Consumers face high green electricity prices after latest auction

Homes and businesses face increased bills for future renewable electricity following the latest round of supply contracts awarded by the State to solar and onshore wind generators.

National grid operator EirGrid said on Tuesday that 24 wind and solar projects had won provisional contracts to supply electricity to the Irish wholesale market at a price of €100.47 a mega watt hour (MWh), the unit in which power is sold.

Successful bidders included State-owned ESB, SSE Renewables, part of the same group that owns Airtricity, and Danish utility, Orsted.

The €100.47 MWh price is higher than the €97.87 awarded to suppliers in a similar auction last year, despite the Government agreeing new conditions for the Renewable Energy Support Scheme (RESS) meant to encourage suppliers to seek lower prices for their electricity.

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The price is close to 50 per cent more than contracts recently awarded in the UK to onshore wind and solar farms, which were worth about €70 MWh.

It also narrows the gap between future renewable electricity costs and current wholesale prices, which averaged about €106 MWh for the last two months.

[ Ireland’s solar revolution: the country’s fastest-growing renewable power source is having a profound impact ]

Government hopes that increasing supplies of green electricity will help lower stubbornly high energy bills.

The RESS theoretically favours cheaper generators by awarding supply contracts to companies that offer to supply electricity at the lowest prices.

Most existing Irish onshore wind farms get about €75 MWh for their electricity. Industry bodies maintain that this has helped protect homes and businesses from the full impact of the energy crisis.

Suppliers given provisional contracts on Tuesday must begin generating electricity by April 2027. The agreements mostly run for 15 years, which means they are guaranteed the €100.47 MWh for the power they produce over that time.

They sought higher prices for electricity in this year’s auction despite key concessions from Government.

These included allowing suppliers some scope to increase their prices to match inflation and to claim compensation where they are shut down when there is more renewable electricity available than the system can handle.

Suppliers blamed the State’s planning system, high interest charges which are driving up building costs and commercial rates, among other factors, for the high prices.

Noel Cunniffe, chief executive of lobby group Wind Energy Ireland, pointed out that this week marks one year since An Bord Pleanála last granted an onshore wind farm planning.

“That meant fewer wind farms going into the auction and so less competition and higher prices,” he said.

He noted that the planning board was taking up to 90 weeks to decide on wind farm applications, where it should be taking 18 weeks.

Mr Cunniffe dubbed the problem a “blueprint for failure” and warned that it threatened Government climate targets.

Conall Bolger, chief executive of the Irish Solar Energy Association, pointed out that indexation only applied to 30 per cent of the price, while the renewables industry had sought 100 per cent.

“The Government basically oversold the effectiveness of its mitigation measures,” he added.

He argued that developers had to boil uncertainties including global supply-chain pressure, high building and grid costs, and rising commercial and interest rates, down into “one number” in order to bid.