Recent Developments in Irish Offshore Wind

The last few months have seen momentum building in Ireland behind offshore wind. The Climate Action Plan has set a target of reaching 3.5GW of offshore wind in Ireland by 2030.  Kristen Read and John Dallas from A & L Goodbody have prepared this Insight to provide an overview of recent developments which have been introduced to set Ireland on course for achieving this target.

Relevant Projects

The recent announcement from the Department of Housing, Planning & Local Government (DHPLG) that seven Irish offshore wind projects have been designated as ‘Relevant Projects’ in the context of the forthcoming Marine Planning and Development Management legislation (MPDM) is a welcome step forward to give greater certainty and confidence to developers of offshore wind projects in Ireland.
In the past, there has been significant uncertainty for developers of offshore wind projects in Ireland, particularly in relation to the offshore and onshore consenting process for their projects. The Climate Action Plan (CAP) published in July 2019 (which underpins the Government’s policy for incentivising offshore wind projects) committed to address the question of how ‘legacy projects’ would be treated under any new legislative regime for offshore renewable energy projects. The designation of Relevant Projects is the latest step by Government to clarify the position of these projects.
The seven Relevant Projects, together with SSE’s 520MW Arklow Banks project, have the potential to deliver 4.4GW of capacity as part of Ireland’s strategy to support very significant deployment of offshore wind projects between now and 2030.

For the Relevant Projects it means that they will be granted a ‘Planning Interest’ under the new MPDM (when enacted) and will therefore have priority over earlier stage projects in accessing the new offshore consenting regime.

Timing for Consents

Given ongoing delays in the formation of a new Government, it is unclear when the MPDM will be enacted and therefore uncertain when the Relevant Projects will be able to commence the planning process under the new regime. However, it is encouraging to see that MPDM will be priority legislation for the likely future Government and that significant progress is also being made in relation to other pillars of the offshore consenting regime, in particular on the development of our National Marine Planning Framework (NMPF).

Whilst the single consent principle will remove unnecessary duplication in the offshore consents process, the MPDM general scheme does not include a clear statutory timetable for An Bord Pleanála to carry out its examination and issue its decision. If we look to our nearest neighbours in the UK and the Development Consent Order process, having a clear and statutory timetable to obtain consent has certainly facilitated the timely delivery of offshore wind projects in the UK. If the ambition for offshore wind energy, as set out in the CAP, is to be realised by 2030, then the timely delivery of planning consents will be key. A statutory time period for decisions would be very helpful in this regard, as well as an appropriate resourcing strategy in An Bord Pleanála to deal with the likely volume and complexity of applications for offshore development consents under MPDM.

Grid Connection

Only one offshore wind project currently holds a grid connection agreement (namely Oriel). Clearly, securing a grid connection offer is a priority for most offshore wind developers. On foot of a direction issued by the Commission for Regulation of Utilities in January 2020, EirGrid is required to commence processing grid applications from projects that are designated as a ‘Relevant Project’ under the Transitional Protocol. It is expected that the formal designation of Relevant Projects by DHPLG will facilitate engagement between EirGrid and these projects.
On 10 June, the Department of Communications, Climate Action and Environment published a formal consultation to inform the grid development policy for offshore wind in Ireland. The consultation document and accompanying report by Navigant sets out a number of approaches from ‘Developer-Led’ (decentralised) to ‘Plan-Led’ (centralised) and includes helpful comparisons across a number of European jurisdictions. It is expected that this consultation will guide Government policy on grid delivery for offshore wind projects and will address important questions such as responsibility for consenting, construction and operation of offshore grid assets. It is possible that a different or ‘transitional approach’ may be taken in respect of Relevant Projects to avoid potential delays to these projects in making the regulatory and legal changes required to implement an enduring offshore grid connection policy.
We anticipate that the approach to ownership and operation of offshore transmission infrastructure will come into sharper focus as part of this policy design process.

Route to Market

The CAP targets a first offshore wind RESS auction in Q2 2021. On the assumption that only ‘consented’ projects (i.e. projects with a development consent / a Marine Area Consent (MAC) under MPDM or an appropriate foreshore lease) will be eligible to participate in that auction, it is difficult (for that and other reasons) to see sufficient offshore wind projects being in a position to participate in an auction within those timeframes.
The timing of the first RESS auction allowing offshore wind to compete as a ring-fenced technology category requires deliberate coordination with other key workstreams including (i) enactment of MPDM and finalisation of NMPF, (ii) delivery of development consents under MPDM, (iii) finalisation of the charging regime for MACs, and (iv) issuing of grid connection offers. Each of these are important to confirm overall project design and costs in the context of competitive auctions.
The MPDM also suggests that only projects that have been granted support through a competitive process established under Section 39 of the Electricity Regulation Act (i.e. RESS) will be eligible to receive a MAC. We would suggest that this is a relatively inflexible approach in that it pre-supposes that the only viable route to market for offshore wind projects (now or in the future) is through a RESS supported power purchase agreement. We would suggest that the industry should be allowed greater flexibility to innovate in relation to alternative routes to market for offshore wind (as is being seen in the US and Europe) whilst recognising that Government will require sufficient comfort on the viability of any alternative route to market when granting exclusive rights over the Irish marine area.

Supply chain challenges and opportunities

The recent report, Harnessing our Potential, commissioned by IWEA and prepared by the Carbon Trust, outlines that significant investment is needed in the Irish supply chain to ensure that the wider economic benefits of offshore wind development can be captured domestically. The report highlights a number of issues including:-

• At present, Irish firms only stand to capture approximately 20% of the likely investment that will be generated through development of offshore wind in Ireland unless steps are taken urgently to grow the local supply chain;
• Currently, Ireland does not have a port capable of supporting the construction and operation and maintenance of offshore wind farms, meaning developers will have to depend on ports in the UK; and
• SSE has recently announced its selection of Arklow harbour as the preferred operations and maintenance base for the Arklow Bank windfarm. This is a welcome development and one which is hoped to be a sign that Ireland can capture as much of the offshore wind value chain as possible.

Recession and the Economic Impact of Covid – 19

Whilst Covid-19 has wreaked havoc on the Irish economy, and the full economic impact of the pandemic is still unknown, the European Commission’s proposal for a major recovery plan places the Green Deal at its core. As part of the European Green Deal and to help drive the energy transition and to ensure that it’s a just transition, the European Commission has tabled a Sustainable Europe Investment Plan worth €1 trillion. Specific measures for offshore wind are included in the Green Deal. This means that there is an opportunity for offshore wind to not only be instrumental in Ireland achieving its 2030 targets but to also be a part of Ireland’s economic recovery story. This should only serve to drive further momentum in the burgeoning Irish offshore wind sector.

For more information please contact Kristen Read, associate on A & L Goodbody’s Environmental & Planning team or John Dallas, partner on A & L Goodbody’s Energy, Infrastructure & Natural Resources team.

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