Impact of inflation stalling green energy projects, industry says

Green energy projects due to begin supplying electricity by the end of this year will not meet that deadline as rising costs mean they are no longer viable, industry figures say.

More than 100 wind and solar farms won contracts from the State to supply electricity in an auction run three years ago by national grid operator, EirGrid.

Successful bidders must begin supplying electricity by the end of this year, but industry figures say that rising costs have left significant numbers of them unable to meet that deadline, as they are not viable at the price agreed in 2020.

Contracts awarded in the 2020 Renewable Energy Support Scheme (RESS) auction pay €74.08 a mega watt hour (MWh) for electricity, but inflation has added up to 40 per cent to the cost of building these generators.

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Kieran White, Cork-based senior vice-president onshore Europe, with Danish multinational, Ørsted, says the industry fears that a significant number of those developments will not go ahead.

Noel Cunniffe, chief executive of industry group, Wind Energy Ireland, confirmed that businesses awarded contracts in the 2020 RESS auction will be unable to begin generating electricity by December 31st deadline.

“But that does not mean that they will not go ahead at all,” he said. Mr Cunniffe explained that some developers got alternative electricity supply deals with individual business customers at prices that will allow them to build their wind farms.

Bidders at the most recent auction, concluded in September, were awarded €100.47 a MWh. The RESS fixes the price that generators are paid for electricity in return for guaranteeing it.

Onshore wind farm costs have risen to around €2 million a MW from €1.5 million before 2020, leaving developers with a €200 million bill for a 100MW facility, against €150 million three years ago.

Contracts awarded in 2020 could have supplied around 500,000 homes with electricity had they all proceeded. However, between wind and solar, projects capable of supplying more than 100,000 homes will not go ahead.

Conall Bolger, chief executive of the Irish Solar Energy Association, says that solar generators accounting for up to 200MW of the 800 awarded to that sector could have opted out.

According to Wind Energy Ireland, inflation has ruled out generators with a total capacity of 162MW, although the organisation believes that two bigger ones could bid in later RESS rounds.

Eamon Ryan, Minister for the Environment, Climate and Communications has said RESS auctions are key to achieving the Government’s Climate Action Plan target of generating 80 per cent of electricity from renewables by 2030.

News that planned solar and wind farms awarded deals under the process in 2020 are unlikely to go ahead on time is a further setback to this. Planning delays have already raised doubts that the Republic will hit the target.

Ørsted has been waiting three years for An Bord Pleanála to decide on its application for permission to build a 100MW wind farm in north Cork, according to Mr White.

As applications for electricity grid connections only open once a year, if the company does not get a decision in the coming weeks, that will delay it for a further 12 months.

Mr White pointed out that meeting the Government’s target required onshore wind farm capacity here to almost double, to 9,000MW from around 4,700MW currently.

“We are not getting close to delivering anything like 600MW a year,” he argued.

He said delays hit returns from individual projects, making companies less willing to back them.

Developers must then grapple with rising costs, including turbines and construction, along with supply chain delays and other issues, he added.

Ørsted won contracts for two projects, wind and solar, in the last RESS auction.