Prices for renewable electricity auctions approved

Date

2019 05 31

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On the 30th and 31st of May, the National Commission for Energy Control and Prices (NCC) set prices for electricity generated from renewable energy sources (RES). These prices will be used to set the maximum premium, for which energy producers will compete at an auction to be held in early September. The quota of 0.3 TWh of electricity will be allocated during the auction. With the announcement of the first auction, the schedule of next auctions will be approved.

“This is the final step out of five which have already been completed. It was necessary as it enabled us to hold open, transparent and competitive auctions for building power plants using renewable energy sources. The first auction will take place in September. We will see the value created by the development of this new, green energy before 2025, when Lithuania will be producing twice as much green energy and reduce its dependence on energy imports by a third, and this will be achieved at prices close to market prices,” stated minister of energy Žygimantas Vaičiūnas.

At the end of 2018 the Parliament has approved a new renewable energy development model, under which the support for RES power plants will be allocated by way of technologically neutral auctions. The key criterion, that will determine the winners of new auctions will be the lowest premium to the hourly electricity market price in the day-ahead Nordpool spot. The support will be paid for the period of 12 years.

To set this premium NCC held a meeting which approved two prices – the reference price and the maximum price. The reference price, which is EUR 45.07 per megawatt hour (MWh), is set for a concrete auction and will be used to determine the maximum premium for the participants of the auction. Meanwhile, the maximum price, which is EUR 48.93 per MWh, is set for the whole 12 year support period and will be used to calculate a premium paid to an electricity producer when the sum of the awarded premium and the market price does not exceed the maximum price.

Based on these prices, the maximum premium to be offered by an electricity producer at an auction held on 2nd of September 2019 will make up EUR 3.86 per MWh.

The premium or its part will be paid to electricity producers, the winners of the auction, based on two cases, taking into account the hourly price in the day-ahead market in the Lithuanian price zone of the electricity exchange.

In the case when the sum of the hourly price in the day-ahead market and the premium awarded at the auction is bigger than the maximum price set by NCC, a producer will be entitled to a part of the awarded premium equal to the difference of the maximum price and the hourly price.

In the case when the sum of the hourly price in the day-ahead market and the premium awarded at the auction is equal to or smaller than the maximum price set by NCC, a producer will be entitled to the whole awarded premium.

A producer will not be entitled to the premium, if the hourly price is bigger than or equal to the maximum price, including other cases when, for example, the hourly price is below or equal to zero for six hours or more.

In comparison with the previous year, the average electricity price in the day-ahead market in the Lithuanian price zone of the electricity exchange was EUR 50 per MWh in 2018.

A premium to the electricity market price will be financed from the funds of public service obligations, without additional costs to consumers, as for some RES producers receiving support under the current support scheme the support period will end in 2021 and the level of support will be less intense.

The new auctions will also be open for electricity producers of other EU countries having a direct electricity link with Lithuania and obliged to share some of their support with Lithuanian companies. The producers of other countries will be able to compete for some share of the total electricity amount to be allocated.