Stark warning to ministers on true cost to households of green targets

Officials warn of €750 annual energy cost hike

Households are facing an extra €750 a year in energy costs by 2050 if the Government’s promises on renewable electricity are met, senior Cabinet ministers have been told by the Department of Public Expenditure.

The true cost of meeting ambitious renewable energy targets is likely to be “significantly higher”.

But the “net impact” of meeting these targets will mean hikes in electricity bills for households and businesses, ministers have been warned.

Families will face an extra €750 a year on electricity costs in 2050 if the target of 37GW offshore renewable energy is met. By 2040, households will be already seeing an extra €100 a year in electricity bills.

The Government has committed to delivering 20GW of offshore wind by 2040 and at least 37GW in total by 2050.

However, a stark warning to ministers on the Cabinet sub-committee on climate in recent weeks lays out the risks and the true cost of the targets, the Irish Independent can reveal.

The projected costs to households and businesses are based on modelling that predicts the technology costs of offshore wind will halve in price and that other countries will help out with construction costs.

But the Department says the costs to the Irish public are likely to be “significantly higher in practice”, the Irish Independent understands.

The total projected costs of expanding offshore wind to 37GW is €131bn, which is similar to the State’s entire capital budget for nine years.

Putting in this infrastructure is very expensive, while maintaining it will also be very costly. It would cost around €1.2bn to support 1GW on the grid, and for 37GW of new capacity, the cost is estimated to be €44bn – just for supporting grid infrastructure.

In 2022, Green Party leader Eamon Ryan unveiled the €1.6bn Celtic Interconnector

in Paris. The cable is able to move 700MW of electricity from Ireland to France.

If Ireland was to meet targets of 37GW of offshore wind, then interconnectors of up to a capacity of a further 14GW would be needed to export to other countries.

Putting in the necessary cables alone to export the energy would cost €32bn, separate analysis from the Department of Climate suggests.

While the Government hopes to export a lot of the offshore renewable energy, it is vital that there are huge benefits for other countries, and this may not necessarily be the case, ministers were told.

For example, France is moving towards nuclear energy which is cheaper than the renewable energy Ireland has on offer.

Another challenge of meeting the 37GW target by 2050 is the need to have a booming green hydrogen market in Ireland.

However, it is expected that hydrogen in other European countries is likely to be cheaper than that in Ireland.

The Department of Public Expenditure told ministers Ireland needs to “drastically” drive down the cost of electricity, including renewable electricity, to create a viable export market.

As Ireland hopes to export its massive wind energy investment to other European countries, they will have to pitch into the €131bn cost of putting in the infrastructure, ministers were advised.

But the scale of the infrastructure which will be needed to do this “does not exist today”.

It is also unlikely that taxpayers in other countries would be willing to bear the costs of paying for another state’s renewable energy infrastructure.

Other EU member states may not be “willing” to make too many compromises.

A spokesperson for the Department of Public Expenditure said: “Due to the fact that Cabinet confidentiality extends to the content and details of discussions at meetings of the Government, we will not be commenting.”

A spokesperson for the Department of the Environment also said it would not comment. However, a source in the Department said 37GW offshore wind “could be worth at least €38bn to the Irish economy”, according to a report by Green Tech Skills Net and Wind Energy Ireland.

They said Ireland has plans to engage at EU level “to support future market design developments”.

The Department of Enterprise, Trade and Employment is currently working with Enterprise Ireland and the IDA to develop Ireland’s first offshore wind industrial strategy.

‘Department says costs to the public are likely to be “significantly higher” than projected’