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Winds Of Fortune - Ireland’s Next Export Industry?

08 April 2013

On Thursday, 24 January 2013, the Minister for Communications, Energy and Natural Resources, Pat Rabbitte TD, and the UK Secretary for Energy and Climate Change, Edward Davey MP, signed a Memorandum of Understanding (MoU) on behalf of the governments of Ireland and the UK to agree to explore further the opportunities for the export and trading of renewable energy between the two countries.

The announcement has raised the potential for significant investment and job-creating opportunities.

In taking steps towards achieving the 2020 target, Ireland has identified a significant opportunity in respect of electricity generated from renewable resources. It is estimated that we can potentially supply 40% of our electricity needs from renewable generation. To comply with the same European Directive 2009/28/EC (the Directive), the UK has determined that it must supply 30% of its electricity needs from renewable energy sources. This is to comply with an overall target of obtaining 15% of all energy needs from renewable energy sources.

The UK currently has particular challenges in developing renewable energy projects, and so Ireland should be well-placed, provided it has met its own target, to exploit the opportunity to trade its excess renewable energy capacity with the UK and indeed, with other Member States who are not as well-positioned to meet their own targets. Under the Directive, it is permitted for a country to count renewable energy produced in another country towards its target, as long as the renewable energy target of the exporting country has already been met.

Current Activity

Ireland currently has almost 2,000MW of renewable energy installed on the electricity grid and at current projected demand for 2020, is likely to require another 1,500MW to 2,000MW to meet our 2020 renewable generation capacity target. At present, approximately 3,900MW of onshore and 2,700MW offshore wind-energy projects with grid connection offers are proposed and at various stages of development. In addition, there is an estimated potential for another 5,000MW development, onshore and offshore, at sites which have not yet commenced the consenting process.

 

Next Steps

While a proportion of these projects will not be developed for various reasons, it can still be seen that there is already a demonstrable surplus of projected renewable energy, after meeting our own target. The signing of the MoU is simply a first step towards developing this initiative, mandating both governments to explore the potential, to cost it and to identify the actions that will need to be taken to actually implement trading of renewable energy between the two countries. If there is a successful outcome to this process, the next step will be the entering into a formal Inter-Governmental Agreement to progress the implementation of the initiative.

A number of key challenges will have to be met in realising this vision:

  • The physical electricity infrastructure which would be required in order to generate and transmit the electricity from Ireland to the UK will require a huge capital investment, estimated at up to e8 billion for 3,000MW. This will be particularly challenging in the current economic environment.
  • The electricity regulation regime in both countries will require significant revision. The Single Electricity Market which has already been developed between Ireland
    and Northern Ireland is a valuable precedent of legislative cooperation between the two States in this regard. In addition, the impact of the upcoming EU target
    model for electricity market integration across the entire EU will also have to be accommodated.
  • The impact of public opinion cannot be underestimated. There has already been some negative commentary on the proposal in the media of each jurisdiction and it
    will be necessary for both governments to clearly communicate the economic and environmental benefits of the initiative.

The initiative clearly represents a significant opportunity for Ireland. It is estimated that the development of an additional 3,000MW of energy for export could generate up to 6,000 jobs during the construction phase and 3,000 related service jobs for the 25 year operational life of the projects.

Exporting our wind energy could potentially represent a significant economic opportunity for Ireland. We look forward to fair winds ahead.

For more information, please contact William Carmody at wcarmody@mhc.ie or +353 1 614 5097. The contents of this publication are to assist access to information and do not constitute legal or other advice.

© Copyright Mason Hayes & Curran 2013. All rights reserved.

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