Government must act now to cut future electricity bills

With the new target of 80 per cent renewable electricity by 2030 confirmed in the Climate Action Plan, Wind Energy Ireland has called on the Government to focus on cutting the price of renewable energy and reducing electricity bills for Irish families and businesses.

At a webinar in Dublin today the industry body revealed that despite having some of the best wind energy resources in Europe, the price of wind energy last year in Ireland’s first auction was the highest in the EU.

Recent weeks have been dominated by soaring energy prices arising from global international developments like the rapid rise in gas prices.  At the same time, the Government has recommitted to cutting Ireland’s dependence on expensive fossil fuels and instead developing our own, secure, supply of renewable energy.

Wind Energy Ireland is calling on the Government to create a high-level cross-Government Group, with a brief to develop policy recommendations to cut the price of renewable electricity and report to the Cabinet within six months.

Noel Cunniffe, CEO of Wind Energy Ireland, said: “Ireland has some of the best wind energy resources in the world and, unfortunately, some of the highest prices. It does not have to be this way.

“The current spike in electricity prices is driven by factors largely beyond our control because we are so dependent on gas imports. The more we produce our own renewable energy, the more protected Irish consumers are from very high prices for imported fossil fuels .

“We can produce electricity from Irish wind farms at half the price but only with the right policies. It will be the choices made by this Government which will decide whether Irish consumers are paying the lowest, or the highest, possible prices for renewable electricity.

Wind Energy Ireland pointed to several policy issues driving up the cost of wind energy:

• Taller turbines produce electricity more cheaply. Research by renewable energy consultancy Everoze in the 2020 Saving Money report suggested that allowing turbine heights of more than 180 metres could cut the cost of wind energy by 27 per cent.
• Substantial amounts of power are lost because the transmission system cannot cope with the volumes of renewable electricity available. As more wind and solar farms are built larger amounts of power could be lost. A stronger electricity grid could cut costs by 18 per cent.
• In recent years the Valuation Office has increased the commercial rates liability for wind farms by between 250-300 per cent while leaving fossil fuel generators largely untouched. A 50 MW wind farm now pays two and a half times the rates of a 50 MW fossil fuel generator.
• Unlike in other countries, when Irish wind farms bid in an auction for a 15-year contract the price is not index-linked to inflation. This means projects must effectively guess a price in 2021 to cover 15 years of inflation. Industry analysts believe the decision not to index prices in last year’s auction pushed prices up by 14-16 per cent.

Noel Cunniffe continued: “Every additional euro on the price of wholesale electricity works out at hundreds of millions added onto the bills of hardworking families. Prices will only fall if renewable projects can provide power at the best possible price. We need Government to work with us to push prices down.

“Delays in the planning system, rising commercial rates and the legacy of decades of under-investment in our electricity grid all push up the price of power in Ireland. But there is no reason it has to stay this way when wind energy is available for half the price in other European markets.

“Families and businesses want clean power and they want cheap power. They absolutely can have both but only if the Government works alongside industry to drive prices down as far as possible.”

Background

In 2020 Ireland’s onshore wind industry supplied 38 per cent of the country’s electricity demand and saved 4.5 million tonnes of carbon emissions.

The industry employs a little over 5,000 people and supports local authorities across Ireland to the tune of almost €50 million in commercial rates every year.

In 2020 wind farms bidding into Ireland’s first Renewable Electricity Support Scheme auction cleared at €74 per megawatt-hour (MWh).

This was the highest in the EU last year as prices elsewhere in Europe came in at the high fifties or low sixties. Earlier this week Spain announced that in their most recent auction onshore wind energy had cleared at €30.18.

A megawatt-hour is a unit of electricity. An Irish household consumes on average 4.5 megawatt-hours of electricity per year.