An Insight into the Renewable Energy Support Scheme for Northern Ireland (RESS)

The eagerly awaited high level design (HLD) for the Renewable Energy Support Scheme for Northern Ireland (RESS) has been published by the Department for the Economy (DfE) and it is a welcome step forward for the region. The new Contract for Difference (CfD) style support mechanism will procure a much-needed boost of investment in renewable energy projects and accelerate the pent-up pipeline of projects that are crucial to meeting our 80x30 targets.

Whilst the HLD is still subject to further engagement and design, indicative dates and volumes have been suggested with the first auction in 2025/2026 for delivery in 2027 for approximately 1000GWh (500MW) across 2 pots (pot 1: onshore wind & solar and pot 2: all other technologies except offshore wind).

So, what do we know about the RESS so far?

Scheme Design

• A voluntary CfD scheme. There was some initial speculation that the CfD scheme may require mandatory participation in a bid to stabilise prices for consumers long-term however, it was agreed that this approach may distort competition and flexibility for participants.
• CfD schemes are well recognised and employed in GB and internationally, therefore it is likely to be well understood by prospective market participants.
• The new RESS will not replace or affect the NIRO scheme. There was consensus amongst the industry that withdrawing the NIRO scheme would significantly reduce investor confidence and the two schemes should run in parallel. However, developers should be aware that NIROC accredited projects will not be eligible for participation.

Eligibility

• The HLD includes a diverse range of technologies in a bid to support and improve security of supply on the NI Grid. The following technologies are eligible:
• Onshore wind
• Geothermal
• Solar PV
• Anaerobic digestion
• Offshore Wind
• Landfill gas
• Hydro
• Energy from waste
• Tidal & wave
• Biogas
• Hybrid sites (RES + BESS)
• Biomass

The timeline for Offshore wind is unknown as this stage and has not been included in the HLD. There was momentum amongst the industry to urge DfE to fast-track the deployment of Offshore projects by 2030 however, given that the DfE’s consultation on offshore renewable energy installation (OREI) policy options only closed at the beginning of March, there are still a lot of unknowns in relation to Offshore wind projects and it is unlikely that we will see any supported Offshore projects prior to 2030.

Participants will require planning permission and a grid connection offer for auction participation.

Minimum capacity seems to suggest a baseline of 5MW for project participation which would exclude microgeneration. In the past, NI has relied on small scale distributed generation to meet its 2020 targets therefore, it will be interesting to see if DfE changes its position on this. If not, alternative routes to market for microgenerators will be critical for DfE to consider and deliver on. If a (separate) support scheme is not available for microgeneration, we may see an uptake in Corporate PPAs as we’ve seen in RoI, irrespective of project size. CPPAs can help reduce the cost of capital for investors and contribute to decarbonisation without directly impacting the cost of electricity for the consumers.

Contract structure & payment

• Auctions would be held every 1 - 2 years with a proposed contract term of 15 years. This is broadly in line with the equivalent regimes in GB and RoI.
• The auctions will be pay-as-clear (as opposed to pay-as-bid). This approach encourages participants to bid honestly and should hopefully drive down strike prices whilst reducing the risk of speculative low bidding.
• The strike price is to be fully indexed (with the relevant index to be confirmed). This should help remove uncertainty for participants and deliver better value for consumers overall.
• Participants will be compensated for dispatch down due to oversupply and curtailment.
• The HLD does make it clear that further analysis is required on whether compensation should also be provided for constraints. If the risk of dispatch down is left with the developers, this may lead to higher strike prices and ultimately the consumers will pay the price. The planned network development works are key to alleviating the impact of high constraints, so we need to see SONI and NIE work together to complete this crucial body of works sooner rather than later.

Other unknowns in the HLD

• The matter of community benefit schemes remains open in the HLD and further analysis is required. There is no question that communities, wildlife and landscape will be adversely affected by the installation of additional renewable projects therefore, it is really important that we prioritise and conserve natural habitats as far as possible and deliver real benefits to the communities impacted on a day-to day basis. Whether or not that means including a community benefit stipulation as part of the scheme remains to be seen however, we must learn the lessons from our neighbours in RoI and GB to ensure that community involvement does not act as an inhibitor to the rollout of the scheme or increase costs to consumers.
• Further analysis is required to determine whether existing sites could be made eligible, especially in the case of repowered sites. For now, the first auction will focus on new projects.
• A requirement on successful bidders in the form of a performance bond or other collateral or financial penalty for non-delivery has also been suggested but not yet confirmed.

The HLD RESS is an encouraging step forward for NI and will offer a clear route to market for investment if delivered in an effective and time-efficient manner.

If you would like any further information or advice, please contact Le-ann Campbell from our Energy team.

*This information is for guidance purposes only and does not constitute, nor should be regarded, as a substitute for taking legal advice that is tailored to your circumstances.