Half of state-backed renewable projects are behind schedule

More than half of the renewable energy projects that won contracts in the first state-backed Renewable Energy Support Scheme (RESS) will not be completed on time this year, if at all, the Business Post understands.

A total of 82 projects were successful in the RESS 1 auction process held in 2020, which are supposed to add 1,275 megawatts (MW) of renewable energy to the national power grid.

However, a combination of planning and grid delays, soaring costs for new turbines and solar panels, as well as a large number of projects being bid in at too-low prices have significantly delayed some projects or made them unviable to construct at all.

The Business Post understands less than 630 MW of renewable wind and solar projects will be energised by the end of this year, which is just under half the amount hoped for.

Senior sources in the energy industry have said a large number of solar projects, in particular, had become unviable because they were bid into the RESS auction at rock bottom prices, which meant their economic viability was always going to be uncertain.

A smaller number of wind projects are also thought to be in danger of not being built at all after being bid in at low prices while the cost of new wind turbines has risen by 10-15 per cent in the past year.

It comes as the energy grid faces significant pressure due to rising demand and very little development of new sources of firm power. The government recently increased its target to have 80 per cent of electricity generated from renewable sources by 2030.

The RESS auction process is designed to provide a guaranteed state support to renewable energy projects. The government held its first RESS auction in 2020, at which 82 projects won contracts that guaranteed a set energy price for 15 years.

Under the terms of RESS 1, all projects should be completed by the end of 2022 and have a final deadline of December 2023. Projects that miss this final deadline will be hit with a fine payable in the form of an insurance bond.

A total of 19 renewable wind projects were successful in RESS 1 with a combined capacity to deliver almost 480 MW of clean energy, while 63 solar projects were successful, promising to deliver almost 800 MW of renewable solar power.

However, the Business Post understands that just six wind projects will be built and energised in 2022, which will deliver less than 230 MW of power between them – less than half the total amount of new wind energy promised under the scheme.

It’s understood these projects include Bord na Móna’s two large-scale wind farm developments at Oweninny in Mayo and Cloncreen in Offaly, which will deliver almost 160 MW of power alone. Statkraft, the Norwegian energy company, is also understood to be progressing two projects in Cavan and Offaly that will deliver a combined 57 MW.

Sources in the wind industry said the development of a further 200 MW of projects will likely run into 2023. A number of these are considered low-risk projects that have been delayed due to planning issues or grid connections and will likely be energised next year.

However, many industry experts believe there are some very high-risk wind projects in RESS 1 that may not be developed at all.

“Most of our RESS 1 projects are on track and we should see more than 200 MW of new wind energy connect this year and the same again next year. However, some of our projects are facing challenges,” Noel Cunniffe, chief executive of industry group Wind Energy Ireland, told the Business Post.

“Lengthy delays in the planning system are putting project timelines at risk and there are concerns among some of our members about the speed at which EirGrid and ESB Networks are rolling out grid connections.”

A similar pattern can be seen on the solar side. Just 400 MW of solar projects will be completed and energised by the end of this year, which is just half the total amount that was successful in the RESS 1 auction.

The majority of this capacity will be delivered by a handful of very large solar projects, including two solar farms being developed by Statkraft that will deliver a combined 171 MW of energy capacity. Highfield Energy, an Irish firm led by Peter Kavanagh, will deliver 195 MW of capacity from two solar farms it is developing in Meath and Wexford.

The solar industry said a further 100 MW are likely to be energised in 2023 having been held up by delays with planning permission and grid connections.

However, the Business Post understands about 200 MW of the solar projects that were successful in RESS 1 will definitely not be built, while major question marks are also hanging over a further 100 MW of projects.

This means almost 40 per cent of solar projects that were successful in RESS 1 might never be constructed.

“This situation is a product of international supply chains, policy design and local network delivery. One we can’t control. The others are within our gift,” Conall Bolger, chief executive of the Irish Solar Energy Association, said.

Source: Business Post – https://www.businesspost.ie/energy/half-of-state-backed-renewable-projects-are-behind-schedule-d33502c4