Aidan Forde

Council Member

NOW Ireland

June 2011

Economic signals for investment in offshore wind in

Ireland

NOW Ireland

• Codling Wind Park• Oriel Windfarm Limited• Fuinneamh Sceirde Teo• Saorgus Energy Limited

• Capacity of over 2680 MW from existing project areas with potential for a further 4000 MW.

• Potential investment of over €8bn

• 60bn supply chain opportunity in the Irish Sea (€300bn in North Sea and Baltic)

• Export of renewables can rival agri-food and tourism

By 2030, more than 375,000 people will be employed in the EU wind energy sector – 160,000 onshore and 215,000 offshore.

The National Security Reason for Renewables

• Ireland is the most energy insecure country of its size or larger in Europe (after LU, MT and CY)

• Global natural gas usage to double by 2035 (FT last week)

• Many gas contracts linked to oil prices

• Corrib/LNG/storage will help secure medium term security of supply but no price hedge

• Increase in oil and gas prices has a disproportionate impact on Irish GDP

• Ireland holds a few days of gas supply - interruption would have an even greater effect!

• Nuclear issues becoming clearer - implication is gradual rise in EU gas prices

• OFGEM Chief has recently described UK as heading off an electricity generation cliff

• EU policy clear - is Irish policy just an element of EU policy? Still at 16% in 2020

• Should we be more ambitious?

The Domestic Economic Case for Offshore Wind

• (Most of these comments can be applied to some extent to all marine renewables)

• Two recent studies show that merit order effect of onshore wind equals onshore PSO cost

• Value of fuel price hedge not priced in to analyses generally

• Hedge against EU fines not priced in generally

• Supply chain benefits not generally priced in (jobs we would not otherwise have)

Indecon Cost-Benefit Analysis

• Independent study commissioned by NOW Ireland in March 2008 resulting in “Economic Analysis of the Potential for Offshore Wind Energy Generation in Ireland” published by Indecon in September 2008

• Shows primary net direct benefit for Ireland Inc. of up to €1.7 billion 2012-2027

• Extra quantifiable indirect benefits €2.1 billion including Merit Order Effect, employment, carbon fines saved, reduced emissions, etc.

• In virtually all scenarios there is a direct net benefit, in all scenarios there is an economic benefit when indirect benefits are included

• Cost to Government of carbon fines 2008 – 2012 €1.17 billion

• 2680MW in the consenting process for NOW Ireland Members and an estimated further 4000MW possible on Irish east coast alone

• Written in 2008 but assumptions broadly now (or very soon) in line again

ESRI view• ESRI analysis is that onshore wind is cheapest renewable so let’s use this exclusively

• If there are blockages, just throw money at them - not a considered approach

• Approx. 1,500 MW on line onshore (5,000 MW renewables needed for targets?)

• 115 MW was brought onto the system last year and for the last 6 years the average has been 200 MW per year

• 1873 MW or 48% of Gate 3 projects are in Natura 2000 sites

• 2077 MW or 53% of Gate 3 have firm access dates post 2018

• Gate 3 deposits (CER) pose a significant threat at this stage of development

• SEM regulatory threat significant

• Can we assume an increase in public acceptance?

• So, any low hanging fruit left onshore?

• A portfolio of renewables is clearly needed - opposite of ESRI view

DCENR agrees!

Over the horizon?

Europe needs Renewable EnergyIreland, Norway, & UK own the windy parts of the Ocean

From a recent presentation in Dublin

by Geirr Haarrof Statoil

From a recent presentation in Dublin

by Geirr Haarrof Statoil

12

But, for the time being…….

Greening of energy sources is a national security issue which private capital is being asked to resolve

Suitable investment and regulatory conditions a “no-brainer” but not there

Clear that a portfolio approach for 2020 is essential

ESRI will regret advising reliance on a single renewable technology for 2020

www.nowireland.ie