Ireland

Ireland

Wind bids swamp Irish tender -- Minister praises AER 5 response

Bidding for Power Purchase Agreements

under Ireland's latest round of renewable energy support has swamped the fifth Alternative Energy Requirement (AER 5), mainly due to the number of wind energy proposals for large projects. The government was seeking 255 MW of electricity from renewables, of which the bulk -- 240 MW -- was to be for wind. It received bids, however, to build 367 MW, covering wind, small scale hydro and biomass.

Minister of State Joe Jacob describes the response as "an overwhelming success." He announced AER 5 in May last year and says the bids received, which propose a total investment of EUR 400 million, validate the challenging target he had set to treble the volume of renewables support granted in one round of competitive bidding. Developers, who had to bid with projects for which planning permission had been secured, were competing for 15 year power purchase agreements (PPAs). Tendering was below pre-set price caps per kilowatt hour of EUR 0.04812 for large schemes, EUR 0.05297 for small scale wind, EUR 0.05916 for biomass and EUR 0.06475 for hydro.

The Irish Wind Energy Association is now calling on Jacob to extend the wind target of 240 MW to allow all projects to go ahead. The government is aiming for 500 MW of renewable energy by 2005. Ireland has just 160 MW, of which 132 MW is wind.

It is highly probable the government will award PPAs to all 367 MW of bids. The additional contracted capacity would allow for a margin of failure if a number of projects do not proceed. Despite having main planning consents in place, some projects could still fail to gain the further consents needed for the connections into the grid network.

EU delay

The terms of the competition were finally cleared by the European Commission under its rules governing state aid for environmental projects in mid-January -- some six months later than originally expected. The main sticking point is believed to have been the 15 year duration of the favourable power purchase agreements. Officials in Brussels regard the PPAs as state aid. But they do not regard the levy on customers bills, which pays for any cost difference between the price paid to renewable generators and the Electricity Supply Board's normal electricity tariff, as a form of aid.

Jacob says that if they are all built the renewable projects will prevent over 1.5 million tonnes of greenhouse gas emissions, a reduction equivalent to 10% of Ireland's Kyoto commitment. They will also reduce the country's imports of oil by more than 2 million barrels annually, redirecting EUR 40 million spent on imported fuel back into the Irish economy. One thousand jobs will be generated in building the renewable projects and 200 new jobs in operating and maintenance.

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