Wind energy is great value for consumers says new cost-benefit analysis

29 Jan 2019

Annual cost of wind energy less than a euro per person

Wind drives down price of electricity while cutting carbon emissions

The latest cost-benefit analysis of wind energy in Ireland has confirmed it is not just driving down Ireland’s CO2 emissions but is delivering great value for the Irish electricity consumer.

Today’s report, Wind for a Euro: Cost-benefit analysis of wind energy in Ireland 2000-2020, from leading energy and utilities consultants Baringa reveals that the net cost of wind energy for Irish consumers amounts to less than €1 per person per year since 2000.

Using advanced modelling techniques Baringa analysed Ireland’s electricity market from 2000 to 2020 and then simulated how the market would have behaved without any wind energy on the system. This is the first time researchers have used historical data to carry out a cost-benefit analysis of wind energy.

Researchers found that over the last two decades wind energy has delivered €2.3 billion in savings on the wholesale electricity market, driving down prices for consumers, and outweighing the amount of funding provided to support wind energy through the PSO levy.

Great value for money

Dr David Connolly, CEO of the Irish Wind Energy Association, which commissioned the report, said: “For less than a euro a year wind energy has reduced CO2 emissions by 33 million tonnes and cut the amount spent on fossil fuels by €2.7 billion. That’s great value for money for electricity consumers.

“Wind energy is pushing down the wholesale price of electricity and with the price of wind – both onshore and offshore – falling around the world this is a trend that is only going to improve.

“And of course wind energy is playing a vital role in addressing climate change, which the Government has identified as a key policy priority that must be urgently addressed.”

“This report confirms that wind isn’t just good for the environment, it’s good value for money.”

The report considered not just the financial supports for wind energy but also the cost of additional investment in the electricity network and the additional technical costs of accommodating wind energy’s variability on the electricity grid.

Wind reduces wholesale prices

Against this were set the financial benefits of wind energy in fines avoided, reduced capacity payments to fossil fuel companies and – most importantly – the impact of wind energy on wholesale electricity prices.

Dr Mark Turner, Director at Baringa, who led the research said: “While consumers generally understand a portion of the PSO levy on their electricity bill is used to support renewable energy they are less conscious of the role wind energy has in driving down the price of electricity.

“Every day electricity generators, fossil fuel and renewable, compete against each other in an auction to provide power to the suppliers who sell it on to homes and businesses. The more wind energy on the system, the more it pushes out fossil fuel generators that are much more costly to run.

“We used our advanced power market models to calculate how much wind energy is reducing the wholesale price of electricity and found this ranged from 5-20 per cent, depending on the year.

“As more wind energy is added, the savings typically increase, so the largest reductions are occurring right now across the years 2018, 2019 and 2020.”

“These benefits will continue well into the future too, for as long as wind keeps generating energy.”

Less than a euro

Over twenty years, with all costs and benefits set against each other, the cumulative cost of wind energy works out at €63 million, or just 66 cent per person, per year.

Dr David Connolly said: “For the price of a pint of milk wind energy has become a leader in Ireland’s fight against climate change while making us more energy independent and creating thousands of jobs.

“As an industry we’re focused on reducing the price of wind energy even more in coming years. There is enormous potential in developing Ireland’s incredible offshore wind energy resources and still huge opportunities for expanding the amount of renewable energy we can generate onshore.

“With wind energy at its heart, there is no reason why we cannot, alongside solar, hydro and other renewables, be providing 70 per cent of Ireland’s electricity by 2030.”

The report Wind for a Euro: Cost-benefit analysis of wind energy in Ireland 2000-2020 was commissioned by the Irish Wind Energy Association.

A detailed explanation of the modelling methodology, carried out by Baringa using the same modelling tools used by EirGrid and the Commission for the Regulation of Utilities, is contained in the appendix.