RESS 3 Deadlines Extended

As is the case with all versions of the RESS support scheme, a project supported under RESS 3 must achieve certain construction-related milestones that are set out in the terms and conditions (RESS 3 Ts&Cs). Failing to meet these milestones can trigger draws against the project’s Performance Security. It can also, eventually, lead to the revocation of the project’s RESS 3 Letter of Offer and the withdrawal of its support.

Deadlines extended

The Minister has extended the deadlines for three of the four remaining milestones due to what he describes as “exceptional circumstances” facing RESS 3 projects. These issues include:

• Grid reinforcement delays by EirGrid and ESB Networks
• Challenges – including long lead times – in procuring critical materials to develop grid connections for renewable electricity projects, and
• Grid outage availability

The Minister’s use of his powers to amend the deadlines on an industry-wide basis is noteworthy as this is the second time this power has been used under a RESS scheme. The Minister had previously used a similar power in late 2023 to amend the equivalent three deadlines under the RESS 2 scheme.

The Minister has chosen to make the amendments using his powers under Section 1.11 of the RESS 3 Ts&Cs. Under Section 1.11, the Minister can alter or amend any part of the RESS 3 Ts&Cs.

The extended deadlines will apply to each RESS 3 project to the extent it has not already achieved the relevant milestone.

The amended milestones are as follows:

On Milestone 4 (funding confirmation), the Supplementary Note acknowledges that the original Interim Milestone Date for Milestone 4 (31/10/24) has already passed. It is noted that the Minister has decided to exercise the discretion provided for in the RESS 3 Ts&Cs and confirms that the Performance Security of any RESS 3 Project that has failed to complete Milestone 4 by the original Interim Milestone Date will not be drawn down. We presume this forbearance is intended to apply only to a Milestone 4 failure, and not to an additional failure to achieve another milestone.

RESS 3 Projects are reminded that they must complete Milestone 4 by the now extended Interim Milestone Date of 31/01/25 and if they fail to complete this milestone, the Minister will be entitled to draw down up to a maximum of 25% of their Performance Security (4% per month).

Longstop Date

The definition of Longstop Date in the RESS 3 Ts&Cs is replaced with the following definition:

“Longstop Date” means, in respect of Commercial Operation, 30 April 2028 or such later date to which it may be extended in accordance with Clause 5.5 of the Implementation Agreement.”

Replacement or extension Performance Security

If a RESS 3 project does not achieve Commercial Operation before 30 April 2027, the developer must replace the existing Performance Security with a new performance security instrument, or extend the existing Performance Security. Any such replacement or extension performance security must:

1. Have an expiry date of 30 November 2028[1].
2. Be for an amount calculated in accordance with Section 8.3 of the RESS 3 Ts&Cs, except where one or more Demands were made under the previous Performance Security, the Extension Performance Security must be for an amount equal to the balance of the uncalled security
3. Be issued by a financial company with an Approved Credit Rating
4. Subject to (1) and (2), be in the form set out at Appendix 3 to the Implementation Agreement, and
5. Be effective so there is no gap in security cover

A failure to provide the Extension Performance Security to the Minister before 30 April 2027 will be a breach of the Implementation Agreement and the RESS 3 Ts&Cs. This failure will therefore constitute an Event of Default under the terms of the Implementation Agreement. All references in the RESS 3 Ts&Cs to the Performance Security will be deemed to include any Extension Performance Security.

Following receipt of satisfactory Extension Performance Security, the Minister shall return the Performance Security already held by it to the Issuer.

Extended RESS Support End-Date

The RESS 3 Support End-Date will be updated from 30 April 2041 to 30 April 2042. The End-Date will be subject to any further extension due to a Force Majeure in accordance with the Implementation Agreement.

It remains the case that any extension to the Extended RESS 3 Support End-Date for a Force Majeure may be for a maximum period of one-year, which now runs up to 30 April 2043 (as extended).

Additional details

Where a RESS 3 Project has achieved each Milestone by the relevant Final Milestone Date and is otherwise entitled under the RESS 3 Ts&Cs to receive RESS 3 Support, the period of RESS 3 Support must at all times remain subject to:

• A maximum duration of 16.5 years, and
• A minimum duration of 14 years

The Supplementary Note provides two opposing examples of maximum and minimum support duration:

• The example of a RESS 3 Project which achieves Commercial Operation on 31 October 2024 and which then receives RESS 3 Support until 30 April 2041, i.e. the maximum 16.5 years’ support, and
• The example of a RESS 3 Project which achieves Commercial Operation on 30 April 2028 and which then receives RESS 3 Support until 30 April 2042, i.e. the minimum 14 years’ support

Comment

The extensions to the deadlines under the RESS 3 Ts&Cs will come as welcome news for RESS 3 projects that have narrowly missed Milestone 4 and/or are at risk of missing Milestones 5 and 6. The Minister has taken a variable approach to extension: a 3 month extension is provided for both Milestones 4 and 5, whereas Milestone 6 will benefit from an extension of one year. In particular, affected RESS 3 projects should note that as at the time of publication (23 December 2024), the new interim deadline for Milestone 4 is only 6 weeks away.

It will be interesting to see whether the Minister will continue with this recent trend of providing extensions to RESS milestone dates by making similar amendments to the RESS 4 deadlines.

For more information on the impact of these extended deadlines on RESS 3 projects, contact a member of our Energy team.

The content of this article is provided for information purposes only and does not constitute legal or other advice.

[1] The Supplementary Note explains that if a RESS 3 Project achieves Commercial Operation earlier than the Longstop Date (as amended), the Extension Performance Security will be returned to the Issuer earlier than the Expiry Date, on the date falling seven months after the date the RESS 3 Project reaches Commercial Operation