Will Ireland’s offshore wind riches finally green the Emerald Isle?

February 23, 2024
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11 min read
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Despite being home to some of the richest – and lowest cost – offshore wind resources on the planet, Ireland has struggled to get turbines built off its coasts. But with 3.1GW of projects moving forward under its new government-led market model and more momentum-building auctions ahead is the sector finally going to get both oars in the water? asks Darius Snieckus

The first offshore wind farm off Ireland, the 25MW Arklow Bank (pictured above) brought online in 2004 by Airtricity (now SSE), for many years looked like it might end up being the country’s last. Despite having one of the world’s richest wind resources streaming off its coasts at a globally competitive levelized cost of energy (LCoE), according to a recent intelligence report from Aegir, the play has been stuck in harbor for the past two decades, hampered by grid constraints and lack of certainty around Dublin’s long-term market design.

But in 2021, this slow-burning ambition to harness the hundreds of gigawatts gusting over its waters appeared to catch light, with the change from a developer-led ‘open door’ market model to a government-run approach, and in 2023 a total of 3.1GW were awarded to developers with plans to have industrial volumes of offshore wind power flowing to the Irish grid starting in 2027-28.

Awarded via the ORESS 1 auction at an average contract for difference (CfD) price of €86.05/MWh ($92.61/MWh), the projects set to now follow Arklow Bank – the 1.3GW Codling, the 824MW Dublin Array, the 500MW North Irish Sea Array (NISA), and the 450MW Sceirde Rocks – will be instrumental to Ireland meeting its goal of having 5GW of offshore wind operating by 2030. They will also underpin development of the domestic supply chain needed to support construction of a targeted 20GW by 2040, and 37GW by 2050.

Yet it continues to be far from plain sailing for offshore wind in Ireland. Persistent grid connection bottlenecks, slow-rolling consenting processes, and potentially fierce competition among developers – complicated by not-yet-fully-aligned Irish government ministries and agencies – continue to threaten progress, with Aegir’s latest analysis on the regional market now forecasting only 3GW will be turning by the end of the decade and 14GW a decade later.

Lars Bender CEO Fred Olsen Seawind

'Ireland needs to start auctioning off more [offshore wind] capacity [if it is to stand any chance of hitting 5GW by 2030]. That’s on the critical path.'

Lars Bender
CEO
Fred Olsen Seawind

“I think the Irish government have had an extremely good dialogue with the industry leading up to the first auction,” states Lars Bender, CEO of Fred Olsen Seawind, which is developing Codling with France’s EDF. “Since the award, with the focus being getting the projects to consent, again they’ve shown real dedication, the spirit we see from the goal [of getting developments installed in time to meet the 2030 deadline] has been very collaborative.

“But, as you know, [it is only] nine months after the auction, so it has been difficult at the same time. These are still early days.”

Peter Lefroy, director of RWE Renewables Ireland, which is building the Dublin Array with local player Saorgus Energy, echoes the sentiment: “As offshore wind in Ireland is a brand-new industry everything – policy, rules and resources – needed to be set up, so compared to other markets it may seem to have been quite slow-going.”

‘Clear challenges’ loom in the near-term

Still, he is under no illusions about the “clear challenges” that also loom ahead, “not least the well-known issues with planning and the uncertainty around decision timelines, the ever-present risk of a judicial review and the time it takes for policy decisions taken by government to result in implemented change through the regulator and transmission system operator”.

David Flood, UK country manager at Norwegian utility Statkraft, which is developing NISA in joint venture with Denmark’s Copenhagen Infrastructure Partners, says the process leading up to ORESS 1 and the prospects ahead “as they now appear, reminds [one] of the fact that offshore wind is a long game”.

“There are always teething troubles in any new market and I think we are seeing that. But we are very confident we can work through those to deliver NISA. The bigger issue – with the urgency of the 2030 target – and where we see the bottleneck forming is in the resourcing of government agencies. This a key area we’d like to work with the government on to make sure this doesn’t end up being a blocker.

“What is clear is that we need to make sure we use [the ORESS 1 projects] for all they’re worth,” says Flood. “NISA could deliver 200MW more than our contracted CfD capacity. For me that is low hanging fruit. And far easier to have than getting ORESS 2.1 projects delivered to 2030 timelines.”

'Moving forward from ORESS 1 to the upcoming ORESS 2.1 auction has the potential to finally create momentum in the market’s progress and lay the groundwork for future entry opportunities.'

Maria Holm Bohsen
Head of Research
Aegir Insights
Maria Holm Bohsen Headshot round

Aegir Insights' Head of Research Maria Holm Bohsen says: “The Irish market has not taken off at this point despite the rich resource, attractive LCoE levels and huge interest from developers. The political ambitions are clear, but the development of market and auction design has advanced very much one-step-at a-time and this has hindered long-term visibility and planning for market participants.

“Moving forward from ORESS 1 to the upcoming ORESS 2.1 auction - and the possible 2.2 auction – has the potential to finally create momentum in the market’s progress and lay the groundwork for future entry opportunities.”

Bender remains concerned any shortfall in build-out of projects from ORESS 1 could take wind out of the market's sails ahead of the upcoming ORESS 2.1 and 2.2 auctions – and could have a negative knock-on effect on ORESS 3.

Balancing speed with ‘due process’

“These [ORESS 1] projects need to succeed to ensure investor confidence in the Irish market,” he states. “It is absolutely critical for developers like us, who are looking long-term in Ireland. These first projects can pave the way for later developments. “If they flop, there is a very high likelihood that we will see further delays.”

Lefroy says while RWE is “keen to move forward” with ORESS 2.1, it “recognizes the need to balance speed of progress with due process around the establishment of the first DMAPs [designated maritime area plans] off the country’s south coast”.

map by Aegir Insights showing offshore wind projects off Ireland with ORESS 1 subsidies or Marine Area Content.
LEAVING HARBOR: Offshore wind projects off Ireland with ORESS 1 subsidies or Marine Area Consent (MAP: Aegir)

But he adds: “The challenge of climate change and the need for decarbonization are not slowing down. So there needs to be a proper allocation of risk between developers and government, grid and the regulator to ensure a competitive auction that results in deliverable developments.”

Much is riding on the pace and progress of ORESS 2.1. Slated to kick off with prequalification sometime between this October and June 2025, the auction is set to award 900MW in a DMAP off southern Ireland – and could bridge the gap to Ireland reaching its 2030 offshore wind capacity objectives.

There is an interesting wrinkle here, notes Bohsen, in that six announced projects totaling 4.5GW – a legacy of the country’s former developer-led model – are sited in the wider draft DMAP area.

“This could put these developers in something of location lottery,” she says, “and could potentially give companies with a project in the auction area a competitive edge. But, in the round, it remains to be seen as the industry is waiting for the government’s as-yet-unreleased draft of the ORESS 2.1 auction criteria [expected in March].  

“The planned ORESS 2.2 auction is a bit more of a joker in the pack, as it is intended to close the gap to the 5GW target – but there might not be a gap,” Bohsen adds. “Two projects [one being developed by SSE and another by an ESB-Parkwind joint venture] secured maritime area consents but failed to win CfDs in ORESS 1. If these projects succeed in finding commercial offtake deals they will take the remaining grid capacity.”

‘Limited clarity’ on Future Framework

Lack of long-term visibility has been an issue for several years since Dublin’s decision to make the shift to a centrally led approach to market development. Last November, some light was cast on the government’s plans under its so-called ‘Future Framework’ strategy to award 1.5-2GW annually between 2026-2030. However, there remains limited clarity on issues including site location, grid availability and overall auction design, all of which leaves developers somewhat at sea.

Peter Lefroy, Director, RWE Renewables Ireland

'There needs to be a proper allocation of risk between developers and government, grid and the regulator to ensure a competitive auction that results in deliverable developments.'

Peter Lefroy
Director
RWE Renewables Ireland

Beyond 2030, the route-to-market discussion for Irish offshore wind takes on new dimensions. Domestic appetite for renewables will be fueled by climate-imperative decarbonization of major industries, while the country’s growing network of data centers and wider electrification could drive up electricity demand by 50-80% over the next 10 years. But the 37GW of offshore wind capacity envisaged by 2050 hinges on a vision to export clean energy, both as green electrons and – via Power-to-X generation of hydrogen and e-fuels – molecules.

Interconnectors will be increasingly key to offshore wind power export opportunities for Ireland. The country is currently building the 500MW Greenlink to Great Britain and 700MW Celtic Interconnector to France and has aspirations to construct further power trunklines to Continental Europe to deepen its integration in the EU electricity market. In the longer run – from the mid-2030s – offshore wind mega-projects could be an engine for hydrogen production that could be traded internationally.

“Grid availability remains the biggest constraint for long-term offshore wind deployment in Ireland, and there is still no clarity on plans post-2030 for the required grid expansion,” says Bohsen. “Though electricity export and green hydrogen production have been outlined as future offtake routes, there is still a high degree of uncertainty about where and when these routes will be ready.”

Despite the unanswered questions, heightened competition is likely for wider Irish waters given that some 30-plus local and international players had already unveiled projects under the ‘open-door’ regime before it was swung shut with the shift to the government-led approach introduced in 2023. The coming auctions promise a many-horse race.

Is the future still floating?

For the past decade in Ireland, floating wind has championed by many in the industry as key to spearheading offshore wind development, but the nascent sector’s deceleration globally – Aegir now estimates 1-2GW of floating arrays will be installed by 2030 rather the 14-16GW forecast only a few years ago – has raised questions around this assumption in the Irish market.

“Irish waters offer vast areas with potential for floating wind, however, the first phases of the build-out will focus on the attractive fixed-bottom opportunities, which offer less project uncertainly and lower LCoE,” says Bohsen.

'Ireland taking part in floating wind's cost reduction journey sooner than later will mean it take fullest advantage in the 2040-2050s of what will be an almost limitless opportunity for deep-water wind.'

David Flood
UK Country Manager
Statkraft
David Flood, UK Country Manager, Statkraft

“Dublin has announced plans to launch an auction for two 1GW floating wind projects in 2025 [ORESS 3] as a launchpad for an Irish floating wind industry. But the winning developers need to find another route to market than delivering electrons to the grid, which will be maxed out after ORESS 1 and 2.

“Green hydrogen production is the front-runner for this but would combine two technologies that are not fully mature and do not have established supply chains, adding risk to projects targeted by the government to be completed in the early 2030s.”

Flood says Statkraft nonetheless foresees Ireland being “in a position to play a leading role in floating wind by filling the gap in our market for the 200-500MW projects a little further down the road”, providing a bridgework “between the many pre-commercial, up-to-100MW projects that in development now and the 1-2GW ones that are being auctioned off – and key to floating wind getting down the cost of energy curve the way bottom-fixed did”.

“Ireland taking part in floating wind's cost reduction journey sooner than later will mean it take fullest advantage in the 2040s and 2050s of what will be an almost limitless opportunity for deep-water wind,” he says.

Lefroy adds that while RWE sees floating wind having “great potential and opening attractive market opportunities not accessible via bottom-fixed installations” in Ireland, there “urgently needs to be alignment” with the country’s broader offshore industrial strategy, “including development of the supply chains, investment in Irish ports so they are capable of supporting [construction, deployment and servicing] of floating projects”.

‘Dublin needs to keep up the pace’

First and foremost, Bender states, Ireland “needs to start auctioning off more capacity” if it is to stand any chance of hitting 5GW by 2030. “That’s on the critical path. I believe they can make that: there are the developers present currently in the market with activities that they could draw synergies from [to speed up build-out].

Graph by Aegir Insights showing the current government timeline for offshore wind auctions off Ireland.
IRISH EYES ARE SMILING: Current government timeline for offshore wind auctions off Ireland (Graph: Aegir)

“ORESS 1 has been made to work,” he says. “Now [the government] needs to keep up the pace [with capacity awards] and if it does, Ireland will become a model for offshore wind and renewables [development] in Europe.”

Lefroy isn’t as optimistic about Ireland reaching its 2030 offshore wind-powered energy transition objectives. “We believe that delivery of ORESS 1 projects is entirely possible by 2030 all things being equal but the issues of planning consent, supply chain and broader grid reinforcement mean it remains challenging,” he says.

“We are less convinced that the total 5GW will be achieved by then, given the delays with ORESS2.1 and the lack of certainty on the previously expected ORESS 2.2 auction.”

Flood adds: “We have had the seven turbines spinning [at Arklow Bank] for a long time. Developers now need foresight of and certainty as to where and when future offshore wind may be located. If Ireland’s renewable and decarbonization targets are to be met, it no longer has the time for these processes to be sequential as it has been the case until now.”


Want to learn more about the opportunities and challenges in the Irish offshore wind market?

Aegir Insights just published updated market reports on Ireland to our clients. Furthermore, we release a monthly Auction Intelligence package for subscribers, including an updated Auction Database, giving an overview of offshore wind auctions across all global markets, their volumes and then they are starting.

Reach out to us here to learn more about Aegir Insights intelligence offerings.


This article was first published in Aegir Insights' intelligence newsletter, Beaufort.

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