VAYU Energy: Supporting Ireland’s renewable agenda

Ireland’s target under the EU Directive 2009/28/EC has a binding national overall target for renewable energy consumption of 16 per cent in 2020. In line with these commitments, the Irish Government has decided that in order to achieve this target, 40 per cent of electricity consumed in 2020 will be generated using renewable energy sources, with targets of 10 per cent and 12 per cent in transport and heat respectively. It is certainly the case that great progress has been made to date in relation to the 40 per cent target, as Ireland is now halfway towards achieving this. However, I’m constantly being asked will we reach our final ambition of 40 per cent by 2020?

What we do know is that failure to meet these targets could prove to be very expensive, with varying degrees of estimates doing the rounds. Rest assured any penalties will be in the hundreds, as opposed to tens of millions for not reaching the published targets.

Currently, the vast amount of renewable electricity in Ireland is generated by onshore wind and this technology will make up the majority of the 40 per cent target. Although EirGrid has revealed that sufficient wind farms have accepted offers to connect to the grid to meet the target, there are still a number of challenges associated with commissioning wind projects such as grid connection costs, planning issues, availability of finance and an increase in commercial rates for wind farms. The primary support mechanism to achieve these targets has been the Renewable Energy Feed in Tariff (REFIT), but this same scheme is also nearing its end date, creating further challenges and time pressures. Based on these challenges one might justifiably question, can our energy sustainability ambitions be realised. Thankfully there are many individuals and companies, like Vayu Energy, that share an aligned vision and ambition to play our part in making it happen. Despite there being uncertainties and challenges, this is genuinely an exciting time in the renewable energy sector and I personally would feel confident of the 40 per cent electricity consumption target being achieved.

What role is Vayu Energy playing in shaping a more sustainable future?
Innovation plays a huge part in helping Ireland achieve this 2020 target and this is where Vayu Energy contributes to delivering a more sustainable future for Ireland and our customers. Since our inception, Vayu has prided itself in understanding both customer and market needs and, with professionalism, expertise and agility, has assumed a leading role in developing new ways for large energy users to procure and use their energy in the most effective and efficient manner.
Having established in 2003 as an innovative energy supplier, in 2013 Vayu then established a dedicated renewables team to focus on (i) providing renewable generators with a route to market via Power Purchase Agreements (“PPAs”) and (ii) working with our customers to develop and support them with integrated renewable energy solutions.

Power Purchase Agreements (PPAs)
As part of our evolution in the electricity market and to support renewable generators, Vayu developed a PPA structure for merchant PPAs coming out of the old Alternative Energy Requirement (AER) support scheme (the precursor of REFIT).

Over the past three years, Vayu has become a significant player in the renewables sector; offering PPAs to renewable generators in the REFIT scheme in the Republic of Ireland and also PPAs in Northern Ireland. Our PPA portfolio now includes numerous technologies from onshore wind, landfill gas, biomass, hydro and solar.

Above and beyond the complexity of developing and commissioning a renewable generation project, a further stumbling block for PPA structures can sometimes be the collateral requirements from a project finance perspective. These demands on developers and suppliers can sometimes be so onerous that they can threaten the development of new projects even after the developer has incurred significant risk capital costs. Having the backing of Glencore plc, Vayu’s majority shareholder, leaves us well positioned to work with the various lenders in the market and build our PPA portfolio.

To date our primary focus has been on small and medium size renewable projects of less than 10MW but more recently we are also providing PPAs for larger participant generators, as well as working with developers and lenders opting for the Supplier Lite PPA route. Currently, we have a contracted PPA portfolio of over 120MW and we are aiming to grow this to over 250MWs over the next few years. We look forward to the release of the White Paper this autumn to see what further support will be available to the renewables industry and for which particular technologies. With over 13 years’ experience in the energy market, a dedicated renewables team, proven track record and ISO accredited quality management and sophisticated IT systems, we are confident Vayu will play a significant role in providing a route to market for new projects to meet the 2020 targets and beyond.

Direct PPAs
In recent years, sustainability is of increasing importance to many organisations and many have very stringent goals in terms of reducing their carbon footprint and sourcing renewable green power. Vayu also has a specific expertise of constructing direct PPAs that basically give large energy users dedicated access to the output from a renewable project, irrespective of where the project is located. This also has huge advantages for customers in so far as providing a commercial model to counter energy price fluctuations over the long term. A typical contract length might be anywhere from 3 to 15 years, thus providing tremendous commercial certainty to both the generator and the user. This commercial model can have both a fixed and/or variable pricing mechanism. Monaghan Mushrooms saw the commercial benefit of having a direct PPA having recently signed a €2.8 million electricity deal with us. The deal involves Vayu Energy supplying Monaghan Mushrooms with 100 per cent green electricity generated from a 10-turbine wind farm in West Cork. With a total annual production capacity of 25 GWh, the electricity generated will be used to supply Monaghan Mushrooms’ six sites across counties Monaghan, Mayo and Kildare.

Integrated renewable energy solutions (on-site generation / customers)
In addition to facilitating a route to market for renewable generation projects, Vayu also works tirelessly with its customers to assist them meet their overall sustainability objectives. From an energy perspective, Vayu excels in helping its customers procure, conserve and sustain, efficiently and effectively. Assisting companies transition to a renewable supply of energy, along with realising the commercial benefits of on-site renewable generation (wind / solar PV, etc.) is a fundamental part of our service offering.

In this regard Vayu has developed a bundled solution for customers, with single invoicing for the supply and export of electricity for those customers with
on-site renewable generation. This is viewed very positively by customers as there are limited alternatives in the market to accommodate this.

Summary
It is clear that while Ireland has made significant progress towards the 2020 targets, there is still more to do. Our plans will see Vayu Energy continue to play our part in achieving these targets by taking on PPAs for renewable energy projects, providing innovative renewable solutions to large energy users and helping customers reduce their energy consumption. Our experience, local knowledge, flexibility, technical expertise and innovative approach mean that we are the ideal partner for renewable generators and large energy users.

Vayu Limited, Macken House
39–40a Mayor Street, Dublin 1
Tel: +353 (0)1 884 9400
Email: info@vayu.ie
Web: www.vayu.ie