• We forecast robust renewables growth in the Irish power sector, and note significant upside risk to this already positive view in light of continued investment in the offshore wind sector.
• Ireland will emerge as a renewable energy innovation hub with new developments in floating offshore wind.
• The market’s diverse competitive landscape reflects the attractiveness of the market to large developers, with Ireland offering large rewards for minimal levels of risk.
• Strong growth in new renewable generation capacity will drive the need for investments into power trading capabilities, with the market emerging as a net exported of power, and battery storage.
We expect to see robust renewables growth in the Irish power sector with large upside risks for growth and investment from the offshore wind. The non-hydropower renewables sector will continue its rapid capacity expansion and is set to install 6.7 GW over the coming decade at an average annual growth rate of 9.8%. Accordingly, generation from the sector will more than double, with just under 16 TWh of new generation between 2021 and 2030 leading to the sector’s share of total generation to rise from 38% to just under 60% over the same period. The Irish government has outlined its 2030 energy targets for renewables to meet 70% of total generation needs. Despite our forecasts currently being more conservative, we highlight that growing momentum in the offshore wind sector offers upside risk to our core scenario, making this target a more achievable reality.
We expect that the majority of additional capacity coming online will be led by the wind segment, with 5 GW of net additions forecast to complete, leading to the overall wind sector providing 52.5% share of total generation by 2030. However, we highlight significant room for additional capacity growth by an additional 8 GW as the offshore wind project pipeline swells, with 11 large scale developments in planning. The pipeline includes some of the sector’s most experienced developers, including Spanish Iberdrola and French EDF, who have targetted Ireland’s nascent industry. While we hold a conservative outlook to timely completion we highlight several large projects taking shape:
• SSE Renewables has awarded a framework agreement to technical consultancy firm ODE for providing structural consultation for offshore wind projects in UK and Ireland, according to a press release from ODE. The contract will cover the Seagreen, Berwick Bank and Marrbank offshore wind farms in Scotland, with a combined capacity of 3.2 GW. Additionally, the contract will include the Irish 800 MW Arklow Bank offshore wind farm. As part of the contract, ODE and SSE teams will work together on all project phases and on specific packages such as concept development, technical due diligence and fabrication support. Overall SSE has pledged to spend EUR6bn on its Irish offshore wind portfolio over the decade.
• Iberdrola has agreed to acquire majority stakes in DP Energy’s 3 GW offshore wind portfolio in Ireland, according to a press release from Iberdrola. The deal comprises the Inis Ealga wind farm on the south coast of Co Cork, the Clarus project on the west coast of Co Clare and the Shelmalere project, which will come up off the east coast. Each of the projects will have a potential capacity of 1 GW. The Inis Ealga and Clarus projects will be developed using floating offshore technology and the Shelmalere project will feature fixed foundations. Two-thirds of the wind farms are projected to become operational between 2028 to 2030.
Ireland will emerge as a renewable energy innovator with new developments in floating offshore wind, while the solar sub-sector will also see rapid new growth. Simply Blue Energy has started a preliminary front-end engineering design study for a project to develop a hybrid floating wind and wave pilot plant off the west coast of Ireland. The Western Star Wind, ‘Project Ilen’, is a 1.1 GW floating offshore wind project 35 km offshore County Clare. Western Star Wave, ‘Project Saoirse’, is a pre-commercial demonstration wave energy conversion project located 4-6 km offshore Counity Clare, starting with 5 MW of capacity. Simply Blue Group is working with CorPower Ocean and EIT Innoenergy to develop the Saoirse project. An application for the foreshore site investigation license was submitted in December 2020. We do not forecast these projects to reach completion within our 10-year forecast currently and expect significant technology and development hurdles to remain. That said, we note that the project highlights the investor confidence in the rapidly maturing Irish offshore wind sector.
We have noted the developing prospects for new solar capacity growth to take shape in Ireland with growing developer activity. In contrast to the wind sector, the solar sector will see more modest growth in generation rising by nearly 2 TWh to deliver 4.4% of total generation by 2030. However, this growth will be starting from very minimal capacity, 50 MW over 2021, as the industry shapes up and is set to add over 1.5 GW and enter the global 1 GW capacity club.
The solar sector has garnered mounting interest owing to highly successful capacity auctions where developers received the majority share of capacity on offer. The government of Ireland has declared the provisional results of the first renewable energy procurement tender and expects to allocate more than 2.2 TWh of power generating capacity in the country, according to the government press release. The final average bid price for the auction was Euro 74.08 per MWh, while the results remain subject to government approval. Nearly 2,557 GWh bids have been submitted, of which about 2,237 GWh were identified as provisional winners. Solar will account for the largest of the power plants allocated, with 796 MW capacity awarded, while wind will account for 479 MW. The auction is part of the Renewable Electricity Support Scheme, and its second round that aims for another 3 TWh of clean power is planned for 2021. Furthermore, the government has outlined plans to launch a net metering scheme for the solar sector enabling the selling of excess power to the grid from smaller suppliers, up to 50 kW. We expect that this too will add long term support for the solar sector in Ireland.
The highly developed competitive landscape reflects the attractiveness of the market to large developers, with Ireland offering large rewards for minimal risks. According to our Renewable Risk and Reward Index (RRI), which classifies a markets attractiveness for investments on a global scale, Ireland consistently ranks highly currently taking 5th globally and 3rd in the North America and Western Europe (NAWE) region. The market offers rewards well above the regional average owing to the need to replace the expected losses in thermal power systems and its current status as a net importer.
Ireland’s Above-Average Rewards
We expect the market will see large amounts of new capacity growth in the non-hydropower renewables segment over the coming five years – boosting its Industry Rewards score. The market also continues to hold a highly favourable Risks profile. We highlight that robust legal frameworks and the liberal nature of the power market have ensured an active and healthy competitive landscape, creating a range of opportunities of investors and resulting in low Industry Risks. Furthermore, the market remains a highly attractive place to do business with constant backing of energy policies and very good access to infrastructure financing, further contributing to the market’s low Industry Risks score.
The conducive and attractive environment to renewables investment in Ireland has drawn a range of large scale developers. We highlight that the low risks for projects has seen a number of major foreign renewable developers look to establish dominance in the market. Data from our Key Projects Database demonstrates that the current project pipeline is led by large foreign offshore wind developers.
Large International Presence
We expect to see that the mounting growth in generation capacity will drive the need for investments into power trade, with the market emerging as a net exporter of power, and battery storage. We highlight that in response to the rise of intermittent power generation, power storage initiatives and technology enabling grid stability and flexibility will emerge as an ever-increasing trend creating new investment opportunities. The market will emerge towards the latter half of the decade as a net power exporter. This will be facilitated by ongoing investments into major interconnection projects to the UK and France.
Battery Storage Projects Growing with Renewables
NTR has acquired a solar-plus-storage project portfolio worth Euro 29 million from Renewable Energy Systems Americas in Wexford County, Ireland. The 54 MW portfolio comprises 29 MW of solar plants and two 25 MW of battery storage capacity. As per the terms, RES will continue to be responsible for the construction, operation and maintenance of the battery storage projects. The overall project is expected to become operational in 2022.
Gore Street Energy Storage Fund has awarded Fluence a turn-key engineering, procurement and construction contract and a long-term operations and maintenance contract for the 30 MW Porterstown battery project in Ireland. Fluence will operate the project for 15 years. The scheme is due to be commissioned in Q321. Gore Steet has also applied to increase the total capacity of Porterstown and the 30 MW Kilmannock project from the original 60 MW to up to 180 MW.
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