The Minister for the Environment, Climate and Communications, Eamon Ryan, has announced the provisional results of the second Renewable Electricity Support Scheme (RESS) auction to generate community energy.
RESS 2 includes a strong pipeline of community projects, with 10 communities being supported to produce their own power and share in the ownership of Ireland’s energy revolution.
The volumes procured set Ireland on the right trajectory to achieve the ambitious 80% renewable electricity target by 2030, set out in Climate Action Plan 2021. This also underpins Ireland’s contribution towards an EU-wide 2030 renewable energy target and to Ireland’s own target of a 51% reduction in its greenhouse gas (GHG) emissions by 2030 and related carbon budgets.
Meeting these targets can create roughly 7,020 jobs and contribute approximately €550 million additional gross value to the Irish economy through the onshore wind sector alone. A major expansion of solar energy will bring further economic and sustainable employment benefits across the economy for years to come.
The Programme for Government – “Our Shared Future” – recognises the importance of community involvement in energy projects. RESS 2 includes mandatory community benefit funds for all projects and a dedicated community projects category. The community benefit fund under RESS 2 will deliver approximately €7 million each year to sustainable community initiatives targeted at those communities living in close proximity to the projects.
Minister Ryan said, “I am pleased to welcome the provisional results of the second auction under the new Renewable Electricity Support Scheme (RESS). While these results remain subject to government approval, the second RESS auction delivers a huge volume of renewable energy to our grid, helping to protect households and businesses from high fossil fuel prices and contributing to Ireland’s first carbon budget. International inflationary pressures have contributed to higher auction prices than under RESS 1 and these costs will need to be monitored. Renewable energy delivered under the scheme will shield consumers from high prices, reduce our dependency on imported fossil fuels in the context of the phasing out of Russian energy imports across the EU and contribute to communities across the country.”
Key aspects of the results:
- 2,747.89 GWh of the 3,772 GWh bids submitted have been identified as provisional winners.
- This equates to approximately 414 MW of onshore wind and 1,534 MW of solar. This represents a potential increase of nearly 20% in Ireland’s renewable energy generation.
- The average weighted bid price for the ‘All Projects’ category of the auction was €97.87 per MWh. This represents an increase on the RESS 1 average weighted price. However, as per RESS 1, renewable generators will be required to pay back to electricity customers when market prices are high. The bid prices are also fixed over the lifetime of the support and no payments will be made during negative market price periods. The combination of these factors means better value for the electricity customer.
- International supply chains are under severe strain. Steel, copper and polysilicon prices and transportation costs have increased dramatically over the last 18 months. According to the International Energy Agency (IEA) there has been significant inflation of input costs for wind and solar electricity generation projects. Compared with 2020, it is estimated that the overall investment costs of new utility-scale PV and onshore wind plants are from 15% to 25% higher in 2022.
- According to the IEA, ‘prices for many raw materials and freight costs have been on an increasing trend since the beginning of 2021. By March 2022, the price of PV-grade polysilicon more than quadrupled, steel increased by 50%, copper rose by 70%, aluminum doubled and freight costs rose almost 5-fold. The reversal of the long-term trend of decreasing costs is reflected in the higher prices of wind turbines and PV modules, as manufacturers pass through increased equipment costs. Surging freight costs are the biggest contributor to overall price increases for onshore wind. For solar PV, the impact is more evenly divided among elevated prices for freight, polysilicon and metals’.
- Solar: the design of the auction utilised an Evaluation Correction Factor (ECF) weighted towards solar to reflect the relative benefits that each type of technology (and the diversity that they bring) has on system costs. A large volume of solar capacity, 1,533GWh, was secured under RESS 2 and is expected to contribute significantly, in the first half of the decade, towards our CAP ambitions to connect up to 2.5GW of solar to the electricity system by 2030.
- Community led category: RESS 2 included the use of a preference category for community projects, approximately 1% of the auction volume. There were 10 of 15 projects identified as provisional winners in the community preference category. This will allow communities to develop their own renewable energy projects and sell the energy back to the grid.
In conclusion Minister Ryan said, “now is the time to accelerate renewables to meet our climate targets and to reduce dependency on fossil fuels and deliver benefits to communities across the country. Ireland is a world leader in onshore wind, with the third highest wind generation in the world. The RESS 2 auction continues to build on this and will diversify our energy supply with solar at scale. Higher prices for renewables are mainly driven by inflationary pressures across input costs and international supply chains constraints. However, renewables are still much cheaper than fossil fuel alternatives and will drive down costs of electricity to households and businesses.”