Government’s green energy attempt to lure investment misses target

The Government’s latest bid to lure investment in renewable electricity fell more than 70 per cent short of its Climate Action Plan targets.

More than 20 projects this week won contracts to supply solar- and wind-generated electricity to the Irish market in an auction meant to be a key step towards reaching Climate Action Plan green energy goals.

However, the auction, dubbed Renewable Electricity Support Scheme (RESS) 3, only secured enough green energy to power about 222,500 homes a year, 74 per cent short of the maximum 833,000 homes target set in the climate plan.

Average homes

According to a Department of the Environment schedule published in April, RESS 3 was meant to attract enough wind and solar projects to supply between 2,000 and 3,500 gigawatt hours (GWh) of electricity a year.

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This would be enough to supply between 470,000 and 833,000 average homes with electricity every year.

However, the projects awarded contracts in RESS 3 are likely to generate 934.5 GWh a year, enough to supply just 222,500 households.

The department explained that RESS 3 did meet lower targets, between 500GWh and 1,500GWh, set early this month as the auction neared, and revised to take the number of suppliers likely to bid for contracts into account.

Its April schedule states that the Government’s Climate Action Plan target, to boost renewables’ share of electricity supplies to 80 per cent by 2030, “will be mainly delivered” through RESS auctions.

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The scheme works by favouring suppliers seeking the lowest prices for their electricity and by guaranteeing that those awarded contracts will be paid the agreed price over the deal’s lifetime, generally 15 to 20 years.

Minister for the Environment Eamon Ryan sets the terms and conditions and approves each auction, while national electricity grid manager EirGrid administers the process.

Winning suppliers in RESS 3, including State-owned ESB, Danish group, Ørsted and SSE Renewables, part of the same group that owns SSE Airtricity, will be paid €100.47 a megawatt hour (MWh — the unit in which electricity is sold) for their power over 15 years from April 2027.

The price is higher than the €98.87 set in a similar RESS auction last year, and almost 50 per cent more than the €70-odd agreed in a recent United Kingdom process that also awarded deals to onshore wind and solar generators.

Poor response

Industry groups Wind Energy Ireland and the Irish Solar Energy Association blamed planning holdups, uncertainty over future charges, including commercial rates, rising borrowing costs and other problems for the poor response to the auction.

The department agreed that potential bidders did not take part as they were still finalising electricity grid connections or feared legal challenges to their planning permissions or did not believe their plants would be ready to generate electricity by April 2027, the deadline set in the auction.

“Deferral of participation by certain projects has impacted on the RESS 3 volumes,” said the department.

Its statement added that the auction targeted projects with planning permission, grid connections and that were ready to begin building, arguing that this was more realistic than attracting premature bids from developers who would then struggle to deliver.

Government plans more RESS auctions for offshore and onshore wind and solar power next year and in 2025.