Support for seven projects awarded through auction – the average price of accepted tenders EUR 2.5 per MWh
The Energy Authority has made decisions regarding tenders submitted to the technology-neutral auction for operating aid. All 26 tenders submitted involved wind power production. Feed-in premium was granted to seven projects and 19 were turned down. The projects were accepted in order of cost competitiveness. All accepted projects met the criteria specified for participation in the auction.
The following projects were accepted: Kestilän Kokkonevan Tuulivoima Oy’s Kestilän Kokkonevan Tuulivoima (Kestilä), CPC Finland Oy’s Lakiakangas 3 (Isojoki and Kristiinankaupunki), Puhuri Oy’s Parhalahti (Pyhäjoki), Puhuri Oy’s Hankilanneva (Haapavesi), Kalax Vindkraft Ab/Oy’s Kalax (Närpiö), Tuuliwatti Oy’s Tuuliwatti Simo Leipiö III (Simo) and Tuulipuisto Oy Hirvinevan Hirvineva-Liminka (Liminka). More detailed information on the projects is available on the Energy Authority’s website. A link is provided at the end of this press release.
The average price of the bids for the winning projects was EUR 2.49 per MWh. The lowest accepted bid rice was EUR 1.27 per MWh and the highest EUR 3.97 per MWh. The price of the accepted bids, weighted by the annual offered electricity production, was EUR 2.58 per MWh. The average price of the declined bids was EUR 8.52 per MWh.
The auction was open to projects generating electricity from wind, solar and wave power, and from biomass and biogas. The maximum annual electricity generation for tenders was 1.4 terawatt hours. The combined annual production of the accepted projects was 1.36 TWh.
All electricity suppliers eligible for feed-in premium will receive a premium based on their respective tenders (pay-as-bid). A full premium is paid when the average of the three-month market price of electricity is equal to or lower than the reference price of EUR 30 per MWh. If the market price exceeds the reference price, a sliding scale will be used. No aid will be paid if the market price is higher than the sum of the reference price and the approved premium.
Aid will be paid for a period of 12 years. This period begins no later than three years from the date on which the approval decision was given. The maximum annual costs incurred by the State from the premium scheme total EUR 3.5 million. This is less than 5 per cent of the costs incurred to the State from the feed-in tariff system for the same annual electricity production.
However, the costs of the auction and the feed-in tariff system are not directly comparable because technological progress in the renewable energy sector has been very fast since the feed-in tariff system was introduced, resulting in lower production costs. In addition, the feed-in tariff system was one of the key drivers of wind power plant construction, as indicated by the large number of bids submitted.
The energy and climate strategy approved by the Government in December 2016 included a policy on how the auction for renewable energy operating aid was to be organised. The Government proposal for the act on auction was submitted to the Parliament in autumn 2017, and it was adopted in June 2018. The Energy Authority organised a auction in late 2018.
Roland Magnusson, Competition Adviser, Energy Authority, tel. +358 29 5050 111, email: roland.magnusson(at)energiavirasto.fi
Pekka Ripatti, Deputy Director General, Energy Authority, tel. +358 29 5050 075, email pekka.ripatti(at)energiavirasto.fi
Pekka Grönlund, Deputy Director General, Ministry of Economic Affairs and Employment, tel. +358 29 55064 815, email: pekka.gronlund(at)tem.fi