Consumers in Ireland are set to receive a rebate of €89.10, thanks to profits generated by the country’s renewable power infrastructure.
Under what is known as the Public Service Obligation (PSO) levy, a charge is applied to all electricity consumers to cover the costs of renewable support schemes introduced by the Irish Government. To encourage renewable generation, generators are guaranteed a price for the electricity they generate, however, with recent global events seeing power prices rocket, generators are making this money from the market, meaning payments to generators are being reduced, stopped or in some cases paid back to the consumers.
One of the schemes paid for by the PSO levy is the Renewable Energy Feed In Tariff (REFIT), the payments work as a top up, meaning if the market falls below the guaranteed price for the electricity they generate, they receive an extra payment which is covered by consumers. The higher market prices are, the smaller these top up payments will be.
The Renewable Electricity Support Scheme (RESS) scheme goes one step further, whilst generators will receive similar top up payments, they will also make payments back if the market price is above the generator’s guaranteed price.
There is also a reconciliation known as the R-factor which has resulted in a significant reduction in the PSO levy. This is a result of under forecasting the unprecedented high prices for the 20/21 PSO levy.
Andrew Oliver, Senior Modeller at Cornwall Insight, noted, “Last month’s publication of the final decision paper on the PSO levy for the period 1 October 2022 to 30 September 2023 has shown the rewards to consumers of higher market prices. For the first time since the scheme began in 2010 the PSO levy is negative, meaning consumers will be reaping the benefits of money being returned from renewable generators. With energy bills continuing to spiral and the market in a constant state of volatility, positive news for consumers bills is very welcome.
“In these turbulent times it can be easy for politicians and other stakeholders to look towards policy perceived to be a quick solution to increasing bills. However, it is important that the country is not derailed from its net zero goals in favour of increasing fossil fuel use. These figures show that not only is renewable generation a benefit to energy security in the longer-term, as well as good for the environment, but it also provides tangible financial benefits to consumers right now.”