Renewable electricity generation in Finland will be opened up to competition in autumn 2018.
The Finnish Energy Authority will launch a call for tenders in November/December that will determine which renewable electricity investments will be approved for the new premium scheme.
Tenders will be invited for an annual renewable energy production of 1.4 TWh. Tenders may be submitted by electricity producers whose wind, solar, biomass, biogas or wave power investment projects are far along in the development process.
The Government issued today a decree on the entry into force of the Act on Production Subsidy for Electricity Produced from Renewable Energy Sources. The Act will enter into force on 25 June 2018.
“We will have probably the world’s most technology-neutral call for tenders, which will grant production subsidies only to the most cost-effective and competitive investments. The idea is to see how the different forms of renewable energy production actually manage in real life when they are on an equal footing with other production forms,” Minister of the Environment, Energy and Housing Kimmo Tiilikainen says.
“The scheme will be a transition period solution. We need it to ensure that we reach Finland’s and the EU’s energy and climate goals by 2030. From the taxpayers’ viewpoint, it is a significantly more affordable way to support renewable electricity generation than the current feed-in-tariff system, which it will replace,” Minister Tiilikainen says.
A condition for the competitive tendering is that Parliament approve the budget authority for government subsidy for an annual production up to 1.4 TWh proposed in the first supplementary budget for 2018, currently being discussed in Parliament. The subsidy would be paid for 12 years. It is estimated that the first instalment of the subsidy would be paid in 2020.
The new act will amend the Act on Production Subsidy for Electricity Produced from Renewable Energy Sources. It will lay down provisions on a tendering-based premium scheme, which will promote, in a technology-neural way, power plant investments that use renewable energy sources. The feed-in tariff system will be closed down for new biogas and wood fuel power plants.
An electricity producer, whose power plant is approved for the premium scheme, will be paid a subsidy determined by the premium indicated in its tender. A rise in the market price of electricity will reduce the premium-based subsidy. The producer will be obliged to produce electricity in accordance with the accepted tender. Failure to meet this obligation would lead to a liability to pay compensation to the state for underproduction. The rights and obligations under the premium scheme will be valid for a fixed term.
The Energy Authority will publish more information on the practical implementation and timetables for the call for tenders on its website in July 2018.