Work is now under way to study the costs and benefits of this plan, support mechanisms and the implications and constraints of transmission links across the sea. The governments hope to sign a formal agreement next year. They believe there is potential for 3GW of renewables to be traded between countries, though IWEA has pegged the potential much higher, at 6GW of wind alone.
The UK's main interest in the plan is to help it meet its renewable energy targets. The EU Renewable Energy Directive allows some of the renewable generation needed to be sourced from other countries. Crucially however, the rules stipulate that the exporting country must have met its own target first. And Ireland is significantly behind on this.
Ireland's target under the directive is to deliver 40% of electricity from renewables by 2020. It is halfway there at 20%, according to the government. Wind is the predominant renewable energy source - the 174GW installed represents 98% of renewable sources.
But this is 630MW behind its Renewable Energy Action Plan's 2012 forecast and installation must ramp up from an historic average of 180MW per year to at least 250MW per year. Last year, 107MW of wind was installed, significantly less than the 272MW predicted.
Grid issues
A major cause of the low build rate has been Ireland's limited grid. Combined with low domestic demand, this has led to large amounts of wind being curtailed in very windy conditions; in March 2012, the curtailment rate was 25%. The sites with the best wind resource are the ones with the weakest grid.
Five years of debate over curtailment has ensued and proposals to change the way the cost of curtailment would be met - known as the Tie Break - have spooked developers and investors. Instead of sharing these costs equally between developers on a pro-rata basis, the single electricity market (SEM) committee suggested a system that would effectively have protected older, established projects at the expense of newer wind farms, some of which would have suffered 100% curtailment, rendering them unviable. This was resolved last year when the SEM committee agreed to go back to pro-rata cost sharing. However, it means generators will receive no compensation for losses after 2018.
This leaves investors uncertain about how much a generator may be charged for curtailment, especially as the amount of wind on the system increases, says Diarmuid Twomey, Mainstream Renewable Power's development manager for Ireland. "There is a lot of concern with senior debt providers. What will the situation be when we have 4GW online in 2020?"
Investors are asking developers to allow for 5-10% curtailment, which is limiting the amount of finance they are willing to provide, he says.
A lack of grid capacity has also meant that schemes that were otherwise ready to be built had to wait until they had connection, which had a knock-on effect on how much money they received through the country's financial support system, known as REFIT.
The uncertainty has delayed projects for 18 months, reports Twomey. "Most companies sat on their hands."
In March, the Irish energy department extended the timeframe of the support schemes. As long as 75% of a wind farm is operational within nine months of 31 December 2010 for Refit 1 and 31 December 2017 for Refit 2, they will be eligible for support.
But developers are still waiting for confirmation of an extension to the "backstop date" when payments will end for Refit 1. The government has proposed an extension to 2027, but this is awaiting state aid approval from the European Commission.
Playing catch-up
All this means Ireland is playing catch-up, relying largely on an increase in grid capacity. Grid operator Eirgrid has a significant programme of work under way. It is due to publish its constraint reports, which will estimate the level of curtailment for each project. Developers have until the end of the year to decide whether to build projects.
However, Peter Kavanagh, director of developer Wind Prospect, points out that progress of the first two rounds of applications to connect wind to the grid - known as gates - have been slow. By the time the 363MW of Gate 1 projects are delivered, it will have taken ten years; while the 1.3GW of Gate 2 will have taken 11 years, he says.
This is despite none of these projects needing grid upgrades. The 1.5GW of Gate 3 projects, on the other hand, depend on construction of three 400kv transmission lines. The projects are expected to take 12 years to deliver, with none in the ground as yet.
Andrew Garrad, chairman of renewables consultancy GL Garrad Hassan, says: "The first thing the Irish need to do is accelerate development. Is it slow but sure, or just slow? I think just slow." Luckily, only 50% of Gate 3 projects are needed to meet the 2020 target. "The 2020 targets, while achievable, are not a foregone conclusion," says Kavanagh. "Make no mistake, a huge body of work is needed to deliver them."
ENERGY BRIDGE LEADING THE WAY
Mainstream Renewable Power is the company most advanced in its plans to export energy to the UK. Its Energy Bridge plan will see 5GW of wind energy from the Irish midlands transferred under the Irish Sea.
It has already signed a grid access agreement with the UK's National Grid to start exporting in 2017. It also secured deals with 300 private landowners in the Midlands - half the land required for projects. It has bird and wind resource studies under way and will soon consult on its plans.
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