“GREEN” AUCTIONS AND “GREEN” TARIFF. WHAT TO CHOOSE?

What should an investor choose in 2021 – a “green” tariff or an auction? 

The concept of “green auctions” appeared two years ago when the legislation on alternative energy was changed. For solar power plants installed in 2020 and with a capacity of more than 1 MW, in addition to the “green” tariff, there is an opportunity to get fair prices for electricity generated. 

What are green auctions?

The proposed new system provides an auction among alternative energy producers to obtain the lowest price of electricity for further sale into the system. Competition will take place between projects in one category, and the share of the annual quota for SES will be up to 15%. Auctions will be officially held twice a year by SE “Transparent. Sales “: until April 1 and October 1 of the year (up to 2029 inclusive). A solar power plant that already receives state support in the format of a “green” tariff is not eligible to participate in the auction.

 The organizer – “Guaranteed Buyer” – will sign a “green contract” with the future winner, under which he will buy the produced electricity and provide compensation. The winning investor for the next 20 years is guaranteed to receive redemption from the state of electricity at the price set at the auction. This could be a profitable investment for future solar power plants with the annual reduction of the “green” tariff, which is valid until 2030. But auctions have their minuses.

Pros and cons of green auctions

Competition between Renewable energy stations through auctions allows to form an adequate price for electricity, which is beneficial for both parties: the state and consumers. But it is difficult to predict what price will win and will be recorded after the victory. In addition, the first auction for the distribution of quotas to support renewable energy has not taken place, although it was forecast for April 1, 2020. The Ministry of Energy has postponed the launch to 2021, which will mean a likely increase in competition for participants in the green auction. Investors involved in the new system may continue to be at risk of untimely bidding by public institutions. Unlike the stable “green” tariff, which already operates in Ukraine, has stable payments from the “Guaranteed Buyer” and will be valid for at least another 10 years.

What to choose for an investor: “green” tariff or auction for the sale of solar electricity 

With the installation of roof and ground solar stations for businesses up to 1 MW from the beginning of 2021, the “green” tariff will still remain profitable in terms of payments. For roof SES it is 11.55 Eurocents / kWh in 2021, 11.18 Eurocents / kWh in 2022, 10.76 Eurocents / kWh in 2023-24 and from 2025 the tariff will be 10, 40 Eurocents / kWh As for terrestrial FES, the “green” tariff in 2021 is 10.61 Eurocents / kWh, in 2022 – 10.24 Eurocents / kWh, from 2023 to 2024 – 9.87 Eurocents / kWh. • h, and from 2025 will be 9.50 Eurocents / kWh.

 The reduction of the “green” tariff is due to the increase in the number of RES projects and the inability of state-owned enterprises to pay the starting price.

So investing now in SES is in any case a way to recoup investments that has been made on the station building while the “green” tariff is working and there are no auctions yet. It makes sense to participate in the tender and direct their resources to prepare the necessary documents, when the new system is already working well. At Unisolar, we offer comprehensive services for investors to install turnkey industrial solar power plants. For detailed information and to receive a commercial offer – contact us at the following contacts:

 044-206-45-06 

info@unisolar.com.ua

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