Irish solar to compete in technology neutral auctions, micro-generation excluded from support

Irish solar developers will have to compete with other renewable energy technologies in large-scale auctions under government proposals unveiled yesterday, which also failed to offer concrete plans for support to rooftop solar.

After months of delay, the Department of Communications, Climate Action & Environment (DCCAE) published its consultation on the design of a new Renewable Electricity Support Scheme in Ireland, which will be used to meet the country’s 2030 renewable electricity objective of 40%.

It sets out plans for a ‘principal category auction’ encompassing all viable technology options which will compete on a cost effective basis. A selection of winners will be based on price only, with solar having to compete with other technologies with similar viability gaps.

The other generation assets to be included in the RESS are varying forms of wind, bioenergy, CHP, hydro, ocean, waste to energy and geothermal.

However, additional auctions may be carried out in future with specified categories, with technologies eligible to participate in each one should be selected based on their expected viability gaps.

The projects within these will compete for a ‘Floating Feed-In-Premium (FIP)’, which is to be calculated as the €/MWh difference between the strike price and the reference market price. This is intended to provide renewable energy projects with significant protection from wholesale market price risk, though to a lesser extent than under a traditional feed-in tariff.

This was ruled out as it ‘does not perform well against market integration/I-SEM compatibility criteria’, referring to the wholesale electricity market being introduced across the entire island of Ireland.

The consultation adds that generators receiving a FIT are generally guaranteed a price for their output, which it argues leaves them with little to no incentive to respond to the wholesale price of electricity.

Putting communities at the heart of policy

DCCAE has also included a significant requirement for communities to play a part in the deployment of renewable electricity projects. In order to receive support, all projects above a certain size (500kW has been proposed) must offer local communities an opportunity to invest in some minimum share of the project.

A targeted offer of 20% of the project has been put forward to be enforced as a criterion for pre-qualification for the RESS as opposed to a planning requirement, while views are being sought for the appropriate distance the community should be from the project for the initial offer.

While they do not necessarily need to secure the investment in order to proceed under the RESS, project developers must make reasonable efforts to market the offer and secure community investment.

“If managed appropriately this policy measure should result in a significant increase in community ownership of and participation in renewable energy projects,” the consultation states.

For smaller community projects (<6MW wind, <1MW other technologies) a floating FIP should be made available, while development grants of up to €20,000 would be made to available to support community-led projects through the initial high-risk stages of a project.

Grid access could also be facilitated for community-led projects to give them further support.

Micro-generation left out of initial plans

In a move that had been expected, and campaigned against by Friends of the Earth, DCCAE has excluded micro-generation from support directly under the new RESS. It claims there are significantly higher costs associated with these installations, which would not offer as cost effective a strategy for meeting Ireland’s renewable targets as medium- and large-scale projects.

The department also claims that international experience has shown that market and network reform would be required before micro-generation tariffs are introduced.

Alternative means for developing and supporting micro-generation will be sought through a comprehensive review of the public demand for micro-generation, including identifying the policy drivers needed. A policy framework will then be designed to appropriately support ‘prosumers’ and micro-generation in Ireland, including the structure of any support mechanism.

The consultation will remain open until 3 November 2017 when DCCAE will consider the final design of the RESS before seeking state aid approval for the first auction which will likely take place towards the end of 2018.

Full details of the ~5.4GW of solar farms in the pipeline in the Republic of Ireland are shown in our Republic of Ireland Solar PV Opportunity Tracker report which can be found here, or by emailing us directly.