State electricity company ESB and Danish group Ørsted have won a Government contract to build an offshore wind farm capable of supplying power to about one million homes.
Four groups last week bid for a deal to build the wind farm, close to Dunmore East in Co Waterford, in the latest offshore Renewable Energy Support Scheme auction, bucking a trend in Europe that has meant power companies swerve new offshore electricity plants.
Helvick Head Offshore Wind, a partnership of the ESB and Ørsted, emerged with a winning bid of €98.72 a megawatt hour (MW/h), the unit in which electricity is sold, the Department of Energy confirmed on Wednesday.
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The price is higher than the €86.05MW/h awarded to winning bids to build power plants in the Irish Sea two years ago.
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However, the department and industry groups noted that it compared favourably with similar auctions run in other European countries, where power companies have bid for contracts.
The price is indexed, so could potentially increase by the time the wind farm begins generating electricity, which department officials believe will be around 2032 or 2033.
Renewable Energy Support Scheme auctions favour the lowest bid. Companies must supply power at the agreed price, with any changes tied to indexation.
The wind farm, dubbed Tonn Nua – Irish for new wave – will generate up to 900MW of electricity, enough to supply almost one million average homes, the department said.
Estimates of the development’s likely cost run to €4 billion. The ESB said it could not comment at this stage on the funding needed.
TotalEnergies last month won a contract off Normandy’s coast from the French authorities, priced at €66MW/h in an auction that lured large numbers of bids.
Another sale run at the same time run at the same time by the French government attracted no bids.
Germany failed to lure bids for two sites in the North Sea in August, while poor interest in capacity off the Netherlands prompted its government to allocate €2 billion from a climate fund to drum up business.
Minister for Energy Daragh O’Brien dubbed news of the Tonn Nua award an “important milestone” in the State’s efforts to develop offshore energy.
“The highly competitive price secured represents positive news for Irish energy consumers and our nation, bringing us closer to overcoming the challenges of energy security and affordability,” he said.
Minister of State for the Marine Timmy Dooley predicted the project would contribute to delivering “a clear and sustainable framework for developing offshore renewable energy”.
National grid operator EirGrid will build the power lines and other infrastructure needed to connect the wind farm to the Republic’s electricity system.
Liam Ryan, the State company’s chief transformation, technology and offshore officer, said the firm would work with the joint venture and the Government on the project.
The auction was the first over an offshore area specifically designated by the Government for wind farms.
It has earmarked three other zones, also off the Republic’s southeastern corner, that will be the subject of future renewable support scheme auctions.
Noel Cunniffe, chief executive of industry body, Wind Energy Ireland, argued that the department should say when it is likely to auction the other sites. He noted that the auction was “well designed” and would deliver value for consumers.
Mr Cunniffe added that the result was “a great vote of confidence in Ireland as a place to invest in offshore energy”.
The department did not name the three other bidders, but it emerged last week that a partnership of Bord Gáis Energy and ÉDF Renewables, part of giant utility Électricité de France, was also in the running.
