Energy Community drafted Guidelines on introducing renewable energy auctions

The feed-in tariffs will be replaced by feed-in premiums (FIP), where the renewable energy producers will sell the electricity into the market and get a sliding premium on top of the electricity price. A sliding FIP scheme is based on the so-called “Contracts for Difference”. These are key provisions in the Draft Policy Guidelines on Introducing Renewable Energy Auctions.

The Draft, jointly prepared by the European Bank for Reconstruction and Development (EBRD) and the Energy Community, was presented at the 4th Meeting of the Renewable Energy Coordination Group (RE CG) held this week in the Energy Community’s premises in Vienna.

The European Union’s State Aid Guidelines for Environmental Protection and Energy 2014-2020 calls for more exposure of renewable energy producers to market signals that will ensure a cost-effective renewable energy deployment. These Guidelines requires technology-neutral auctions to procure renewable energy at lower costs.

The Renewable Energy Coordination Group focused its activities on the design and implementation of market-based support schemes for the promotion of renewable energy to comply with the principles of internal market.

“Feed-in premium (FIP) instead of feed-in tariff (FIT) and standard balance responsibility unless no liquid intra-day market exists must be introduced in order to integrate renewable energy into the market,” the EBRD and the Energy Community said in the Draft.

Sliding feed-in premium is the difference between the strike price as result of the auction and the electricity market price or the reference price. This model secures similar price stability as feed-in tariff scheme while allowing the generator to sell electricity in the Day-ahead Market (DAM) or to any market participant.

The contract for difference is a contract between an electricity generator and state. If reference prices are higher than the strike prices, electricity generator doesn’t get FIP.

“The reference price must be calculated using a market that the renewable energy producer can easily access and that resembles the spot market price,” the EBRD and the Energy Community said in the Draft.

The EBRD and the Energy Community proposed three selection criteria for the auction: price per unit of power, multiple criteria with weights and lowest price with adjustments. However, two institutions said that price option guarantees simple and clear selection.

Apart from Policy Guidelines on Introducing Renewable Energy Auctions, the Energy Community will also assist the Contracting Parties with tailor-made auctions documents, with the selection of winning bids and publish the results, if required, analyze the auction process and identify the RES demand and publish an auction calendar for the next 2-3 years.

Energy Community invited Serbia to amend Energy Law

In June the Energy Community invited Serbia to amend Energy Law in order to align its legal framework with European Union’s acquis for renewables.

The Energy Community has prepared a draft set of amendments to the Energy Law in line with the Guidelines on State aid for environmental protection and energy 2014-2020 with instructions for Serbia to adopt them as soon as possible.

Amendments envisage some fundamental changes whereas introduction of tendering or auctioning process to determine the beneficiaries of the support scheme, elimination of the temporary privileged power producer status, balancing responsibility and introduction of renewable energy operator represent major ones.

The similar draft set of amendments has been also prepared for all other Contracting Parties.