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Energy Update: No Longer REFIT For Purpose

AUTHOR(S): Garret Farrelly
PRACTICE AREA GROUP: Energy and Natural Resources, Projects and Infrastructure
DATE: 27.02.2019

On 4 February 2019, the Minister of Communications, Climate Action and Environment refused a request from the Irish Wind Energy Agency (“IWEA”) to grant an extension to REFIT 2 deadlines.

Background

The Irish Government has since 2009 supported the development of renewable electricity in Ireland through the Renewable Energy Feed-In Tariff (“REFIT”).  The various REFIT schemes (REFIT 1, REFIT 2 and REFIT 3) have provided certainty to Irish renewable energy projects by effectively guaranteeing a minimum ‘floor price’ for a 15 year period.

REFIT 2 was introduced to help onshore wind, hydro and biomass landfill gas technologies contribute to Ireland’s 2020 energy targets.

REFIT 2 has been closed for applications since 31 December 2015.  Projects that applied before that date and which want to avail of REFIT 2 support must meet certain deadlines – in particular, they must be connected to the grid by 31 March 2020.  IWEA proposed a grace period to extend this deadline to 31 December 2020 to facilitate additional renewable energy being added to the Irish grid and to avoid a situation where otherwise viable projects would be abandoned for fear that the deadline might not be met.

The Minister rejected the grace period proposed by IWEA.

What Next?

The Irish Government announced a competitive auction-based successor to REFIT last year – the Renewable Electricity Support Scheme (“RESS”).

A high level design paper outlining the key characteristics of RESS was published in July 2018.  However, since that date there appears to have been very little progress made.  In particular, we have not seen a detailed design paper or confirmation of EU state aid approval.

It seems unlikely in these circumstances that the stated target of holding the first RESS auction in 2019 will be achieved.

Comment

It is understandable perhaps that the Irish Government has decided that REFIT is no longer fit for purpose in the context of increasingly lean and subsidy-free energy markets.  However, without RESS in place to pick up where REFIT has left off (and no clear timeline on when RESS will be put in place) it seems inevitable that there will be a regrettable drop-off in Irish renewable energy development.

Corporate PPAs will provide an alternative route to projects falling in between REFIT and RESS but the reality is that the volume of projects facilitated by corporate PPAs will not be close to sufficient to ensure that Ireland reaches its 2020 targets.

As IWEA highlighted when seeking the REFIT grace period, the consequences of this situation are very real – missing our 2020 renewable goals will expose Ireland to significant EU fines.

If you have any questions on REFIT, RESS or any other energy matters please contact Garret Farrelly, Owen Collins or your usual Matheson contact in the Energy team.

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