RESS 2 is the second auction held under the Irish Government’s Renewable Energy Support Scheme, which was established on foot of the Climate Action Plan with a view to meeting Ireland’s target of delivering 80% renewable electricity by 2030. We summarise the Provisional Auction Results under RESS 2, which were published on Friday 20 May 2022.

RESS 2 auction results

A total of 153 projects applied to participate in the RESS 2 qualification process. Of these applications, 130 projects (including 15 Community-Led Projects) qualified, three projects did not qualify and 20 projects formally withdrew from the process. All of the 130 projects that qualified submitted a per-MWh offer price during the auction window. In each case the offer price will, if accepted, become the strike price against which the successful project is renumerated for its output. 80 of these bids have been provisionally designated as successful, consisting of 66 solar projects and 14 onshore wind projects. The list of provisionally successful applicants can be viewed here.

The below table compares the provisional RESS 2 results with the results from the RESS 1 auction that was held in 2020.

By comparison with the RESS 1 outcome, a number of elements are noteworthy:

• Higher Prices

In line with the sharp increase of electricity costs in Ireland, and of global supply chain costs, the per-MWh prices bid by participants in the RESS 2 auction have increased significantly in comparison to the average strike price that was sought in the RESS 1 auction. For RESS 2 projects, the average offer price of successful offers was €97.87/MWh. The average offer price for successful offers with RESS 1 projects was €74.08/MWh.

Despite this apparent price inflation, Minister Eamonn Ryan has said that the build-out of projects supported under RESS 2 will assist in protecting households and businesses against high fossil fuel prices:

“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."

In proportionate terms, the increase in bid prices has been less evident in Community-Led projects than across the entire portfolio.

• Larger Volume

The total volume that was provisionally accepted for support under RESS 2 (measured by MW of generating capacity) increased significantly from RESS 1. The volume from RESS 1 was 1,275.536 MW compared to the 1,948.201 MW in RESS 2.

RESS 2 has continued to attract large solar electricity projects to the scheme. Like RESS 1 there is a large number of solar farms with a capacity greater than 5MW, with several solar farms having capacities of 50MW or more. The tight timeframes being imposed by the RESS 2 terms and conditions (which are consistent with the timeframes in the RESS 1 terms and conditions) appear to be favourable to solar projects.

Next Steps

Following the issuance to each project of its formal notice of award, which is scheduled to occur on 22 June 2022, projects will have 30 working days to enter an Implementation Agreement, post a performance bond and thereby commit to, amongst other things, achieving commercial operation by 31 December 2025 in order to receive RESS support.

As with RESS 1, we anticipate that the developers of successful projects may seek to optimise the ownership of such projects prior to financial close and construction, and it is likely that there will be significant transactional activity through project sale financing processes in the short term.

Conclusion

The provisional results of the RESS 2 auction are to be welcomed as further tangible evidence of Ireland’s commitment to increase its renewable electricity to 80%, as set out under the National Development Plan and the policies and measures in the Climate Action Plan 2021. Global fossil fuel price events, that have occurred since the plan was developed, have emphasised the importance of this initiative on energy security grounds.

For more information, please contact a member of our Energy team.

The content of this article is provided for information purposes only and does not constitute legal or other advice.