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Wind farmers claim windfall tax will damage industry

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The Irish Wind Farmers’ Association (IWFA) claims that a windfall tax announced by the government earlier this week, for wind and solar companies, will be “very damaging” for the industry.

The IWFA held an emergency meeting after the government announced earlier this week that it would cap the market revenues of wind and solar companies at €120 per megawatt hour (MWh).

Elevated wholesale gas prices have led to potential windfall gains for electricity producers, which have seen an increase in revenues from the wholesale electricity market, according to the Department of Environment, Climate and Communications (DECC).

However, the IWFA has said that at a time when the government is looking to the renewables sector to help it meet its ambitious climate and renewables targets, the price cap will severely damage further investment in renewables.

Wind

Following on from COP27, the United Nations climate summit in Egypt, the IWFA said that it is critical that the renewable energy sector makes progress with backing from the government to reach climate change and renewables targets.

The IWFA executive members have asked why windfall taxes are not implemented on other industries, such as those benefitting from the government’s Covid-19 measures.

The association claimed that given escalating costs, many solar and new wind projects will not be able to build at current feed-in tariff prices, and this cap will send a further “very damaging message” to the international investor market.

IWFA executive member and former chairman, Thomas Cooke said: “The proposed government price cap of 12c/unit on wind and solar demonstrates that [the] government is out of touch with the new paradigm of high construction and maintenance costs.

“It would severely damage the prospects of developing new renewable projects that are so badly needed.

“The EU proposal of a cap [of] 18c on the producers of renewable electricity sources would allow for new investment,” he added.

Meeting with the minister

The IWFA has stated that its members will be looking to meet with the Minister for the Environment, Eamon Ryan, to discuss the issue further.

Speaking at the meeting, Grattan Healy, chair of The Irish Wind Farmers’ Association, said: “On top of a massive rates hike and the retrospective addition of electricity market balancing costs, the proposed cap of 12c would cause further severe difficulties for onshore wind , through disruption of existing contractual, financial and futures trading arrangements in the sector.

“Because it has not been thought through properly, or even made workable through consultation with the wind sector, it may actually prove impossible to implement.

“And it would not even directly benefit the consumers of electricity since the wholesale electricity market would continue to operate exactly the way it does today,” he added.

Irish Wind Farmers’ Association

Meitheal na Gaoithe was established almost 20 years ago.

It is a grouping of independent wind developers, although it is now officially called the Irish Wind Farmers’ Association and it is representative of the smaller developers.

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