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Ireland

Ireland

Law contract prices block local efforts -- Ireland policy doubts

The Irish government plans to double its target for renewable energy capacity to 500 MW by 2005, with the bulk coming from wind. Energy minister Joe Jacob has assured the wind industry that he aims to make the increased targets achievable. But his proposals for a twin track approach based on a continued intensely competitive renewables support system and direct sales to final customers are not to the liking of all.

The Irish government's plans to double its target for renewable energy capacity to 500 MW by 2005 -- with the bulk coming from wind -- holds out tantalising prospects for wind energy development in the country. Moreover, energy minister Joe Jacob assured the wind industry at its annual conference last month that he aims to make the increased targets achievable. But his proposals for a twin track approach based on a continued intensely competitive renewables support system and direct sales to final customers were not to the liking of all. Many feel they will probably not deliver the new targets.

The chief system of support will be further Alternative Energy Requirement (AER) competitions -- similar to the existing AER, but at an accelerated rate of one each year designed to deliver 100 MW of new renewables annually. "Competitive pricing at realistic levels will continue to be a feature of the competitions," Jacob adds.

But developers point out that the competitive nature of the AER regime is hindering them from realising perfectly good wind energy projects. Natural Environment Technology (NET), a wind small farm development company based in Kerry, is a case in point. NET was established in 1997 with the aim of promoting renewable energy with the involvement of the local community and farmers. It has a portfolio of around 150 MW, but says it cannot build its first project under the present system.

Consisting of two separate wind developments some 24 km apart in Sligo, this project, if built, would include the country's largest wind farm. "We have a 24.5 MW paper development which is more than one-third of the currently installed wind capacity of Ireland, says NET's Florian Seidler. "We have planning permission for it, we have had everything there ready to go for the last 12 months, but we cannot build it without selling a large chunk of it to the big players because of the regime and the price we would get under it."

Community groups or small, independent players like NET cannot compete for AER contracts against utilities or organisations with backing from large companies, able to finance schemes "off balance sheet," he claims. In the last AER round for wind -- AER 3 -- projects contracts are for as little as IR£0.022/kWh. "We had finance in place, but not at those prices," says Seidler. Moreover, the company does not see much scope for improvement under Jacob's latest proposals. "If the new AER works out the way I expect, we are only going to see sub-economic prices again, which will disadvantage the small developer, community efforts and farmers, unlike the systems that are in place in Denmark and Germany."

Green sales

An alternative option could be through the newly deregulated market by contracting to sell their output to one of the emerging green electricity suppliers. This could be a welcome step forward, he says. "But we have to see first if their contracts are bankable. And while it may work for a small wind farm of two or five megawatts, would it work on a 24.5 MW project that is going to cost IR£22 million to build?"

NET feels, however, that it owes it to the local community to proceed with the project. Local people had solidly backed the wind plans in Sligo. It is one of the few examples where the whole community wants the development, says Seidler. "It is because the farmers are struggling; they are living off sheep farming, but the bottom has fallen out of that market. They need something else in order to make a living. We have an obligation to the landowners and the community; whether through the AER or whatever, we have to build this project."

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