Auction price cap will hinder onshore wind projects, expert warns
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Ireland’s final onshore wind auction may not be attractive enough to procure capacity needed to achieve 2030 targets, a leading research group has warned.
Aurora Energy Research claimed the Government’s decision to reduce the Renewable Electricity Support Scheme (Ress4) auction price cap for onshore wind projects from €110/MWh to €93.50/MWh, could result in difficulty securing finance for projects and subsequently make put the goals outlined in the Climate Action Plan in jeopardy.
Steph Unsworth, a senior associate at Aurora Energy Research, said that the scheme is set to “yet again severely undershoot the procurement target” of between 2,500GWh to 4,500GWh, as the reduction of the auction price cap for onshore wind will lead to fewer projects becoming profitable under a Renewable Electricity Support Scheme contract.
“As a result, this could prove an expensive, yet low volume auction, she added.
Ms Unsworth also noted that renewable energy projects in Ireland remain costlier, compared with other European markets, partly due to “financing difficulties given the arduous planning and grid connection processes".
The director of external affairs at industry representative body Wind Energy Ireland, Justin Moran, echoed concerns about the price cap associated with scheme, but added that planning issues continue to mire the progress of the renewable energy sector in Ireland.
“No matter how effectively designed an auction might be, if the projects cannot get planning permission and cannot connect to the grid they cannot be delivered,” said Mr Moran.
Meanwhile, Mr Moran welcomed “significant improvements” to the design of the auction for the scheme.
These changes include projects being insulated from the risk of judicial reviews and the timeline for achieving commercial operation has been increased by 18 months.
The Renewable Electricity Support Scheme is the last auction to procure capacity to meet the State’s climate targets of 80% onshore renewable, including 9GW of wind energy and 8GW of solar PV generation.
The results of the auction are scheduled to be published by the national grid operator, Eirgrid, at the end of September.
The results of the last auction, Ress3, may foreshadow the outcome as it was “massively undersubscribed”, according to Statkraft vice president and director for Ireland wind and solar projects, Donal O’Sullivan.
Prior to Ress3, the auction was expected to award between 2,000GWh-3,500GWh of renewable onshore wind and solar energy contracts. However, this procurement was reduced to under 1,000GWh.
Meanwhile, the challenges facing onshore wind continue to be a bad omen for offshore wind development — which is beginning to gain some momentum off Ireland's coasts.