The Department of the Environment, Climate and Communications (the Department) has recently invited comments from interested parties on the proposals contained within the Draft Terms and Conditions (T&Cs) for RESS 5 Consultation Document.
While requesting general feedback from stakeholders as to any potential issues, the Department has specifically sought responses to its proposals on the matters below.
Community Benefit Fund
A key ESG component of all RESS iterations is that projects must establish a Community Benefit Fund (CBF) to be used for the well-being of local communities in which the projects are developed, ensuring these communities directly benefit from facilitating renewable projects. Though the Department has proposed maintaining the CBF minimum contribution of €2 per MWh of electricity generated, it considers it appropriate to review the RESS Community Benefit Fund Good Practice Principles Handbook, which provides guidance to developers on how to comply with CBF requirements and implement best practice. The Department is currently undertaking this review by way of a separate consultation available to view in full here.
Support Duration
The Department has proposed increasing or decreasing the RESS support period (which has had a 15-year baseline period in all previous RESS auctions) by 5 years to a baseline of either 20 or 10 years respectively. The Department is seeking views on the potential positive impact on bid prices and overall costs to consumers, as well as on project financing and deliverability, that may arise by taking either course.
Capacity Factors
The Department has proposed that the capacity factors outlined in the RESS 4 T&C’s (35% for onshore wind and 11% for solar) will be increased to reflect increased technology efficiencies, while the Bid Bond and Performance Security calculation formulae will be amended in order to avoid any associated increase of the bond/security requirements for projects applying to/successful in the scheme.
Relief Events
The Department has proposed that the relief events for System Operator (SO) and Judicial Review (JR) delays introduced by the RESS 4 T&C’s be maintained.
Indexation
The Department has proposed to review the current indexation provisions, which currently index 30% of the value of RESS 4 Strike Prices annually to the HICP, and is considering the introduction of two-way indexation for RESS 5.
As any increase in the indexation of RESS 5 Strike Prices would result in a greater share of long-term risk being taken on by the consumer, the Department has stated that this may only be considered in light of robust evidence that it would result in lower bid prices and better value for money to the consumer.
Constraints Compensation
Previous RESS auctions have not provided for compensation for dispatch down due to system ‘constraints’. Unlike ‘curtailments’ (which refer to the dispatch down for system wide reasons), constraints refer to dispatch down for localised network reasons. The Department has outlined that while it is not currently minded to introduce constraints compensation for RESS 5, positing that Unrealised Available Energy Compensation for curtailment costs and Relief Events for SO and JR delays already provide substantial risk mitigation for project developers, stakeholders are nevertheless invited to provide evidence-based submissions on the impact of constraints on project financing and bid prices. This position complies with the recent orders set out by the High Court in the GR Windfarms case, a summary of which is available to view here.
Auction Qualification Process
The Department is seeking respondents’ views on the efficacy of measures introduced in the RESS 4 Auction Qualification process, putting to stakeholders that the quality of applications has been poor in all RESS auctions to date.
Next Steps
Responses must be received no later than 14 February 2025, with publication of the Final RESS 5 Terms and Conditions set for April 2025.
The Draft Terms and Conditions are available to view in full here.
Contributed by Matthew Smith, Colm Booth.