As Ireland faces up to the prospect of stiff penalties for falling short of its Kyoto commitments to limit greenhouse gases, a healthy market for wind energy -- an essential part of the solution -- continues to elude the country. This was a key issue debated
As Ireland faces up to the prospect of stiff penalties for falling short of its Kyoto commitments to limit greenhouse gases, a healthy market for wind energy -- an essential part of the solution -- continues to elude the country. This was a key issue debated at this year's premier annual conference of the Irish Wind Energy Association (IWEA).
The two day conference, held in Cork April 10-11, celebrated the ten year anniversary of both IWEA and Ireland's first wind farm, at Bellacorick in Mayo. Yet with only 145 MW of installed wind capacity, despite an abundant wind resource which is the envy of most European countries, delegates at the conference found little cause for celebration. The industry now awaits the last competition for contracts under Ireland's Alternative Energy Requirement (AER) legislation and a consultation on a new support mechanism to replace it.
Setting the scene, economist Peter Bacon reflected that when Ireland's Kyoto commitment was set, its target of a rise in greenhouse gases to 13% above 1990 levels in the period 2008-12 looked lenient at the time. Explosive economic growth, however, has led to the country exceeding this target by 10% in 2000. It now looks as though by 2010 emissions will be 25-30% higher than in 1990.
From the government's environment department, Patrick O'Sullivan added that Ireland is the highest per capita emitter of greenhouse gases among EU countries and the fourth highest in the world. "Our per capita emissions are completely out of control. There are under five years to go before we will be in the start of the commitment period," he said. To reach its emissions targets, Ireland will have to reduce its projected emissions by 15 million tonnes of carbon dioxide, said O'Sullivan. Under the National Climate Change Strategy (NCCS), renewable energy sources would account for a reduction of one million tonnes of CO2.
facing big penalties
Bacon pointed out that, according to some projections, penalties for exceeding emissions targets could cost the country EUR 1.45 billion in 2008 at the start of the compliance period, and up to EUR 4.3 billion by 2012. This would amount to 1.1% and 2.8%, respectively, of projected GDP. Even if measures are introduced to limit emissions as assumed in the national climate strategy, the country would still incur fines of EUR 650 million in 2008 and EUR 1.3 billion in 2012, he said. "You are talking about big numbers."
Government policy statements have consistently identified the role wind energy has in curbing greenhouse gases, but all initiatives to date have failed to exploit it fully, said Bacon. Moreover, they have failed also to recognise the sector's potential to export green energy to Europe, he added. "If the sector is going to grow, the economy needs adequate interconnector capacity with Europe," he said. This would assist market liberalisation, allow Ireland access to internationally competitive power prices and reduce the need for spinning reserve to back up wind generated electricity.
Minister for Communications, Marine and Natural Resources Dermot Ahern told delegates he was determined that government targets for renewables would be achieved. The government's aim is for an additional 500 MW of renewable energy by 2005, and Ireland's EU target is for 13.2% of electricity from renewables by 2010. To meet the targets huge private sector investment will be needed, said Ahern. "And if investment conditions are not right then we will not have projects built."
Open and transparent
Ahern defended the government's closure of a tax loophole and its ending of other fiscal measures that the wind sector had used in the past to raise equity for wind projects, and he warned that no other tax incentives are to be made available. "The slowing down of the economy has placed pressure on public finances and the reality is that measures that contract the tax base are extremely difficult to obtain, regardless of the merit of your case." Instead, he said, he had addressed those setbacks in the terms of AER VI, and "put in place an open and transparent mechanism that would be attractive to investors."
The minister assured the conference that he would offer contracts "as soon as practicable" after the end of April closing date. But he warned that under European state aids rules, support in the competition would be limited to 500 MW for onshore wind. "I predict in AER VI the reserve list option will be activated," he said.
Turning to offshore wind, Ahern said he had thought long and hard about including it in AER VI. "The key issue is whether additional costs can be justified." He said he would have liked to go further than the two 25 MW projects included in the competition, but was advised that support for one or more small demonstration projects could reduce offshore costs of subsequent projects.
IWEA chair Tim Cowhig reported that wind now accounts for 145 MW of capacity -- 1.5% of the Ireland's electricity needs. But only 21% of large-scale projects have been built under AER III, and scarcely any projects under AER V.
To date, pricing structures have not allowed most projects to achieve a commercial return, he explained. And given a typical set of project financing conditions, only sites with wind speeds of 8.4 m/s and above will be viabl