€10 billion white elephant for Christmas - is it too late to stop this waste?

[Pat Gill]

Since we do not measure or quantify where our electricity comes from in the grid at any point during distribution, it is a wild and false statement to stay we will be exporting only wind power.

riven,

That was the exact point I made on the programme. As far as the customer in the UK is concerned, it will simply be Irish electricity. And certainly the new highly efficient CCGT plants will also be exporters.

[CanRonPaulSavetheUS]

Lemme get this straight .. a megalomaniac politician in a bankrupt country wants to waste billions in taxpayers' money on expensive eco-bling.

Surely this thread belongs in the economy forum?

MODS?

Not so, it belongs in the justice forum.

10 billion euros are being stolen.

[Cut Once]

Since we do not measure or quantify where our electricity comes from in the grid at any point during distribution, it is a wild and false statement to stay we will be exporting only wind power.

You are correct, technically, of course, but this does not change the €10 billion own goal we are about to score.

If we go from the current situation where we only generate the amount of electricity we need to one where we generate an excess, and that excess is matched by the amounts traded in intra-market renewable energy schemes, then we can be said to be exporting that renewable energy in the market.

We will get paid the market rate at that time for these exports, which will be low due to excess wind generation in these islands, but we may have to pay the generators a huge Refit support of €140/MWh, or 14 cent per unit.

We could have supplied that energy using onshore wind turbines and saved ourselves an estimated €10 billion by doing so.

Our windy location gives us an advantage over other less-windy countries. But our advantage is that we can use onshore wind for all our needs (including exports) and do not need to use expensive offshore, unlike Germany and others in western Europe.

[Pat Gill]

Cut Once,

The above makes good sense but have a look at the speeches from the Ministers again,

The energy ministers of the UK and Ireland addressed the NOW Ireland conference in Dublin on the 15th of Nov.

Here are the highlights of Pat Rabbittes speech.

[FONT=Arial, sans-serif]I very much welcome our well established and flourishing cooperation between the UK and Ireland on all energy policy areas and in developing shared opportunities in renewable energy resources in particular. I look forward to moving that agenda ahead and with the objective of successfully arriving at quite a formal inter-Governmental Agreement using the co-operation mechanisms in the Renewable Energy Directive which will enable these islands to be among the first Member States to engage in cross border renewable energy trade to the mutual benefit of our economies. An export opportunity for Ireland can once again be an import opportunity for UK. This can indeed be a win/win for both our countries and for the industry players present here today. Let’s work together to make it happen in a way which delivers a fair economic and commercial return for all. [/FONT]


NOW Ireland Conference Tuesday 15 November 2011 - Department of Communications, Energy and Natural Resources

And highlights of Mr Hendrys speech at the same conference.

I’d like to start by recognising Ireland’s strong recent growth in renewables, and particularly your expertise in harnessing your abundant wind energy resources.


Over the next decade around a quarter of the UK’s existing generating capacity will close, and an estimated £110 billion investment in electricity generation and transmission is likely to be required by 2020, more than double the current rate of investment.


While the UK is looking to meet our 2020 renewables target domestically, the Roadmap mentions that the UK will look to ensure we have the powers to both import and export renewables through the use of the flexibility mechanisms in the Renewable Energy Directive that I’ve just mentioned, where this can secure the greatest benefit to the UK.

As part of this work, we are exploring the best way to increase investor confidence should it become clear that trading must be part of the UK’s path to meeting the 2020 target.
We are looking at how the UK’s existing and future support mechanisms could be used to support generation outside of the UK and the policy will need to consider and take account of the new mechanisms we are putting in place as part of Electricity Market Reform.

Charles Hendry speech to the National Offshore Wind Association of Ireland Annual Conference - Department of Energy and Climate Change

Now lets have a look at the Renewable Energy Directive both Ministers refer to and we see that the cooperation mechanism is as follows. (Item 25)

It introduces optional cooperation mechanisms between Member States which allow them to agree on the extent to which one Member State supports the energy production in another and on the extent to which the energy production from renewable sources should count towards the national overall target of one or the other.

http://eur-lex.europa.eu/LexUriServ/...16:0062:en:PDF

Should I be called as a witness to Dan's threatened trial proceedings in this matter in the Justice Forum, I solemnly promise to comb my hair.

[Cut Once]

Cut Once,

The above makes good sense but have a look at the speeches from the Ministers again,

The energy ministers of the UK and Ireland addressed the NOW Ireland conference in Dublin on the 15th of Nov.

Here are the highlights of Pat Rabbittes speech.

And highlights of Mr Hendrys speech at the same conference.

Now lets have a look at the Renewable Energy Directive both Ministers refer to and we see that the cooperation mechanism is as follows. (Item 25)

Pat,

All that is fine and good, but these are "optional cooperation mechanisms between Member States" and therein lies the rub. If the UK decide not to exercise their option on our energy as they have enough renewables for their own domestic needs, we will be stuck with this Refit for offshore that we do not need and cannot afford.

What I would like to see is a business case for Ireland regarding offshore energy and the Refit.

Why is it worth our while to give a massive 14 cent per unit to offshore wind when we can supply all the renewable energy we need from onshore wind turbines for €10 billion less?

Without this analysis, we should Stop Offshore Refit NOW!

[Cut Once]

Please ignore this post - a computer glitch caused a duplicate entry. Apologies.

[Pat Gill]

Pat,

All that is fine and good, but these are "optional cooperation mechanisms between Member States" and therein lies the rub. If the UK decide not to exercise their option on our energy as they have enough renewables for their own domestic needs, we will be stuck with this Refit for offshore that we do not need and cannot afford.

What I would like to see is a business case for Ireland regarding offshore energy and the Refit.

Why is it worth our while to give a massive 14 cent per unit to offshore wind when we can supply all the renewable energy we need from onshore wind turbines for €10 billion less?

Without this analysis, we should Stop Offshore Refit NOW!

Cut Once,

The Sustainable Energy Authority of Ireland (SEAI) in co-operation with the Department of Communications, Energy & Natural Resources (DCENR), EirGrid and the Commission for Energy Regulation has commissioned Redpoint Energy Ltd and GL Garrad Hassan to undertake a Study on the Viability and Cost Benefit Analysis for Ireland of Exporting Renewable Electricity (RES-E) using the Co-operation Mechanisms in Directive 2009/28/EC.


Offshore renewable energy - Department of Communications, Energy and Natural Resources

[Cut Once]

Should we not wait until after the study into this €10 billion waste of money is conducted? We are about to approve the waste of €10 billion before the study is conducted!

[Pat Gill]

Should we not wait until after the study into this €10 billion waste of money is conducted? We are about to approve the waste of €10 billion before the study is conducted!

The offshore REFIT was introduced in 2008, how many offshore windfarms have been constructed since ?

My own assessment is that the Irish domestic electricity market is not big enough to sustain an offshore build out of any scale and scale is what attracts finance. Given that financiers are the prime movers in this enterprise and as the ability to issue UK ROC's is a more valuable asset to use as collateral for finance than Irish REFIT I expect that nothing will happen in practice until access to the UK market inc the right to issue ROC's is negotiated.

As initial capital expenditure is circa 90% of the entire lifetime cost base of an onshore windfarm reducing to perhaps 75% in the case of an offshore windfarm, the VAT returns alone are very significant to the state, add the PRSI and income tax from the large amount of new employment required in the build out of the infrastructure and we can see that building this new electricity export industry is very attractive to the government, the challenge as you correctly point out is to accomplish this without heavily impacting on domestic electricity costs.

[Cut Once]

I don't often disagree with you, Pat, but in this case I make a few exceptions....

The offshore REFIT was introduced in 2008, how many offshore windfarms have been constructed since ?

Incorrect, and this is the whole point of the thread - the offshore REFIT is about to be approved before Christmas and we have not done the Cost Benefit Analysis yet. I reckon the extra cost of installing this wind energy offshore instead of onshore will be €10 billion. If we wait for the Analysis to be conducted we may find out that we should not proceed with offshore wind.

Not having to go offshore may well be the competitive advantage that Ireland's good wind regime gives us!

My own assessment is that the Irish domestic electricity market is not big enough to sustain an offshore build out of any scale and scale is what attracts finance. Given that financiers are the prime movers in this enterprise and as the ability to issue UK ROC's is a more valuable asset to use as collateral for finance than Irish REFIT I expect that nothing will happen in practice until access to the UK market inc the right to issue ROC's is negotiated.

Again - once we grant the offshore REFITs, the offshore farmers can route their electricity through our market and use the REFIT to get our guaranteed payments. The UK ROCs will be optional and the UK will only use them when it suits the UK. See their stance on the recent Fiscal union issue for evidence of this.

As initial capital expenditure is circa 90% of the entire lifetime cost base of an onshore windfarm reducing to perhaps 75% in the case of an offshore windfarm, the VAT returns alone are very significant to the state, add the PRSI and income tax from the large amount of new employment required in the build out of the infrastructure and we can see that building this new electricity export industry is very attractive to the government, the challenge as you correctly point out is to accomplish this without heavily impacting on domestic electricity costs.

I think the capital expenditure on wind farms is 100% tax deductible - I'm open to correction on this.

I did a quick sum last year and found that the extra REFIT of offshore over onshore wind resulted in an extra cost per Irish job of €4 million per year, and that was being generous in the number of Irish jobs created.

Whatever way you look at it, this has the potential to be a massive burden on us for 15 years and we should wait until the cost benefit analysis is completed before we decide to risk this €10 billion.