RES investors in rush to avoid €35,000/MWh guarantee cost

Thousands of RES investors already holding producer certificates are racing against time to avoid letter-of-guarantee payments of 35,000 euros per MW, which will be avoided if they manage to submit complete applications for finalized connection offers by a February 28, 2022 deadline to distribution network operator DEDDIE/HEDNO or power grid operator IPTO.

This same deadline applies for imminent producer certificates to be issued through last month’s application cycle. RAE, the Regulatory Authority for Energy, has already begun processing these applications submitted in June. If these investors miss the February deadline for finalized connection offers, they too will also face letter of guarantee costs.

From the next cycle – in October – onwards, most applicants will need to submit letters of guarantee worth 35,000 euros per MW. Investors behind smaller projects with capacities of less than 1 MW, strategic investments, projects for public-benefit purposes, as well as projects developed by local authorities and foundations, will be exempted from the upcoming letter of guarantee requirement.

Its prospect is expected to increase the pressure on DEDDIE/HEDNO and IPTO, expected to face an increased inflow of applications over the next few months as investors scramble to meet the February 28 deadline.

The 35,000-euro per MWh letter of guarantee is being introduced to prevent saturation caused by applicants submitting bids but not following up with actual project development.