Ireland has launched competitive auctions for renewable energy under its new Renewable Electricity Support Scheme (RESS) for which the European Union (EU) has approved state aid. It means Ireland will have a minimum of 4 auctions between 2020 and 2025 (the operative period of the RESS) to be able to meet its 70% renewable electricity target by 2030.
About the RESS
Under the new scheme, Ireland will invite renewable electricity projects to bid for capacity to win a guaranteed price for the electricity they generate for a maximum of 16 years. Depending on the pipeline of such projects, the auctions can be extended to beyond 2025.
The European Commission (EC) stated, "Successful applicants of the RESS will receive support over 15 years in the form of a premium on top of the market price. The competitive auctions through which the aid is granted will set a 'strike price'. When the market price is below this 'strike price', beneficiaries will be entitled to receive payments equal to the difference between the two prices. However, when the market price is above the 'strike price', beneficiaries will have to make payments equal to the difference between the two prices. These payments will be returned to Irish consumers in the form of reduced electricity bills."
An onshore wind focused market so far, Ireland will now also encourage development of solar and offshore wind under the new scheme which will be open to a range of technologies to broaden the renewable energy mix. After basically hardly any solar has been installed in the past despite a huge pipeline, the is planned to be changed under the new scheme – the 1st RESS auction (RESS 1) will have a dedicated solar category representing close to 10% of the overall auction.
The RESS will also include use of preference categories to enable technology diversity. There will also be a preference category for community projects to allow communities to develop their own renewable energy projects and sell the energy generated back to the grid. In RESS 1, this category will have up to 30 GWh requirement.
Estimated budget for the RESS is between €7.2 billion and €12.5 billion ($8.2 billion to $14.3 billion) till 2025.
RESS 1 launched
Having cleared the qualification round for RESS 1 in April 2020, eligible projects can now submit their proposals and offers under RESS 1 from July 21, 2020 to July 28, 2020 with tariffs capped at €120.00 ($137.30) per MWh.
Eligible technologies are onshore and offshore wind, solar PV, solar thermal, hydro, waste-to-energy, biomass and biogas. Projects will compete under community preference, solar preference and all projects preference categories. As the categories suggest, preference will be given to the first 2 categories.
Provisional auction results will be announced on August 4, 2020 and after giving time to participants to offer their notice of dissatisfaction, final auction results will be out on September 10, 2020 as per RESS 1 timetable. Awards will be handed out on September 25, 2020. Details about RESS 1 can be accessed on EirGrid website.
According to the ministry, all projects under RESS 1 must ensure community benefit funds for all projects and a dedicated community projects category.
Importance of the RESS
The Irish Minister for Communications, Climate Action and Environment Eamon Ryan TD said this state aid approval endorses his government's commitment to the European Green Deal and launches a renewable energy revolution in the country.
"The RESS will provide us with a platform for rapid deployment of onshore and offshore wind and solar projects at scale and at least cost, replacing fossil fuels on our energy grid. It also offers communities the opportunity to produce their own power and share in the ownership of Ireland's energy revolution," added Ryan.
Auction process will be implemented and operated by the state-owned electric power transmission operator EirGrid along with the Commission of Regulation of Utilities (CRU) providing competition advice along with auditing and monitoring the auction process.
The government will soon share an indicative timeline and auction volume to enable project developers to get their projects 'auction ready'. During the 5-year period of the scheme, the EU state aid will be evaluated to see if the scheme is working to ensure intended objectives for the state aid to be continued beyond 2025.
Late last year, Ireland released a potential roadmap of the RESS to be implemented annually reserving total capacity of 13,500 GWh between 2019 and 2025, however it was subject to EU state aid approval (see Ireland Approves Renewable Energy Auction Scheme).