AERS publishes draft methodologies for auctions for premiums, feed-in tariffs

The Energy Agency of the Republic of Serbia (AERS) has prepared drafts of two methodologies for calculating the maximum purchase price for electricity and the maximum feed-in tariff for electricity from renewables. The methodologies are a precondition for organising auctions for premiums and feed-in tariffs. AERS has put the two methodologies up for public consultation until October 14.

The maximum purchase price for electricity and the maximum feed-in tariff for electricity are the amounts above which the participants’ bids in auctions won’t be considered. Based on the analysis of the drafts, conducted for Balkan Green Energy News by an energy expert, it is expected that the maximum purchase price and the maximum feed-in tariff will be lower than the currently valid feed-in tariffs.

The maximum purchase price and maximum feed-in tariff are expected to be lower than the currently valid feed-in tariffs

After the adoption of the two methodologies, in order to hold the auctions, it is necessary to adopt a rulebook on auctions and to set the quota to be distributed. Zorana Mihajlović, Deputy Prime Minister and Minister of Mining and Energy, recently said the first auctions will be announced in December.

AERS said it has prepared a draft methodology for determining the maximum purchase price for electricity and a draft methodology for determining the maximum feed-in tariff for electricity and put them up for public consultation.

Given the importance of the methodologies, which create the preconditions for the implementation of the new law on renewable energy sources and the start of the auction process for electricity produced from renewable energy sources, the regulatory body invited all interested parties to send their comments by October 14.

The LCOE method to ensure subsidies are not awarded to high bids at auctions

Both draft methodologies are more or less the same, and are based on the levelized cost of electricity (LCOE) model, which is used in most countries that have auctions.

The LCOE method will be used to determine the maximum purchase price and the maximum feed-in tariff, which should ensure incentives are not awarded to expensive projects at auctions, according to the drafts.

AERS will calculate the purchase price and the feed-in tariff every December and they will be applied at all auctions held in the following year

The purchase price and feed-in tariff are determined by AERS in accordance with the law on renewable energy sources and are expressed in eurocents per kWh. The purchase price and feed-in tariff are determined for each power plant type and subtype by the Quota Regulation, for newly built and reconstructed power plants.

Every December, AERS will calculate the purchase price and the feed-in tariff, which will be applied at all auctions conducted during the next year, the drafts read.