Ryan’s much-heralded wind energy would be world’s most expensive at first auction 

Last year, to great razzmatazz, Minister Eamon Ryan announced that opportunities to generate energy from Ireland’s wind was going to go to auction in 2023.

Going to auction means that a route to market would be established for an energy provider – typically in relation to renewable energy which is produced or largely subsidised by the state.

Potential bidders will compete against each other to provide renewable energy, with the government looking at the cost per megawatt hour proposed, and an emphasis on community involvement and benefit funds for communities.

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Project developers can then submit a bid to the auction, outlining their project proposal and stating the price per unit of electricity at which they will be able to realize their project. The government then evaluates the different offers, which are ranked and selected in order of increasing cost or price until a volume, or the budget limit is reached. Lastly, the best candidates are selected and the government signs a power purchasing agreement with the successful bidders.

Back in 2022, the Minister couldn’t have sounded more excited.

It was “a massive step forward”, he claimed, not just for wind energy but for “Irish climate leadership” – with his Department adding that it was a “seminal moment for the delivery of offshore wind in Ireland.”

“The publication of these ORESS 1 Terms and Conditions is another massive step forward – for offshore wind, for Irish climate leadership and towards Ireland’s future as an international green energy hub,” Ryan said.

The first stage of this transformative auction will start before Christmas and it sets us on a path to powering many more of our homes and businesses from our own green energy resources over the coming years.”

Exciting stuff – and, coming at a time when Irish people were reeling from the cost of electricity, it sounded like good news indeed.

The Irish government has been investing in wind energy since 1992. Subsidies and other state transfers in regard to renewable energy in the 2011 to 2020 period alone amounted to more than €1.3 billion according to the CSO.

“Wind is Ireland’s oil,” said Micheál Martin told Davos last year. “Certainly, by the mid-2030s we want to be exporting energy.”

Ireland’s Renewable Energy Support scheme (RESS) says its aim is to “rely on competitive forces to achieve renewable energy ambitions at the lowest feasible cost to electricity customers while delivering technology diversity and significant community participation.”

But alas, the outcomes seem a little underwhelming, as reported this week in the Sunday Business Post by Lorcan Allen.

Ireland is set to unveil the world’s most expensive offshore wind prices this week when the government announces the results of its first ever offshore wind energy auction.

The price tag is expected to be close to €150 per megawatt hour, which is three times more expensive than the latest sale in Scotland and far higher than other European countries

If this bears out, the energy generated by the first wave of offshore wind farms in Ireland will be anything but cheap for consumers and will be on par with the unprecedented price of electricity last winter, which was made so expensive by record high gas prices.

The paper says that the latest offshore wind auction in Scotland “delivered projects at below €50/MWh – less than a third of the price Ireland could end up paying”.

It also notes that “none of the six offshore wind projects that have submitted bids to the first O-RESS auction have planning permission for their respective wind farms.”

Wind turbine manufacturers in Europe have faced increasing problems with input costs and supply chain issues, and those difficulties have fed into increased costs for wind energy providers.

Industry observers also say that inflation means that “costs are rising at a higher rate than prospective revenues”.

The reliability of wind energy is also an ongoing problem for energy provision, as is the as yet unsolved million-dollar question as how to store the energy once the wind stops blowing.

It may be an ill-wind that blows no good, but if this is an insight into the cost of renewable energy for the long-suffering Irish consumer then Ryan’s justification in rushing to close down peat stations because we could rely on renewables seems more like hot air than anything else.