Key Items in the RESS 5 Terms and Conditions

Key Contacts: Niall Donnelly – Partner

The Renewable Electricity Support Scheme (“RESS”) 5 is the latest iteration of Ireland’s competitive auction-based framework to promote renewable electricity generation. Developed by the Department of the Environment, Climate and Communications, RESS 5 is designed to help Ireland achieve its ambitious target of 80% renewable electricity by 2030, in line with the National Energy and Climate Plan and EU directives. The scheme is structured to ensure cost-effectiveness, technology diversity, and community engagement, while also providing clear legal and administrative processes for participants.

This alert summarises the key items in the RESS 5 Terms and Conditions, focusing on eligibility, auction mechanics, support structure, obligations, and compliance requirements.

1. Eligibility and Qualification Requirements

• Eligible Technologies: RESS 5 supports a range of renewable technologies, including Onshore Wind, Solar, Hydro, Hybrid Wind and Solar, Hybrid Wind and Storage, Hybrid Solar and Storage, Waste to Energy High Efficiency Combined Heat and Power (HECHP), Biomass HECHP, and Biogas HECHP.

• Planning and Grid Connection: Projects must have a full and final grant of planning permission (not just a notification of decision) and must not be subject to a decommissioning condition that would require closure before the end of the support period. A valid grid connection agreement is also mandatory, and the project must be a “Grid Contracted Project” at all times.

• Site Control: Applicants must demonstrate control and access rights to the project site, and each application must relate to a single, contiguous or near-contiguous site.

• Financeability: Projects must be financeable at the submitted offer price, with evidence of funding or credible expressions of interest from investors or lenders.

• New Project Requirement: Only new projects are eligible, meaning the equipment must not have previously exported electricity at the site, and the investment must meet a minimum threshold. Repowered projects must increase output by at least 50% over previous levels.

• Interaction with Previous RESS Projects: Projects cannot rely on planning or grid arrangements already used by previous RESS projects, except in the case of separately metered extensions.

2. Auction Process and Bid Bonds

• Auction Structure: RESS 5 uses a sealed-bid auction format. Qualified applicants submit a single offer price (€/MWh) and offer quantity (MW). The auction is cleared based on a combination of price and technology-specific evaluation factors.

• Bid Bond: Each applicant must submit a bid bond of €6 per MWh (annual deemed energy quantity) to participate. The bond is forfeited if the applicant fails to submit an offer or execute the Implementation Agreement and provide the required performance security.

• Winner Selection: Offers are ranked by a “Deemed Offer Price” (adjusted for technology) and “Deemed Energy Quantity.” The auction clears by accepting the lowest-priced offers until the target volume is met, subject to competition and technology diversity rules. Support is provided for a maximum of 16.5 years.
• Performance Security: Successful applicants must provide a performance security of €20 per MWh (annual deemed energy quantity) in the prescribed form. Failure to provide this security results in loss of award and forfeiture of the bid bond.

3. Support Structure and Payments

• Feed-in Premium (FIP): RESS 5 support is structured as a two-way floating feed-in premium. The “Strike Price” is set at the successful offer price and indexed annually. Payments are made to or from the supplier based on the difference between the strike price and the market reference price (typically the Day Ahead Market price).

• Annual Reconciliation: Payments are forecasted and reconciled annually, with adjustments for actual generation, market prices, and capacity market revenues.

• Unrealised Available Energy Compensation (UAEC): Projects are compensated at the strike price for “available” energy that could not be generated due to curtailment or oversupply (but not for network constraints). This de-risks exposure to system-level curtailment. Constraints are not compensated under RESS 5.

• Community Benefit Fund: All projects must establish a Community Benefit Fund, contributing a minimum of €2/MWh of metered and unrealised available energy. For onshore wind, direct household payments are required for residents within 2km of the project, with at least 40% of funds allocated to community initiatives.

4. Ongoing Obligations and Compliance

• Milestones: Projects must meet a series of development milestones (e.g., grid connection, funding, PPA execution, community fund establishment, commercial operation) by specified dates. Failure to meet milestones can result in partial or full forfeiture of the performance security and revocation of the Letter of Offer.

• Relief Events: RESS 5 will maintain relief events for delays caused by the System Operator (SO), such as when the Transmission or Distribution System Operator fails to deliver necessary grid connections or permits the requisite outages within the contracted delivery period. In addition, Judicial Review delays will remain covered, providing relief where legal challenges to planning permission or grid connection affect a project’s ability to reach commercial operation by the longstop date.

• Enduring Eligibility: Projects must maintain planning permission, grid connection, and compliance with all technical and legal requirements throughout the support period. Any material changes require Ministerial approval.

• Withdrawal and Termination: Projects may withdraw before commercial operation (with consequences for future eligibility and security forfeiture) or after commercial operation (with 12 months’ notice). The Minister may terminate support for material breaches, non-compliance, or failure to meet milestones.

• Audit and Monitoring: Projects are subject to audit by the Minister, Regulatory Authority, and network operators. Access to the site and provision of technical and financial information is required.

5. Administrative Provisions

• Reserved Rights: The Minister reserves broad rights to amend the terms, reject applications, and adjust scheme parameters in response to policy, regulatory, or legal developments.

Conclusion

RESS 5 represents a significant opportunity for renewable energy developers in Ireland, but it imposes strict eligibility, compliance, and delivery requirements. Early and thorough preparation is essential to ensure qualification, successful participation in the auction, and ongoing compliance throughout the support period. Participants should pay particular attention to the financial security requirements, milestone deadlines, and community benefit obligations, as well as the potential for audits and regulatory scrutiny.

For further advice on participating in RESS 5 or on compliance with the scheme’s terms and conditions, please contact us.