Written by Alma Causey
Threatened by global warming and environmental pollution, the world is desperately trying to move towards renewable energy. According to new data made available by the International Renewable Energy Agency (IRENA), renewable energy generation capacity increased by 167 GW to 2,179 GW by the end of 2017, representing an increase of 8.3%, an average for the seventh consecutive year.
The growth was led by solar photovoltaics, which grew by 32% in 2017. Wind energy, on the other hand, increased by 10%. A 73% drop in the cost of electricity from solar PV is the reason behind this growth.
Low cost combined with technological advancements have prompted many countries to adopt renewable energy. In 2017, China won the race by installing a record 53 GW. The US, on the other hand, installed 11 GW. China constitutes one-third of the total global capacity, i.e. 130 GW.
Given the advantages, it only makes sense for countries to adopt renewable energy now. As far as Ireland is concerned, the country has been slow to leverage solar power. Here is why commercial solar power is viable for the country:
Since Ireland is an EU state, it has to follow the 2009 Renewable Energy Directive, which bounds it to produce at least 16% of energy from renewable resources by 2020, which means that at least 40 percent of the electricity the country uses has to come from renewable resources. Hence, Ireland has to produce more energy through renewable resources to meet the targets.
So far, Ireland has been shifting to renewable energy primarily with the help of onshore wind, and wind energy will continue to be the principal source as 3.7 GW is expected to be added by 2020. However, wind energy alone is not sufficient and has to be complemented by other resources.
According to SEAI estimates, the country might miss its targets by 3 percent. In case that happens, Ireland will have to pay hefty fines and bear compliance cost. Ireland will have to purchase renewable energy credits from neighboring countries that have already exceeded their targets. Purchasing credits would cost the country between €68 million to €315 million.
Boosting the solar power industry does not only help a country achieve a reduction in pollution and save money, but it also benefits the economy regarding job creation. In the US, for example, the solar industry creates more jobs than any other sector; in fact, it adds jobs 17 times faster than the overall economy. Globally, renewable energy industry added 9.8 million jobs in 2016.
Hence, improving the solar power industry will benefit Ireland regarding job creation as well. According to estimates, the sector will likely create around 7,300 jobs and add €2 billion in gross value to the economy. The jobs will mostly originate in the construction and installation sectors. Other employment opportunities will come from operations, maintenance, manufacturing and research sectors.
Other than the primary operations, the industry also provides opportunities to support companies such as IT companies that offer solar sales software, which will help in generating more commercial solar leads and make implementation process seamless.
Ireland’s highest electricity demand comes from the industrial sector, which stood at 40 percent in 2016. The residential demand came second and was 31 percent. The requirement is met by electricity generation from fossil fuels as well as renewable resources to some extent. Fossil fuel usage stood at 84 percent in 2016, out of which natural gas accounted for 48 percent.
The problem with generating electricity from fossil fuels is that it costs a lot of money as Ireland has to import natural gas, which is vulnerable to price fluctuations. For example, the natural gas price fell from 2015 to 2016 by 45 percent before increasing again by around 42 percent by the end of the year.
If the country shifts to solar power commercially, it can save costs considerably since the cost of solar PV now has reduced and installation has become quite easy. Moreover, adding solar panels increases the value of the commercial property. Big retailers such as Walmart and Target are already leveraging solar power. Target is planning to install solar panels on 500 stores by 2020.
Also, because of the high cost of electricity, the payback for commercial installation is around 7 to 8 years. While the life of solar panels is approximately 25 years, which means the returns last longer and it also immune to price fluctuations.
Developing commercial solar power will also benefit the country in tax revenue. According to estimates, it could earn the country €0.8 billion in taxes. The taxes will come in the form of labor taxes that include income tax and Universal Social Charge and stands at 20.4 percent. Apart from that, 9.1 percent will also come from pay related social insurance.
Other sources of taxes include product taxes, which comprise approximately 10.1 percent of tax on electricity produced. Other than that, some taxes apply to the process. In the case of Solar PV, solar plants will pay these taxes, and they will be around €7,000 per MW. Ireland also applies taxes on profits.
Even though Ireland receives similar solar radiation as its neighboring countries such as Germany, Belgium, Denmark, and the Netherlands, it still lags in implementation. These countries have already invested heavily in solar PV; Germany produces 7 percent of its electricity from Solar power. The reason behind Ireland’s underdeveloped solar sector is probably the lack of policy and incentives. Other countries already have support mechanisms in place for some years, and Ireland needs to implement them as soon as possible.
Ireland can either implement Contract for Difference (CFD) or some Feed-in Tariff (FIT). A CFD pays a guaranteed amount to the generator and increases the revenue received from the sales of electricity in the market. FIT, on the other hand, stabilizes the income that fluctuates due to movements in electricity prices.
The selection of CFD or FIT depends upon the sector and priority of the Irish government. A CFD is more suitable for large-scale projects that sell their electricity to the grid. In this case, the government can set a single price to calculate the top up payments.
So in the end, whatever the government decides to choose as an option for generating energy through renewable sources, it needs to act fast if it is hoping to meet its targets for 2020.
Alma Causey is a Freelance writer by day and sports fan by night. She writes about tech education and health-related issues. Live simply, give generously, watch football and a technology lover.