Feed-in tariff

Updated: 07.01.2017

Author: Ivana Naydenova

In Montenegro, electricity from renewable sources is supported through a feed-in tariff (Art. 20 § 2 Energy Law). The operators of plants that generate electricity from renewable energy sources can obtain the status of a „Privileged Producer/Generator“ („povlašćeni proizvođač“) and thereupon acquire the right to a price support for the generated electricity under the legal requirements (Privileged Producer Decree and Art. 3 Tariff System Decree). Every year in January, a new incentive fee is adopted, which is applied to the end-costumers, who bear the costs from RES. The amount of incentive fee to encourage the production of electricity from renewable energy sources and cogeneration in 2016 is 0.058715 c€/kWh (Incentive Fee Rulebook Art.2). The Energy Market Operator (COTEE), who is legally obliged to buy the electric energy from privileged producers, pays the incentive for a period of 12 years after having concluded a formal agreement (Art. 95 Nr. 7 Energy Law). The exact amount is determined in the Tariff System Decree and mainly depends on the type of RES technology. 

Eligible technologies

In general all renewable electricity generation technologies, except of geothermal energy, are eligible. However, in some technologies distinctions between the capacity and the amount of produced energy apply.

Wind energy

Eligible (Art. 4 Tariff System Decree).

Solar energy

Eligible for residential and commercial rooftop systems (Art. 4 Tariff System Decree) not exceeding 1 MW (Art. 2 Privileged Producer Decree in conjunction with Art. 4 Classification Rulebook).

Biogas

Eligible, if not exceeding 10 MW (Art. 4 Tariff System Decree and Art. 2 Privileged Producer Decree in conjunction with Art. 4 Classification Rulebook). The Tariff System differentiates between biogas and waste gas.

Hydro-power

Small hydropower plants not exceeding 10 MW (Art. 2 Privileged Producer Decree in conjunction with Art. 4 Classification Rulebook) are eligible (Art. 5 Tariff System Decree).

Biomass

Eligible for solid biomass from forestry and agriculture and from the wood-processing industry, if not exceeding 10 MW (Art. 4 Tariff System Decree and Art. 2 Privileged Producer Decree in conjunction with Art. 4 Classification Rulebook). Besides a special tariff applies for solid waste (Art. 4 Tariff System Decree).

Amount

Based on Art. 73 § 2 Energy Law the Government adopted the Tariff System Decree, that determines the amount of the feed-in tariff, which depends on the renewable energy source or the produced amount of energy (hydro power). The particular incentive prices are revised annually in accordance with the inflation indexes reported during the previous year (Art. 8 § 2 Tariff System Decree). If the electricity is produced from reconstructed plants using renewable energy resources, or a plant for high efficiency cogeneration, the incentive price shall be obtained for the overall amount of the annual electricity production (Art. 7 Tariff System Decree). This incentive price is paid for the amount of electricity that surpasses the average quantity of the annual electricity production in the 5 preceding years before the commissioning. However, Art. 7 does not apply, if the reconstructed plant produces twice the average amount that was produced after the first (initial) construction. In this case, the incentive price is calculated in accordance with Art. 4 and 5 Tariff System Decree.

Wind energy

The tariff amounts to 9.61 ct€/kWh (Art. 4 Tariff System Decree).

Solar energy

The tariff amounts to 12 ct€/kWh (Art. 4 Tariff System Decree) for power plants using solar energy on buildings and engineering constructions equally (Art. 4 Tariff System Decree).

Biogas

The level of incentive depends on the used gas type:

For power plants using waste gas the tariff amounts to 8 ct€/kWh.

For power plants using biogas the tariff amounts to 15 ct€/kWh (Art. 4 Tariff System Decree).

Hydro-power

The amount of the incentive price varies according to the quantity of produced energy (Art. 5 Tariff System Decree):

 

  • For produced electricity of up to 3 MW the tariff amounts to 10.44 ct€/kWh.
  • For produced electricity from 3 up to 5 MW the tariff amounts to 8.87 ct€/kWh.
  • For produced electricity from 5 up to 8 MW the tariff amounts to 8.35 ct€/kWh.
  • For produced electricity from 8 up to 10 MW the tariff amounts to 6.8 ct€/kWh.

If the small hydropower plant has been built on an existing pipeline or dam, the incentive price is reduced to 80% of the above mentioned value (Art. 5 § 3 Tariff System Decree). 

Biomass

The Tariff System distinguishes between the different types of biomass (Art. 4 Tariff System Decree):

For power plants using biomass from forestry and agriculture the tariff amounts to 13.71 ct€/kWh.

For power plants using  biomass from wood-processing industry the tariff amounts to 12.31 ct€/kWh.

Addressees

Entitled party: This support scheme is addressed to producers of electricity from renewable energy sources, who obtained the status of “privileged generators” pursuant to Art. 78 Energy Law.

Obligated party: The Energy Market Operator is obliged to purchase the entire electricity from renewable sources produced by the privileged generator. The respective price is set out in the Tariff System Decree and depends on the technology and the amount of the produced electricity.

Procedure

Process flow

On application the Energy Regulatory Agency confers the 12 years lasting status of „Privileged Generator/Producer“ upon Energy producers, who fulfil the criteria set out in Art. 78 § 1 Energy Law (grid connection, recognised RES facility, metering place, network security). Art. 4 Privileged Producer Decree defines the more specific prerequisites for the application, such as a concluded contract on the connection of the power plant with the distribution/transmission system, an energy licence or a contract on the concession for the land use and a use permit for the energy plant (see also Energy Licence Criteria Rulebook).

The Energy Regulatory Agency adds the chosen candidates to the register of privileged generators, which is available online: regagen.co.me/category/obnovljivi-izvori-energije/registar-povlascenih-proizvodjaca/

The Agency is also responsible for the maintenance of the register of issued guarantees of origin, which the privileged generator needs in order to prove to the purchaser (Market Operator) the electricity’s origin from RES.

Once the status of privileged generator is acquired through the decision adopted by the Energy Regulatory Agency, the energy producer concludes a contract with the Market Operator on the guaranteed purchase of electricity from RES at the incentive price. The contract also sets out details such as the estimated yearly production, the amount of the incentive price and the balance responsibility.

The TSO and DSO convey the data on the power transmission from privileged generators to the Market Operator in order that he can carry out the transfer of the funds from the final consumers to the privileged generators once a month. Prior to the payment the privileged producer needs to submit to the market operator guarantees of origin for the total electricity production, for which the incentive prices have been obtained (Art. 9 Tariff System Decree).

Competent authority

The Energy Regulatory Agency (Regulatorna agencija za energetiku) and the Electricity Market Operator of Montenegro (Crnogorski operator tržišta električne energije).

Flexibility mechanism

According to Art. 23 Energy Law a joint support scheme for the use of renewable energy sources can be implemented, if an international agreement is settled. So far Montenegro did not conclude international treaties of this sort.

Degression

The tariffs are revised and set by the regulatory authority for energy every year in January. The duration of feed-in tariffs for all types of renewable is 12 years. The Energy Market Operator (COTEE) is legally obliged to buy the electric energy from privileged producers and to pay the incentive for the above mentioned period (Art. 95 Nr. 7 Energy Law). 

Cap

Pursuant to Art. 73 § 3 Energy Law the government is entitled to limit support schemes, if a negative impact on the economy or on the electricity price can be expected. At present there is no cap in place.

Eligibility period

According to Annex 1 Tariff System Decree the duration of the contract on the purchase of electricity from RES is 12 years.

Distribution of costs

Consumers

The support scheme is funded by a fee that is charged on each kWh purchased by the final consumers (Art. 21 § 1 Energy Law). The fee is subject to the provisions of the Incentive Fee Decree and amounts to €ct 0.058715 per kWh (Art. 2 Incentivet Fee Rulebook).

Distribution mechanism

The distribution mechanism of the funds generated through the incentive fee is specified in the Incentive Fee Decree from 2016. It provides that the Market Operator (COTEE) purchases the entire energy produced by privileged generators at the price defined by the Tariff System Decree and sells it to the energy suppliers (Art. 12 Incentive Fee Decree). The financial resources, with which the energy supplier pays, ultimately consist of the electricity price and the additional contribution that the final consumers have to pay for the promotion of RES.

Montenegro

Further information

  • Crnogorski operator tržišta električne energije d.o.o. (COTEE) – Electricity Market Operator of Montenegro
  • +382 20/22 37 03
  • Operator website
  • info(at)cotee.me