System 'killing' green energy sector
Red tape is putting €17bn investment at risk, with more than 300 wind-farm applications still awaiting green light
Published 16/01/2011 | 05:00
IT seems unthinkable, although perhaps unsurprising, that at a time when the Irish economy is crying out for new investment, government red tape and bureaucracy is putting €17bn of investment in wind energy and green technology at risk.
There have been more than 300 applications for new wind-farm developments since 2007, reflecting the potential that the industry has for growth in Ireland, yet none of the applicants have received any confirmation of when, or indeed if, their applications will be processed.
While the Government has claimed that the green economy is one of the sectors that will lead Ireland out of recession, the outlook for the industry, according to Tim Twohig of Element Energy, is not as positive or a clear cut as is often portrayed.
"On paper everything looks fine; in reality, there's a lack of joined-up thinking and the industry is struggling at present. It's been extremely stop-start over the last while. While we've had two very good years of development, we could now be facing a situation where there's no real development for the next number of years."
As Mr Twohig points out, a large part of the problem is a lack of communication between the numerous government departments involved in the process.
"What we desperately need is joined-up thinking between the Department of Finance, the Department of Communications and Energy, the Department of the Environment, the Commission for Energy Regulation, Eirgrid and the individual local authorities. Unless they're all working in tandem, you're going to have this stop-start situation in developing our greatest natural resource."
But the bureaucracy that the industry faces doesn't end there. Once the lengthy application process has been completed, wind-farm developers have to wait an average of seven years to get connected to the national grid. Some wind-farm operators will have been waiting for an unbelievable 14 years by the time they get a connection.
'The country is rapidly losing its appeal to investors'
As one investor succinctly put it, "you could put up a wind farm in six months, but you might spend seven to 10 years getting permission from all of the relevant authorities to get connected to the national grid. Once you're connected to the grid you could wait a further 12 months to get an off-take agreement."
Even the most conservative estimates put the cost of these staggering delays to Ireland's economy at millions.
According to Stephen Wheeler, managing director of Airtricity, despite Ireland's natural superiority as an energy-generating location, the country is rapidly losing its appeal to investors due to a lack of joined-up thinking and the delay in getting wind farms connected to the national grid.
"Red tape is the biggest issue facing the green energy industry and the biggest risk in attracting investment in the renewable business in Ireland. There's huge potential business there, but what's slowing development down right now is grid delivery.
"Airtricity have high quality sites identified which we're ready to invest over €170m in straight away -- and if all our projects got the go-ahead we could invest a further €680m in Ireland.
"The problem we have is that we have no idea when, or if, we'll ever get a connection to the national grid."
The Department of Energy, Communication and Natural resources has admitted that the necessary development to make Ireland's electricity grid fit for purpose won't be completed until 2025. The department also concedes that grid capacity has remained largely unchanged for the past 20 years, despite the fact that demand increased by more than 150 per cent in that period.
Mr Twohig believes that this lack of foresight is unacceptable. "The problem with the grid has been ignored for a long number of years. We've known for ages that Ireland has a great wind resource, but they're only now looking at developing the national grid."
While Ireland has one of the greatest natural wind energy resources in Europe, it currently accounts for just 2 per cent of European wind-energy installation and many in the green energy industry are calling for Energy Minister Eamon Ryan to appoint an energy czar to cut through the bureaucracy that is hampering the industry at all levels in Ireland.
Whatever the solution, until the environment for doing business is improved, Ireland is likely to lose much of its green energy business to other European markets with inferior natural resources, but where the wheels of government move quicker.
Sunday Indo Business