The Renewable Energy Support Scheme 2 (RESS 2) auction, which took place earlier this month, marks a key stepping stone on the path to delivering Ireland’s 2030 renewables target. The process secured 2.7 terawatt hours (TWh) of renewable energy from 400 megawatts (MW) of onshore wind and 1,500 MW of solar – enough to provide clean power to over 600,000 Irish homes.
The RESS programme is a series of auctions in which renewable electricity projects bid for capacity and get a guaranteed price for their output. At least five RESS auctions are planned to be held between 2020 and 2025, supporting the government’s objective of cutting emissions by 51% and reaching up to 80% renewable electricity by 2030.
The tender took place against a backdrop of unprecedented uncertainty and volatility in the wholesale power market. The clearing price, at €98 per megawatt hour, is half the cost of current gas-fired electricity generation, but is higher than the previous auction in 2020, RESS 1, and significantly above other recent European auctions. The high prices have been driven by increasing global inflationary pressures, the auction market design, and regulatory uncertainty in Ireland.
Sebastian Pont, expert in the Irish Power Market said: “Baringa supported multiple participants in the auction and we are delighted that our clients have obtained positive outcomes for their projects. Our deep-dive into key bid drivers and in-house view of the competition was a key input into our clients’ bidding strategy, and the outturn clearing price aligned closely with our projections.
“Next, we’re turning our focus to Ireland’s first ever offshore wind auction – ORESS 1. The large scale of offshore wind may result in greater competitive pressure, but the nascent market may need to solve some of the same challenges as onshore projects in Ireland and factor these risks into bid prices. We look forward to analysing these trends with our clients in the coming months!”