Wind support system almost breaks even

IRELAND: The cost of Ireland's wind support mechanism is almost exactly offset by the reduction in the wholesale price of electricity achieved by including wind on the grid.

This is the conclusion of two separate reports that were published ahead of a review by the new Irish government of the current renewable energy support mechanism (REFIT).

The Irish Wind Energy Association (IWEA) commissioned a report on the cost of wind from analytical consultancy Redpoint Energy in readiness to combat any negative policy changes after the new government came to power following elections last month.

The new centre-right Fine Gael/centre-left Labour coalition government has indicated that it will review the support mechanism to ensure that the system remains cost beneficial as Ireland struggles with economic recovery.

Too late

However, the REFIT proposal is currently before European commissioners and is awaiting imminent state-aid approval. IWEA chief operating officer Catriona Diviney says that the commissioners have already indicated that they do not support any retrospective changes to policy once it has been approved.

Retrospective changes to the Spanish feed-in-tariff last year has caused huge uncertainty in the renewables market there.

The IWEA report, published in March, found that an 11.5% reduction in wholesale electricity prices would be achieved through delivering 45% of the overall generation mix from wind by 2020. This is just above the Irish target of 40%.

Wind energy currently accounts for approximately 12% of Ireland's electricity needs. The study predicts that in 2011 savings for consumers as a result of wind generation are set to reach EUR36.6 million.

Redpoint Energy director Phil Grant says: "Our analysis shows that increased levels of wind generation will displace coal and gas-fired generation, and reduce the costs of electricity production." The report goes on to say that savings will increase if oil and gas prices rise.

IWEA chief executive Dr Michael Walsh says that, even allowing for the cost of developing new transmission lines to connect wind generation, by 2020 customers could save almost EUR100 million per year. "This is because the saving in the wholesale process of EUR256 million greatly outweighs the cost of Public Service Obligation (PSO) support of EUR52 million and the EUR108 million annual costs of new network," he says.

The PSO allows additional costs of renewables support to be passed on to electricity customers.

Brian Motherwell, chief operations officer of Ireland's national energy authority SEAI, says: "It is right that we keep the focus on energy costs, and it is very good news to see that we can capture the benefits of wind energy without having to pay extra for them. And as fossil fuel prices increase, the economic benefits become more significant."

A second report, from the Irish Academy of Engineering, published in February, paints a bleaker picture. It claims that planned development of the wind industry in Ireland could cost the country more than EUR10 billion and calls for a halt to all wind farms planned for the next five years.

This report does not take into account gas and oil prices.

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