ORESS 1 final auction results and next steps

Auction results

There has been no change to the provisional results announced on Thursday, 11 May, with four of the six projects that bid in the ORESS auction awarded long-term contracts based on the strike price they submitted at auction (weighted average price of €86.05/MWh). The ORESS contracts guarantee a stable revenue for the duration of the support scheme (up to 20 years) and make these projects very attractive to investors and lenders.

1. Codling Wind Park (Fred Olsen Seawind and EDF Renewables), east coast, off Wicklow, 1,300MW.
2. Dublin Array (RWE and Saorgus Energy), east coast, off Dublin, 824MW.
3. North Irish Sea Array (Statkraft and Copenhagen Infrastructure Partners) east coast, off Louth, 500MW.
4. Sceirde Rocks (Fuinneamh Sceirde Teoranta), west coast, off Galway, 450MW.

The auction results exceeded expectations, both in terms of the volume delivered and the price achieved.

The 3.1GW awarded in ORESS 1 (versus 2.5GW expected) is the largest volume of renewable energy ever awarded at auction in Ireland.

The weighted average strike price of €86.05/MWh is lower than expected (albeit higher than in some other European countries) and has the potential to save Irish electricity consumers hundreds of millions of euros per year. For comparison, the average wholesale electricity price in May 2023 was €105/MWh.

Sponsors for the two unsuccessful projects have advised that they remain committed to delivering the projects and are currently reviewing their options to secure a route to market. They will submit planning applications later this year for the following:

1. Oriel Wind Park (Parkwind NV and ESB), east coast, off Louth, 375MW. 
2. Arklow Bank Wind Park II (SSE Renewables), east coast, off Arklow, 800MW.

Next steps

To capitalise on the many opportunities offshore wind presents, Ireland has to get several things right.

Planning

Offshore wind projects and the supporting infrastructure (e.g. the ports where they will be assembled) must pass through the planning process as efficiently as possible.  Key factors include:

• Appropriate resourcing of all areas of the planning and the regulatory process. In addition to a significant increase in resourcing in An Bord Pleanála, Minister Darragh O’Brien T.D. recently announced that the Maritime Area Regulatory Authority (MARA) will be established on 17 July 2023. MARA will have responsibility for assessing applications for maritime area consents (MACs), which will be required before developers can make a planning application.
• Dealing with challenges to planning applications in a timely fashion.

Grid

The electricity network needs to be upgraded to cope with the additional capacity from offshore wind and to re-orientate transmission lines away from fossil fuel sources towards renewable sources.

Developers of the successful ORESS 1 projects will be responsible for developing the offshore grid transmission infrastructure to connect their projects to the national grid. These assets will be subsequently transferred to EirGrid.

To expedite delivery, EirGrid will develop the offshore grid transmission infrastructure for ORESS 2 projects, including offshore electricity substations and associated undersea electricity cables. EirGrid is currently running a series of Offshore Energy Citizens Roadshows to inform stakeholders.

For auctions after ORESS 2, successful bidders may be required to develop the offshore grid transmission infrastructure as per ORESS 1.

Port infrastructure 

Ports are a central part of offshore wind development. Building offshore wind farms in Irish ports will reduce costs for consumers and create jobs in coastal communities.

According to Wind Energy Ireland’s (WEI) 2022 National Ports Study, Belfast is currently the only port on the island of Ireland that is fully equipped to serve as a construction base for offshore wind farms.

Several ports, including Rosslare, Cork and Shannon-Foynes, plan to expand, but these works will need significant investment. State investment will be critical in unlocking much-needed infrastructure projects and attracting private investors.

Supply chain 

A robust and resilient supply chain is essential to the successful delivery of offshore wind in Ireland. This means access to the right skills and materials at the right cost and within appropriate timelines. Therefore, more certainty around the offshore wind project pipeline post-ORESS 1 is required to allow businesses within the supply chain to allocate funds and resources to support the build-out of offshore wind in Ireland.

Interconnectors

In 2022, Ireland became a net exporter of electricity to Great Britain via the East-West Interconnector for the first time. By the end of the decade, Ireland is expected to become a net energy exporter. We need to capitalise on this opportunity, assisting countries that are struggling to decarbonise their own energy supplies by continuing to invest in interconnection between Ireland, the UK and Europe.

Green hydrogen

Ireland has one of the best offshore renewable energy resources in the world — a key competitive advantage in the production of green hydrogen.

According to Minister Eamon Ryan, “If Ireland can harness the opportunities offered by hydrogen, we can achieve our goals of a zero-carbon, secure energy system and become an energy exporter.”

We need a government hydrogen strategy (due to be published later this year) to give certainty to investors and industry as to how green hydrogen will be deployed in the Irish energy system.

We are here to help you

Given our experience working with public and private sector clients in the renewable energy sector, we are ideally positioned to assist you with financial advisory services in respect of ORESS. We can advise you on routes to market, project finance, financial modelling, valuations, negotiations and research. Contact us today.