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SEM Chart of the Week

2019

Financial opportunities in RESS-1

Catherine Edwards Research Analyst

The proposed new Renewable Energy Support Scheme (RESS) will provide support to renewable electricity projects in Ireland. The scheme will be a competitive auction based funding mechanism with a primary focus on cost effectiveness. The RESS-1 auctions are actively targeting between 1TWh – 3TWh of renewable energy that can be delivered ahead of 2022. In this chart of the week, we look at the interesting incentive built into the new auction design. Added incentive The Department of Communications, Climate Action and Environment (DCCAE) are targeting shovel ready projects with the expected deadline for the RESS-1 project to be at or before December 2022. Support for these successful projects will last up to 15 years. There is additional value on offer to those who can deliver quicker. If a project can be operational in time for July 2021 they can earn 1.5 years of additional support from the RESS process as can be seen in Figure 1. Impact on bidding? A rule of thumb for wind project is that financing will take 12 months and a further 18 months for construction. This makes December 2022 a sensible deadline if the auction is to take place in June 2020. If a project developer is confident that they can deliver in time for July 2021 it is possible that this may impact their bidding strategy. If the project could be delivered ahead of schedule, it would receive an additional 18 months of support if the bid was accepted. This could give rise to the potential incentive to bid in lower prices. Potential pitfalls Delivery of ...

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