Tender (Contract for Margin)
Updated: 05.02.2019
Author: Tim Sternkopf
The public utility is obliged to purchase electricity from renewable energy producers. For large renewable energy producers, the remuneration by a premium tariff is determined through a competitive bidding process, which is set in a contract between the utility and the renewable energy producer (Art. 3 f,gj, Renewable Energy Law). All renewable energy sources are eligible for support under this scheme (Art. 3, dh), Renewable Energy Law).
Eligible technologies and support requirements
Renewable energy producers can bid for a premium tariff. The auction terms and conditions are proposed by the Energy Minister and approved by a decision of the council of ministers (Art. 9, § 4, Renewable Energy Law).
The tender itself is open to all technologies but can be limited to certain technologies by the Minister and the Council of Ministers if certain criteria with regard to network connection cost, resource diversification etc. (Art. 9 § 3 Renewable Energy Law)
Tender characteristics
| Bidding procedure | The bidding procedure is open to all electricity producers from renewable energy sources based on transparent and non-discriminatory procedures (Art. 9, § 1, Renewable Energy Law). |
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| Tender constraints | The starting price is set to €ct 7.6 per kWh for wind and €ct. 10.0 per kWh for solar (Annex, Decision on Tariff Methodology). The assumptions for starting prices of the tenders in 2017 until 2019 by the Council of Ministers are the following:
2017:
- WACC: 8.8% (Wind and Solar)
- LCOE: € 1.450 per MWh (Wind), € 1.400 per MWh (Solar)
2018:
- WACC: 8.0% (Wind and Solar)
- LCOE: € 1.400 per MWh (Wind), € 1.300 per MWh (Solar)
2019:
- WACC: 7.5% (Wind and Solar)
- LCOE: € 1.350 per MWh (Wind), € 1.000 per MWh (Solar)
(Annex, Decision on Tariff Methodology)
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Addressees
All producers of electricity generated from renewable energy sources (Art. 9, § 1, Renewable Energy Law)
Procedure
Process flow and deadlines | The construction of new generating capacities of up to 2 MW is approved the Ministry of Energy, whereas the generation capacities of more than 2 MW are approved by the Council of Ministers (Art. 49 Power Sector Law).
Additionally, renewable energy capacities require the license granted by the Albanian Energy Regulatory Authority. The license is granted based on the technical and economic documentation together with the approvals from the relevant bodies including environmental permissions, water usage permission and permissions from TSO and DSO (Licensing Regulation).
The renewable energy producers with the obtained license conclude a Power Purchase Agreement with the Electricity Power Distribution System Operator (Oshee sh.a.) |
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Competent authority | Ministry of Energy, Council of Ministers, Energy Regulatory Authority |
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Distribution of costs
| Consumers | The costs of the support scheme for electricity produced from renewable energy sources are borne by final consumers (Art. 3, o), Renewable Energy Law). |
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| Distribution mechanism | ERE approves the fee for the end consumer for the costs resulting from the feed-in tariff. The operator assigned by the Council of ministers is responsible for the collection of money from energy suppliers and the payment to the producers eligible for support. (Art. 11, Renewable Energy Law) |
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