Minister’s speech achieves clarity

Minister clarifies the future for energy conservation and renewable production sector.

 

While there were many good points made by the Minister the issue of supportive community involvement in renewable developments is still not really addressed.

Pat Rabbitte’s speech to the LK Shields Energy Conference (Wednesday 10th October, Shelbourne Hotel, Dublin) provided much needed clarity to the direction of government policy in the area of renewable energy and energy conservation.

 

There has been a torrid summer and autumn in the sector this year with two large scale infrastructural projects (regularly) announced, speculation on the future of REFIT, and questions asked about the security of long-term investment in renewables projects. The Minister succeeded in putting many of those questions to bed – many of them in a highly satisfactory manner.

According to the Minister, ‘REFIT payments are fixed for 15 years so as to provide the sort of certainty that developers need.’ This is probably long enough to ensure a solid long term return for many investors. He also indicated that he hopes to hear from the EU commission soon on the issue of the extension of REFIT1 up until 2027.

Further clarity came form the Minister’s announcement that large scale energy exporting schemes would not qualify for producer subsidies, though surely there was never a chance that this would happen. On the contrary, ‘such energy exported will be subject to the State retaining a share of the renewable energy value and/or a type of royalty payment bringing revenue into the Irish exchequer.’

This is entirely in keeping with the notion that natural resources are at least in part the property of the people of the country.

The Minster was however rather less clear about the community benefits from other renewable energy projects. His speech mentioned those opposed to wind farms believe that ‘benefits arising from wind are not enjoyed locally but by consumers far removed from the locus of generation’. He countered that rates paid by developers amounted to a community dividend.

The Minister is surely aware that there there are many who are wholeheartedly in support of wind farms who do not believe that the industry’s benefits are properly distributed. The payment of commercial rates to local councils does not in fact represent much of a community dividend, rather simply a meeting of legal obligations. The added local tax revenue will in reality simply replace central taxation. In addition, in a tone that was oddly anecdotal given the forthrightness of the rest of the speech, the Minister said he ‘was told’ that developers paid €1,000 per megawatt into community funds.

Per annum? By all developers, by some, by one? Is this level of community involvement in projects that will be operating profitably for the next 20 years any where near adequate? In 2032 will a community hosting a 50MW wind farm be happy with a €50k donation it received in 2012?

On conservation the Minister said that he is still committed to the existing supports to businesses which are proving successful. He was less certain that the domestic grants in the Better Energy Programme were reaching the take-up levels he would like. He signalled a change in tack towards a ‘Pay As You Save’ scheme. This will bring in those domestic users who have not been until now able to come up with the matching funds to avail of the existing grants.

Again, this can be seen as a positive step. However, the PAYS scheme, if poorly designed could end up weighted in favour of the energy retailers. They have credit lines and collection methods that could put them at an unfair advantage effectively handing them a multi-million euro construction business as an unintended gift.

It may be better if the PAYS scheme was structured in such a way as for registered contractors to be involved in retro-fitting energy upgrades. This will not be simple to organize, but it is vital if we are to avoid two or three large retailers being given an oligopoly in the home energy upgrading sector with all the likely inefficiencies that would result.