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Update on Irish support schemes for renewable energy

AUTHOR(S):
PRACTICE AREA GROUP: Energy and Infrastructure
DATE: 08.09.2011

The Irish Department for Communications, Energy and Natural Resources (the “Department”), the government department having responsibility for energy policy, has published a welcome update in relation to the status of the main public support scheme for renewable energy projects in Ireland.

Since 2006, the main form of support that is available for the development of such projects has been a feed-in tariff scheme known as “RE-FIT”. Payments under the scheme are made to the purchasers of electricity from participating renewable projects, in order to provide a hedge against the higher costs associated with the generation of electricity from renewable sources.

The rules of the RE-FIT scheme were published by the Department in 2006 and received European Commission state aid approval in September 2007, and the first tranche of eligible projects were admitted to the scheme – by way of the publication of a statutory instrument – in July 2008.

According to the terms of the state aid approval that was granted to the RE-FIT scheme, participation was limited to generating capacity of 1,450MW. By contrast, it has been estimated that the installed capacity of Ireland’s fleet of connected renewable generators will need to reach approximately 5,800MW by 2020, in order to achieve the production of 40% of Ireland’s electricity consumption from renewable sources – which is the current Irish government target. 

By late 2008, approximately 1,300MW of renewable generation had been connected in Ireland, meaning that:

(a) additional renewable generation having an aggregate capacity of 4,500MW would be required in order to meet the 40% target; and

(b) due to the scheme’s 1,450MW capacity limit, RE-FIT support would not be available to all such projects.

It has therefore been clear for some time that in order for Irish government support to be available for enough renewable capacity to meet the 40% target, an extension of, or replacement to, the original RE-FIT scheme would be required.

The latest iteration of the Department’s “RE-FIT” web page: www.dcenr.gov.ie/Energy/Sustainable+and+Renewable+Energy+Division/REFIT.htm now clarifies the status of a number of separate state aid applications that have been made by the Department to the European Commission, in respect of further tranches of RE-FIT support.

In particular, the web page now refers to:

(a) “RE-FIT 2” – a scheme intended to cover small and large scale onshore wind, biomass landfill gas and hydro projects; and

(b) “RE-FIT 3” – intended to cover certain categories of biomass generating technology, including anaerobic digestion and combined heat and power.

The Department also notes on its web page that “separate state aid applications will be required for additional REFIT categories of offshore wind, wave and tidal energy” - although the announcement does not make it clear whether or when the Department intends to make any such applications.

The proposed terms and conditions of eligibility for support under RE-FIT 2 and RE-FIT 3 have not yet been published, and in any event are likely to be subject to the terms of any state aid approval that is ultimately forthcoming from the European Commission.  However, the inclusion of these details on the Department’s website provides welcome confirmation that further support for renewable electricity generation in Ireland is in an advanced stage of planning.

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