The Department of the Environment, Climate and Communications (“DECC”) today published its consultation on the terms and conditions for the fifth onshore Renewable Electricity Support Scheme (RESS 5). Key points are:

• Constraints: DECC is not minded to introduce constraints compensation for RESS 5. Stakeholders are nevertheless invited to provide evidence-based submissions on the impact of constraints on project financing and bid prices, as well as any information which may inform considerations for future auctions and iterations of the scheme.
• Relief Event: RESS 4 introduced Relief Events for System Operator and Judicial Review delays outside of a RESS 4 project’s control. It is proposed that these provisions be maintained in RESS 5.
• Indexation: 30% of the value of RESS 4 Strike Prices are indexed annually to the Harmonised Index of Consumer Prices. The intent is to take account of inflationary pressures on Operation and Maintenance costs ongoing over the support lifetime. DECC intends to review the indexation provisions for RESS 5, which will include consideration of two-way indexation.
• Support Duration: DECC is seeking views on the potential cost savings to consumers associated with either increasing or decreasing the RESS support period.
• Capacity Factors: DECC considers that capacity factors (used in the calculation of Bid Bonds and Performance Securities, as well as Deemed Energy Quantities for the purposes of winner selection in the auction) should be updated for RESS 5 to reflect increased technology efficiencies. DECC proposes to increase the capacity factors, but to amend Bid Bond and Performance Security calculation formulae to avoid any associated increase of the bond/security requirements.

DECC states that it is possible for potential RESS bidders to split their project capacity and bid a portion into RESS and pursue a corporate power purchase agreement for the remainder, subject to the project remaining in compliance with the RESS terms and conditions.  Recent amendments to the Internal Market in Electricity Regulation included an obligation that support schemes for electricity from renewable sources would allow the participation of projects which reserve part of the electricity for sale through a renewable PPA or other market-based arrangements.

The draft terms and conditions are available here. Responses to the consultation are invited by 14 February 2025. Publication of the final RESS 5 terms and conditions is anticipated in April 2025.