Incentives for energy storage projects

Incentives for energy storage projects

The Ministry of Environment and Energy aims for greater and faster penetration of storage units into the electrical system, redesigning tenders and subsidies to deal with the problem of green energy cuts, at a time when production of renewable energy sources exceeds demand.

The plan, which is expected to take the form of legislation, is based on the logic of limiting the subsidies approved for storage projects by the Recovery Fund and REPowerEU so as to incentivize more investors to develop projects.

In this context, the decision to abolish operating aid in the next tenders seems to have been finalized.

The support of the new projects will be limited to subsidizing the capital expenditures (CapEx) at a low percentage of 30-40% which remains to be finalized. This percentage will be the starting basis for the auctioned projects in the tenders that will follow and an eligibility criterion, although the ministry is examining alternatively or in combination as an eligibility criterion the time of electrification of the project (i.e. its connection to the grid).

The projects that will proceed based on the new design will operate on market terms, fully assuming the risk of the investment. In the event that a RES unit adds a battery behind the meter, the stored energy when available in the system will be sold at the current wholesale price. Accordingly, a standalone unit will generate revenue by storing energy at times when the market price is low and making it available to the system at peak demand times when prices are high.

On the basis of this new philosophy, the auctions of the Regulatory Authority for Energy, Waste and Water (RAAEY), which have been planned as part of the support from the Recovery Fund with total funds of 200 million euros, will also be redesigned.

So far, two auctions have been held by RAAEY for a total capacity of 700 megawatts and one more is pending for a capacity of 300 MW, which will proceed with the new data as soon as it is finalized and legislated.

With the attempted opening to investors, the ministry seeks to mitigate the problem of overproduction of RES in periods of low demand, which is currently being addressed with energy cuts.

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