European Union: Public Consultation On New Renewable Electricity Support Scheme (RESS)

Last Updated: 23 January 2018
Article by Ronan T. O'Grady

On 4 September 2017, Minister for Communications, Climate Action and Environment, Denis Naughten, published a public consultation on the design of a new Renewable Electricity Support Scheme (RESS).

The new scheme is being developed to incentivise the introduction of sufficient renewable electricity generation to meet national and EU-wide renewable energy and decarbonisation targets out to 2030. Ireland has a national binding target of meeting 16% of its energy requirements from renewable energy sources by 2020. This results in a 40% renewable electricity target, 10% in renewable energy in the transport sector and 12% renewable energy in the heating sector.

Reflecting a broader movement towards greater public engagement in relation to energy policy, the emerging principles of the scheme are now being presented for public consultation. A range of policy measures have been identified and the Department is now seeking public feedback on these.

Communities

The new scheme will be designed to increase community and citizen participation in the energy transition to a low carbon economy. Communities and citizens will actively participate in and benefit from renewable energy projects in their local area.

Diversification

The new scheme will be designed to help realise the Government's objective of broadening the renewable energy mix. As renewable technologies mature and costs fall, Ireland is well placed to take advantage and greatly diversify its renewable portfolio.

Micro-generation

The economic evidence indicates that meeting Ireland's renewable electricity targets and renewable diversity ambitions are more cost-effectively achieved at large and medium scale. As a result, micro-generation has not been included directly under the emerging principles of the new RESS.

RESS Structure

The new RESS will largely be shaped by EU State Aid Guidelines which call for competitive auctions and bidding between project developers for state support which are very different to existing REFIT design principles, whereby generators get a fixed price (tariff, €/MWh) for each unit of electricity exported to the grid. The PSO currently makes up the difference between the market reference price and the fixed price.

Fixed tariffs are no longer available under EU State Aid rules, and when designing new schemes, generators must compete in auctions for support, by bidding in a price at which they are able to deliver renewable generated electricity. This price might vary from project to project and also from auction to auction. It is expected that generators bids (costs) will reduce as the scheme matures with each additional auction, due to technology cost reductions and learnings from previous auctions. This in turn will put downward pressure on the prices that end consumers pay to support renewables through the PSO.

Prequalification rules and mechanisms such as bid bonds will be introduced to ensure that generators cannot participate until they have met certain criteria in terms of planning, community participation etc. And those generators who are successful and don't deliver in the required timeframe will face penalties.

Technology Neutral or Technology Specific. A key design principle of any new RESS is whether technologies compete against each other for support in auctions (e.g. wind and solar PV projects competing for support) or whether they are technology specific auctions (an auction for solar PV projects) where the same principles of

competitive bidding and premium payment still apply. The economic evidence suggests that a number of technologies have overlapping costs and could compete against each other. It would be expected that the broadening of the renewable technology mix will increase as the scheme matures and technology costs further reduce.

The Department's consultation is due to close on 3 November 2017. We expect that further developments will emerge over the coming months.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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