A new Cornwall Insight and RenewableNI report sets out how supportive Department for the Economy (DfE) policy can reduce the renewable electricity cost for consumers.
‘Supporting Renewables – Understanding policy impact on the cost to the consumers of renewable development in Northern Ireland’ investigated how DfE’s renewable electricity support scheme can boost the investability of renewable projects in NI and reduce the cost to consumers by addressing certain risks.
Cornwall Insight, report authors, revealed the key factors that will de-risk investment and result in lower prices are a longer fixed-term contract, indexation, and compensation on curtailment and oversupply (dispatch down).
The report also addresses the industry concern that a new support scheme would be mandatory, limiting the potential for other routes-to-market including PPA agreements.
Detailed analysis calculated that a non-mandatory renewable support scheme that is 100% linked to Consumer Price Index, compensates on all dispatch down and for over 20 years could reduce the base bid price by almost 50 per cent*. The report also concluded these were ‘quick wins’ as inclusion of them in the support scheme is under the control of DfE.
Supporting Renewables also recommended allowing flexibility for developers impacted by planning timelines and delays in grid expansion. Removing this financial and contractual risk from developers, would further reduce the price consumers pay.
Report author Lisa Foley, Principal Consultant at Cornwall Insight, said:
“Northern Ireland’s renewable energy developers are facing an uphill battle, grappling with risks that outweigh the potential gains of investing in renewable schemes. The report reveals six key challenges to investment – ranging from high costs and delays to market barriers – that were echoed consistently in our conversations with industry experts.
Time is of the essence. With ambitious renewable energy targets and a volatile international market keeping consumer prices high we are at a critical point on the decarbonisation journey. Mindful of the significance of a renewable support scheme the Department for the Economy (DfE) must take action to address these risks head-on through strategic, long-term plans, ensuring that the burden of risk isn’t solely on the shoulders of investors or consumers, but assigned appropriately.
We are in the fortunate position to have examples from neighbouring support schemes, such as the GB Contracts for Difference and ROI Renewable Energy Support Scheme, and we can learn from what has and hasn’t worked. Armed with these lessons, we have modelled improved outcomes which could help build the robust renewable support scheme which can deliver the renewables revolution Northern Ireland urgently needs.”
RenewableNI Director, Steven Agnew said:
Renewable development has stagnated in NI since the closure of the last support scheme. Investors are currently put off by extended timelines, higher costs and lack of government support, creating risks for projects.
DfE needs to protect its consumers from high costs of energy and ensure a security of supply, and they need to do it by 2030 to meet the legal obligation of 80% renewable electricity by 2030. Launching a new support scheme that addresses the concerns of potential investors and developers will ensure that the Department is able to achieve these goals.”
RenewableNI launched the Supporting Renewables report at a seminar featuring key stakeholders in the audience and speaker lineup.
Speaking about the importance of the report to the industry Steven Agnew continued: RenewableNI had representatives from DfE, NIE Networks, the Utility Regulator, SONI, developers and investors at the launch. Tickets were fully booked in two days and there was an extensive waiting list. This shows there is significant interest in Northern Ireland renewable energy right now. Everyone knows the decisions made over the next year will determine the success or failure of the 2030 target.
As an organisation, RenewableNI will continue drive the transition to a net zero electricity system by 2035.”
"The report reveals six key challenges to investment - ranging from high costs and delays to market barriers - that were echoed consistently in our conversations with industry experts."
Lisa Foley Principal Consultant
