The Government has increased incentives for investors in renewable energy projects after a previous scheme failed to add significant generation capacity to the national grid.
The development effectively scraps the fifth alternative energy requirement (AER) programme, which was designed to meet Ireland's "green" energy requirements under the Kyoto protocol.
The Minister for Communications, Marine and Natural Resources, Mr Dermot Ahern, yesterday announced a package that significantly increased the amount of green energy that can be sold at premium prices to the ESB for transmission into the national grid.
Contracts will available to add 578 megawatts to the grid by 2005, up from 157 megawatts at the end of 2002. This has the capacity to provide power to 500,000 homes.
The terms are more favourable than the fifth AER programme, which was designed to increase capacity to 364 megawatts but did not lead to a significant increase.
This in turn raised the prospect of fines against the Government if it failed to reach targets set by Kyoto by 2008.
Mr Ahern said: "If we are to meet our Kyoto obligations we must maximise the contribution made by green energy.
This new programme is a major step towards delivering on Ireland's commitments under the Kyoto agreement, which will see pollution penalties against states imposed towards the latter half of this decade."
The terms of the sixth AER, disclosed yesterday, exceed those mooted last November in the initial proposal, when the Government wanted to increase to 500 megawatts the amount of green energy in the system.
Because power generated with wind, hydro and biomass plant is not competitive with large-scale production using gas and coal, the State intervenes to guarantee a premium to make green projects bankable.
Contracts for 15 years will be available under the scheme. In addition, power produced at offshore wind projects will be supported for the first time. Some 50 megawatts of capacity will be supported under this element of the plan.
A number of companies plan such projects, among them Airtricity, which is developing plans for produce power off the Co Wicklow coast.
With potential investors claiming incentives under the old scheme did not increase the viability of projects, some have not passed the planning permission stage of development.
The new programme is confined to applicants whose schemes already have planning permission. It also withdraws a previous cap on the size of projects.
Mr Ahern said yesterday that he would offer full indexation with inflation in the bid prices paid by the ESB for power. In the old scheme, bid prices increased at only a quarter of the inflation rate.
