Renewables

Serbia adopts wind, solar power auction plan

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Published

June 6, 2023

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Published:

June 6, 2023

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The Ministry of Mining and Energy intends to carry out Serbia’s first wind and solar power auctions, with quotas of 400 MW and 50 MW, respectively, by the end of June. Investors will be able to participate in competitive procedures for an overall 1.3 GW through March 2025.

The Government of Serbia approved the incentives plan for renewables for the period 2023-2025, envisaging three rounds of auctions for wind and solar power facilities: in the second quarter of this year and in the first quarters of 2024 and 2025. Total available capacity is 1.3 GW, according to the Ministry of Mining and Energy.

Last week the government adopted a quota for photovoltaics of 50 MW for the first bidding, compared to 400 MW in wind power capacity, a level that was determined a year and a half ago. There is 100 MW and 300 MW, respectively, in plan for first quarter of next year. Investors would compete for two-way market premiums for 150 MW in solar power capacity and 300 MW in wind power in the third round.

Public call for investors to be issued soon

The auctions will be carried out according to the contract-for-difference (CfD) model. When the market power price is lower than the price with which an investor won at an auction, the guaranteed supplier (in this case, state-owned electricity producer Elektroprivreda Srbije – EPS) pays the difference or the market premium to the investor. In case the market price is higher than the approved price, the privileged producer pays the difference to the guaranteed supplier for the sold electricity.

The maximum offered price for electricity from wind parks will be EUR 105 per MWh and the ceiling for photovoltaics was set at EUR 90 per MWh

After the recent changes to the Law on the Use of Renewable Energy Sources and the adoption of several bylaws, the next step is to publish a call for the first two auctions. The maximum offered price for electricity from wind parks will be EUR 105 per MWh and the ceiling for photovoltaics was set at EUR 90 per MWh. The market premium is awarded to the investor with the lowest bid.

Power plants from first auctions seen coming online in 2025

According to the document, the photovoltaic plants that win the right to incentives in the first auction (50 MW) are expected to be put into operation in the first quarter of 2025. Most of the wind power capacity from the first auction (for 300 MW) and most of the solar power capacity from the second auction (50 MW) is seen coming online in the fourth quarter of the same year.

The ministry projected that in 2025 privileged producers in the mechanism would pay EUR 3.43 million more to the guaranteed supplier than the other way around. Moreover, the balance for market premiums was calculated with the maximum allowed auction price, but the winning bids will actually be lower, the authors of the plan noted.

Other criteria to be added

The first two auctions will have a classic and simpler form, as the incentives will be awarded based only on the financial offer, the ministry pointed out and revealed that other criteria would be added later. One is the producer’s willingness to offer its electricity to the guaranteed supplier for the guaranteed power supply to households, small buyers or another end buyer through a direct renewable electricity purchase agreement. Such deals will ensure that the beneficiaries in the incentives system sell electricity to Serbian citizens and companies, the ministry argued.

Biogas power plants weren’t included in the plan. Feed-in tariffs for a total 68.3 MW in the pipeline have been awarded so far in the segment, and the entire capacity is expected to come online through 2025, so with the current 28.5 MW it is more than enough, given the considerably high tariff of EUR 200 per MWh, the document adds.

There are not enough projects in Serbia for other technologies, like biomass and geothermal energy, for a competitive process, the ministry explained.

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