Elering has published the methodology for calculating the profitability limits for the solar power plants completed in the second half of 2020
Solar power plants completed in the period from 1 July to 31 December 2020 are the last ones that are entitled to receive a fixed-price renewable energy subsidy pursuant to the Block Exemption Regulation of the European Union. This means that the aid given must not exceed the profitability limit. As of now, Elering has elaborated the methodology for the limit and has published it.
The final version of the profitability methodology is available on the website of Elering: https://elering.ee/taastuvenergia-toetus#tab1
River Tomera, Head of the Renewable Energy Department of Elering, considers the new methodology to be a balanced solution: “Implementing the grant scheme for solar power plants under the provisions of the Block Exemption Regulation took place as a result of an amendment to legislation requested by producers in a very short period of time in the spring and summer of 2020 and, arising from the amended legal environment, Elering as a grant provider was overnight given the obligation to elaborate new rules for the calculation of profitability. In cooperation with KPMG experts and market participants, Elering has taken efforts to find a methodological solution for calculating the profitability limit which complies with the requirements for state aid but also ensures a stable environment for investments.”
Andres Meesak, CEO of the Estonian Solar Power Association, noted that it is excellent to see that the proposals of the Association have been taken into consideration. “We have given a considerable amount of feedback for elaborating the profitability calculation model and we are glad to see that our proposals have been accepted to a significant extent. The completed model is dynamic and gives reassurance to producers about earning investment revenue either via grants or directly via the price of electricity,” said Meesak.
Elering as a provider of state aid ordered an opinion on the investment expenses of the respective solar farms for four groups of producers from the international advisory company KPMG Baltics, and thereafter elaborated the methodology and an implementation plan in cooperation with the aforesaid company for calculating and monitoring the profitability of the projects on a sector basis.
In 2021, a public consultation was conducted with the Estonian Solar Power Association, market participants, and stakeholders. The calculation model was shaped to be more dynamic on the basis of the feedback received in order to take into account insofar as possible the actual situation on the market with regard to electricity prices, the consumer price index, balance energy expenses and other variables.
On the basis of the profitability methodology, producers will be paid a fixed amount of aid until the date on which the average profitability of the producer group exceeds the permitted profitability limit calculated on the basis of 12 years.
In February 2022, the improved model was again introduced to the market participants, with the last amendments to the model made thereafter.