The economics of electricity generation

The general definition of economic sustainability is the ability of an economy to support a defined level of economic production indefinitely - Thwink.org 

Able to be maintained at a certain rate or level  e.g. "sustainable economic growth" - Definition of Sustainability, Oxford English Dictionary

Traditionally, when you wanted to build a new gas plant, you obtained a bank loan on the basis that the output and hence income of the plant could be determined in advance and was at a price linked to the wholesale cost of gas. There would be a certain amount of downtime for maintenance but your plant would be running for most of the year. This meant that the bank was satisfied that you could meet your repayments.

Total generation capacity in the country was linked to demand for electricity in the economy with some spare capacity for reserve. This meant that the cost of your electricity bill was pretty much directly linked to the amount of electricity you consumed with a few added extras to keep the system running and of course, profitable.

During the last decade, with the advent of intermittent renewables, most notably wind generation, both of the above sound economic principles began to be unwound.

Wind generation requires a subsidy because the output of wind is uncertain and therefore banks would be wary of funding such intermittent generation. The wind might blow, then again it might not. If your 20MW wind farm is only generating at half output i.e. 10MW, the subsidy you receive in effect brings your output up to 16MW (10MW multiplied by € 80 / €50 ). In otherwards you would only have received 10MW * €50 = € 500 MWh but instead you will receive 10MW * 80 =
€ 800MWh. Now the bank will be much happier.

If we now go back to our gas plant that has received bank funding, its output is starting to become more uncertain as intermittent wind is pushed onto the grid. Therefore, its income which was once fairly regular becomes staggered and less certain. Now, the banks will become worried, how certain are the loan repayments ?

So once we introduce alot of intermittent generation such as wind and solar into the system, all forms of generation, which were once dispatchable and reliable, become intermittent. This means that some form of subsidy needs to be introduced for the gas plant either in the form of a REFIT style subsidy on the market price or a capacity payment to ensure the plant remains financially viable throughout periods of high wind and solar penetration. So now, we enter into a new era of electricity generation economics where subsidies are required to maintain all generators, not just the renewables. We reach a stage where the gap between supply and demand is so large that there is simply not enough peanuts to go around for everybody and so subsidies are required for all. This differs from the heavily subsidized farming industry because demand for farming products is always equal to or above supply.

This situation that we then have is the exact opposite of the free competitive electricity market we were promised by the Fianna Fail government, when in 2006 they broke up ESB's monopoly on the market and set up Eirgrid to run the national grid. The fact is that when ESB controlled the electricity market, electricity was much cheaper (and no, I don't work for them).

The housing bubble evolved in exactly the same manner - there was a huge over-supply of houses, developers required subsidies in the form of tax reliefs and cheap credit (we now know that all that cheap credit was in effect a taxpayer funded government subsidy) and there simply was not and never could have been enough demand to maintain that level of supply indefinitely.

So the question is how long will it take for the levels of over investment in the electricity market to begin to become unsustainable and the bubble bursts ? It will most likely happen when the level of electricity bills becomes so high that more and more consumers fail to pay the bills on time or at all. Disconnections will rise. Quite a large proportion of the hikes in energy bills are loaded on industry. When most of them decide to jump ship to more competitive countries, as in the case of Cadburys, we are deep trouble, not just because of the resultant job losses, but because there will be a significant hole in the funding of the electricity bubble. When holes begin to develop at the bottom of a pyramid, the whole pyramid eventually collapses.

When this happens, subsidies to generators will be slashed, loan repayments will no longer be met, and the banks will be facing another hole in their balance sheets. In effect, this means that today, the electricity generation assets on the balance sheets of banks are significantly overvalued. Their current valuation is only as good as the ability of the electricity consumer to continue funding indefinitely the ever wider gap between electricity supply and demand (and the supporting grid infrastructure required to support it).

It may turn out that because electricity is a necessity good, the bubble will continue for longer than the housing bubble. This then means that people will have less discretionary spending in direct proportion to the increasingly higher electricity bills. So there will be a period where the electricity bubble will impact other sectors in the economy, themselves already impacted by the higher bills (e.g. a designer clothes shop will be impacted twofold with less customers and higher bills).

There are alot of industries dependent on discretionary spending in Ireland and along with the water charges (water is another necessity good), the hikes in energy bills will put a squeeze on them. Cold weather will also increase the demand for coal and oil - necessity goods which are now heavily taxed. With government policy, and the majority of investment, focused almost solely on electricity generation and windmills, people have little choice when it comes to heating their homes e.g. the investments into retrofitting and energy efficiency are tiny compared to wind energy.

In this scenario, different sectors in the economy will start to feel the squeeze and we will see another recession. This will be the beginning of the bottom sections of the pyramid collapsing. On top of this will be the disappearance of large industry - another section at the bottom of the pyramid gone. The electricity bubble will have collapsed but, like the housing bubble, will have brought down alot of other industries with it.

But whatever the sequence of events - one thing economists know for certain is that an economic bubble will eventually collapse.

An open letter to SEAI

Sustainable Energy Association of Ireland are currently preparing a strategic plan to 2020. Submissions, in the form of responses to 4 questions, can be sent in here by 30th June 2015 :

http://www.seai.ie/SEAI-strategic-Plan-post-2015-Public-consultation/

I have been sent the following superbly written response which sets out the path that Ireland now needs to follow to put Ireland's energy policy on a proper sustainable footing. The defintion of sustainable is :

able to be maintained at a certain rate or level  

e.g. "sustainable economic growth"

As this blog and other commentators have shown, the current energy policy is anything but sustainable and will in fact, lead to another economic crash.

An open letter to SEAI

by David Whitehead. BA(Mod. Nat.Sc.)TCD, FIMMM, C.Eng.

Question One – What are the key issues facing SEAI in developing its strategy to 2020?

• Reorienting SEAI's focus from its politically correct and Green ideology motivated by Eamonn Ryan and re-focus it firmly on  the needs  and tolerances of Ireland’s  population and its reasonable requirement  of an efficient, reliable, affordable and fit for purpose energy sector. 

• Defining what "sustainable energy "  means in  the framework Ireland's future energy needs and  in the context of macro-scenarios bounding the limits of Ireland's social and economic futures, 

• Defining the requirements and constraints and  developing Ireland's energy sector in a socially cohesive and economically rational  strategy in balance with the country's  scale and population and in which environmental impact is managed in a socially cohesive manner respecting the fact that the environment is a social good and not the property of the State and its Agencies and  is neither regarded  as "untouchable" nor a parish pump political no -go area.

• Abandoning the pretence that Ireland can make anything other than a meaningless, but economically and socially damaging, symbolic gesture in the context of " decarbonisation" . If we ceased emitting all CO2  tomorrow the effect on global CO2 emissions would be overcome by the growth of GHG in China and India in less than a few months. 

• SEAI should acknowledge  that the  impact  of   any Irish energy strategy on global temperature will be below the detection limit.

• Developing a national energy management strategy that is based in the actual physical, technological, manufacturing, knowledge and economic realities of a small geographic entity with limited population and natural resource base rather than pandering to politically correct, but  currently fashionable  ideology. 

• SEAI should recognise that as Ireland and the  EU enacted the National Renewable Energy Action Plan (NREAP)in  breach of the Aarhus Convention,  REFIT and other subsidies to the Renewable energy  industry may constitute illegal state aid  are of questionable legality and  enforceability.

• Recognising that so long as Irish electricity generation is largely based on fossil and biomass thermal technology Electric vehicles  will exacerbate rather than mitigate CO2 emissions  and are thus only justifiable on economic grounds if energy prices are supportive and if air quality is threatened by  vehicle exhaust  in large urban areas. Recognising that freight vehicles are large contributors and unlikely candidates for electrification. 

• Limiting the addition of unnecessary, intermittent, non-despatchable generating capacity  to the national generating fleet which already has significant overcapacity and which contributes to grid instability and escalates cost to consumers.

• Abandoning the irrational strategy of simultaneously planning to increase generating capacity and decrease demand especially as the wind  sector's requirements for smart metering, grid extensions and inter-connectors is politically, economically, socially and environmentally unsustainable.

• Developing a vision and  strategy in which meeting consumer needs  at affordable prices, promoting social, cohesion  and respecting  environmental  and economic constraints are the proper   motives of SEAI  rather than pursuing transient  ideological, "green" and  politically motivated  objectives.

• Recognising that Ireland's construction industry, consumer demand and economic affordability are the prime drivers of building energy conservation initiatives and not SEAI. 

• Developing internal and  external SEAI and consumer awareness that many so-called renewable and energy saving devices require the supply and use of materials either themselves toxic ( mercury in low energy light bulbs) and/or create  hazardous toxic waste problems in  disposal and in supplying countries ( samarium, neodymium, lithium etc.). The increased use of technologies requiring these materials is not environmentally sustainable  even if the impacts are outside Ireland.

Question two – Is SEAI’S current vision understandable and relevant?

• SEAI’s current  vision is not  relevant to today’s world and is not understandable other than in the context of the Green  Party’s political agenda in the previous government. SEAI must articulate  a vision which meets the values  and the present and future needs  of the taxpayers of this country and supports  its industries and investors and recognises that affordability and reliability are more relevant to them  than any hypothetical impact on global average temperature. To the extent that such a vision supports  exploitation of  genuine external opportunities to the benefit of SEAI's funders ( the taxpayers) it may do so. It should not be driven by low-carbon solutions as Ireland's GHG emissions are insignificant on any scale. 

Question Three- have you had any recent interaction with SEAI?

• I  once applied for a position on the SEAI board. 

Question Four- Have you any suggestions for SEAI to consider in developing its strategy?

• Reposition SEAI in  the realities of this country, its people, its energy needs, its constraints arising from the social and economic mileu and the environmental and social impact.  Stop attempting to become a world leader in developing green and low carbon solutions for the Irish energy sector  unless there are clear opportunities that better resourced entities can not reproduce. 

Eirgrid accept that generators will require more maintenance

Last year, I posted an article from Germany about the damage that increased cycling of power plants, due to balancing of renewables on the grid, is having on generation equipment :

http://irishenergyblog.blogspot.ie/2014/10/news-from-germany-and-uk.html

In Eirgrid's Generation Adequacy Report for 2015-2024 published this year, they state that this is in fact the case now in Ireland :

Another aspect of plant availability is that of two shifting, which may result in a change to maintenance patterns. Two shifting is where a generator is taken off overnight or at minimum load times. This will occur more frequently with increased penetration of wind generation, and will result in the requirement for additional maintenance and increased Scheduled Outage Days (SODs)

This then represents another cost to be loaded on to people's electricity bills.

Most engineers will tell you that turning on and off a large power plant like this is inefficient and will actually increase emissions. Its a bit like someone continually walking and running. It takes a lot of energy to begin running from a walking position but once you are running it takes less energy. This is because there is momentum behind you. Think of how much energy is required to stop running and to fight the inertia in your body. This is why its better to go running in a park or in the country, having to stop and start in a busy city street is not very efficient.  Race tracks are designed like they are to give athletes the best chance. And so it is not very different with a gas or coal generator. But this is now the norm for many of them.    

Coherent energy policy needed says economist Colm McCarthy

Ireland’s weak political institutions, unassertive public administration and populist media expose taxpayers to regular raids from predators posing as creators of jobs or saviours of the planet. This is most vividly illustrated in the continuing windfarm bonanza. Ireland has an enormous surplus of electricity generation capacity but an entire pseudo-green industry of self-styled entrepreneurs continues to prosper through farming, not the wind, but the taxpayers’ pockets.

There is a terrific article by Colm McCarthy in this week's edition of The Farmers Journal that can be found here (it only takes a few seconds to register) :

http://www.farmersjournal.ie/coherent-energy-policy-needed-183178/



The only problem is I'm not sure if our government understand the word "coherent".

What will happen if Europe enters a cold period ?

The winter of 2010 was characterized by low temperatures and low wind speeds. It was considered a 1 in 10 year i.e. a year like this comes around roughly once in ten years. But there are long term cycles which determine temperature in Europe. The North Atlantic Oscillation (NAO) is the dominant mode of winter climate variability in the North Atlantic region. A negative NAO results in low temperatures and weaker storms and a positive, vice versa. The NAO oscillates between positive and negative every few decades and there are hints of a transition to a negative NAO at the present time. This could mean that we are entering a cold and calm period in the coming decade with weather much like the winter of 2010.

So what will this mean for Ireland's energy strategy ?

Along with the amount of installed wind capacity (currently 2,200MW which needs to be at least doubled by 2020 but may well be trebled) there are two main factors which determine whether or not Ireland meets its renewable targets :

1. The strength and frequency of the wind blowing during the year (I will use the term capacity factor¹) and 
2. Annual demand for electricity (total electricity consumption over the year).

Capacity Factor  

In 2010, according to Eirgrid, average capacity factors for wind was 24% (see page 33 here) well below the average of 31%. Long cold periods usually bring calm weather and this would be a disaster for the wind industry and Ireland's energy policy. The wind farms would receive less income from the market and some would go bankrupt.

So could they increase the PSO Levy to save them from bankruptcy ? Well the simple answer is no. The PSO Levy exists to bring the income they receive from the market (about € 50 per MWh) up to the subsidized REFIT level (€ 80MWh). So the less power a wind farm produces, the less it receives from the market and the less it receives from the PSO Levy. Payments from the PSO Levy are directly linked to the power a generator produces. It cannot be used to generate additional income over and above what a generator produces. 

Electricity Demand 

Eirgrid explain :

The actual amount of renewable energy this requires will depend on the demand in future years, the forecast of which has decreased due to the economic downturn. 
(Eirgrid Capacity Statement 2015)

The renewable targets essentially depend on the outcome of a simple equation - total wind output divided by total electricity consumption or demand. The higher the demand the smaller the renewable generation percentage and vice versa.

A long cold period will create higher demand for electricity (peak demand hit 5,100MW during the winter of 2010) :

Temperature has a more significant effect on electricity demand, as was particularly evident over the two severe winters of 2010 and 2011, when temperatures plunged and demand rose (Eirgrid Capacity Statement 2015)

So extended periods of cold temperature will increase the bottom figure in our equation (demand) reducing the percentage of wind in our energy mix and eroding the bottom line for many wind companies.


So basically, if the NAO becomes negative for a prolonged period, wind output goes down, demand goes up, and the percentage of wind relative to our electricity needs goes down, meaning our renewable energy targets will be next to impossible to meet regardless of how much wind capacity we install.

There will be alot of head scratching should this happen. Perhaps we shouldnt have put all our eggs in one basket we will most likely be told by journalists who will have suddenly become experts but refused to listen to anything other than the official line at the time².

¹Capacity factor gives the amount of energy actually produced in a year relative to the maximum that could have been produced, had a generator been generating at full capacity all year.
²There have been notable exceptions - economist Colm McCarthy for example

PSO Levy: wind energy prevents consumers from seeing a large reduction in energy bills this winter

Increases in wind capacity and lower wholesale prices have shoved PSO Levy back up close to last year's levels.

On Friday, the proposed 2015/16 PSO Levy paper was published. In January, this blog predicted that the PSO would have to rise this year, due to lower gas prices and this has come to fruition :

Lower wholesale prices. The benchmark price, which is the estimated wholesale System Marginal Price (SMP) in SEM for the 2015/16 levy period, is €53.52/MWh, down approximately 6% on the €57.17/MWh used to determine the levy for the current PSO period. A lower wholesale price for next year results in the PSO plant needing more PSO money to cover their allowed costs, to offset the lower money they are predicted to receive from the market. This applies across-the-board for renewables, peat and security of supply plants supported by the PSO. The lower estimated wholesale price for next year is reflective of a trend in the SEM since the first half of 2014 of lower spot prices, related to lower gas prices;

We have also added more wind which needs to be funded through the PSO. The cost of supporting renewables, mostly wind, has risen from €94 million to €174 million :

More renewables. An estimated 2,080 MW of renewable generation, mostly wind,will be supported by the PSO next year. This is 206 MW, or 11%, more than the 1,874 MW supported in the current PSO period, hence driving-up the levy

Last year, wind received supports of € 313,260 per MW from the PSO¹. This year it has gone up to
€ 386,400 per MW due to the lower gas prices², a 23% increase.  Absolute madness - when the price of fuels go down, consumers have to pay more. 


However, due to reductions elsewhere we are not seeing the full impact of these increases this year. This should begin to bite next year. For this year, the PSO Levy has actually gone down by 9% due to the "security of supply" gas plants having their support cut by € 68.5 million and other reductions (including Cfds, R-Factors, admin and inflation) of € 41 million.

The chart below shows where the PSO Levy has gone in the past few years :




We can see that for the first time renewables, mostly wind, has overtaken peat and is now the largest recipient of the PSO Levy - 57% of the levy is going to renewables for the year 2015/16.

So if wind is receiving € 386,000 per MW this year from the PSO, what will future PSO increases look like ? The IWEA announced yesterday that circa 250MW of wind would have to be added each year by 2020. So that means that the PSO Levy will have to be increased by € 96.5 million per year for the next four years. That's a total increase of € 386 million - well over double the proposed PSO Levy for this year of € 304 million.  Thats a lot of money to spend on infrastructure that cannot replace a single traditional power plant in the country and requires large scale grid upgrades. Contrast this with subsidizing biomass which can replace the existing coal power station at Moneypoint and does not require additional grid infrastructure.

We are often told that we are small island, last on the gas pipelines, and therefore cannot expect low electricity prices. But back in the 90s, we had lower energy prices that the UK. The fact is that it is the Irish government who keep electricity prices high, not the Norwegians or the English.

Responses to the PSO Proposal Paper can be sent to jlynch@cer.ie by 3rd July 2015.


¹ 138MW of new wind generation required € 43.23 million (94.3 less 51.07) from PSO last year. So    € 43.23m / 138MW = €313,260 per MW

² 206MW of new wind generation required € 79.6 million (173.9 less 94.3) from PSO this year. So    € 79.6m / 206MW = €386,400 per MW

Public Consultation on Ireland's transition to a low carbon economy

The public are invited to submit views on the development of Ireland's first National Mitigation Plan to a low carbon economy by 2050:

http://www.environ.ie/en/Environment/Atmosphere/ClimateChange/PublicConsultation/

Written submissions from any interested party may be forwarded to NationalMitigationPlan@environ.ie by Friday 31^st July 2015

Biomass - To convert or not to convert

With huge surplus generating capacity already in this country, it was announced last week that we are to build a brand new biomass plant in Mayo with capacity of 42.5MW. It is costing € 180 million to build it compared to a gas plant which costs just over two times as much but provides ten and a half times as much electricity output. (The 445MW Whitegate gas plant cost € 400 million to build in 2010).

This works out at a capital cost of €4.2 million per MW output for the biomass plant compared to just  € 900,000 per MW for the gas plant i.e it costs nearly 5 times as much to build a biomass plant than a modern CCGT plant.

As usual, economist Colm McCarthy is spot on in his analysis :

http://www.independent.ie/opinion/columnists/colm-mccarthy/endas-new-power-plant-is-set-to-generate-lots-of-cash-for-investors-31300651.html

We have three peat plants and a coal power station that could be converted to biomass (Edenderry is partly converted already). The biomass route to meeting our targets is better than wind as it provides dispatchable power, but it makes much more economic and engineering sense to convert these existing plants rather than adding more capacity. Converting Moneypoint (which has 855MW capacity) would cost approx € 380 million according to BW Energy. This works out at a capital investment of €0.4 million per MW compared to Killala's € 4.2 million per MW i.e. it costs over 10 times more to build a new biomass plant than it does to convert an existing power station. Also, with the conversion of Moneypoint, higher emitting coal gets displaced, whereas the Mayo plant will be displacing "cleaner" gas.

So it's a no brainer - we should be converting Moneypoint, not building new capacity.

Why aren't we investing more in Energy Efficiency ?

On the 3rd June, 2015 the Department of Energy held an Energy stakeholder conference at Dublin Castle. There was a very interesting contribution from David Hughes of Passive House on energy efficiency which can be viewed here at 1:16 :

https://www.youtube.com/watch?v=-r9fKZUvPNk

There is a technical limit (50%) on the amount of wind that can be allowed into the system so it stands to reason that if we are on a trajectory to reduce demand to keep in line with EU targets on energy reduction that we cannot continually grow the amount of renewables as it becomes surplus to requirements.

The mechanism for funding energy efficiency has been very poor. To date, total expenditure has been € 137 million, whereas the payments to wind farms in one year has been € 500 million.

So if we reduce demand, the limit for wind penetration decreases and we need to curtail and dump more wind. It therefore makes absolutely no sense to install more wind farms, and instead we should be directing investments for wind and REFIT into retrofitting instead. Investing in energy efficiency also alleviates the need for new grid infrastructure.

So the question has to be asked why are we not doing this ?

Could it be that the authorities prefer higher bills to lower bills ?  Are they afraid of reducing the electricity market pie for investors ?

If so, this is a serious breach of political responsibility towards its citizens and the future of this country and amounts to a hi-jacking by corporate interests over the public interest.

You can also find in the above video contributions from Val Martin on the legality of NREAP and John Dooley on the diminishing performance of wind turbines, regular commentors on this site.   Mr Duggan from the Irish Academy of Engineering asked the pertinent question of what they intend to do about oil depenedency, considering it provides over 50% of our energy consumption.

The complete inadequacy of the responses to all these important issues raised shows that Ireland's energy policy is a closed shop at the Department of Energy. It is only certain interested parties who are allowed an input into its direction. The first contributor at the conference, Sheila O'Brien, made this point quite well (along with an interesting point about the displacement of hydro by wind).

Public Participation, this is not.

Cost Benefit Analysis Obligations - Parts 1 to 5

Without reflection, we go blindly on our way, creating more unintended consequences, and failing to achieve anything useful - Margaret J. Wheatley (born 1941), American writer and management consultant

Pat Swords, an environmental and chemical engineer, has written an excellent series of articles on the cost benefit analysis that should have been, but wasn't, prepared for Ireland's Renewable Action Plan (NREAP) back in 2010. The full implications of the failure to comply with proper procedures is only beginning to come clear and will be with us for a long time. In the UK yesterday, there were warnings about legal action over wind subsidies as the new UK government attempt to introduce some long overdue free market policies into their energy policy.  Pat alludes to some other potential legal actions that are coming down the line in Part 5. In Ireland, it was reported this week that, despite having installed 2,200MW of fuel free wind (equal to about half of peak demand), we now have the third highest electricity prices in Europe with network costs (increasing to facilitate NREAP) now making up about 30% of people's bills.  


Parts 1 to 5 can be found below -

Part 1 - Obligation to complete a prior cost benefit analysis

Part 2 - What has been the benefit to date from our expenditure?

Part 3 - What is being used to justify the approval of wind farms in my vicinity?

Part 4 - Abuse of your right to a ‘highly competitive social market economy’

Part 5 - A mandatory programme and we will be fined – how accurate is this claim?

Cost Benefit Analysis obligations for Ireland's Renewable Action Plan - Part Five

A mandatory programme and we will be fined – how accurate is this claim?

By Pat Swords BE CEng FIChemE CEnv MIEMA. 

There is a website funded by the EU’s Intelligent Energy Europe Programme ‘Keep on Track’, whose function is to track the progress towards the EU’s 20% renewable energy by 2020 target, namely the implementation of Directive 2009/28/EC. Indeed, the website’s press release of 6^th October 2014 couldn’t be clearer: “14 EU Member States will fail to meet their 20% renewables target by 2020, as progress stands today”.

• According to the 2020 RES (Renewable Energy Sources) Scenarios for Europe Report, as it stands today, 14 Member States will fail to meet their 2020 RES targets and there are doubts about 4 other Member States reaching their target.

Consideration of this report provides the results below of the quantitative analysis of a Member State’s ability to meet its 2020 target given the current ‘business as usual’ scenario:

Note: The traffic light colours of the figure on the left hand-side show an achievement or shortfall 

of 2020 RES targets by Member State after possible adjustments through RES cooperation.

It is not as if these issues weren’t known already prior to the above report of late 2014. Indeed, the EU Commissions had also published a “Renewable energy progress report COM(2013) 175 final” in March 2013. In addition, the Commission published a Staff Working Document accompanying this progress report, entitled SWD(2013) 102 final. As the latter pointed out:

• These findings are based on data from the period 2008-2010. Since then, as set out in the Report mentioned above, the economic climate has changed significantly and, as a result, the overall prospects of Member States meeting their targets for 2020 are less evident.

If we consider the main “Renewable energy progress report” itself, the same issues are to be seen. Indeed, as presented in the following graphs and bullet points.

Planned (blue) versus estimated (red/dotted) trend in EU renewable energy

• The failure to comply with national plans is most evident in the wind sector. According to Member State plans, wind capacity is expected to reach 213 GW in 2020 (169 GW onshore and 44 GW offshore). Electricity generation from offshore capacity is planned to reach 140 TWh (roughly 12 Mtoe). However, according to the Commission's analysis, it may only reach 43 TWh (3.7 Mtoe) due to reduced national efforts and infrastructure difficulties.

• Despite the recent strong growth in the onshore wind industry of recent years, Member States' plans for onshore wind production 354 TWh may fall short. Further efforts will be needed to reinforce measures and improve infrastructure, or only an estimated 210 TWh might be achieved.

Planned (blue) versus estimated (red/dotted) trend in EU onshore wind energy

• Total wind generation may therefore fall short of expectations. Whereas Member State plans foresee wind generation of almost 500 TWh, current trends point to the risk of achieving only half of it, i.e. 253 TWh.

This dysfunctional renewable programme energy was impractical from the outset, so is it now surprising it has come off the rails? Furthermore, no matter how many incompetent reports are produced by the various academic computer models, the programme is not going to ‘get back on the rails’. It simply takes enormous sums of money and time to develop this amount of infrastructure, both of which are increasingly running out, as we approach 2020.

Yet the ‘bogey man under the bed’ is constantly wheeled out, i.e. as to how Ireland and other Member States will be exposed to billions of Euros in fines, if they don’t meet these targets. In reality this is a pure lie. If we take the manner in which the EU Commission takes legal proceedings against a Member State, then this process requires more than five years to progress and indeed the number of times fines have actually been levied by the European Court are extremely limited, such as less than twenty times. See the relevant blog post on ‘The Law is my Oyster’.

So are we really going to reach the situation where the majority of Member States end up in the European Court, in relation to non-compliance with a Directive, which was not only fundamentally flawed and impractical, but also legally non-compliant with Community law and Democratic Rights? There is enough resentment around Europe already with respect to the lack of Democratic accountability of the EU, as was evident in the election results of the 2014 vote on the European Parliament. To even contemplate such draconian fines ignores the reality of the complete backlash that it would generate around Europe, in particular with a population, which is becoming increasing sceptical and disillusioned with the whole programme.

However, this renewable energy programme is already in the Courts with large financial claims against the Member States and this trend is likely to rapidly increase. To digress a little first of all, the current claims against the German State in relation to their abrupt shut down of their nuclear energy sector has led to some €30 billion of compensation being sought from nuclear generators there. This includes compensation for the effective confiscation of generating rights from the eight reactors ordered shut after Fukushima in March 2011, despite safety assurances from the regulator that everything was in compliance. Business is business, and if the German State chooses to ignore its technical regulators, and instead appoint an Ethics Commission with no technical representative and two bishops, to facilitate politically populist decision making, then why should these companies carry the financial ‘can’ for it.

While a number of the German power companies are currently pursuing matters through the German Courts, Vattenfall are a Swedish company and since June 2012 are contesting the confiscation of generation rights for their nuclear power plants through the autonomous International Centre for Settlement of Investment Disputes (ICSID) in Washington, which was designed in 1965 by the World Bank and established by a Convention now signed by 143 countries.

Indeed, in the European and Asian area there is an Energy Charter Treaty, which entered into legal force in April 1998. To date, the Treaty has been signed or acceded to by fifty-two states. The Treaty includes a legal mechanism for resolving disputes, which also utilises the ICSID referred to above. Currently over sixty cases have been referred to this disputes mechanism. Of these, well over twenty cases are relating to disputes over reforms to renewable energy tariffs, principally against Spain, although Italy and the Czech Republic also feature. These reforms had to occur as the financial costs of these tariffs were simply spiralling out of control.

There are serious questions to be asked here, if for instance Spain rushed in to this renewable programme to comply with EU Directives, and as a result of it going ‘sour’ now finds itself at the wrong end of huge legal claims for financial compensation in the International Courts, who picks up the tab? Is it the Spanish electricity consumer by being fleeced even more, while the EU officials who instigated all of this walk away with massive pensions to go with their previous massive salaries? Are there more financial claims going to come from companies, who have been put at a grossly competitive disadvantage as a result of this State Aid for renewables, State Aid which wasn't legally compliant?

We all know the answer to this, plus that it is a process which is going to be replicated in a lot of other Member States in the future. Clearly it is long overdue that the plug was pulled on this illegal and dysfunctional renewable programme, the consumer has been fleeced enough and there is already enough damage done to the countryside and the people who live there.