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Energy regulator says wind so cheap that renewables levy on consumers no longer necessary
1 September 2006
Higher gas prices and the relatively low cost of wind energy in Ireland are major factors behind the energy regulator's decision to scrap the levy on electricity customers to compensate the national Electricity Supply Board for the additional costs of contracting for renewables and peat-fired power stations. The levy is pegged to the "best new entrant" (BNE) price, calculated as the cost of generating from new gas fired CCGT plant. Continuing hikes in gas prices have led the regulator to set a 30% increase in the BNE price to EUR 86.40/MWh for 2007. While most peat plants are still more expensive than gas, prices for wind energy over recent years have fallen well below the BNE price. This effectively means that wind has been cross-subsidising more expensive peat-fired generation. "It is what we have been saying all along," says the Irish Wind Energy Association's Tim Cowhig. "There is no additional cost to providing long term contracts to wind farms." Because the amount recoverable under the levy for 2007 is just EUR 2.8 million, compared with EUR 44.2 million for 2005, the Commission for Energy Regulation (CER) has now decided to set the levy at zero. The small amount of money recovered would not make the work involved in collecting payments from customers worthwhile, the CER argues.
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