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Irish government needs to balance rates increase with EU commitments

20th June 2015

Ireland’s commitment to generate 40% of its gross electricity from renewable energy sources by 2020 is at stake, as commercial rates revaluations for wind farms are double those of fossil fuel plants, which is negating profitability of wind energy and creating a disincentive for investment. Ireland will be facing fines of hundreds of millions of euro for the shortfall, as well as having to purchase CO2 emission permits. And in the renewable sector, the uncertainty around revaluations of rates by the Valuation Office of Ireland is affecting the financial viability of existing renewable projects, and turning away investment for newer projects.

As the Government prepares to lead through the Dáil the Valuation Amendment No.2 Bill (2012), whereby renewable energy, including wind energy, will see an approximate 218% increase in rates liability, IWEA and Wind Farm owners across Ireland have decided to approach the Minister of State, Simon Harris T.D., to request and amendment to the Bill and ask for his support within the Committee and Dáil deliberations to come to exempt wind energy from the increase.

In 2013, around €240m in fuel imports were saved by using Ireland’s own generated wind energy, reducing the dependency on fuel imports and the C02 emissions. Wind energy also contributes to the Irish economy in terms of jobs and investment, that will be jeopardised by the increased rates.

Wind Energy Development Guidelines – Noise and Shadow Flicker Consultation

12th February 2014

Minister for Housing and Planning, Jan O’Sullivan TD, announced on the 11th of December 2013, the commencement of a public consultation process on proposed revisions to the 2006 Wind Energy Development Guidelines focusing on the issues of noise (including distance) and shadow flicker.

The revised noise and shadow flicker sections of the Wind Energy Development Guidelines being put out for public consultation proposes;

  • The setting of a more stringent absolute noise limit (day and night) of 40 decibels (dB) for future wind energy developments. This limit is an outdoor limit, in general the reduction of noise levels between the outside of a dwelling and inside would be approximately 10 decibels.
  • A mandatory setback of 500 metres between a wind turbine and the nearest dwelling for amenity considerations.
  • A condition be attached to all future planning permissions for wind farms to ensure that there will be no shadow flicker at any dwelling within 10 rotor diameters of a wind turbine. If shadow flicker does occur, the wind energy developer or operator will be required to take necessary measures, such as turbine shut down for the period necessary, to eliminate the shadow flicker.

 

The proposed revisions to the guidelines and the Marshall Day Acoustics noise study are available online at www.environ.ie in addition to information on making written submissions during the public consultation period.

Submissions on the consultation are due in by the 21st of February 2014 and can be e-mailed to windsubmissions@environ.ie.

Are you fit for the new REFIT 2 timelines?

28th May 2013

In the latest example of “non-joined up thinking” by the government, if a generator wants to receive REFIT 2 payments for a given PSO period (Oct-Sep), then it needs to have a REFIT 2 Letter of Offer and a PPA agreed 5 months beforehand (end of April). It’s a good thing that the new legislation states they only had to notify the suppliers of this change and not the generators!

 

The Dept. of Communications Energy and Natural Resources (DCENR) have significantly changed REFIT legislation for 2013 and how it affects generators looking for REFIT 2 Power Purchase Agreements (PPAs).

In the current Statutory Instrument Amendment of the Electricity Regulation Act, there have been two significant changes:

  • At least 5 months prior to the commencement of a levy period each relevant supplier shall provide the CER with an estimate of the additional costs……that such supplier estimates it will incur in the next levy period in complying with its obligations under this Order in respect of each REFIT power purchase agreement to which it is a party.
  •  A relevant supplier may only receive payment from the PSO Levy fund in respect of each REFIT PPA to which it is a party in any given levy period when the specific REFIT PPA……has been included in both the PSO levy decision taken by the CER for the specific levy period.

 

So for example, the upcoming PSO period is October 2013 to September 2014. If a generator plans on being operational within that timeframe and it wants to receive REFIT 2 payments, then it would have needed a REFIT 2 Letter of Offer and PPA contract in place before the end of April 2013.

It is also reported that in the case of projects that require banks to cover the senior debt, some banks are now asking for proof from the PPA providers that a given project has been included in the PSO period submissions.

This is going to put even further pressure on generators that require REFIT 2 payments to get their projects off the ground. It gives less flexibility for PPA negotiations, it restricts the timelines of projects and it gives the financial lenders yet another Condition Precedent when closing out financial agreements.

 

 Acronyms:

CER – Commission of Energy Regulation

DCENR – Department of Communications, Energy and Natural Resources

PPA – Power Purchase Agreement

PSO – Public Service Obligation

REFIT – Renewable Energy Feed-In-Tariff

Eirgrid announce timelines for Gate 3 Constraints Reports

16th May 2013

Further to the publication of the decision paper Treatment of Curtailment in Tie-break Situations (Reference: SEM-13-010) by the SEM committee on the 29th of March 2013, Eirgrid are now in a position where the Gate 3 Constraints Reports can be completed and issued to Gate 3 applicants as per the CER Direction CER-08-260.

The reports will be issued for different areas around the country at different time periods between the 24th of April 2013 and the 19th of July 2013. Click here to view the issuance dates of the Gate 3 Constraint Reports.

The constraint levels identified in these studies will ultimately play a part in determining if projects can be successfully financed or not. For those developers that can proceed with their projects, they will then have to contend with more time and policy constraints such as REFIT 2 timelines and planning conditions and expiry.

Treatment of Curtailment in Tie-Break Situations

1st March 2013

Today, the 1st of March 2013, the Single Electricity Market (SEM) Committee has published its decision paper on the Treatment of Curtailment in Tie-break Situations (Reference: SEM-13-010). This paper outlines the SEM Committee decision following a period of consultation on the proposed decision paper (Reference: SEM-12-090) and consideration of the responses to same.

In summary, the SEM Committee has made the following decisions in respect of the treatment of curtailment in tie-break situations in the SEM:

  • Pro rata treatment of all windfarms in dispatch (firm and non-firm) for the purpose of curtailment;
  • On the market side, a cessation of Dispatch and Balancing Cost (DBC) payments for curtailment in tie-break situations by start of 2018 (1 January 2018);
  • The Transmission System Operators and Single Electricity Market Operator (TSOs/SEMO) will be tasked with implementing this mechanism through the relevant market system, codes and dispatch system changes.

 

Responses received to SEM-12-090 are published alongside this paper. The paper and responses can be viewed here on the All Island Project website. The Committee also published the TSO ‘Definition of Curtailment and Constraint’ setting out the methodology for distinguishing between events of constraints and curtailment (SEM-13-011).

It should be noted that this decision paper does not align with the opinions of the majority of respondents, which include private developers, state owned developers, international developers and associations.

Furthermore, at a Meitheal na Gaoithe conference in 2012, the Commission for Energy Regulation (CER) highlighted that there may be need to incentivise TSOs to minimise curtailment and constraint. This was also raised by respondents to the paper. However, this valid point was only acknowledged with no actions implemented which may create regulatory uncertainty around the levels of curtailments and constraints that are coming down the road…

REFIT Indexation for 2013 published at +1.7%

29th January 2013

The Department of Communications, Energy and Natural Resources has recently published 2013 indexation figures for the Renewable Energy Feed-In-Tariff (REFIT). As per Section 5.2 of the Terms and Conditions of the three REFIT schemes, the reference prices are adjusted annually by positive indexation.

For 2013, the indexation for all three current REFIT programmes is +1.7%. See the Department website for more information.

The resulting reference prices, in €/MWh, are provided in the following tables.

 

REFIT 1
Year Inflator Large Wind Small Wind Hydro Biomass Landfill Gas Other Biomass
2005 57 59 72 70 72
2006 1.025 58.425 60.475 73.8 71.75 73.8
2007 1.04 60.762 62.894 76.75 74.62 76.752
2008 1.049 63.739 65.976 80.51 78.276 80.513
2009 1.041 66.353 68.681 83.81 81.485 83.814
2010 1 66.353 68.681 83.81 81.485 83.814
2011 1 66.353 68.681 83.81 81.485 83.814
2012 1.026 68.078 70.467 85.99 83.604 85.993
2013 1.017 69.235 71.664 87.46 85.026 87.455

 

REFIT 2
Year Inflator Large Wind Small Wind Hydro Biomass Landfill Gas
2010 66.353 68.681 83.814 81.485
2011 1 66.353 68.681 83.814 81.485
2012 1.026 68.078 70.467 85.993 83.604
2013 1.017 69.235 71.664 87.455 85.026

 

REFIT 3
Year Inflator Biomass Combustion Biomass Combustion – Energy Crops Large Biomass CHP Small Biomass CHP Large AD Non CHP  Small AD Non CHP Large AD CHP Small AD CHP
2010 85 95 120 140 100 110 130 150
2011 1 85 95 120 140 100 110 130 150
2012 1.026 87.21 97.47 123.12 143.64 102.6 112.86 133.38 153.9
2013 1.017 88.693 99.127 125.213 146.082 104.344 114.779 135.647 156.516

 

Kerry County Development Plan Variation Finalised – RE Strategy

5th November 2012

On the 5th of November, Kerry County Council Councillors voted through the 8th Variation to the 2009-2015 County Development Plan, a Renewable Energy Strategy which can be accessed here. In particular, Section 5 of the Renewable Energy Strategy on Wind Energy, proposes exclusion of wind development from the county’s natural heritage designations. This includes the Stacks to Mullaghareirk Mountains, West Limerick Hills and Mount Eagle Special Protection Area (SPA).

This will have repercussions on the future of the wind energy industry in Kerry, the third largest county in installed MW; and a county that has seen great benefits in terms of investment, jobs and rates. This action will also set precedence in place which could in turn affect other local authorities around the country. The reports to date also leave significant question marks around the re-powering of wind farms currently operational within the SPA.

Proposed Treatment of Wind Farms in Tie-Breaks – SEM-12-090

30th October 2012

On the 3rd of October 2012, the Single Electricity Market (SEM) Committee published a proposed decision on the treatment of curtailment in tie-break situations (SEM-12-090). Two other documents were published alongside SEM-12-090. They were a Transmission System Operator (TSO) report examining the effect of three options outlined in SEM-12-028 on Dispatch Balancing Costs and wind curtailment and a TSO annex setting out the proposed methodology for distinguishing between events of constraints and curtailment.

The extended deadline for receipt of responses to these publications is close of business Monday the 19th of November 2012.

Summary of Proposed Decision

The Proposed Decision of the SEM-12-090 document is Pro-rata dispatch with defined curtailment limit.

This option involves the pro-rata treatment for curtailment of all operational windfarms in dispatch and the imposition of a cap / threshold for the payment of Dispatch Balancing Costs (DBC) compensation for curtailment. It is the SEM Committee’s intention that by 2020, there would no longer be DBC compensation available for curtailment of wind.

The features of this option are as follows:

On the dispatch side curtailment for all operational windfarms will be treated on a pro-rata basis, i.e. all operational windfarms (firm and non-firm) will be turned down on an equal basis by the TSO in a curtailment situation. On the market side, as per current rules, firm projects will be paid market revenues through DBC when curtailed. However this full compensation of curtailment for firm and partially firm generators (0.1% to 99.9%) will only continue up to a fixed point – at the absolute latest this will be the 1 January 2016.

Kerry County Development Plan Variation – Renewable Energy

22nd June 2012

 Kerry County Council have recently proposed an 8th Variation to the 2009-2015 County Development Plan which can be accessed here. This variation mainly takes the form of a Renewable Energy Strategy document and maps and is stated to facilitate and manage the development of renewable energy development in a manner which is accordance with the proper planning and sustainable development of the county.

The document deals with several aspects of Renewable Energy in the county and the proposed renewable energy strategy of the Planning Policy Unit for the future. Section 5 on Wind Energy forms a substantial part of the document and has significant proposals that will affect future developments in the county. In particular, the draft plan proposes exclusion of wind development from the county’s natural heritage designations.

This will include the Stacks to Mullaghareirk Mountains, West Limerick Hills and Mount Eagle Special Protection Area (SPA). According to the Renewable Energy Strategy document, this SPA has 225 permitted turbines in it, of the 375 turbines permitted in the county between 1997-2011 (no information was available on actual constructed turbines). Referencing a Habitats Assessment and other information, the document states that:

“Having considered these assessments, the objectives of these conservation areas, the extent of existing and permitted development and the Planning Authority’s obligation to ensure compliance with the Birds and Habitats directives these areas are considered to have no further capacity for wind development.

In contrast with this, the SPA which covers over 56,000 hectares, has a maximum height of 451m and a mean height of 200m, which provides some of the best wind resources in Ireland along with having relatively low amounts of dwellings and noise sensitive locations. Exclusion of this entire SPA area in Kerry for future wind energy development will put question marks over the economic feasability of “suitable” development areas proposed in county Kerry.

Observations and submissions must be submitted before 5.00 p.m. Thursday 28th June 2012.

Treatment of Curtailment of Wind Farms in Tie-Break situations

28th May 2012

On 29th March 2012 the SEM Committee decided to withdraw its decision to treat curtailment issues in a tie-break situation on a firm access quantity basis (as set out in Section 3.5 of the SEM-11-105) and publish a further consultation paper on the matter.

As identified by the Irish Wind Energy Association (IWEA) in their response to the current consultation (SEM-12-028) “the treatment of curtailment has been acknowledged for almost 10 years now and indeed has been an item under consultation for more than four years”.

This current consultation is the summation of several regulatory approaches to addressing the unavoidable curtailment issues facing wind generation in Ireland as we reach maximum allowable penetration levels in the electricity network.

As a result, the current consultation has attracted considerable interest from all affected players in the Irish energy sector. The progress of the SEM-12-028 consultation can be viewed on the All Island Project website.