Irish upheaval causes investor dismay

• Ireland is planning a second auction for its 5GW-by-2030 offshore target
• But rule changes are leading to uncertainty for offshore wind developers
• Industry warns that timelines are tight and it cannot risk further delays 

The Republic of Ireland wants 5GW of offshore wind in its waters by 2030. Until a fortnight ago, it looked like it was on track to achieve this. 

Around 88% of that capacity (4.4GW) should be covered by Ireland’s first offshore wind tender, which is being held under the offshore Renewable Electricity Support Scheme (ORESS 1). This started in December and is set to conclude this June. 

But you don’t have to be mathematically-minded to realise there is a shortfall, even assuming all those phase one projects secure a route-to-market and the necessary development permits to be operational by 2030. Ireland needs a second tender, and quickly, with a process that developers and investors are already comfortable with. 

That is where things get tricky. On 10^th March, the Irish Government set out its plan for the ORESS 2 tender and threw firms’ investments into disarray. The change has “created massive levels of uncertainty among international investors and the global supply chain”, according to Noel Cunliffe, CEO of trade body Wind Energy Ireland. 

Radical overhaul 

The Irish Government is planning to launch ORESS 2 by the end of 2023. This was due to be developer-led, which means that companies believed they would be able to secure government backing for projects wherever they were in Irish waters.

That is no longer the case. In its ‘Policy Statement on the Framework for Phase Two Offshore Wind’ on 10^th March, the government clarified that offshore development is due to be focused on Offshore Renewable Energy Designated Areas. This is under provisions for Designated Maritime Area Plans in the Maritime Area Planning Act.

This means state agencies have to define offshore development zones where wind farms can be built. This immediately rules out of contention a chunk of the offshore wind projects in development in Irish waters, which RenewableUK said last month amounted to 56.4GW capacity and which others have put as high as 80GW.

These areas will also need to go through potentially lengthy public consultation and environmental assessment processes. This needs to happen quickly if areas are to be designated so developers can prepare projects for a tender start in the next nine months. It looks unlikely. For example, Wind Energy Ireland said state agencies are “grossly under-resourced and will struggle to deliver in time unless the right people with the right skills are put to work on it as soon as possible”.

In theory, it makes sense for the Irish state to identify sites where it wants offshore development, but this could have happened years ago. There is also the potential damage to Ireland’s reputation as a safe haven for investors, which are notoriously unhappy about dealing with countries that change the rules at short notice. And this can only delay vital investments in the Irish offshore wind supply chain.

Those offshore areas are set to be designated based on where likely available grid capacity can be found onshore. But until developers and investors know where the zones are likely to be, there is little incentive for them to put investment into projects that may fall outside the zones. Firms must pick where to focus in a global market.

“We are effectively being told to stop developing offshore wind energy and wait for further decisions at a point when we have no time to lose,” said Cunliffe.

Potential zones

One area transmission operator EirGrid has already identified is off the south coast of Ireland with the potential to accommodate 700MW of offshore wind, split into two 350MW sites. The Irish Government has also committed to an ORESS 3 tender that would focus on 2GW of floating wind farms off Ireland’s south and west coasts, but it added that it only expected those projects to be in development by 2030.

However, it has not given clarity over where the other offshore zones are likely to be.

This could put at risk the government’s long-term targets to grow Irish offshore wind capacity to 20GW by 2040 and more than 37GW by 2050. It also launched a public consultation last month on the draft of Ireland’s Second Offshore Renewable Energy Development Plan, which is due to close to submissions on 20^th April.

It is hard for investors to deliver on those targets when the rules are again in flux.