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Ireland

Ireland

2010 is crunch time says Irish wind power industry

IRELAND: Decisions due this year will have a fundamental impact on the viability and profitability of the wind sector in Ireland for the next decade, according to Irish Wind Energy Association (IWEA) chief executive Michael Walsh.

The wind industry, government, regulator and grid system operator have a strong strategy for renewable energy, he told delegates at the annual Irish Wind Energy Conference in March. "We need to follow through on that and put in place a framework to deliver it," he said.

"We have identified what the right answers for this island are; we are very clear on the way forward and what benefits that will bring, but we need to turn that into action, make concrete decisions and do it in an effective and co-ordinated fashion," he said. "That's why we're saying that 2010 is decision time. It's absolutely essential we get it right."

Ireland's target for 40% of electricity to come from renewables is consistent with the country's obligation to the EU to generate 16% of energy from renewable sources, Walsh said.

A minimum of 4GW of renewables capacity will be needed to meet the target. But Walsh argued that the country should be more ambitious and aim to produce 11GW by 2020. More wind turbines would be needed to make up for constraints on wind generation until the electricity grid is developed. More wind capacity in Ireland may also contribute to meeting the country's renewables heat and transport targets, and to be exported to the UK and continental Europe, he said.

North of the border, the Northern Ireland Assembly government is to finalise its strategic energy framework this year. This proposes a 40% target for electricity from renewables which would bring its six counties in line with the Republic of Ireland. Walsh is confident the 40% target will be agreed. "That will be positive for the whole island because it will really facilitate a co-ordinated approach to delivery," he said.

Planning bill

Also due to be passed in Ireland's parliament, the Dail, this year is the planning bill, which will be a major revision of the planning code. Ireland's planning regime and the country's grid connections timescales do not align, Walsh noted.

For the past four years, timelines for wind farm developers gaining connection to the electricity network have been growing. This has meant that the five-year planning permits for many projects expire before the projects can be built. But securing an extension to a planning permit is not straightforward.

John Brereton, general manager of development and engineering consultancy Wind Prospect Ireland, was also concerned about the difficulty encountered in securing extensions for site permits. Extension rules are applied inconsistently throughout the country.

"Twenty-six counties: 26 different views on what you need to do to get a planning extension," he said. And there are significant problems with the draft-planning legislation going through the Dail, he warned. The Department of the Environment has proposed removing the ability to apply for a second extension. "At the moment, grid development timelines are so long that, believe me, many people do need a second extension," said Brereton.

Limited progress

Grid and planning issues have contributed to Ireland's slow delivery of renewables capacity. Just 7% of all proposed projects have progressed to completion, Walsh pointed out. "That is a very poor throughput. We are not as strong at converting proposed projects into constructed projects as we need to be."

Currently, nearly 4GW of planned projects are being issued with offers to connect to the electricity network by grid operators under the third round of processing applications for connection - known as gate three.

"We need to look at what has to be done to turn those offers into constructed projects," said Walsh. "We need to learn the lessons of gate two and we need to work with other agencies to see what's holding up the delivery of those projects."

One "bugbear of an issue" that needs to be addressed soon is the locational element of transmission charges, he said. For some projects, the charges, which reflect the costs of transmitting electricity from weaker parts of the network, can rise significantly once a wind farm is up and running. This causes uncertainty for investors. Grid operators should give developers locational signals before they make commercial decisions about where to site their projects, he said.

He urged the regulator, the Commission for Energy Regulation, to consider the impact on projects of the variable charges which change every year and are impossible to forecast. "The idea that we're going to allow projects to connect and then, for their lifetime, apply random risk factors to them: that's not something the investment community can tolerate any more," he said. "The financial crisis has made people more aware of risks, and this is risk written large in every single project."

Looking ahead, Ireland's renewables support system, the renewable energy feed-in tariff (Refit), needs to be extended, he said. Over 1GW of consented projects are being developed under the first tranche, to 2025.

But for new projects coming through the gate-three process, the government will need to get EU state-aid approval for its proposals, which are to include some operational tweaks to the Refit mechanism. "There is a lot of talk about what it's going to look like," Walsh said.

To provide certainty for investors, decision makers must bring talks over the Refit to a close and provide a clear understanding of the investment framework to 2020, he said.

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