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Tilting at windmills: the blowhard debate over new wind farms
Credit: Mark Paul | The Irish Times | Oct 24, 2014 | www.irishtimes.com ~~
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Colm McCarthy, the clever but contrarian UCD economist, doesn’t mince his words. He prefers instead to mince the targets of his ire, which last weekend happened to be the wind energy industry. He went in, studs up.
At a conference in Cork, McCarthy, an avowed sceptic of the economic merits of further mass investment in windfarms, gave a speech entitled Time to Tilt at Windmills. In a nine-slide presentation, he criticised the rush to pepper Ireland with new windfarms by 2020 to meet European Union emissions targets.
Ireland has pledged to generate 40 per cent of its electricity from renewables by that time, almost all of it with new taxpayer-subsidised windfarms. “It is contrary to the national interest,” he said. “Pointless…. Ireland has done enough.”
Yesterday EU politicians were still negotiating further emissions targets for 2030, from which Ireland was seeking leniency.
McCarthy argues no new windfarms are needed because there isn’t demand for the electricity they will produce. It will only burden consumers with the cost of their subsidisation, he believes, damaging the wider economy with higher bills and necessitating a future “Nama for windmills”.
He claims EU policy on the area is on the point of collapse as some other countries, notably Germany, scale back their subsidies for wind power, while Ireland maintains its (lower) subsidies for what he sees as “big wind”. Bord Gáis, Bord na Mona, SSE, NTR and Gaelectric are all heavily invested in wind here.
“Ireland’s policy is to be the best pupil in the class,” McCarthy scolded. “But [EU POLICY] has had no impact on the other pupils.”
Cue a gale of opprobrium this week towards the economist from the Irish wind energy industry, which is well used to his orthodoxy-challenging barbs.
Wind is often portrayed as the archetypal economic win-win: a guilt-free way to boost the economy with investment and save the planet while we’re at it.
McCarthy derides this notion.
The Irish Wind Energy Association (IWEA), the main lobby group for the “big wind” industry he criticises, argues he has his facts wrong and cannot back up any of his arguments with hard figures. McCarthy did not present a researched paper at the Cork conference.
“He has displayed a complete lack of understanding of how the power system works,” said Kenneth Matthews, the IWEA chief executive. “He isn’t offering up solutions. If no more windfarms are built as he suggests, it will cost the country €400 million in EU fines [for missing emisisons targets].”
Speaking to The Irish Times on Wednesday, McCarthy, as he generally tends to do, firmly stood his ground and dismissed IWEA’s criticisms.
“They’ve been polluting the air with their propaganda for years. These guys aren’t here to help us, they’re trying to hold onto their jobs. Ireland is a great country in which to be a lobbyist. Did you ask them how much their budget is?”
It is about €1.2 million, according to IWEA’s latest accounts.
The association this year commissioned a study on the economic merits of wind energy, which was delivered by Pöyry Consulting and Cambridge Econometrics. It was published in March prior to the launch of the Government’s Green Paper on energy, and directly contradicts many of McCarthy’s claims.
IWEA, which is known around town as an effective lobby group, describes the report as “independent”, although the association paid most of the bill. Still, Pöyry, a Finnish outfit, is respected in its industry for empirical analysis.
Pöyry says an extra 2.2 gigawatts of wind farms would need to be added onto the system in the State to meet the 2020 targets. There are more than 180 windfarms in the country, according to IWEA. This would need to more than double.
Pöyry claims this would lower the wholesale cost of electricity, although it says this would be cancelled out by the need for more subsidies on customers’ bills to cover “system costs” to cope with the development.
“Bills will not fall from meeting 2020 targets,” it says.
Wind energy producers, along with turf-fired plants and certain gas-fired generators, are subsidised with a guaranteed price for the electricity they put on the market: a reference price plus a 15 per cent kicker. It is paid for by all of us, via a levy on electricity bills for homes and businesses. The levy is about €64 for each household this year, with nearly a third of that due for wind.
McCarthy argues the true cost of wind is higher.
“Investment is a ’God’ word. But someone has to pay for it, and it takes a lot of debt that has to be paid back. Most of the cost of the electricity on your bill is to recoup the cost of capital investment.”
Wind energy, as with other forms of generation, also sometimes incurs “balancing costs”, according to the IWEA, such as capacity payments and constraint payments, which are paid when the power generated isn’t needed.
McCarthy and other critics of wind energy policy, such as the Irish Academy of Engineering, say that other costs will also be incurred with further deployment of wind, through extra transmission infrastructure needed to cope.
The academy has called on the Government to “rebalance” policy away from renewables towards gas-fired plants. It says emissions targets can be met through conservation and other policies.
IWEA’s Matthews says new grid infrastructural investment is not just for wind. He also argues Ireland is “top of the class” at incentivising wind energy investment at a lower cost to consumers than in other countries.
Germany, whose Government is sometimes criticised at home for being too “aggressive” in pursuing wind policies since it abandoned nuclear, has recently cut its sky-high levies.
John Mullins, the former Bord Gais chief executive who now runs solar company Amarenco, invested heavily in wind during his time at the semi state. He believes McCarthy and others like him ignore the fines that Ireland will be subject to if emissions targets are missed.
“If he has a solution [apart from renewables investment] to offset those fines, I’d like to hear it,” said Mullins.
McCarthy proposes more carbon taxes to control emissions.
The Economic and Social Research Institute (ESRI) last week produced an analysis of Irish energy policy. It agrees with McCarthy that there is excess capacity, but says this is mostly in “the short run” because of the economic downturn. It argued the levies to subsidise wind development should be more fairly spread between consumers and the industry, because all the “risk” on electricity prices currently lies with billpayers.
It also warns that without more interconnectors to export excess electricity generated by wind, “it will significantly raise costs for consumers” as the power may otherwise have to be dumped. Yet the capacity to generate the power will still have to be paid for.
John FitzGerald, the research professor of the ESRI, says his views are “less extreme” than McCarthy’s, but says policy on windfarms needs to be “tweaked” and that an interconnector is badly needed if the mass deployment continues.
“On paper, it makes sense [to have a lot of wind] on the system. But you can have too much [unless you have adequate interconnection to get rid of the power it produces],” he said.
It may be contrary to EU rules, FitzGerald argues, but Ireland needs to find ways to cheaply “chop off” wind producers when their power is not needed, on a last-in first-out basis. The most recently developed windfarms would be the first to be chopped, under FitzGerald’s suggestion.
As for practitioners within the wind industry, most of weary of what they see as ideological “anti wind” arguments. Brendan McGrath, the chief executive of Gaelectric, makes the not unreasonable point that all infrastructure needs to be constantly upgraded: “You can’t just stop when you think you have enough, like McCarthy suggests. Most of our electric plant is old and needs to be replaced.”
Why not replace it with wind, he argues?
McGrath went to the same north Dublin school as McCarthy, as did Brendan Gilmore, the chairman of tidal energy company Openhydro. McCarthy was two years ahead of the wind energy boss.
“We had a 50-year reunion, and I saw a photo of the hurling team. Myself and Brendan were in the picture. There was no McCarthy. He was a hurler on the ditch then. And he’s the same now.”
Expect the blowback on this debate to continue until the Government publishes its White Paper on energy policy next year.
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