Guaranteed price for wind energy sector - Dempsey

Minister for Communications Noel Dempsey has promised the wind energy sector that it will be paid a guaranteed price for its output in the future, despite reservations voiced by energy regulator Tom Reeves. Emmet Oliver reports.

Mr Dempsey said a strong support mechanism was needed to boost the amount of renewable energy produced in the Republic.

He said the Government wanted 13.2 per cent of all energy to come from renewable sources by 2010.

Speaking at a conference this week, Mr Dempsey said he would be changing the type of support mechanism used in the wind energy sector.

He said this would mean changing from a competitive tendering system to a "fixed feed-in tariff system".

This system would mean wind energy companies getting a fixed price for their power when it was sold into the system. This approach was previously questioned by Mr Reeves who heads the Commission for Energy Regulation (CER).

Wind energy companies have expressed reservations for some time about the competitive tendering system where wind companies get contracts based on the lowest price bid.

Full details of Mr Dempsey's offer have yet to be released but his comments to the Wind Energy Association annual conference will be welcomed by the industry. The regulator declined to comment yesterday on the decision.

Mr Dempsey emphasised that only companies wishing to advance real wind energy projects would benefit from the system. He said companies would have to possess a valid grid connection to qualify.

In a letter sent to Mr Dempsey's department late last year, Mr Reeves called on the Minister not to extend further financial support to the wind energy industry.

Mr Reeves said he supported the target of 13.2 per cent of all energy coming from the renewable sector, but he questioned whether further support was the best way of achieving this.

At present, many wind companies receive contracts agreed as part of the Alternative Energy Requirement (AER) competition. Under this competition, wind energy companies can win 15-year contracts with the ESB for the supply of power.

Mr Reeves claimed in his letter the AER was impinging on competition generally in the sector.

He cited the case of one supplier. "This supplier had reached agreement with a number of developers and their bankers on long-term contracts only for the developers to avail of an opt-out clause in the contracts when it became clear that they would be offered AER contracts with preferential terms," said Mr Reeves.

He said he remained "unconvinced of the need for additional support at this time".

Instead, he said, there was "significant appetite" for onshore wind farms and many self-financed plants, known as merchant plants, were viable.