More expensive Irish wind energy down to a number of factors

The Government was quick to highlight on Thursday the relatively cheap rate at which the State had secured electricity from its first offshore wind auction. Following a competition overseen by national grid operator EirGrid and the Commission for the Regulation of Utilities, where companies bid against each other to supply power from planned wind farms off the Republic’s coast, four developers emerged with contracts averaging €86.05 a mega watt hour (MWh).

The winners were three in the Irish Sea – Codling Wind Park, 1,300 mega watts (MW); Dublin Array, 824MW; and North Sea Irish Array, 500MW. The fourth was Sceirde Rocks off Galway with 450MW.

According to the Department of the Environment, Climate and Communications, €86.05MWh is among the best prices achieved in any first-time auction to supply offshore wind-generated electricity in the world. Nevertheless the price is higher than the €65MWh European average for wind power. It is also twice the £37.50 sterling MWh (€43MWh) that suppliers in Scotland were awarded following an auction in July last year.

Differences between here and both Scotland and Europe partly account for the gap. Scotland’s auctions were priced relative to sterling’s value in 2012 so the real price paid under last year’s contracts will be closer to €55MWh. It is likely that UK auctions this summer will produce prices equal to around to €75MWh, according to Noel Cunniffe, chief executive of industry group Wind Energy Ireland.

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His organisation’s counterparts, Scottish Renewables and Renewables UK, warn that developers will have to take their rising costs into account when bidding for deals. Those groups recently branded the UK green energy budget “too low and too tight”.

UK contracts allow for inflation-linked increases after a price is struck. Those announced by the Irish Government on Thursday have only limited scope for this, so companies here have to factor that into their bids, which is likely to increase them.

In the rest of Europe governments play a bigger part in the process, building more of the infrastructure needed for offshore wind, zoning specific sea areas and providing data that companies need to locate power plants, cutting developers’ costs.

The Republic will go some way along this route for the next phase of offshore wind development, along the south coast. EirGrid last month confirmed that it would build offshore substations, needed to feed electricity from wind farms into the national grid, there to facilitate the second phase. According Mr Cunniffe, there was not enough time to do this for the first phase. “We’d have missed our renewables targets,” he says.

Those targets call for 7,000MW of offshore wind electricity by 2030. The projects contracted yesterday approach half this figure, prompting the obvious next question, will they make this deadline?

Statkraft, the Norwegian group behind North Irish Sea Array, believes it could begin generating power by 2028. Codling Wind Park’s backers, EDF Renewables and Fred Olsen Sea Wind, said in late 2021 that it could be 2027 assuming no big hitches in the planning process.

That is the next hurdle the projects face. The four will seek permission to build the wind farms from An Bord Pleanála in coming months, so even with appeals or judicial reviews the end of the decade looks realistic.