Ireland

Ireland

All bids selected in Irish tender -- Contracts for 318 MW of wind

The Irish government is to award power purchase contracts to all the projects bid into its latest round of support for renewable energy. Nearly 370 MW of wind, hydro and biomass proposals -- all with planning consent in place -- have secured 15 year contracts in the country's fifth competitive Alternative Energy Requirement Twenty-one large wind projects totalling 318 MW and 19 small scale wind projects totalling 35 MW are taking the lion's share of contracts.

The Irish government is award power purchase contracts to all the projects bid into its latest round of support for renewable energy. Nearly 370 MW of wind, hydro and biomass proposals -- all with planning consent in place -- have secured 15 year contracts in the country's fifth competitive Alternative Energy Requirement (AER 5). Despite being Ireland's largest competition for renewables, AER 5 was substantially over subscribed. Minister Joe Jacob explains that he had initially sought 255 MW of electricity from renewable sources. "I am delighted to say that the overwhelming response to the competition and the competitive prices bid are evidence of the huge interest in renewable energy throughout Ireland," he says.

Twenty-one large wind projects totalling 318 MW and 19 small scale wind projects totalling 35 MW are taking the lion's share of contracts. The power will be sold to the Electricity Supply Board (ESB) at the prices bid by developers. While the government appears satisfied that the terms of AER 5 did produce competition among bids for contracts, the difference between the lowest bid prices for wind and the highest -- which were at the upper price limit set by the government -- is not very large. The price range for large wind is EUR 0.04547-0.04812/kWh and EUR 0.04723-0.05297 for small wind projects. Five biomass projects giving a total 8 MW range in price of EUR 0.03765-0.05916/kWh, while the weighted average price for three small hydro schemes totalling 1 MW is EUR 0.0641/kWh.

Jacob expects AER 5 to lead to EUR 400 million of renewable energy investment and to double the amount of electricity from renewables in Ireland. But the initial delight of the Irish Wind Energy Association (IWEA) that all applicants were granted contracts, has given way to disappointment that eagerly hoped for tax breaks for wind energy investments did not materialise in the Treasury's finance bill at the end of January.

no room for returns

These are essential if many of the projects are to be viable, explains IWEA's Inge Buckley. "Otherwise, with the low contract prices under AER 5 there is no room for any return on equity," she says. "So a lot of projects that got contracts will not get built unless they get some clever money from abroad." Buckley adds that IWEA has not given up on lobbying for tax incentives on investments to be extended to wind energy. "It is still possible to get it in at the committee stage of the bill as it goes through the Dàil (parliament)," she says.

Problems in gaining planning permits for grid connections are also likely to cast doubt on Ireland's ability to meet its targets of 500 MW of renewable energy by 2005 and 13.2% of electricity from renewables by 2010. To minimise delays in the rate of build, the government required all projects to have planning permission in place as a pre-condition for bidding into AER 5. But IWEA claims that at least 50% of all wind projects still need consent for their connection into ESB's local grid network.

"A lot of projects are going to need fairly long runs to the national grid," says Aidan Forde from Saorgus Energy. And public resistance to new power lines in the countryside is growing, he adds. "There is no point in Joe Jacob saying we will have 370 MW from AER 5; we will not. The proof of the pudding is the rate of construction -- and it is going down. The reality on the ground is that we are not meeting the necessary progression towards our targets."

Who got what

The geographical spread of wind projects under AER 5 is wider than ever before, although large schemes tend to be concentrated in the west, north and south west of the country, compared with a more even distribution of small scale projects. No single developer is dominant. Saorgus Energy, with partner PowerGen Renewables, has secured the largest amount of installed capacity with the two biggest projects in AER 5 -- 60 MW in Galway in the west of Ireland, and 37 MW in Kerry in the south west. Forde says the larger project could be built the sooner of the two since it already has consent for the transmission line to connect it to the grid network.

Green electricity supplier Eirtricity was awarded the largest number of contracts of any developer, with six projects totalling 72 MW. Eirtricity will not be able to market power from its AER projects to its green supply customers, but the company's Declan Flanagan points out that under the terms of the AER, generators are not tied to their contracts. "This is just another option that is available to us as a generator," he says. "The AER contract provides for termination by the operator at any time during the contract."

Cork-based family wind energy development firm DP Energy is involved with three projects totalling 30 MW, one of which is an extension to its existing Blackbanks wind farm in County Leitrim. Two contracts apiece went to both Natural Environmental Technology from Kerry (30 MW) and Gaoithe Saor Teo from Arigna (12.7 MW). All other developers in the large wind tranche have one project each.

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