Renewable Electricity: RESS 3 Auction
As suggested in the consultation, RESS 3 will provide for an Unrealised Available Energy Compensation (“UAEC”) with the intent of minimising the extent to which regulatory risk is factored into RESS auction bid prices.
Compensation for constraints, however, is not included in the UAEC and DECC states that this is because constraints remain an important locational signal. However, the manner of implementation of Article 13(7) of the Internal Market in Electricity Regulation means that wind units remain exposed in relation to constraints (even where they have a Firm Access Quantity) given that complex bids are regulated at short-run marginal cost, as we discussed in more detail here. Projects bidding into RESS 3 may wish to find out more about the methodology that will be used for identifying curtailment, constraints and oversupply – whether, for example, it is by flagging and tagging in the SEM or based on ECP constraints reports.
Contrary to the suggestion in the RESS 3 consultation, there will not be explicit locational signals, although development of policy in this area around future auctions is understood to be under consideration.
There will be partial indexation throughout the Support Period. The Support Period starts on the “RESS 3 Support Start Date” which means the later of 31 October 2024 or 90 days after the date the RESS 3 Project’s Interim Operational Notice is issued. It ends on the earlier of (a) 30 April 2042, subject to any extension for an event of Force Majeure; or (b) where the RESS 3 Project has had its Letter of Offer withdrawn or revoked or has exited or withdrawn from RESS 3, the date of such withdrawal, revocation or exit.
To compete in the auction, projects will be required to have a connection agreement or a Letter of Offer for connection that is capable of being accepted within the 90-day validity period.
Successful projects may request to withdraw from RESS 3 by giving at least 12 months’ prior written notice, provided the PPA counterparty agrees. This provides more flexibility than envisaged in the consultation, though it is worth noting that the EU direction of travel supports flexibility, for example by enabling participation of projects in support schemes which reserve part of their electricity for sale outside the support scheme, as we note here.