Wind power savings offset PSO levy

THE increase in wind-generated electricity looks set to reduce the wholesale price of electricity this year, a study has shown.

The report by the Sustainable Energy Authority of Ireland (SEAI) and Eirgrid finds that the cost of a controversial public service obligation (PSO) levy and a reduced wholesale price practically cancel one another out, meaning wind power is not more expensive for customers than more traditional sources of electricity.

The energy authority said the research proves that “our strong wind energy resource comes at no extra cost.”

The research was completed following growing criticism from householders at having to pay the PSO levy. This levy is aimed at recouping the costs incurred by the ESB and other electricity suppliers by having to source their electricity from these higher cost sectors.

Wind-derived electricity generation requires higher capital costs than other types of electricity generation and so costs more to buy — a differential that providers are reimbursed for via the levy.

The research showed that this year, wind generated electricity looks set to reduce prices in the €2 billion electricity wholesale market by €70 million, as it does not consume fuel and so costs less to produce.

“Wind generators have high capital costs, but as they do not consume fuel they have no short-term costs. By displacing higher cost fossil fuel generation, wind energy tends to reduce the wholesale cost of producing electricity, the study has found. When balanced against other costs [such as PSO], the overall cost impact of wind is less than 0.5%, which is within the study’s margin of error,” the study says.

The €70m saving almost exactly offsets the cost to the public of the PSO levy and other costs associated with the generation of wind energy.

SEAI chief operations officer, Brian Motherway, said the research brings “solid facts and clear evidence” to the wind energy debate.

“This detailed analysis answers an important question — that exploiting our strong wind energy resource comes at no additional cost.

“It is right that we keep a focus on energy costs, and it is very good news to see that we can capture the benefits of wind energy without having to pay extra for them. And as fossil fuel prices increase, the economic benefits become more significant.”

EirGrid chief executive, Dermot Byrne said wind power is vital to Ireland’s future. “Renewable energy can play an important part in the energy mix but it is important to continuously look at the effect on prices of all sources of energy, in the interest of consumers.”