One step before its implementation, but with strong reactions from the market, is the Energy Ministry’s plan to introduce letters of guarantee for Renewable Energy Source (RES) projects in a bid to decongest the green power market. According to sources, an amendment will be submitted to parliament at the end of the week as part of legislation on waste management which will require a letter of guarantee reaching 35,000 euros / MW be submitted for all producer certificates over 1 MW.
As reported by Business Daily, the ministry is focused on introducing letters of guarantee in order to clear the landscape and leave only those who can really invest. In fact, last week, speaking at an event at the Delphi Forum, the Minister of Environment and Energy, Costas Skrekas, said that there are 10 times more applications that can be met, a fact that created a "bottleneck" with energy regulator RAE but also an increase in market pressure. The issue has strongly troubled RAE and IPTO. As the president of RAE, Athanasios Dagoumas noted in his article, in December 2020, 1,865 applications with a total capacity of 45.5 GW were submitted.
Dagoumas stressed that RAE managed to meet the requirements concerning the increased volume of applications by issuing 1,249 producer certificates with a total capacity of 27 GW and completing the evaluation of most RES project requests. So today there are about 47 GW of new RES projects in the licensing stage, which will be added to the approximately 30GW of old projects that have a license to generate electricity.
However, the president of RAE warns investors that the longer this large number of applications continues, the lower the prices will be. "It is clear", he emphasizes, "that the inflation of applications is expected to lead to a significant reduction of prices in the competitive bidding processes, as reflected in the tender of May 2021, where the lowest price was set at 32.97 € /MWh, while the average price was set at 37.6 €/MWh, and in fact for projects up to 20MW.“ However, despite efforts by the ministry to weed out the serious investors from the less serious in the RES market, there are protests to the plan amidst allegations that the proposal differs considerably from what the ministry had previously agreed with market participants.
In a letter to the Energy Ministry, the Association of Photovoltaic Companies notes how, although it initially supports the move, it highlights its concern about the specific way that licenses are awarded, as it considers that the exception of the lower 1 megawatt projects under the new guarantee will not lead to a decongestion of the system.
In particular, the SEF letter states that: “This proposal differs substantially from the one presented last April which spoke of "submitting a Letter of Guarantee during the application for a Final Connection Offer (for all projects)". Where exactly is the difference? In the new proposal, investors with a Producer Certificate are required to pay twice for the same thing, ie the Producer Certificate, a license without special weight anymore once having paid the "One Time Certificate Issuance Fee" (and once by depositing a guarantee). In addition, the new warranty excludes projects with a power of less than 1 MW, which, remarkably, accumulate several thousand megawatts. So, a decongestion of networks is not expected from the new proposal.”