Electricity generated by wind farms has become an important addition to the capacity available in Northern Ireland.
There are now several hundred wind farms located in rural areas on the rolling hills across the province.
The official Government-sponsored scheme to incentivise renewable wind farm investments ended for new applicants four years ago. However, many licences have taken some time to be completed so that the scale and evidence of the investments has since been increasing. Local investors have committed significant amounts to units which, sometimes after initial connection difficulties, are now conspicuous land marks.
A large part of the investment in wind farms has been by investors from outside Northern Ireland. Several renewable energy businesses are large enough to figure in the list of our more profitable organisations, including:
· SSE Renewables Onshore.
· Greencoat UK Wind Holdco.
· NTR Green Energy.
Last year SSE Renewables was listed as the most profitable business registered here. Its pre-tax profits were supplemented in part by one-off gains from disposals of some of its assets. Following a classification change, SSE Renewables is now expected to be one of the five most profitable local organisations.
In the forthcoming 2020 list of our more profitable businesses, two other new names will be added.
NTR Green Energy is owned by investors based in the Republic and has Irish directors. Amongst its subsidiaries there are three Northern Ireland-registered subsidiaries.
Greencoat UK Wind Holdco has in recent years been adding new subsidiary wind farms to its extensive UK-wide portfolio and, in a recent research review, listed eight with addresses in County Tyrone (6), Fermanagh (1) and Londonderry (1). Summary details of the trading performance of the eight subsidiaries, listed in the table (attached), show that they have all established healthy trading results.
With a capacity of 204 mw, Greencoat provides a significant proportion of the local renewable generating capacity. In the trading year ending in 2019, these subsidiaries registered pre-tax profits of £19.2m - equivalent to 43p per mwh. Greencoat can expect to be one of the 20 more profitable local businesses.
The profitability of wind farms can be attributed to two features.
First, NI is well endowed with frequent and strong winds, although as with wind power everywhere, there is no guarantee of steady regular wind power. Second, these wind farms enjoy an unusual form of subsidy. As suppliers of renewable electricity they earn renewable obligation certificates (ROCs).
As an incentive for renewable supplies, conventional fossil fuel generators have an obligation to purchase a proportion of the energy which they sell to customers from renewable sources. The ROCs of the wind farm therefore have commercial value to fossil fuel suppliers. In effect, renewable businesses are subsidised by the effect of ROCs which are then, indirectly, paid for by all electricity consumers.
Neither the Department for the Economy nor the Utility Regulator publishes estimates of the effect of ROCs on the economics of the electricity market.
However, these relationships will have an important part to play when the department and regulator make decisions on how the scale of renewable energy can be increased from the current 40% of demand to a higher target expected to be nearer 70%. Unfortunately, the department and the regulator are prepared to allow the wind farm owners to operate with a high degree of non-disclosure. Companies legislation is heavily used to claim either dormant or small company status to avoid even basic commercial details. For example, there is apparently no full list of the beneficial ownership and capacity of all the renewable installations.