Wind energy organisations are incensed by Reeves' claim that current trends show that enough new renewables will be built to meet Ireland's 2010 target of 13.2% of electricity from renewables without burdening the consumer unnecessarily. He expects much of the new capacity to be merchant plant.
In a letter to Noel Dempsey, minister for communications, marine and natural resources, Reeves says that of 233 MW of existing wind capacity, 83 MW (36%) has been built on a merchant basis, with at least a further 82 MW under construction. He states: "there is, therefore, a track record to show that plant can be built on a merchant basis. In addition, the large number of projects (2,494 MW) in the applications process for connections from the network operators illustrates clearly that there is no need to further stimulate the sector at this time."
The government is looking into a new renewable support mechanism to achieve the country's renewables target and replace its present competitive tendering process, the Alternative Energy Requirement (AER). Dempsey's decision will be informed by the findings of the Renewable Energy Development Group, set up by the minister to report on future renewables policy.
The regulator maintains that a renewable obligation and trading certificate program would not work in Ireland in the short term. Neither does he favour any form of support requiring the Electricity Supply Board (ESB) to buy renewable output through a public service obligation (PSO). This would count out a fixed "feed-in tariff" system or another competitive tender support system. Support through a PSO is costly for the consumer, he explains. "Bilateral contracts (as under a merchant system) with no government support element -- and as such no impact on the PSO -- represent better value for the customer and help to promote competition."
The Irish Wind Energy Association (IWEA), however, insists that Ireland would not be able to meet its 2010 targets under Reeves' proposals. It urges the minister to continue its support for wind and other renewables. Contrary to CER opinion, a merchant system would not encourage further renewable development, it adds.
Wind energy generator and retailer Airtricity calls the regulator's comments misleading and inaccurate. Without state support, the entire Irish development program would be impacted, and Airtricity would be unlikely to build new plant in 2005, says the company's Mark Ennis. "The growth of the industry has already suffered due to an unnecessary moratorium on grid connections. If Ireland does not introduce a support mechanism, it would be the only country in Europe without one."
According to the company's calculations, Ireland needs an additional 615 MW to meet its targets, but this is unlikely to be built without a support mechanism. As a result, the country will be liable to multi-million euro fines for failing to meet its EU commitment.
Thomas Cooke from the Irish Wind Farmers Co-operative calls for Reeves' removal as head of CER. Cooke accuses the regulator of double standards over costs and competition and ignoring the environmental and the security of supply benefits of indigenous wind. "Cost is only an issue where renewable energy is concerned," claims Cooke. He points out that the CER has allowed ESB to raise its electricity prices by 40% over three years, at the same time licensing the ESB's peat burning plants, which receive over 65% of the PSO compared with wind's less than five per cent.
Furthermore, says Cooke, Reeves demands competition in renewables, while competition is minimised for incumbent national electricity supplier and wires operator ESB. He adds: "We consider it false to argue that a merchant plant approach is optimal from a cost point of view, since that would give rise to variable renewable energy prices linked to fossil fuel prices." A guaranteed price system for renewables, on the other hand, would give adequate returns to developers and stable prices over 15 years for consumers, "regardless of what is happening with oil and gas prices."