The roller coaster approach to renewable energy policy

This article by Colm Kelpie in the Irish Independent is quite disturbing because EU and national energy policies were supposed to develop a long-term policy framework that gave investors confidence and reduced risk.  Instead, we are seeing the traditional stop-start approach to energy policy.  If we are serious about 2030 or 2050 energy and climate policy objectives, this type of approach cannot continue.  Topsy-turvy policymaking only loses credibility and no one wins.  This does not only apply to renewable energy.  All sustainable energy policies – including energy efficiency – lose.  This means market actors lose – manufacturers of renewable energy or energy efficient technologies, distributors, installers, financial institutions and so on.  Hopefully, with this year’s European Parliament elections and a new Commission to be installed we can finally break from our old ways.  We thought we had, but obviously not.

Backing for renewable energy to be cut ‘once targets reached’

Irish financial supports for renewable energy schemes will be scaled back once EU targets are met, Davy Stockbrokers has predicted.

Supports cannot be kept at the current “elevated” levels, according to the stockbrokers.

The State has been pushing renewable energy in part because it faces fines of about €150m a year if it fails to ensure that 16pc of all energy in Ireland across the electricity, heat and transport sectors is from renewable sources.

The National Renewable Energy Action Plan sets out that the 16pc overall will be achieved by around 40pc of electricity consumed being from renewable sources – 12pc of consumption in the heat sector and 10pc consumption in the transport sector.

“Irish financial supports are likely to be curtailed once the threat of financial sanctions from Europe is overcome,” Davy said.

“It is clear that the current financial supports cannot be kept at elevated levels indefinitely, so it is likely that once the EU targets have been met, the explicit supports for wind projects are likely to be materially lower.”

REFIT stands for ‘Renewable Energy Feed in Tariff’ and is the primary means through which electricity from renewable sources is supported in Ireland. The first REFIT scheme was announced in 2006 and state aid approval was obtained in September 2007.

The REFIT 2 scheme, for onshore wind, small hydro and landfill gas facilities, was opened in March 2012 and the REFIT 3, for biomass technologies, opened in February 2012.

Davy said it was in the Government’s interest to reach the targets as soon as possible as the country was referred to the European Court of Justice last week for failing to meet intermediate targets, which could result in fines of €25,000 a day.

“If Ireland missed the 2020 targets, it would face fines of €150m/year,” it said.

“If Ireland sourced 14pc, instead of the 16pc energy target, fines of €300m a year would be applied.”

And it said that after 2020 the EU-wide target would be increased to 27pc, but without national recourse, giving those countries that seek to back the industry the opportunity, but not the obligation, to do so.