Dr. Muireann Lynch:

Renewables are a little complicated. More renewables put downward pressure on prices. Wholesale prices come down as you get more renewables. We can predict that using models, and we can see it in the data for Ireland and other countries. Having said that, renewables also get a subsidy, especially when prices are low. When prices are high, renewables pay back to the consumer and we get money back. When prices are low, the consumer pays a top-up to renewables. They depress the price level but in so doing kind of eat their own value a little because as prices are depressed, they need more of a top-up.

The real challenge is the fact that our renewable auctions are coming in so high. The bids during onshore auctions declined for the first time in the most recent auction, which was great to see. However, they are still very high compared with other countries. Why is that? We should such a good wind resource. Why is our wind so expensive relative to these other countries? There seem to be a couple of things going on. The planning process is far more cumbersome in Ireland relative to other countries. The grid connection costs are highly uncertain. You do not find out until after the fact how much a grid connection is even going to cost. You are guessing the price you will need in order to figure out what kind of cost you will have to cover.

Another thing I am looking at increasingly is the competition ratio. When it comes to onshore wind, almost all the wind that goes into the auction has been getting a contract. Realistically, you do not have a big incentive to bid competitively if you know you are almost guaranteed a contract either way. While there is competition in the onshore market, it is between wind and solar. They are such different technologies that they are not competing properly.

We have had one offshore auction. The price came in super low. I was delighted. However, all the projects failed to get their planning applications in on time. I do not think any of them will be built by 2030. We will see what the next auction brings in terms of pricing, but I am less optimistic now than I was when the first auction came in.