Why recent Budget measures are a game changer for energy crops

Energy crop miscanthus

Louise Hogan

October 20 2017 06:00 AM

The revival of energy crops such as miscanthus and willow was being forecast following the Government decision to commit €7m to the Renewable Heat Incentive scheme (RHI) in last week's Budget.

Industry sources pointed out that exchequer supports for the RHI scheme are set to increase from €7m to €90m annually as the initiative becomes fully operational and that this will completely change the outlook for energy crops.

"This is very positive news. At long last the road ahead is bright," said Paddy O'Toole of Quinns in Baltinglass.

Details of the initial €7m package are expected to be announced by the end of November, when the support payments for users of renewable heating fuels will be made known.

The RHI scheme will cover the higher cost of generating heat from renewable sources such as willow, wood chip, wood pulp, straw and miscanthus. The support payment will be calculated on a per-unit-of-energy-produced basis. Given the controversy from the 'cash for ash' scandal in the North, it is anticipated that a tiered payment system will be employed by the authorities here.

Ireland must increase the proportion of energy it produces from renewable sources from the current 9.2pc to 16pc by 2020, or face annual fines of around €90m for every percentage point it is below this target. The most challenging component of this target is in heat generation, where we currently produce just 6.2pc from renewable sources and must increase this to 12pc by 2020.

It is envisaged that applications to participate in the scheme will open in July 2018, with the scheme being fully operational by 2019-2020. The administration of the scheme will be handled by the Sustainable Energy Authority of Ireland.

Although much of the biomass material for the scheme will have to be imported, industry sources maintained that it will provide a ready market for locally produced willow, miscanthus, wood pulp and straw.

Barry Caslin of Teagasc said that the scheme will increase demand for energy crops. It could also put a floor price on straw, as well as offering alternate land uses - such as producing silage for anaerobic digestion - for farmers who currently struggle to get an adequate return from conventional enterprises.

Paddy O'Toole claimed that the scheme could also rehabilitate the reputation of miscanthus by providing cereal growers with an alternative crop and the potential for a guaranteed return where supply contracts are agreed.

He insisted that supporting miscanthus was also a "no brainer" for the Government.

"Each tonne of miscanthus that replaces fossil fuels will save this country €460 in penalties," Mr O'Toole claimed.