Wednesday, 14 January 2015

What happened to the promises that wind energy would bring down energy prices ?

This week it was revealed that oil prices and wholesale gas prices both fell by 50% and 27% respectively but that electricity suppliers would not be passing on the savings to consumers. But weren't we told that one of the justifications for the large investments in wind energy was that it would bring down energy prices :

 The development of renewables is a way of bringing down electricity and gas prices, as well as tackling climate change   - Eamon Ryan, Minister for Energy, 2009

More wind energy means lower energy bills; it's as simple as that. - Eddie O'Connor, CEO Mainstream Renewables, 2006
The result is that when wind and solar are included in the generation portfolio they have a powerful effect on the economics of electricity, which means a reduction in price - Eddie O'Connor, 2012

          In fact the presence of wind reduces electricity prices - Greenwire, July 2014

Adding significant amounts of wind capacity to a country's generation portfolio leads to lower overall generation costs, and to lower bills, while increasing energy security - Mainstream Renewables - Why Wind Energy ?

 DOUBLING the amount of  wind energy on the national grid is key to preventing  higher electricity bills in the future, Energy Minister Pat Rabbitte has said. Increasing the amount of renewable energy would provide a "hedge"against future oil and gas hikes and ensure Ireland had an indigenous source of secure and cheaper energy - Pat Rabbitte, Minister for Energy, February 2014

When the reduction in wholesale electricity prices is also taken into consideration wind energy will actually deliver savings to the consumer - IWEA

But John Lynch, manager of renewable energy at Bord na Mona, reckons the biggest winner [with wind energy] could be the consumer - February 2014

There's sound economic reasons for having these supports in place. Because wind generation is "free" and does not involve burning oil or gas, it helps reduce the price for all electricity customers  - Paul Melia, Irish Independent 2014

In the meantime, we should be looking at producing as much clean energy as possible, if nothing else than to reduce our bills - Paul Melia, Irish Independent, July 2014 

But we see now, that no matter which direction wholesale prices of fossil fuels goes, our energy bills remain high. The Energy Regulator explained last year what exactly it was that kept our bills high when fossil fuel prices were low:

It (wind) lowers the wholesale price of electricity," a spokesman said. "When fossil fuel prices are high, wind has a particular benefit and tends to reduce costs. When fossil fuel prices are low, wind tends to add to bills CER, February 2014 

 While the price of fossil fuels comes under the spotlight in the media, and quite rightly so, it is important to bear in mind that the cost of fossil fuels only accounts for 22%-25% of your final electricity bill :

In general, supply companies purchase power 12-24 months in advance so there is a timing lag with actual fuel price movement. It’s also worth noting that fuel costs (primarily gas) only account for an average of 25% of a customer’s bill, with other costs, including Government levies, accounting for the vast majority of the bill - Energia

Based on an in-depth analysis by the Academy, the total cost of imported fossil fuels for electricity generation in Ireland in 2013 was approximately €875 million (natural gas - €755 million; coal - €100 million and €18 million for fuel oil and gasoil). The total value of electricity sales in Ireland in 2013 – household and business/industrial – was approximately €4 billion. This means that imported fossil fuels accounted for only 22% of electricity price. A critical analysis of the other components of electricity price is essential - Irish Academy of Engineering

 So, the spotlight now needs to come upon the other elements that make up electricity bills. I have already dealt with two - Energy and Constraint Payments, and hope to have a look at more in the future.


  1. Nicely put - truly gives the lie to the myth that wind energy benefits the consumer. The beneficiaries are easy to spot. Snake oil salesmen live, OK?

  2. This comment has been removed by a blog administrator.

  3. They will do anything to make them work. As Deiter Helm said, it will end in tears. Article in Mondays Irish Mirror, people cannot pay their electricity bills. Several industries complained to the Green Paper consultation they they were worried about electricity prices

  4. T Bone Pickens was all for wind energy, now see what he has to say.