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Two track price and quota proposal -- Ireland's next round of support

Ireland is headed for a further round of bidding for renewable energy contracts within the term of the present government, pledged minister in charge of energy Joe Jacob at the autumn conference of the Irish Wind Energy Association (IWEA). With a general election in May 2002, this means that Ireland's sixth Alternative Energy Requirement (AER 6) will follow hard on the heels of the fifth. Wind project developers are expecting to find out within the next few weeks whether they have been successful in securing contracts under AER 5.

The government's aim is to meet its targets of 500 MW of renewables by 2005. So far, the AER has only delivered 124 MW of wind. AER 5 could produce up to 255 MW of new renewables -- including 200 MW of large wind and 40 MW of projects less than 3 MW in size.

To minimise delays and streamline the examination of bids, a pre-condition of AER 5 was that all developers who bid for contracts must have secured planning permission in advance. "The accelerated selection process in AER 5 means we can move quickly to the next support measure. That support measure will do all that is necessary to deliver the overall 500 MW target," said Jacob.

He added that he would consult IWEA before setting terms and conditions for the competition, but it is understood AER 6 will follow closely the outline of AER 5. It will grant 15 year power purchase agreements (PPAs) by competitive tender.

The tight timeframe for the next order by May does not leave much scope for any radical departure from the existing system. This will be a disappointment to the IWEA, which is lobbying for a fixed price wind power output rather than another round of PPAs. At its conference in November, however, some IWEA members called for a two pronged system of support for AER 6: a program of contracts similar to France's new support mechanism; and a government obligation for a fixed quota of renewables in the supply mix.

Outlining the proposal, Aidan Forde from developer Saorgus Energy explained that the quota on all suppliers could be increased year-on-year to ensure orderly progress towards the country's target. The quota could be administered by the regulator, and because there would be no state aid element, it could be brought in without delay without European Commission approval. However, he added, because the quota system tends to favour large companies who could finance projects off their balance sheets, a French style system would be needed to give smaller players the security of long term state PPAs. These would be available to any site, but at a price adjusted according to its wind speed.

Forde said the two track system would avoid the stop-start nature of previous AERs, allowing developers to proceed as soon as they had gained planning permission and other necessary consents. The Irish wind industry is full of people who have had planning for three or more years but have had to wait until AER 5 to have a chance to build, he says. "It would be useful to have two ways of meeting the targets. To get on track for our target of 13.2% of electricity from renewables by 2010, we will need an incredible rate of build."

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