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New details on Irish renewables subsidies announced

The Irish government’s Climate Action Plan published in mid-2019 outlined an ambition to move Ireland to 70% electricity generated from renewable sources by 2030.

To help deliver this, more details around the Renewable Energy Support Scheme (RESS), and in particular the first auction, were announced this week. 
Under the scheme, which is still subject to EU state aid approval, renewable energy projects in Ireland will bid for capacity in a series of auctions through 2020 to 2027.

Future auctions will be held at intervals throughout the scheme’s lifetime to benefit from falling technology costs and to help manage the supply pipeline in relation to grid and planning requirements, but it is expected that were will be a minimum of four auctions. It is anticipated that the first auction (RESS 1) will take place in June 2020.

Although not yet finalised, a November stakeholder briefing presentation suggests that the quantity procured under RESS 1 may be within the range of at least 1000 to not exceeding 3000 GWH/year. Significant growth in wind capacity to date is highlighted and expected to continue alongside solar and community projects.

Proposed elements of the scheme which have been agreed by the Irish government this week include technology that broadens the renewable generation mix as well as solar and community initiatives. Solar, in particular, looks set to benefit with an indication in the latest announcement that this could be approximately 10% of the overall auction. RESS-1 will be technology neutral, which is likely to favour onshore wind, albeit that specific eligibility criteria may tip the balance to some extent to other technologies and it appears that the Irish Government has listened to industry concerns, particularly in relation to opportunities for solar PV where planning consent has already been banked. There have been a raft of legal challenges against grant of planning permission for wind farms in Ireland over recent years along with third party planning appeals creating delays, which in itself may pave the way for what may be considered less controversial technologies such as solar to gain a foothold.

The strong community focus is clear throughout the Scheme with a Community category of up to 30 GWh (subject to state aid approval) announced within the first auction. Pre-qualification criteria for projects also include offering communities the opportunity to invest and take part ownership of renewable projects in their local area. Alongside this, all successful projects in a RESS auction will be obligated to provide a Community Benefit Fund with a EUR2/MWh contribution.  This has been a focus of the RESS since its inception and could see community projects increasingly favoured in later auctions. 

It is clear with this week’s announcement that the scheme is finally gaining momentum. Draft Terms and Conditions for RESS-1 are now set to be published in mid-December and will be open for consultation for five weeks. An auction timetable is expected and more details of how the system will operate are to become available this month. 

Whilst RESS does not apply to the Northern Irish renewables market, the opportunities south of the border will be a boost for local expertise that has developed during the last decade, and both developers and funders across the UK will no doubt be getting involved. Its impact upon the Irish Single Electricity Market will also be watched closely as there will be knock-on effects in the Northern Irish PPA and electricity supply market. 

Although emerging later than originally anticipated, this announcement is to be welcomed across the renewables industry and will drive significant new generation in the Irish market throughout the next decade. The finer details of the proposed auction will need to be scrutinised, but the intention to accommodate a broader range of projects from the outset is encouraging and the opportunities for community-based projects opens the door for new partnerships between developers/generators and the public.

It is also worth noting that the auction can include repowering of existing generators provided that such projects increase output by 50% or more which could allow existing operators to capitalise on established generation projects. In some respects RESS-1 will be a test-bed for future auctions; this is an entirely different scheme to the previous REFIT and inevitably there will be a learning experience that will feed into future auctions. It is however a huge step forward for the Irish renewables market, albeit a slightly stuttering one given that the original optimistic timescales have not been met. 

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