Avoiding EU fines with a REFIT extension

The Irish government is facing substantial fines for missing 2020 energy targets. The Irish Wind Energy Association (IWEA) has put forward a proposal for avoiding this outcome an extension to the REFIT 2 scheme. The extension, it is argued, would allow the required number of projects from renewable sources to be built to meet Ireland’s 2020 energy targets.

The chart shows the pipeline of wind projects currently with planning status in Ireland. It has ranked them by the lowest to highest risk of meeting the current REFIT deadline in March 2020. If all this wind were able to be delivered, it would enable Ireland to meet its 2020 renewable energy targets, avoiding any possible fines.

A graph showing REFIT 2 Extension - Meeting Ireland's 2020 renewable targets

James Goldsmith, Senior Consultant at Cornwall Insight Ireland, said:

“At this point, Ireland is likely to face EU fines between €98mn and €500mn – which will be unpopular – given the reaction into the lack of carbon tax increases in October’s Government Budget. To avoid this something needs to change.

“IWEA suggest that, with the proposed extension, there is potential for some significant benefits to Ireland from the build-out of the low, medium and high-risk projects, including extra jobs and a large amount of inward investment which may be attractive to the government.

“Avoiding all of the fines may not be plausible but partial build-out will help to meet energy targets, particularly as development challenges abound for medium and high-risk projects even if REFIT is extended. Each MW that gets erected chips slowly away at the final EU bill and reduces Ireland’s carbon emissions and provides a good long-term foundation for achieving subsequent targets.

“Other options available to the government also have possible hurdles. Ratification and implementation of the new Renewable Electricity Support Scheme (RESS) is one route that can be taken, although, the time for this is short to make a difference for 2020. High Level Design (HLD) was released last summer, but the detailed rules have yet to be consulted upon, pushing an already tight timeline to the brink, if assets are to be built by the end of this decade.

“The last possible saving grace is corporate Power Purchase Agreements (PPAs) providing some new build assets. However, this is unlikely to help in the short term, with assets coming out the back of the current REFIT scheme being more competitive than new build offerings, in a corporate PPA market that has been slow to grow.

“With the time into a RESS auction dwindling, Ministers considering options like a REFIT extension is now much more plausible if the objective of avoiding financial penalties is at the forefront of their thinking.”