Wind industry urges Government to cut power prices

Over the last 20 years the price of onshore wind energy has been falling steadily. Wind farms in the Nordic countries are selling power at prices as low as €30 per megawatt-hour (MWh) while in Spain, Germany, Turkey and Poland prices have fallen to €40/MWh. In comparison the average annual price on Ireland’s wholesale electricity market over the last 10 years has ranged from €45-65/MWh.

The next Government will face a number of policy choices that can cut – or drive up – the price of wind-generated electricity. Government Ministers, officials in various departments and other policymakers will soon decide whether Ireland’s homes are powered with some of the most, or the least, expensive renewable electricity in global markets.

The report identifies 10 policy choices critical to setting a low price for renewable electricity of which the four most important are:

• Taller turbines are more efficient and Everoze’s research suggests permitting turbine heights of 180 metres or more could cut the cost of wind energy by 27 per cent.
• The noise limits proposed in the new draft Wind Energy Guidelines, which have been heavily criticised by independent experts, are among the harshest in Europe and, if approved, would increase the cost of electricity produced by wind farms by 11 per cent.
• Wind farms normally get planning permission for 20 years. But turbines have proven far more robust than expected and are lasting much longer. Ireland’s first wind farm is still operational after 28 years. Increasing the duration of planning permission from 20 years to 30 years could cut costs by 10 per cent.
• Substantial amounts of power are lost today because the transmission system struggles to cope with the volumes of renewable electricity available. As more wind farms – onshore and offshore – and solar farms are built there is a risk ever larger amounts of power will be lost. A stronger transmission grid could cut costs by 18 per cent.

Dr David Connolly, CEO of the Irish Wind Energy Association, said: “It will be the policy choices made by the next Government which will decide whether Irish consumers are paying the lowest or the highest possible prices for renewable electricity. Every additional euro on the price of wholesale electricity works out at hundreds of millions added onto the bills of hardworking families. 

“We are calling on the incoming Government to immediately set up a task-force with the sole remit of identifying ways to reduce the price of renewable electricity in Ireland and require it to report within nine months.

“We hope this study will ensure the choices made by the next Government are informed and focused on delivering renewable electricity at the lowest possible cost to the consumer.”

Simon Bryars from Everoze said: “It is clear from the analysis that certain policy changes now could have a significant impact on the costs of onshore renewables to consumers in the short term and over the next 30 years. The ability to utilise the latest technology combined with a strong transmission network with export capability are key to further large reductions in costs.”

Auctions

Key to pushing down the price of renewable electricity in Ireland will be the introduction of renewable electricity auctions. The first of these is due to take place next month under the new Renewable Electricity Support Scheme.

In an auction, each wind or solar farm bids a price and only the projects that offer the best value make it into the support scheme. Auctions have put price front and centre for renewable electricity in Ireland, but they are only part of the picture.

Dr Connolly continued: “Prices will only fall if projects can provide power at the best possible price but in recent years Government policy has been pushing prices up, not down.

“Commercial rates for onshore wind farms have more than doubled. The proposed new Wind Energy Guidelines will add billions onto consumer bills over the next 25 years.

“Families and businesses want clean power and they want cheap power. They can have both but only if the Government works alongside industry to drive prices down as far as possible.”

Background

Everoze carried out this research by creating a model of a typical modern wind farm and then adjusting the project’s costs depending on the impact of each of ten different policy choices. The methodology is set out in more detail in Chapter 3 of the report.

 Energy experts Baringa calculated that wind energy is currently reducing the wholesale price of electricity each year by approximately 20 per cent, which is almost €400 million per year.

When all costs and savings are accounted for, Baringa concluded that wind energy in Ireland has only cost €1 per person per year since 2000. In return, the consumer is getting a third of electricity from wind energy which is now saving more than 3 million tonnes of CO₂ annually.