Contracts under the AER are awarded for a 15 year period, with pre-set energy payments. These are IEP 0.065/kWh for peak periods and IEP 0.04/kWh for off peak supplies. Renewable energy technologies which generate a steady output will receive IEP 0.04/kWh, but wind projects will benefit from the stronger winter winds and receive around IEP 0.041, possibly a little more. To support these preset prices, the government also offered a capital subsidy to projects requiring it.
Under NFFO and the SRO, bids from the various renewables technologies competed in specific bands for each technology and choice was made on the basis of the lowest bids per kilowatt hour for the supply of power. But the selection in Ireland was made on the basis of which requests for capital subsidy were the lowest. In the event, not one of the chosen wind projects sought a subsidy.
Ireland, like Scotland, has very good winds, but the economics of wind generation at the prices on offer are still as tight as those for the NFFO and SRO contracts (Windpower Monthly, February 1995). Although AER contracts run for 15 years, bank loans are unlikely to stretch beyond 12 years and developers will probably hold off building until 1996 or 1997, in the hope that the cost of generating power from the wind will continue to fall. As in the UK the cost needs to drop to around £750/kW, or lower, to enable the projects to be viable.