Energy: A Value Chain Analysis 2020

Ireland’s energy needs are served by domestic and foreign companies. The economy consumed over €16.9bn worth of energy products in 2020 in the form of oil (petrol, diesel etc.), electricity, gas, coal, peat and firewood. Value is added in the domestic economy when energy is transformed (such as gas to electricity) or distributed (such as through fuel forecourts) before its end-use by consumers, both households and businesses.

It should be noted that the COVID-19 pandemic had an impact on the use of energy throughout the economy in 2020, but the structure of energy production remained similar to previous years. Restrictions on travel significantly lowered energy consumption for transport and also resulted in lower office and school attendance, which lowered energy consumed by businesses. Spending by households fell by 5.8%, while the Business Energy Use Survey indicated that energy consumption by enterprises declined by 28% between 2019 and 2020.

Table 5.1 below gives an overview of the sources of the €16.9bn worth of energy products supplied in 2020. This follows the structure of Supply and Use tables and breaks down the total supply into domestic production, imports, trade margins, taxes and subsidies. The majority of the €16.9bn worth of energy products supplied (over 95%) are made up of oil, gas and electricity products. The generation of electricity (€5.7bn) accounted for much of the €7.2bn worth of energy products produced domestically. Imports of gas and crude oil dominated the €4.3bn of energy product imports in 2020. Just over €1.8bn of trade margins were earned and €3.6bn worth of energy taxes were collected, both almost entirely explained by oil.

Crude Oil, Natural Gas and Refined Petroleum

Oil and Gas were among the top products supplied by producers in 2020, with Figure 5.1 showing the domestic supply of these products. The Extraction of Crude Petroleum & Natural Gas was responsible for generating €277m worth of gas in 2020. Refined oil products valued at over €1bn were produced from crude oil imports, in addition to imports of refined oil products shown in Table 5.2.

Table 5.2 decomposes imports of oil and gas in 2020. Crude oil¹ to the value of €942m was imported for refining and not used by businesses or households for consumption. The United States accounted for 76% of the imports of crude oil, and Norway over 18%. The imports of gas of €1.7bn were mostly (90%) supplied through the Ireland-United Kingdom interconnector. Looking to the imports of refined oil products of €1.5bn, the majority of this came from Great Britain.

Coal, Peat & Firewood

Solid fuels (Coal, Peat & Firewood) provided a relatively small proportion of Ireland’s energy supply in 2020, and for this reason have been treated together here.

Table 5.3 below shows that €349m worth of these products were supplied by producers in 2020 and €150m was sourced domestically. Imports of €67m were recorded, which was largely explained by coal. Trade margins of €90m were earned by wholesalers and retailers involved in the selling of peat, coal & firewood products, while taxes amounted to €41m. This tax figure is mainly Value Added Tax (VAT) paid by households and businesses on these energy products.

Figure 5.2 shows the amount of coal, peat & firewood that was domestically supplied in 2020.The extraction of peat by turf cutters/bog owners and some companies such as Bord na Móna is included in this €84m. This was prior to the introduction of the ban on commercial turf cutting in bogs and the cessation of briquette production by Bord na Móna.

Electricity

There was €6.4bn worth of electricity supplied in Ireland in 2020, almost 38% of total energy supplied. This includes some element of own account production (€613m), that is households and companies using their own solar panels or wind turbines to generate electricity for their own power requirements².

The output of electricity includes the activities of distributors. Trade margins earned by the distributors and sellers are captured in the domestic supply of electricity. Electricity taxes amounted to over €619m in 2020 and this is largely explained by excise duties such as the carbon tax, the Public Service Obligation (PSO) levy as well as VAT. Imports of electricity were €74m in 2020.

Figure 5.3 shows the source of the €5.7bn of electricity supplied domestically in 2020. Of this total, €5.1bn of it was from the Electricity, Gas & Steam sector itself. The remainder was explained by own account production of electricity taking place across the remaining sectors of the economy. This can occur when firms in the Manufacturing sector, for example, install wind turbines or solar panels to meet their own electricity needs.

Electricity Generation Inputs

A large portion of this €5.7bn of electricity produced domestically can also be explained by renewables (€2bn). The greater importance of renewables in recent years reflects the transition away from fossil fuels. Since 2010, the share of renewables used in electricity generation increased from 15% in 2010 to close to 40% in 2020.

Figure 5.4 below shows the components used in electricity output in Ireland in 2020. Fossil Fuels were the largest source for the output of electricity at (60%), closely followed by Renewables at (40%).

 

Table 5.5 below shows the transition from SEAI quantities for inputs to electricity generation to monetary values. A total of 403 KTOE of coal, peat and firewood was used in electricity generating and this translates to €83m. Gas was the largest fossil fuel source used in electricity generation with 2,291 KTOE used which is the equivalent of €896m (inclusive of VAT). Oil was the source used the least in electricity generating which equates to €107m used. The €3bn of fossil fuels used is inclusive of the services supplied by Grid and Networks providers, these are companies involved in the distribution of electricity and gas, while other services accounted for €967m.

¹As this is an import of crude oil this is recorded under the product “extraction of natural gas and crude petroleum” rather than under the product category of “coke and refined petroleum products”.

² This own account generation can now be sold back to the electricity grid.