Last month, the Government of Ireland released its terms and conditions for the sixth competition under the Renewable Electricity Support Scheme (RESS 6). RESS refers to the Republic of Ireland’s competitive auction-based scheme for providing financial support to renewable electricity projects. Developers apply to participate in RESS and bid into an auction, offering a price at which they are willing to sell renewable electricity. Successful bidders then receive financial support by reference to that auction price, giving developers more revenue certainty while helping Ireland achieve its renewable generation targets.

The release of the terms for the RESS 6 auction provides a potential indication of the direction of travel for renewable energy policy on an all-island basis, especially since certain elements of the scheme design for the Renewable Electricity Price Guarantee (REPG) in Northern Ireland (NI) have been influenced by RESS.

 

Non-price criteria

One key update with RESS 6 has been its incorporation of the EU Net-Zero Industry Act (NZIA) requirements directly into auction scoring. For example, non-price eligibility criteria have now been included to qualify for the RESS 6 auction. These requirements include:

• taking appropriate and proportionate technical, operational and organisation measures to ensure cybersecurity including by taking measures such as cybersecurity risk analysis, incident handling and supply chain security (a trend which reflects Ireland’s impending National Cyber Security Bill, which will transpose the EU’s NIS2 Directive into Irish law);
• ensuring that operational control of the RESS 6 Project is exercised by an operator established in the European Economic Area (EEA) (which will be of interest for UK- and NI-based companies owning or operating Irish projects, particularly where operations or asset management functions sit outside the EEA);
• bidders demonstrating that they have taken action to conduct risk-based human rights and environmental due diligence under EU legislation; and
• bidders communicating on their responsible business conduct by means of a public statement.

For Northern Ireland, the inclusion of non-price criteria in RESS 6 suggests that renewable support schemes are increasingly being used not only to secure the lowest strike price but also to progress wider policy objectives, including cyber security, tax revenue and ESG criteria.

If the REPG is to attract long-term investment, policymakers may consider whether similar non-price requirements should be built into the NI framework, while ensuring that any additional obligations are proportionate without creating unnecessary obligations for developers (and reflecting that developers will ultimately have to convince often internationally domiciled funders to invest their money into REPG eligible project finance).

The key message is that NI developers should monitor these requirements as if similar non-price criteria are incorporated into the future REPG auctions, developers will need to evidence areas such as those outlined above. Developers should review their internal policies, and project governance to identify any gaps early, particularly where projects involve complex arrangements with supply chains, technology providers or operational control arrangements.

This is particularly the case for larger projects likely to fall within the ambit of the UK’s forthcoming Cyber Security and Resilience (Network and Information Systems) Bill (the UK’s equivalent to the EU NIS2 directive), which will impose additional cyber security requirements on particular businesses in the sector and on which Tughans will be updating impacted clients separately.

 

Storage

RESS 6 supports the NZIA’s goal to develop net-zero technologies and allow them to move from testing stage to deployment. This is evident through the accommodation of hybrid projects in the terms as the list of eligible technologies for RESS 6 include:

• onshore wind and storage;
• solar and storage; and
• onshore wind and solar and storage.

Notably, the RESS 6 terms now distinguish ‘Primary Technology’ and ‘Secondary Technology’ with the metering provisions also referring to separate metering for ‘Secondary Technology’. This approach recognises that projects may be hybrid or co-located with battery storage and should be accounted for. This is an important consideration for Northern Ireland as the REPG framework develops.

The REPG Final Scheme Design already notes that ‘some adjustments may be required for some generation sites, for instance generation from hybrid technology projects or those co-located with battery storage.’  RESS 6 may therefore provide policymakers in NI with a useful precedent for how the REPG could cover the treatment of hybrid projects such as how they should be classified, metered and supported.

 

RESS Community Benefit Fund

RESS 6 provides for the RESS Community Benefit Fund (RESS CBF) which updates the previous Community Benefit Fund introduced by RESS 1. For example, the definition of “household” for the CBF has now been updated to refer to an owner or tenant who “owned and occupied” the property. The purpose of this update appears to be to narrow the category of persons who may receive direct RESS CBF payments, so that payments are made to those with both a legal interest in and actual occupation of the property. For generators, this provision helps avoid uncertainty around whether payments can be claimed by individuals with only a limited connection to the relevant property.

NI is taking a similar approach to RESS in the Community Benefits provided through REPG as indicated by the recently proposed Renewable Electricity Generation Bill and therefore NI policymakers may consider using the more limited definition of “household” to confirm recipients of the Community Benefits payments. This approach could address the concerns raised around who is entitled to receive payments, it could reduce the risk of disputes where properties are rented or vacant and give greater certainty to developers participating in the NI REPG.

The RESS 6 terms have also appeared to strengthen the durability of the RESS CBF obligations. Where a RESS 6 Project’s participation is terminated, the obligation on a generator to make annual RESS Community Benefit Fund contributions continues to apply until the end of the RESS 6 support that would have applied where the participation had not been terminated. For NI, where Community Benefit obligations are embedded within the REPG, policymakers will need to decide whether those Community Benefits should be a continuing obligation for generators following termination. Clear drafting will be important so that developers and funders can determine the duration and cost of this responsibility, while local communities have certainty as to the benefits they can expect to receive from the project.

 

Next Steps

Overall, RESS 6 is a positive development that demonstrates how support schemes can evolve to address more complex project structures such as hybrid generation and co-located projects. The next step for NI developers is to consider RESS 6 as an early indication of the issues that may be relevant to future NI support schemes such as REPG.

NI developers should monitor the REPG terms and regulations and continue to engage with policymakers on the design of key features such as the Community Benefit obligations, using RESS 6 as a helpful comparator for how issues such as eligibility and administration could be addressed.

We will be watching closely for further developments, and will keep our clients and contacts in the renewables sector updated on any future developments.

 

For legal guidance and support in understanding the terms, preparing for the REPG auction, engaging with policymakers, or advice on wider energy matters, please contact Andrew Kirke, Charlotte Gourley or a member of the Energy team.

While great care has been taken in the preparation of the content of this article, it does not purport to be a comprehensive statement of the relevant law and full professional advice should be taken before any action is taken in reliance on any item covered.