The REFIT scheme — backed by the Government and the EU — is intended to create jobs and meet targets for the use of renewable fuel in the generation of energy at a series of small power plants here.
Farmers and companies running the plants are guaranteed a minimum price for green electricity they produce and are paid for the amount of energy generated per hour. But now it has emerged forestry agency Coillte is demanding those prices be increased.
The semi-state company will benefit from higher prices because it would be the biggest supplier of fuel to run plants, as it controls 50pc of Irish forestry.
But Brussels officials, who have to clear the proposals under state aid rules, are unhappy with the company’s demands and have put the scheme on ice until the Department of Energy redrafts the plans.
It is understood Coillte wants up to 16c per kilowatt hour of energy generated — significantly higher than the 12c proposed for biomass energy.
The scheme was supposed to be up and running this year but the Department of Energy has received correspondence from European officials in the past month highlighting their opposition to Coillte’s demands.
Renewable energy companies say the hold-up is delaying the creation of thousands of jobs because they cannot access any funding until the scheme gets the green light from Europe.
These would include construction, operational and transport jobs, said Alan Fox, owner of Shamrock Renewable Fuels who is ready to employ up to 300 staff through the scheme.
The company has a biomass plant ready to go in Letterkenny – and another one in Meath.
Mr Fox said: “We have already invested €4.5m in obtaining grid connections and planning permissions ahead of the scheme. As a manufacturer of biomass energy systems we are losing out in exports.”