Partner and Head of Energy & Natural Resources, Ainsley Heffernan recently wrote an article for the Energy Ireland Yearbook 2020 on Ireland's offshore wind potential. Read the original article here or below.
Opportunity Knocks - Ireland's Offshore Wind Potential
With a sea area more than seven times our land mass and some of the strongest wind speeds in Europe, you'd be forgiven for assuming that Ireland must have a well-established offshore wind sector. But you'd be wrong. Despite a promising start with the Arklow Bank project in 2004, Ireland has only managed an installed capacity of 25MW of offshore wind in the last 15 years. During the same period, our nearest neighbour has installed a whopping 8,483 MW (8.4 GW) of offshore wind power and become a global leader in this growing sector.
What went wrong?
The answer to that question is multifaceted. On the one hand we have a combination of structural issues, including an antiquated foreshore licensing system which is no longer fit for purpose, no marine spatial planning strategy and no route to market for offshore renewable energy (ORE). On the other hand, I would argue that offshore wind was a victim of the huge success of Ireland's onshore wind sector. Put simply, why build expensive offshore wind when you have an abundance of cheaper, high quality onshore wind sites?
What's different now?
Again there are a number of answers to that question. The levelised cost of energy or "LCoE" of offshore wind has fallen rapidly in recent years. This is aptly demonstrated in the recent UK offshore wind CfD auction where the strike price came in at £39 per megawatt hour, a reduction of 66% compared to the price of the first UK CfD auction in 2015. At the same time, it has become exponentially more difficult to develop onshore wind farms in Ireland, due largely to a combination of local opposition and more stringent planning guidelines. More importantly however, is an acceptance on the Government's part that if it wants to decarbonise the Irish economy and meet its ambitious 2030 renewable energy targets, offshore wind must form a large part of our future energy mix.
Where to from here?
On 17 June 2019, the Irish Government published it’s long awaited Climate Action Plan (the CAP). The CAP sets out a road map for how the Government will realise its stated ambition of delivering 70% of Ireland's electricity from renewable sources by 2030. Offshore wind plays a significant role in the CAP, with a stated target of at least 3.5GW by 2030. WindEurope has predicted that this could rise to as much as 22GW by 2050 as floating wind technology becomes more advanced, thereby opening up the huge potential in the deeper waters off Ireland's western Atlantic coast.
The CAP sets out a number of actions which are specific to ORE, including:
- Reforming the licencing and development consent regimes for the maritime area through the enactment of the Marine Planning and Development Management Bill (the MPDM Bill). The MPDM Bill will effectively replace the existing offshore licencing system under the Foreshore Acts and will introduce a single consent system for the maritime area. The General Scheme of the MPDM Bill was published on 15th July 2019 and it is expected that the Bill itself will be finalised in Q3 2020 following a process of pre-legislative scrutiny.
- Developing a Transitional Protocol to deal with historic ORE applications (the so-called "Legacy Projects"). At the time of writing this article the Transitional Protocol has not yet been released. However, it is generally understood that the Legacy Projects are those which either already have a Foreshore Lease or which applied for a Foreshore Lease prior to the publication of the Offshore Renewable Energy Development Plan in February 2014.
- Developing a comprehensive marine spatial plan through the implementation of the National Marine Planning Framework (the NMPF). The draft NMPF was published on 12th November 2019 for a three month consultation. The Government intends to issue a finalised NMPF by Q4 2020.
- Establishing a robust grid connection policy for ORE projects. Ireland's TSO (EirGrid) is currently preparing an options paper on a centralised versus decentralised approach to ORE grid connections. In the meantime, Ireland's Utilities Regulator (the CRU) is developing a policy decision on grid connection offers for Legacy Projects, in line with the CRU's wider enduring grid connection policy.
- Establishing a secure route to market for ORE projects by holding a series of Offshore RESS Auctions. The first dedicated Offshore RESS Auction is expected to take place in Q2 2021, with two further auctions to follow up to 2030.
Opportunities and challenges ahead
At the time of writing this article I have recently returned from the WindEurope Offshore Wind Conference in Copenhagen. I couldn’t fail to be impressed by the sheer scale of the ambition in the European Offshore Wind Sector. Experts are forecasting as much as 450GW of offshore wind capacity in European waters by 2050. In order for Ireland to stand any chance of realising its share of this opportunity it is imperative that each of the actions set out in the CAP are fully implemented in a timely manner. 2030 may seem like a long way off, but when you consider the scale and complexity of these projects and the fact that Ireland will be competing with other countries for a limited offshore wind supply chain (turbines, installation vessels, subsea cables, etc) we need to start now or else run the risk of missing our 2030 renewable energy targets, just as we are unfortunately set to miss our 2020 targets.