Wind Generation Not Increasing Wholesale Electricity Prices

A new study on the Irish electricity system has revealed that the growing levels of wind generation on the Irish electricity network are not adding to the wholesale price of electricity. The report by grid operator EirGrid and the Sustainable Energy Authority of Ireland, uses detailed modelling tools to look in detail at the wholesale prices in the Irish electricity system in 2011, which has a total annual value of almost €2 billion

The analysis showed that wind generation lowers wholesale prices by over €70 million, which almost exactly offsets the costs of the Public Service Obligation (PSO) levy and other costs associated with the generation of wind energy. The study clearly demonstrates that wind energy is not contributing to higher wholesale electricity prices on the Irish electricity system.

Wind generators have high capital costs, but as they do not consume fuel they have no short-term costs. By displacing higher cost fossil fuel generation, wind energy tends to reduce the wholesale cost of producing electricity, the study has found. When balanced against other costs, the overall cost impact of wind is less than half of one percent, which is within the study’s margin of error.

The increased use of wind energy on the Irish electricity system increases Ireland’s security of supply and ensures a more diverse fuel supply in the long-term.

Dermot Byrne, chief executive of EirGrid, says: “Reliable, economic and sustainable power is crucial to Ireland’s future. Renewable energy can play an important part in the energy mix but it is important to continuously look at the effect on prices of all sources of energy, in the interest of consumers. This report is a significant contribution to that.”

Dr Brian Motherway, chief operations officer of SEAI.

Dr Brian Motherway, chief operations officer of SEAI, remarks: “It is important that our energy debates are based on solid facts and clear evidence. This detailed analysis answers an important question – that exploiting our strong wind energy resource comes at no additional cost. It is right that we keep a focus on energy costs, and it is very good news to see that we can capture the benefits of wind energy without having to pay extra for them. And as fossil fuel prices increase the economic benefits become more significant.”

IWEA (Irish Wind energy Association) has today welcomed the publication of the Eirgrid/Sustainable Energy Authority of Ireland study. “The report is further proof that Ireland’s most abundant and environmentally friendly natural energy resource, wind, can be harvested without any additional cost to the consumer,” comments Dr Michael Walsh, chief executive of IWEA. “The study, we anticipate, will be supported by the findings of our own comprehensive report, titled ‘The Impact of Wind on Pricing Within the Single Electricity Market’, which will be published on March 1st. This report, which was conducted by international specialist energy consultancy Redpoint, follows an in-depth analysis of the impact that wind generation has on two components of consumer bills; electricity prices and renewable support.”

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