Time to grasp the renewables opportunity | KPMG | IE

Time to grasp the renewables opportunity

Time to grasp the renewables opportunity

A fundamental shift in the Irish renewable energy landscape occurred in September.

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With no great fanfare a new grouping came together to represent all strands of the renewables generating sector as well as consumers and various other stakeholders.

RECAP (Renewable Energy Consumers and Producers) was established to respond formally to the government’s Renewable Electricity Support Scheme consultation document which sets out various actions in relation to state support for renewable energy in the future. These include proposals to introduce auction based systems for allocating system renewable supports and also proposed the concept of community involvement in renewable projects.

“The usual response to such consultation documents in the past has been for the various different players in the renewables sector to respond on the basis that they didn’t address the specific needs of the particular technology”, says RECAP member and incoming KPMG global head of renewables Mike Hayes. “This time it’s different. RECAP has come together and produced a response to the consultation on behalf of all strands of the industry and other stakeholders with an interest in renewable energy including specifically consumers of electricity.”

The response document - Decarbonisation of electricity in Ireland, a new roadmap – was published earlier this month and could mark a significant turning point in the approach to renewables in Ireland.

“We think that being more ambitious in terms of where the country can go on renewable investment is not only in the best interests of the environment, but is also in the best interests of consumers as it will decrease overall energy costs”, says Hayes. “There are considerable economic and other benefits that the green economy can yield for Ireland.”

These benefits are not simply the avoidance of EU fines for missing renewables targets but include economic gains including job creation, opportunities for companies providing services, increased exports, and tax revenue.

“Ireland has abundant natural resources for renewable generation and the country is capable of becoming a leader in terms of the adoption and integration of renewable energy, without increased cost to the consumer”, Hayes adds.

“Investment in technologies like offshore wind or solar could bring considerable benefits to local communities in areas like the West of Ireland which require more investment, he continues. “Also, we are going to face hefty fines from the EU for failing to meet our renewables targets. On top of that, the EU is now talking about increasing the 2030 target from 27 per cent of energy to possibly up to 35 per cent by 2030. In Ireland, we need to recognise that the direction of travel is more investment in renewables, not less.”

EU policy isn’t the only driving force. “The whole direction of travel from the corporate sector is rising demand for green power”, he notes. “Data centres require new sources of green power. As much as our tax rate, the availability of renewable energy is a factor in attracting FDI. We have already been engaging with the American Chamber of Commerce and government in relation to this issue.”

One of the key arguments against renewable energy from the consumer side is that it leads to higher energy prices due to the public service obligation (PSO) levy that is added to bills to fund the subsidies required to bring green power onstream. However, the RECAP report demonstrates that with the right type of economic support in the form of subsidies and greater investment in storage and interconnection, much higher renewable penetration can be achieved and prices can actually be lower.

“The assumption that this will lead to additional cost particularly with regard to the PSO levy is not a view that the group shares and we have provided independent third-party evidence to back up this opinion”, says Hayes. “In fact, we have shown as part of our modelling work, that increased renewable penetration in Ireland will result in a lower cost of electricity to the consumer even after the increased PSO cost is taken into account.”

Time is of the essence if Ireland is to realise the benefits on offer. “This is going to happen anyway”, Hayes points out. “But if Ireland doesn’t move now, others will take the lead and we will lose out on the benefits. We also need to prepare for the growing numbers of electric vehicles which will start appearing on our roads very soon. Electric vehicles are going to be adopted much quicker than anticipated and they are not going to be powered from fossil fuel sources. This will require a very significant increase in renewable energy.”

Hayes, who received Sustainable Nation’s 2017 Sustainable Business Leadership Award recently, wants to see a partnership approach between the industry, government and other stakeholders in addressing the issue. “The Government’s Energy White Paper sets out an ambitious and visionary policy objective of decarbonisation of the Irish energy sector. We are concerned that the proposals in the RESS consultation will not deliver these objectives”, he says. “In fact, we want to work constructively with the government to develop a more cohesive green energy policy. The response we have received to the RECAP document has been tremendous and we have started sharing it with government departments, EU bodies, state agencies, universities and other interested parties. We plan to continue reaching out to others with a view to sharing our messages and creating a consensus around this agenda.”

This article was originally published in the Irish Times on 30/11/2017 and has been reproduced here with their kind permission.

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