Chris Egan

Wind Energy in Ireland: Securing Our Electricity Supply Against Rising Uncertainty Over Fossil Fuel Prices

Abstract

This study is aimed at investigating the use of wind energy in Ireland as well as the position of wind energy globally. A comparison is undertaken between current non-renewable energy generation methods with renewable methods, focusing particularly on wind energy. A mathematical analysis is provided between the different energy sources. It will be shown that wind energy is a good source of energy for Ireland and its competitiveness will improve in the years to come.

Furthermore a case study of the current competitiveness of wind energy focusing on the feasibility of having installed a wind farm instead of a gas power plant recently installed in Ireland is presented and outlines some of the barriers hindering the growth of wind energy in Ireland. These fundamentals can be applied on a global scale.

Introduction

The move to dependence on a sustainable energy supply comes with challenges such as reliability, security of supply and cost. The areas of Ireland’s electricity market will be examined as well as wind power technologies and their application to Ireland. A cost analysis will also be investigated with reference to other forms of energy supply, both renewable and non-renewable, to see if it is feasible to have a reliance on sustainable energy sources. This analysis will be completed using current technologies in energy generation as well as future trends for the electricity market.

Literature Review

Ireland’s Electricity Market

The electricity grid in Ireland is controlled by Eirgrid which is a state owned company. Eirgrid looks after the electricity grid for the North and South of Ireland and is unique in that it runs over two jurisdictions and deals in two currencies due to the different jurisdictions involved. Eirgrid reported for 2010 there was an increase in the electricity usage compared to the 2009. [1]

The single European electricity grid is an initiative introduced by the European commission to have one single electricity grid for all members of Europe. Individual nations would maintain areas of the grid in their jurisdiction. The aim of the single European grid is to give security of supply to all members of the EU. Also it would also mean nations which have issues with capacity would have the ability to tap into the generation capabilities of the other EU nations.

Energy Mix

The energy mix is a breakdown of the amount of energy consumed by a country into the source of the electricity. Figure 1 below shows the energy usage in Ireland from 1990 to 2009. It can be seen that overall there has been an increase in electricity usage in this period which would be expected but the dependency on fossil fuels is still very much there. The use of coal and peat as an energy source has reduced slightly but it shows an increase in the reliance of oil and natural gas. The most interesting aspect of these figures is that our use of renewable energy sources is not a big part of Ireland’s energy mix. In 2009 it represented 3.6% of the energy produced in Ireland. [2]

Figure 1: Energy Consumption in Ireland from 1990 to 2009 (Source - SEAI Report 1990 – 2010)

Our reliance on oil is a matter of critical importance for the Irish economy and the stability of our supply. Oil prices have risen significantly over the last 5 years and this means that the cost to produce electricity from oil sources increases. Also the deregulation of the electricity market has meant the electricity providers are fighting to keep prices down in order to attract consumers in an increasingly competitive market.

Furthermore the modern consumer is much more aware of the requirement to move away from non-renewable methods as a source of energy. The consumer wishes to see a sustainable energy but they do not wish there to be an associated cost with this. This brings a challenging aim for engineers to introduce a sustainable method of energy generation where the costs are at least on par with non-renewable energy sources. The challenge in this is introduced a renewable method of energy in large quantities to compete financially with non-renewable method while still competing with the reliability of the supply of non-renewable energy generation methods.

Governmental Strategy

The Irish governmental strategy in relation to renewable energies is largely set in line with guidelines and directive set by the European Commission. It is hoped that by 2020 that 20% of the electricity consumed to be from renewable resources across Europe according to the EU directive. Ireland was given an aim of 16% of all electricity consumed from renewable energies by 2020 as part of this directive. [3]

Furthermore Ireland is signed up to the Kyoto agreement which is a promise from the government to reduce the amount of greenhouse gases released to the atmosphere. There are a few areas that are focused on to achieve the targets set down in the protocol, such as reduction in transport energy consumed and improvements in energy efficiencies. The role of renewable energies to have a cleaner more sustainable future is a big factor in meeting our objective of the protocol.

Non-renewable Energy Sources

This section is devoted to the investigation of energy sources which are from non-renewable means and taking a closer look at the current dependence on oil as a source of energy and our need to move away from this as oil supply worldwide becomes more expensive and less secure.

Generation Methods

The main methods of energy generation using non-renewable resources are as follows:

· Oil

· Natural Gas

· Peat

· Coal

Each of these resources has a finite amount of resources available to us to utilise to generate energy. Once these resources have been used up it could take millions of years for resources to be replenished naturally in nature.

One of the main sources of energy and probably the energy sources which is most susceptible to fluctuation in pricing and security is oil. Peak oil is the term used quite often in the industry as the point to when oil production is at its maximum.

For decades the debate has continued over oil supplies and reserves with numerous studies contradicting each other. One study suggests we will hit peak oil in 2018 and there will be a plateau in production for decades [4]. This uncertainty over the supply of oil, and to a lesser extent other non-renewable energy sources, has driving a demand for sustainable energies globally. Oil is a cheap source of energy source in comparison with other fuel sources and sustainable energies, but with oil set to increase further this decade and with the effectiveness of sustainable energy generation methods getting better this may not be the case for long.

Oil is produced by drilling into the ground and locating oil which is under the Earth’s surface. The oil is extracted and can be used for a number of different uses, one of which is an energy source. This requires refinement of the oil. Natural gases, peat and coal are other fossil fuel types which have been used effectiveness in electricity generation for decades with proven mining and generation techniques as well as high net energy yields. However due finite resources available we must search for an energy sources which is sustainable but also give a secure and reliable supply.

Environmental Factors:

It is well documented the use of energy generation from non-renewable resources has an adverse effect on the environment. There are both local and global environmental impacts to consider. Local effects would be the damage to the geographical area located to the production step of the energy sources. The power plants required in the production of energy from non-renewable sources impact on the local environment in terms of the destruction of local habitat and wildlife as well as the pollution it causes to the air and water. There is also the mining of the energy sources which can be very damaging on the environment for the same reasons as for the power plants.

The global environmental impacts would be more focused on the issue of carbon emissions and the effects these non-renewable resources have on climate change. If you consider the oil spill which occurred in the Gulf of Mexico in April 2010, that happened during the exploration for oil by oil company, BP. This became one of the worst environmental disasters the world had seen in decades with widespread destruction of marine wildlife and habitats as well as the impact on the shoreline location as well. This highlights the requirement to move to a cleaner fuel sources to protect the environment we live in today to protect it for future generations.

Wind Energy

This section will investigate the use of wind energy in the Irish market as well as looking at the theory behind wind energy design and use. This will involve inspecting the different factors affecting the use of wind energy and the environmental impacts it has along with future trends in the industry. Furthermore a brief review will be done on the use of wind energy utilised in the field of micro-generation.

Theory

Wind energy works on the principle of utilising the kinetic energy of the wind and converting this into energy which can be used. The wind power turns the turbine blades which results in mechanical energy being produced and the generator turns this mechanical energy into electrical energy. The first area to look at is how much energy is available in the wind. The formula below shows the power of the wind through a particular area, A, for a specific wind speed, V.

It is shown from above that the factors affecting the power in the wind is directly proportional to the area being investigated and also reliant on the velocity of the wind. The velocity of the wind has the biggest impact which is evident from the cubic relationship between the power and wind speed in the above formula. For example if the wind speed doubled over the same area the power available in the wind would be eight times greater.

The wind speed is dependent on a number of factors such as the geographical location as well as the topography of the land. Geographical location will be discussed at a later point. The surface topography relates to the local contours of the land and the roughness of the land itself. Moreover the higher wind speeds are realised at higher altitudes. Efficiencies of the turbine are also a huge area of interest. An increase in the efficiency of the turbine results in more of the available power of the wind being converted into useful energy. This efficiency is referred to as the capacity factor, C_f, of the turbine and gives a direct relationship between the power available in the wind and the electrical output from the turbine. The formula below shows the impact of the capacity factor on the power output.

The typical capacity factor for modern wind turbines ranges from 10% to 30%. Increasing this rating is dependent on improving the design of the turbine to harness the power of the wind in a better manner.

Turbine Design

The two principle types of turbine available commercially at present are vertical axis wind turbines (VAWT) and horizontal axis wind turbines (HAWT). Firstly the VAWT will be examined. The vertical axis refers to the orientation of the axis of rotation. The VAWT has a vertical shaft which is rotated by wind power and is mounted to a generator at the base of the turbine. Figure 2 below shows an image of a vertical axis wind turbine.

Figure 2: Vertical Axis Wind Turbine (Source: Aerotech Turbines Inc.)

The advantages of the VAWT are they work well at low wind speeds and also in unpredictable wind conditions where the wind direction may change a lot. This setup of the VAWT is that the direction of the wind is not of importance. Furthermore there are mechanical advantages from a maintenance perspective with the generator being located at the base. The disadvantages are that the VAWT’s have lower efficiencies in comparison to HAWT’s and are not as aesthetically appealing.

The HAWT is the wind turbine type which has dominance at present in the commercial wind energy sector and for this reason the costs are reducing for them as improvements are being made in manufacturing due to economies of scale. For the HAWT the axis of rotation is in the horizontal axis. The turbine blades are attached to the moving shaft which is connected to the generator which is located at the same height as the axis of rotation. The image below, Figure 3, shows the use of HAWT's in Father Collins Park, Donaghmede, Dublin 13. This shows the integaration of the turbines into an urban location.

Figure 3: Horizontal axis wind turbines in use in park in North Dublin (Source: Dublin City Council)

The HAWT is the main commercial wind turbine type currently in the market. Its advantages over the VAWT are that its efficiency is higher. The reason for the higher efficiency is that the area of rotation is always receiving power through its full rotation when it’s the rotational axis is aligned perpendicular to the wind direction. Furthermore the design allows more control over the angle of pitch of the blades and direction to the wind to maintain efficient power production. The HAWT design also utilises the higher win power generated a the higher heights.

Even though the HAWT is the primary type of wind turbine used there are a few disadvantages of this design over the VAWT. One disadvantage is the need for a tower which is strong enough to support the moving parts of the blade, shaft and generator located at the top of the tower which means higher materials, transport and construction costs associated with it. Furthermore there are issues with blades can cause signal disruption in the vicinity of the wind turbine.

Another factor involved in the design of the wind turbine for either the HAWT or VAWT is the use of the speed control. The two types of control are constant speed and variable speed wind turbines. The constant speed is where the rotor rotates at a constant speed whereas the variable speed equivalent can rotate at differing wind speed. The constant wind speed variant requires enough wind power to move the commence rotation. This is a simple system to implement however there is a lack of efficiency as the design of the turbine is optimised for a particular wind speed and not over a variety of wind speed for which the turbine would experience. There can also be issues with mechanical stress on the blades and generator if the wind speed is greater than the rated speed which would results in greater torque on the blades.

The variable speed wind turbine allows rotation at a variety of wind speed. This requires control of the rotational speed of the shaft which can be controlled by use of a gearbox to optimise the amount of energy produced. This increases the overall efficiency of the turbine. The issue with this design is that it is more complicated due to the parameters which require controlling to maintain aerodynamic efficiency and also they are more expensive.

The variable speed HAWT is the dominant design type currently utilised in the commercial market. There is a niche market for VAWT’s and constant speed VAWT but these are predominantly used for smaller applications or residential micro-generation purposes.

Geographical Factors

The location of the turbine is a big factor which determines the power harnessed from the wind which can be used. The objective for any wind turbine is to generate as much electrical energy as is possible. As previously outlined the power available in the wind is reliant on the area and to a much larger extent the wind speed. The area to focus on in determining where to place the turbine will depend a lot on the wind speed at that location. In general offshore locations have greater mean wind speeds than onshore locations. For this reason it would be useful to place wind farms on offshore locations. However there are obvious barriers to this in that the construction of a wind farm at sea and this would bring increased cost with it as well as access issues when seeking to perform maintenance on the turbines. For this reason the majority of wind farms are onshore. Furthermore there is also a complexity in connected an offshore wind farm to the electricity grid.

In Ireland for instance there is just one offshore wind farm which is located off the coast of Arklow, County Wicklow. This currently has a 25 MW capacity which was due to be further increased to 520 MW but this phase of the project never went ahead. The next section will look in more details into the wind resources available in Ireland in comparison to other European countries.

Environmental Factors

One of the main environmental factors for consideration is the reduction is carbon emissions that would result in the introduction of more wind energy. There are some emissions associated with the manufacture of the wind turbine but this is minimal in comparison to fossil fuel power plants. Its energy source is free and abundant in nature and efficient harnessing and commercial viability over non-renewable energy sources is key to its success.

The main issue with wind energy is with noise pollution. The noise is a combination of the mechanical noise of the generator and gearbox assemblies as well as the noise generated from the rotation of the turbine blades. This is an issue that regularly pops up from people against wind energy, primarily their locations close to residential areas. The effect of noise pollution can be offset by placing them at a distance away from residential dwellings. This factor must be given a great deal of consideration during the design and planning process. The use of offshore wind farms would also remove this issue of noise pollution from the mix altogether. There are also issue with the visual intrusion which is very much a point of contention as some people see wind farms as visually excellent and a sign of self-dependence whereas others would take the view they do not suit the surroundings.

Wind Energy in Ireland

Of all types of renewable energy the two which are most suited to Ireland are wind and hydro energy given are climate which sees some of the highest annual mean wind speeds in Europe and an abundance of rainfall throughout the year. None the less Ireland has a low percentage of our fuel mix supplied by wind energy compared to other European nations. For instance the total installed wind energy capacity in Ireland in 2011 was 1585 MW which is low compared to Germany (23903 MW) and Spain (16740 MW). [5,6] There are a number of issues with have prevented a higher usage of wind as an energy source such as initial investment costs and public opinion limiting their use.

At present in Ireland there is a population which is at approximately 4.5 million and a demand in 2010 for 27 TWh of electricity throughout the year. This was an increase of 0.9% of the previous years [7]. However during this time there was also a slight decrease in the amount of the renewable energy utilised in the generation of electricity for 2010 compared to the previous year [8]. The chart below in Figure 4 shows the fuel mix for the island of Ireland in 2010.

Figure 4: Fuel Mix 2010 (Source: EU Fuel Mix Data 2011)

Since the total demand for 2010 was 27 TWh as mentioned above we can work out how many turbines would be required to satisfy this demand. For this calculation we will assume that the turbines being used will be 2 MW turbines which is a simplification of the fact where there would be a variety of different rated turbines throughout the country. A conservative capacity for the turbine will be assumed at 20%. Given a 365 day year this would mean each 2 MW turbine would produce 3504 MWh each year. In order to meet national demand this would require the installation of approximately 7700 turbines rated at 2 MW or a total installed capacity of 15400 MW which is a significant increase on the current installed capacity of just over 1000 MW.

One barrier to the use of wind energy in Ireland is the environmental issues it raises. They are very different to the environmental issues raised in relation to fossil fuels. Noise pollution and visual impact is a big factor and for this reason many people would object to a wind farm being built near their home, although they may be in factor for the energy sources it is very much that the idea is liked but not wanted in their locality. There is also an issue with a lack of financial incentives to invest in wind power. This is a big issue as at present it is cheaper to produce electricity from non-renewable resources and as such incentives need to be provided to have providers invest more in sustainable energy resources.

The wind resources available in Ireland are greater than in most other European countries. Figure 5 below shows the mean annual wind speeds for European countries and these shows that Ireland has excellent wind resources, in particular for the west of Ireland. The main question this brings up is that why do other countries, with lesser wind resources, invest in this form of energy production however its growth is not as good in Ireland where are resources are one of the best in Europe. This needs to be address at governmental level with increased objectives and support to drive forward the need for greater wind power to be utilised in line with current goals for a sustainable future.

Figure 5: European Mean Wind Speeds at 50m (Source: European Wind Atlas)

The use of wind energy in Ireland is promoted in Ireland by the Sustainable Energy Authority of Ireland (SEAI) which was setup in 2002 under the Sustainable Energy Act. This state funded body is active in the promotion of not just wind energy, but all sustainable energy methods which are economically viable. They promote by means of publications to raise awareness and provide facts on the subject area as well as providing grants for the investment in sustainable energies for residential and commercial uses.

Alternative Sustainable Energies

This section will briefly introduce other sustainable energy resources which are currently in use. It is important to understand that as society moves towards a sustainable future that all energy methods will need to be embraced and utilised as required.

Photovoltaic (PV) Solar

As the name suggests photovoltaic (PV) is the conversion of light energy into electrical energy. A material, such as silicon, is utilised and a p-n junction is created by the doping of the material with impurities to create a material with a positive charge (p-type) and one with a negative charge (n-type). Once the light energy, or photons, reacts with the material it results in an electron being free due to the excitation applied to the electron. The electron moves through the materials and creates a current with the electrical field. Also this moving electron leaves a hole behind in the material which attracts movement of electrons from the negatively charged side. [9]

PV cells can be used for commercial uses as well as for residential uses. PV cells utilised for residential use generally have a crystalline structure which is not as pure as it would be for cells which are used commercially available. The manufacturing of the silicon is very important in the process to ensure a good quality crystalline structure is present in the silicon. However current manufacturing processes for manufacturing high quality mono-crystalline structure are very expensive and labour intensive and thus can be restrictive in the global use of this method of energy production. There are PV cells being introduced to the market which have a multi-crystalline structure which are getting good efficiencies but at a reduced cost compared to the cost of mono-crystalline silicon structure. [10]

The advantages of photovoltaic cells are that they have no moving parts so maintenance issues are not important. They also have no emission related to their operation as well as their design possible to be integrated into a variety of applications such as buildings and road lights. The main disadvantage of the PV cells is their low efficiencies however this is in comparison to the free fuel source of the sun from which it is gaining its input so this must be considered when comparing efficiencies of different energy generation methods. They also require a high initial investment as well being entirely dependent on the weather conditions.

Tidal Energy

Tidal energy is where a device is utilised to harness the kinetic energy in in the ocean created by tidal movements created by the gravitational pull of the moon as well as well as being dependent on the power of the sun to a lesser extents. There is huge potential is this energy source. It is estimated in Ireland there is a resource of 230 TWh per annum available which is five times the annual energy requirement for the entire island of Ireland. This is however a purely theoretical figure produced from tidal patterns known on the coast of Ireland. It is estimated the viable amount of power at present that can be produced is under 1 TWh. [11] The image below shows the tidal currents around the Irish coast. It can be seen clearly from this that the maximum tidal currents are located on the East and North East coastline.

Figure 6: Irish Tidal Resources (Source: SEAI - Tidal & Current Energy Resources in Ireland)

Hydro Energy

Hydroelectric power is electricity generated from the potential energy in the water. The water is stored at a height and thus has a potential energy. The water is then released to a lower level and thus the potential energy turns into kinetic energy. The power available in the water is defined by the following formula which is dependent on the density of the fluid, ρ, acceleration due to gravity, g, the flow rate of the fluid, Q, and the effective head, H.

Turlough Hill hydroelectric power station is located in County Wicklow and has a capacity of 292 MW. This is a pumped hydro storage facility which pumps the water to the elevated position by using pumps which are run at off-peak times when electricity is cheapest. At peak times the water is released to a lower elevation and the kinetic energy available in the water rotates a turbine at the lower position. The turbine is connected to a generator which creates electricity from the process.

Figure 7: Turlough Hill Hydroelectric Plant (Source: ESB)

Hydroelectric power gives a valuable source of energy which can be utilised to provide a boost of energy capacity for the grid in times of peak demand. This is due to the energy having an almost immediate availability compared to other energy sources. There are environmental issues which come with the introduction of hydro energy. One concern is the damage to the natural surroundings which can be an issue especially in the introduction of hydro dams to fresh water rivers where there is a natural habitat for flora and fauna. A big concern is the future of the salmon populations as the dam can block the movement of the salmon upstream. Many dams now have a tiered water ladders which have constant water flowing down them which bypasses the dam and allows the salmon to move upstream.

Geothermal Energy

Geothermal energy is the harnessing of the thermal energy located in the Earth. There is an abundance of thermal energy which is due to temperature gradients under the Earth’s crust. The aim of geothermal energy production is to utilise this energy and turn it into a useful form of energy such as electricity. This is done by drilling into the ground and pumping water which has a high enthalpy to the surface. High enthalpy is defined as the heat content of a substance and for water is related directly to its temperature. At the surface this is used in a steam turbine connected to a generator to produce electricity. This can be done on a large scale basis to provide as sustainable energy source as shown by the 720 MW capacity geothermal power plant located in Cerro Prieto, Mexico. Furthermore geothermal energy has a constant energy source as opposed to some other energy sources which may not be as reliant to depend on for a secure supply. [12]

There is also use for geothermal power on a micro generation level. Heat pumps can be used in homes to pump low to medium enthalpy water to the surface to heat a domestic water supply or produce a small amount of electricity. This arrangement also has minimum environmental intrusion apart from the introduction of pipework into the ground to bring the water to the surface.

Economics

Levelised Cost of Energy

The cost of each energy source will be investigated in this report and the base units being used will be in euro cent per kilowatt hour (€ cent/kWh). This will allow a cost analysis to be performed between the different energy sources and an investigation into future trends will be assessed and its impact on the figures will be analysed.

The figures in table 1 below show the levelised cost per unit of energy which takes into account the capital cost of the energy source, fixed operation and maintenance costs, variable operation and maintenance costs as well as investment required in the transmission network. The table below shows the levelised cost of energy per kilowatt hour for the main energy sources which will be analysed in this report. This shows the levelised cost as predicted in 5 years’ time, in 2016. This is a good basis to look from as if considerations are being investigated at this point to increase the installed capacity of a certain energy source being considered at this time may not be operational before 2016.

Table 1: Levelised Cost of Energy in 2016 (Source: IEA - Annual Energy Outlook 2011)

The following graph shows a visual representation of the data contained in the previous table. This gives a good idea of where each of the major fuel sources and the breakdown of their costs which allows a good comparison with one another.

Figure 8: Estimated Levelised Cost of Electricity in 2016 (Source: IEA - Annual Energy Outlook 2011)

The graph above shows that for the mainstream renewable energies being investigated here the majority of the cost involved is in the initial capital investment. The two non-renewable energy sources being examined here are coal and gas as they are the greatest constituent to Ireland’s electricity consumption. There methods show a proportionally smaller impact from capital investment on the cost of electricity compared to the renewable energy methods. However the non-renewable energy sources do show greater variable operation and maintenance costs. This is mainly attributed to fuel costs. These variable operation and maintenance costs are more susceptible to market fluctuations such as changes in supply and demand for coal which would result in changes in the cost of the fuel. Once example of this was the oil crisis in the 1970’s where the cost of the oil increased rapidly due to the lack of supply and increase in demand.

External Costs

The external costs of energy are attributed to costs not associated directly with the production of energy. These costs can be broken up in some key areas as outlined below. [13]

· Human Health

· Effects on Crops

· Global Warming

· Building Materials

· Loss of Amenities

· Damage to Ecosystems

The study on the externalities of energy was carried out on all the energy sources being investigated in this study apart from geothermal energy. The use of geothermal energy has very little impact on the environment due to its minimal invasive nature. This study will thus continue its focus on the costing while considering the external costs of geothermal energy to be negligible. The table below shows the external costs of energy for each of the energy generation methods, apart from geothermal.

Table 2: External Costs of Energy (Source: ExternE - Externalities of Energy Study)

Furthermore the study performed by the European Commission does not distinguish the external costs between onshore and offshore wind energy. Due to its low value and over all small proportion in comparison to the overall levelised cost of energy it will be considered that the external costs provided in the stud of €0.01 per kilowatt hour is the same for onshore and offshore wind energy.

Security of Supply

The key to moving towards a sustainable future is to also be maintaining a secure supply. At present fossil fuels provide a relatively secure fuel supply for Ireland. However the majority of energy consumed in the country is imported from abroad with a recent study putting the figure at 89% of energy consumed in Ireland imported [14]. This reliance on foreign energy markets leaves Ireland open to the demands of the foreign markets and political instability. The electricity imported by Ireland is predominantly from the non-renewable resources of coal and gas. However our transport industry is run primarily using oil as an energy sources with little use in the way of electric vehicles and LPG as a fuel source. Recent years have shown instabilities in the supply of oil globally, generally due to political instabilities in the far east.

The importance of gaining an increased independence in terms of electricity generated domestically means that a greater amount of energy needs to be created in Ireland. This needs to be addressed by increasing the investment in renewable energies as well as utilising the excellent natural gas resources available in Ireland.

Consumer Impact

The impact to the consumer is most apparent and quantifiable by the unit price of electricity for which the consumer is billed for. This however does not take into account the external cost which has been presented in this report. These external costs are often met within governmental budgetary constraints and not directly associated with the cost by producer of the energy. For transparency one way these external costs could be addressed is for governmental policy that these costs are absorbed into the costs per unit of electricity billed to the consumer.

This methodology would result in a higher unit cost of electricity for the consumer and ultimately higher bills. This extra cost would be offset by the reduction in governmental budgetary requirements to meet the external costs. The advantages of the transparency of the external costs would be that the consumer would be aware of the actual cost of the energy they are being supplied with and the comparison in costs between renewable and non-renewable energy sources. With the costs of some renewable energy sources becoming comparable with non-renewable source without factoring in the external costs it is something which leads to awareness and greater pressure for more electricity to be generated from renewable means.

Energy Study

Introduction

This section will introduce the study of the energy costs in Ireland and analyse future trends and study the impacts they will have on the various costs associated with cost of electricity generation within each source. Furthermore a critical analysis will be performed on recent governmental strategy.

Energy Cost

Figure 9 below shows the total cost per unit of energy which includes the levelised costs and the external costs of the energy unit. This graphs shows that when the external costs of energy are factored into the matter that the cost of electricity derived from non-renewable sources, such as coal and gas, a more transparent comparison can be shown between the different energy sources.

Figure 9: Estimated total cost of electricity in 2016 factoring in the estimated levelised costs and the external costs associated with the energy source

The introduction of the external costs has the biggest effect on the unit cost of energy for coal where it can be seen that there is a 81% increase in the cost of energy. This is in comparison to gas which sees a 33% increase in its unit cost, hydro seeing a 6% increase in its unit cost and solar PV having a 3% increase. The increase in the unit cost of the other energy sources with the introduction of the external cost is negligible. With the external costs factored into the matter it is shown that the cost of electricity production from non-renewable means increases considerably and becomes more expensive per unit of electricity compared to some of the renewable energy sources.

The above graph shows the effect the external costs have on the unit cost of energy produced. Once the external costs are factored into the mix with the breakdown of the levelised cost it gives a much clearer picture of where the cost is in creating energy. Figure 10 below shows a complete breakdown of the cost per kilowatt hour for each energy source with the individual components of the levelised cost as well as the external costs.

Figure 10: Estimated levelised cost of electricity in 2016 factoring in external cost and with full breakdown of levelised costs

I can now be seen that there is a better comparison to be made between the different energy sources with the price per unit of electricity produced for the non-renewable resources becoming comparable to the renewable methods. Furthermore the majority of costs associated with renewable energy methods are focused on the initial investment. The reason for the higher investment costs is the relative young age of the manufacturing process for the renewable energies compared to the finely tuned manufacturing processes associated with the production of energy from non-renewable method such as coal and gas.

An analysis will now be performed on the estimated levelised cost for energy in 2026 to include the external costs. The non-renewable resources of coal and gas also have a higher reliance on variable operation & maintenance costs. This is primarily costs associated with the purchase of fuel to run the respective power plants. This reliance on the costs of fuel can be heavily influenced by the economics of supply and demand in the market as well as political motivations. This is a more difficult area to predict and is very much subject to external markets to which the Irish electricity market has very little control over. Gas prices have been historically experienced cyclical cycles in terms of the price fluctuations. It is very uncertain how the prices of gas and coal will fluctuate. It will be given a conservative estimate to increase in the region of 10% from current values given the increase demand that the supply of the fuel will be under given its depleting resources and also the ever increasing global consumption of energy.

If we take a look at wind energy and its future it is clear to see that there will be an increase in its installed capacity as the world seeks to move towards a more sustainable future. For this analysis a tripling of the installed wind capacity is accepted by 2026 which is in line with the view of EWEA’s forecast of 200 GW installed capacity by 2020 and 300 GW installed capacity by 2030. There is currently 57 GW installed capacity in the EU. It is estimated that as the installed capacity of the world doubles that there would be a 10% drop in the costs per unit energy. This decrease in costs is attributed to economies of scale in the production of more wind turbines and improvements in the costs of the technology which would lead to better efficiencies. For this reason a total decrease in cost of wind energy by 20% will be applied. [15,16]

Hydro is a very established generation method and the price of this energy source may remain stagnant due to the damaging effect it can have on local ecosystems as well as the very large initial investment required. The levelised cost has hydro energy having a lower initial investment compared to other renewable energy sources. This is true due to the expected lifetime of hydro power stations being longer thus the levelised cost over time is lower. However the initial investment is very high and this can be an obstacle to increasing the installed capacity.

Furthermore the external costs will be impacted on in the future. Globally there is a requirement to provide greener solutions and reduce are carbon footprint. This will result in increased costs being incurred on the cost of energy to pay for any damages that occur from the production of the energy. For instance CO2 emissions have been predicted to rise by as much as 25% by 2030 [17].This increase in CO2 will result in higher charges on the cost of energy for the higher emissions being emitted. For this outlook a value of 10% increase in external costs for the fossil fuel sources will be applied.

The cost of solar PC energy is very dependent on the cost of silicon and the improvement in the efficiency of solar PV cells. The European Photovoltaic Industry Association predicts that by 2020 the cost of solar PV electricity will reduce by 50% from 2010 prices. Factoring in the levelised costs is estimated for 2016 we will work off a reduction in cost of solar PV of 25% of where it is in 2016. [18]

To outline the assumptions which are being made as part of the analysis being performed:

· 10% increase in the cost of wholesale gas and coal prices

· A decrease by 20% of the cost of wind energy

· Increase in 10% of external costs for fossil fuel sources

· Decease in cost of solar by 25%

Based on these assumptions we get the following graph, Figure 11, which shows an estimate for the levelised cost of electricity in 2026. As it can be seen from this graph the difference in cost between the renewable and non-renewable resources has reduced with the cost of coal increasing to levels above all the other energy sources apart from offshore wind generation. From the previous levelised cost estimates for 2016 it is shown that the price of coal is heavily reliant on external costs for which the cost of emissions from the burning of the fuel is the main contributor to.

Figure 11: Estimated levelised cost of electricity in 2026

Furthermore the price of onshore wind energy has the lowest cost per kilowatt hour between all the energy sources with hydro energy close behind as well as coming in at a lower cost than the non-renewable generation methods. The following chart shows the change in cost per unit of energy estimated between 2016 and 2026. As can be seen from this graph the cost of non-renewable methods increases primarily due to the price increase of their respective fuel sources. The renewable methods see reduction in cost to produce electricity with the biggest reduction being seen in the offshore wind energy which has a bright future to provide a sustainable global energy source.

This analysis shows the cost of renewable energy sources becoming more competitive in comparison with their non-renewable counterparts. The initial capital required is the obstacle which is hindering further investment in some renewable resources. It can be clearly seen that the investment portion of the levelised cost is high. One point to note is that for hydro energy the levelised capital cost is in line with electricity generated from fossil fuels but lifetime of a hydro power plant is generally longer than that of a coal or gas power plant and thus the levelised capital cost is on par but the actual initial capital cost required would be significantly greater than that for a coal or gas power plant. Figure 12 below

Figure 12: Difference in levelised costs 2016-2026 including external costs

Feasibility Study

This feasibility study will investigate the introduction of wind energy instead of the development of a non-renewable energy power plant. In particular the focus will be on the investment by the Electricity Supply Board in Ireland of €360 million for a combined cycle gas turbine (CCGT) at Aghada, County Cork. The installed capacity of this power plant was 435 MW which was in addition to the 528 MW which was already installed on site. The power plant has an efficiency of greater than 58% according to its manufacturers, Alstom Power Systems [19]. At an efficiency of 58% this results in an output capacity of approximately 2.7 TWh. This results in a cost per MW of installed capacity of €681,818.

The Arklow Bank phase 2 wind farm which was planned for Arklow, County Wicklow had an estimated cost of €630 million for an installed capacity of 495 MW of offshore wind energy. This equates to a cost per MW of installed capacity of €1.27 million which is almost double that of the CCGT mentioned above. This phase of the project got formal planning permission to proceed with construction but the project was cancelled in 2007. Furthermore an analysis can be show that the levelised capital cost per kilowatt hour is 0.79 cent for the combined cycle gas turbine and 2.85 cent for phase 2 of the Arklow wind bank. This is basing the life cycle of the CCGT and the Arklow wind bank to be at 25 years and 20 years respectively as well as an efficiency of 58% for the CCGT and 20% for the wind turbines. The below equation shows how the levelised capital cost was calculated for the CCGT power plant.

The chart below in Figure 13 shows the estimated levelised cost using the calculation above for the levelised cost. The other costs involved are maintained at the level estimated in Table 1. As can be seen from the levelised cost the actual cost of the electricity produced from the Arklow wind bank offshore wind farm is cheaper than that for the current CCGT in operation in County Cork. This basic analysis gives a brief insight into the comparison of costs between the different energy sources.

Figure 13: Levelised costs including external costs for comparison between the Aghada CCGT power plan and phase 2 of the Arklow wind bank

Although the Arklow wind bank would be a cheaper form of energy the effect of the initial investment is very clear in this example. The CCGT power plant came in at a cost of €360 whereas the Arklow bank wind bank was estimated to cost €630 million. This initial investment required for the renewable energy source in this scenario is significantly greater and thus this would create an obstacle for this energy source as the capital investment money needed may not be available.

The wind energy in this would be feasible however this would only be if the funding was available to construct the wind farm. In the current economic climate with a serious cutbacks in capital expenditure worldwide, both publically and privately, it is difficult to see if capital projects similar to the one previously proposed for the Arklow wind bank will get the go ahead anytime in the next number of years. However the planning permission remains in place for the wind farm and thus is the project is revived in a few years the plans are ready to go.

Economic Roadmap

The Irish government have put in place guidelines which show how the issue of renewable energy is within its own economic roadmap. The Sustainable Energy Authority of Ireland have a strategic plan in place for renewable energy sources to be the mainstream by 2025 as well as Ireland being a global leader for innovation in the field of sustainable energy. SEAI also have longer term goals for 25 years into the future to further improve the country’s use of renewable energy sources. The aims of SEAI are put into action by supporting governmental decisions with the provision of research and analysis on a wide variety of topics concerning renewable and sustainable energies so an educated decision can be made at governmental level on the future of renewable and sustainable energy methods. [20]

The National Renewable Energy Action Plan is a white paper released by the Irish government which outlines targets to be achieved by 2020 for renewable and sustainable energy and its place within the energy sector. The paper outlines the target for 40% of all electricity consumed in Ireland will be from renewable means by 2020. There are a number of measures outlined in the report for the support of a wide range of sustainable energy projects. These supports are not just in the form of direct financial funding, but also the provision of infrastructural and regulatory backing. Furthermore the paper sets out the details regarding the exemption of the planning process for the installation of a number of sustainable energy methods which meet a number of requirements. This removes a lot of the regulatory red tape which is sometimes associated with installations of this kind and allows homeowners and small business greater access to direct investment in small renewable energy projects without having to undergo a timely and sometimes expensive planning process.

Also there are attractive renewable energy feed in tariffs for a number of different sustainable energies. This allows owners of installations that meet the terms of the program to be paid a rate for electricity exported to the grid. The advantages of this are two-fold. Firstly this promotes the private investment by companies and individuals into small scale sustainable energy projects. Furthermore the scheme generates some income for the owner of the installation. [21]

The following graph, Figure 14, shows the position of wind energy in Ireland relative to other EU countries. This shows that Ireland is not a leader in Europe or close to it for wind energy. This is not understandable since Ireland has the greatest mean wind speeds in Europe as previously outlined. [22]

Figure 14: Installed wind capacity for EU countries for the end of 2010 (Source: Global Wind Energy Council)

With recent economic uncertainty hanging over many economies in the world there is less investment taking place in capital projects. The Irish government has confirmed it will not be proceeding with big projects in next few years and companies are finding the economic climate tougher every year and thus private investment is hard to get. Therefore a number of plans need to be formulated in order to further promote the investment by individuals and companies in the future of renewable and sustainable energy means.

In order to consider a scheme to promote sustainable energy it is good to investigate schemes which have been put into use into other countries and assess their advantages and application to the Irish market. One project investigated was in Denmark there is a cooperative scheme whereby a wind turbine installation would be owned by a group of people, generally in the location where the turbine is installed. The cost of the turbine is distributed between the investors depending on the number of shares which are purchased. This was a big part of the growth in the Danish wind industry in the 1970’s and 1980’s and how they are now viewed as pioneers in the industry. The advantages of the project would mean the local community would be able to see the financial benefits of the turbine in terms of energy bills. This would help the issue of acceptance of the wind energy which has been a problem in the industry for some time. It also creates an eco-friendly community and this green approach would hopefully spread to other areas in the community. The disadvantages of the scheme are the financial commitment which is required initially. However with the help of some financial incentives and possible tax breaks for individuals involved it may be something for which can help rural communities build a sustainable and self-sufficient habitat for themselves. [23]

Ethical Considerations

This section gives an outline of some of the ethical issues surrounding the contents of this research. First and foremost is the topic of climate change. Globally there is a consensus that it is required to move towards a more sustainable future by reducing our dependence on fossil fuels and reducing our carbon footprint, which go hand in hand with one another. The impact of wind and other renewable energies impact on the environment can be measured by avoided CO2. This quantifies the amount of CO2 which is not released into the atmosphere due to the sustainable method of energy production. In Ireland in 2008 it was estimated that 1309 kt CO2 emissions were avoided from due to the installed capacity of wind. This was higher than any other renewable energy form. [24]

There is also the topic of jobs created directly from the wind industry in Ireland. In 2008 there were 1500 people directly employed in the wind energy industry in Ireland and a total employed directly in the EU of over 108,000. Furthermore it is estimated that as the amount of installed wind capacity increase over the next two decades and with this increase in installed capacity will be an increase in directly employed. The European Wind Energy Association puts increase in direct employment to multiply by threefold between 2008 and 2020 with the number of people in direct employment in 2020 estimated at over 325,000. [25]

Another ethical consideration is the noise pollution that is created by wind energy turbines and their disruption to local inhabitants. As previously described there are issues associated with wind turbines and noise pollution and there is a need for the planners of wind farms to take consideration of this issue as part of the planning process. Furthermore there is an argument against wind energy due to the negative visual impact they have on the landscape. This is purely subjective as some people would consider wind turbines as a sign of hope and the future whereas other people would consider them an obtrusion on the landscape. Either way this is a consideration planners would need to take on boards during the process.

Furthermore projects concerning the installation of wind turbines or other renewable resources should be following in line with international standard, more precisely ISO 14000/14001. These standards give guidelines on how the management and operation of renewable facilities with a focus on reducing their impact on the environment and complying with legal and regulatory requirements.

Conclusion

This reports highlights the competitiveness of wind energy and its ability to provided a cost effective solution to our energy needs against our current reliance on fossil fuels which will increase in the years and decades due to rising prices of their respective fuel types and uncertainity over their supply due to political instabilities. This puts the case forward that for future power plants being commissioned for the production of electricity there should be a feasiblity study undertaken to see if it possible to have a renewable and sustainable facility compete with the capacity of the non-renewable plant while maintaining competitiveness financially. This increases competition for manufacturers of wind turbines and planners to propose alternatives for non-renewable power generation methods. Furthermore this reduces our reliance on fuel which is often imported from aborad and thus improves our security of supply.

At present Ireland is attempting to increases its use of renewable resources through a number of inititives. However their remains the issue that the Irish government do not have the capital required to investment in large scale projects which are what is currently needed. Their needs to be funds raised to allow the investment in large scale renewable energy project or initiatives and incentives provided to private investors to invest in these projects.

References

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[3] “National Renewable Energy Action Plan,” Article 4 of Directive 2009/28/EC, Irish Government, Dublin, Ireland.

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[7] Eirgrid, 2010, "Annual Report 2010," Eirgrid, Ireland.

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[13] ExternE, 2005, “Externalities of Energy – Methodology 2005 Update,” European Commission, Europe.

[14] Howley, M., Dennehy, E. and Ó Gallachóir, Dr. B., 2010, “Energy in Ireland 1990-2009,” Sustainable Energy Authority of Ireland, Dublin, Ireland.

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[17] Exxon Mobil, 2010, “The Outlook for Energy: A View to 2030,” Exxon Mobile, Irving, TX.

[18] European Photovoltaic Industry Association, 2011, “Solar Photovoltaics – Competing in the Energy Sector,” European Photovoltaic Industry Association, Brussels, Belgium.

[19] Alstrom Power Systems, UK, [online], http://www.alstom.com/power/resources/brochure/aghada-ireland-combined-cycle-power-plant (accessed 6th December 2011).

[20] Sustainable Energy Authority of Ireland, 2009, “Strategic Plan 2010-2015,” Sustainable Energy Authority of Ireland, Dublin, Ireland.

[21] Sustainable Energy Authority of Ireland, Ireland, [online],http://www.seai.ie/Renewables/Bioenergy/Renewable_Energy_Feed_In_Tariff (accessed 6th December 2011).

[22] Global Wind Energy Council, 2011, “Global Wind Statistics 2010,” Global Wind Energy Council, Brussels, Belgium.

[23] Danish Wind Association, 2009, “Cooperatives – A Local and Democratic Ownership to Wind Turbines,” Danish Wind Association, Aarhus, Denmark.

[24] Sustainable Energy Authority of Ireland, 2010, “Renewable Energy in Ireland – 2010 Update,” Sustainable Energy Authority of Ireland, Dublin, Ireland.

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