States guaranteed investors the return of invested funds by introducing a system of mandatory purchase of produced electricity at a defined price. In our country, the purchase was carried out by Elektroprivreda Srbije, and the consumers paid for it, although a good part of the “covering” of these tariffs also fell on EPS itself due to the frequent mismatch of feed-in tariff volumes with newly built capacities.
All in all, this system in the world has been overcome, so Serbia also organized the first auction for electricity produced in wind farms and solar farms. This incentive system is already being implemented in Europe and the model has been copied again. It should be said that investors, even without feed-in tariffs, will be protected by so-called market premiums.
The market premium is an incentive for the production of electricity by which the state protects the producer from changes in market prices in relation to the price offered by the producer at the auction, by paying the difference between the price offered at the auction and the market price. If the market prices are higher than the manufacturer’s offered price at the auction, the manufacturer will pay the difference to the state.
In the announcements of the Ministry of Mining and Energy, it was stated that the auctions for the allocation of market premiums for a total of 450 MW are the largest auctions that are conducted at once in the Western Balkans region and the first auctions within the three-year incentive plan through which a total of 1,300 MW of new green energy capacities will be provided.
The lowest price offered at the auction was 64.48 euros per megawatt-hour (€/MWh) for wind power plants, or 88.65 euros per megawatt-hour for solar power plants, which is almost twice as cheap as the current market prices. According to MRE, during the fifteen-year validity of the contract of the winner of the auction for wind power plants, the State of Serbia will earn between 240 and 600 million euros based only on the difference between the realized and market price of electricity. However, it should be said that the state also guarantees the winners of the auction not to be in the red.
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