Wind energy companies blame regulator for rise in prices as new figures show bumper profits

Wind-energy generators have blamed the regulator for a hike in the levy on domestic electricity bills, claiming it got its figures wrong.

Consumers are facing higher electricity bills from October after the energy regulator confirmed it is to hike a levy on their bills.

The so-called Public Service Obligation (PSO) levy is in place to subsidise the generation of electricity from sustainable sources, such as wind farms and solar panel operations.

It will be €40 a year per household from the autumn.

This is in contrast to this year, when the levy on electricity bills was set at zero.

Renewable energy generators made bumper profits in 2022.

Collectively, their profits jumped from €125m in 2012 to €509m in 2022 after the spike in energy prices following the Russian invasion of Ukraine, according to information obtained by The Sunday Times.

A windfall on super profits was imposed by the Government the following year.

Wind Energy Ireland claimed the levy was due to cost households a combined €17m from this October because the regulator, the Commission for the Regulation of Utilities (CRU), overcharged electricity generators last year.

The levy guarantees the price renewable energy generators get for the electricity they produce.

The CRU sets the level of the PSO levy, which applies from each October.

Director of external affairs for Wind Energy Ireland, Justin Moran said: “Irish wind and solar farms will pay back to electricity consumers a net €17m over the 2024/25 PSO period.

“This is because new renewable ­energy projects, when prices are high, return the excess over what they’re contracted to receive to help Irish households and businesses.”

He said he reason consumers will be paying the PSO levy again this year “is because the CRU overcharged electricity generators in 2022/23 as it had, like many others, anticipated higher wholesale prices”.

“That needs to be corrected this year and it is this which is driving the PSO levy back up.”

Wind and solar generators get guaranteed prices for the energy they generate, in a bid to encourage the transition to renewable energy.

When wholesale prices are high, mostly because of high gas prices, renewable generators – which do not require gas – receive greater revenues for the electricity they sell in the wholesale market, the CRU said.

If what they earn exceeds their contracted earnings they return these funds via the regulator.

Asked if it had a mistake in its calculations for the PSO levy that will now cost households and businesses, the CRU said that in the summer of 2022, after Russia invaded Ukraine, as part of the PSO process and given the trajectory of wholesale gas prices, the PSO levy was calculated at expected market price for electricity for 22/23.

This has always had to be done as an estimate, as wholesale prices can move up or down during each year in the middle of PSO periods, it said.

“As with all estimates in the PSO levy process, and as can be seen over the lifetime of the levy, these estimates have been higher or lower than the actual wholesale price during each of these years, which means there has to be a correction each year, or R-factor.

“This may be negative or positive.

“Fortunately for all end customers, market prices were significantly lower in 22/23 than had been calculated in the summer of 2022, which had to be based on that particularly volatile period for wholesale gas and electricity prices due to the geopolitical environment.”

The CRU said the charges collected from generators on the basis of the higher price in the calculation was returned to customers in 2022/2023.

In the calculations for this PSO period 2024/2025, it was calculated that generators did not actually make as much from the market in 2022/2023 as had been estimated, the regulator said.

“This is why there is a correction this year that will see a higher level of support for renewable generation charge required and attributed to the PSO levy in charges to end electricity users,” the CRU added.

Reporting on:independent.ie