New RES tender model to help industries
The Energy Ministry is about to open up the market of bilateral energy supply contracts, based on terms that will bind producers of renewable energy sources (RES) to channel part of their new capacity to the local industry, assisting in the reduction of energy costs and strengthening its competitiveness.
Minister Kostas Skrekas is positive about the recommendations from the Regulatory Authority for Energy, as well as other entities, concerning tenders for new hybrid-type RES projects, which will create some scope for the signing of bilateral contracts with major clients, such as energy-intensive industries and electricity retailers.
According to this model, the investors that secure a guaranteed rate for the output from major RES projects will also commit themselves to have 50% of their new capacity construction funded through bilateral contracts, and also grant industries 25% of the new units’ output. Failing to meet that commitment will mean they will lose their beneficial guaranteed rate for their output.
In practice, all this means that of the new installation of RES capacity totaling 4.2 gigawatts that the European Commission has approved up to 2025, with a budget of 2.27 billion euros, 2.1 GW can proceed via bilateral contracts with clients. That way the industry and the energy retailers will be able to cover a significant share of their needs at fixed rates, thereby offsetting fluctuations in the wholesale market. The current energy crisis has highlighted the significance of that tool in the formation of the final cost of energy for households and corporations: In Greece, all power consumed goes through the energy exchange market, with consumers suffering 100% of the increased costs, while in other countries where the bilateral contracts are extensively used that amount ranges between 40% and 60%.
While the ministry is preparing the new model for the RES projects, competent officials note that it will not be ready to apply in the first tender next month, concerning capacity of 600 megawatts in total. The aim is for the new model to be ready for the next tender, also within 2022.
That RAE proposal was drafted in cooperation with Scandinavian consultancy AFRY, while similar proposals have reached the ministry from other entities too.
