Offshore wind developers are set to seek guaranteed prices for the electricity generated by their projects under a scheme announced by the Government.
Minister for the Environment Eamon Ryan confirmed on Thursday that the Government had approved terms and conditions for the first offshore renewable energy support scheme.
The move means that businesses with plans to spend about €5 billion on building electricity generators in the Irish Sea will be able to bid for guaranteed prices for the power they produce.
The State’s renewable energy support scheme, funded through levies on electricity customers’ bills, guarantees prices to wind, solar and other “green energy” generators.
The scheme approved by the Government this week is the first that will back offshore wind. It is likely to cover projects capable of generating up to 2,500 megawatts (MW) of electricity, close to half of peak demand in the Republic.
Noel Cunniffe, chief executive of industry lobby group Wind Energy Ireland, said the projects that succeeded in getting backing would be the Republic’s first offshore power plants in a generation.
“The Government’s decision to provide 20-year contracts and to index-link prices will give our members confidence to help push down prices in next year’s auction,” he added.
Wind Energy Ireland has been pushing for prices set in renewable energy support auctions to be tied to inflation.
The organisation argues that without index-linking, companies bidding for supports under the scheme have to increase their asking prices to take possible future inflation into account.
This forces up the prices at which they bid for contracts under the scheme, leading to more expensive electricity, according to the group.
Instead of getting a flat rate, as in previous renewable incentives, companies bid through an auction that awards contracts to the cheapest generators.
Generators receive only the contracted amount for their power. If the market price exceeds this, they refund the difference to electricity customers through the levy system.
Only developers with marine area consents, a key step in the planning process, will be allowed take part in the offshore auction, which is due to take place early next year.
Norway’s Statkraft and Fred Olsen Renewables, French giant EDF, German group Innogy, UK business SSE Renewables and Irish State company ESB are among those planning to build offshore wind farms off the Republic’s east coast.
Government climate targets aim to have enough offshore power generating 5,000MW of electricity by 2030.
