While the winners of last year’s auctions for the allocation of market premiums for renewable energy sources are building their projects, other auctions are approaching, which should be announced in November.
In Montenegro, too, there is a lot going on in the RES sector: the first auctions are expected in the first quarter of next year, and EPCG will start building the first wind power plant it owns in October.
All of this could be heard on the panel “Auctions in Serbia: Challenges of realizing projects of auction winners? Are we ready for other auctions? And what if we don’t want or can’t go to the auctions?” held at the RES SERBIA 2024 conference in Vrdnik.
The panel was moderated by Miloš Laković, partner in Schoenherr, while the participants were Rade Mrdak, special advisor to the minister in the Ministry of Mining and Energy, Ivan Bulatović, executive director of Elektroprivreda Crne Gore, Kai Rintala, general director of Taaleri Energia and Francesco Korbo, assistant director and regional head of energy EBRD.
Lower prices on other auctions
Rade Mrdak, the minister’s special advisor in the Ministry of Mining and Energy, reminded us that we are expecting quotas of 300 MW for wind and 100 MW for solar, increased by 25 MW remaining from the previous auctions.
According to him, the prices will be significantly lower than at previous auctions, but sufficient to attract investors. He also announced the introduction of a new criterion, which means that, in addition to the offered price, part of the capacity that the investor intended for the supply of end customers is also evaluated. That capacity can be offered to a guaranteed supplier, EPS, or to an end customer through a PPA contract, a corporate contract on the purchase of electricity.
With this criterion, the Ministry wants to reward investors who are ready to help end customers – emphasized Mrdak and added that the criterion will not be elimination, but evaluation, and that even investors who do not secure a contract with end customers will be able to win at auctions.
Investors will have enough time to familiarize themselves with the newspaper, because, as explained by Mrdak, the plan is to leave a slightly longer deadline for submitting bids and to publish the list after the New Year holidays. As he says, the Ministry is carefully working on the preparation of the second round because it wants to defend the success achieved with the first auctions. He expects the solar auctions this year to be perhaps more attractive than for wind, and the outcome will show the future direction and whether a change in quotas is needed in the future.
It would be natural if wind and solar were equal, but we defined the first three-year plan in accordance with the real situation on the market, where wind power plants are more developed. Our decision will depend on the results of these auctions – said Mrdak.
He reminded that auctions are an instrument that enables massive development of RES projects with minimal costs for citizens. As he says, in the region and beyond, auctions will be the main driver of the growth of renewable sources, because the market is not yet capable of ensuring that the risk associated with changes in energy prices is eliminated in the long term.
The first auctions in Montenegro at the beginning of next year
While Serbia is preparing for other auctions, Montenegro is waiting for the first auctions, which will be held in the first quarter of next year, said Ivan Bulatović, executive director of Elektroprivreda Montenegro, who also announced that EPCG will start building the first wind power plant under its ownership in October. Iron. For the 54.6 MW wind farm project, EPCG received a loan of EUR 82 million from the European Bank for Reconstruction and Development.
We are developing several solar power plants, then a floating solar power plant with the EBRD. We are proud of the Solari 5000+ project, where we expect to install photovoltaic systems with a total power of 70 MW on the roofs of buildings by the end of the year. All this should enable us to make a peaceful transition to green energy – notes Bulatović.
He pointed out that Montenegro is in a strong investment cycle and that EUR 400 million will be invested in green energy in the next four years. However, he reminded that Montenegro still gets 40% of its energy from coal. And that’s a problem we struggle with every day. The energy community sets increasingly strict conditions in this regard. We invested EUR 80 million in the ecological reconstruction of our thermal power plant. We still see it in operation, and we will see how much reduced volume it is – says Bulatović.
RES projects must be developed outside the auction system
Kai Rintala, general manager of Taaleri Energia, which together with the Masdar company is behind one of the winners of the Serbian auctions, the Čibuk 2 wind farm, is satisfied with the outcome of the auctions.
For us, the outcome of the auctions is fantastic. The auctions were organized with clear rules, an efficient process and a good price was achieved – said Rintala.
However, he emphasizes that one auction cannot replace fossil fuels.
A long-term solution for the development of RES projects must be sought outside the auction system. It is important that we have more players in the market. Auctions should be developed in parallel with contracts for difference – he said and added that he believes that a market for commercial PPAs, energy purchase contracts between electricity producers and commercial buyers, such as companies or industrial users, will emerge.
EBRD: Investors need certainty
Francesco Corbo, assistant director and regional head of energy at the EBRD, which assists both Serbia and Montenegro in conducting auctions, notes why it is important for investors to have a multi-year incentive system plan.
The cycle of three calls that exists in Serbia is important for investors to know that they have a chance even if they fail at the first auctions. Auctions are being prepared for Montenegro, where 2-3 rounds are also planned for consistency and security – announces Korbo.
However, he points out that the EBRD also encourages bankable projects outside the auction system.
The EBRD wants to speed up decarbonization and the energy transition, and auctions are the first step, but only the tip of the hill. We need to develop the market and the EBRD supports projects outside of auctions – concludes Korbo.
E2 portal
Source: www.e2.rs
