Lithuania’s proposed regulatory framework for the development of offshore wind will jeopardise the delivery of projects at the lowest cost for society, according to trade body WindEurope.
The Committees of Economic Affairs and Environment in the country’s Parliament has recommended changes to the auction design that would support only part of the electricity produced by the winning bidders, instead of the whole output which is what happens in other countries, WindEurope said.
“If finally adopted as law, it would result in project developers having to compete in the auction not only on the lowest price, but also on the lowest volume of electricity to be supported,” it added.
WindEurope said that this would bring additional risk to the project developers, which “we believe would result in higher bidding prices in the auctions”.
The proposal would also mean that much of the output of the winning project would not be covered by a Contract for Difference, which would increase the financing costs for the rest of the wind farm and result in higher total lifetimes costs, the Brussels-based group said.
WindEurope added: “We fully understand the intention of the Parliament to minimise cost to the State and society, but we fear the measure would therefore increase the long-term costs to Lithuanian consumers.
“Moreover, these changes have emerged very quickly, and there has been little if any public consultation with market participants. Nor has there been a detailed impact assessment published.”
The trade group said it urged Lithuania to remove the changes to the auction rules and maintain the Ministry’s proposals of auctioning a double-side CfD based solely on a strike price.
It said: “The two-sided CfD as original proposed is the best form of revenue stabilisation mechanism to minimise the total societal costs of offshore wind.
“And the industry has been working on this basis for the last two years, in an open and constructive dialogue with the Lithuanian authorities, which enabled a conducive environment for competition and investment certainty. These sudden changes seem to put all that at risk.”