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Aidan Forde
Council Member
NOW Ireland
June 2011
Economic signals for investment in offshore wind in
Ireland
NOW Ireland
• Codling Wind Park• Oriel Windfarm Limited• Fuinneamh Sceirde Teo• Saorgus Energy Limited
• Capacity of over 2680 MW from existing project areas with potential for a further 4000 MW.
• Potential investment of over €8bn
• 60bn supply chain opportunity in the Irish Sea (€300bn in North Sea and Baltic)
• Export of renewables can rival agri-food and tourism
By 2030, more than 375,000 people will be employed in the EU wind energy sector – 160,000 onshore and 215,000 offshore.
The National Security Reason for Renewables
• Ireland is the most energy insecure country of its size or larger in Europe (after LU, MT and CY)
• Global natural gas usage to double by 2035 (FT last week)
• Many gas contracts linked to oil prices
• Corrib/LNG/storage will help secure medium term security of supply but no price hedge
• Increase in oil and gas prices has a disproportionate impact on Irish GDP
• Ireland holds a few days of gas supply - interruption would have an even greater effect!
• Nuclear issues becoming clearer - implication is gradual rise in EU gas prices
• OFGEM Chief has recently described UK as heading off an electricity generation cliff
• EU policy clear - is Irish policy just an element of EU policy? Still at 16% in 2020
• Should we be more ambitious?
The Domestic Economic Case for Offshore Wind
• (Most of these comments can be applied to some extent to all marine renewables)
• Two recent studies show that merit order effect of onshore wind equals onshore PSO cost
• Value of fuel price hedge not priced in to analyses generally
• Hedge against EU fines not priced in generally
• Supply chain benefits not generally priced in (jobs we would not otherwise have)
Indecon Cost-Benefit Analysis
• Independent study commissioned by NOW Ireland in March 2008 resulting in “Economic Analysis of the Potential for Offshore Wind Energy Generation in Ireland” published by Indecon in September 2008
• Shows primary net direct benefit for Ireland Inc. of up to €1.7 billion 2012-2027
• Extra quantifiable indirect benefits €2.1 billion including Merit Order Effect, employment, carbon fines saved, reduced emissions, etc.
• In virtually all scenarios there is a direct net benefit, in all scenarios there is an economic benefit when indirect benefits are included
• Cost to Government of carbon fines 2008 – 2012 €1.17 billion
• 2680MW in the consenting process for NOW Ireland Members and an estimated further 4000MW possible on Irish east coast alone
• Written in 2008 but assumptions broadly now (or very soon) in line again
ESRI view• ESRI analysis is that onshore wind is cheapest renewable so let’s use this exclusively
• If there are blockages, just throw money at them - not a considered approach
• Approx. 1,500 MW on line onshore (5,000 MW renewables needed for targets?)
• 115 MW was brought onto the system last year and for the last 6 years the average has been 200 MW per year
• 1873 MW or 48% of Gate 3 projects are in Natura 2000 sites
• 2077 MW or 53% of Gate 3 have firm access dates post 2018
• Gate 3 deposits (CER) pose a significant threat at this stage of development
• SEM regulatory threat significant
• Can we assume an increase in public acceptance?
• So, any low hanging fruit left onshore?
• A portfolio of renewables is clearly needed - opposite of ESRI view
DCENR agrees!
Over the horizon?
Europe needs Renewable EnergyIreland, Norway, & UK own the windy parts of the Ocean
From a recent presentation in Dublin
by Geirr Haarrof Statoil
From a recent presentation in Dublin
by Geirr Haarrof Statoil
12
But, for the time being…….
Greening of energy sources is a national security issue which private capital is being asked to resolve
Suitable investment and regulatory conditions a “no-brainer” but not there
Clear that a portfolio approach for 2020 is essential
ESRI will regret advising reliance on a single renewable technology for 2020