Navigating a volatile global energy system

James Delahunt, Head of Energy and Natural Resources at KPMG, highlights the implications of the Energy Institute’s 75th Statistical Review of World Energy for Ireland, alongside insights from the Sustainable Energy Authority of Ireland’s (SEAI) National Energy Balance.

The review, developed with Ember and in collaboration with Kearney and KPMG, provides the first complete view of 2025’s global energy landscape. It charts rising demand, a historic milestone for low carbon electricity, and sharply diverging regional transition pathways, amid elevated geopolitical risk.

Grid constraints impact renewable electricity generation growth

Ireland’s renewable electricity supply grew by 6.8 per cent in 2025; however, a tenth of all renewable generation was dispatched down due to grid capacity constraints and system operational limits. Renewables now meet 40.9 per cent of Ireland’s electricity demand, up from 39.6 per cent in 2024.

In 2025, Ireland added approximately 150 MW of additional onshore wind and 800 MW of solar PV capacity, with total installed capacity now exceeding 7 GW across both generation sources. Offshore wind remains well off track of its planned position in Ireland’s decarbonisation and energy security agenda. Five of the original six phase one Offshore Renewable Electricity Support Scheme (ORESS) projects entered planning in 2025, but the sixth, Sceirde Rocks, was withdrawn by its developer.

Recent policy development such as the Government’s Critical Infrastructure Bill, which allows fast-track statutory delivery for strategically important projects, aims to address key obstacles. This infrastructure delivery will ultimately determine whether Ireland can convert its decarbonisation and system security ambitions into reality.

Balancing economic growth and infrastructure constraints

Ireland’s energy system continues to make progress on efficiency and emissions reductions, while running up against the limits of its own infrastructure. Total national energy use declined by 2.2 per cent in 2025 and energy-related emissions reduced by 3.7 per cent despite strong GNI* growth of 3.8 per cent and population growth of 1.5 per cent over the same period.

Continued improvements in energy efficiency and the electrification of heat and transport reduced reliance on fossil fuels and improved overall system efficiency. GHG emissions reduced by 3.7 per cent, reflecting continued progress towards an increasingly more efficient and lower carbon national energy system.

However, progress remains insufficient to place Ireland on a pathway consistent with its 2030 climate targets. Provisional estimates indicate that the electricity sector has exceeded its sectoral emission ceiling in the 2021-2025 carbon budget by 1.1 per cent.

The transport sector is also estimated to have exceeded its sectoral ceiling by 8 per cent, reflecting growing demand for aviation fuel and petrol, alongside an inadequate rate of EV deployment.

Ireland’s 2025 data show meaningful gains in efficiency and emissions, but also the limits of progress without timely delivery of infrastructure. To keep affordability, security, and decarbonisation in balance, Ireland must accelerate no-regrets investments – includes renewables, storage, grid capacity, and interconnection – while streamlining delivery and maximising the utilisation of existing assets.

Significant challenges lie ahead

Despite the gains made in 2025, Ireland continues to grapple with critical challenges, including security of supply concerns, rising infrastructure costs, and delays to major grid projects.

The cost of standing still is mounting: Temporary Emergency Generation and the retained Moneypoint plant have together cost consumers over €1.5 billion since 2021, highlighting the cost of maintaining system adequacy while longer term infrastructure is delivered.

Meanwhile, further delays have been announced to the North-South Interconnector and the Celtic Interconnector, both of which are central to improving supply security, enabling future offshore wind deployment, and lowering electricity costs.

In December 2025, the CRU’s PR6 Final Determination approved up to €18.9 billion of investment in electricity networks between 2026 and 2030, with the baseline investment package representing an 80 per cent increase versus PR5 outturn expenditure.

As the largest grid investment programme in the State’s history, PR6 reflects the scale of infrastructure required to support electrification, renewable integration, and economic growth in Ireland.

Fossil fuels dependency persists

Fossil fuels continue to dominate Ireland’s energy mix, accounting for 79.2 per cent of total energy supply in 2025, down only slightly from 81.4 per cent in 2024, with oil alone making up 47 per cent of the overall mix.

Ireland imports all of its oil and more than 82 per cent of its natural gas, making it one of the most energy import dependent countries in Europe. Ireland’s fossil fuel import dependency ranks as the fourth highest in the EU and sits substantially above the EU average of 57.3 per cent.

A call to action

Ireland’s route to a more affordable, secure, and sustainable energy system must reflect the realities of our geography, economy, and islanded energy system, along with acknowledging the trade-offs of competing policies.

The pathway to success is one which leverages our abundant renewable resources, maximises utilisation of existing assets, strengthens interconnection, and improves the efficiency and cost-effectiveness with which energy projects are delivered.

Ireland’s future depends on delivery. With focused execution, Ireland can translate its renewable resource potential into enduring advantages in security, competitiveness, and decarbonisation.

For more insights: www.kpmg.ie