Renewable Electricity Support Scheme 1 Terms and Conditions “Out Now”!
On 27 February 2020 the Department of Communications, Climate Action and Energy published the final terms and conditions for the first competition under the Renewable Electricity Support Scheme (“RESS”)which aims to support 70% renewable electricity on the system by 2030. The RESS will be implemented through a series of renewable electricity competitions, providing a renewable electricity roadmap and indicative timelines and capabilities.
RESS 1 is the first competition under the scheme, and will be conducted by EirGrid as a simple sealed bid auction. Applicants seeking to take part in RESS 1 can apply to qualify as RESS 1 participants from 10.00 am on 9 March 2020 until 5.00 pm on 2 April 2020. An information pack for prospective applicants is expected to be published on 9 March 2020. Some high level points on the newly published RESS 1 terms and conditions are provided below.
Which technologies are eligible for RESS 1 Support?
RESS 1 is open to “new projects”: a term which is defined by reference to the following cumulative five conditions. First, the project’s electricity generating equipment must be electricity generating equipment that was not previously used at the project site to export electricity to the grid. Second, the project generator must secure project investment of either €300 per kW of capacity or more. Third, if the project is built at a site that was previously used for renewable generation, it must have a 50% increase in installed capacity compared to the installed capacity of the previous renewable energy project on that Site. Fourth, the project cannot benefit from any other support scheme funded via the Public Service Obligation (“PSO”) Levy while in receipt of RESS 1 Support and the project cannot have previously received payments under any other support scheme funded via the PSO Levy. Fifth, the project must produce electricity generated from one of the following energy sources (and meet any specific technical requirements provided for its category type):
- Onshore wind
- Offshore wind
- High Efficiency CHP boilers fuelled exclusively by Waste
- High Efficiency CHP boilers fuelled by Biomass
- High Efficiency CHP boilders fuelled by Biogas
Applicants are required to select a preference category/categories for their respective projects. Applicants can select from one or more of the following options: (a) the “Community Preference Category” which is open to community projects ranging in size from 0.5MW up to 5MW; (b) “the Solar Preference Category” which is open to projects ranging in size from 0.5MW up to 125MW; and (c) the “All Projects Preference Category” which is open to projects ranging in size from 0.5MW up to the MW equivalent of 600 GWh/year (excluding Community Zero-Bond Projects). Aggregation of smaller projects to achieve the minimum threshold is not permissible. RESS 1 support will be awarded on a price basis to qualifying projects beginning with those in the Community Preference Category; then to those in the Solar Preference Category; and finally to qualifying projects in the All Projects Preference Category.
What criteria should applicants be aware of?
Planning requirements: RESS 1 Projects will be required to have a full and final grant of planning permission for the construction and operation of the electricity generating plant. The planning permission for a RESS 1 Project must not have an expiry date or a decommissioning obligation prior to the anticipated end of the term of RESS 1 Support for a RESS 1 Project. Any final grant of planning permission may be the subject of a judicial review challenge or still be within the 8 week period during which such a judicial review challenge may be commenced. Allowing permissions subject to challenge is an important change from the position under the draft rules.
Grid requirements: The RESS 1 Project must be (i) a Grid Contracted Project or (ii) an ECP-1 Project that is eligible to be processed to receive a valid connection offer, in both cases with a capacity at least equal to the Offer Quantity of the relevant RESS 1 Project. There is no requirement for the grid connection to have secured planning permission or property rights.
Site control: The RESS 1 project site must be specified using Irish Transverse Mercator and applicants must demonstrate control of the project site.
Funding: The RESS 1 Project must have sufficient equity funding in place, or expressions of interests or indications from investors or funders to provide funding to construct and operate the RESS 1 Project, should it receive an Award. RESS 1 Project generators will be required to provide a performance bond of €25,000 per MW of Offer Quantity. This requirement will not apply to certain community projects.
Commercial Operation Date: RESS 1 Support will be eligible to commence upon the Commercial Operation of the RESS 1 Project or on 1 July 2021 (whichever is later), subject always to the RESS 1 Project having been listed in the Public Service Obligation (“PSO”) Order. Generators of commercial projects must ensure that the project has achieved commercial operation by a “Longstop Date” of 31 December 2023. The terms and conditions do not provide for extensions of the long-stop date or for force majeure inclusion for grid delays.
Community Benefit Fund: All RESS 1 Projects are required to establish a Community Benefit Fund prior to Commercial Operation of the project. The contribution will be €2/MWh of Loss-Adjusted Metered Quantity for all RESS 1 Projects.
How is RESS 1 Support structured?
RESS 1 Support is structured as a FIP (i.e. a 2-way floating Feed-In Premium). Each Qualified Applicant will be required to specify an Offer Price for its RESS 1 Project in the RESS 1 Auction. If successful in the RESS 1 Auction, this Offer Price shall be the “Strike Price” for that Qualified Applicant used to settle the FIP for the RESS 1 Project. The Strike Price will be constant over the term of the RESS 1 Support and will not be indexed or adjusted for inflation. This is a pay as bid as compared to a pay as cleared model.
The Hourly Day Ahead Market price will be used to settle the FIP for variable projects (onshore wind, offshore wind, solar any hydro). The time weighted average of the Day Ahead Market Price calculated over the relevant PSO Levy Year will be the market reference price used to settle the FIP for non-variable (Waste to Energy HECHP, Biomass HECHP, Biogas HECHP) projects. DS3 and constraint revenues will not be considered as market revenues and therefore will not be taken into account in the calculation of Support Payments and Difference Payments.
How long can the support last for?
The RESS-1 Support scheme is designed to run from either from the Commercial Operation date of the project or 1 July 2021 until 31 December 2037. A Supplier entering into a Power Purchase Agreement (“PPA”) with a Successful Applicant is entitled to receive RESS 1 Support for a period extending no longer than 31 December 2037 (and potentially 31 December 2038 solely in the event of Force Majeure having been successfully claimed prior to achieving Commercial Operation).
Should you have any queries on the terms and conditions of RESS 1, please contact Valerie Lawlor, Brendan Slattery, Stephen Proctor, William Marshall, Eva Barrett or your usual contact in McCann FitzGerald.
This document has been prepared by McCann FitzGerald LLP for general guidance only and should not be regarded as a substitute for professional advice. Such advice should always be taken before acting on any of the matters discussed.