Key Contacts: Niall Donnelly – Partner |
The Department of Climate, Energy and the Environment (“Department”) has published a consultation document proposing significant changes to the design of the sixth Renewable Electricity Support Scheme auction. This consultation represents a pivotal moment in the evolution of Ireland’s flagship renewable electricity support mechanism, with proposals that could fundamentally reshape the economics and structure of future renewable energy projects. The consultation deadline of 13 March 2026 provides stakeholders with a limited window to influence the final Terms and Conditions, which are expected to be published in Q2 2026.
Several of the proposed changes represent substantial departures from the established RESS framework. The Department’s willingness to reconsider core design features reflects both the maturation of the scheme after five completed auctions and the imperative to align Irish support mechanisms with evolving EU state aid rules, particularly the Clean Industrial Deal State Aid Framework and the Net Zero Industry Act requirements. Project developers, investors, and other stakeholders should carefully consider the implications of these proposals and provide responses where the proposed changes could impact project viability or costs to consumers.
Support Duration and Consumer Protection
The Department is revisiting the fundamental question of support duration, having maintained a 15-year term since RESS inception. While the Clean Industrial Deal State Aid Framework permits support periods up to 25 years, the consultation explores both extensions and contractions of the current term, seeking evidence on whether 10-year or 20-year support would suppress bid prices and reduce overall consumer costs. More innovatively, the Department proposes a phased reduction model where support might extend to 20 years but with strike prices gradually declining over the final five years. This approach attempts to balance enhanced investment certainty against consumer protection in scenarios where long-term market prices fall.
The consultation explicitly links support duration changes to Community Benefit Fund obligations, meaning any extension or contraction would equally affect the mandatory €2 per MWh contribution period. The Department frames this discussion around total lifetime project economics rather than merely the support period itself, requesting quantified evidence comparing minimum necessary revenues across different support duration scenarios.
Community Benefit Funds: Certainty Through Deemed Output
Two targeted reforms to Community Benefit Fund administration aim to reduce complexity and improve certainty for both developers and communities. The first proposal would shift CBF contributions from actual metered output to deemed energy output calculated using the same capacity factors applied in the auction winner selection process. This change would eliminate the current annual reconciliation process and provide fund administrators and communities with greater certainty about funding availability in each annual cycle. The practical impact would be to fix CBF obligations at the point of auction success rather than allowing them to vary with actual performance, dispatch down levels, and curtailment.
The second reform would establish a clear temporal milestone for CBF establishment by requiring funds to be operational on or before receipt of the Interim Operation Notice from the System Operator. This represents a tightening of requirements compared to previous practice and responds to instances where CBF establishment has lagged project commissioning. The Department characterises this as simplifying compliance checks and ensuring consistent treatment across all projects, though developers will need to ensure CBF governance structures can be finalised in parallel with technical commissioning activities.
Technology Eligibility and Auction Structure
The Department proposes to fundamentally narrow RESS technology eligibility, restricting future auctions to onshore wind and solar PV projects, including hybrid configurations incorporating battery storage. This represents a significant departure from the technology-neutral approach that has theoretically permitted hydropower and biomass/biogas high-efficiency CHP participation. The rationale centres on administrative efficiency, noting that no technologies other than wind, solar, and hybrid projects have participated in completed auctions and that developing Net Zero Industry Act resilience criteria for technologies unlikely to compete would impose unnecessary regulatory burden.
This eligibility restriction will be accompanied by the introduction of dual technology-specific auction pots to facilitate equitable implementation of the NZIA non-price criteria, which differ by technology. The shift from a single technology-neutral pot to separate wind and solar auctions raises questions about capacity allocation between pots, competition dynamics within each pot, and the potential for reallocation if one pot experiences undersubscription. The Department seeks feedback on auction parameter application in this dual-pot structure, recognising that this architectural change could influence bidding strategies and clearing prices across both technologies.
Technical Parameters and Market Design
Several technical parameter adjustments aim to better align RESS mechanics with real-world performance and market developments. The Department proposes increasing capacity factors for wind and solar to 45% and 14% respectively, reflecting improved technology efficiency while adjusting bid bond and performance security formulae to avoid increasing financial requirements for applicants. This change addresses the distortion whereby current capacity factors understate actual contracted volumes and overstate average strike prices when auction results are reported.
The minimum eligible Maximum Export Capacity would increase from 0.5MW to 1MW, the maximum permitted under Clean Industrial Deal State Aid Framework rules. This reform responds to evidence that smaller projects require higher strike prices and struggle to meet delivery milestones. The Department also proposes extending relief event windows from two to three years to better accommodate current timelines for judicial review resolution and System Operator delays, potentially reducing risk premiums in bid prices.
On market settlement mechanisms, the consultation explores introducing longer market price reference periods beyond the current hourly Day Ahead Market price. This proposal derives from December 2025 European Commission guidance recommending that CfD schemes use longer reference periods to incentivise forward market participation and cost-efficient maintenance scheduling. While potentially improving market efficiency, this change could introduce new hedging considerations and price risks that may affect project bankability and strike price levels.
Unrealised Available Energy Compensation and Energy System Integration
Perhaps the most contentious proposal concerns potential removal or adjustment of Unrealised Available Energy Compensation (“UAEC”) in light of new Net Zero Industry Act Energy System Integration criteria that will award additional auction points to hybrid projects with storage. The Department questions whether continuing to compensate projects for curtailment might dilute the incentive to develop hybrid configurations that the NZIA criteria aim to encourage. This represents a potential reduction in revenue certainty for generation-only projects at a time when curtailment levels remain elevated.
The Department acknowledges that supporting policy and market arrangements such as MEC sharing remain under development and frames this as seeking views on the interaction between UAEC and Energy System Integration incentives rather than announcing a definitive policy change. However, the consultation language suggests significant consideration is being given to removing UAEC, which would represent a substantial shift in risk allocation between developers and consumers. Stakeholders developing generation-only projects should provide detailed evidence on how UAEC removal would impact project costs and bid prices absent fully developed storage integration solutions.
Repowering and Investment Thresholds
The consultation seeks to refine rules governing repowered projects, which currently must increase deemed annual output by at least 50% and meet the €300,000 per MW investment threshold applicable to all projects. The Department expressly notes that EU state aid rules permit support only for additional costs related to repowered capacity, raising questions about whether current eligibility criteria adequately prevent overcompensation. The consultation explores potential measures including separate auction pots for repowering with distinct parameters, lower price caps for repowered projects, or alternative investment thresholds that better capture only the incremental costs of repowering versus greenfield development.
This discussion reflects broader concerns about ensuring competitive parity between repowered sites with existing infrastructure and grid connections and greenfield projects facing full development costs. The Department requests specific evidence on expected cost differentials between greenfield and repowered sites of the same technology. Responses should consider not only capital cost differences but also the valuation of existing grid connections, site control, and planning permissions that may reduce repowering costs while potentially commanding support levels calibrated to greenfield economics.
Administrative Matters and Application Quality
The consultation includes a warning about application quality following significant administrative burdens in previous auctions caused by incomplete or incorrectly completed applications. The Department specifically highlights two recurring problems: unauthorised amendments to Qualification Declaration signatory pages and unpermitted changes to Performance Security templates, particularly expiry dates. Future applications with invalid declarations risk outright rejection, and the Department emphasises that Performance Securities must use the exact template provided for each auction with no modifications or use of prior auction templates.
This administrative guidance underscores that applicants must thoroughly understand the binding instructions in Terms and Conditions regarding bid bond and performance security calculations and strictly adhere to published auction timetables. The Department’s frustration with past application quality issues suggests enhanced scrutiny and potentially reduced tolerance for errors in future auctions. Legal and commercial teams should ensure robust internal processes for RESS application preparation and review.
Stakeholders should carefully evaluate these proposals in light of their specific project portfolios and development strategies. The March 13 deadline requires prompt internal assessment and response drafting. Responses should focus on providing quantified, evidence-based analysis rather than general commentary, particularly on questions relating to support duration economics, capacity factor accuracy, relief event window adequacy, and the interaction between UAEC and storage incentives. Where proposals could materially impact project viability or consumer costs, financial modelling and supporting evidence will be essential to influence the final Terms and Conditions.
Projects currently in development pipelines should also consider the transition implications if RESS 6 incorporates substantially different parameters than previous auctions. While the Department maintains that final Terms and Conditions may include changes not flagged in this consultation, the issues raised represent the core areas under active consideration. Early engagement with these policy questions and thorough consultation responses will be critical to ensuring the final RESS 6 design supports continued renewable energy deployment while maintaining appropriate consumer protections and market efficiency.
