Competition is high in Greece’s first energy storage auction, as 95 offers were submitted to the Regulatory Authority for Waste, Energy and Water (RAAEY).
The storage auction’s deadline was July 10. According to market sources, the 95 offers amount to a total capacity of 3.3 GW. Interest was over eight times the offered capacity of 400 MW, therefore the result is considered a success.
Now investors have to submit their letters of guarantee in order for the battery projects to be viable. RAAEY will carry on with the examination of the offers until August 9, before the results are announced.
According to the terms of the auction, individual projects had to be 100 MW at the most, but most investors chose to submit smaller projects of 25-35 MW in order to have more flexibility. They are required to be connected to the country’s transmission grid.
Given the complexity involved in the process, RAAEY issued detailed instructions for the submissions in order for investors to avoid mistakes and being left out of the auction.
Subsidies yet to be specified
It should be noted that the maximum offer for each project was set at EUR 115,000 MW per year. The chosen projects will also receive a grant of EUR 200,000 per MW as well as profits from their participation in the market.
This last point is of particular importance, since there are still some regulatory details to be determined when it comes to the batteries’ commercial operation in the balancing market and the income from providing ancillary services. The level of this remuneration is set periodically by RAAEY and the authority is called to provide a level sufficient to support investment without being too high.
“A hypothetical battery project of 10 MW with a minimum storage of 20 MWh that gets accepted in the auction with an offer of EUR 100,000 per MW will receive EUR 2 million as a grant plus EUR 1 million in annual support. However, this support depends on the performance of each supported project as part of the total annual income of each project group. Therefore, the calculation formula of this income is important, as it affects the final distribution of support for each project,” said Professor Manolis Karapidakis from the National Technical University of Athens (NTUA).
24 new battery projects added in June
During the licensing cycle for the month of June, 24 applications were submitted to RAAEY for new battery projects, amounting to a total capacity of 1.6 GW. Most of the projects (1.5 GW) are for installations without the ability to absorb energy from the grid.
Existing wind and solar farms have an incentive to add storage in order to reduce curtailment and take advantage of the priority they gain in future auctions. Given the fact that curtailments have increased in recent years in Greece, storage can protect investors and ensure their projects are easily financed.