Greece’s energy regulator has announced three separate auctions for grid-connected independent energy storage systems. The application process for the first auction, which includes 400 MW of energy storage, is open until July 10.
RAAEY – Greece’s newly established waste, energy and water regulator – has revealed that the country is earmarking 1GW of new energy storage capacity. The program consists of three separate auctions with capacities of 400 MW, 300 MW and 300 MW.
The first and second tenders of the program focus on independent energy storage projects connected to the Greek electricity transmission grid. The bids do not include the island network of Crete, which was connected to the Greek mainland electricity grid in 2021.
The application process for the first tender will end on July 10, and the list of eligible bidders will be published on July 10. August. The date of the auction will be announced later this year. In addition, the application process for the second and third energy storage competition will open by the end of this year.
Greece’s support for the winners of energy storage projects in future tenders is generous.
During the construction phase, all winning projects receive a one-time payment of €200,000/MW, which serves as investment support. According to market sources, this support can cover around 40% of the construction costs of the battery project at current prices.
In addition, the winning projects are awarded Contracts for Difference (CfD), which guarantee a certain income for 10 years. CfD prices are determined by tenders. For the first energy storage auction, the regulator has set the CfD price at €115,000/MW per year.
As a result, the winning projects must participate in energy markets, such as the Greek electricity wholesale and secondary balance services markets. The board annually evaluates the market income of the projects. If the returns are lower than the CfD price, investors will receive an additional payment to cover the difference. On the other hand, if the result exceeds the CfD price, the surplus must be returned to the state.
Energy storage projects participating in the Greek program are not allowed to participate in the energy derivatives market and cannot enter into power purchase agreements (PPAs) with private investors.
In order to participate in the Greek energy storage tenders, projects must have an energy storage permit, a capacity duration of at least 2 hours, an injection capacity of at least 1 MW, and construction work must begin after the end of the tender.
The regulatory authority has implemented rules to ensure competitiveness. The tender’s connection rule is 100%, which means that at least 800 MW of energy storage capacity must compete for the selection for the allocation of 400 MW of capacity. This rule maintains the competitiveness of the auction, according to the controller.
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Each offer must have at least four independent participants with no business relationship. In addition, the participant cannot offer more than 25% of the energy storage capacity offered in the auction. In the Greek energy storage program, the participant is limited to 100 MW in the combined first and second tenders.
The participants in the tender have strict financial requirements, which limits the offers to large players. Qualified participants must provide the regulatory authority with three guarantee letters issued by banks and financial institutions that demonstrate the sustainability of the financing: a participation guarantee letter (€35,000/MW), a guarantee letter for the timely performance of the business (€250,000/MW) and a guarantee letter. for high-quality use (€200,000/MW). In addition, an application fee of 2,500 euros applies per application submitted to the regulator.