The Irish Solar Energy Association (ISEA) welcomes the publication of the final terms and conditions for the first auction of the Renewable Electricity Support Scheme (RESS). The first auction (RESS-1) is scheduled to take place in July this year in line with timelines set out in 2019 by the Department of Communications, Climate Action and Environment (DCCAE) and EirGrid.
RESS marks a historic first in offering Government support to the Irish solar industry. The support scheme will be administered through an auction mechanism. The primary goal of the scheme is to assist the installation of renewable projects in Ireland working towards the 2030 energy target of 70% renewable penetration. Successful renewable projects will be awarded a Government-backed contract for power produced enabling projects to obtain capital to begin installation.
DCCAE held a consultation on the draft RESS-1 terms and conditions in January. In its consultation response, ISEA highlighted the key issues affecting its’ members and the solar industry as; indexation, a limited solar quota, forecast curtailment and negative pricing. The final terms and conditions do not allow for indexation. Without indexation, the auction strike prices will be higher as generators price in their costs, subject to inflation, and debt providers apply conservative assumptions to size debt. These increased costs will be passed through to the PSO levy. In addition, project financers will use conservative assumptions to size their debt. Several additional factors will influence the auction price with the major consideration being grid costs; Ireland has among the highest grid specifications and associated charges in Europe.
“ISEA very much welcomes the measures proposed and the ambition of the Climate Action Plan. We are encouraged that Minister Bruton demonstrated real leadership in Climate Change and is seeking to decarbonise our economy. We are nonetheless disappointed that the terms and conditions in the initial auction for renewable energy may have unintended consequences leading to consumers paying a higher price on the PSO levy. The lack of indexation has an obvious impact on the initial price bid in the auction for wind and solar. Other uncertainties in the auction are likely to lead to a higher price as bidder’s price in uncertainty such as DUOS and TUOS charges, negative pricing, curtailment and local authority rates.” – David Maguire, Chairman ISEA
RESS-1 will afford a 10% allocation for solar projects; this will result in solar comprising circa 2% of the total wind energy currently on the system. In order to successfully diversify the electricity network, technology specific auctions are required. This approach has already been successfully applied in the German market. As of 2019, 1500 megawatts (MW) of solar projects are ready for installation in Ireland.
Globally, solar energy power prices are breaking records and over the past ten years the cost of solar PV has decreased by 80% while the technology has improved. It is imperative that solar PV is fully considered as a viable alternative to wind. A diverse energy mix is the key to decarbonisation and ensuring Ireland has a secure and robust electricity network.
Currently, RESS is the only policy measure in place to support large scale renewable deployment in Ireland. Through its implementation, RESS sends positive signals to industry and will lead to increased investment in Ireland. However, the current proposals for RESS-1 will result in the largest projects receiving support. Future auctions must take place in a timely manner, providing certainty for market participants and support for projects of all sizes.