Economics of Offshore Wind Energy
Indecon International Economic consultants carried out an “Economic Appraisal of the Potential for Offshore Wind Generation in Ireland” which was published as a report in September 2008. The objective of the analysis was to estimate the net cost/benefit for enhanced offshore wind development in Ireland and to estimate other benefits including non-GHG emissions abatement, Kyoto compliance, tax and employment, fuel-price risk reduction, etc.
A Financial model based on a 1000MW wind farm for a 15 year period starting in 2012 was used with a conservative cost base of €3.5 million per megawatt capital cost and conservative fuel price forecasts.
The analysis shows primary net direct benefit for Ireland Inc. of up to €1.7 billion 2012-2027. Extra quantifiable indirect benefits €2.1 billion including Merit Order Effect, employment, carbon fines saved, reduced emissions, etc. In virtually all scenarios there is a direct net benefit, in all scenarios there is an economic benefit when indirect benefits are included. There is going to be a cost to Government of carbon fines 2008 – 2012 of €1.17 billion if Ireland fails to meet its obligations.
The other quantifiable benefits include the merit order effect, savings associated with reduced NOx & SOx Emissions, an estimate of Carbon Fines Avoided (2008-2012), the macroeconomic benefit and an estimate of fuel risk reduction.
Cost Benefit Analysis Conclusions
- Shows primary net direct benefit for Ireland Inc. of up to €1.7 billion 2012-2027
- Extra quantifiable indirect benefits €2.1 billion including Merit Order Effect, employment, carbon fines saved, reduced emissions, etc.
- In virtually all scenarios there is a direct net benefit, in all scenarios there is an economic benefit when indirect benefits are included
- Cost to Government of carbon fines 2008 – 2012 €1.17 billion
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