The first auction in Lithuania has already been announced

The first auction for renewable energy developers began in September. At the beginning of 2020, those companies that have offered the lowest premium on top of the reference market price set out by the National Energy Regulatory Council will become the winners. However, the association sees some risks in the new support model, on which the auctions will be based.

The aim of the auction announced by the National Energy Regulatory Council is to distribute a support quota of 0.3 TWh. Energy producers will receive the support for 12 years. The auction is open to companies involved in producing power from wind, sun, biogas and biomass energy.

The price range of the auction was determined some time ago. As is indicated in the published description of the terms and conditions, the maximum price for renewable energy will amount to 48.93 EUR/MWh, which comprises the reference price of 45.07 EUR/MWh and the premium price of up to 3.86 EUR/MWh.

Planned stages of the auction:

2 September 2019 – auction announcement (the information published on www.vert.lt)

11–25 November 2019 – document acceptance period

26 November 2019 – the first meeting of the auction Committee and evaluation of the applications

Beginning of 2020 – announcement of the winners of the auction

More information:

• Regulations of Auctions for the Distribution of Support Quotas
• Description of the Terms and Conditions of the Auction
• Website of the National Energy Regulatory Council

Association’s position

Lithuanian Wind Power Association notes that this auctioning model is rather risky for the renewable energy developers – the requirements are high, while the offered incentives are relatively small. 

“The aim of the auctions is to achieve the goals set out in the National Energy Independence Strategy. It is great that the implementation of the strategy is moving forward, but we also anticipate some challenges. One of them is the auctioning model itself, which is seen by the investors as risky,” said Aistis Radavičius, Executive Director of the Lithuanian Wind Power Association.

According to him, the investors see it this way due to several key aspects. Firstly, the wind energy project developers will have to cover 100% of the costs related to their connection to the electricity grids, while they will also have to trade electricity in the spot market and take all the risks related to price fluctuations. Furthermore, the energy producers will have an obligation to pay for any production forecast inaccuracies and undertake to produce at least 80% of the agreed amount of energy; otherwise, they will be subject to penalties. The wind energy developers view these factors as risks and would like to see a more favourable investment environment.