Proposed incentives designed to support the development of the wind farms needed to meet the Republic’s renewable energy targets will cost €300 million, according to the State’s utility regulator.

The Republic has agreed with the EU that 40 per cent of its electricity will be generated from renewable sources by 2020.

The commitment will require the construction of more wind farms and specialised gas-fired power plants that can be called on to plug the gap when wind generators cannot be used.

National grid operator Eirgrid recently finalised proposals that included payments and incentives that the agency believes such specialised power plants will need to operate and deliver a return to their investors.

The Commission for Energy Regulation (CER) confirmed this week that the package as it stands will cost an extra €300 million, which would ultimately be passed on to consumers and businesses if the proposals were implemented.

Regulator
The regulator and the Single Electricity Market Committee, which oversees the system for setting wholesale electricity prices, have held off on making a decision on the proposals and instead asked Eirgrid to review them to carry out a cost-benefit-analysis.

The committee said that it believes a further economic analysis of the proposals is needed before it can reach a decision on the total amount of money that can be made available for these services.

While the proposals would result in extra payments being made to new electricity suppliers, it is argued that their introduction could result in savings elsewhere. The CER’s spokesman pointed out that they are designed to facilitate more wind generation, which should result in lower wholesale electricity prices.

The proposals, the result of a two-year consultation process between Eirgrid and industry players, have sparked a row between the national grid operator and Lumcloon Energy, the backer of a proposed new power plant at Ferbane, Co Offaly.

Lumcloon claims that Eirgrid’s proposals would benefit its own operations and says that the power supply agreements that it has been offered act as a disincentive to new entrants to the market. Eirgrid says that both claims are without foundation.

The national grid operator welcomed the Single Electricity Market Committee’s response to its proposals.