Standard imbalance and connection charges to be borne by renewable sources under the new draft GBER Regulation
Monday, 10 June 2013 11:46

 

Acknowledging a patchwork of existing European renewable promotion schemes may provide to the contrary, the requirements proposed in the latest version of the draft GBER Regulation propose that if a renewable electricity is supplied to the grid, the producers or where relevant aggregators should be subject to standard obligations regarding network connection and network connection charges and should bear responsibility, in financial terms, for all deviations (imbalances) between their scheduled and actual generation within a given imbalance settlement period. The said responsibility can be outsourced to other balance responsible parties, subject to commercial arrangements.

 

The key issue is also that the State aid to electricity generation from non-renewable sources and to energy infrastructures will not be exempt from the EC notification 'in view of their high distortive potential impact on the internal energy market.' Such investments will have to be notified to the European Commission to assess their compatibility with the internal market.

 

 

The significance of the GBER Regulation (Draft Commission Regulation declaring certain categories of aid compatible with the internal market in application of Articles 107 and 108 of the Treaty) consists in that it indicates State aid categories exempted from the notification requirements. The earlier version of the said legislative instrument comes from 2008 and expires in the end of 2013.

 

The general intention is the reviewed GBER contribute to a high level of environmental protection and thus to sustainable growth by facilitating measures incentivising undertakings to achieve a higher level of environmental protection than required by EU standards and facilitatating early adaptation to future EU standards for SMEs. The European Commission also want the reviewed GBER facilitate the granting of environmental aid in the areas of resource efficiency (energy saving and energy efficiency, cogeneration), climate change and energy measures, while a new category is added, support for district heating. New provisions are introduced on aid for the remediation of contaminated sites where the polluter cannot be identified.


In view of the difficulties in determining the extra cost resulting from the investment to improve environmental protection, the systematic identification of an alternative investment won't be required; if an alternative investment cannot be identified, the total costs of "green" investments may be taken into account.

 

Aid for the production of biofuels is proposed to be exempt from the notification requirement only to the extent that the investments are used exclusively for the production of sustainable biofuels.

The aid intensities are left open at this stage of the draft GBER consultation.

 

Draft GBER models to support renewables

 

The draft GBER laid down the general rule that aid for the promotion of energy from renewable energy sources will be compatible with the internal market within the meaning of Article 107(3) of the Treaty and will be exempt from the notification requirement of Article 108(3) of the Treaty, provided the conditions laid down in Article 34 of the draft GBER and in Chapter I of the draft GBER (covering general rules) are fulfilled.

 

Track 2


[The aid shall be granted in a genuinely competitive, technology-neutral bidding process on the basis of clear, transparent and non-discriminatory criteria, effectively ensuring that the aid is limited to the minimum necessary for delivering newly installed renewable energy. Such a bidding process shall comply with the following requirements:
(i) It shall provide for the participation of a sufficient number of undertakings.
(ii) The budget related to the bidding process shall be a binding constraint in the sense that not all bidders can receive aid.
(iii) The aid shall be granted on the basis of the initial bid submitted by the bidder, thus excluding subsequent negotiations.
(iv) The bidding process shall be open to bidders from all EEA countries. Member States shall ensure that a cooperation mechanism is in place with the countries in which bidders may be located. Member States may
require that the bidder ensures that it is able to deliver the electricity to the Member State granting the aid.
(v) A cap may be imposed for each stage of the auction process to ensure that the bidding process is genuinely competitive in each stage. All technologies shall be able to make bids within the established cap and at each stage of the process while ensuring the cheapest technology cannot be overcompensated.
OPTION 1
(vi) The aid shall be granted in the form of a Feed-in Premium.
(vii) The bidders shall be made to bear standard balancing responsibilities and be subject to standard obligations regarding network connection and network connection charges in the Member State where electricity is produced.
(vii)
OPTION 2
(vi) The aid shall be granted in the form of a Feed-in Premium for power generated, and sold on the electricity market.
(vii) The bidders shall be made to bear the responsibility, in financial terms, for all deviations (imbalances) between their scheduled and actual generation within a given imbalance settlement period. Subject to commercial arrangements this responsibility can be outsourced to other balance responsible parties and shall be subject to standard obligations regarding network connection and network connection charges in the Member State where electricity is produced. Renewable producers shall not be exempted from obligations offering balancing services to the Transmission System Operators, where technologically possible.]

 

Draft GBER proposes the two alternative models to support to renewables:

1) an investment model - on the basis of total costs of the "green" investment.

2) an auctioning model - on the basis of technology neutral, open and competitive bidding processes,

 

The particulars are covered by Article 34 of the draft GBER. Under the first model (let's call it "Track 1") the investment aid will be granted to newly installed capacities with a specified maximum capacity (to be laid down at the later stage). The eligible costs will be investment costs necessary to achieve the higher level of environmental protection. The costs not directly linked to the achievement of the higher level of environmental protection will not be eligible.


The draft GBER regulatory regime under Track 1 introduces the rule that if electricity is supplied to the grid, the producers or where relevant aggregator will be subject to standard obligations regarding network connection and network connection charges and be bear responsibility, in financial terms, for all deviations (imbalances) between their scheduled and actual generation within a given imbalance settlement period. Subject to commercial arrangements this responsibility can be outsourced to other balance responsible parties.

It is appropriate to add that standard balancing responsibilities under the draft GBER Regulation mean the balancing responsibilities normally applicable in a Member States to electricity producers, including to conventional electricity producers.

 

The EC proposed regime for the Track 2 are presented in the box. It also refers to the similar rule. If the proposed rules materialise, it will mean for renewable electricity sources the crucial change in the business regulatory environment - at least in some Member States.

 

 

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