Lithuania announces further renewable energy auctions

Author: Tasmin Chowdhary

2019/09/10

LONDON (ICIS)--Lithuania has outlined plans for reaching its renewable energy targets with further auctions scheduled until 2022, the energy ministry announced on Monday.

Between 2020 and 2022, the government will procure 0.7TWh of renewable generation annually and including this year’s 0.3TWh of generation, taking total generation procured over this period up to 2.4TWh.

The future auctions should enable the country to meet a target for a 38% renewable share in final consumption by 2025, equivalent to around 5TWh.

The capacity additions are likely to have a bearish impact on power prices and reduce the country’s net imports.

In 2017, the share of renewable energy stood at nearly 26%, making Lithuania one of the few EU member states to exceed its 2020 target, Eurostat data shows.

Capacity growth has almost stagnated in recent years and a dry summer combined with lower wind output saw total renewable production dip in 2018 to around 2.2TWh, according to government data.

AUCTION STRUCTURE

A spokesperson for the energy ministry told ICIS that the future auctions would follow the same structure as this year’s round .

Auctions are technology neutral, with onshore wind, solar, biogas and biomass all competing for a market premium.

Support will be in the form of a floating feed-in premium and the maximum for this year has been set at €48.93/MWh, according to energy regulator VERT.

Lowest bidders are more likely to be successful and chosen projects receive the difference between the wholesale market price and this maximum.

Future maximum price levels will change annually, the ministry spokesperson confirmed.

FORECAST

ICIS Power Horizon modelling suggests that onshore wind projects would emerge as the most successful in the auction round this year, as there are already a number of projects planned.

Costs for wind projects also tend to be lower compared with solar installations, making wind technology more competitive.

The maximum price in future rounds is also expected to rise, as ICIS Power Horizon forecast Lithuanian prices steadily increasing above €50.00/MWh in the coming years.