Greece awards 62 MW of small-scale PV, cancels tender for larger projects in the same day

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Greece held two PV tenders on December 10. The first concerned projects up to 1 MW; and the second regarded projects 1 MW up to 20 MW. A third tender pot also took place on the same day concerning wind power projects from 3 MW to 50 MW each.

62 MW of small-scale PV awarded

The first PV pot attracted 3907 online bids from 192 different projects, leading to 61.943 MW of new capacity being awarded.

The winning 95 solar PV farms were awarded tariffs that ranged between €63 to €68.99/MWh, with an average weighted price at €66.66/MWh. Greece’s last PV tender in July had awarded projects of the same pot with an average weighted price at €78.42/MWh. So, competition was heavy this time, resulting in lower awarded tariffs.

These prices bring Greece closer to the tariffs we see in other European markets. A French tender in the summer produced similar prices. German tenders have of course generated even lower tariffs, but Germany has one of the worlds strongest economies, and its economic performance can outperform even cloudy skies.

Projects smaller than 500 kW

An interesting trend in the first category is that of the winning 95 projects, the vast majority comprises projects of around 500 kW or larger. Only four projects were smaller than that.

A viable explanation is this: projects larger than 500 kW need to participate in the tender and win a premium feed-in tariff that tops up their earning from the electricity market at a set price.

However, projects smaller than 500 kW can still be developed and claim a stable feed-in tariff. Depending on the size of the plant, this tariff is about 10 to 20% higher than the marginal price of Greece’s electricity system.

Given the system’s marginal price in 2017 was €54.68/MWh, non-tendered PV plants up to 500 KW can claim a tariff about €0.06015 to €0.06562/kWh in 2018, says a report published by the Hellenic Association of Photovoltaic Companies (Helapco) in March. Helapco’s report adds that these prices are not economically viable to support non-tendered plans smaller than 500 kW.

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However, the PV market can change so fast that last week’s PV tender in Greece leaves Helapco’s comment looking decidedly outdated just a few months later. The four PV projects awarded that were smaller than 500 kW won tariffs of about €68/MWh in last week’s auction, and therefore many investors might prefer to bypass the tender mechanism that requires strict financial guarantees.

All projects, either receiving a feed-in premium or a stable feed-in tariff, are guaranteed their prices for 20 years.

Awards for 86 MW of large-scale PV scrapped

A second PV tender concerning projects larger than 1 MW also took place on December 10th. The second pot led to 12 PV projects totalling 86 MW winning premium tariffs that ranged between €63 to €71.91/MWh.

Specifically, Spes Solaris Solar Concept ltd won €71.91/MWh for four projects, while the same tariff was also won by another three projects submitted by different developers. Overall, last week’s auction exercise was less competitive than July’s tender, when the average weighted price was €63.81/MWh.

However, this is not the only problem. Greece’s regulator (RAE) realized that 13 projects by Spes Solaris Solar Concept ltd and another two projects by Spec Solaris Tria ltd did not submit bids in the tender.

All in all, RAE had given the green light to 27 projects to participate in the auction of the second pot, totalling 151.32 MW. Of these, 17 projects belonged to Spes Solaris Solar Concept ltd alone. Furthermore, the capacity of the 15 projects that did not submit bids was 65.33 MW.

It appears that RAE found the practise of getting entry into the tender but not submitting a bid manipulative and anti-competitive. Thus, it has decided to cancel the auctioning of the second pot and ordered the auction to be repeated next year. A date for the new tender will be announced in January, RAE said.

Greece’s tender applies a strict minimum level participation rule. According to this, a tender needs to be oversubscribed by at least 75% of the awarded capacity. RAE argues that if it had known that 65.33 MW of projects would not participate in the tender, it should have lowered the amount of tendered capacity. Consequently, a lower tendered capacity would have sparked stronger competition, leading to more aggressive bidding and eventually lower prices to be paid by the consumer. RAE’s institutional role is to protect the consumer.

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