Objections to further wind-farm development around the country are based mainly on concerns about noise and visual intrusion. There is a further objection – the cost in direct and indirect subsidies is bad value in terms of securing extra reductions in carbon emissions.
No subsidies for onshore windfarms
The United Kingdom government decided not to offer subsidies for onshore windfarms at its recent renewables allocation – there has been widespread opposition to further onshore wind in England, and the request for proposals was confined to offshore developments.
It has long been understood that costs per megawatt-hour (MWhr) offshore tend to be higher than onshore costs, depending naturally on the characteristics of the chosen site.
Wind speeds are often better offshore but capital costs can be much higher in deep water and maintenance likewise.
The interest
In Ireland, there has been no great interest in offshore development in recent times and the continuing quest for planning permissions, and the direct and indirect subsidies available, is for onshore developments.
The UK no longer offers renewable contracts at a set level of subsidy. Companies are invited to bid a price level per megawatt-hour, which they will be paid regardless of the wholesale electricity price. The lowest bids win.
The recent auction saw bids down to £57.50, or roughly €64, per MWhr, much lower than expected, for two large offshore projects. Had bids been entertained for onshore projects the figure could have been as low as €50 according to trade estimates.
There have been substantial advances in wind-power technology and capital costs have fallen sharply.
UK numbers
These UK numbers compare to current Irish subsidies fixed at around €79, including the guaranteed REFIT price and the so-called balancing payment. The Irish scheme does not require developers to bid, with the lowest subsidy cost adjudged the winner.
Instead, a set price is simply guaranteed for fifteen years.
Thus the ever-generous Exchequer does not seek any benefit from the falling costs and the profitability of new wind farms must be rising sharply. If Irish onshore costs are falling as quickly as these UK figures suggest, the nationwide enthusiasm for saving the planet through building more wind-farms is entirely understandable.
The costs
The subsidy costs of wind-farms are not the end of the story.
The hidden costs include the weaker economics of gas stations, whose unit costs are worsened when they run intermittently to facilitate the vagaries of the wind. There are also extra costs for EirGrid, the state-owned grid company, which does not charge the wind-farms the connection costs they ought to face.
The consumer
The consumer picks up all of these costs in the price of electricity. As the portion of subsidised renewables in the overall generation mix continues to rise the extra costs tend to rise even faster: a power system with a very large percentage of intermittent generation becomes more and more costly per unit and the Irish system already has one of the highest wind shares anywhere. It also has a considerable surplus subsidies of overall generating capacity.
In the circumstances the continuing offer of open-ended subsidies to wind developers is difficult to rationalise.
In April last, EirGrid estimated that 2,500 MWs of wind capacity had already been installed in the Republic and a further 3,500 MWs had been notified. Additional projects are constantly being proposed and the latest recruits to the ranks of renewable generators are the would-be developers of solar farms.
There is no customer demand for any of this extra capacity, since existing generators can comfortably meet peak demand, even when the intermittent wind output is not available.
Moreover, none of the building cost is funded visibly through the budget of the Department of Energy as voted through Dáil Éireann. The costs are simply loaded onto electricity bills and onto the cost structures of EirGrid and the conventional generators.
The cheaper way
The auction system in the United Kingdom at least tries to minimise the direct subsidy portion of the extra costs, through capturing the benefits of the improvements in renewables technology.
This is a cheaper way to procure extra renewable capacity.
Unless the Irish system is changed developers will continue to pocket ever-growing margins and it is hardly surprising that the supply of renewable generation capacity has lost all contact with market demand for electricity.
Emissions from the electricity sector have fallen substantially in Ireland over recent years, and will fall further as older peat, oil and coal units are replaced in the generation mix by more regular use of lower-emitting gas stations already built and paid for.
Building new wind-farms, adding to the high base already in operation, is a very expensive method of securing additional reductions in carbon emissions.
Read more
Full coverage: Colm McCarthy
Objections to further wind-farm development around the country are based mainly on concerns about noise and visual intrusion. There is a further objection – the cost in direct and indirect subsidies is bad value in terms of securing extra reductions in carbon emissions.
No subsidies for onshore windfarms
The United Kingdom government decided not to offer subsidies for onshore windfarms at its recent renewables allocation – there has been widespread opposition to further onshore wind in England, and the request for proposals was confined to offshore developments.
It has long been understood that costs per megawatt-hour (MWhr) offshore tend to be higher than onshore costs, depending naturally on the characteristics of the chosen site.
Wind speeds are often better offshore but capital costs can be much higher in deep water and maintenance likewise.
The interest
In Ireland, there has been no great interest in offshore development in recent times and the continuing quest for planning permissions, and the direct and indirect subsidies available, is for onshore developments.
The UK no longer offers renewable contracts at a set level of subsidy. Companies are invited to bid a price level per megawatt-hour, which they will be paid regardless of the wholesale electricity price. The lowest bids win.
The recent auction saw bids down to £57.50, or roughly €64, per MWhr, much lower than expected, for two large offshore projects. Had bids been entertained for onshore projects the figure could have been as low as €50 according to trade estimates.
There have been substantial advances in wind-power technology and capital costs have fallen sharply.
UK numbers
These UK numbers compare to current Irish subsidies fixed at around €79, including the guaranteed REFIT price and the so-called balancing payment. The Irish scheme does not require developers to bid, with the lowest subsidy cost adjudged the winner.
Instead, a set price is simply guaranteed for fifteen years.
Thus the ever-generous Exchequer does not seek any benefit from the falling costs and the profitability of new wind farms must be rising sharply. If Irish onshore costs are falling as quickly as these UK figures suggest, the nationwide enthusiasm for saving the planet through building more wind-farms is entirely understandable.
The costs
The subsidy costs of wind-farms are not the end of the story.
The hidden costs include the weaker economics of gas stations, whose unit costs are worsened when they run intermittently to facilitate the vagaries of the wind. There are also extra costs for EirGrid, the state-owned grid company, which does not charge the wind-farms the connection costs they ought to face.
The consumer
The consumer picks up all of these costs in the price of electricity. As the portion of subsidised renewables in the overall generation mix continues to rise the extra costs tend to rise even faster: a power system with a very large percentage of intermittent generation becomes more and more costly per unit and the Irish system already has one of the highest wind shares anywhere. It also has a considerable surplus subsidies of overall generating capacity.
In the circumstances the continuing offer of open-ended subsidies to wind developers is difficult to rationalise.
In April last, EirGrid estimated that 2,500 MWs of wind capacity had already been installed in the Republic and a further 3,500 MWs had been notified. Additional projects are constantly being proposed and the latest recruits to the ranks of renewable generators are the would-be developers of solar farms.
There is no customer demand for any of this extra capacity, since existing generators can comfortably meet peak demand, even when the intermittent wind output is not available.
Moreover, none of the building cost is funded visibly through the budget of the Department of Energy as voted through Dáil Éireann. The costs are simply loaded onto electricity bills and onto the cost structures of EirGrid and the conventional generators.
The cheaper way
The auction system in the United Kingdom at least tries to minimise the direct subsidy portion of the extra costs, through capturing the benefits of the improvements in renewables technology.
This is a cheaper way to procure extra renewable capacity.
Unless the Irish system is changed developers will continue to pocket ever-growing margins and it is hardly surprising that the supply of renewable generation capacity has lost all contact with market demand for electricity.
Emissions from the electricity sector have fallen substantially in Ireland over recent years, and will fall further as older peat, oil and coal units are replaced in the generation mix by more regular use of lower-emitting gas stations already built and paid for.
Building new wind-farms, adding to the high base already in operation, is a very expensive method of securing additional reductions in carbon emissions.
Read more
Full coverage: Colm McCarthy
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