High RESS strike costs down to link expenses as well as PPA size

• High grid link prices led to a solar strike cost in Ireland's first Renewable Electricity Support Scheme (RESS) public auction "dramatically greater than anywhere else in Europe" according to the Irish Solar Energy Association (ISEA).

The overall strike cost - EUR74.08/ MWh (₤ 66.90/ MWh) - can be found in at over double the type of costs seen in the UK's Contracts for Difference system, one of the most current of which saw prices run as low as ₤ 39.65/ MWh.

For solar especially in the RESS, the strike price was EUR72.92/ MWh (₤ 65.78/ MWh). Speaking to Solar Power Portal, chairman of the Irish Solar Energy Association David Maguire said that there was a combination of reasons that the strike rate was the highest possible in Europe, the first of which being that Ireland likewise has the "highest grid interconnection expenses in Europe generally".

This is an outcome of design as well as planning defense criteria being "much higher than they require to be". Whilst Maguire concurred that the futureproofing being taken on by the grid operators is "a fantastic concept", he added that this is a "extremely high" requirement of futureproofing, specifically on the high voltage network, and also this has actually for that reason influenced the strike rate of the RESS.

An additional variable is the tone of the PPAs only being 15 years, with Magure stating that financiers prefer a 20 year lifecycle as a minimum in order to release their funding.

" We've stopped working in attracting in as well as having the ability to amortize our capital over a somewhat longer period and those 5 years make a distinction," Maguire clarified. "Folks that look at funding framework in this area will certainly take a view on what the vendor contour will resemble in year fifteen and that's kind of like crystal ball staring. Some folks will certainly take an aggressive view, however most financiers will take a conventional view as well as they'll value it accordingly."

The absence of indexation in the RESS additionally does not assist hereof, with Maguire explaining it as "among the most significant motorists on the expense of funding".

" If you wish to draw in inexpensive resources to maintain your expenses down, you will attract in capital that is risk damaging, so pension fund money etc. If you fall short to provide an indexation aspect, they will certainly take a very conventional view on what their boost on O&M are going to resemble and so forth, so you've got an increase in the price factor of anything from 10% - 15% in your PPA number from that absence of indexation."

Concerns over the absence of indexation were elevated by NTR's team business financing supervisor Anthony Doherty at Solar Media's Solar Finance and Investment Europe seminar in February, specifying that "it presents an element of pricing which will obtain put into the marketplace that is not required in our sight". However, on the same panel Jim Arigho, supervisor of energy and climate adjustment infrastructure at the Allied Irish Bank claimed "the absence of indexation isn't a problem from a financing point of view".

Along with the indexation, the ISEA's Magurie additionally pointed to elements such as the absence of embedded advantages in Ireland that puts solar at a "substantial negative aspect", the requirement in the RESS to pay EUR2/MWh (₤ 1.80/ MWh) towards a neighborhood fund as well as uncertainty over neighborhood authority prices for why the strike rate was so high.

Solar took home a far larger portion of the auction than originally expected, with up to 10% at first took for the innovation, equal to 100-300MW. Solar wound up being contracted for 796MW, equal to 34% of the total auction volume.

This was partly because of the competitors proportion in the innovation neutral public auction being reduced from 2 - as originally detailed - to 1.3, Maguire clarified, indicating more certifying jobs were to be awarded.

Along with this, there wasn't much wind bidding as whilst some wind jobs would certainly have certified "they wouldn't have actually had the ability to deliver the grid affiliation by the deadline of 31st December 2022".

" Solar grid links often tend to be a little bit more uncomplicated therefore the people who had solar tasks took a sight that they had a high opportunity of supplying grid affiliation promptly as well as a few of the wind people took a sight that it was a little a threat."

Magurie continued to laid out just how Ireland doesn't have a grid moratorium. In the UK's CfDs there is a moratorium, where if the grid and DNOs are late providing an affiliation the designer would certainly have up to a 12 month grace period without losing that CfD.

This is not the instance for the RESS, and whilst Ireland has a long history of effectively releasing wind, it only has one DNO that has "fairly limited sources" with there being a "long background of not delivering grid interconnections in a timely manner".

Maguire said that normally a designer has to factor in a 6 to nine month hold-up, which would have been "a large driving element of a lot of wind not bidding process".

" Very little competent solar pulled out, to make sure that's why you had more solar coming on than wind."