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Ireland: Royalties on energy exports?

Oct. 15, 2012 at 6:30 AM   |   Comments

DUBLIN, Ireland, Oct. 15 (UPI) -- Future renewable energy exports to Europe could generate revenue for Ireland through the imposition of royalty fees, Irish Energy Minister Pat Rabbitte says.

Rabbitte, speaking last week at the LK Shields Energy Conference in Dublin, strongly defended government subsidies for onshore wind power projects as talks are under way to establish a green energy export market in Britain.

One of the benefits of building overseas market for Irish wind energy would be royalty fees tacked onto its price, which could funnel much needed revenue into the country, Rabbitte said.

"Any such energy exported will be subject to the state retaining a share of the renewable energy value and/or a type of royalty payment bringing revenue into the Irish exchequer," he said. "Exporting to foreign markets provides an opportunity to boost economic growth here at home."

Investing to create access to foreign electricity markets, he said, will pay for themselves by "(driving) down costs through competitive forces. Furthermore, it provides backup against wind's intermittency."

The Irish electric grid, he said, is becoming better linked to Britain and other European markets through the new East-West Interconnector, which was officially opened last month.

That 115-mile, $739 million project involved laying a 500-megawatt electrical cable beneath the Irish Sea between County Dublin and northern Wales. It began commercial operations Oct. 1.

Another 500-megawatt undersea cable runs from Northern Ireland to Scotland.

Rabbitte and British counterpart Charles Hendry over the summer agreed on a formal memorandum of understanding on renewable energy trading between the two countries, which would be included in the coalition government's upcoming Energy Bill now going through Parliament.

The idea of importing green energy from a substantially beefed-up Irish wind farm sector is gaining support among British Conservative Party ministers was well as Tory backbenchers in Parliament, who see it was a way around fervent and growing opposition to onshore wind farms in the British countryside, The Independent reported.

They are reportedly intrigued by Irish wind power projects floated by developers Mainstream Renewable Power and Element Power, which are seeking a build a total of 8 gigawatts of wind power in Ireland to be transmitted to Britain.

"From the Tory side, this is something that addresses their concerns about further onshore wind farm development, while at the same time bringing them closer to green growth," Element Power President Mike O'Neill told the newspaper. "And in Ireland people appear to be less concerned about the construction of wind farms and place greater emphasis on the economic growth they can bring."

Rabbitte, citing the overseas earnings potential of wind power, told attendees at last week's conference the subsidies handed out by Dublin to developers are well worth it.

He disputed critics who claim they have added to consumers' power bills, pointing to research by transmission operator Eirgrid and the Sustainable Energy Authority of Ireland purporting to show investment in wind energy has in fact not increased energy bills.

"In 2011-12, the wind sector received a (subsidy) of around ($47 million). This represents less than 2 percent of total electricity expenditure in the year," he said.

"This gross cost represents an insurance premium against future oil price increases. As shown in the Eirgrid-SEAI study, it is more or less offset by the reduction it brings by lowering the pool price in the (single electricity market)."

Topics: Mike O'Neill
© 2012 United Press International, Inc. All Rights Reserved. Any reproduction, republication, redistribution and/or modification of any UPI content is expressly prohibited without UPI's prior written consent.
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