Ireland’s renewable energy goals are as ambitious as they are impressive – a target of 80 per cent renewable electricity by 2030, including 8GW of solar PV and 500MW of community energy over the same period. The Government’s commitment to these goals was underlined by the launch of the second phase of the Small-Scale Renewable Electricity Support Scheme (SRESS) earlier this year, designed to help SMEs seeking ways to reduce energy bills and contribute to the State’s decarbonisation goals. But while the scheme was welcomed in many quarters, some stakeholders say the numbers don’t add up.
This second phase will cover export-only small-scale and community renewable projects above 50kW and up to 6MW. A spokesperson for the Department of the Environment, Climate and Communications says SRESS will provide support for renewable electricity installations that are not as suited to other support measures, such as the utility-scale Renewable Electricity Support Scheme (RESS) and the Micro-generation Support Scheme (MSS). “It is essentially filling the gap between those two schemes.”
The department says the scheme will offer a simpler route to market for community and SME projects. “SRESS is a key building block of the Government’s solar strategy and forms part of the Government’s comprehensive enabling framework for Renewables Self-Consumers,” says the spokesperson. “SRESS will enable community groups, farmers, businesses, and others to maximise their participation in the energy transition.”
The tariffs related to the project were announced in May – there are three community rates, ranging from €90/MWh to €150/MWh, and three small and medium-sized enterprises (SME) rates, ranging from €80/MWh to €130/MWh, covering both solar and wind.
The department says the tariffs were determined with the assistance of external economic consultants, who used the latest economic data to consider the costs associated with establishing and operating a renewable electricity project in Ireland.
“Renewable energy community projects are offered a higher tariff than SMEs due to the additional barriers they face establishing such projects,” says the department spokesperson. “The reason for a higher community tariff is that the department’s analysis shows that for communities developing their own renewable energy projects, development and financial costs can often be higher than those faced by commercial developers or even small businesses.”
For example, the largest supported category, grid scale community solar projects, will receive a guaranteed tariff 20 per cent higher than the average community price of €116.41/MWh in the most recent RESS auction for community projects in 2022.
The exact terms and conditions of SRESS are still not known. The department says they are expected to be finalised over the coming months, with applications due to open before the end of the year.
Pat Smith co-chairs the Micro Renewable Energy Federation (MREF), an industry group that has been lobbying the Government on the policies MREF says are needed to achieve the State’s renewable energy potential. He says while the scheme is a welcome step, it does not make these projects economically viable for small businesses or communities. A significant increase is needed on the scheme’s guaranteed export tariff of €130/MWh or 13c/kWh, says Smith.
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“Of course, we are positive on anything that can help develop this sector but the problem we see is that the economics of it are questionable,” he tells Business Ireland.
“The rate of 13 cent is not enough. Maybe you can get a return on your cash but if you need to borrow money as a farmer or a business it will take 15 years for the project to pay for itself between the loan and interest. It is very challenging to make it work at these rates.”
MREF is asking that the tariff be increased to “a more viable level of between 17 and 20 cent” and that applicants can continue to avail of other grants in this space – currently, this is not allowed.
According to Smith, significant infrastructural improvements are also required to ensure microgeneration projects are expedited.
“EirGrid and ESB Networks have to get in tune with the Government ambitions to roll out microgeneration projects and speed up the enhancement of the grid so that these systems can be smoothly connected,” he says.
“The grid connection process for this type of project can be anything between two and four years – that needs to be speeded up considerably and priority needs to be given to these types of projects.”