Irish government consults over terms and conditions for offshore wind auctions

Out-Law News | 12 Oct 2021 | 10:55 am | 2 min. read

The Irish Department of the Environment, Climate and Communications (DECC) is consulting over the terms and conditions for the first auction to supply electricity from offshore wind under the Renewable Electricity Support Scheme (ORESS 1).

The Irish government has set a target of 80% of the country’s electricity coming from renewable sources by 2030, with 5GW from offshore wind.

The consultation (19-page / 353KB PDF) is aimed at gathering feedback on the terms and conditions (118-page / 950KB PDF) of the auction to ensure the efficient and economical delivery of renewable electricity projects under ORESS 1.

The terms and conditions relate exclusively to the first offshore auction, and the government said they should not be taken as a basis for future auctions.

The consultation covers issues such as the eligibility criteria for projects bidding in the auction process, bidding independence, grid connection status to participate, whether the indexation of bid prices would help reduce costs for consumers, and auction mechanisms such as the proposal to retain the pay-as-bid pricing rule. It also asks for views on the levels of financial commitment required to bid, and the milestones successful projects will be asked to meet.

Murphy Richard

Richard Murphy

Partner

We have a fantastic opportunity for offshore wind in Ireland, but we need to pick up the pace significantly with developing the policy frameworks needed to unlock Ireland’s offshore wind potential

Onshore auctions under RESS, which provides support to renewable electricity projects in Ireland, require all projects to pre-qualify for participation by providing evidence of full planning permission.

However, this will not be an eligibility criterion for participation in ORESS 1 due to the fact that the offshore wind sector is still developing and the legislation to facilitate offshore development consent is not yet enacted.

Despite this, DECC said it was not a good idea to delay ORESS 1 until a cohort of projects with planning permission was available.

In a related development, the Commission for Regulation of Utilities (CRU) has also published a proposed decision paper on proposals for the next stage of processing the first phase of offshore generation projects only, known as Phase 1 projects.

This marks the first consultation by the CRU related to the new offshore regulatory framework for Ireland. In the document, it is proposed that EirGrid will issue a Grid Connection Assessment (GCA) to each eligible Phase 1 applicant. The GCA will detail the method and cost of connecting a Phase 1 project to the transmission system at its onshore connection point. The proposals relate to Phase 1 offshore wind projects only.

Renewable energy expert Richard Murphy of Pinsent Masons, the law firm behind Out-Law, said the government needed to speed up the development of offshore wind projects.

“We have a fantastic opportunity for offshore wind in Ireland, but we need to pick up the pace significantly with developing the policy frameworks needed to unlock Ireland’s offshore wind potential. If we do not move faster to put in place ‘future fit’ consenting, regulatory and grid policy, we put the government’s 5GW offshore wind generation target by 2030 at considerable risk. 2030 is less than nine years away,” Murphy said.

“Delivering on net zero means going further and faster across the board – a sequential approach to the development of offshore policy frameworks in Ireland will not work. We don’t have the luxury of time. These streams urgently need to move together and in parallel given the development timelines for developing and building offshore wind projects. These publications – which should be read together – are a good step forward with this type of thinking.” Murphy said.

The DECC consultation is open until 6 December 2021 and publication of the final terms and conditions is expected in the second quarter of 2022. Meanwhile, the deadline for comment on the CRU proposed decision is 22 November 2021.