Update on RESS 3 auction

Following the latest renewable electricity auction in Ireland, our Sustainable Futures team looks at whether it has lived up to industry expectations. 

RESS 3 is the third Onshore Renewable Electricity Support Scheme by the Government of Ireland and was seen as a pivotal component of meeting ambitious renewable electricity targets set out in Climate Action Plan 2023.

Whilst it is welcome that annual auctions are now a recurring feature of the renewable electricity market, unfortunately, RESS 3 has ultimately failed to deliver what was hoped by industry, with contracts awarded to only three wind farms for a total capacity of 148 MW, and to just under 500 MW of solar. The total annual generation from this capacity is expected to be 934 GWh, which is significantly short of the indicative auction volume of 2,000 – 3,500 GWh targeted by the Department of the Environment, Climate and Communications to meet Ireland’s 2030 80% RES-E target. 

The cost of securing renewable projects has increased by €2 per MWh compared to RESS 2 and is significantly – 26 €/MWh or 36% – higher than RESS 1.

It is important to note however that 30% of the RESS 3 offer price is now indexed, providing asset owners with a degree of protection from inflation risk which is to be welcomed. The offer price would have been higher had it not been for this element partial indexation. 

Two key themes stand out from the RESS 3 auction. International developers are keen to build, own and operate renewable assets in Ireland due to our supportive renewable policy, for example Engie, Orsted and SSE Renewables were three of the biggest winners in RESS 3.

However, RESS 3 also highlights a significant failure in Ireland’s planning and consenting regime, adding to uncertainty for potential developers. With such limited volumes of renewable projects entering the auction, questions must be asked of Ireland’s planning regime and lessons learned ahead of Ireland’s next renewable electricity auction.

There is no shortage of renewable energy developers with secured sites which they have submitted for planning approval that wish to participate in auctions. Whilst all sites will naturally not be consented, the fact that many developers can expect the planning process to take up to 80-90 weeks along with the associated risk of judicial reviews is one of the biggest inhibitors to accelerating the further deployment of renewables in Ireland.

A failure to learn from RESS 3 will leave Ireland at an even greater risk of not meeting ambitious 2030 carbon emission reduction targets.  

Looking ahead to RESS 4, which is targeted to deliver between 2,000 – 5,500 GWh of annual renewable generation, Ireland must ensure there is a pipeline of projects ready to bid in to the 2024 auction.

According to Wind Energy Ireland “This week marks one year since the last onshore wind farm received planning permission from An Bord Pleanála. Dozens of wind energy projects are in planning limbo. They are supposed to get their decisions in 18 weeks but the average decision time for a wind project is well over 90 weeks”. 

If you would like to discuss the outcomes of RESS 3 in further detail, assess the potential for an alternative route to market for your project or have a general conversation about the renewable market in Ireland, please reach out to one of the team below.