Community projects will not be able to participate in the third round of the Government’s Renewable Electricity Support Scheme (RESS 3).
First launched in 2020, RESS is a competitive, auction-based system where developers of renewable energy projects, namely wind and solar farms, compete with each other for 15-year government support.
There were 169 wind and solar farm projects that were successful in the first two tranches of the scheme, RESS 1 and 2, amounting to 3,248MW (megawatts)of renewable generation capacity. This included 134 solar farms across 21 counties, and 35 wind farm projects across 15 counties.
Approximately 17 of these projects were community-owned and led. Here, community groups were supported to develop their own solar of wind projects and sell the electricity back to the grid after competing for Government support in their own, ring-fenced category.
However, in the upcoming RESS 3 auction, due to take place in September, the Government have opted to remove the ‘community projects’ category.
There are currently a number of farmer-led community groups at various stages of project development for solar and wind farms and anaerobic digestion plants.
The news is likely to leave some of these groups in limbo, until a suitable replacement is launched.
What will replace it
The Government say that support for communities in the development of renewable projects will now transition to a new, non-competitive Small-Scale Generation Scheme (SSGS), which is due to be launched later this year.
The Government say that the scheme will “align more closely to the capacity of the community energy sector, thus ensuring a more sustainable delivery of the renewable energy community target of 500MW by 2030”.
Little is known about the SSGS, but details are expected to be announced soon.
Community funds
Despite the removal of the ‘community’ category, the obligatory Community Benefit Fund (CBF) scheme, established in RESS 1, will remain in place for RESS 3.
The CBF provides money for communities living in close proximity to RESS-funded renewable projects each year for the duration of the support scheme.
Key changes of RESS 3
RESS 3 is expected to deliver between 2,000GWh (gigawatt hours) and 3,500GWh in renewable electricity generation across 2026 and 2027.
This is the third of a minimum of five envisaged auctions, which will take place between 2020 and 2025 to deliver on the target of 80% renewable electricity by 2030.
The structure of the first two auctions has been largely supported by participants, and the key design features from RESS 1 and RESS 2 have been maintained to ensure the process remains competitive.
De-risk
Other key changes to the scheme, however, include the introduction of a new mechanism to significantly de-risk RESS participants exposure to uncertainty surrounding curtailment and oversupply.
RESS 3 proposes to introduce an ‘Unrealised Available Energy Compensation’ (UAEC) provision (subject to state-aid approval). This will replace the curtailment compensation arrangements that were provided for in RESS 1 and RESS 2.
UAEC is intended to de-risk a RESS 3 project’s exposure to uncertainty.
The mechanism will compensate – at the strike price – for eligible availability not converted to generation for reasons of either curtailment or oversupply.
The means renewable generators will likely still be compensated even when the grid is oversupplied or cannot accommodate the total volume of electricity produced.
According to the Department, this de-risking should translate into lower auction bids through the removal of risk premia and, in turn, lower costs to consumers.
The Government have also introduced a limited form of indexation on the operation and maintenance element of projects, while only projects in receipt of a letter of offer for a grid connection can take part in the auction.