Minister Ryan welcomes hugely positive provisional results of first offshore wind auction
The Minister for the Environment, Climate and Communications, Eamon Ryan, has today welcomed the provisional results of the first offshore wind auction under the Renewable Electricity Support Scheme (ORESS 1). The results mark a breakthrough moment for Ireland’s offshore wind future.
ORESS is an auction-based process which invites renewable energy projects to compete against each other, by bidding as low as possible, in order to win contracts to provide electricity at the bid price for a twenty-year period.
The auction results have surpassed expectations, both in terms of the total volume of renewable energy procured and the low price at which it has been secured. The hugely competitive price secured — at an average of €86.05/MWh — is one of the lowest prices paid by an emerging offshore wind market in the world. For comparison, the average wholesale electricity price in Ireland over the past 12 months was in excess of €200/MWh. It is expected that this price will save Irish electricity consumers hundreds of millions of euros per year.
Over 3GW of capacity has been procured from four offshore wind projects, which will deliver over 12TWh* (Terawatt-hours) of renewable electricity per year. This is the largest volume of renewable energy Ireland has ever procured at auction — equivalent to over a third of Ireland’s entire electricity consumption this year and over a quarter of projected 2030 electricity demand. It is also enough to power over 2.5 million Irish homes with clean electricity and reduce greenhouse gas emissions by over 1 million tonnes in 2030.
Welcoming the provisional results, Minister Ryan said:
“The provisional results of the ORESS 1 auction are not just a hugely positive story for Irish energy consumers, but for Ireland as a whole. The results are further evidence of what many of us have known for a long time; that we, as a nation, can develop and produce enormous quantities of clean energy – securely and at low cost.
“My Department is developing further offshore wind auctions to bring us closer to this energy-independent future, while also chairing the whole-of-Government Offshore Wind Delivery Taskforce to maximise the benefits to the economy, local communities, and the environment.”
The results announced today are provisional and are subject to the normal RESS confirmation and State Aid processes, both of which are expected to be complete by mid-June, as per EirGrid’s published auction timetable.
Under the community benefit fund provisions of ORESS 1, the successful projects are required to make payments to local marine and coastal communities hosting offshore renewable energy projects. These communities will now benefit from over €24 million per year, beginning before construction and continuing for up to 20 years after a project begins to produce renewable energy.
* 12TWh (Terawatt-hour) = 12,000,000MWh or 12 million MWh (Megawatt-hour)
ORESS 1 auction:
The RESS (Renewable Electricity Support Scheme) is a competitive process to select projects to receive two-way contracts for difference for a guaranteed price, or strike price, for renewable energy generated over a period of up to 20 years. This effectively operates as an automatic protection against windfall gains; when wholesale prices are in excess of the strike price secured at auction, projects must return the revenue difference to electricity consumers. The RESS also includes incentives for early deployment, with projects expected to begin construction from 2026 and with first projects to begin operationalising from 2027.
The ORESS 1 auction was open to six offshore wind projects under the first phase (Phase 1) of the Government’s offshore wind programme, which is co-ordinated across Government by the Offshore Wind Delivery Taskforce, chaired by the Department of the Environment, Climate and Communications. The Final Competition Ratio (FCR), which is a mechanism designed to drive competition on price between bidders thereby reducing costs to consumers, means that four projects were successful under ORESS 1. Unsuccessful projects may still find a route to market via a Corporate Power Purchase Agreement (CPPA), an arrangement whereby a company procures renewable electricity through a direct contractual agreement with a renewable electricity generator, or a future ORESS auction.
All six Phase 1 projects held Maritime Area Consents (MACs) issued by the Department in December 2022 under the Maritime Area Planning Act 2021 and successfully underwent the ORESS 1 qualification process.
These projects are currently in the early stages of making planning applications to An Bord Pleanála, which has been resourced with a dedicated marine directorate to process these applications.
The terms and conditions for the ORESS 1 auction were published on 9 November 2022. The auction is administered by Eirgrid. The published auction timetable sets out dates for the various milestones that form the auction process. While the auction process has been underway since November 2022, the window for submission of bids opened on 27 April 2023 and closed on 3 May 2023. Unsuccessful applicants have until 15 May 2023 to lodge a Notice of Dissatisfaction with the Minister. The provisional results announced today are to be confirmed by 14 June 2023.
A Maximum Offer Price of €150/MWh was set by Minister Ryan on 7 March 2023. The maximum offer price is an auction design safeguard only, and the Minister reserves the right to refuse offers below the Maximum Offer Price. It was the role of the competition ratio, independently determined by the Commission for Regulation of Utilities (CRU), to drive a competitive result in ORESS 1. The competition ratio was not known to auction participants at auction stage, instead being published by the CRU on 5 May 2023. The weighted average price announced today of €86.05 per megawatt hour is significantly below the maximum offer price demonstrating the effectiveness of the final competition ratio in driving competitive bids in the auction.
Offshore Wind Delivery Taskforce
The Department of the Environment, Climate and Communications chairs the Offshore Wind Delivery Taskforce, which is responsible for co-ordinating all relevant Departments and agencies towards mobilising our economy towards Ireland’s offshore wind opportunity. Members of the Taskforce include, among others, the Department of Transport; the Irish Maritime Development Office; the Department of Housing, Local Government and Heritage; the Department of Enterprise, Trade and Employment; Enterprise Ireland; the IDA; and the Department of Further and Higher Education, Research, Innovation and Science.
In March, the Government approved the Offshore Wind Energy Programme, the system-wide plan developed by the Taskforce, and a summary of the key actions highlighted for delivery in 2023 across the Taskforce’s eight workstreams was published. The actions include measures relating to supply chain, ports policy, skills and workforce, and regulatory consenting.
Climate Action Plan 2023
The Climate Action Plan 2023 (CAP23), launched in December 2022, is the second annual update to Ireland’s Climate Action Plan 2019. This plan is the first to be prepared under the Climate Action and Low Carbon Development (Amendment) Act 2021, and following the introduction of economy-wide carbon budgets and sectoral emissions ceilings. Implementation of the Climate Action Plan will create jobs, new economic opportunities and protect people and the planet. You can view CAP23 and its annex of actions HERE or visit www.gov.ie/climateaction
