The European Union has set tough targets to reduce greenhouse gas emissions and increase the proportion of energy it obtains from renewables. Janet Wood looks at the targets, and examines the response in Ireland to this call to action
The thrust of the European Union’s (EU’s) programme on climate change into the next century was determined at the Convention on Climate Change, held in Kyoto in 1997. The Kyoto meeting followed on from work done at the Rio Earth Summit in 1992, and it was at Kyoto that the EU agreed to reduce the level of climate change gases it produces by around 8%, compared with 1990 levels, by the period 2008-2012. There is a long way to go to meet that target: it will represent a reduction of around 30% on the ‘business as usual’ option.
The range of measures that will help achieve the Kyoto targets include promoting renewable energy develop-ment, as well as increasing energy efficiency, enhancing the provision of CO2 ‘sinks’, promoting sustainable agriculture and using fiscal incentives to promote reduction of emissions.
Increasing the use of renewables — including small hydro — is therefore a major part of the EU’s strategy, and the contribution from all types of renewable energy is planned to double: from meeting 6% of energy of EU energy needs in 1996, it is planned to reach 12% by 2010. These targets, described by the Commission as ‘ambitious but realistic’ were set out in a White Paper published in December 1997.
The Commission does not expect to achieve this growth in renewables without capital investment: estimates suggest that it will cost some ECU165B. There is a payback, however: the associated new technologies and industrial growth will also mean well over half a million new jobs, a reduction in imported fuels of more than 17%, and an annual saving of 402Mt in CO2 emissions. The Commission also foresees that the programme will build expertise in renewables in the region, helping develop a renewables-based export business.
Within the renewables sector most of the growth arises from biomass and wind power, which are set to grow from 45Mtoe to 135Mtoe, and from 2.5GW to 40GW, respectively. Small hydro’s contribution at present is expected to be somewhat smaller: it is expected to increase from 9.5GW (in 1995) to reach 14GW by 2010 (see table).
The Irish experience
Ireland’s Renewable Energy Information Office estimates that renewables provide some 6% of Ireland’s electricity generating capacity. This is around 2% of the country’s total energy requirement, with electricity from hydro power and other renewables accounting for around 0.8%, and the remaining 1.2% arising from heat supplied by wood fuel in the domestic and wood processing sectors. The Irish aim is to increase renewable capacity so that it will represent 10% of installed generating capacity by 2000.
The route being used to increase renewables capacity in Ireland is a series of competitions known as the Alternative Energy Requirement competition (AER). Winners of the third in this series of competitions were announced in April 1998 (see IWP&DC, May 1998, p4).
The AER competitions offer guaranteed power purchase agreements with Ireland’s Electricity Supply Board (ESB) for developers of renewable energy projects. The winners are also able to make use of some fiscal incentives as follows:
•Tax relief on company profits is available in respect of capital costs for new renewable energy projects. The relief is available for three years and is capped at 50% of capital expenditure net of grants or Ir£7.5M. The relief is withdrawn if the shares are not held for a minimum of five years by the investor company.
•The developers can apply for European Union ERDF funding to cover some capital expenditure.
Under the PPA the ESB buys electricity from the project on what is often known as a ‘take or pay’ basis. According to the Information notes for generators: ‘The generators will in normal circumstances be ‘self dispatched’ but ESB may disconnect or control the output of the facility. During periods of ESB controlled output where the facility is available to generate, payments will be made to the generator as if the facility were running at its normal level of output, so that full kWh payment compensation will have been achieved for any loss of output required for production/demand balancing on the ESB network or in the event of a transmission system emergency. Payments will not be made to the generator when the facility is disconnected from the network for other reasons such as fault outage or maintenance of the network connection.’
‘Normal levels of output’ generally refers to the nameplate rating of the plant multiplied by a mutually agreed availability factor.
The winners of the AER1 competition were announced in March 1995. The contracts had been bid in terms of price per kWh, and in terms of grant aid that would be required to set up the project. The selected projects were also required to provide a performance bond set at IR£3 per kW of the generating capacity bid. The 34 contracts covered an installed capacity of 111MW split between the fuel sources as follows:
•Wind — ten contracts for 73MW.
•Hydro — ten contracts totalling 4MW.
•Landfill and waste — six contracts totalling 12MW.
•Combined heat and power — eight contracts totalling 22MW.
Three years later, six of the ten hydro projects chosen have been completed and are producing electricity. According to Ireland’s Department of Public Enterprise, they are:
•A 2.1MW project at Anarget Upper, in County Donegal, owned by Saporito. (80kW of this project is currently in commercial operation).
•A 435kW project in Ashgrove Mill, County Kerry, owned by Sandview.
•A 21kW project at Ormonde Mills, Kilkenny, owned by Kilkenny Island Historic Park.
•A 140kW project at Cahir Mills, County Tipperary, owned by Cahir Commercial Enterprises.
•A 70kW project at Ballinrobe, County Mayo, owned by the Valkenberg Hotel.
In the event, all of these were completed without grant aid.
The second phase of the renewables programme, AER2, was a dedicated call for biomass projects, and included no hydro capacity.
In the third phase, AER3, some 100MW of capacity was originally offered in 1997. Announcing the winners on 8 April this year, Joe Jacobs, Minister of Public Enterprise, noted that 188 bids for various forms of renewable energy had been offered, totalling over 1100MW. As a result, the total capacity offered was increased to 159MW.
The bids were assessed (by the UK-based Energy Technology Support Unit) on technical competence and price; in comparing prices, technologies were compared ‘like with like’ so that hydro bids were compared only with other hydro bids. The winners were: ten hydro plants; nine large wind farms; eight small wind farms; two waste-to-energy projects; one landfill gas-to-electricity project.
The hydro plants total 4.42MW (for a full list see IWP&DC, May 1998, p4), and will provide electricity at a price between 3.38p/kWh and 3.9p/kWh. Finally, a tidal energy project is still being assessed. All the AER3 projects must be up and running by the end of 1999.
How has the AER process helped towards meeting Ireland’s commitment to the EU? The AER3 projects will save 150,000t per year in CO2 emissions — a small but significant saving when compared to the 3Mt Ireland produces each year. Joe Jacobs noted that he was currently inviting submissions on renewable energy for a forthcoming Green Paper: the country, he said, was ‘on track to have 10% of the electricity network based on renewables by the year 2000’.