The quick answer is no. The illusion that electricity produced from renewable energy sources is cheap has yet to be proven. Two of the early adopters of renewable energy, Denmark and the UK, both have some of the highest consumer electricity prices in Europe at €0.60 kW/h compared to Ireland which currently averages at about €0.42 kW/h and way above the EU average of €0.28 kW/h. Considering that Denmark generates over 70% and the UK 41% of their electricity from renewable sources (mostly wind) it appears that renewable energy will not deliver the lower prices we had hoped for.

On the other hand, electricity should not necessarily be cheap and, though there are social issues to overcome, increasing consumer (and commercial) electricity prices is one of the most effective ways of reducing electricity consumption and as a result, climate impacts.

To cover the initially higher costs involved in generating from renewable sources in Ireland, projects are subsidised. Developers partake in a government Offshore Renewable Energy Support Scheme (ORESS), which guarantees them a fixed price for electricity for the duration of the project.  Developers must place bids regarding their supply prices and generation capacity in an auction (ORESS 1) and, in theory at least, the cheapest bids are accepted. A strike (guaranteed) price is determined by Eirgrid and successful developers are then assured of a route to market and a guaranteed price for the electricity their development generates. The auction price is based on contracts for difference, which means if the wholesale (spot) price drops below the strike price, the government will top up the developers to the predetermined strike price. If the wholesale price goes above the strike price, the developers pay back the balance.

This gives developers and investors a safety net, ensuring there is no way projects will fail in terms of financial viability. Ireland’s first two onshore wind energy auctions struck a price of €75/MWh and €97/MWh respectively; more recently the price was €100/MWh, higher than the previous auction but not surprising due to supply chain costs and inflationary pressures. Our first offshore auction reached a strike price of €86/MWh. This is quite expensive compared to current wholesale gas prices which are currently €50/MWh. This means that Ireland’s offshore renewable energy prices are almost twice times the price of gas (October 2023) and the cost to the Irish taxpayer will be enormous. While the price of gas can be volatile due to market speculation and reaction to global events, the war in Ukraine and Germany’s long-term dependence on Russian gas and oil drove gas prices to €340/MWh in August 2022. Gas prices have now recovered due to abundant LNG supplies and reduced consumption.