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Planning Environment Engineering Project Management Project
Communications Due Diligence
rpsgroup.com/irelandLocal knowledge INTERNATIONAL EXPERTISE
IRELAND SPECIAL REPORT 2015
18 JUNE 2015 n WWW.RENEWS.BIZ
Irelandin fullbloom
CONTENTS
Rocketing rates threaten to ruin investment mood musicReading the runes for Dublin’s post-Refit worldPitfalls and upsides in new-look single market
Turbine setback alarm bells ringingSupply chain running hot
Size matters for yield-hungry operatorsFertile soil for Bord na Mona
Refit pours oil on asset-buying firesBanks pile aboard the Refit trainUK demand key to offshore ambitionsDawn breaks for solar sector
North on verge of quantum leapWind farm project countdownSeaGen keeps seat at Fair Head tidal projectGaelectric in vanguard of energy storage revolution
Industry hopes for break-out moment
FRONT PIC: the38MW Sorne Hill wind farm in Donegal Photo: Brookfield
POLITICS
ONSHORE CHALLENGES
DEVELOPERS
FINANCE/SECTORS
NORTHERN IRELAND
BIOMASS
07-09
04-07
10-12
13-17
18-20
21
n n n
n n
n n
n n n n
n n n n
n
IRELAND 0218 June 2015
Champagne yearsfor the Republic
Rush for the Refit 2 wire puts
construction plans into overdrive but supply chain and
policy uncertainty could spoil party, writes
Stephen Dunne
03
“...Wind has moved beyond
just being an energy
resource; it is now also an
enabler for foreign direct
investment in Ireland...”
renews.biz
The wind industry in the Republic of Ireland is ramping up to smash construction records as
developers race to beat the Refit 2 support regime deadline of end-2017.
Some 788MW of onshore projects are set to be built next year, more than double the previous 12-month best of 350MW, according to figures compiled exclusively by renews with developer, planning and grid-provider input
A relatively modest tally of 283MW is expected this year while 550MW is slated to come online in 2017 itself, although the latter figure could rise significantly with a further 609MW already consented.
In total, the two-year stretch from the start of 2016 could see 1900MW of capacity added to the grid, putting Ireland on target to exceed its target of generating 40% of electricity from renewables by 2020, equivalent to 3.8GW. If planners take a favourable view on the 1300MW in the planning queue the industry is likely to pass the 4GW mark well before the end of the decade.
The anticipated construction spike raises questions, however, about the
supply chain’s ability and willingness to get the job done. Construction and electrical engineering prices are said to be unsustainably low with many contractors reluctant to over-extend themselves for the meek returns on offer.
“Across the board you are going to see problems with the supply chain,”
said Natural Power project manager Marc Lamphiere. “The market really needs certainty to support the construction contractors to go out and get the people they need.” Turbine transporters, cranes and even ESB-certified poles could
BUILDING BOOM: wind farm construction stretches into the twilight hours Photo: Moriartys
also be pinch-points. Beauchamps Solicitors head of renewable
energy Ainsley Heffernan said he believes the private sector will rise to the challenge but is concerned about the public sector. “Eirgrid, ESB Networks and the CER all have to step up to the plate. Are they going to be adequately resourced to hire the staff they need?” he asked.
Other issues could slow progress. A potential trebling of business rates, complex new market rules due in 2017, uncertainty about a successor support mechanism to Refit 2, new planning guidelines and an increasingly emboldened anti-wind movement are all making developers sweat.
Bord na Mona head of PowerGen John Reilly said serious doubts are emerging about whether the wind sector can fulfil its potential and help Ireland meet renewable targets. “There is no doubt these things in combination are likely to see a significant slowdown in the rate of development. Ultimately if we don’t hit the targets the taxpayer will have to pick up the bill unnecessarily,” he said.
Irish Wind Energy Association chief Kenneth Matthews said even if the renewables target is hit three years early there needs to be a continuing regime beyond 2017. The wind sector is anticipating a 900MW increase
in national electricity demand as a result of a data centre boom led by technology giant Apple.
“They are coming to Ireland because of its stable policy environment and phenomenal wind resource,” said Matthews. “Wind has moved beyond just being an energy resource; it is now also an enabler for foreign direct investment in Ireland.”
The semi-state development stable remains in rude health. ESB leads the pack with a 300MW installed wind target. Coillte is chasing similar numbers with tie-ups at ESB and SSE underway, including the 169MW Galway Wind Park due to be commissioned in 2016.
Bord na Mona is pinning its hopes on the 370MW Oweninny mega-farm, an ESB partnership due to be decided by state planners later this year. Gaelectric, Galetech, Ecopower, Energia and Craydel are continuing their recent growth with serious multi-megawatt project targets.
Despite the emerging risks, developers with consent and grid connections in place are being offered increasingly attractive terms by debt providers scrambling for business.
Domestic and international banks are all offering keenly-priced finance deals while equity investors eager to get in on the ground floor are throwing cash at attractive assets. n
IRELAND 03 18 June 2015
02
Measurement systems
Mast installation and management
Remote sensing
Acoustic monitoring
Data management
IIIttt’sss aalllll aaabbbooouuuttt ttthhhee ddddaaaattttaaa”””
MEASUREMENT SERVICES
www.res-group.com/measurement | +44(0) 141 404 5689
REPUBLIC’S WORK ROSTERDue in 2015Name County Developer MWAcres Donegal GE/Element 17.5Barranafaddock Waterford GE/Element 34.2Carrowleagh 2 Mayo Independent 2.65Carrownaweelaun Clare Windsource 4.6Clahane 2 (Pallas 2) Kerry Clahane (2) Energy Limited 13.8Cloghboola Kerry Gaelectric 46Cloonlusk Galway Connaught Power 4.6Collon Meath Collon Wind Power 3Cooly Cork Independent 4Glanta Common Cork Ballybane 13.8Glentane 2 Cork Brookfield 12.5Kilbranish Wexford Greenogue Wind Farm Ltd. 2.5Killin Hill Donegal Enercon 6.9Kilmeedy Limerick Unknown 4.9Knockduff Cork Invis Energy 65Leabeg Offaly Gaelectric 4.6Roosky Roscommon Gaelectric 4.6Three Trees Donegal Three Trees Wind Project 4.6Tullynamoyle 2 Leitrim Tullynamoyle Wind Farm 2 13.8Woodhouse Waterford ESB 20TOTAL 283.55MW
In the pipeline for 2016An Cnoc Tipperary Cnoc/Gaelectric 11.5Ballagh Limerick Gaelectric 4.6Ballybay Kilkenny Gaelectric 13.8Ballycumber Wicklow KBM 18Buttevant Cork DP Energy 18Carrickallen Cavan Galetech 23Cloghaneleskirt Kerry Cloghaneleskirt Wind Farm 11.5Coolegrean Kerry SSE 18.5Derrynadivva Mayo Ecopower 6.8Derrysallagh Sligo Kilronan Wind Farm Ltd. 34Foyle Kilkenny ART Generation 9.6Galway Wind Park Galway SSE/Coillte 169Glencarbery 2 Tipperary Ecopower 33Kilberehert Cork Independent 4.5Killala Mayo Killala Community Wind Farm 14Kilmaley Clare Seahound Wind Development 13.4Knockawarriga 2 Limerick Brookfield 7.5Lettergull Donegal Impax 18.4Lisdowney Kilkenny Lisdowney Wind Farm Ltd 9.2Meenadreen Donegal Energia 95Mountain Waters Monaghan Galetech 11.2Oldmill Monaghan Galetech 16Rahenleagh Wicklow ESB/Coillte 36Sliabh Bawn Roscommon Coillte 58Slievecallan Clare West Clare Renewable Energy 87Taghart Cavan Galetech 20.7Tullabrack Clare Windsource 13.8Tullaroan Kilkenny ART Generation 12TOTAL 788.0MW
Scheduled for 2017Boolynagleragh Clare ESB 20.7Cappawhite Tipperary ESB 54Castlepook Cork ESB/Coillte 33.1Coolberrin Monaghan ESB 15Coolegrean Kerry Harry Harbison/SSE 18.5Corkermore 2 Donegal Energia 10Cullenagh Laois Coillte 45Grousemount Kerry ESB 104Leanamore Kerry SSE 18Lisheen 3 Tipperary Brookfield 24Moneypoint Clare ESB 15Scartaglen Kerry Harry Harbison 39Seven Hills Roscommon Galetech 87.5Upperchurch Tipperary Ecopower 66TOTAL 549.8MW
Any move by Dublin to enforce a 700-metre turbine setback distance could seriously imperil
the nation’s renewables targets, the wind industry has warned.
Discussions with officials on a new set of wind farm planning guidelines are coming to a conclusion with Environment Minister Alan Kelly understood to be supporting a plan to deal with noise and shadow flicker via a minimum setback, potentially linked
to turbine height. However, industry is unhappy with the proposals, arguing they will add more uncertainty to the post-2017 scenario.
Irish Wind Energy Association chief Kenneth Matthews said he is surprised setback has moved centre stage as the department’s original thinking was focused on issuing new benchmarks on shadow flicker and noise.
“It would seem odd that the
Environment Department would impose conditions that would make it harder to meet (renewables) targets,” Matthews said.
While the guidelines will not have any bearing on projects with consent and in the pipeline over the next two and a half years, what may happen in 2018 and beyond is another matter. Beauchamps Solicitors head of renewable energy
IRELAND 0418 June 2015
Turbine setback alarm bells ringing
05
Industry at battle stations over feared measure in coming
planning update
renews.biz
ENVIRONMENTAL SUPPORT FOR RENEWABLES PROJECTS(LEADING EDGE SERVICES TAILORED TO CLIENT NEEDS)www.ramboll-environ.com Nathan Swankie [email protected]
WIND FARMS ON IRISH HORIZONConsented, no build date
Name County Developer MWAught Donegal Aught Wind Farm Ltd. 23Barna Cork Craydel 28Beam Donegal Beam Wind Ltd. 9Bonniconlan Mayo Independent 28Bunkimalta Tipperary ESB/Coillte 48Butter Mountain Wicklow Galetech 27Carrowleagh Kilbride Mayo Independent 48.3Castlepook Cork ESB/Coillte 42Cleanrath Cork Craydel 21Coomatallin 2 Cork SSE 3Cordal Kerry Saorgus 84Derryvacorneen Cork Craydel 17Dromadda Beg Kerry Dromadda Beg Wind Farm 3Dromadda More Kerry Impax 32Esk Cork Craydel 24Kilcarrig Carlow Kilcarrig RE 15Loughderryduff Donegal North West Wind 9.35Milestone Tipperary ABO Wind 15Tooberatoreen Limerick SSE 11Treannagleragh Mayo Monterrosso 9.2Tullynageer Monaghan Galetech 11.5Upper Lillies Donegal Fahan Wind 5Yellow River Offaly Greenwind 96TOTAL 609.35MW
Major projects in planningAltnagapple Donegal Altnagapple Wind 26Ardderroo Galway Invis 87Ballyhorgan Kerry Craydel 30Boolynagleragh 2 Clare ESB 16.1Carrickaduff Donegal Invis 126Cloghan Offaly Galetech 28.8Clogheravaddy Donegal ABO Wind 19.95Cregg Meath Cregg Wind Farm 18Dalton Mayo Invis 40.8Derragh Cork Framore 13.8Derrykillew Donegal Derrykillew Community Wind Farm 12.5Emlagh Meath Element Power 160Esk 2 Cork Craydel 18Garvegort Donegal Bonnar Engineering 3.6Glenahiry Waterford Ecopower 25Knockalough Galway Invis 27.5Knocknamona Waterford Ecopower 27Maighne Kildare Element Power 141Meenwaun Offaly Element Power 15Oweninny Mayo Bord na Mona/ESB 370Pine Woods Laois Galetech 48Shehy More Cork Craydel 36Shragh Clare Clare Coastal Power 27Tawnanasool Mayo Ecopower 16.8TOTAL 1333.85MW
Ainsley Heffernan said investors are already picking up on
future planning risks from a setback distance.
“The risk is you have large tranches of the country sterilised,” he said. With an election looming within 12 months and the junior coalition partner Labour under serious pressure, many fear a change in planning parameters may be used as a sop to secure rural support. Kelly is a Labour TD for Tipperary North.
“If you look at who has backed Alan Kelly there would be more of an anti-wind hue,” said a political source. “Pylons and wind farms may well become an issue and all TDs and ministers are going to be thinking where there is less damage for losing votes.”
Not everyone is so downbeat. Galetech director Darren Sherry said developers just want certainty.
“We are getting a lot of strange decisions at the local authority level so planning guidelines this year
would be helpful,” he said. “Once they established a form of best practice they would be welcomed by industry.”
Appeals body An Bord Pleanala is struggling to deal with around 1500MW of wind projects at various stages in the Irish planning system. In May it shot down Coillte’s 48-turbine, 150MW Cluddaun application in County Mayo.
Coillte director Mark Foley said the decision was “harsh”, adding he believes there is too much at stake for energy policy to be politicised.
“There is a very serious risk that if you get the planning guidelines wrong there may be irreparable damage done to the Irish wind industry,” he said.
Projects require planning consent before the end of this year to qualify for Refit payments and other developers with applications before ABP are getting nervous.
Partners ESB and Bord na Mona’s 370MW Oweninny wind farm has been lodged for almost two years.
BnM’s John Reilly said he is confident of building the wind farm outside of the Refit process should
IRELAND 0518 June 2015
04
“...There is a very serious risk
that if you get the planning
guidelines wrong there may
be irreparable damage done
to the Irish wind industry...”
LOVE THY NEIGHBOUR: Energia’s 9MW Hollyford wind farm nestles into the Tipperary countryside Photo: Sean Abeyta
no decision be made this year but not everyone is so lucky. “There is no doubt that with these sort of delays projects may fall away,” he said.
Ireland’s 2020 target of meeting 40% of electricity demand with renewable energy is at risk, Reilly added.
“It was assumed that we would hit that target but I think there is a question mark over that now.”
Adding to the mix is last year’s project-splitting ruling in Dublin’s High Court, which planning sources said is causing delays with case officers seeking more information on grid routes before issuing decisions
Brian Keville, a director of planning consultancy McCarthy, Keville and O’Sullivan, said the judgment has led to a “new reality” where developers need to carry out impact assessments of grid connections when submitting initial planning paperwork. n
IRELAND 0618 June 2015
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Developers have the upper hand in tender negotiations with contractors as the Irish wind
industry prepares for its busiest ever period.
Supply chain players are being forced into cut-throat pricing competition in the hectic project construction market with developers also keen to ensure costs are kept to a minimum. If the trend persists big contractors could withdraw, leaving an already limited pool of experienced companies in Ireland further diminished.
Powerteam director Alastair Dawson said the electricals outfit is becoming increasingly selective about tendering. “We see some very silly prices in the Republic. People are going in with ridiculously low rates. That’s probably a function of the recession and what happened to the construction industry.”
Developers should not get too comfortable, however. “There’s a fairly buoyant market not so far away in Scotland,” Dawson warned. “If prices for electrical work remain on the floor it could be difficult to get contractors
to take on the work (in Ireland).” Civil contractors tell a similar story. Many could potentially expand their operations but are reluctant to do so due to tight margins and uncertainty post-2017. One senior source at a
leading wind farm constructor said developers are starting to realise their projects may fall through if they fail to sign on experienced companies.
“Start dates and financial close timelines are slipping on virtually every project and there’s a bit of a panic with tenders coming out from
all angles,” said the source. “On our part there is still a certain degree of selection of clients with prices still so low.”
Developers are refusing to yield to demands for better pricing, he added. “We tried to increase our price on a couple of small jobs recently and we didn’t get anywhere near the final shake-up.
“Market prices are totally unrealistic at the moment. People are still trying to do work at very small margins and the reward really doesn’t justify the risk.”
Opinion is mixed on whether the supply chain can cope with demand given there is at least 1800MW in the Republic’s construction pipeline for the next two and a half years.
Marc Lamphiere of Natural Power said as well as getting face time with a limited number of finance decision-makers, turbine manufacturing schedules are looking dicey.
“We are typically seeing a nine-month wait for turbines and if everyone is working within that window someone is going to
Supply chain running hot
Race to the bottom on prices
‘threatens to drive out experienced
contractors’
07
“...Start dates and financial
close timelines are slipping
on virtually every project and
there’s a bit of a panic with
tenders coming out from all
angles...”
renews.biz
A trebling of business rates could push struggling operational wind farms into default with
lenders and prompt a rethink for big investors with skin in the Irish game.
In recent months the Valuation Office has boosted the levy on wind farms in Limerick from €6000 to more than €20,000 per megawatt per
annum as part of a plan to review the business tax across the Republic.
Appeals in Limerick have been launched by operators but Dublin has pressed ahead with a roll-out of legislation that will see nationwide revisions, sparking widespread anger in the wind industry.
If the Limerick appeals fail wind farms could be on the hook for damaging, possibly fatal, opex increases as rates bills represent one of the largest annual outgoings.
Energia Renewables director Peter Baillie said he believes the industry has been unfairly targeted and argued
price supports are insufficient to give developers cover to deal with revisions.
“A rates increase is fair enough but a trebling of (bills) has the potential to be a show-stopper,” he said.
With inflation flat-lining, any opex hike will make it even harder to manage debt. “Some projects from the last five years are struggling because they have factored in inflation,” said HgCapital director Emma Tinker. “With the rates issue on top, it may push them into default.”
Banks are watching the process closely but are confident debt repayments can take the increase at existing projects and will remodel lending terms to cover potential exposure. It is in the investment
community, however, where the risks are being most keenly felt.
Several recent equity deals and major project sales have either collapsed or been postponed until the outcome of the Limerick appeals are known, renews understands.
Sellers are being shouldered with risk by buyers keen to bring prices down in a bid to salvage some long-term profitability on projects.
Gaelectric chief financial officer Barry Gavin said any large rate increase amounts to a “retrospective tax” that will scare off big investment funds like BlackRock. The asset manager’s Teresa O’Flynn told this year’s Irish Wind Energy Association conference it was a “retroactive change” and “not a risk we signed up for”.
One company with hefty investments in Ireland is Canadian giant Brookfield Renewable Energy Partners.
Last year it secured the former Bord Gais portfolio for €700m and plans to extend the operational assets beyond 320MW to 500MW.
Finance sources said the developer, which is thought to have been unaware of the revisions when carrying out its due diligence, is likely to be deeply unhappy with potentially swingeing cuts to long-term returns.
Intensive industry lobbying of government is ongoing and, in a possible sign of a softening stance in Dublin, junior finance minister Simon Harris recently said “another legislative vehicle” could be used to offer “a partial exemption”.
This has raised hopes that a solution can be found given further revisions in other counties are imminent. n
IRELAND 07 18 June 2015
Rocketing rates threaten toruin investment mood musicTax shock in Limerick
tears up wind farm revenue expectations
06
“... It is in the investment
community where the risks
are being most keenly felt...”
renews.biz
lose out. It will end up as a race.”
Lamphiere added that relatively straightforward issues such as the availability of cranes, ESB-approved wire poles and electrical commissioners are also set for a scramble.
Wind Prospect Ireland director Ken Boyne is more upbeat. “The supply chain will certainly be stretched by the projected volume of work but already we are seeing a welcome spreading of that workload due to the normal mix of project delays and inertia,” he said. n
KNIFE-EDGE MARGINS: turbine blades navigate a tricky corner en route to the site of Element Power’s Barranafaddock wind farm Photo: Element Power
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IRELAND 0818 June 2015
The Irish wind industry is looking to Dublin to provide a stable Refit 2 successor in order
to avoid a collapse in activity after 2017. Consultation on a new support mechanism is due to get underway soon with the government set to detail its plans in the autumn.
Energy Minister Alex White has repeatedly signalled in recent months that a “market-based” regime will replace Refit. Sources suggested Dublin favours an auction or Contracts for Difference-style proposal with EU policy moving away from feed-in tariffs.
The minister has already said the White Paper will feature stronger rules on public consultation. Communities must be given a “genuine stake” in renewables and energy department officials are examining a shared ownership incentive to encourage developers to offer up to 20% equity.
Electricity demand is set to increase
by at least 900MW in the coming years as technology companies look to set up data centres powered by renewables, according to Irish Wind Energy Association forecasts.
IWEA chief Kenneth Matthews said clear policy statements are needed
from Dublin to avoid a “boom and bust” cycle of wind development. “We don’t want to see (a) massive supply
chain increase to 2017 that goes down to 200MW per year after that.
“Demand is going to grow because (tech) companies want access to clean renewable energy. Unfortunately the political support seems to be wavering so one would wonder if politicians are plugged into the business environment.”
The industry consensus is that an increasingly mature wind sector can successfully transition to a competitive auction-style scheme. Whatever it looks like, developers and investors are seeking clarity. “We need certainty,” said Barry Gavin of Gaelectric, “and I’d be looking for that sooner rather than later because with uncertainty people are going to be slow to make real capital investment.”
The supply chain is also looking for a firm footing as it targets growth after a lean recessionary
Reading the runes for Dublin’s post-Refit world
Smart money on market-based
support regime and greater role for
communities
09
“...Clear visibility of the new
mechanism needs to be seen
this year to ensure continuity
of the project development
cycle beyond 2017...”
renews.biz
actively. “It’s a regressive step because… a single entity doesn’t have the ability to manage power that a big (integrated) entity does,” said Darren Sherry of Galetech. “It’s almost anti-competitive. The costs should be socialised.”
Emma Tinker of HgCapital said she believes the current design needs tweaking if it looks set to “penalise wind for being wind”.
“Does it makes sense to have a market design that has balancing payments and a capacity mechanism targeted away from wind?” she said. “The regulator should stand back and say ‘we’ve encouraged wind onto the system, let’s not penalise them for what they are’, because that seems counterproductive.”
Uncertainty over the impact ISEM will have on Refit payments is causing anxiety among developers who note a tightening in power purchase agreement terms offered by electricity supply companies reluctant to over-extend themselves. Existing deals are also coming under threat due to market change clauses.
“Both lenders and PPA suppliers are pushing the risk back on the developer,” said Gael Force Wind Energy chief executive Michael Sheehy. “The fact that Refit 2 has fewer
IRELAND 0918 June 2015
Pitfalls and upsides innew-look single market
EU-inspired overhaul to bring energy
trading, balancing and more forecasting
“... Does it makes sense to
have a market design that
has balancing payments
and a capacity mechanism
targeted away from wind?...”
renews.biz
08 period. Several senior electrical and civil engineering sources
told renews they are keen to add staff to meet short and long-term demand once Dublin commits to a strategy beyond 2017.
Wind Prospect Ireland director Ken Boyne said he has no preference for a Refit successor but wants the direction of travel to be clear.
“Visibility... needs to be seen this year to ensure continuity of the project development cycle beyond 2017, especially if industry needs the supply chain to invest in additional capacity to deliver in the short term.”
Domestic and international investors are keen to avoid chaos over the next two years and are looking for comfort from Dublin. “We need a long-term view in the White Paper,” said EY cleantech director Barry O’Flynn.
“Ireland has positioned itself very well in how the renewables sector operates and we must examine how we are going to leverage that.”
The business rates issue and renewed commitments to the emission-heavy agriculture industry are examples of a questionable approach to the government’s green credentials, he added.
A “holistic” approach is required to enable new renewables growth in onshore and offshore wind, solar and storage. “If policy does that in a clear way to 2030 and beyond investors will flood in,” O’Flynn said. n
MARKET SIGNALS: Energy Minister Alex White Photo: IWEA
Looming electricity market changes look likely to make life even harder for the smaller,
independent developer in Ireland.A so-called integrated single
electricity market (ISEM) will replace the existing all-Ireland single electricity market, probably in the third quarter of 2017, as a result of EU legislation. Regulators north and south of the border are working through numerous lengthy consultations on the new design and a better picture is expected next year.
ISEM will expose the wind sector to the volatility of an auction-based market requiring a far greater level of output forecasting. The industry is still grappling with what energy trading will look like post-2017.
“ISEM will require things such as energy trading, balancing and more forecasting,” said Beauchamps
Solicitors head of renewable energy Ainsley Heffernan. “If you get your forecasting wrong you are going to pay for it in the balancing market.”
Many believe the new market will have a lasting impact on those independent players without the in-house ability to trade and forecast
guarantees for the supplier, coupled with the timelines for Refit 2 deadlines and ISEM introduction, has resulted in limited and poor PPA offers.”
Others are highlighting the potential upsides. “Having the trading timeframes aligned with the UK might facilitate export of energy and reduce curtailment,” said Irish Wind Energy Association policy manager Mary Doorly. “If the forecast is for high wind people can trade accordingly and send a signal that we have cheaper energy in Ireland.”
Some companies are already using the uncertainty and complexity of the new market design to carve out niche positions. Brookfield is understood to be examining the supplier option while Gaelectric has already moved into the supplier space, offering the carrot of better forecasting and operational management.
“Off-takers’ terms were getting tighter and the number of players was getting tighter,” said Barry Gavin of Gaelectic. “As a developer we were taking a huge amount of risk and giving away a lot of the upside so we made a conscious decision to start writing our own PPAs (ahead of ISEM).”
Concerns over serious falls in wind farm revenues are real but unlikely to push operational or new projects into default territory with many banks factoring in the changes to debt terms.
“The way that we have structured projects with sponsors over the last few years has left enough headroom in cash flows to be able to absorb reasonable amounts of change,” said Theodore Collins, director of German bank Nord/LB. “ISEM on its own should not cause a default scenario.” n
Irish developers are demanding longer turbine blades in a bid to increase capacity factors with a
growing portion of construction in the coming years likely to take place at less windy sites.
County councils have meanwhile been inundated with a slew of turbine modification requests as operators battle to maximise revenue potential.
Marc Lamphiere of Natural Power said capturing better yields via changes to hardware specifications is an industry-wide trend.
“Some of the projects you see coming through now were consented around eight or nine years ago,” he said. “Turbine suppliers are trying to tune their hardware as they realise that not all projects are on top of a mountain in west Cork.”
Lamphiere cites Senvion’s MM82 and MM92 models, which have enjoyed great success at medium and low profile sites in the UK, as an example of a manufacturer rising to developer needs.
The supplier has yet to make inroads in the Irish market but other turbine makers have taken up the mantle. On the back of some stellar
years in Ireland, Siemens recently unveiled a SWT 3.3MW machine with 130-metre rotor diameter as well as a 2.3MW model with a larger 120-metre rotor.
The German company said that contract negotiations are increasingly focused on how developers can maximise power output at medium to low wind sites.
Enercon has also spotted the opportunity, introducing its E-82 class machine offering 20% more production than its E-70 predecessor on smaller towers.
“A lot of people were requesting 100-metre Class I machines and they are getting it now with the E-101 3.5MW, which offers an increased rate of power,” said Northern Europe sales manager Robin Borgert.
Wind projects are also increasingly being monitored for breaches of noise planning conditions. Enercon has introduced trailing edge serrations on its fleet and is working on quieter generators.
Technology demands are a sign the Irish wind industry is maturing, according to Wind Prospect Ireland director Ken Boyne. “Our client base is
very much focused on maximising the value of all developments rather than merely rushing for megawatts,” he said. “Alternative turbine options can unlock greater project value, especially for those projects that are being competitively acquired.”
The race for better yield is likely to hit a ceiling at some point, however, with logistical and visual impact concerns putting pressure on delivery and consent decisions.
In addition, increasing blade sizes to bump up yield is only financially viable to a point as haul routes must be upgraded, developers pointed out.
The decrepit state of local and regional roads across much of Ireland means serious cash can be sunk into just getting the blades to site, leaving many projects with a tight specifications window.
Turbine modification consents from An Bord Pleanala and county councils are gradually increasing.
Major cases heading for determination in the coming months include Invis Energy’s 126MW Carrickaduff with 156.6-metre tips and Element Power’s 141MW Maighne at 169 metres. n
IRELAND 1018 June 2015
Push on to maximise returns with larger wind turbines but
crumbling road system a challenge
renews.biz
STRETCH LIMO: Element Power’s Monaincha wind farm in Tipperary features 15 Nordex N117 turbines, the largest erected to date in Ireland
Photo: Wind Prospect Ireland
Size matters for yield-hungry developers
Tel: +353 66 7121468 Email: [email protected] www.moriarty.ie
Ireland’s Leading Civil Engineering Contractors
to the Wind Industry
A new 42MW wind farm now towers over a Tipperary peat bog that has provided energy
for centuries. Bruckana is semi-state developer Bord na Mona’s third wind project after the 6.5MW Bellacorick in Mayo and 84MW Mount Lucas in Offaly.
While Bruckana may be the little brother to Mount Lucas, its completion marks the company’s emergence as a serious player in the Irish wind sector. The 14-turbine project also underlines its evolution from peat generation to green power with the company targeting 50% renewables output this year.
John Reilly, who heads up the developer’s PowerGen unit, said much of its 80,000-hectare land bank is ripe for further wind development. Pre-planning is already underway on a number of projects and community consultations will start once Dublin’s
new wind farm planning guidelines are published.
“Subject to some of the big issues being resolved, we feel wind still has a big role to play,” said Reilly. “That doesn’t mean a wind farm at every
crossroads or on every headland but at appropriate areas to help Ireland meets its decarbonisation objective in a cost-effective way.”
Bruckana ticks the boxes when it comes to “appropriate areas”. Built
on the expansive Templetuohy Bog with turbines in three counties — Tipperary, Kilkenny and Laois — the site is a developer’s dream.
The state of Irish roads means haul routes are a nightmare for developers. Thanks to the nearby Lisheen zinc mine, however, few upgrades were necessary for Bruckana bar the building of a haul route known as road 23 across a section of bog. In addition, many of the internal site tracks already existed and just needed upgrading.
Bruckana is aesthetically laid out to compliment the long straight troughs made in the bog during the peat harvesting process and construction faced little opposition from local communities.
Brookfield’s Lisheen 1&2, much of which has been operational since 2009, is said to have
IRELAND 1118 June 2015
Fertile soil for Bord na Mona
Land-rich peat specialist now picking
up head of steam as renewables
developer
12
“...Community ownership...
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dunk... but we are certainly
willing to engage...”
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IRELAND 1218 June 2015
11 eased the path. However, with a total of 44 turbines
spinning planners have said the area is “approaching saturation”.
Future projects could find themselves in the sights of organised anti-wind groups, which are ratcheting up efforts against the industry. Reilly said Bord na Mona is already looking at ways to solve the issue, including community ownership schemes.
“It isn’t by any means a slam dunk in terms of how a project would be structured but we are certainly willing to engage with communities and understand the level of interest,” he said.
“(We will look at how) local communities could feel they have some sort of a stake in a wind farm on Bord na Mona lands.”
Bruckana has had a few scrapes along the way. During a recent site visit, Siemens technicians were preparing to remove the rotor on turbine number 10 to replace the main bearing on the manufacturer’s 3.0DD-101 model. Some repairs have also been needed on Siemens hardware at Mount Lucas.
Elsewhere on Bruckana, turbine number 13 was out of action as engineers worked on resealing the main bearing rather than a full replacement.
The wind farm was exporting 6MW at the time of the visit with wind speeds averaging 5.3 metres per second on a below-average day in the Irish midlands.
Bruckana will have better days as it finalises its grid code compliance tests and should cement Bord na Mona’s potential as a coming force in Irish renewables. n
EMERGING FORCE: Bord na Mona’s 42MW Bruckana wind farm in County Tipperary
Photo: renews
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Investors remain keen on pumping cash into Irish wind but the risk profile will spike later this year as the
2017 Refit cut-off hits build timelines. Developers report overwhelming
interest in for-sale projects of all shapes and sizes despite a shortage of assets on the block, which means premium prices can be commanded in a seller’s market.
The playing field has been levelled to some degree by uncertainties around business rates and policy changes but developers with planning approval and grid offers in place are holding a strong hand.
Feilim O’Caoim of corporate law firm McDowell Purcell said he expects to see the mergers and acquisitions market heat up in the coming months.
“Projects have to crystallise in the market very soon because anyone who is buying has to leave themselves enough wiggle room to construct and
become operational before the Refit deadline.”
Investors may take a step back later in the year, he added. “You will see investors like pension funds, which have no appetite for risk, allowing
developers to develop and consider buying once constructed.”
UK-based investment fund Impax Asset Management has been leading the charge, recently acquiring the construction-ready 18.4MW Lettergull and 32MW Dromadda More projects.
Other investors such as NTR, BlackRock, Glennmont Partners and Brookfield are looking to add to their recent Irish purchases in a bid to lock in long-term returns.
Last year Glennmont lined up three deals for Irish wind but got cold feet. “We’ve got to play capital where we can get a good return so we can only go so far with pricing,” said the clean energy fund’s Peter Dickson.
Even so, the prospect of long-term returns is keeping it in the hunt despite the emergence of risk.
“Obviously we don’t like it when costs increase… We make our investments with flexibility to absorb quite a few shocks that occur downstream,” he said. Barry O’Flynn of financial consultancy EY said the high level of investor interest isdown to policy stability. “Ireland is at a competitiveadvantage. Investors
IRELAND 1318 June 2015
Refit pours oil on asset-buying fires
Wind investors pile in while the
going is good
14
“...We’ve got to play capital
where we can get a good
return so we can only go so
far with pricing...”
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IRELAND 1418 June 2015
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13 know they are getting a market designed to take on renewables.”
He added, however, that supply cannot meet the demand for construction-ready or operating projects. “This year is still hot, there is lots of money out there but there aren’t enough projects. It’s a case of people joining the queue if they want to invest in Irish wind.”
Despite the bullish sentiment the potential for policy change is worrisome. An election is due within 12 months and some are concerned
politicians may cling to anti-wind fears to secure votes. Indeed, the Irish industry is watching Whitehall machinations as Conservative backbenchers demand action on anti-onshore election promises.
One high-profile international fund manager said the sector is dealing with the “political legacy” of the Midlands export project. “The wind industry has done a singularly poor job in providing the other side of the story in a way that can be explained to the ordinary person.
“We have to ask for joined-up government in a way that makes these people electable because if the people out there who are willing to stand up and support us cannot get elected then we’ve got a problem.” n
“... if the people willing to
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PORTFOLIO BUILDER: Canadian renewables player Brookfield’s 88MW Knockacummer wind farm in Tipperary Photo: Brookfield
IRELAND 1518 June 2015
Banks pile aboard the Refit train
Financing window of opportunity for
big-hitters and their local project partners
but independents left out in cold
16
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Irish banks have re-entered the domestic renewables sector in a big way, offering attractive debt terms to
developers itching for financial close.Led by Allied Irish, institutions are
aggressively targeting the small and medium wind sectors where local players are seen as having a stronger hand due to their relationship with more established development companies.
“Irish banks are giving small developers another option and are keen to stress a long-term, local approach with good accessibility,” said a senior banking source in the renewable sector. This has driven down debt costs with developers and bankers reporting up to one percentage point cuts in terms on offer.
Other domestic banks are keen to muscle in on the large-scale generation market in a bid to provide debt and spread their risk. They are finding it hard, however, to displace the German and British debt providers who can leverage lower fund costs.
Among the more notable deals of recent months is Nord LB’s financing of Energia’s 95MW Meenadreen wind farm in Donegal. “We’re mandated on nearly 300MW this year, which is the strongest year we have ever had in
Ireland,” Theodore Collins of Nord/LB told renews.
The bank has released around €1bn into the Irish renewables market and is looking for more business over the next two years. Collins said there is a good supply of high-quality projects in the pipeline with domestic competition driving down financing costs.
“At the worst time of the recession we saw a margin 100 basis points higher for Irish projects than UK projects. That premium doesn’t exist
any more and, with euro versus sterling swap rates, the all-in cost of Irish financing is lower than the UK.”
Securing project finance is set to become more challenging in the coming years, though, warned Nord’/LBanalyst Alan Harling. “Towards the
back end of 2016 it’s going to get harder. In 2017 we don’t see many deals being financed because of the Refit deadline.
“There is a finite period where projects need to be finalised to meet the deadline that the system currently has in place. With grid delays, planning challenges and the recent Coillte project being canned by An Bord Pleanala, it’s going to be hard.”
Debt providers are examining how the integrated single electricity market will interact with current support mechanisms but are more fearful of what will happen post-2017.
“At the moment we are going from having a Refit to a situation where we have nothing at all,” said Harling. “This needs to be sorted quickly because there is going to be a point when banks find it harder to finance renewable projects. There could potentially be a natural stoppage.”
Barry O’Flynn of EY is equally cautious: “The market is full of interest at the minute but this may soften at the end of this year as the Refit deadline approaches and banks become more sceptical about developer’s ability to build out and commission their projects.”
While cheap debt is currently being made available to the big
CASH GENERATOR: Energia’s 95MW Meenadreen wind farm in Donegal, part of a €1bn financing drive in Ireland by Nord LB
Photo: Energia
Uncertainty about the long-term future of onshore wind in the UK could be the spark needed
to light Ireland’s offshore sector.Irish Wind Energy Association
boss Kenneth Matthews is keeping a close eye on policy movements in Whitehall. Irish offshore wind, which has been unsuccessful in securing a state subsidy from Dublin, could plug the gap if the British onshore industry is hit hard by the new Conservative government, he argued.
“If we get the scale right that is the opportunity to trigger the industry in
Ireland. The UK is likely to focus on the cheapest offshore wind. Some of the cheapest offshore wind in the UK happens to be Irish offshore wind,” Matthews said.
A deal to export wind power from Ireland to the UK failed to materialise last year after talks between Dublin and London broke down.
However, industry sources are confident potential new avenues may open up for cross-border trading, in particular for offshore output.
Insiders point to the ISLES joint industry initiative, which is looking at ways to join the Irish and Scottish electricity grids to tap marine renewables.
A study due out today in Dublin is expected to name Fred Olsen’s
220-turbine Codling and 55-turbine Oriel wind farms as potential first-mover projects for interconnections, it is understood.
However, to date Ireland’s offshore sector remains becalmed after the much-hyped early promise. First Flight Wind last December abandoned plans for a 400MW wind farm off the Down coast. The 100-turbine B9 Energy, Dong and RES tie-up was canned over changes to the UK’s subsidy scheme. The partners also cited uncertainty over electricity market changes.
Irish offshore sources confirmed exploratory talks have taken place between Irish and French grid operators about power exports to France with wind players keen to exploit mainland European markets.
Initial studies by Eirgrid suggest an interconnector with France would be economically viable and a full seabed analysis will be completed this summer. n
IRELAND 1618 June 2015
UK power demand keyto offshore ambitions
Industry pins hopes on interconnectors
to Britain and mainland Europe
15
“...exploratory talks have
taken place between Irish
and French grid operators
about power exports to
France with wind players
keen to exploit mainland
European markets...”
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players with clear project pipelines, some independent
one-off developers are suffering, according to Feilim O’Caoimh of law firm McDowell Purcell.
“A lot of the lending in recent years has been ‘relationship lending’ where developers have large portfolios and are delivering megawatts each year,” said O’Caoimh. “But independent developers struggle with the availability of finance where you only have one project with no big annual relationship.”
As a result, this class of proponent is struggling to convince banks to loosen the purse strings.
O’Caoimh said this is likely to lead to increased consolidation in the wind sector with independent projects put on the block in increasing numbers. n
The solar industry is building a head of steam in Ireland as the government mulls committing
to a support mechanism later this year. Intense lobbying of officials is expected to ensure PV will form part of the post-Refit 2 mix.
Major players are trying to get out in front by signing option deals with landowners across the southern half of the country. Bidding wars are underway for the best sites as solar developers look to take advantage of any policy changes in Dublin’s forthcoming energy policy statement.
A number of international outfits such as Amarenco, BNRG and Lightsource have been joined by domestic contenders like Gaelectric and Bord na Mona. Several others are considering dipping their toes in to the market.
“Ireland’s got a late-mover advantage,” said Irish Solar Energy Association chief David Maguire. “It’s one of the few countries that’s never had a solar support mechanism and because we’re late to the party we can learn from the mistakes of other European countries.”
Maguire said solar could help
increase renewables generation to 2020 without the need for further significant grid investment. Yet without a support mechanism of around €0.15 per kilowatt-hour and a reduction in European import tariffs Irish solar could struggle. “Solar is being restricted in terms of competitiveness and cost base by protectionism,” he claimed.
Amarenco chief executive John
Mullins said a support mechanism should only be made available for sites with consent, financial backing and a robust design in order to avoid a rush of unviable projects.
Mullins, whose Irish plans are being backed by Australian investment group Macquarie, said 35 planning applications for solar farms in the southern half of Ireland will be submitted this year.
The former Bord Gais man said
his company will follow the wind industry’s efforts at getting community buy-in. “We’ll go to local village halls, put up the displays, talk about it and answer any of the concerns that people have,” he said.
However, without a stable support mechanism, the game will be up. “In Europe they are surprised that Ireland hasn’t followed the lead of nearly every other country,” said Mullins.
“The price of the technology will keep coming down and you have to start a market somewhere. But both Macquarie and ourselves make it very clear that unless there’s a tariff, investors’ money is not going to get deployed.”
Other companies are in pre-planning stages. Wexford Solar is currently awaiting the outcome of an appeal to planning body An Bord Pleanala for a 5MW project in the south-east.
Bord na Mona, Coillte and ESB are understood to be examining solar development while Gaelectric is involved in UK projects in the hope of building up the expertise to take advantage of policy changes in Ireland. n
IRELAND 1718 June 2015
Dawn breaks for solar sector
But support mechanism is vital
to project feasibility, say developers
“...The price of the technology
will keep coming down...”
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A shave over 30MW of wind capacity will be added this year in Northern Ireland, continuing
the province’s run of weak build years.
Ever-increasing uncertainty over grid connections is front and centre in a spread of major issues damaging developer confidence. Figures compiled by renews show just four projects scheduled for completion.
Despite concerns over the future
subsidy mechanism for Northern Irish wind, however, developers have begun circling the wagons for a major push in 2016 and 2017.
Next year is likely to see a construction boom with at least 230MW set to go live. A further 105MW is confirmed for 2017 but this will be swelled by the 170MW-plus of consented projects without a clear build timeline.
At least 416MW is in planning and industry is hopeful of meeting the further 850MW needed to hit the magic installed capacity mark of 1600MW required to meet a 40% renewable electricity target in 2020.
Northern Ireland Renewables Industry Group chair Patrick McClughan said 2016 is a “huge year” but a range of risks could strangle progress. The perennial problem of the province’s grid is “nearing crisis point” as system operator NIE’s cluster substation timelines cause headaches with the 2017 Renewables Obligation deadline approaching.
“It’s been agreed a number of clusters will be developed in the next four or five years but we cannot wait
five years on a grid connection,” he said. “We have planning permissions ready to expire and large amounts of capital allocated that will move to other jurisdictions. NIE needs to move quickly to temporary and pragmatic connection solutions available at zero cost to the consumer.”
Industry is willing to underwrite the cluster strategy and will transfer
from temporary connections once the cluster substations are complete. “It is a win-win for everyone and deals practically with an issue where hundreds of millions of investment
IRELAND 1818 June 2015
North on verge of quantum leap
Grid tops list of issues that could trip up major build plans
over next two years
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SIGN OF THINGS TO COME: Gaelectric’s 42MW Dunbeg wind farm in Derry went live last November Photo: Gaelectric
IRELAND 1918 June 2015
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could dwindle away,” McClughan said.
TLT planning and environment partner Andrew Ryan warned, however: “Even if clusters are brought in it’s still going to be a problem, particularly the constraints on generation. It’s difficult to see those being reduced until the North-South interconnector is built.”
Ryan said M&A activity has slowed down with some banks reluctant to
over-extend themselves. Once big planning decisions are released later in the year, he believes, cash will start flowing.
Uncertainty reigns over what form of subsidy will replace the RO. In a consultation issued earlier this year, the Department of Enterprise, Trade and Investment questioned whether Northern Ireland should adopt the
UK’s Contracts for Difference auction system.
McClughan said industry was “shocked” by the position and flooded DETI with responses. The NIRIG man believes Northern Ireland is on the cusp of securing an RO grace period to March 2018. He is also confident CfDs will thereafter be the province’s support mechanism despite the negative mood music played by the Conservative government in Westminster about onshore wind.
“If Northern Ireland doesn’t complete electricity market reform it would be the only area in the UK and Ireland without any form of price floor support for renewables,” he said.
“But we are wholly confident that CfDs will be available to us, that we will bid in those auctions, and that we will win, because Northern Ireland wind is cheaper and better than wind in other parts of the UK.”
As well as securing transitional relief from rates increases, 11 new super-councils took over planning functions in April in a bid to speed up the approvals system. Energia boss Peter Baillie said the decentralisation of planning may see pressure put on councils to oppose wind farm development. n
“...We will bid in those auctions
and... we will win because
Northern Ireland wind is
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NORTHERN IRELAND PROJECT COUNTDOWNDue online in 2015Project County Developer MWClondermot Derry Energia 2.3Lisglass Antrim Energia 2.3Molly Mountain Fermanagh Erne Concrete Pumping 15Monnaboy Derry Gaelectric 12TOTAL 31.6MW
Scheduled for 2016Altaveedan Antrim RES 18Brackagh Derry REG 6Cloonty Antrim Gaelectric 12Corby Knowe Antrim Gaelectric 5.4Cregganconroe Tyrone Gaelectric 13.8Crockandun Derry Brookfield 18Eshmore Tyrone Energia 6.9Gortfinbar Tyrone DW Consultancy 15Inishative Tyrone Gaelectric 13.8Long Mountain Antrim Energia 27.6Ora More Fermanagh RES 12Seegronan Tyrone Brookfield 13.8Slieve Divena 2 Tyrone SSE 20Smulgedon Derry Gaelectric 16.1Tievenameenta Tyrone SSE 32.2TOTAL 230.6MW
Coming in 2017Brockaghboy Derry TCI Renewables 45Crockbaravally Tyrone TCI Renewables 6.9Crockdun Tyrone ESB 15Eglish Derry ESB 27Upper Ballyrogan Derry TCI Renewables 11.5TOTAL 105.4MW
Consented, no build dateAltamooskin Tyrone DW Consultancy 6Cam Burn Derry TCI Renewables 13.8Castlecraig Tyrone RES 25Craiggore Derry RES 18Draperstown Derry REG 6Draperstown Derry Creagh Concrete/REG 6Glenbuck 2 Antrim TCI Renewables 15Mullynaveagh Derry TCI Renewables 2.6Pigeon Top Tyrone TCI Renewables 27Pollnalaght Tyrone DW Consultancy 39.6Teiges Mountain Fermanagh DW Consultancy 12.5TOTAL 171.5MW
In planningBallyhanedin Derry Gaelectric 24Beltonanean Road Tyrone Island Renewable Energy 12Bessy Bell 3 Tyrone SSE 27.2Carnalbanagh Antrim ABO Wind 28.5Crighshane 2 Tyrone DW Consultancy 15Doraville Tyrone SSE 128Evishagaran Derry ABO Wind 35Feystown Antrim ABO Wind 13.8Gruggandoo Down ABO Wind 39.6Murley Tyrone RES 20.7Ora More 2 Fermanagh RES 6Tullyneil Armagh Gaelectric 13.8Windy Hill Derry Windyfields 52.5TOTAL 416.1MW
IRELAND 20 18 June 2015
SeaGen keeps seat at Fair Head tidal project
But ocean energy sector hardware yet
to make grade
renews.biz
DP Energy is sticking with MCT’s SeaGen turbine technology for the first phase of its 100MW
Fair Head tidal project in Northern Ireland after the former Siemens outfit was snapped up by Atlantis Resources in April.
The Cork-based developer’s chief executive Simon De Pietro said Siemens’ sale had caused “some uncertainty” but after recent talks with Atlantis and the MCT team it is now pressing ahead with its chosen turbine supplier and FP7 funding remains in place.
A planning decision for the initial 10MW array off the Antrim coast is due soon. An application for the remaining 90MW will be filed later this year.
Environmental impact assessments,
seabed analysis and grid connection studies are all ongoing. DP hopes to wrap up this work in the coming months.
Also in County Antrim, Canadian behemoth Brookfield Renewable has taken over from Bord Gais on the 100MW Torr Head tidal tie-up with OpenHydro. Environmental impact investigations are underway ahead of a consent application due this year for the initial 30MW phase planned for 2017.
In the Republic, flagship 5MW pre-commercial array WestWave’s developer ESB is in talks with a range of technology partners with none yet meeting the required readiness threshold. The project, in County Clare, will open in 2018 at the earliest
but nailing down a timeline is virtually impossible with hardware still well off the pace.
Technology remains the elusive final piece of the jigsaw in the Republic with a marine Refit due in 2016, prototype to full-scale testing sites nearing deployment, a streamlined consenting process on the horizon and onshore infrastructure development well in train.
Next month, the Irish Maritime and Energy Resource Cluster’s €15.2m Beaufort research building will be officially opened. Construction on IMERC’s Cork campus began last year with the aim of bringing together researchers and industry to support development of ocean energy projects. n
Gaelectric in vanguard of energy storage revolution
TIME AND TIDE: the site of the Fair Head project off County Antrim in Northern Ireland, where a planning decision is expected shortly
Photo: DP Energy
Gaelectric has identified two sites elsewhere in Europe where it could replicate
its planned 330MW Islandmagee compressed air energy storage system (CAES) in Northern Island.
The Dublin-based renewables group said it has substantially progressed proposals for a 268MW CAES facility in Cheshire in the UK and a 330MW plant in the Netherlands.
A planning application for the 330MW scheme at Islandmagee near Larne will be lodged with officials within the next three months, sources confirmed. The company hopes to develop the Cheshire and Netherlands projects in parallel.
Studies have discovered sufficient salt deposits required to host the massive underground compressed air caverns at all three locations.
Earlier this month, FTI Consulting released a study stating Larne could spark a Europe-wide expansion of the technology.
Barry Gavin of Gaelectric told renews that utility-scale and local level storage systems are the missing link in the decarbonisation transition. “The old energy model of hub and spoke, where big centralised generators distribute over wide networks, is broken,” he said.
“Utilities are being forced to reorganise, driven primarily by solar, wind and biomass. Big industrials are self-generating, which is creating opportunities.”
As well as CAES technology, battery energy storage will play an increasing role in Ireland. Gaelectric said in May it would partner with US electric car outfit Tesla to trial a new 1MW utility-
scale battery, the first of what the partners hope will be many projects.
“Whether it’s on solar or wind, local or grid level, storage will be key over the coming years,” said Gavin. “With renewables there are huge opportunities but also challenges to the industry as a whole. Storage is vital if we want renewables to reach full penetration.”
In a first for Europe, US energy storage company Beacon Power plans to build a 20MW hybrid battery/flywheel plant in Offaly. The project is being implemented by Irish company Schwungrad Energie and the Department of Physics and Energy at the University of Limerick.
Construction has begun on the 320kW first phase, which features two 160kW flywheels, with completion pegged for next year. The site will
store renewable electricity from the grid via two-metre long carbon fibre spinning tubes, which are floated on magnets and buried in the ground.
When grid demand requires extra power, the power can be pumped back into the system.
Elsewhere, a 10MW battery storage set-up is currently being installed at the AES Kilroot coal-fired power station in Northern Ireland.
In April, AES issued a tender seeking suppliers of lithium-ion batteries, inverters and balance of plant contractors. The company said it expects to award the three contract lots in July and deploy the initial 10MW storage system by the end of the year.
The company is working towards installation of a 100MW project, Europe’s largest battery installation, in 2017. n
Construction is due to begin this month on the 42MW Killala wood-fired biomass
plant in County Mayo, providing a much-needed fillip to the wider Irish bioenergy industry.
Mayo Renewable Power’s €180m combined heat and power project, the largest yet seen in Ireland, is scheduled to go live in 2017. Backed by US investment company Weichert Enterprise, Killala is being built by John Sisk & Son with engineering consultants Arup and Merrimac Associates also on board.
Irish BioEnergy Association general manager Michael Hegarty said the plant represents a significant boost for the domestic industry even if imported fuel will be required to satisfy demand in the short term. “It’s a signal bioenergy is important from the perspective of achieving Ireland’s renewable targets and for biomass providers as well,” he said.
IrBEA reports that land set aside for fuel crops has doubled in recent years as a result of significant national and international investment. A mature supply chain is now in place offering lower-cost domestic feed-stocks to electricity and heat generators, the group claimed.
Yet the market has stalled due to sluggish demand. “Thinnings are coming on stream or are available
now but farmers need a decent return on that investment,” said Hegarty. “That’s where there is a market failure. The demand needs to come from industry.”
An attractive successor to the current biomass-focused Refit 3 support regime, which pays €125.09 per megawatt-hour to large-scale CHP, is required alongside transparency about the renewable heat inventive due in 2016, the association added.
Dublin’s Energy Department is working on both policies but more urgency needs to be shown to encourage investment, Hegarty insisted. “Until there is clarity on qualifying criteria people won’t invest because they are afraid they might miss out on the payments.
“Incentives must be set at a level that is competitive with current fuel sources, be they natural gas or oil. It’s essential the tariff and RHI stimulate the switch to renewables.”
Once Dublin settles on its future biomass policy, many companies are in a position to follow Killala’s lead. “There is no question about the interest, it’s just that the market is waiting for the signal, clarity and commitment from the government,” Hegarty said.
Much of the indigenous biomass expertise has flooded into the UK market due to inertia in Ireland. n
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IRELAND 2118 June 2015
Biomass hoping for break-out moment
Domestic fuel supply chain ready
and waiting for demand to take off
renews.biz
GREEN PASTURES: the 42MW Killala plant will eventually burn locally-grown willow Photo: Mayo Renewable Power
