- The Irish government recently announced its commitment in the Climate Action Plan to achieve a 70% renewable power target by 2030, as a stepping-stone towards reaching net zero emissions economy-wide by 2050
- Achieving the target will require an additional 20TWh of renewables generation, relative to now, supported under the Renewable Electricity Supply Scheme
- A new study by Aurora Energy Research shows that the increased renewables generation target from 55% to 70% would cost €200-400 million more to the economy as a whole in 2030
- The analysis suggests this could increase customer electricity bills by, on average, €25-40 per household in 2030
The Irish Government’s Climate Action Plan report set new targets to reach 70% of power from renewable sources by 2030, as part of an ambitious plan to reach net zero emissions economy-wide by 2050. Reaching the 70% renewable energy target means the system will require over 20TWh of additional renewables generation. The Plan mentions technology specific deployment targets for onshore wind, offshore wind and solar at 8.2GW, 3.5GW and 1.5GW, respectively. The new renewables capacity is expected to be supported under the new government subsidy scheme, the Renewable Electricity Supply Scheme (RESS).
A new study release today by Aurora Energy Research, a leading independent European energy market analytics company, discusses the costs of achieving this target. It shows that the 70% renewables target is achievable through two different approaches; a first approach focusing mainly on offshore wind, and a second approach involving a diversified mix of renewables (onshore and offshore wind and solar).
Based on modelling of the Integrated Single Electricity Market (I-SEM), Aurora has calculated that achieving this target could cost on average, €200-400 million more to the economy as a whole by 2030. This equates to a cost of €25-40 per household per annum, paid through charges on electricity bills.
The integration of higher levels of renewables generation in a relatively isolated power system will require additional flexible generation capacity to ensure grid stability. The expanded procurement of system services through the Government’s DS3 programme is expected to stimulate interest and deployment of flexible power generation capacity throughout the 2020s. This, accompanied by further interconnection capacity (e.g. to GB and/or France), should help reduce the instances of high price volatility in the I-SEM market despite the increase in renewables penetration.
Rebecca McManus, I-SEM analyst at Aurora Energy Research commented:
“The Government has recently set a 70% renewables target by 2030, as part of its plan to reduce emissions to net zero by 2050. Meeting this target will require 20TWh of additional renewable generation to be supported by the Government under its new Renewable Electricity Support Scheme. This will cost at least €200m more to the economy in 2030 alone, translating into an increase in customer electricity bills of €25-40 per household.”
The study suggests that despite the downward pressure that higher renewables generation places on wholesale market prices, it is insufficient to counteract the increased cost associated under RESS scheme to support the level of renewables generation needed to meet the target. This, combined with additional costs to ensure the stability of the electricity system in a higher renewables scenario, is likely to increase the cost of electricity to consumers. The analysis shows that the cost can be minimised by pursuing a diversified mix of renewables, rather than focusing mainly on offshore wind.
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Notes to editors
Aurora Energy Research is a leading independent European energy market analytics company founded in 2013 by University of Oxford professors and economists. Aurora provides deep insights into European and global energy markets supported by cutting edge models to help our clients navigate the global energy transition and make bankable investment decisions. We work with world leading organisations across Europe, including energy companies, financial institutions and governments. Our services include: subscription-based forecasts, reports, forums and bespoke consultancy services. Aurora Energy Research has offices in Oxford and Berlin. For further information, please visit: http://www.auroraer.com