Cantillon: Yet another headwind for householders

Today's annual Irish Wind Energy Association conference in Galway will hear that the industry is poised to attract total investment of €4.7 billion between now and 2020. That is close to €660 million a year.

The figure is the association’s own. It is based on the fact that 119 developers planning to build wind farms with a total capacity to generate 2,746 megawatts (MW) of power have signed contracts for connection to the national grid. The organisation values the investment at €1.7 million per MW, a realistic calculation.

It means that the Republic will meet its commitment to the EU that 40 per cent of all electricity generated here will come from renewable resources by 2020. One thing it won’t mean is cheaper electricity.

The guaranteed prices paid to renewable generators, the vast majority of which are wind developers, will add €51 million to the national power bill over the next 12 months. This €51 million, along with various other extra costs, such as supporting peat-fired power plants, will be paid for through a public service obligation charge imposed on every electricity bill.

The charge kicks in from October 1st, and €210 million will be collected over the next 12 months . Large energy users will shoulder just over €100 million of this. Households will pay €42.87 each over the 12-month period, the cost of one litre of milk a week.

You could argue that the €51 million contribution for one year is not bad considering the wind industry is investing €660 million annually. However, if all those extra wind farms are built and begin supplying power that €51 million will have to increase to €136 million based on this year’s charge. Households will end up paying an extra €58.95 a year, or close to €5 a month. The beneficiaries will be the investors: developers, finance houses and pension funds.

Perhaps this is worth it as we will have a thriving wind energy sector. Or perhaps it is time we had a debate about whether businesses and consumers should be paying extra to support an industry that already appears in rude health.