It is declared Government policy to push ahead with wind farm development and these plans are driving the major transmission investments being promoted by EirGrid.

The ESB is having second thoughts and is urging the Government to scale back on the wind commitment. This would also mean a reduced need for grid investment.

Wind farms are expensive to build but cheap to run. Part of the capital cost is concealed, since grid reinforcement costs are borne only in part by wind investors, who also benefit from a Government minimum price guarantee.

It is this guarantee, the cost of which is passed to consumers along with the extra grid costs, which makes it attractive for banks to provide finance to wind farmers.

Without these subsidies, it is debatable whether the credit markets would finance any further wind development in Ireland. Wind lobbyists who maintain that wind energy is cost-competitive should have nothing to fear from the removal of subsidies.

GRID COSTS

The grid costs associated with further wind development arise from the dispersed location of wind farm sites. There are grid costs associated with all electricity generation, but they are particularly heavy for wind farms. It is clear from the ESB’s submission to the current energy policy review that a substantial portion of the planned grid investment might not be needed if further wind farm investment is curtailed. Since Ireland now has more than enough generation capacity, some of the planned transmission lines may not be needed.

This is particularly the case with the Grid West project and the Grid Link scheme, which would route through the southeast on its way from Cork to the Dublin area.

There may be some requirement for grid strengthening in these areas eventually, even in the absence of further wind developments, but the projects could be deferred or downscaled if the current ambitious wind plans are revisited.

The third major transmission project, the so-called Grid North, is in a separate category. This is not needed mainly to cater for wind farms, it is needed to connect the generation surplus in the Republic to Northern Ireland, where there is an emerging shortage of capacity.

Unfortunately, the interconnector linking Northern Ireland to Scotland has malfunctioned and it cannot operate at full capacity. This problem is urgent and decisions need to be taken soon.

There are modern gas-fired units in the Republic operating intermittently, and in danger of being mothballed, while a serious power supply crisis is emerging in Northern Ireland.

One of the hidden costs of subsidised wind investment is the negative impact on the economics of newly built gas units. Bord Gais Energy (BGE) built a modern gas unit at Whitegate in Co Cork which was commissioned in December 2010 at a cost of €400m.

MILESTONE

The BGE chairperson claimed at the ceremony that “the opening of Whitegate is a significant milestone for both Ireland and Bord Gáis. Whitegate is a very tangible symbol of how Bord Gáis has transformed from a gas supply utility to a dual fuel provider to over one million customers. The Whitegate power plant will add significantly to Ireland’s security of energy supply while contributing to a cleaner environment.”

The station was sold to the UK power company Centrica earlier this year, at a loss calculated by the Irish Academy of Engineers at €300m.

That is to say the station ended up worth one-quarter of what it cost to build a few short years ago. A significant milestone indeed. Through the ESB, the State owns several other modern gas units. In the light of the disastrous experience at Whitegate, the ESB will have to face large impairment charges against these assets in its annual accounts in future years.

The other manifestation of the excess costs imposed by wind generation comes around every couple of months in your electricity bill. The top-up payments to wind generators are added to consumers’ bills, which also include the cost of the extra transmission constructed by EirGrid, since the wind farms do not pay the full cost.

The result is electricity charges in Ireland averaging 25% above the typical cost across the European Union.

Wind capacity is already at 2,200 megawatts and rising. The low point of demand (a warm summer night) requires only about 1,800 megawatts.

The high point (a cold snap in December or January) sees demand at about 4,900 megawatts. Ireland already has more intermittent wind capacity than can readily be accommodated on the power system without pushing up system costs even further.

Green Party leader Eamon Ryan has recently called for the wind farms to be taken into public ownership. Be careful what you wish for – a Nama for wind farms is entirely possible when the subsidies are withdrawn.

This article was originally published in the Irish Farmers Journal