The Irish Wind Energy Association (IWEA) has stated that the ESRI ‘Review of Irish Energy Policy’ is an important reminder that Ireland is far too dependent on importing its energy supply from other nations and needs to accelerate the move towards maximising our own resources. However, responding to the report, IWEA chief executive Dr Michael Walsh says that any reduction in current supports would undermine investment, cost jobs and result in Ireland potentially failing to meet its EU 2020 renewable energy targets.

“A reduction in supports would most definitely be a major setback for a sector that is more than justifying these same supports but is going to deliver savings to the consumer and create export revenue for Ireland in the future as well. A recent study by international energy analysts Redpoint on the Irish market showed that wind energy generation will deliver savings to Irish consumers of Eur100m by 2020. This demonstrates that wind generation does not add cost in today’s market let alone in the future when we can become an exporter of renewable energy,” he points out. “In that regard, any reduction in the current supports will be a set-back. It will deny investment and, therefore, potentially lead to higher prices, higher emissions, continued imported fuel dependence and a missed opportunity to create thousands of new jobs.

He continues: “This ESRI report, if anything, reaffirms that we are way too dependent on external sources of energy, with approximately 89% of our energy requirement being imported, and justifies the need for accelerating our wind energy programme. What we need now is to develop our own unique resources as quickly as possible to reduce this excessive dependency on what are long term unreliable and, from a price perspective, volatile international energy sources.”

Ireland has strong onshore and offshore wind resource yet last year, due to a lack of co-ordination, Ireland saw only 115MW of onshore wind built – approximately a third of what needs to be built annually to meet our targets. The IWEA is calling on the Government to introduce a co-ordinated energy and enterprise implementation plan to ensure we deliver as much capacity as possible and to develop a major income stream for Ireland by becoming a leading European exporter of wind energy.

“Specifically, we can ensure that Irish projects play a part in meeting the UK’s energy needs as we will have the resources to meet over 15% of the UK’s 2020 renewable requirements in a highly cost effective fashion for UK consumers. This would result in additional jobs and investment in Ireland and ongoing export revenues,” says Michael Walsh.

The economic crisis, the evolving EU policy context and recent developments in technology require new approaches to domestic energy policy, according to a new report – A Review of Irish Energy Policy – by the Economic and Social Research Institute (ESRI). While the objectives of policy remain the enhancement of competitiveness, ensuring a secure energy supply, and tackling the problem of climate change, the changing external context requires some new solutions.

According to the ESRI, one of the key successes of Irish energy policy in recent years was the implementation of the Single Electricity Market on the island of Ireland. It has ensured a secure supply of electricity at a competitive price since 2007. However, new developments at the EU level may require a change in the market structure to facilitate trading in electricity across the EU and it will be important to ensure that the enhanced integration of the Irish electricity system with that of North-Western Europe benefits Irish consumers.

Even if oil and gas prices result in higher electricity prices in the future, it is not sensible to use scarce resources to subsidise electricity prices, says the ESRI. Furthermore, any windfall gains from free electricity permits should accrue to the exchequer.

The report also points out that while current policy on promoting renewable electricity may be broadly consistent with the strategic aims of Irish energy policy, there are aspects of market design and of the support scheme for renewable energy (REFIT) which could result in substantial unnecessary costs falling on Irish consumers. The current support scheme for onshore wind is probably too generous – the additional sum payable where prices are high should be dropped for new investors, argues the report.

The ESRI also maintains that incentives for offshore wind and wave and tidal generation are not appropriate as it is premature to incentivise substantial investment in such technologies. This aspect of current policy could prove very expensive for the Irish economy, while bringing little or no environmental benefits. The Irish electricity market may also need to be adjusted to ensure that the level of investment in intermittent renewable generation is appropriate.

The ESRI report urges Ireland to contribute to a review of EU policy on renewables, as current European policy is likely to increase the cost of reducing emissions while providing limited security of supply advantages. While the costs to Ireland from the inappropriate configuration of EU policy may be small, the potential costs to the EU economy as a whole are likely to be significant. Ireland should also contribute to the next stage of EU policymaking to ensure that the approach to managing greenhouse gas emissions from agriculture is efficient from both an economic and an environmental point of view.

EU policy on energy security is developing in the light of changing circumstances. The extension of the current arrangements for cross-country co-operation in the event of a shortage of oil to the gas market is important for Ireland. It is to be welcomed that the EU is also developing clear rules on gas transmission through member states. Domestic security of energy supply requires that the Corrib gas field is brought to production as rapidly as possible, says the ESRI.