Saturday, November 1, 2014

1/11/2014: IAE Raises Concerns with Irish Energy Policy Framework


Here is an interesting study published by the Irish Academy of Engineering in response to the Government Green Paper on energy: http://www.iae.ie/publications/publication/iae-response-to-green-paper-on-energy/.

To put matters into context IAE notes elsewhere that:

  • Since 2007 energy prices in Ireland have risen by 29% in real terms compared with an  average rise of 20% in OECD countries.
  • Between 2010 and 2013 Ireland’s electricity and gas prices rose between 5% and 15% more than the EU-28 average.
  • Household electricity prices have increased by approximately 30% in the last 3 years.
  • Household electricity prices in the Republic are 33% higher than in the UK. Industrial electricity prices are ca 12% higher than the UK and the EU-28 average (ex VAT)

According to IAE, at least in part, the above price distortions are accounted for by the wind generation policies.

Summarising the above document, IAE said that "Continuing with the existing policy and related conditions is likely to have adverse economic consequences. Commitments entered into in 2007 relating to the amount of renewable generation on the Republic’s electricity system ...could lead to the addition during the next decade of more than 3,000MW of Windpower onto a system that has already excess capacity.  Approximately 1,000MW of existing gas or coal fired power plants would be displaced with the following consequences:

  • At current price differentials it would add €200 million to the annual cost of electricity.
  • It would involve additional capital expenditure of between €1 - €2 billion to integrate this level of Windpower into the grid. (The entire Exchequer capital program for 2014 is €3.3 billion)."

I am not an energy or environmental economist to make an in-depth observations on technology and its economic efficiency, but it is clear that Irish energy policies to-date

  1. Have been actively focused on renewables generation at the expense of consumers; and
  2. Resulted in one of the most expensive energy generation and supply systems in the advanced world.
All of which suggests that our continued pursuit of increasing wind generation investments should be put to a rigorous and public scrutiny.

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