A Great Leap Forward? Offshore Wind in Ireland
The Irish energy industry faces fundamental changes, making this research a timely and important call to action. Ireland has only 25MW of installed offshore wind capacity but has some of Europe’s best wind resource. Large-scale deployment has strayed behind other markets due to lack of strong policy support. However, evolving energy policy and market frameworks raise the prospect of increased support and investment in Irish offshore wind.
The paper finds an evolving landscape for offshore wind in Ireland, driven by:
- The new Integrated Single Electricity Market (I-SEM) wholesale market arrangements will fundamentally alter the risk and reward dynamic for all generators.
- The Renewable Electricity Support Scheme (RESS) offers potential for offshore wind to access stable revenues via contract for difference (CfD) mechanisms but lacks essential detail.
- New EU-wide targets for renewable energy, which require a draft ‘National Energy and Climate’ plan to be completed by the end of 2018.
- Cost reductions observed in other markets should benefit the nascent offshore sector in Ireland.
Current indications of support for offshore wind by 2030 show that the technology could represent a significant fraction of the overall generation mix in Ireland. However, the sector would still be relatively small in comparison to other international markets. Our analysis suggests that current policy developments afford support for a maximum of 2.4GW by 2030.
To attract sufficient competitive tension from a large enough pool of developers, Ireland must be viewed by investors as a market with enduring appeal. This requires a stable, coherent and long-term framework to establish a viable offshore wind sector, or a sector where returns are likely to be attractive enough to warrant a less strategic, more transactional approach.
The paper makes several recommendations, including enacting The Maritime Area and Foreshore Bill into law and resolving the longer-term outlook for offshore wind under the Enduring Connection Policy. It also proposes finalising details on RESS auction rules – essential for offshore wind projects with longer lead times – and developing appropriate technology caps under RESS. Greater collaboration between government, regulatory authorities and industry will also be essential.
These recommendations could unlock the potential of offshore in Ireland, maximising the appeal to investors to compete and deploy capital in this relatively undeveloped market.