparently already being followed up.

There has been some consternation about the announced energy levy. See Times, Examiner, and Independent (in decreasing order of accuracy).

The CER has announced an increase of the PSO levy (currently near zero) to a total of €157 mln a year. This is a levy on a connection, €33/yr for households and €99/yr for small businesses. Large companies pay a levy that depends on the capacity of their connection: €14/kVA/yr. The method of payment and the distribution of costs makes perfect sense if the PSO levy would be for security of supply (in the sense of avoiding black-outs), but that is only €14 of the €157 mln.

These are small amounts, but the costs are unnecessary. About €72 mln will be a subsidy for peat, and about €43 mln will be a subsidy for wind. That is, we subsidise carbon dioxide emissions and subsidise the reduction of carbon dioxide emissions at the same time!

Tuohy et al reckon that 0.9 mln tonnes of carbon dioxide can be avoided if we do away with the peat subsidies, and save €70 mln. On average, that is €78/tCO2, but their estimate of the marginal cost is €19,500/tCO2! Today’s spot price for emission permits is €14/tCO2.

I am not aware of a detailed study of the implications of the REFIT scheme on emissions and costs. REFIT is part subsidy and part price guarantee, so back of the envelop calculations are more likely to confuse than to illuminate. Suffice to say that REFIT subsidises carbon dioxide emission reduction.

The prime instrument for emission reduction is, of course, the EU ETS. I would think that that is enough. I do not understand why we would also subsidise emissions and emission reduction — and we would save €115 mln while simplifying regulations.

Some say that we need REFIT to meet the renewables obligation, but the EU will likely scrap that as some of the big Member States cannot meet theirs. Besides, it has yet to be established that REFIT is an effective and cost-effective way to meet the renewables obligation. Both renewables and peat are said to help with security of supply (in the sense of import dependence), but that is just another word for import substitution, and the available analysis has not gone much beyond hand-waving.

So, for now, I would think we would be better off without (most of) the PSO levy.

The government will establish the European Energy Research Centre at the Tyndall National Institute, and provide initial support of 20 million euro. See here.

Tyndall has no prior experience with energy research, and I must admit that I was unaware of its existence until the 20 million euro rumour emerged a few months ago. Wikipedia has an interesting entry. Then again, sometimes it is good to start with a clean slate.

I was wrong. I previously argued that subsidies for home insulation are an expensive way to reduce carbon dioxide emissions. The SEAI has now release a post-hoc assessment of the Warmer Homes Scheme. The executive summary puts a brave face on, but if you have a look at the detailed results, you soon discover that the Warmer Homes Scheme seems to have had no noticeable effect on fuel use (and hence emissions), poverty, comfort, or health. Most results are insignificant, a few are significant with the right sign, and a few significant with the wrong sign.

One of the striking results is that the control group (without subsidies) have put in about as much insulation as the intervention group (with subsidies).

The research is not brilliant, so perhaps there is more to it, but for now the conclusion must be that the Warmer Homes Scheme is an expensive way to achieve nothing.

The SEAI should be praised for studying the impact of their interventions and for publishing the results.

Following an apparent revival of the Spirit of Ireland on Monday, it’s now Organic Power’s turn to look into pumped hydro to store electricity, using salt water and the Atlantic Ocean as the lower reservoir.  I have not changed my mind during the week or indeed the year, but Organic Power works at a more realistic scale than Spirit of Ireland; Organic Power works with experienced people; and it is does not seem to be looking for public subsidies.

Best of luck to them. Let’s hope their current investigations spring a surprise.