Business Irish

Monday 24 October 2016

'Why do all other countries have solar and we don't?'

Grazing sheep in the same field where thousands of solar panels are used to produce electricity may seem like something out of Father Ted, but it could be the future, writes Environment Editor Paul Melia

Published 14/04/2016 | 02:30

Amarenco chief executive John Mullins pictured outside Dublin’s Gresham Hotel. Photo: Caroline Quinn
Amarenco chief executive John Mullins pictured outside Dublin’s Gresham Hotel. Photo: Caroline Quinn

Amarenco chief executive John Mullins has big plans. The former Bord Gáis boss wants to build at least 40 solar farms across the country, without affecting agricultural production.

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This can be easily achieved, he insists. Because panels are mounted around 1.3 metres off the ground, and six metres apart, sheep can graze and the grass continue to grow while clean, green energy is produced and Ireland ramps up its effort to combat climate change.

It's a win-win for the farmer, paid an annual lease for use of their land, and the State in its effort to meet binding 2020 EU targets. But he is hugely frustrated at the lack of Government support.

There is no tariff or guaranteed payment for solar as applies for wind, biomass, hydro and even polluting peat generation. None is expected until at least late this year.

The Sustainable Energy Authority of Ireland (SEAI) barely mentions the technology as being a realistic option to help meet the 2020 goals, and the cost of connecting farms to the electricity network is higher than in other jurisdictions, he claims.

Not only will the first large-scale solar farm on the island go ahead in the North, where there is less light and sunshine, he says that unless the State ups its game, it faces missing the targets and being hit with fines from the European Commission running to hundreds of millions of euro.

"You can't rely on one silver bullet," Mullins says. "Wind is cheapest for Ireland, but are we maxing out on public acceptance? We've been 25 years building windfarms, and we're half-way to our targets and it's more challenging every day. The question is: do we invest in climate change, or pay fines?"

Mullins ran the semi-state energy giant Bord Gáis for five years from 2007, and has a background in the renewable energy space, previously working with NTR. He founded Amarenco in 2013.

In March 2014, the company acquired a 12MW solar plant on a 42-acre site at Avignon in France valued at €19m. The Centrale Photovoltaique De La Garrigue generates revenues of €2.1m a year.

Four more followed, which produce 34MW of power and generate revenues of €8.3m. Another three have since been completed, and nine are under construction, with a total capacity of 65MW. In all, the French operations are forecast to generate annual revenues of almost €23m.

Activity in Ireland is also ramping up. Last December, Amarenco secured planning permission for a 5MW solar farm in Kilcannon, Co Waterford, with Cork County Council approving plans for another at Carrigaline in January, which will see 22,200 photovoltaic panels installed across a 10.2-hectare site.

A third was approved in Inniscarra last week, and the company has also completed a 40KW installation in Waterford Institute of Technology, and is working with UCC and Mayo County Council on similar projects.

It plans to develop 40 solar farms across the country, and 18 more will be in the planning system by the summer with a view to all being built in 2017 - if a tariff is in place.

The projects will be financed through a mix of borrowings and equity - the company has debt of €183m, equity of €52m and the Australian bank Macquarie is willing to invest €180m.

Amarenco is profitable, making around €500,000 last year following a startup loss in 2014, and work is progressing on the basis of a tariff being approved. Land options have been signed with farmers across Cork, Waterford, Wexford and Clare. Annual payment rates vary from €900 to €1,800 per acre across France, with Amarenco paying "at the lower end" in Ireland. Each farm will cost around €6.5m to deliver.

Mullins says that as much as 3GW (gigawatts) of solar could be installed across 600 sites - around the same amount of wind currently across the Republic, and sufficient to power around two million homes. This would represent investment of €5bn, and create 5,000 jobs.

Around 1GW, or 1,000MW, could be erected on rooftops in built-up areas, but none of these grand plans will happen without Government support.

"I have heard commentators say that there shouldn't be a subsidy, but I understand that for every 1pc off our 2020 targets we are, there's a potential fine of €150m. The Public Service Obligation (PSO) levy for peat, which is due to go, could be used for renewables. Instead of supporting carbon production, it could support carbon reduction. All I'm saying is, why do all other countries have solar photovoltaic (PV) and we don't? Why is this (industry) growing, and why are we different?

"There are industrial players ready to build in Ireland. I would like to see this technology installed. It's an investment in rural Ireland, and to mitigate CO2 emissions." The costs of installation is falling, and there is huge investment across the US, China and Japan. Around 35GW is installed in Germany, and 8.5GW in the UK. Last month, Morocco switched on the first phase of a $9bn plant at the edge of the Sahara desert which will be the world's biggest on completion.

Around 20 companies are looking to invest in Ireland, including the ESB and Europe's largest solar energy company, Lightsource. That's in part because solar farms operate at the distribution level, meaning they don't need a connection to the national grid. If the site is right, Mullins says, they're not intrusive, and they produce during the day, when demand is highest.

As the panels are mounted four feet off the ground, it means sheep can graze and grass continues to grow. It gives an opportunity to invest at farm level, and you'll always absorb the energy. This is an opportunity to invest in rural Ireland."

The company is also open to developing community farms where a stake of up to 30pc could be held by local people. In addition, it's considering a 1pc turnover community gain fund. In Denmark, community projects enjoy a higher tariff, but he admits that the ultimate owners are likely to be pension funds seeking a steady return.

Panels can be delivered into the Port of Cork for €125 each. Each operates for 30 years. Once planning is secured, a farm can be erected in 12 weeks.

But Mullins is critical of the SEAI for not highlighting the opportunities. The agency says a recent assessment of what Ireland needs to do to meet 2020 targets, including installing 250MW of wind a year, retrofitting homes and having 50,000 electric vehicles on the road by 2020 (fewer than 600 were sold last year, he notes), is based on actions currently supported by government. The lack of support for solar meant it was not considered in depth.

Mullins says a suggestion that solar is too expensive for Ireland will not be borne out.

"There's a genuine interest from industry, for its own reasons including its CO2 balance sheet which needs to be in a better place, and solar is the easiest one to put in place with the least planning constraints

"The SEAI says we need to install 250MW (of wind) a year, but you have to question is there's money for these investments. Security of supply is a big issue for biomass, and ocean energy is very limited. I believe a lot of the targets... are not obtainable.

"The SEAI has zero mention of solar PV. I believe there's a view it's too expensive for the Irish market, but we're producing at 6.7 cent per MWh in the south of France, and could get to 12 cent in Ireland over one or two years in the best areas of the country."

The planning process has worked relatively smoothly to date, but connecting with the distribution network is expensive.

"We should get an offer of a connection from the ESB within 90 days, but costs are an issue which need to be debated. As an industry, a number of us have built in other jurisdictions. In Ireland, a 1.5km connection to a substation can cost €500,000. It's €200,000 to €250,000 in France. I had one project involving a 15km connection, with a river crossing, which cost €1m.

"But we need a tariff. There's needs to be a discussion around this, and it's entirely up to the regulator and the Government to set that. There's a gap - an enormous gap - and I don't think this blueprint will get us there."

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