Ireland’s upcoming renewables auction is unlikely to achieve its procurement target due to a lack of eligible and profitable projects under the new reduced cap price, according to Aurora Energy Research.
The Irish Department of the Environment, Climate and Communications’ recent decision to reduce the Renewable Electricity Support Scheme (RESS4) auction price cap for onshore wind projects is expected to make it difficult to meet the Climate Action Plan 2024 (CAP24) capacity targets and both the Climate Change Advisory Council (CCAC) and EU carbon budgets, highlighted Aurora Energy Research.
According to Aurora increased lenience in eligibility is not expected to widen the pool enough to meet the procurement target.
RESS4 is the last auction to procure capacity to meet the 2030 targets of 80% renewable electricity, 9GW onshore wind and 8GW of solar.
Aurora’s latest analysis indicates that the auction is unlikely to achieve its procurement target of 2500–4500GWh due to a lack of eligible and profitable projects under the new reduced cap price.
The introduction of technology-specific caps, which lowered the onshore wind cap from €110/MWh to €93.50/MWh, has resulted in fewer projects being able to secure financing under a RESS4 contract.
Additionally, the increased lenience in eligibility, which now allows projects under juridical review to enter the RESS4 auction, is not expected to widen the pool enough to meet the procurement target, Aurora stated.
Steph Unsworth, Senior Associate, Aurora Energy Research, said: “RESS4 is set to yet again severely undershoot the procurement target and clear near the price cap, as the reduction of the auction price cap for onshore wind results in few projects proving profitable under a RESS contract.
“As a result, this could prove an expensive, yet low volume auction.
“This low volume will lead to Ireland significantly missing both its renewable capacity targets and the carbon budgets.
“Projects in Ireland remain higher cost than in other European markets due to tight supply chains on the island system and financing difficulties given the arduous planning and grid connection processes.
“So, this low auction cap price is not high enough for projects to come online.”
The RESS4 auction is the fourth round of the Republic of Ireland’s current renewable subsidy scheme and will be held from 22 August to 29 August 2024.