Separate auctions for new wind and solar PV capacity
Because of the different positive externalities and the different levelized cost of electricity (LCOE)5 between the various renewable technologies as well as other differences between them (i.e. licensing and commissioning timelines, availability of grid capacity in windy areas, allocation of grid capacity between intermittent and non-intermittent technologies) RAE considers it more appropriate to conduct separate auctions for each renewable technology instead of technologically neutral auctions where all technologies compete against each other.
More specifically, RAE proposes that only sufficiently developed wind projects exceeding 3MW capacity and found at least 1.5 kilometers away from each other to avoid abuse of capacity thresholds (save for cooperative schemes to which a 6MW threshold is intended to apply) and sufficiently developed solar PV projects regardless of capacity should be subject to auctions on pricing. These projects are proposed to be those with an Environmental Terms Approval and a Final Grid Connection Offer from the competent grid operator6. Separate auctions should be conducted for solar PV projects less than or equal to 1MW and greater than 1MW. Early-stage projects could be exceptionally auctioned off in case of imminent spare grid capacity following major grid upgrades or expansions and special interconnections like the South Evia island – Polypotamos – Nea Makri (Attica) and the Cyclades islands – Attica interconnection projects.
It is expected that RAE will also consider the case for separate wind capacity auctions in different geographical zones and areas of the country in order to take into account different wind potentials whilst avoiding overconcentration of projects in areas with great wind potential.
Technologies and projects to be exempt from auctions
The remaining renewable technologies such as small scale hydropower (i.e. ≤15MW), solar thermal, biogas, biomass, geothermal and highly efficient cogeneration of heat and power plants of a total new capacity in the range of 300 – 400MW are proposed to be excluded from auctions because there are insufficient numbers of projects to hold successful competitive auctions and to achieve economies of scale in most cases.
Likewise, 18 clusters of onshore wind projects in islets and the Non-Interconnected Islands (NIIs) and two offshore wind projects with Electricity Production Licences (most of them exceeding 250MW) that are to be connected to the mainland grid through dedicated new subsea interconnection cables are also suggested to be also excluded from auctions, subject to prior notification and approval from the European Commission regarding individual aid granted on the basis of an aid scheme under paragraph (20) of the Guidelines, and a special cost-benefit study when NIIs are involved according to Article 4 of 2014/536/EU7. Law 4414/2016 provides for up to a 25 per cent uplift on the currently applicable regulated reference tariff for such projects provided that it does not result in an excessive internal rate of return for the project (Project IRR)8.
Further, RAE recommends that ground mounted solar PV projects of great investment value that have qualified under the Fast Track Licensing provisions of Article 9 of Law 3775/2009 or as Strategic Investments under Law 3894/2010 should also be excluded from auctions on the condition that the entire project will be built, in which case the relevant reference tariff would be set at around 90 per cent of the lowest price offered by solar PV projects in previous year’s auctions. Otherwise these investments should be also subject to auctions.
Finally, RAE is of the opinion that hybrid stations (those combining at least one renewable technology with energy storage systems interacting with the local distribution system subject to some technical limitations) should enjoy different technology-specific feed-in tariffs for electricity generation and a price for their generating capacity. RAE does not exclude an individual aid approach (as above) based on substantiated feasibility studies providing for a reasonable return on invested capital in the range of 10 per cent account taken of the variable cost of power generation in the isolated systems (NIIs) concerned, nor does it exclude auctions for hybrid stations should they are expected to result in more competitive pricing.