RenewableNI’s successful series of renewable energy seminars in partnership with A&L Goodbody continued this week with a sold-out session on the upcoming renewable electricity support scheme.
Focusing on the recently published high-level design, Niccòlo de Franceso from DfE’s Renewable Electricity team set out the latest policy developments, and alongside RenewableNI Director Steven Agnew and A&L Goodbody Partner Mark Stockdale, engaged with members in a wide-ranging Q&A.
RenewableNI Director Steven Agnew opened the session by welcoming the publication of the high-level design, stressing that it had been a longstanding goal to see the return of a route to market for renewable electricity projects.
NI had fallen from leaders to laggards on renewable energy deployment as last year’s KPMG report, Accelerating Renewables in NI, commissioned by RenewableNI had demonstrated.
82% of developers found NI an unattractive place to invest with lack of support named as the main barrier by 37% of investors. For RNI, the new support scheme, if designed correctly and delivered timely, would return NI to an even-footing with our closest neighbours, restoring the region’s reputation as a compelling location for the significant investment needed to meet the ambitious 2030 energy targets.
DfE representative, Niccòlo de Franceso, who has been leading on the scheme’s design, provided a detailed overview and fielded the many questions from the seminar audience.
Concentrating on the elements of the proposed high-level design criteria which still require further analysis from DfE and its consultants, he addressed:
Minimum Size
- DfE’s view was that analysis suggests a minimum generation of 5MW. However, there was acknowledgement that industry’s preference was to reduce this threshold.
- This would be subject to further analysis, with a focus on what impact it would have on the mechanics and competitiveness of future auctions.
- It provided DfE with a timely opportunity to consider the wider range of developers and projects which could be included, and there was potential the minimum size could still be lowered.
Community benefit
- There was no definitive consensus on whether community benefit should be mandatory and if so, what form it should take.
- DfE had considered a wide range of options, looking at the voluntary vs mandatory approaches of GB and ROI respectively, and the success rates such schemes had achieved.
- The Department wanted to see additional benefits delivered to consumers beyond the grid facilitating more renewable electricity, but needed to further analyse this additional cost.
Dispatch Down compensation
- DfE accepted that there had been significant concern expressed by industry about the persistently high levels of constraints and the serious investment obstacle this posed.
- The issue of constraints and how to best compensate it had to be addressed.
- Compensation for curtailment and oversupply were included within the scheme’s high-level design, but questions remained on whether this should extend to constraints, with DfE’s primary concern being the impact on consumer costs.
- However, the Department ultimately acknowledged that a balance did need to be struck between protecting consumers, but also attracting sufficient investment and making these long-term contracts sustainable and projects economically viable.
Next Steps and timelines
- DfE and its consultants would undertake further technical modelling focusing on (i) spatial considerations, namely the limited availability of land for onshore wind development and (ii) ongoing issues with grid connections, particularly the currently high levels of constraints.
- This would be accompanied by a financial impact assessment looking at the ultimate impact on consumers from the cost of both the scheme itself and the cost to future electricity prices. DfE would engage closely with the Utility Regulator on this.
- Work on the institutional framework would be agreed by the end of 2024. This would provide detail on the delivery partners and the registration and application processes. A similar approach to what has been done in ROI and GB was likely.
- These various workstreams would see the detailed scheme design finalised and translated into Terms and Conditions during Q1 2025.
- Work had already begun on the legislation required to deliver the scheme, as had efforts on state aid notification. These would continue throughout 2024/2025.
- This would culminate in the first auction being scheduled for Q1 2026, and in Q4 2025 if possible to expedite any of the workstreams. The second auction would follow in 2027, to deliver in 2029.
Mark Stockdale, Partner at A&L Goodbody head of the firm’s Renewable Energy team, pointed to the strong pipeline of renewable projects which have been waiting for the right policy signals to proceed with investment.
Noting the successful schemes operational in GB and ROI, he hoped that NI could take learnings from those jurisdictions and use these to press ahead with refining the final of the scheme and launch of the first auctions. As DfE continues with its further analysis, he stressed the need for early consultation on terms and conditions and certainty and clarity on timelines for future auctions, key scheme actors and bonding requirements.
RNI looks forward to continued collaboration with DfE as it progresses with work on the scheme’s detailed design. A robust route to market will be critical in stimulating investment in NI’s renewable electricity industry, making the most of our homegrown energy resources and helping to deliver our target of 80% by 2030 target.
