Tenders (Sliding feed-in premium)
Updated: 21.12.2018
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 or a distribution system operator, supplying more than 100 000 consumers 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).
Please note: The Law on Energy from Renewable Sources introduced a support cap for 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 is supported through the sliding feed-in premium scheme. According to the NCC, all technology-specific support caps have already been reached and therefore no new tenders are currently planned under the sliding feed-in premium scheme. However, a new support scheme for renewable energy technologies is planned to be introduced - technology neutral tenders in combination with a fixed feed-in premium, which would be paid for 12 years. The first technology neutral tender for 0.3 TWh is expected in July 2019.
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. If electricity producers sell their electricity on the power exchange, they receive a difference between the guaranteed price and the price of electricity sold on the power exchange. The price of electricity sold on the power exchange cannot be lower than the price of the previous month, announced on the power exchange (Lithuanian bidding area) (Chapter III Art. 20 Par. 2 and 14 Law on Energy from Renewable Sources). Except for geothermal energy, all renewable generation technologies are eligible for this support scheme. Sliding feed-in premium contracts for the operators of 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 is 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). |
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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 premium is 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 premium is 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 premium is 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 premium is 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. The 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 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. RES plant owners 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 plant operator has to submit a technical project (Chapter III Art. 14 Par. 15 Law on Energy from Renewable Sources). |
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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 offer for a guaranteed price (Chapter V Item 35. Resolution No. O3-229/2011). |
Tender constraints | The Law on Energy from Renewable Sources introduced a cap for the support with the sliding feed-in premium for each eligible technology. This means that until 2020 only a limited amount of electricity produced with a particular technology is supported under the sliding 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 support caps have already been reached and therefore no new tenders under the sliding feed-in premium scheme are planned. However, a new support scheme for renewable energy technologies is planned to be introduced - technology neutral tenders in combination with a fixed feed-in premium, which would be paid for 12 years. The first technology neutral tender for 0.3 TWh is expected in July 2019. The following maximum tariffs are set by the NCC by the end of 2018 (Resolution No. O3E-171/2018):
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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 |
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Frequency of tenders |
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Addressees
Entitled party: The persons entitled to the purchase of electricity exported to the grid are the operators of RES 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, at the request of the electricity generator (on contractual basis), a distribution system operator, supplying more than 100 000 consumers:
a) 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
b) 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 transmission 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 RES plants which are not connected to the transmission grid and are not listed under a) and b) above, have the right to sell their electricity to the distribution system operator, supplying more than 100 000 consumers (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 sliding feed-in premium by participating in a tender. For each RES technology, a separate tender is organised in every region. The tariff rates 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. 3 and 6 Law on Energy from Renewable Sources) The tender procedure is as follows:
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). |
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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) |
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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:
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Distribution of costs
Consumers | As generation of electricity from renewable energy sources is a Public Service Obligation (PSO), the costs arising from the sliding feed-in premium are borne by the consumers through the electricity prices (Chapter II Item 7.1. Resolution No. 916/2012). |
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Distribution mechanism | Electricity company designated by the Ministry of Energy or a distribution system operator, supplying more than 100 000 consumers, 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 sliding feed-in premium are included in the PSO levy and thus borne by the consumers through the electricity prices (Chapter II Item 7.1. Resolution No. 916/2012). |