UK to plug into green Irish energy

A deal to enable exports of renewable energy from Ireland to the UK could be in place within six months as the two states start formal discussions on the issue next week

TALKS ON A deal that could pave the way for green electricity exports from the Republic to Britain are likely to begin in earnest next week when the Minister for Communications, Energy and Natural Resources, Pat Rabbitte, meets his opposite number, Charles Hendry, in London.

The theory is that wind farms based either on land or offshore could hook directly into the British national grid and export wind-generated electricity.

EU legislation provides a framework for individual member states to strike formal agreements opening up their markets to arrangements such as this. Rabbitte and Hendry are set to begin discussing this next week.

If a deal is done, it could happen by the end of this year or early 2013.

Not surprisingly, a number of players in the wind energy industry are already eyeing up the opportunities that they believe will arise.

A number of potential investors have themselves had talks with both the Irish and British governments about the possibility of establishing wind farms here that will ultimately supply electricity to our neighbouring island.

The sector’s lobbyists have been quick to point out that there will be broader spin-off benefits for the economy as a whole. Brian Britton of National Offshore Wind (NOW) Ireland, says that if the two governments agree a deal, then that will bring in developers, who will in turn require suppliers and services.

Kenneth Matthes of the Irish Wind Energy Association makes a similar point. He says that a deal will give rise to “significant investment opportunities” for new and existing companies.

Belfast’s Harland Wolff shipyard, in the news earlier this year because of the Titanic centenary, has a successful division that services offshore wind developers. Turbines are assembled and installed from its dockyards.

The numbers employed, up to 500 at times, are a far cry from its ship-building heyday, but the wind industry has given it a new lease of life.

Harland and Wolff is part of the Norwegian Fred Olsen Group, which, in partnership with Treasury Holdings, has plans to invest in an offshore wind farm on the Codling Bank off the east coast, designed to export power directly to Britain.

One business that recently expressed interest in these opportunities is Mainstream Renewable Power, the company headed by Airtricity founder, Eddie O’Connor.

There are a number of other players in the mix, mainly home-grown and with some experience in the wind energy business. It is likely that they will bring in overseas investors, to back their projects, but these backers are only likely to begin emerging from the woodwork if a deal is done.

Rabbitte seems confident that it can happen, and last month went so far as to suggest that ultimately, the Republic could export as much electricity as it consumes in its domestic market to Britain.

The idea has been around for some time.

However, while it was always possible to demonstrate that it was possible to generate the electricity, it was not always clear that there was a market for it, either in Britain or other EU states.

Britain was the most obvious port of call, but its government, and particularly Hendry’s department, has always said that it could meet its target for renewable energy consumption from its own resources. Over the last year, Britain has indicated that it would be willing to import renewable-generated power from the Republic.

In fact, during a visit to Dublin in November, during which he and Rabbitte discussed the issue, Hendry said that the country would welcome such imports.

Earlier this week, his department finished taking submissions from interested parties on renewable energy trading, which it is exploring in light of EU developments and green energy targets that require Britain to install between 17,500 and 18,000 turbines, three times the existing amount, by 2020.

Britain is facing a number of challenges on the energy front.

Its older coal-fired and nuclear generators are either facing shutdown or have been shut down, meaning that it needs to invest in new plants or find new sources of electricity to ensure that supply keeps up with demand.

While the recession has eased the immediate pressure, and some older plants have been mothballed, it still faces problems in the longer term.

This is happening against a background of EU plans to integrate its energy markets. That sees Ireland and Britain as part of a larger northwestern European network that could include France, and possibly, the Benelux countries.

So, while there are no certainties, the indications for the talks between the two ministers are positive at this stage. Either way, it looks like there will be plenty of interest in the outcome.

THE ENERGY EXPORT INDUSTRY - COMPANIES, PROJECTS AND PEOPLE LIKELY TO FIGURE

MAINSTREAM RENEWABLE POWER

Established BY Eddie O’Connor with the €50 million he made from the sale of Airtricity to SSE in 2007, Mainstream initially focused on projects in locations as diverse as China and Chile.

However, it is looking at a number of developments here, including one it has dubbed “Energy Bridge” which is an ambitious plan to run a 5,000 mega watt (MW) electricity cable under the Irish Sea, 10 times the size of Eirgrid’s Meath-Wales interconnector.

Mainstream recently confirmed that it has applied to the British authorities for a grid connection for the cable, and the company envisages using it to transmit electricity from onshore and offshore projects to Britain.

CODLING BANK

Backed by Norwegian shipping and utility giant, Fred Olsen, and Treasury Holdings, Codling has plans to build a 220-turbine wind farm close to the sand bank of the same name that sits off the Wicklow coast.

Treasury’s Richard Barrett and Annette Olsen, managing director of Fred Olsen, are directors.

As things stand, 220 turbines would generate over 400 MW of electricity at full capacity. A wind farm on that scale would cost around €800 million to build.

ELEMENT WIND POWER

Element is a multi-national backed by US-based Hudson Clean Energy, a private equity firm that specialises in sectors such as wind and solar power, that is managing over $1 billion worth of investments.

Element has operations in 14 countries, including Ireland, where Tim Cowhig is local chief executive. The west Cork man already has form in the wind energy business.

He set up SWS Energy and was its chief executive until its sale to Bord Gáis in 2009 for €500 million. The company had around 200MW in operation and 400MW in development.

ORIEL WIND FARM

Oriel’s investors include Martin Naughton of Glen Dimplex and former Anglo Irish Bank chairman, Donal O’Connor.

Led by Brian Britton, a vocal advocate for offshore wind development, the company is planning a large-scale wind farm off Dundalk Bay. Oriel plans to install 55 turbines with a capacity of 6MW each, a total of 330MW at full capacity. At that scale, the project has an estimated development cost of between €900 million and €1 billion. The company first announced its plans back in 2007, but has been waiting for various policy developments to get it off the ground.

BORD NA MONA/COILLTE

The two State companies are also the Republic’s biggest landowners, and own sites that are suitable for onshore wind development, making them attractive partners for developers. Through their own plans and any deals that they may strike with prospective partners, they could end up as big players in an energy export industry.