Government renewable energy policy is adding to green electricity costs, says wind lobby

Boosting the national grid and overhauling green energy supports could cut electricity bills for homes and businesses, a leading industry group has claimed.

National electricity grid operator Eirgrid recently awarded contracts to 80 new projects, with the capacity to supply around half the Republic’s peak power needs, under the State’s Renewable Energy Support Scheme (RESS).

However, lobby group Wind Energy Ireland said that the average price of €97.87 per megawatt (MW) hour that power companies will receive under the new contracts is 15 per cent higher than similar agreements struck by Eirgrid in 2020. The industry body argued that this means the price of green electricity is rising when it should be falling.

Wind Energy Ireland partly blames the fact that the grid regularly cannot transmit all the electricity generated by wind and solar farms to customers, adding an estimated 8 per cent to the cost of power.

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The organisation also pointed out that Eirgrid’s latest strategy focuses more on planned offshore projects in the Irish Sea than on boosting the network to allow it handle more wind and solar projects built on land.

According to Noel Cunniffe, the lobby group’s chief executive, a squeeze on current grid capacity means some onshore wind generators are regularly prevented from supplying electricity. Consequently these businesses must seek higher prices when bidding for power generation contracts under the RESS to guarantee a return for the electricity they can sell.

Last year a study commissioned by Wind Energy Ireland from energy consultants Everoze calculated that this added 8 per cent to the cost of green electricity.

Eirgrid said its strategy, Shaping our Electricity Future, is meant to prepare for 2030, when renewables will generate at least 70 per cent of the Republic’s power. That requires 5,000MW of new offshore electricity and 2,300MW of onshore wind and solar power, said the grid company.

“Eirgrid is committed to developing the infrastructure required to deliver this clean electricity to homes and businesses in an efficient manner, and already has a significant number of infrastructure projects under way, as called for in Shaping our Electricity Future,” it added.

The State company pointed out that the Government increased the renewables target to 80 per cent of electricity since Eirgrid published its strategy.

Wind Energy Ireland also argued that the Government should allow renewable generators to tie their electricity supply bids to consumer prices, so they can increase charges in line with inflation.

RESS rules do not allow this. Consequently, Mr Cunniffe said wind farm operators have to increase their bids to take likely inflation over the lifetime of their 16-year contracts into account.

His organisation pointed out that most comparable European systems for backing renewable electricity allow generators tie their contract offers to inflation. It added that changes by the State’s Valuation Office have tripled and quadrupled commercial rates paid by onshore generators. In some cases they now pay two and a half times the rates levied on fossil fuel power plants, the group said.