As of 2 September 2016, the Republic of Ireland’s pipeline of PV projects amounted to 3.5 GW, in anticipation of a new incentive scheme to be published in the coming months. The most active developers have come over from the United Kingdom in the search for new opportunities, as PV opportunities dwindle in the United Kingdom after incentive cuts. The top five developers – Elgin Energy, Highfield Solar, Solas Eireann Renewables, Lightsource-RE, and Amarenco Solar – all have connections to the United Kingdom. Combined?they hold 50% of the total current PV pipeline. The big questions are whether Ireland’s policy scheme will offer an attractive enough market, at what volume, and in which time frame.
Key points
IHS Analysis
Developers from the United Kingdom have rushed to Ireland to develop PV projects in anticipation of a future incentive scheme, of which few details have been disclosed. As a sign of the intense development activity, close to 500 individual PV projects, amounting to 3.5 GW have been registered with Ireland’s grid operator Eirgrid, in pursuit of a grid connection offer. The majority of the projects are below 5 MW, as this facilitates the grid connection, and many expect a support scheme to target smaller projects. Yet, a fifth of the pipeline capacity comes from projects larger than 40 MW. The total capacity under development is projected to continue increasing over the coming months so that once an incentive scheme comes into place, probably in the middle of 2017, developers will be quick to act.
The big uncertainty is what Ireland’s support scheme will look like. The new policy will need approval from the European Commission, whose rules dictate that support for renewable power plants larger than 1 MW must be awarded through competitive bidding. A tender scheme would set a limited annual market volume, and create uncertainty around profitability. Not all of the developers that have flocked to Ireland would be comfortable with the tight competition and likely low prices in a bidding process. A bidding process also requires patience, as projects might not be installed until 2018 or 2019.
Of the approximately 90 companies that develop PV projects in Ireland, the largest five control?50% of the pipeline: Elgin Energy, Highfield Solar, Solas Eireann Renewables, Lightsource-RE, and Amarenco Solar. Of these five, Elgin Energy and Lightsource-RE have come straight from the Unied Kingdom. Highfield Solar is a joint venture (JV) between Irish wind developer Highfield Energy and UK solar developer Aura Power, and Solas Eireann has entered into a JV with UK developer Golden Square Energy. Amarenco Solar stands out as an investor coming from the French PV market. However, the Australian investment bank Macquarie, with a solar track record in the UK, recently took a 50% stake in Amarenco to support its?developments in Ireland.
Highfield, Lightsource and Elgin seem to be anticipating tenders by developing a few very large PV plants in addition to the common?sub-5 MW projects. These three develop nine projects larger than 40 MW, of which two projects from Highfield are 95 MW each. If the future incentive scheme allows for such sizes, and land permits are secured, project scale could be the key to competitive bid prices in a possible tender.