Detailed guide to submitting auction bids for the allocation of market premiums for RES - Less than two weeks left, high investor interest expected

There are less than two weeks left until the deadline for submitting auction bids for the allocation of market premiums for a quota of 300 MW of wind power and 124.8 MW of solar power.

What conditions investors must meet to participate and win the auctions, what the new features are in this year’s race for incentives and what is the interest of investors, is discussed by Rade Mrdak, Advisor to the Minister at the Ministry of Mining and Energy, in a special interview for the RES Serbia portal.

– We expect great interest from investors in both technologies – by analyzing projects under development that can potentially participate in auctions for the allocation of market premiums for RES, it was estimated that the total capacity of solar power plants of potential participants exceeds the offered quota approximately 3 times, while the total offered capacity of potential participants for wind power plants is approximately 2 times higher than the offered quota.

Through a detailed analysis of projects under development, i.e. analysis of solar and wind power plant projects in different stages of development based on a series of set criteria, such as possession of a valid energy permit, location conditions and conditions for design and connection, the beginning of the construction phase, etc., lists of projects that can qualify for participation in the auctions have been determined.

– The auction process is conducted electronically in 4 phases: application; qualification; bidding; and the final phase; which are carried out in 10 successive steps.

It begins with the submission of a completed application for participation in the auction via the “RES - auctions portal”, which can be found at the link https://oieaukcije.mre.gov.rs. All domestic legal entities or entrepreneurs who meet the conditions for participation in the auction prescribed by the Public Invitation, and whose applications relate to wind power plants with an approved capacity of 3 MW and above or solar power plants with an approved capacity of 500 kW and above, have the right to submit an application.

During the application phase, participants submit, modify and withdraw applications for participation in the auction on the aforementioned portal; they submit a financial offer, the offered capacity for supplying end customers in the Republic of Serbia and all the documents prescribed by the Public Invitation; also, interested participants are required to submit a financial security instrument during the application phase.

In the qualification phase, the participant qualifies to compete in the auction. This phase begins with the opening of applications by the commission, then the commission assesses the fulfillment of the qualification conditions, as well as whether all the evidence prescribed by the Public Invitation has been submitted. If the participant has submitted all the documents, a bid and a financial instrument for the seriousness of the bid during the application phase, and has met all the qualification requirements, they pass the qualification phase and become eligible to compete in the competition phase. After the deadline for assessing the fulfillment of the qualification requirements has expired, the commission publishes a Report on the fulfillment of the qualification requirements, the publication of which marks the completion of the qualification phase.

In the competition and quota filling phase, the commission opens the financial offers of only those participants whose applications have passed the qualification phase, then carries out the process of evaluating the offers based on the offered price and the offered capacity from the purchase agreement, and based on the points achieved, conducts the competition and ranking in order to fill the quota, as well as the distribution of the quota itself among the participants. The maximum number of points is 100, and the method of scoring and detailed rules for the distribution of the quota are described in more detail within the Public Call. The competition phase ends after the ranking and quota-filling have been carried out, and is carried out by the commission by compiling, concluding and publishing the ranking list for the allocation of the market premium and a report on the auction.

Finally, the Ministry issues individual decisions on granting or denying the right to a market premium to each participant. The participants then conclude a market premium agreement with an authorized contracting party and submit a new financial security in the amount of 60 euros per kW of power plant capacity for acquiring the status of a privileged producer. The expected deadline for project implementation is a maximum of 4 years from the date of acquiring the status of a temporarily privileged producer, for projects for which a construction permit was obtained before acquiring the status, or a maximum of 6 years for projects for which a construction permit was not obtained.

– Ranking in this year’s auctions, in addition to the financial criterion, also includes a non-financial criterion – the percentage of the capacity of the auction participant’s power plant offered to the guaranteed supplier for the needs of guaranteed supply and/or to the end customer through a contract for the purchase of electricity from renewable sources.

The introduction of this criterion ensures that the energy produced in power plants that have received incentives is consumed in the Republic of Serbia, which has positive effects in increasing the share of renewable energy sources in the total final electricity consumption, reducing electricity costs and diversifying the offer for end consumers.

The total points of the auction participants ultimately depend not only on the offered energy price, but also on the offered capacity for electricity production that will be consumed for domestic needs.

– Since the interest in this year’s auctions is extremely high, and the assessment of projects under development has determined a significant number of participants for the allocation of the market premium, necessary measures have been adopted to ensure the participation of as many participants as possible, and to achieve the fairest possible distribution of incentive funds, respecting the interests of both small and large producers.

In practice, this limitation means that the total share of the quota allocated in the bidding process to participants who are considered related parties and/or related market participants in accordance with the law cannot exceed 105 MW. In addition to related parties and related participants, this limitation also applies to individual auction participants in relation to one or more power plants for which an application has been submitted, and individual participants will not be able to exercise their right to incentives above the amount of the aforementioned limitation.

– The final auction results can be expected during March.

– Out of a total of nine power plants for which incentives were granted in the previous round of auctions, five power plants (four solar power plants and one wind farm) have already been connected to the electricity system, so the current total capacity of the commissioned power plants is 120.8 MW.

The remaining four projects are expected to be built and commissioned within the planned timeframe.