Focus on structuring the future market

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Optimism and a determination to bring wind to the forefront of Ireland's energy mix were key features of this year's Irish Wind Energy Association's conference, held April 3-4 in Carrick on Shannon, County Leitrim. At the event, the industry pushed for an ambitious new target for wind energy and demanded an end to the barriers that are impeding its progress.

The new president of IWEA, Eddie O'Connor, set the tone as he unveiled the association's new goal of 2000 MW of installed wind capacity in Ireland by 2012. This is double its previous target, adopted only last autumn and if built will displace half of Ireland's total installed generating capacity -- currently around 4000 MW. Half of the proposed wind capacity would be built on land, with the other half offshore. Accepting the difficulty of absorbing 2000 MW within Ireland, O'Connor claimed the solution lies in interconnection -- firstly with Northern Ireland and, more importantly, with the larger UK grid.

The conference generated an atmosphere of optimism despite general dissatisfaction with the competitive nature of the Alternative Energy Requirement (AER) -- the current government support program. Nonetheless, the government's delay in announcing the results of the third and last AER competition -- finally published a week after the conference -- proved a major disappointment. Joe Jacob, state minister at the Department of Public Enterprise said he is looking beyond the AER in a wide ranging review of renewable energy strategy that will "effectively put everything back on the table" .

Jacob expects to produce a Green (discussion) Paper before the end of 1998 which will shape Ireland's energy options post Kyoto. It comes at the same time as liberalisation of Europe's energy markets and will take account of the goals and strategies set out in the EU White Paper on renewables (Windpower Monthly, January 1998). The Green Paper will select priority renewable technologies and will examine grid connection issues, unit prices, the future of R&D projects, the planning process, the need for longer term targets and the broader socio-economic dimension to renewables' development, said Jacob.

The government has put in place the right policy environment for wind to flourish, Jacob claimed. But he made it clear that he now expects the industry itself to tackle a number of issues, inlcuding the growing opposition to wind energy -- the biggest single problem facing the sector, he said. He urged IWEA to draw up an awareness-raising and marketing strategy to help overcome problems with planning and local acceptability. He expressed particular concern about the number of projects that fall at the planning hurdle. He pointed out that those who object to wind plant proposals at the local planning level tend to be genuinely concerned about the environment, but fail to see the huge benefits of wind energy for the landscapes they are seeking to protect. "A serious, concerted and, above all professional promotion of wind energy by the sector is absolutely imperative," he said.

Another challenge for the wind industry is the creation of jobs. The AER I wind program entailed a capital investment of some I£45 million and a revenue stream of I£100 million over the 15 year life of the power purchase agreements, he said. AER III could double these figures. Yet wind energy appears to be employment neutral, he said, adding that in any other sector this level of investment would create significant employment. "Let's see some jobs flow from it to maximise the socio-economic value of these resources to our country," he admonished.

Stick and carrot

O'Connor, formerly chief executive of peat producer Bord Na Mona, outlined the advantages of a wholehearted commitment to wind energy. It would help maintain rural communities, reduce imports of energy and remove the need for more thermal plant in Ireland. But while in one hand holding out this carrot to Jacob, O'Connor held in the other his own list of demands which included a complete rethink of the AER system, which carries with it the problems inherent in any highly competitive system, not least the banishment of the small investor.

Casting envious eyes on the Danish and German support mechanisms for renewables, he said it was time to go "back to the drawing board" in Ireland to design a new market model. This should be based on higher prices for output and above all, increased local ownership of wind turbines. This issue will be the key to development of significant amounts of wind energy in Ireland. "Do we think we would have the same level of objections if local communities were proposing wind energy schemes?" he asked. He wanted to see farmers, landowners and local communities owning or part owning small or medium sized wind farms. Revenue from wind energy "could be used to stabilise rural communities and commercially underpin country life in general," he said.

Admitting that local involvement has been difficult under the AER, Jacob said he aspired to do something positive after his review to encourage citizens' investment. But he maintained it would not be a cure-all for the opposition that wind has encountered at local and planning levels.

John Burke from Saorgus Energy earned spontaneous applause by backing O'Connor in demanding an end to competitive bidding for power purchase contracts under the AER. They favour big players and, moreover, indicate a lack of self confidence, he said. "If we are meant to be this tremendously confident nation -- this Celtic tiger -- then your advisers in the civil service must be sufficiently confident to devise another way of getting this industry on the road," he told Jacob. The minister defended the AER competitions, claiming they had kick-started the industry. Nonetheless, the round of applause registered with him, he said.

Market solutions

The Irish Business and Employers Confederation (IBEC) preferred "market solutions" rather than fixed price contracts for renewables. Rosemary Steen from IBEC challenged O'Connor's recipe for success. "The solution to your issue is . . . to go out and find the customer and then develop your market." She warned, however, that the cost per kilowatt hour is going to be critical. "My members are prepared to pay a premium for green energy, but they are not willing to pay over the odds." Drawing attention to a survey of chief executives of energy companies she pointed out that most -- 80% -- believe their biggest competitive threat will come from retail stores. "In ten years time consumers will buy green electricity from Tesco, I believe, as easily as light bulbs," she said.

Brian O'Gallachoir from the Irish Energy Centre cautioned that any new Irish support mechanism for renewables would have to fit in with the plethora of rules emanating from the EU -- these include directives on the internal electricity market and harmonised renewables support, the White Paper on renewable energy and commitments under the Kyoto agreement.

The problems of the relatively weak grid network and grid access charges were recurring themes throughout the two days. Simon Grimes from the Electricity Supply Board (ESB) reminded the conference of the dispersed nature of the load in Ireland. "ESB provides four times more network per customer than in the UK, and double that in France," he explained. "The amount of wind generation that can be integrated into the network in the rest of Europe far exceeds that in Ireland."

From East Connacht Energy Agency, Michael Layden added that in his area, where three wind farms are now operating, the grid cannot cope with much more wind generated electricity. "Tens of million worth of investment is needed, but that is not going to happen under the current bidding structure." O'Connor called for a re-design of the grid with peripheral small scale generation in mind. He also argued for fair access to electricity grids and affordable wheeling charges. These concerns were shared by IBEC. Steen highlighted the lack of transparency and high access charges to the gas network. If a similar approach is taken for electricity after liberalisation of the ESB network in 1999, it will be very damaging, she warned.

Fish to fry

Some 130 people attended the conference, held at the Bush Hotel in the small town of Carrick-on-Shannon. Some delegates felt the attendance was slightly down from last year, and would have been higher if the AER III results had been announced at the conference, as hoped. One conference veteran remarked: "Every person with an agenda was there and every person with a fish to fry." An innovation this year was holding the event over two days. A visit to the nearby wind farms at Arigna was laid on for the second afternoon. Six exhibition displays were ranged around the conference room: four by turbine manufacturers, one by a developer and one by the Irish Energy Centre. The event was sponsored by AIB Capital Markets.

Many delegates said they were encouraged by Jacob's pronouncements and by the fact that he was taking notes throughout Eddie O'Connor's presentation. The content and delivery of most of the papers was approved. "I came here to learn, and that is what I have done," commented one delegate.

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