The Forfás competitiveness report was just released today. On the energy front, it recommends a number of things.

First, it recommends a phasing out of peat plants by converting them to biomass plants. Getting rid of peat is clearly a sensible idea. Converting them to biomass plants needs costing and analysis. And to its credit, the report recognizes this.

Second the report recommends reducing planning delays in cross border connectors, which are currently adding a burden of 20-30 million a year to our pockets. It does not highlight what exactly the planning delays are, but I think we all have a fair idea of the speed at which the civil service moves (the use of the word ‘speed’ almost constitute an oxymoron in its own right).

Finally, it argues that REFIT (Renewable Energy Feed-In Tariff) subsidies enjoyed by wind farms should be substantially revised. In this respect, its numbers are not entirely convincing. The current 2000MW of renewable energy is currently estimated by Forfás to account for between .8% and 2.3% of wholesale electricity prices. Forfás claims this rate is acceptable. Yet while that figure is considered acceptable, it deems that supporting into the future a renewable wind capacity of 6000MW (in order to meet the 20202 obligations) would constitute an unacceptable burden on whole sale electricity prices.

For this claim, it quotes an ESRI report forecast figure of between 3.2% (not all that far off current costs) and 9.8%. These figures in turn, are essentially based on 2020 estimates for international fuel prices. If they are low, renewables are costing 9.8% of wholesale electricity prices. If they go higher, renewables are only costing 3.2%.

Now you don’t need to be a rocket scientist to realize that at some stage the global economy will pull itself out of its self inflicted spiral of despair. All storms must end eventually. In which case, demand for finite fuel resources will rise rapidly, along with price, and the figure could easily reach 3.2%. (Incidentally, if things get worse, political instability hardly augurs cheap fuel). But in any case, if medium, the figure according to the ESRI report is 5.1%.

This half-way figure is not an unreasonable estimate – it strikes a reasonable balance – but conveniently goes unmentioned in the Forfás report. How the 5.1 got lost in favour of the more rhetorical 9.8% is anyone’s guess.  But a figure of 5.1% for wholesale electricity prices hardly seems onerous. Especially, when it constitutes a long term hedge against rising fuel prices, a clean environment, avoidance of EU fines, and a spur to greater technological innovation.

Looking for savings elsewhere in the wholesale costs might be a more productive idea.