ESB says cheap electricity should not decide who wins offshore wind contracts

Picture: Stock image

Caroline O'Doherty

The ESB, which lost out to cheaper rivals in the competition for offshore wind energy contracts last week, has said they should not be judged on price alone.

Senior executive with the electricity firm, Jim Dollard, said track record and capability should carry more weight in future competitions.

The ESB was one of six companies and consortiums to enter the country’s first ever auction for lucrative contracts to supply renewable electricity from offshore wind farms at a state-guaranteed price for 20 years.

Its proposal, the Oriel Wind Park, which sought to install wind turbines off the coast of Co Louth, was one of two projects not to receive contracts.

The four cheapest projects made bids to provide power at an average cost of €86.05 per megawatt hour.

That is the price now set for the duration of the contracts and will be the price influencing how much ordinary householders and business customers pay into the 2040s.

Individual bids were not revealed for commercial reasons but the ESB’s was above the highest of the four successful companies.

Mr Dollard, an executive director with the ESB, told a conference hosted by industry body Wind Energy Ireland and sponsored by ESB that it was “fantastic” to see the auction completed and it provided “tremendous optimism” for the future and the next phase of auctions.

However, he added: “In terms of phase two, we believe in ESB it should not be purely based on price.”

He said the bids should also be assessed on factors such as a developer’s track record, a credible plan for delivering on the project, access to supply chains for materials and services, and innovation.

“In terms of the type of auction that’s required for phase two, we would think that’s very important.”

Environment Minister Eamon Ryan said that, under EU rules, the only criteria the bidders could be judged on was price.

He said these rules were starting to change and if they did, he would look at adding other criteria in future.

However, he stood over the way the first auction was run. "The auction process really did deliver," he said.

Mr Dollard stressed that the ESB remained committed to pursuing offshore wind projects.

The Oriel Wind Park remained viable and the company had around 10 offshore wind proposals and ideas under development.

This morning it announced that is has applied for a foreshore licence to survey a site off Co Wexford with a view to developing plans for a wind farm there.

The four successful bidders in last week’s auction intend building wind farms off the coast of counties Dublin, Wicklow and Galway.

They are backed by companies from Germany, France, Norway and the UK.

The ESB would have been the only project with an Irish company as its primary backer.

Noel Cunniffe, chief executive of Wind Energy Ireland, stressed the significance of the price agreed last week.

It is more expensive than offshore renewable power supplied in other European countries, but Mr Cunniffe said: “€86.05 one of the most competitive prices in emerging markets.

“It locks us into low-price, green energy for 20 years.”

The four successful bidders must now secure planning permission and are due to submit their applications to An Bord Pleanála in the coming months.

Mr Cunniffe said the proper resourcing of the planning system remained a concern.

He also said it was essential that developers get sight of proposed DMAPs (designated maritime area plans) as soon as possible.

These will set out the areas around the coast where future offshore wind farms will have to be located.

The four winning projects would provide 2,200 construction jobs, he said, and 600 permanent operations and maintenance jobs after that.

Long-term the industry would provide tens of thousands of jobs, he said.