Developing a renewable energy project can provide a good return on investment, and government tax incentives mean pursuing this option is becoming more affordable.

Ireland is hugely dependent on imported energy; imports account for around 90% of our total primary energy supply. We have a great opportunity to reduce our dependency on fossil fuels by encouraging micro power generation from other sources including the sun, wind and waves.

The growth in Renewables is particularly crucial in the context of Ireland reaching its Kyoto target (an international environmental treaty introduced by the UN to reduce the Greenhouse gases that cause climate change) that 13.2% of national energy consumption is derived from renewable sources by 2010 in line with the EU Renewables Directive. This flourishing industry represents a unique investment opportunity for Irish businesses.

Some of the renewable energy options open to businesses include investment in solar panels, geothermal pumps, landfill gas sites, biofuels, and wind turbines. According to Sustainable Energy Ireland, wind farms, small hydro power schemes and landfill gas recovery developments can all offer a good rate of return on investment. One of the most popular investments for businesses is in wind farm projects. This option is especially suitable for those located along the west of Ireland and in other windy regions.

Tax relief is available for companies making equity investments in wind, hydro, solar and biomass energy projects approved by the Government. A company can invest up to €38 million over three years in renewable energy projects and recoup tax relief at the rate the company currently pays.

The biggest challenges facing those looking to invest include; planning permission requirements, grid connection arrangements, and organising contractual agreements for use of the electricity. In advance of seeking finance for an investment, you should secure land leases, planning permission and grid connection arrangements. Environmental impact statements will also need to be prepared.

Earlier this year Bank of Ireland launched a €100 million fund aimed at those expanding an existing project or developing a new project in the renewable energy sector.

Investment in this area will lead to reduced energy costs for households, small businesses and farms and will be critically important in our future economy.

For more information contact Bronagh Larkin, Senior Manager - Tax/Project Finance,
on 01 665 3476.