The number of long-term sustainable jobs that new renewable energy projects can deliver depends on a variety of factors. The figures quoted are estimates based on a variety of assumptions. A 2009 report by the Irish Wind Energy Association (IWEA) entitled “Jobs and Investment in Irish wind energy” estimated that the wind energy sector in Ireland can support 1.5 jobs per MW installed. At the end of 2011, 17.6% of Ireland’s electricity was from renewable sources, with approximately 1900MW installed.
At an EU level, the European Wind Energy Association (EWEA) analysis found that there are 15 jobs created per MW - wind turbine and component manufacturing provide the majority of employment opportunities at circa 59% of direct employment. These elements represent 12.5 of the 15.1 jobs created in the EU for every MW installed. Ireland’s ability to harness a high level of employment from renewable energy projects would depend, to a large extent, on related industry such as turbine and cable manufacturing industry relocating to Ireland.
The development of renewable energy in Ireland is being pursued in line with our obligations under the Renewable Energy Directive, that 16% of all energy consumed in the State must be from renewable sources by 2020.
This is a legally binding obligation introduced by the EU to ensure that our climate and energy goals of reducing CO2 emissions and increasing security of energy supply can be achieved by 2020. In the event that Member States fall short of their national renewable targets, the Directive provides that they will be obliged to purchase renewable energy credits from other Member States that have exceeded their targets, at a price that is not yet known.
In the electricity sector, 17.6% of electricity consumed was from renewables in 2011, in the transport sector 3.6% of energy consumed was biofuels and in the heating sector 5% of energy consumed was from renewable sources (mainly biomass and shallow geothermal.) The total of the renewable energy consumed in 2011 across the three sectors amounted to 6.5% of all energy. The objectives, in order to meet our 2020 binding targets are to increase renewable energy consumption in those sectors to 40% in the electricity sector, 10% in the transport sector and 12% in the heating sector, which together will mean the 16% overall target can be reached.
Onshore wind rather than offshore wind will be the major mechanism towards the meeting of our 2020 target. This is because the cost per MW for offshore wind is significantly higher than onshore wind and a higher feed in tariff (REFIT) for offshore wind would have had to be provided, funded through the PSO levy.
The potential for export of renewable electricity was outlined in the Strategy for Renewable Energy 2012-2020 which I published earlier in the year. The mechanisms by which renewable energy can be exported or traded with another country are provided for under the Renewable Energy Directive in Articles 6-12 on co-operation mechanisms. Countries can agree statistical transfer, which involves the purchase of renewable credits by the importing country in order to meet their target or they can agree joint projects which involves identifying specific projects for the purpose of renewable trading and agreeing how the projects will be financed and how the renewable value will be counted towards each country’s renewable target under the Directive.
The use of these co-operation mechanisms under the Directive requires formal agreement between two or more Governments. I have had a number of bilateral discussions with my UK counterpart in this regard as well as some discussion under the auspices of the British Irish Council. We are actively exploring the possibility of trade in renewable energy between the two jurisdictions, with a view to reaching an agreement that would provide for that.
It will be necessary to ensure that Irish consumers do not have to foot the bill for renewable electricity that is exported to the UK and that there are real benefits from renewable trade accruing to the Irish State and Irish consumers. Renewable developers will only pursue an investment if they can finance the investment and usually this involves a guaranteed minimum price for 15 or 20 years over which time they can repay the loan for the capital outlay.
In the event that renewable power was being exported to the UK, for example, it would be necessary to ensure that the costs associated with new transmission infrastructure to export the power and the cost of a support scheme for renewable developers is paid for by UK consumers, rather than Irish consumers who would not be benefitting from either the power or the renewable value of the electricity.
The current market price for electricity in the SEM is approximately €65MWh. The capital costs of offshore wind are high. Offshore wind developers would need a significantly higher guaranteed price more than the current market price for electricity in order to finance an offshore wind project and to finance new transmission infrastructure to transport the electricity generated by such a project to the marketplace.
A loan to finance a project is only helpful insofar as the project has a reasonable prospect of earning sufficient revenue from the project to pay off the loan over time. The current market prices in Ireland and the UK would be insufficient in the case of an offshore wind project. If the UK or another market wanted to import power from an offshore wind project under the cooperation mechanisms in the Directive, so that they could count some or all of the output towards their target, they would need to be willing to offer a sufficient support price to the project developer over a defined period to make the investment viable. This is an area that the UK Government is currently examining as part of their market reform.
If the Irish Government decides to enter an Inter-Governmental agreement under the Directive with the UK or another Government, it will have to ensure sufficient return to the State from such projects. This might include a share of the renewable value or the imposition of a royalty of some type.
The Irish State Companies, notably ESB and BGE already have a significant presence in the onshore wind energy sector. Further investment in wind energy would be a matter for the companies themselves, taking full account of their commercial remit.
