Background

RENEWABLES TARGETS

The Irish Government has a target of 40% electricity generation from renewables by 2020. To achieve this ambitious target Eirgrid (Transmission System Operator) estimate that a wind power generation (WPG) capacity of 5,400MW will be needed. To put this in perspective, this is the equivalent of 225 Loughaun North's.

Reaching these ambitious renewable energy targets will be expensive. ESB estimates 22 billion euros financing will be needed for its Strategic Framework to 2020. Much of this will be spent on upgrading the grid to cope with WPG from remote areas. The significant cost of financing all of this will ultimately be met by consumers. In the UK, it is estimated that reaching renewables targets will add 20% to electricity costs.

How much WPG needs to be built? 920MW is already installed. Grid connection offers equal to 1,457MW have been made by ESB under the Gate 2 Connection process. Loughaun North is part of this. Therefore about 3,000MW of additional capacity will be needed to reach the 40% renewables target. According to Eirgrid, 7,000MW of other WPG projects are awaiting a grid connection offer

Eirgrid's data show that there are already many more WPG proposals in the system than need to be approved. And more grid connection applications are being made all the time. The planning system faces the important job of eliminating the most environmentally harmful proposals.

LOUGHAUN NORTH: ECONOMICS IN PEATLAND

The primary aim of expensive renewables targets and the government REFIT (Renewable Energy Feed-In Tariff) scheme is to reduce greenhouse gas emissions. How do emissions from destroyed peatland affect the economics of a wind farm such as Loughaun North?

As a rough guide, an industrial wind farm developer can expect to make a profit of €100,000 per MW of installed capacity. By this estimate, the developer SWS can realise a €2.4 million profit by selling the Loughaun North wind farm at commissioning stage even before any electric power is generated. Revenues are guaranteed because the rates paid for intermittent wind power are fixed under REFIT.

However this ignores the financial cost of potential CO2 emissions associated with oxidation of peat. A current price of CO2 emissions can be obtained from prices in the EU Emissions Trading Scheme. Even at the current low price of about 20€/tCO2, an estimated profit of €2.4 million equates to 120,000 tons of CO2. If emissions from damaged peatland at Loughaun North exceed this number, it renders the project uneconomic.

Loughaun North appears profitable to SWS. Why? Only because peatland CO2 emissions are being ignored. Or perhaps because these will paid for by the taxpayer?

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