www.davy.ie Bloomberg: DAVY<GO> Research: +353 1 6148997 Institutional Equity Sales: +353 1 6792816 Davy Research August 16, 2012 Davy Research Research Report: Sector update Caren Crowley Ireland's Electricity Future
[email protected] / +353 1 6148997 Barry Dixon
[email protected] / +353 1 6148997 Policy and players shaping David McNamara
[email protected] / +353 1 6148997 investment 2020 EU climate change commitments to drive growth Table of contents • Despite overcapacity in conventional power generation, the Republic of Executive summary 2 Ireland and Northern Ireland are committed to generating 40% of electricity requirements from renewable resources by 2020 to meet The Single Electricity Market (SEM) – an binding EU climate change targets. all-island wholesale electricity market 4 Some €5bn of capital investment will be required to construct an • additional 3–3.5GW of onshore wind by 2020. SEM generation capacity and fuel mix 8 • Government schemes to support this investment have been implemented in both jurisdictions. Growth in generation capacity 10 Larger industry players to deliver renewable investment Renewable energy incentives 13 • Certain technical challenges and the constrained financing environment Challenges in delivering SEM 2020 renewable mean that scarce capital is more likely to be channelled into projects via energy targets 16 the utilities and larger, more experienced project developers. • The four integrated energy utilities that currently dominate the all- A changing SEM 18 island electricity market – ESB, Bord Gáis Energy, SSE Ireland and Viridian – are best placed to support continued delivery of onshore Retail electricity markets supported by the wind capacity. SEM 21 • Larger project developers such as Bord na Móna, Coillte, Mainstream and Element Power will also feature.