Out-Law Analysis 4 min. read

Net-Zero Industry Act set to reshape renewable energy auctions in Ireland


The EU’s Net-Zero Industry Act (NZIA) is set to reshape how Ireland supports renewable energy projects, marking a significant shift towards an auction model that rewards sustainability, innovation and strategic value.

Ireland’s Renewable Electricity Support Scheme (RESS) historically focused on only price competitiveness. This month, the Irish government began a public consultation to explore integrating non-price criteria into future RESS auctions in line with article 26 of the NZIA. The consultation will close on 21 November.

The NZIA, which was adopted in June 2024 alongside Implementing Regulation (EU 2025/1176), introduces new, mandatory pre-qualification standards and scoring criteria that reflect the EU’s broader industrial and climate goals.

While the shift to non-price criteria supports EU strategic autonomy and sustainability, it also presents risks. It may also have profound impact on future iterations of RESS or other support schemes, depending on how the NZIA is ultimately implemented by EU member states. Ireland must carefully design its response, balancing compliance with affordability, speed, and market participation.

Currently, Ireland’s RESS auctions are designed to deliver cost-effective renewable energy deployment, with successful bidders receiving a two-way contract for difference (CFD), typically lasting 15 years. CFDs offer price certainty to bidders, as where the market price falls below the pre-agreed price, the project receives a top-up; and if the market price rises above the price, the project pays back the difference. The price is determined against the Single Electricity Market (SEM) day-ahead market price.

To date, RESS auctions have used a ’pay-as-bid’ format, with projects ranked by price and selected until the required aggregate generation capacity is reached. While eligibility criteria such as planning permission, grid connection contracts, and bid or performance securities ensure project viability, the RESS scheme does not currently score non-price factors like carbon footprint, supply chain diversity or cybersecurity.

Mandatory pre-qualification criteria

From 30 December, at least 30% of auctioned renewable energy volumes must include non-price criteria, departing from the previously used cost-only selection model.

Article 26 of the NZIA requires EU member states to ensure that their auctions account for a variety of non-price criteria at both the pre-qualification and award stages. To enter the auction, projects must meet three mandatory pre-qualification criteria:

Responsible business conduct

Large bidders must demonstrate due diligence aligned with EU standards for responsible business conduct, including UN guiding principles, OECD guidelines and the Corporate Sustainability Directive. Small and medium entities and projects under 10 megawatts (MW) are exempt.

Cybersecurity and data security

Bidders are required to implement robust cybersecurity measures. Those linked to high-risk jurisdictions must provide detailed plans to ensure data storage and operational control remain within the European Economic Area (EEA). 

Deliverability

Bidders must show they can execute the project fully and on time via the necessary permits, financial capacity, technical experience and detailed project plans. Ireland already has deliverability criteria in place via bid bonds and planning permission requirements.

Projects will score higher if they meet certain criteria including sustainability, resilience, innovation and energy system integration. These criteria must account for 15% to 30% of the total evaluation score, with scoring based on pricing capped at 85%, introducing a new layer of complexity and strategic planning for developers. 

Post-qualification award criteria

Projects that pass the pre-qualification stage will be assessed based on:

  • resilience: a mandatory criterion that evaluates supply chain diversity and the origin of components; and
  • one of three optional award criteria: sustainability, innovation, or energy system integration (ESI). The Department of the Environment, Climate and Energy (DCEE) has indicated a preference for ESI in Ireland, covering temporal flexibility, geographic location, and energy storage capabilities.

Price will remain the dominant factor, accounting for 70 - 80% of the final evaluation score, with additional compliance checks introduced to ensure delivery on declared commitments.

Implications for Ireland

Ireland typically auctions between 1 and 2 GW of new generation capacity per year, meaning most rounds will fall under NZIA’s 30% rule. The impact could be particularly pronounced in the solar sector, given the global dominance of Chinese supply chains. Applying resilience criteria too rigidly could reduce participation or raise costs significantly.

The EU’s Carbon Border Adjustment Mechanism (CBAM) adds further pressure by imposing a carbon price on imports of materials like steel and aluminium. These are key components in solar panels, so this will potentially increase project costs and influence bidding strategies.

Like other EU countries, Ireland has several pathways to comply with NZIA while managing cost and delivery risks.

If applying sustainability and resilience criteria would raise bid prices by more than 15%, under article 26(5) of the NZIA, Ireland could opt out of scoring them, but it must still apply the mandatory pre-qualification criteria. However, the DCEE has indicated that this opt-out is unlikely to be used, as it is too difficult to directly attribute cost increases to NZIA criteria. This reinforces the need for a flexible auction design that supports participation while aligning with EU strategic objectives.

As part of Ireland’s implementation of the NZIA, policymakers are considering whether to run future RESS auctions as a single pot, where all technologies compete together, or to adopt technology-specific pots, which would allow tailored treatment based on market maturity and strategic value. A single pot approach promotes competition and cost-efficiency but may disadvantage emerging technologies that struggle to meet resilience or ESI criteria. In contrast, technology-specific pots could enable differentiated scoring and weighting, allowing each technology to play to its strengths: for example, wind projects contributing to resilience; while solar projects focus on ESI. The consultation suggests growing support for a flexible, multi-pot structure, which could help balance affordability, innovation and strategic autonomy.

Policy considerations

As recognised in the consultation, there are also policy considerations that can assist Ireland in ensuring that timely and affordable deployment of clean technologies is achieved, in line with the country’s binding 2030 climate targets. While NZIA compliance is essential, it should be approached in a way that supports, rather than slows, renewable energy momentum.

The practical and cost implications of the cybersecurity and due diligence requirements may be disproportionately challenging for smaller developers.

Ireland already requires planning consent, grid connection contracts and performance securities of RESS bidders, which are key deliverability safeguards. These should be recognised as part of NZIA compliance to avoid duplication. Ireland’s existing ‘evaluation correction factor’, which adjusts bids for technology-specific factors, could be expanded to reflect sustainability or resilience metrics. 

A phased, flexible approach, grounded in existing RESS safeguards and tailored to technology maturity, offers the best path forward. With clear guidance and strategic planning, Ireland can meet its climate targets while supporting the broader goals of the EU’s green deal industrial plan.

Co-written by Helen Sparrow of Pinsent Masons.

 

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