The Renewable Energy Feed in Tariff (REFIT) operates by guaranteeing minimum prices for electricity output from various categories of renewable technology over a 15 year period and is funded through the Public Service Obligation levy.
Under Directive 2009/28/EC (the Renewable Energy Directive), Ireland has been set a legally binding target for renewable energy as a share of consumption by 2020. That target is 16% overall which, as set out in the National Renewable Energy Action Plan, will be met from around 40% in the electricity sector, 12% in the heat sector and 10% in the transport sector.
Articles 6-11 of Directive 2009/28/EC provide for cooperation mechanisms under the Directive, whereby the renewable value of generation in one Member State may be accounted for in another Member State, providing there is a Government-to-Government agreement in place. Without such an agreement, the renewable value of generation produced is retained in the country of origin.
The reason for this approach at a European level was that it was decided that if Member States are to have the responsibility of binding renewable energy targets, they must have the ability to ensure that renewable value produced on their territory is not traded away without their control.
Once the East West Interconnector to the UK is in place, next year, wholesale electricity will be traded between the two markets. Under the Renewable Energy Directive, the renewable value of generation produced in Ireland and supported through REFIT will continue to count towards Ireland's renewable energy target. The renewable value of such generation will not be traded unless and until there is a specific Governmental agreement in place, backed up by any necessary underpinning legislation and addressing any relevant issues inherent in the operation of two different support schemes in the respective Member States.