September 26 2011 Government publishes update on support for renewable energy Matheson LLP | Energy & Natural Resources - Ireland Energy & Natural Resources The Department for Communications, Energy and Natural Resources – the government department with responsibility for energy policy – has published a welcome update on the status of the main public support scheme for renewable energy projects in Ireland. Since 2006 the main form of support available for the development of such projects has been a feed-in tariff scheme known as 'RE-FIT'. Payments under the scheme are made to the purchasers of electricity from participating renewable projects in order to hedge against the higher costs associated with the generation of electricity from renewable sources. The rules of the RE-FIT scheme were published by the department in 2006 and received European Commission state aid approval in September 2007. The first eligible projects were admitted to the scheme – by publication of a statutory instrument – in July 2008. According to the terms of the state aid approval that was granted to the RE-FIT scheme, participation was limited to a total generating capacity of 1,450 megawatts (MW). By contrast, it has been estimated that the installed capacity of Ireland's connected renewable generators will need to reach approximately 5,800MW by 2020 in order to achieve the government's target of producing 40% of Ireland's electricity consumption from renewable sources. By late 2008 approximately 1,300 MW of renewable generation had been connected in Ireland, meaning that: additional renewable generation having an aggregate capacity of 4,500MW would be required in order to meet the 40% target; and due to the scheme's 1,450MW capacity limit, RE-FIT support would not be available to all such projects.It has therefore been clear for some time that in order for government support to be available for enough renewable capacity to meet the 40% target, an extension of or replacement for the original RE-FIT scheme would be required. The latest iteration of the department's RE-FIT website,(1) clarifies the status of a number of separate state aid applications that have been made by the department to the commission, in respect of further tranches of RE-FIT support. In particular, the website now refers to: 'RE-FIT 2' – a scheme intended to cover small and large scale onshore wind, biomass landfill gas and hydro projects; and 'RE-FIT 3' – a scheme intended to cover certain categories of biomass generating technology, including anaerobic digestion and combined heat and power. The department also notes on its website that "separate state aid applications will be required for additional RE-FIT categories of offshore wind, wave and tidal energy", although the announcement does not make clear whether or when the department intends to make any such applications. The proposed terms and conditions of eligibility for support under RE-FIT 2 and RE-FIT 3 have not yet been published, and in any event are likely to be subject to the terms of state aid approval which will be forthcoming from the commission. However, the inclusion of these details on the department's website provides welcome confirmation that further support for renewable electricity generation in Ireland is at an advanced stage of planning. For further information please contact Michael O'Connor or Peter McLay at Matheson Ormsby Prentice by telephone (+353 1 232 2000), fax (+353 1 232 3333) or email ([email protected] or [email protected]).Endnotes(1)The Department for Communications, Energy and Natural Resources RE-FIT website can be accessed at www.dcenr.gov.ie/Energy/Sustainable+and+Renewable+Energy+Division/REFIT.htm.