Progress on renewable projects ‘much slower than expected’

Ireland’s transition to renewable energy is progressing “much slower than expected”, hindered by planning bottlenecks, grid capacity, and economic challenges.

A new report from stockbrokers Davy has highlighted that as little as half of projects that were successful under the first auction of the Government’s Renewable Energy Support Scheme (RESS) are likely to actually be delivered.

The RESS scheme was designed to support the delivery of projects that would produce between 16,500 – 53,500 GWh of renewable energy, representing between 73-237 per cent of Ireland’s targeted renewables output to meet binding climate commitments.

To date, support has been awarded for about 18,000 GWh worth of developments, across three onshore RESS auctions and one offshore ORESS auction.

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However, the Davy report prepared by analysts Michael Mitchell and Kate Nurse found that “progress is lagging” in delivery of RESS projects.

Between RESS1 in August 2020 and RESS3 in September 2023, total submissions fell by 71 per cent, with the average cost of delivering renewable capacity rising by 36 per cent.

The report notes that several industry bottlenecks are hindering progress on renewable projects, including planning and grid capacity.

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With the average planning wait time for an onshore wind project now thought to be 90 weeks, the report says that planning delays are frequently cited as a “major impediment to renewable energy projects in Ireland”, while grid capacity is also “limiting the pace of new [renewable] connections”.

The report adds that industry bottlenecks have been compounded by economic challenges, such as a volatile energy price market and the rising cost of capital.

Facing these challenges, Davy analysis suggests that no more than 50 per cent of projects that were successful under the first RESS auction, and 65 per cent of successful projects under the second auction, are likely to become operational under RESS.

The report highlights that onshore wind projects are “especially challenged” by current obstacles, as not a single onshore wind farm has been granted planning permission in the past 12 months, and of the 23 projects that succeeded in the RESS3 auction, just three were for onshore wind.

Davy also notes that for Ireland’s first four offshore wind projects, that succeeded in the ORESS auction in June of this year, their delivery and timing “remain[s] highly uncertain”, and offshore wind cannot be relied upon to contribute to Ireland’s 2030 goals.

The report calls for the re-acceleration of progress on onshore wind projects, and says an additional three RESS auctions may be required, on top of the already scheduled RESS4 and RESS5 auctions.

“However, even if the Government offers more RESS support for onshore wind, planning and grid connectivity bottlenecks must also be urgently addressed,” the report reads.

It also recommends that solutions to improve grid capacity and flexibility be supported and incentivised, including for battery, interconnection and demand-side offerings.