Tenders (Sliding feed-in premium)

Updated: 16.10.2017

Author: Jurga Tallat-Kelpšaitė

In Lithuania, renewable electricity generation is promoted through a sliding feed-in premium, i.e. the difference between the guaranteed tariff and the sale price for electricity generated from renewable energy sources. The RES plant operators are entitled against the electricity company designated by the Ministry of Energy - a public electricity supplier serving the area in which the RES producer is operating or an independent electricity supplier - to payment for electricity exported to the grid. Tariff contracts for the operators of RES plants with a total installed capacity exceeding 10 kW are awarded through tenders. The tariff rates offered by the tender participants cannot exceed the maximum tariff rates per technology and per different capacities of a technology, being set by the NCC. Maximum tariffs are reassessed by the NCC every 6 months, taking into account the actual amount of electricity generated during the previous calendar year, the total installed capacity of the already operational RES plants and the total capacity of the RES plants under construction, however only for the subsequent tender procedures. Except for electricity generated from geothermal power technologies, all renewable generation technologies are eligible for this support scheme. For each RES technology, separate tenders are organized in every region.

In Lithuania, a sealed bid format is applied. An applicant has to submit two sealed envelopes – one with the application documents and one with the tariff rate offer. The winner of a tender is the one who has offered the lowest preferred guaranteed tariff rate (‘pay as bid’ bidding process).

The Law on Energy from Renewable Sources introduced a cap on sliding feed-in premium payments for each eligible technology. This means that until 2020 only a limited amount of electricity produced with a particular technology will be supported through the feed-in premium scheme (see below). According to the NCC, all technology-specific volume capacities, except for hydro-power, have already been reached and therefore no tenders are planned until 2020. However, there are ongoing discussions to increase the 2020 cap for wind power from 500 MW to 750 MW in the near future.

Eligible technologies and support requirements

Electricity generated from renewable sources is eligible for a sliding feed-in premium, i.e. the difference between the guaranteed tariff and the sale price for electricity generated from renewables. This price shall not be lower than the average market price of the previous month and shall be calculated according to the procedure set by the NCC (Chapter III Art. 20 Par. 2 Law on Energy from Renewable Sources). Except for electricity generated from geothermal power technologies, all renewable generation technologies are eligible for this support scheme. Feed-in premium tariff contracts for the operators of the existing and new RES plants with a total installed capacity exceeding 10 kW are awarded through tenders. For each RES technology, separate tenders are organized in every region. (Chapter III Art. 13 Par. 3, Chapter III Art. 20 Par. 2, 3 Law on Energy from Renewable Sources, Chapter II Item 4 Resolution No. 827/2012; Chapter V Item 34.3 Resolution No. O3-229/2011) 

Wind energy

Wind power plants exceeding 10 kW are eligible for tenders. Tender requirements are specified in the tender announcements. For wind power plants, sliding feed-in premiums shall be paid for 12 years from the issue of the power generation licence (Chapter III Art. 13 Par. 3 Item 1 and Art. 20 Par. 7 Law on Energy from Renewable Sources). 

Solar energy

Solar power plants exceeding 10 kW are eligible for tenders. Tender requirements are specified in the tender announcements. For solar power plants, sliding feed-in premiums shall be paid for 12 years from the issue of the power generation licence (Chapter III Art. 13 Par. 3 Item 2 and Art. 20 Par. 7 Law on Energy from Renewable Sources).

Biogas

Biogas power plants exceeding 10 kW are eligible for tenders. Tender requirements are specified in the tender announcements. For biogas power plants, sliding feed-in premiums shall be paid for 12 years from the issue of the power generation licence (Chapter III Art. 13 Par. 3 Item 4 and Art. 20 Par. 7 Law on Energy from Renewable Sources).

Hydro-power

Hydro-power plants exceeding 10 kW is eligible for tenders. Tender requirements are specified in the tender announcements. For hydro-power plants, the sliding feed-in premiums shall be paid for 12 years from the issue of the power generation licence (Chapter III Art. 13 Par. 3 Item 3 and Art. 20 Par. 7 Law on Energy from Renewable Sources).

Biomass

Biomass power plants exceeding 10 kW are eligible for tenders. Tender requirements are specified in the tender announcements. For biomass plants, the sliding feed-in premiums shall be paid for 12 years from the issue of the power generation licence (Chapter III Art. 13 Par. 3 Item 4 and Art. 20 Par. 7 Law on Energy from Renewable Sources).

Tender characteristics

Pre-qualification criteria

Project developers willing to participate in a tender, have among others to submit to the NCC the following documents:

 

  • Preliminary grid connection conditions. RES plant operator submits to the grid operator a request for preliminary grid connection conditions. Grid operator is obliged to issue preliminary conditions no later than within 30 calendar days from the receipt of the request by the RES operator. Preliminary grid connection conditions shall specify all necessary actions that RES plant operator has to take to connect his RES plant to the electricity grid. They cannot contain requirements other than those that are necessary to ensure a reliable, safe and proper functioning of the RES installation and the power system (Chapter III Art. 14 Par. 8 Law on Energy from Renewable Sources).
  • Letter of intent (LoI). After having received the preliminary grid connection conditions, RES plant operator submits to the grid operator a request to sign a LoI, committing both RES plant operator and grid operator to construct and to connect an installation. The grid operator is obliged to sign the LoI no later than within 30 calendar days from its receipt. The Letter sets out the capacity, the energy source that will be used in the plant as well as the respective deadlines for the project (Chapter III Art. 14 Par. 10, 11 Law on Energy from Renewable Sources). The capacity of RES-facilities that are planned to be connected to the electricity transmission grid cannot be lower than 6 MW (Chapter V Item 34.6 Resolution No. O3-229/2011).
  • Financial guarantee. After having signed the LoI, the RES plant operator submits to the grid operator a financial guarantee obliging the former to install a plant or otherwise pay a fine. The amount of the guarantee to be provided depends on the generation capacity of the plant (1 kW x € 14.48) (Chapter III Art. 14 Par. 13, Art. 15 Par. 1, 2, Art. 20 Par. 3 Law on Energy from Renewable Sources).
  • Confirmation of the already installed or planned to be installed new RES-facilities, and commitment to use the assigned supported capacities in case of winning the tendering procedure. (Chapter V Item 34.3 Resolution No. O3-229/2011)
  • Confirmation that the same RES-facility receives no other state support. (Chapter V Item 34.4 Resolution No. O3-229/2011)
  • Power generation licence. Owners of the existing RES plants have to submit a power generation licence, a connection agreement with the grid operator and a confirmation by the grid operator that the grid connection service agreement is concluded with the applicant. (Chapter V Item 34.8 Resolution No. O3-229/2011)
  • Technical project. If requested by laws, RES operator has to submit a technical proposal. (Chapter III Art. 14 Par. 15 Law on Energy from Renewable Sources) 

Bidding procedure

In Lithuania, a sealed bid format is applied. An applicant has to submit two sealed envelopes – one with the application documents and one with the tariff rate offer. (Chapter V Item 35 Resolution No. O3-229/2011)

Tender constraints

The Law on Energy from Renewable Sources introduced a cap on sliding feed-in premium payments for each eligible technology. This means that until 2020 only a limited amount of electricity produced with a particular technology will be supported through the feed-in premium scheme.

Until 2020 the following caps are set:

 

  • For wind power plants: 500 MW (Chapter III Art. 13 Par. 3 Item 1 Law on Energy from Renewable Sources)
  • For solar power plants (excluding plants of up to 30kW authorised to expand electricity generation capacity according to the applications submitted on 31 December 2012 at the latest): 10 MW (Chapter III Art. 13 Par. 3 Item 2 Law on Energy from Renewable Sources)
  • For hydro-power plants: 128 MW (Chapter III Art. 13 Par. 3 Item 3 Law on Energy from Renewable Sources)
  • For biogas and biomass power plants: 105 MW (Chapter III Art. 13 Par. 3 Item 4 Law on Energy from Renewable Sources)

According to the NCC, all technology-specific volume capacities, except for hydro-power, have already been reached and therefore no tenders are planned until 2020. However, there are ongoing discussions to increase the 2020 cap for wind power from 500 MW to 750 MW in the near future.

In addition, the NCC every 6 months reassesses the maximum guaranteed tariff rates for the subsequent tender procedures for RES plants exceeding capacity of 10 kW (Chapter III Art. 20 Par. 3, 4, 6 Law on Energy from Renewable Sources). From 1 July 2017 to 31 December 2017, the following maximum tariffs are set by the NCC (Resolution No. O3E-165/2017):

 

  • Maximum tariff rates for wind power plants (Items 3.2. and 3.3. No. O3E-165/2017)
    •  10 < Installed Capacity ≤350 kW: € 0.050 per kWh
    •  Installed Capacity > 350 kW: € 0.041 per kWh
  • Solar energy (Items 1.2.-1.4. and Items 2.2. - 2.4. Resolution No. O3E-165/2017)
    • Maximum tariff rates for building integrated installations
      • 10 < Installed Capacity ≤ 100 kW: € 0.152 per kWh
      • 100 < Installed Capacity ≤ 350 kW: € 0.141 per kWh
      • Installed Capacity > 350 kW: € 0.148 per kWh
    • Maximum tariff rates for installations not integrated in buildings
      • 10 < Installed Capacity ≤ 100 kW: € 0.124 per kWh
      • 100 < Installed Capacity ≤ 350 kW: € 0.115 per kWh
      • Installed Capacity > 100 kW: € 0.122 per kWh
  • Biogas (Items 7.2. – 7.4. and Items 8.2. – 8.6. Resolution No. O3E-165/2017)
    • Maximum tariff rates for power plants using landfill gas
      • 10 < Installed Capacity ≤ 500 kW: € 0.107 per kWh
      • Installed Capacity > 500 kW: € 0.086 per kWh
    • Maximum tariff rates for power plants using biogas derived from anaerobic digestion or other biodegradable organic waste or substrates
      • 10 < Installed Capacity ≤ 500 kW: € 0.122 per kWh
      • 500 < Installed Capacity ≤ 1000 kW: € 0.116 per kWh
      • 1000 < Installed Capacity ≤ 2000 kW: € 0.110 per kWh
      • Installed Capacity > 2000 kW: € 0.107 per kWh
  • Maximum tariff rates for hydro-power plants (Items 4.2. – 4.4. Resolution No. O3E-165/2017)
    • 10 < Installed Capacity ≤ 1000 kW: approx. € 0.053 per kWh
    • Installed Capacity > 1000 kW: € 0.047 per kWh
  • Biomass (Items 5.2. – 5.4. and Items 6.2. – 6.4. Resolution No. O3E-165/2017)
    • Maximum tariff rate for new build power plants using biomass:
      • 10 < Installed Capacity ≤ 5000 kW: € 0.057 per kWh
      • Installed Capacity > 5000 kW: € 0.051 per kWh
    • Maximum tariff rates for reconstructed power plants using biomass
      • 10 < Installed Capacity ≤ 5000 kW: € 0.040 per kWh
      • Installed Capacity > 5000 kW: € 0.035 per kWh

Pricing rules

In Lithuania ‘pay as bid’ bidding procedure is applied (Chapter IX Resolution No. O3-229/2011). The winner of a tender is the one who has proposed the lowest preferred guaranteed tariff rate. Where two or more tender participants have submitted proposals with the same preferred tariff, the winner is the one who offered to build the RES plant with the highest total generating capacity. Where several tender participants have proposed the same tariff and the same generating capacity and the tendered capacity is sufficient, all these participants are tender winners. Where several tender participants have proposed the same tariff and the same generating capacity and the tendered capacity is not sufficient for all of them, the supported capacity will be split between these participants reducing the capacity to be installed in proportion to the offered one. (Chapter IX Resolution No. O3-229/2011)

Lead time

Not defined by laws.

Frequency of tenders

Not defined by laws.

Addressees

Entitled party: The persons entitled to the purchase of electricity exported to the grid are the operators of renewable power plants (Chapter III Art. 20 Law on Energy from Renewable Sources).

Obligated party: The following electricity is purchased by the electricity company designated by the Ministry of Energy or, on contractual basis, a public electricity supplier serving the area in which the RES plant is operating:

 

  • electricity produced in RES plants with the installed capacity of up to 250 kW which until 23 May 2011 obtained the permission to expand electricity generating capacity
  • electricity produced in RES plants with the installed capacity not exceeding 30 kW and which obtained the permission to expand electricity generating capacity from 24 May 2011 onwards (Chapter IV Item 14.1 Resolution No. 827/2012).

Operators of RES plants connected to the distribution grid sell their renewable electricity to the electricity company designated by the Ministry of Energy (Chapter IV Item 14.2 Resolution No. 827/2012). Operators of the remaining RES plants have the right to sell the whole renewable electricity to the public electricity supplier in the region of the respective RES plant (Chapter IV Item 14.3 Resolution No. 827/2012).

Procedure

Process flow and deadlines

RES plants with a total installed capacity exceeding 10 kW acquire the feed-in premium by participating in a tender. For each RES technology, a separate tender is organised in every region. The tariffs offered by the tender participants cannot exceed the maximum tariffs per technology and per different capacities of a technology, being set by the NCC. Maximum tariffs are reassessed by the NCC every 6 months, taking into account the actual amount of electricity generated during the previous calendar year, the total installed capacity of the already operational RES plants and the total installed capacity of the RES plants under construction, however only for the subsequent tender procedures. (Chapter III Art. 20 Par. 2, 3 and 6 Law on Energy from Renewable Sources)

The tender procedure is as follows:  

  • Request to organise a tender. After having received the plant operator’s request to organise a tender for a specific RES technology in a certain region, the NCC:
    • promptly publishes on its website information about the receipt of plant operator’s request, indicating the specific RES technology and region
    • within 30 calendar days from the receipt of request, prepares conditions of a tender procedure
    • no later than 50 calendar days before the registration of tender participants, publishes on its website conditions of the tender procedure. (Chapter IV Items 26 - 29 Resolution No. O3-229/2011)
  • Registration of applications. The NCC launches the registration of applications 15 calendar days before the tender. An applicant has to submit two sealed envelopes – one with the application documents and one with the tariff rate offer. (Chapter VII Items 33 and 35 Resolution No. O3-229/2011)
  • Evaluation of tender documents. The NCC evaluates the applications received (i.e. if they meet all statutory requirements) and by resolution approves the list of eligible tender participants. The next day the NCC has to publish on its website the list of eligible tender participants as well as the time and place of examining offers for guaranteed tariff. (Chapter VII Resolution No. O3-229/2011)
  • Examination of offers. No later than within two working days from the moment of publishing the list of eligible tender participants the NCC organises a hearing to examine offers for a guaranteed tariff. The hearing is open to applicants and other interested parties. At the hearing, the NCC evaluates the offers and compiles a list of offers. No later than next working day the NCC publishes on its website the list of offers and potential winner(s) of the organised tender. (Chapter VIII Resolution No. O3-229/2011) The winner of a tender is the one who has offered the lowest preferred guaranteed tariff rate (it cannot exceed the maximum tariff rate set for this tender by the NCC). Where two or more tender participants have submitted proposals with the same preferred guaranteed tariff, the winner is the one who offered to build the RES plant with the highest total generating capacity. Where several tender participants have proposed the same tariff and the same generating capacity and the tendered capacity is sufficient, all these participants are tender winners. Where several tender participants have proposed the same tariff and the same generating capacity and the tendered capacity is not sufficient for all of them, the supported capacity will be split between these participants reducing the capacity to be installed in proportion to the offered one. (Chapter IX Resolution No. O3-229/2011)

A tender has to be organised no later than within 180 calendar days from the receipt of an application. (Chapter II Item 4 Resolution No. O3-229/2011)

Competent authority

he Ministry of Energy is responsible for supervising compliance with the regulations regarding the feed-in premium and the NCC for setting the maximum tariff rates and organizing the tenders (Chapter II Art. 6, 11 Law on Energy from Renewable Sources).

Penalties

Amount of the fee

To be eligible for a tender, a RES plant operator has to submit to the grid operator a financial guarantee obliging the former to install a plant or otherwise pay a fine. The amount of a guarantee to be provided depends on the generation capacity of the plant (1 kW x € 14.48). If a plant operator wants to extend the duration of the permit for the expansion of electricity production capacity, the amount of a guarantee is increased by multiplying the amount of the guarantee (1 kW x € 14.48) by the duration of extension expressed in number of years. (Chapter III Art. 15 Par. 1 Art. 20 Par. 3 Law on Energy from Renewable Sources)

If RES plant operator does not fulfil or improperly fulfils his obligations set out in the Letter of Intent and (or) connection agreement, the grid operator has the right to keep the amount of the guarantee paid by the RES plant operator or part thereof. However, only if there is no fault of the RES plant operator in not fulfilling his obligations. The grid operator can use these irrecoverable amounts only for upgrading the electricity grid, which is necessary for the connection of RES plants. (Chapter III Art. 15 Par. 3 and 5 Law on Energy from Renewable Sources)

Mechanism in place to ensure the payment of the fee

A plant operator willing to participate in a tender, has to submit to the NCC evidence that: 

  • the company is not subject to bankruptcy or that there is no extrajudicial bankruptcy commenced by the creditors
  • the company is not subject to restructuring procedures
  • there is no court decision, decision of creditors or shareholders of the company, etc. to liquidate the company
  • that plant operator pays taxes and social security contributions, etc. (Chapter V Item 34.2, Chapter VII Items 58.6 – 58.13 Resolution No. O3-229/2011).

Distribution of costs

Consumers

As the generation of electricity from renewable energy sources is one of these services, the costs arising from the feed-in premium are borne by the consumers through the electricity prices (Chapter II Item 7.1 Resolution No. 916/2012).

Distribution mechanism

Electricity company designated by the Ministry of Energy, or a public electricity supplier serving the area in which the RES producer is operating, or an independent electricity supplier purchase electricity from renewable sources from the RES plant operators (Chapter IV Item 14, Chapter V Item 21 Resolution No.  827/2012). The costs arising from the feed-in premium are included in the charges for services of public interest and thus borne by the consumers through the electricity prices (Chapter II Item 7.1 Resolution No. 916/2012).

Lithuania

Further information