Thursday, 16 November 2023
Ceisteanna ar Sonraíodh Uain Dóibh - Priority Questions
Renewable Energy Generation
5. To ask the Minister for Communications, Climate Action and Environment further to Parliamentary Question No. 72 of 28 September 2023, and subsequent follow-up, the details of the analysis carried out by his Department regarding the operation of the community-led category in RESS 1 and RESS 2, and in particular the challenges faced by community-led energy projects; the details of the analysis behind the decision to discontinue the community-led category in RESS 3 and to provide support instead under the small-scale renewable energy support scheme; and if he will make a statement on the matter. [50115/23]
Deputy O’Rourke raised this matter in a slightly different way, but both questions are the same really. As the Minister knows, this is an issue that I follow up on continuously. I do not know how many questions I have tabled on it. It is good that there is a community-led category – I welcome that as well as the changes – but my problem is that I do not know where the analysis is. I have asked repeatedly for details of the analysis carried out by the Department of those who rose to take up the challenge of running community-led schemes, the difficulties they faced, the reasons they dropped out, etc. I have been promised the details, but I have never received them.
A community projects category was included in the RESS 1 and RESS 2 competitions. In total, seven community projects were successful in the RESS 1 auction. Four remain in progress and are either energised or due to energise this year. In RESS 2, eight community projects were successful in the auction, are continuing to progress and are currently expected to energise by the end of 2025.
Through my Department and SEAI’s continued engagement with RECs, there is evidence of significant challenges that REC projects may face. These challenges include the competitive auction-based nature of RESS, along with grid, financial, general know-how and other barriers to project delivery. My Department's analysis is that the auction and contractual delivery-based nature of the RESS does not align well with the capacities and structures of communities. Grid connection costs and uncertainties are a major challenge for communities, which is something that the CRU is examining as part of a review of its electricity generation policy.
In addition, the financial risks associated with being unsuccessful in a RESS auction are difficult for a community to manage, particularly in the current challenging macro environment where supply chains and inflationary pressures are adding additional project risks. The SRESS will offer such projects a simpler, non-competitive route to market. Potential SRESS applicants will know the export tariff they are eligible for before planning for their project begins. This will give them more certainty compared to the competitive RESS.
As someone who supports what the Minister is talking about, I am frustrated. The Minister of State, Deputy Ossian Smyth, was present the last time I asked about this on 28 September. He stated that he would contact my office. I received an acknowledgement but nothing with details of the analysis. Where RESS 1 is concerned, I have been told repeatedly that seven community-led projects were successful and four remained. I would like to know what happened to the other three. What were the difficulties? Where is the analysis? I would like to see it. Where RESS 2 is concerned, eight communities were successful. How many of those remain? Are they all solar or are other forms of generation involved? What are the possibilities? I agree with Deputy O’Rourke that this is an exciting area. It is a way to both power and empower communities. I think of my city of Galway and the areas of, for example, Claddagh and Shantalla, which could be self-sufficient.
I would like to see the analysis, so will the Minister depart from the script and tell me how removing community projects from the auction system, which I welcome, was decided? Give me the evidence, please.
We came to this change because, in a sense, the auction-based system was not working. In the early 2000s, there was a similar competitive bidding system. One of the several reasons projects ran into difficulty was that people were bidding down so tightly that they were not able to get financing and get their projects built. This was a particular issue in the past two to three years. With the war in Ukraine, coming out of Covid and supply chain constraints, the price of steel, PV pounds and contractors increased. Indeed, the price of every element increased. This meant that communities were not able to deliver the projects as expected.
All going well, we will see those four projects delivered under RESS 1. The eight in RESS 2 are progressing. It is not guaranteed that every single one of them will reach the point of final delivery, but we want and need them.
Seeing that the current system was not working drove us towards a different approach, one that has removed the financing risk in the sense that applicants know their price before they start their projects. This financing certainty is helpful. Financing is one of the obstacles. Grid connections and planning are others that we need to overcome.
I do not disagree with the Minister and I am delighted that community projects are out of the auction system. They should never have been in it in the first place. When we declared a climate emergency, we spoke about needing transformative change because our corporate model and other models had not worked for energy. That transformative change will come from the ground up and nowhere else. When community and other ground-up initiatives come forward, they need help, including financial assistance. The Minister mentioned that technical expertise was available from the SEAI and that there would be financial aid.
While I welcome the Minister saying that there has been a change, on what basis was that decided? I would like to be empowered so that I can help empower my communities in how they proceed. Where is it spelled out in the Department’s analysis what the challenges were for those projects that, after going to significant effort, dropped out? Maybe they could come forward again if we knew what challenges they faced. Is there a piece of research somewhere in the Minister’s office or his Department that we could have access to so that we could empower ourselves and, more importantly, our communities?
One of the other key developments we need to work on – the CRU has been tasked with this and will shortly conclude its work – is grid connection policy. Of all the various aspects, that policy has been one of the main challenges. I have seen that myself in meeting various community groups. They often have grid connection points, but they take on the full cost of the relevant grid upgrades. Typically, solar is the largest example. The development of solar community projects is a positive one because they can be done economically, but the grid constraint and the cost of the grid upgrade has been one of the main obstacles.
I expect the CRU to come back with a new connections policy that, combined with a regulatory certainty around price and support for that, will help us.