Driving Ireland's solar revolution: Achieving climate goals by 2030

Under its Climate Action Plan, the Irish Government has committed to achieving climate neutrality by no later than 2050. A key focus of this target is to reduce greenhouse gas emissions by 51% by 2030.

The development of a national focus on increasing renewable generation is a fundamental pillar of this strategy. The Climate Action Plan sets out an ambitious target of renewable generation accounting for 80% of demand by 2030. Solar energy will account for 8GW of power by 2030 under the plan.

To achieve these solar energy targets, it is important that there continue to be sound pillars in place to facilitate the delivery of solar development in Ireland.

Access to finance

The development of a solar farm can cost anywhere in the region of €600k-€900k per MW, depending on prevailing market conditions. Input costs include materials (panels, inverters) and labour.

A funding market that supports the capital cost of these projects will be critical. Provided the project has a contracted route to market (see below), finance should be readily available as the project can be underpinned by secure long-term cash flows.

Once construction risk is removed post-energisation, the consistency of the cash flows represents an attractive proposition from an investment perspective.

Effective planning processes

Solar farms typically have a high approval rate on securing planning. Despite this, the planning process in Ireland can be an arduous journey. It will be important to ensure there is a joined-up approach between industry and the State to make the planning process as smooth as possible. Delays in securing planning for utility-scale projects can turn developments from being viable to unviable.

There needs to be a clear roadmap to achieve planning and a consistent review process across all planning bodies to provide certainty to the planning process.

Equally, planning applicants need to ensure that their applications address all key areas on submission, including technical assessments and community engagement.

Grant funding

Residential solar accounts for c. 30% of Ireland’s current solar capacity. This has been underpinned by an attractive grant funding model through the SEAI.

The Non-Domestic Microgen Grant (NDMG) is a recently introduced scheme which provides similar supports to small commercial entities and community organisations. The grant is applied based on the standard output of the installed system and is capped at €162,600.

The supports provided are welcome additions that should support the acceleration of delivery of solar projects, making them economically viable investments. The level of State support to the sector will need to be sustained and enhanced to meet our 2030 targets.

Routes to market

There are two clear routes to market for solar developments: the Renewable Electricity Support Schemes (RESS) and Power Purchase Agreements (PPA).

Renewable Electricity Support Schemes

The RESS scheme, and the recent introduction of the Small-Scale Renewable Electricity Support Scheme (SRESS), provides developers with a clear option for a route to market.

The schemes are run by the Department of the Environment, Climate and Communications (DECC) in partnership with the Commission for Regulation of Utilities (CRU) and EirGrid.

There have been a number of auction processes for the RESS scheme, whereby developers with live projects can bid in to the auction to strike a price to sell their energy to the grid. While the strike price is set by the auction, a maximum price is capped by the Department. To ensure that projects can be delivered cost-effectively, it is important that the capped price is set at an appropriate level.

At a broad level, the schemes should continue to support the acceleration of delivery of utility-scale and small commercial projects. The terms of each auction process will need to be considered carefully to ensure the schemes are fit for purpose.

Power Purchase Agreements

An alternative route is the PPA market. PPAs are transacted directly between corporates and the developer, providing energy certainty to the corporate and securing a fixed price for the developer.

PPAs can either be through the grid network (i.e., the developer sells to the grid but has a back-to-back agreement with the corporate) or “behind-the-meter” (whereby the energy generated is routed directly to the end user).

A clear and defined route to market is the cornerstone to provide economic certainty to the solar development ecosystem.

Grid capacity

Access to the national grid remains a significant roadblock to achieving Ireland’s targets. Grid connection delays and grid capacity continue to affect the roll-out of solar projects from residential to utility scale.

The infrastructure in place needs significant investment to remain fit for purpose.

The grid connection application process can be slow and ineffective. As with the challenges around planning, a smoother process would be welcomed by the industry.

With years of experience advising on renewable energy and infrastructure projects, our team understands the complex landscape solar developers and business owners must navigate – from finance and planning to routes to market and grid access. If you’re exploring opportunities in the solar sector or facing challenges with your current development, talk to us today about how we can help you make smart decisions that deliver lasting value.