Breakthrough for offshore wind in Ireland, with power for 2.5 million homes

The government held a "first-of-a-kind" auction where companies offered the lowest prices for 20-year distribution contracts

Last week, Ireland held its first-ever offshore wind auction and according to the Minister for the Environment, Eamon Ryan, it has been a breakthrough moment for renewables in the Republic. The process has guaranteed a relatively low price of renewable energy for households for the next 20 years – around 86 euros per megawatt hour.

The auction added 3 gigawatts to the energy mix in the form of four offshore wind farms – enough to power around 2.5 million homes. The addition will boost the country’s Climate Action Plan – a 51% share for renewables in the energy mix by 2030. The addition of the new offshore wind capacities accounts for around a third of Ireland’s entire energy consumption.

Racing to the bottom can be a good thing

The new offshore wind farms participated in an Offshore Renewable Electricity Support Scheme (ORESS). The process is designed to drive competition between bidders, driving prices for end consumers down. Renewable energy projects competed against each other by bidding as low as possible to win contracts to provide electricity for a twenty-year period.

In this way, Ireland was able to ensure an extremely competitive price of 86 euros per megawatt-hour – one of the lowest for wind energy in the world. For comparison, the average wholesale electricity price in Ireland over the past 12 months was more than 200 euros per megawatt hour.

At the same time, the new capacities will produce 3 gigawatts and according to an official government statement, that will deliver 12 terawatt hours of renewable energy per year. This is the equivalent of a third of Ireland’s energy consumption and more than a quarter of projected energy consumption by 2030.

Authorities put those numbers in very real terms, pointing out that this roughly equals enough power for around 2.5 million homes, as well as a reduction in greenhouse gas emissions by around 1 million tons in 2030.