Tax and advisory specialist KPMG says offshore wind has an “essential” role to play enabling Ireland to meet demand for electricity and targets for renewable energy.
In a new report, Offshore Wind: Ireland’s Economic and Social Opportunity, it details how offshore wind can assist in Ireland’s transition to a low carbon economy and considers growing renewable energy demand in Ireland, technology options to meet this demand, and where and how offshore wind can be a key part of the solution.
KPMG Ireland global head of renewables Michael Hayes, who advises clients in the renewable energy and asset management sectors, said Ireland is expected to experience strong, sustained growth in electricity demand between now and 2030.
He noted that in an analysis of various future energy scenarios, EirGrid estimated that Ireland’s total electricity requirement will increase by between 22% and 53% by 2030. This increased demand must come from renewable sources to satisfy both national and EU targets, as well as corporate social responsibility agendas of large corporates and FDI.
Ireland has set a target that 40% of all electricity comes from renewable sources by 2020, rising to at least 55% by 2030, with many industry participants encouraging 75% by 2030. The EU has also set a separate target that 16% of all energy is to come from renewable energy sources by 2020, rising to 32% by 2030. Recent analysis suggests Ireland will miss this 16% target, with the current trajectory suggesting it will only achieve 13% by 2020, which could result in EU fines.
Mr Hayes said meeting future renewable electricity demand, while also meeting EU renewable targets, will require Ireland to deploy between 400 MW and 700 MW of new renewable generation capacity per year, against a historic onshore wind deployment rate of circa 200 MW per year.
“While solar and onshore wind can and will play a role, offshore wind is the only technology with the scale and deployment capacity to meet this demand in full,” said Mr Hayes. “Dramatic reductions in technology prices and improved performance now mean that offshore wind costs a fraction of historic pricing, with a trajectory to hit parity with other technologies in the short to medium term.”
As he noted, and as previously highlighted by OWJ, Ireland is the only European Union country with an Atlantic coastline which is not developing its offshore resource. Not only is this placing Ireland at an economic and competitive disadvantage, Ireland is missing out on a large number of associated economic and social benefits, including providing significant volumes of renewable power relative to other technologies, which can have a meaningful impact on renewable energy targets.
It has been found in the UK economy that per 1.0 GW installed, an economic boost of €2Bn is expected. The development of existing projects which have up to 4.0 GW potential capacity would result in significant economic impact to the Irish economy. Delivering significant employment, estimated at 20,000 new jobs (including onshore) by 2040, as well as very substantial additional investment. Offshore wind can also contribute, through the development of both fixed and floating wind projects, to the economic revitalisation of coastal areas, including the coastline of the west of Ireland whose sea basin is suitable for such development and enhance Ireland’s security of energy supply, which is increasingly topical given Brexit considerations.
In addition, said Mr Hayes, it can assist Ireland in meeting its commitment to electrify its transport system, which will not be possible without the volume of renewable power which the offshore industry can deliver. Deployment of large-scale MWs close to the load centre (Dublin) would improve grid optimisation and reduce transmission costs. Providing additional volumes of renewable power is necessary to attract new foreign direct investment and to support the development of energy intensive industries; and the location of turbines out at sea has a low level of visual impact and virtually no noise impact on communities.
“There is a strong pipeline of offshore wind projects in the Irish sea,” said Mr Hayes. “With clear government support, these projects could deliver 1.0 GW of capacity in the immediate future that could help mitigate the 2020 fines. There is an additional 3.0 GW that could be delivered between 2020 – 2030.
“With appropriate policy support, Ireland can become an industry leader in the emerging area of floating wind, which is a particular technology where the western seaboard can experience significant benefit due to the nature of the sea basin and the large scale of the natural resource.
“In addition, once Ireland has achieved its targets for domestic renewable energy supply, there are significant opportunities in relation to interconnection and export. Such interconnection will support a higher penetration of renewable power onto the Irish grid and enable future exports.
“In order to facilitate development of the Irish offshore wind industry and stimulate the required private sector investment, specific government policy support is required,” said Mr Hayes. “To ensure joined up work and action, it is proposed that the government forms an Offshore Wind Development Committee, where the Department of the Taoiseach plays a lead role, to bring together representatives of the relevant government departments and state agencies and industry representatives, with a remit to oversee the work necessary to develop the offshore wind industry.”
Based on consultation with key industry participants, the KPMG report recommends the following policy initiatives. Firstly, the Irish Government should develop a targeted policy for the development of the Irish offshore wind industry; secondly, there should be technology-specific support for offshore wind within the proposed renewable electricity support scheme; and foreshore leases should be issued under the current Foreshore Act to enable Irish Sea projects to commence development in the immediate term. A Foreshore Amendment Act should also be introduced, said KPMG, dealing with offshore wind, along with a specific offshore wind grid connection round for Irish Sea projects.
“These policies would facilitate existing projects and provide a stimulus to the industry for future projects, enabling immediate investment and activity in the sector. All of the suggested policies can be implemented in the short term,” Mr Hayes said.