Why 2019 will be Ireland’s year for energy

July 2018

Hang in there guys – new renewables auctions and DS3 competitive tenders are just around the corner in Ireland. Everoze partner Felicity Jones gives a short briefing.

Waiting. That’s what we’ve been doing in Ireland. Waiting for grid connections. Waiting for a renewables support regime. Waiting for a new system services framework. Waiting for I-SEM.

That doesn’t mean that the renewables sector has been idle – far from it. As my due diligence colleagues remind me, there’s been no shortage of financing activity in Irish onshore wind recently. Meanwhile for developers it’s been tough times, characterised by a painful state of suspense.

But the mood is soon set to change: here’s why.

CfD auctions tabled for mid 2019

The first reason is that the Irish government has just signed off a new Renewable Electricity Support Scheme, as announced today (24 July). This is based on Contracts for Difference (CfD), a mechanism commonly used elsewhere in Europe.

Bearing in mind the time lags of European State Aid approval, wind and solar developers can expect to have a route to market from around Q2 2019 onwards. There will be multiple auction rounds – one every year from 2019, with the delivery date for the first year looking potentially tight. Projects will need to have secured grid and planning to bid, and be able to satisfy certain community investment criteria.

This long-awaited development is hugely welcome. The lack of an overarching policy framework has undoubtedly slowed progress in Irish project development recently, despite the ingenuity of some developers in pursuing creative PPA solutions and exploring relationships with data centres. The new scheme will help Ireland achieve its contribution to the EU-wide binding renewable energy target of 32% by 2030.

DS3 procurement notice expected late 2018

The second development catalysing Irish market interest is DS3, which, as my colleague Benjamin Lock puts it, is currently under ‘deliberation’. System Operators EirGrid and SONI announced yesterday (23 July) that procurement timelines will be pushed out again,with industry now hoping for a Procurement Notice before Christmas.

DS3 is a bit like blockchain: people love to drop it into conversation, often without really knowing what it is. Despite valiant efforts by EirGrid and SONI to simplify the over-engineered scalar framework for the upcoming tender, it’s still tough for people to jump in without understanding the legacy of the Regulated Arrangements.

So in case you’re still getting to grips with it all, here are some plain-language basics for you:

  • DS3 is a multi-year programme that seeks to ‘meet the challenges of operating the electricity system in a secure manner while achieving 2020 renewable electricity targets’. It covers Northern Ireland too.
  • Industry focus is currently on the DS3 system services being procured by System Operators EirGrid and SONI, which include frequency response. This creates new revenue opportunities.
  • In particular, the procurement notice for the first competitive 100MW tender is expected in late 2018, with two follow-on tenders of up to 100MW each likely to follow. These tenders promise 6 year bankable contracts.

And so you can show off in conversation, here are some DS3 soundbites to consider for insertion:

  • ‘For me, the defining characteristic is the <300ms speed of response required – which is globally pioneering. It’s like DS3 is taking the Enhanced Frequency Response (EFR) service in GB as a starting point, and then setting the bar one notch higher’.
  • ‘What does the value stack look like after DS3 contracts expire? That’s what I want to know.’
  • ‘Yes, we’re going to see a near-term battery boom, but for me people have overlooked the bigger picture. Will Ireland follow the GB towards battery 2.0?How might DS3 offer top-up revenue for renewables, and how does this fit with the electric vehicle revolution?’

And to really sound like an insider, comment on Jon O’Sullivan’s inspirational intro to the last DS3 Seminar.

Ready to pounce

So: 2019 will be Ireland’s year to shine – and the coming months are about getting ready. For renewables developers, it’s time to (re)mobilise. For PV in particular, Everoze’s solar team sees a need for local upskilling in the market, given that Ireland is a comparative newbie here.

Meanwhile for folk targeting DS3 tenders, this summer requires a focus on drafting ITTs to send out to EPCs, and figuring out the glorious landscape of Capacity Remuneration Mechanism, levies, hybrid sites and more. Let us know if Everoze can help – we’ve been proud to act as Independent Engineer on 5 EFR projects, and Nithin Rajavelu has an unlikely soft spot for DS3 detail.

In the meantime – good luck with those DS3 conversations 😉

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