Neil Garland
Head of Origination, GridBeyond
The renewable energy sector’s rapid expansion and falling costs now rival conventional energy. Yet, this success introduces new challenges for further growth and integration.
The mainstreaming and maturing of renewable technologies have prompted governments around the world to review publicly funded support schemes brought in to stimulate the market. In Ireland, for instance, the Renewable Electricity Support Scheme (RESS) is based on a contract-for-differences (CfD) structure and operates through a series of competitive auctions.
RESS 3 fewer projects and lower output
Only 33 projects qualified to bid into RESS 3. This was significantly lower than RESS 1 (108 projects) and RESS 2 (130 projects), with the reduced volume mainly due to planning delays. As a result, the latest round (RESS 3) delivered the smallest volume of renewable energy of any auction to date (934GWh compared to an expected volume of 2,000-3,500GWh) at a weighted average strike price of €100.47/MWh (compared to €97.87/MWh in RESS 2). With late RESS 4 auctions having just closed for submissions, it will be interesting to see if lessons are learned from RESS 3.
In addition, there are a number of projects across Ireland whose government-backed funding is, or shortly will tail off. This low or no-subsidy world requires developers to find alternative sources of revenue to anchor the low-cost, long-term financing needed for projects to be economically viable.
There are a number of projects across
Ireland whose government-backed
funding is, or shortly will tail off.
Growing corporate demand drives PPAs
As a result, developers are increasingly looking to the growing number of corporations that are seeking to access green power through power purchase agreements (either traditional PPAs with a utility or CPPAs with a corporate buyer) to provide that alternative revenue certainty. This growing demand from corporate buyers is illustrated by the success of RE100, which brings together businesses committed to 100% renewable electricity.
Moreover, in many markets, demand from off-takers is outpacing the supply available from new projects coming on stream. Finding the right off-taker for a project can be a significant challenge, but one that GridBeyond is able to overcome.
Generators can also earn revenue from merchant trading. Increasingly, projects are financed or refinanced on an almost-merchant basis, especially as some reach the end of their guaranteed tariff period.
AI boosts renewable energy reliability
Without subsidies, the true value of AI in renewable energy asset management becomes clear. AI not only enhances the reliability of energy streams but also creates smart systems that deliver measurable results, attracting investment. The actionable insights AI offers on asset performance help investors mitigate risk.
