Energy Market Update: COVID-19, the RESS 1 Auction and Electricity Consumption in Ireland
The closing date for applications to qualify for the RESS 1 Auction has been extended to Thursday 30 April and we await further changes to the auction timetable in the next month.

 

The application process to participate in the first auction under the Irish Government's new Renewable Energy Support Scheme (the "RESS 1 Auction"), designed to provide new renewable electricity generation to Ireland's grid, is currently open.   EirGrid and the Department of Communications, Climate Action & Environment ("DCCAE") published an auction timetable on 9 March 2020 which specified next Thursday, 2 April 2020, as the closing date for applications.  

COVID-19 and RESS Auction Dates

However, since then we have seen a rapid escalation of the COVID-19 crisis and a corresponding escalation of the Government's response to the pandemic, in the form of emergency legislation and directions to businesses.  EirGrid and DCCAE have recognised the challenges being experienced by RESS 1 applicants as a result of the COVID-19 pandemic and, in line with the wider governmental response to these issues, have extended the closing date for applications for RESS 1 Qualification from Thursday 2 April 2020 to Thursday 30 April 2020.

EirGrid and DCCAE have committed to provide a revised timetable setting out the implications this change will have for the rest of the RESS 1 Auction Timetable no later than 30 April 2020 and we will provide further updates in this regard.

COVID-19 and Electricity Consumption in Ireland

In the context of this change to the RESS 1 Auction timetable, it is worthwhile considering briefly the impact of COVID-19 on electricity consumption, now and going forward.  

The precise impact that the staggered shut down of the Irish and wider European economy will have on electricity consumption remains to be seen.  Certainly, there will be a significant reduction in overall energy consumption in Ireland in the coming months.

However, the position of Ireland as a central hub for European data and the increased incidence of working from home by certain sectors of the economy (among other factors) may result in electricity demand being somewhat less elastic than overall energy consumption.  In this regard, an analysis of the total and peak electricity generation over the period 26 February to 25 March showed a relatively robust, albeit gradually weakening, demand for electricity. It seems that the decrease in electricity generation is becoming more pronounced with almost 20% less electricity generated on Wednesday 27 March than four weeks ago on Wednesday 26 February. This trend is expected to continue over the course of the shutdown.

Irish Electricity Generation (All-Island)
Ireland Electricty Generation Data Source: EirGrid

The expected overall reduction in energy consumption means that, depending on the length and degree of the shutdown, Ireland may meet its Renewable Energy Target 2020 by the end of this year (a prospect which did not look likely in January). However, this should not distract the Government from the important task of decarbonisation as we look beyond the tragedy of the pandemic and its artificially low emissions towards our 2030 targets.  The underlying trend is still towards ever increasing energy consumption and, once the COVID-19 outbreak is under control emissions will begin to rise sharply.  RESS 1 is still an important milestone in our drive to ensure that the next period of economic growth is decoupled from increased carbon emissions.

For further information on RESS 1 or the market in general, please contact Fergus Devine, Colm Booth or James Downey.