The terms and conditions for Ireland’s three onshore Renewable Electricity Support Scheme (RESS) auctions have generally remained fairly stable since the first set were published for RESS 1 in 2020.
Draft RESS 3 terms and conditions were published for consultation in October 2022. See our previous article on the consultation. These have now been finalised and there have been some material amendments from previous RESS terms and conditions.
The policy items that have been the main points of discussion around RESS 3 are:
- Compensation for curtailment via the “Unrealised Available Energy Compensation” (UAEC) methodology: the use of this novel methodology has been confirmed.
- Strike price indexation: after this topic being one of the most discussed in the RESS 1 and RESS 2, which did not feature indexation, the final decision for RESS 3 has opted for indexation that applies to 30% of a successful project’s offer price. This will be adjusted annually, starting on 1 January 2024, in line with changes to the Harmonised Index of Consumer Prices published by Eurostat. It is notable that this indexation may result in both increases and decreases to a strike price, but it will be welcomed by bidders.
- Offer price cap adjustment: the downwards adjustment of the maximum offer price, relative to previous RESS auctions, had been flagged as one of the novelties of RESS 3. In fact, the novel element of the auction is now that the exact level of the cap – and whether or not it has been adjusted upwards or downwards – will not be announced until the Auction Information Pack is published in September 2023.
- Restricted ability to withdraw: unlike previous RESS schemes, RESS 3 now makes explicit a requirement that any 12-month withdrawal notice, given by a project that has reached commercial operation prior to the RESS 3 deadline but seeks to withdraw from the scheme, cannot be given prior to the start of the period of RESS 3 support.
- Corporate power purchase agreements (CPPAs): the draft RESS 3 Terms were issued alongside a statement to the effect that consideration was being given to the inclusion in RESS 3 of “levers to stimulate supply of CPPAs”. However, explicit provisions to this effect do not appear to have been included in the final document.
Other noteworthy items of RESS 3 are:
- Grid connection: only projects that have accepted an offer of grid connection, or that hold an offer that is capable of acceptance within 90 days, will be eligible to qualify to participate in RESS 3.
- Participation of RESS 1 and RESS 2 Projects: A RESS 3 project will not be permitted to rely on the same planning consent or grid connection offer or agreement as has previously been relied upon by a project that was successful in RESS 1 or RESS 2. This definition references projects which have received a relevant RESS auction letter of offer and signed an implementation agreement. This measure appears to be directed at preventing supported projects from exercising a “free option” to improve their level of RESS support, although it may also have the effect of excluding projects that, for legitimate reasons, had been unable to meet the applicable RESS timetable.
- Commencement of support: The commencement of support will no longer be triggered by a declaration from the generator and will instead commence upon energisation. This would therefore remove the opportunity to avail of a “merchant nose” prior to participating in RESS. The definition of Commercial Operation has been amended as well to require projects to have both:
- Been issued with an Interim Operational Notification, and
- Achieved an Installed Renewable Capacity equal to or greater than the Minimum Installed Renewable Capacity.
The publication of the Final RESS 3 Terms and Conditions, and Final Auction Timetable, should now confer sufficient clarity for prospective RESS 3 bidders in deciding whether or not to seek to qualify to take part in the auction – albeit that the price cap is still awaited and will not be available until September (just ahead of the opening of the bidding window itself).
Potential bidders are reminded that the closing date for applications to qualify to participate in RESS 3 falls on 14 June 2023.
For more information and expert guidance on participating in the RESS 3 process, 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.