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Wind-fuelled future

Aug 08, 2022
As Shannon Foynes Port Company advances plans to become a global leader in offshore floating wind energy, CEO Pat Keating outlines his ambitious vision for the Shannon Estuary

The Shannon Estuary is primed to become a renewable energy leader and global hub for floating offshore wind farms as Shannon Foynes Port Company advances plans to harness the power of its close proximity to the Atlantic.

“Ireland’s potential for floating offshore wind generation off the West Coast stands at 70GW, which is 12 times our current installed wind capacity on land,” said Pat Keating, FCA and Chief Executive of Shannon Foynes Port Company (SFPC).

“The potential is enormous. It is all there, and it could play an enormous role in enabling Ireland’s transition to a low carbon economy, but, without the right infrastructure, all that potential energy will be going nowhere. Now is the time to plan ahead and make the right decisions.”

SFPC recently appointed Bechtel, the US engineering firm, to revise Vision 2041, the development masterplan it published back in 2013.

“Bechtel is assessing the entire potential of the Shannon Estuary for us, from an engineering point-of-view, so that we can plan out the roadmap of deliverable supply chain investments required to assemble these floating wind turbines and transport them out to sea,” said Keating.

Ports like SFPC could act as a crucial focal point in the manufacturing, installation, and operation of large-scale offshore wind farms, while also supporting crucial local supply chains, Keating said.

“The port infrastructure is critical, but there is a lot more to it. We are looking at other critical elements like how we can accommodate the offshore grid along the Shannon Estuary, so that this renewable energy has a route to market. 

“We’re looking at the potential to produce eFuels from the wind energy resource, like hydrogen ammonia and sustainable aviation fuel. 

“We won’t see wind turbines in the Atlantic until 2030 at the earliest, but if we don’t plan now for all of the different infrastructural and supply chain elements that will need to be in place, we may not even make that deadline.”

As Keating sees it, Shannon Foynes Port Company is well-placed to play a leading role in the roll-out of such a strategy, with its most recent annual report, released in July, revealing record earnings in 2021 with profit before taxation exceeding €5.2 million for the first time.

SFPC is Ireland’s largest bulk port company and second largest port operator. A commercial semi-state company, it is responsible for operating Foynes and Limerick ports and has statutory authority over all marine activities along the estuary, stretching from Kerry to Loop Head and Limerick city.

“Our ‘harbour’ is the entire Shannon Estuary, the largest and deepest watercourse in the country, which consists of 500 sq. km. of water with channel depths of up to 32 metres. That is a unique asset in its own right,” said Keating.

“Now, we want to use this unique asset to harness the renewable energy asset we have here in the Atlantic.” 

Climate Action Plan

If realised, Keating’s ambition to develop the offshore renewable energy resource off Ireland’s West Coast could potentially exceed targets laid out in the Government’s Climate Action Plan to achieve 5GW in offshore wind energy by 2030, rising to 30GW by 2050. 

As it stands, Phase One projects currently in development under the plan mainly comprise fixed-pile developments situated off the East Coast.

These include the Codling Wind Park co-development between EDF and Fred Olsen off the Wicklow coast, Oriel Windfarm – a joint venture between ESB and Parkwind NV in Louth – the RWE Renewables and Saorgus Energy-led Dublin Array Project, and Statkraft’s 750MW North Irish Sea Array.

Only after these Phase One projects have been completed is the focus expected to shift to the floating offshore wind developments Keating is envisioning, in the deeper waters off the West Coast.

Currently, offshore wind infrastructure in Ireland is markedly underdeveloped compared to other EU countries.

The 25MW Arklow Bank Wind Park in the Irish Sea off the coast of Wicklow is our only existing operational offshore renewable energy project, but recent developments suggest significant change ahead.

Offshore wind history

“The Arklow Bank Wind Park goes back to 2004 and it was actually one of the largest offshore wind farms in the world,” said Noel Cunniffe, Chief Executive of Wind Energy Ireland.

“At that point in time, Ireland was regarded as a world leader in offshore wind, but then we put the brakes on, mainly I think because offshore wind was seen as prohibitively expensive to develop.”

In the years since, Ireland has been overtaken by the UK and a clutch of European leaders in offshore wind energy, among them Denmark, Germany, Holland and Norway.

“We have definitely fallen behind, but there is an upside,” said Cunniffe. “The cost of developing offshore wind energy has come down massively since the early 2000s and Ireland is now in a strong position to take the learnings from Britain and our EU neighbours, so that we can hit the ground running at a much faster pace.”

Policy and legislation

The Irish Government has made substantial progress over the past 12 months in introducing policy and legislative measures to support the ramping up of offshore energy development.

The National Marine Planning Framework was published by Taoiseach Micheál Martin on 1 July 2021, followed late last year by the Marine Area Planning Act.

“The National Marine Planning Framework is Ireland’s first comprehensive marine spatial planning framework, and the Marine Area Planning Act provides the legal and administrative underpinning for a new planning regime in the maritime area, facilitating the development of offshore energy,” explained Rebecca Greene, Energy Tax Policy Leader with PwC Ireland. 

A regulatory agency has also been announced to enforce the new planning regime and manage the relevant Maritime Area Consents (MACs) and foreshore licensing requirements.  

The Maritime Area Regulatory Authority (MARA) is expected to be operational in 2023, while the first batch of MACs are expected to be issued soon to selected Phase One projects.

“All of these developments are critical to paving the way forward for our offshore wind sector and making Ireland an attractive location for renewable energy investment,” said Greene.

“At a fundamental level, Ireland’s maritime area is seven times the size of our landmass, so we have access to significant marine renewable energy resources, such as offshore wind, but also wave and tidal.”

Renewable energy export

The Programme for Government set out targets of 70 percent renewable energy by 2030, underpinned by 5GW of offshore wind. 

Thereafter, the plan is to commission at least 30GW of floating offshore wind by 2050, turning Ireland into a significant exporter of energy to other markets. 

Speaking recently at the National Economic Dialogue in Dublin Castle, Tánaiste Leo Varadkar, TD, highlighted the country’s potential to one day generate enough green energy to sell excess supply overseas.

“While weaning ourselves off coal, oil and gas is a global challenge, it also presents incredible opportunities for Ireland, specifically in the area of electricity generated by offshore wind, backed up by mega-batteries and interconnection, and of course, green hydrogen,” Varadkar said.

“I believe, in a few decades, we can go from being an energy importer to being an energy exporter,” he added, “with all the benefits that come with it – greater energy security and price stability, employment and regional development.”

Surplus energy produced in the future would be transported through purpose-built interconnectors or existing gas infrastructure converted for the purpose. It could also be converted to green hydrogen stored in Ireland for energy security purposes.

“Under the new planning system, we expect to see the first planning application submitted for a new offshore windfarm in the first half of 2023, and the government is also working on the ancillary infrastructure needed to cater for offshore wind energy,” said Cunniffe.

“The Department of Environment Climate and Communications is currently working with Eirgrid to work out the cable infrastructure plan for connecting offshore wind farms to the electricity transmission grid around our coastline.”

Route to market

The route to market for new projects in the pipeline, meanwhile, will be handled initially via a series of auctions under the Offshore Renewable Energy Support Scheme (ORESS).

Delivered by the Department of Environment, Climate and Communications with the support of Eirgrid and the Commission for Regulation of Utilities, the ORESS auctions will see offshore wind developers bid for capacity, receiving a guaranteed price for the electricity they generate. 

“The most competitive projects will get contracts and they will then enter into construction. The first auction will open before the end of the year and we expect the bidding to take place around April 2023,” said Cunniffe.

In addition to planning, licensing, and commercial supports, investment in the ancillary infrastructure for the developing offshore wind energy sector will be crucial in the years ahead, according to Greene.

“We need to invest significant amounts in port infrastructure, supply chains and workforce requirements. Doing so will enable us to meet our climate objectives, but it will also create huge opportunities for economic prosperity across our economy and society,” she said.

Cunniffe agreed that a “major recruitment drive” would be needed to support anticipated growth in the sector.

“It is really great that we now have a planning system in place for offshore wind energy with the introduction of the National Marine Planning Framework and Marine Area Planning Act, but what we don’t have enough of are the skills we’ll need to support this,” he said.

“There is definitely a shortfall in the number of marine ecologists, biologists and planners we will need to process the quantity of applications we’ll see over the next few years. 

“We’re also going to need a lot of electricity transmission grid reinforcement around our coastline, so that we have sufficient capacity to move offshore power from where it’s being created to where it’s needed.”

Budget 2023

As we await the announcement of Budget 2023 on 27 September, PwC is calling on the Government to prioritise measures that will support private investment in offshore wind and other renewable energies.

“From a tax perspective, developers and investors in the Irish energy sector – and, in particular, the offshore wind sector – require certainty and stability in the tax regime given the significant investment involved. Minimising the administrative burden they face is critical,” said Greene.

Among the recommendations outlined to the Government in PwC’s Pre-Budget 2023 Submission for Climate Action is the introduction of accelerated capital allowances for investment in port infrastructure, and the extension of the capital gains tax participation exemption to pre-trading ventures, including renewable energy developers.

“We would like to see a broad exemption for infrastructure projects extending to Irish companies investing in renewable energy projects, even if they are not directly involved in the project,” said Greene. 

“We’d also like to see the pre-trading expenditure window increased from three to seven years and would welcome clarity and confirmation from the Government with regard to the qualifying nature of grid connection costs.”

The R&D tax credit regime could be improved to support green innovation and the development of climate technologies, Greene added.

“We are also recommending that the Government reintroduces the relief for investment in renewable energy generation (s486B TCA 97), which ceased in 2014, in order to encourage corporate investment,” she said.

“And we would also like the Government to amend the Relevant Contracts Tax regime to enable non-resident contractors with good tax standing to avail of the zero percent rate, and allow for monthly VAT returns to improve cash flow for projects at development or construction phase.”

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