Ireland Moves Towards Auction Based Support System for Renewables

The Minister for Energy and Climate has announced that Ireland will move to an auction system for renewables in 2019.

RESS been approved by Government and I will now seek EU State Aid approval. This Scheme will mark a shift from guaranteed fixed prices for renewable generators to a more market-oriented mechanism (auctions) where the cost of support will be determined by competitive bidding between renewable generators. The RESS is a critical step in bringing Ireland to a leadership role in relation to renewable energy, climate action, and energy efficiency. Communities are central to the design of the new Scheme and this will have a transformative impact on renewable energy projects right across the country.

 Theoretically, this should lead to lower electricity prices but let's wait to see the finer details of how it will work. The Press Release mentions the importance of not locking in higher costs for consumers - surely the first time an Irish minister has acknowledged that the existing REFIT scheme led to higher electricity prices. 

RESS auctions will be held at frequent intervals throughout the lifetime of the scheme. This will allow Ireland to take advantage of falling technology costs and by not auctioning all the required capacity at once, we will not be 'locking in' higher costs for consumers for the entirety of the scheme.

In the submission made by Irish Energy Blog to the consultation on the scheme (which can be read here), I outlined a scheme that would allow a low cost alternative to the fixed price REFIT scheme, which of course wasn't adopted, but I did warn about locking society into high energy costs : 

This would ensure that our society is not locked into high energy costs for many years to come.

The proposed auction scheme still requires EU State Aid approval.

The New Renewable Electricity Support Scheme

The consultation for the forthcoming Renewable Electricity Support Scheme (RESS) ends today. Here is my submission :

A Floating Feed in Premium (FIP) which reduces over time to nil as the generators borrowings are paid down should be the primary financial support mechanism for the main RESS. This makes a lot of sense with regard to Irish wind energy which is now a mature technology, where there are no fuel costs and where Irish wind farms have access to the best wind resources in Europe.

I believe that LCOE is not a good measure for comparing different sources of generation.  As is well known, the system effects of uncontrollable variable renewables are not adequately addressed by LCOE, since adding uncontrollable variable renewables to a system increases overall costs (new grid and operating procedures, suboptimal operation of the conventional fleet and new fast acting plant required as back up), all of which tends to reduce system productivity thus increasing costs. LCOE doesn’t capture this, so a Total System Cost analysis is required to discover what the probable effect would be on the consumer. This does not appear to have been carried out.

I therefore do not agree with the statement that “the least-cost RES-e mix would consist of mostly onshore wind”.

Indeed, the system costs will rise exponentially with the higher levels of wind proposed in RESS as conventional plant will be forced to run at far below their optimal efficiency*.  

This means that the viability gaps of various renewable technologies are not comparable as stated in the RESS report. Some technologies incur less system costs (like biomass which can use the existing grid), some incur more.

In an analysis carried out by Irish Energy Blog, it was found that even without including the additional grid investment required for wind and other system costs, we have to spend € 1.00 on wind energy to replace 40 cents worth of fossil fuels. This does not represent value for money to the consumer nor is it a cost effective way of reducing fossil fuel imports.  I would support instead investing in energy efficiency and in particular Passive Housing as a more cost effective way of reducing emissions.

Best wind location in Europe

“Ireland has one of the best onshore wind locations in Europe. Purely from a technical perspective, ignoring all other considerations, the unrestricted technical potential for onshore wind would be more than sufficient to meet Ireland’s energy needs”.

I fail to understand why, if the above statement is true, Irish onshore wind requires a high support scheme. Surely if Ireland has one of the best onshore wind locations in Europe, then a lower support scheme would be required than other European countries as the resource is greater.

In Germany, onshore wind receives € 4.66cent – 8.38cent per kWh (according to duration of payment) (§ 46 EEG 2017) minus €0.40 cent per kWh (§ 53 no. 2 EEG 2017) compared with    € 6.72 cent per kWh (5.1 and 5.2 REFIT 2) in Ireland.  The support scheme in Germany reduces over time which makes sense as the wind farms loans are paid down over the same period. A similar “reducing” scheme should now be adopted by Ireland given that Irish onshore wind is a mature technology and has access to the best wind resources in Europe.  This would provide best value for money to the consumer. The support scheme should eventually reduce to nil after a fixed period of say 10 years.

This would ensure that our society is not locked into high energy costs for many years to come.


*Increased costs of combined cycle gas turbines (CCGT) running inefficiently to provide back up for when the wind does not blow were estimated to rise by €175 million per annum according to a 2014 Single Electricity Market report.

Are the EU hypocritical when it comes to transport emissions ?

During the recent Paris climate talks, exemptions were given to both aviation and shipping from reducing CO2 emissions. Aviation it seems is necessary for climate change missionaries to travel to climate change conferences and shipping is required to ship in the cheap Chinese and Indian goods that can no longer be made here thanks to EU energy policies.

Recently the Competition wing of the Commission ruled in favour of big car manufacturers Porsche, BMW and Audi where Member States had offered them generous State Aid handouts to attract their manufacturing facilities. Of the four cases, only one related to the manufacturing of electric and hybrid cars - BMW. The rest were related to the manufacture of new models of conventional gas guzzlers.

The Member States involved were Spain, Germany and Hungary.

Similar justifications for the aid were given in all the cases :

•  The Commission's assessment showed that the aid was necessary for the project to go ahead in Győr (Hungary), as the aid merely compensated the company for extra investment costs incurred by carrying out the project in Győr and not in an alternative location.   

• The Commission's assessment showed that the aid was necessary for the project to go ahead in Leipzig and that any effects on competition were limited, because the aid merely compensated for the extra costs incurred by carrying out the project in Leipzig and not in the alternative location.

There are two interesting conclusions that I read from these decisions :

1. Is this an acknowledgement that EU energy policies have forced manufacturers to move to alternative locations and therefore will require from now on some form of State Aid as an incentive not to re-locate ? Are precedents being set here not just for the car industry but all industry ? 
2. Given that State Aid is no longer allowable for coal mines or indeed coal power stations, how can State Aid for the manufacture of oil consuming vehicles (in the larger engine bracket) be justified if burning fossil fuels are now considered evil ?