New wind-energy facilities in danger of tariff deal reductions

Many reneweable energy source (RES) investors, especially ones active in the wind energy sector, face the danger of a drastic turnaround of market conditions as a result of the new RES support model being prepared by the energy ministry, sources have informed.

Current tariff rates already agreed to and signed between RES facility investors and LAGIE, the Electricity Market Operator, may no longer apply once the new RES support model is introduced.

In this case, wind energy producers would probably receive payments based on a price ceiling tariff rate, set at 98 euros per MWh, despite the fact that they have signed agreements for rates of 105 euros per MWh.

This promises to cause business plan problems for many RES producers who have not only already signed tariff rate agreements with the market operator but also taken further steps to purchase equipment, obtain bank loans, and proceed with developing RES facilities.

According to estimates by market officials, such cases, entailing investors who have either already purchased equipment or made installations, represent a capacity in excess of 200 MW. RES projects for which new agreements have been signed with LAGIE total a capacity of 1,250 MW.

The matter is expected to be raised by RES sector authorities during upcoming talks with energy ministry officials as part of the public consultation procedure for the sector’s new support model.

The new model is based on a combination of feed-in-premiums and tenders, in accordance with EU directives.

The energy ministry is aiming to secure internal rates of return (IRR) of between eight and twelve percent. Based on these figures, the price ceiling for feed-in-premiums is 98 euros per MWh for wind-energy facilities, 100 euros per MWh for small hydropower plants, and 90 euros per MWh for photovoltaic systems over 500 KW.