Dáil Éireann debate -
Thursday, 28 Mar 2002

Vol. 551 No. 4

Written Answers. - Alternative Energy Projects.

Jim O'Keeffe

Question:

32 Mr. J. O'Keeffe asked the Minister for Public Enterprise the reason the average unit price offered to wind farmers here is the lowest in Europe and is less than the ESB's average cost of generation; and her views on this policy when Ireland is now the most energy import dependent country in Europe. [8568/02]

Minister of State at the Department of Public Enterprise (Mr. Jacob)

It is accepted that renewable energies need special support to operate successfully in the internal electricity market. In Ireland the support measure is a power purchase agreement, PPA, between a producer and the ESB obliging the latter to purchase the output from nominated new renewable energy based electricity generating stations at guaranteed prices for up to 15 years. Possession of a PPA enables producers to raise the necessary finance to build projects.

In September 1999 I published a challenging target to increase electricity generating plant using renewable energies by an additional 500 MW by 2005. The European Commission has determined the necessary PPAs constitute state aid. A requirement of the state aids clearance is that successful projects be selected by competitive tendering to ensure the state aid is the minimum necessary.

In February last I announced the results of the most recent competitive tender round, AER V. Originally I had signalled my intention to support up to 255 megawatts, MW, of plant. Due to the quality of applications submitted I increased the support to 363 MW.

In the wind energy categories the original target was 240 MW. In the event, I conditionally accepted 40 projects, amounting to 354 MW, of which approximately 330 MW was bid below the price cap offered to the market. I do not accept, therefore, the maximum price offered is too low where I am bound by EU rules to accept the lowest compliant competitive bids for the award of state aid.