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Renewable Resources Act Amendments

EcovisThe Parliament of the Republic of Lithuania on January 17, 2013, adopted the amendments of Renewable Resources Act. In one hand the new amendments, as identified by the Parliament of the Republic of Lithuania, will guarantee protection against electricity price increases, ensure the protection of public interest and balance development of renewable resources. In the other hand, as it is spoken public, new amendment of Renewable Resources Act are made in hurry, and are not consistent with interested groups.

Renewable Resources Act was adopted in May of 2011, since than it was noticed that interest in solar energy is growing. Competent authority receives thousands of applications to develop solar power plants under 30 kW. Ministry of Energetics issued more than 5000 licenses and under following licenses it is liable to build up power stations, whereof total power exceeds 200 MW. Mentioned facts and numbers shows that development of energetics is not well-proportioned and it can destine a huge increase of electric power tariff for the consumers.

After mentioned amendments, persons that has licenses for solar power plants under 30 kW power, or persons who submitted request to get licenses till the amendments of Law becomes operative, have to bring up a security of performance of obligations till 1st March of 2013. This performance will guarantee producers commitment to develop electric power production capacities for operators of network of electricity. The amount of security of performance of obligations will be assessed for individual persons by multiplying provided power of power-station (kW) by 500 Lt for 1 kW.  Security of performance of obligations will be repaid after the power-station is erected.

Project that are already began can be done. Validity of licenses that are issued till the amendments of Renewable Resources Act becomes operative is limited till 1st of July, 2013. However, persons that are already began to realize project can request for extension of license validity for 7 months, if they invested in project non the less than 50 % of finances provided for project. According to mentioned licenses for already erected power-stations will be applicable tariff that was valid at the time, when the license was issued.

Persons that will not begin to realize project till the 1st of July, will miss the opportunity. However it will be covered the costs for those persons, that was because of activity in development of power-station project. In consequence of those covered costs applicant can to apply till 1st of September, 2013.
Those provisions are provided on purpose not to contravene interest of persons that has began the projects, and to evade further solar power-stations extend growth, that according to initiators of amendments will determine the increase of electrical energy tariff for customers.

The amendments of Renewable Resources Act will stop the exceptional conditions for power-stations under 30 kW owners. After the amendments will become operative all the power-stations under 10 kW will compete in auctions for the appropriate technology that allows conditions to develop economically effective projects. Power-stations under 10 kW can be build by private persons for private use and the redundancy of power (no more than 50 %) to supply for power network by the provided tariff.

Major than hoped-for solar power-station development is because of beyond measure procurement prices, that National Control Commission for Prices and Energy assess. Last year the price was even 1,44-1,80 Lt/kWh. For this year National Control Commission for Prices and Energy determined lower price - 1,25-1,60 Lt/kWh. In market share at the mentioned prices the investment after 4-6 years starts to earn benefit, accordingly that sponsorship is determined for 12 years, the power-station owners 6-8 years gets clear profit from mentioned sponsorship. Pursuant to mentioned estimation fair price for solar energy should be 0,5-0,6 Lt/kWh.

So it can be drawn a conclusion, that precisely incompetent decision of National Control Commission for Prices and Energy to raise the prices of solar power recently years cause an amount of request for licenses. As it is spoken in public, if all the requests for the licenses would be granted than general fitted solar power-stations capacity would be 500 MW. It entails that everyone that used electrical energy would pay 5 ct/kwh only for solar power development. It is continually spoken that green energy is getting cheap and the prices approximate to the prices of market, however actually determined prices for solar energy do not reflect tendency. Actually the solar power producers gets ten times bigger price than the price of energy is in the market.

The taken calculation of energy prices increase under the project of Law explanatory notes is not objective. There are written that Ministry of Energy of the Republic of Lithuania received 16 000 requests for licenses to build new solar power-stations and all of them could make more than 500 MW, whereas customers would pay 5 ct more after the projects are done. For such projects the investors would need 2,5 mlrd. Lt and also there are not a lot of chances to do such a big project from technology side.

Even if the purpose of the Law is to protect public interest ant to prevent from the power prices increase, however the new amendments are made in hurry. It can cause renewable resources energetics sector in negative and to frustrate the trust of state legal system. Also it is possible that state will get claims for incurred cost.

Donata Pundinaite
Assistant to the Attorney at Law
ECOVIS Miškinis, Kvainauskas ir partneriai advokatų kontora
Mesiniu str. 5/2, LT-01133 Vilnius, Lithuania
Phone: +370 (5) 212-40-84 - Fax: +370 (5) 212-27-41
E-Mail: donata.pundinaite@ecovis.lt - Internet: www.ecovis.lt