Reverse auction FAQ

The guaranteed rate of sales revenue is the guaranteed sales price of electricity presented in the bid, which consists of the hourly day-ahead exchange price of electricity in the Estonian price area for the calendar month and the amount of support. The maximum support rate is 20 €/MWh and the producer’s income, including the support, must not exceed 45 euros in any hour on the day-ahead exchange price of the electricity market in the Estonian price area.

The purpose of the guaranteed selling price is to ensure a stable income for the producer, and it includes both income received from the electricity market and support.

How is the support rate to be paid calculated?

The maximum support for the winner of a reverse auction is 20 euros per megawatt-hour of electricity produced from renewable energy sources. The support is calculated on an hourly basis. Th support amount is determined based on the sum of the maximum support rate and the day-ahead exchange price of the electricity market in the Estonian price area. The maximum for this amount is 45 euros per megawatt-hour, which means that the producer cannot submit a bid higher than this amount. No support is paid for electricity produced during the period of negative exchange price.

For example, if the successful bidder offers a price level, i.e. guaranteed selling price, of 45 euros per megawatt-hour, no support is paid for renewable electricity produced during an hour when the exchange price is 45 euros per megawatt-hour. If the exchange price is 35 euros per megawatt-hour, in this example, the support would be 10 euros per megawatt-hour. If the exchange price of electricity is 25 euros per megawatt-hour or drops to 0, the maximum support rate applies in this example and no support is paid for above 20 euros per megawatt-hour. If the exchange price exceeds 45 euros per megawatt-hour, no support is paid to the producer and the producer receives the exchange price in full, i.e. if the exchange price is higher than the guaranteed selling price, the producer does not have to pay anything to the state.

For example, if the successful bidder offers a price level, i.e. guaranteed selling price, of 42 euros per megawatt-hour, no support is paid for renewable electricity produced during an hour when the exchange price is 42 euros per megawatt-hour or above, and the producer does not have to pay anything to the state for the higher exchange price. If the exchange price is 32 euros per megawatt-hour, in this example, the support would be 10 euros per megawatt-hour. If the exchange price of electricity is 0 to 22 euros per megawatt-hour, the maximum support rate 20 euros per megawatt-hour applies in this example.

For what quantity of electricity is the support paid?

Support is paid to the winner of a reverse auction for the quantity of electricity transmitted to the network of a system operator operating under an authorisation or to the consumer via a direct line. No support is paid for the quantity of energy supplied to a closed distribution system. No support is paid for electricity produced during the period of negative exchange price.

The calculation of the payment of reverse auction support is based on the quantity proposed in the bid for each calendar year. If the winner of a reverse auction produces more than the annual production volume proposed in the bid with the production device(s) proposed in the bid, no support is paid for the quantity exceeding the production volume proposed in the bid.

For example, if the bidder has promised in its bid to produce 10 GWh per year, including at least 50%, i.e. 5 GWh, in the first and fourth quarters, the maximum annual quantity of energy produced in the second and third quarters for which support is paid is 50% of the offered amount, i.e. up to 5 GWh. Therefore, in the same example, the payment of support stops when 50% of the annual bid volume, i.e. 5 GWh, has been produced in the second and third quarters, or when 100% of the annual bid volume, i.e. 10 GWh, has been reached.

For example, if the production volume in the bid is 10 GWh, of which 3 GWh is produced in the first and fourth quarters and 7 GWh in the second and third quarters, support is received for the production in the first and fourth quarters (3 GWh) and partially for the production in the second and third quarters (max. 5 GWh), but the payment of support is suspended next year to eliminate the deficiencies because at least 5 GWh was not produced in the first and fourth quarters.

For example, if the production volume in the bid is 10 GWh and the producer produces 10 GWh in the first quarter, the support for the annual quantity (10 GWh) specified in the bid is paid in the first quarter, and no support is paid in the remaining quarters for the quantity exceeding the volume specified in the bid.

What are the requirements for providing a security deposit with a letter of guarantee?

The guarantee of a credit or financial institution or insurance undertaking presented as a security deposit for a reverse auction pursuant to clause 59⁷ (3) 1) of the Electricity Market Act must meet the terms and conditions specified in section 155 of the Law of Obligations Act and, when describing the content of the debt relationship and claim, be based on the conditions of the reverse auction, including the grounds for making the payment specified in subsection 59⁷ (6) of the Electricity Market Act.

Does this mean that no requirements have been set for the rating and that an Estonian SEB guarantee can be provided as a security deposit?

Yes, to participate in a reverse auction, you can also present a letter of guarantee from Estonian SEB Pank AS. A sample letter of guarantee form approved by the Estonian Banking Association can be downloaded from https://elering.ee/en/bid-form.

Can a guarantee from a parent undertaking, for example, serve as a security deposit?

A guarantee from a parent undertaking is not suitable as a security deposit for a reverse auction A guarantee from a credit or financial institution or an insurance undertaking can be provided as a security deposit, or a cash deposit can be paid to the person carrying out the reverse auction (Elering AS).

If the power-generating facility is not built or is not completed on time for some reason beyond the developer’s control, is it possible to get the cash deposit back or is it the developer’s risk?

In accordance with subsection 59⁷ (5) of the Electricity Market Act, the cash deposit is returned to the winner of a reverse auction (or the issuer of the guarantee is notified of the renouncement of rights held under the guarantee) within five working days following the time starting from which the winner is generating power at the bid annual amount. In the case of clause 59⁷ (6) 1) of the Electricity Market Act, the cash deposit does not pass to the State if during the first 12 months, the winner of the auction generates electricity to the extent of at least 60 per cent or, during the first 24 months, of at least 80 per cent of the bid annual amount. However, if the winner does not generate the bid annual production volume, the administrative order of the Government of the Republic may be revoked with respect to the respective producer and, in this case, the cash deposit shall not be returned to the winner of a reverse auction.

If a reverse auction is won by a bid with multiple production devices and the support cannot be paid for the entire quantity offered in the bid, is it permissible for the bidder (or joint bidders) to exclude some projects (production devices) from the bid and for the bidder to decide which production devices will be used to fulfil the volume of production won? If so, should this be stated when making the bid, or can it be decided after winning?

According to clause 12 (2) 7) of the Government of the Republic Regulation No. 86 “The conditions and rules of a reverse auction for the production of energy from renewable energy sources and in efficient co-generation mode” of 7 November 2019, the bid must state the minimum annual production quantity with which the bidder agrees to participate in determining the results of a reverse auction if it is not possible to pay the support for the entire quantity offered in the bid. If a bidder who has submitted a bid with multiple production devices does not win the entire offered production volume, after ranking the bids (if it is clear in what amount the bidder will receive support), the bidder may decide with which type of production device(s) the winning production volume will be fulfilled, provided that the respective device(s) can produce the volume of electricity won.

If solar and wind energy are offered together and a connection contract has been entered into for solar energy and the same connection is planned to be used to connect a wind farm, how is the amount of the required security deposit calculated?

If the bidder plans to generate part of the offered production volume with a production device using solar energy for the capacity of which the bidder has entered into a connection contract and the other part with a production device using wind energy for the production of which there is no corresponding connection contract, the security deposit should be combined from two parts as follows:

• output of the production device using solar energy for production (MWh) * 12 €/MWh * 0.7, because a connection contract has been entered into for this part for the production of solar energy; and
• output of a production device using wind energy to produce energy (MWh) * 12 €/MWh, because there is no connection contract for wind energy production.

Is the bid for a proposed new production device eligible if it uses the connection point of an existing production device? What is the impact of the connection point and connection contract of an existing production device on the security deposit?

Yes, it is eligible, because it is permitted to participate in a reverse auction with an additional electrical installation planned for an existing production device, provided that the producer ensures separate, proper measurement of electricity produced by the new electrical installation in the future with a remotely readable metering device and transmission of data in accordance with the requirements of the Network Code via the Elering data exchange platform. The connection point and network contract used within the capacity of the existing production device do not affect the security deposit, as only electricity produced by a new additional electrical installation can be offered at a reverse auction.

Is it possible to initially make a transfer to Elering’s account to provide the security deposit and later exchange it for a bank guarantee?

Upon submission of a respective application, it is possible to exchange the security deposit for a bank guarantee.

Can the submitted letter of guarantee be in English?

As in accordance with subsection 10 (1) of the Language Act, business with Elering is conducted in Estonian, a letter of guarantee in English may be submitted, but with a translation into Estonian.

Can the translation of the letter of guarantee into Estonian be submitted as a separate document, i.e. not included in the submitted letter of guarantee, and does the translation have to be done by a sworn translator?

The letter of guarantee must be submitted together with an Estonian translation, which is included in the letter of guarantee, but does not have to be translated by a sworn translator.

If the quantity offered and the minimum quantity in the bid differ and the winner should be the one with the minimum quantity (which has been smaller than the quantity offered), how is the security deposit handled?

If a bidder wins the reverse auction with a reduced quantity determined in accordance with subsections 19 (4) and (5) of the regulation on reverse auction, the security deposit is returned partially, i.e. to the extent of the production not won, pursuant to subsection 59⁷ (4) of the Electricity Market Act. If the security deposit is a cash deposit, the cash deposit is refunded to the corresponding extent. If the security deposit is a guarantee, in accordance with the rules set out in the letter of guarantee, Elering partially waives the rights arising from the letter of guarantee, i.e. in respect of the guarantee of the non-winning production, by submitting a corresponding confirmation to the guarantor. Therefore, the letter of guarantee in its entirety is not returned and a new letter of guarantee is not required.

Can a bidder submit a security deposit to the extent of 70% even if a connection contract has not been entered into with the bidder?

Yes, they can, but if a connection contract has been entered into with a third party, in order to pay a more favourable security deposit, the bidder must also submit a written consent from the third party who is a party to the connection contract to participate in the bid, by which the party to the connection contract confirms that the bidder becomes a party to the respective connection contract in the future or the bidder has the right to use the respective connection point in the future until the end of the support period.

The annual quantity of energy offered in a reverse auction must be at least 10 GWh or a multiple thereof, meaning that an annual quantity of electricity that can be offered is 10 GWh or 20 GWh, etc.

The notice of a reverse auction states that the Ministry of Defence must have issued an approval necessary to build the production device by the time the bid is submitted. Does approval also include, for example, the approval of the Ministry of Defence issued during the design conditions or detailed spatial planning procedure, or must the respective approval be issued for the building permit(s)?

The position of the Ministry of Climate, as the legislator, is that if the legislation requires an approval from the Ministry of Defence, it is sufficient if a preliminary assessment of the Ministry of Defence according to which it is possible to erect wind turbines in the specific area has been issued for the construction of the production device by the time of the submission of the bid. Such a preliminary assessment does not presuppose a final decision and does not mean that approval would be rejected at a later stage, but it provides certainty in the context of a reverse auction process that the Ministry of Defence can potentially erect wind turbines.

When dismantling an old production device and replacing it with a new production device at the same location, support is only available for electricity generated by the new production device if the old production device was older than 25 years.

For example, if a co-generation plant has received support and the plan is to replace it with a solar park, can this solar park participate in a reverse auction?

When dismantling an old production device and replacing it with a new production device at the same location, support is only available for electricity generated by the new production device if the old production device was older than 25 years.

There is no specified capacity limit, but it should be kept in mind that the annual quantity of energy supplied must be at least 10 gigawatt-hours or a multiple thereof.       

How does the difference in the net capacity of the actual production device compared to that indicated in the bid affect the eligibility of the bid?

The bid should carefully state the capacity that is expected to generate the full amount offered. By order of the Government, support is granted for the output to be generated by the production device specified in the bid in the proposed amount. If it becomes necessary to amend the capacity of the production device, the payer of support must be notified thereof. If different stages of the same production device participate in different auxiliary schemes or if an existing production device is being expanded, the producer must ensure that the output of the different stages is measured separately.

The construction of a metering point does not require the construction of an additional connection point. Establishing a connection point is necessary if the current connection does not have sufficient capacity for the energy generated by the new installation to reach the network, but a metering point can also be established without a new connection point.

If a producer participates in a reverse auction with planned additional capacity for an existing production device (based on subsection 108 (5) or (7) of the Electricity Market Act), pursuant to the requirement of subsection 58 (2) of the Electricity Market Act, it is necessary to ensure proper measurement of subsidised electricity with a remote reading device. As the system operator is not obligated to organise measurement in this case, the producer must ensure the availability of a proper measuring instrument that allows for remote reading, proper measurement, and the transmission of metering data to Elering’s data warehouse.

Elering allows the producer to enter into a contract for the use of data warehouse (https://elering.ee/en/electricity-data-exchange), which is normally intended for transmitting metering data to system operators and line possessor, but to ensure compliance with legal requirements, it also allows the producer itself to transmit remotely readable metering data to the data warehouse on a daily basis.

If a bidder participates in a reverse auction with added capacity, how is the production data of the existing production device and the added capacity measured?

According to the notice of a reverse auction, if the capacity in question is additional generating capacity planned for an existing production device, the producer must ensure separate and proper measurement of electricity generated by the new capacity with a remotely readable measuring instrument and transmission of data to Elering AS.

In other words, you must establish a separate metering point for the added capacity with a remotely readable metering device, enter into a contract for the use of Data Warehouse, and ensure daily transmission of metering data to the Data Warehouse, after which Elering itself will distinguish between the metering data of the existing production device and the added capacity.

More information about the contract for the use of Data Warehouse and the instructions for using and connecting to Data Warehouse can be found here https://elering.ee/en/electricity-data-exchange.

...does this production device meet the conditions for participating in a reverse auction and is the calculation of the quantity of electricity at the direct line metering point accepted?

The production device must be directly or indirectly connected to a connection point that is part of the production device and for which the system operator certifies the compliance of the production device. Support can be paid for the quantity of electricity that is supplied to the network of a system operator operating under an authorisation or to a consumer through a direct line in accordance with the Electricity Market Act.

The producer can also start operating as a line possessor and transmit the generated electricity to the consumer through a direct line. If electricity is transmitted via a direct line, only the electricity transmitted to the consumer is eligible for support.

Does Elering provide for network tests based on a production device (at direct line metering points) or based on the consumer’s grid connection point?

Network tests (compliance checks) are organised by the system operator to which the production device is connected.  Since there can only be one production device behind one connection point, the tests are carried out based on the connection point.

Can a separate renewable energy bid be made for both production devices (which have one common connection point) or must one bid be made for both production devices, based on the total nominal capacities (2*250 kW = 500 kW) based on the consumer’s grid connection point?

As it is a single production device, only one bid can be made.

According to current Electricity Market Act, it is possible to receive renewable energy support for electricity consumed through a direct line. Is it also possible to receive support as a winner of a reverse auction and what does this look like legally?

Support is also paid for electricity transmitted via a direct line, and more information about applying for support with a direct line can be found here https://elering.ee/en/renewable-electricity-support.

Yes, the annual quantity of energy offered must be at least 10 gigawatt-hours or a multiple thereof.

A bidder may submit a bid for the production of energy from renewable energy sources with one or more production devices. If a single bid is submitted for production with multiple production devices, all conditions for a reverse auction must be met for all production devices presented in the bid.

According to subsection 59⁴ (6) of the Electricity Market Act, participation in a reverse auction is open to legal persons from countries of the European Economic Area, provided the law of the country of domicile of the legal person permits Estonian legal persons to participate in a similar reverse auction in that country. Electricity production and a production device must be located in Estonia.

The bidder may withdraw their bid before the deadline for submitting bids has expired by submitting a notice to that effect to the entity carrying out the reverse auction in the same form as the bid. In this case, the security deposit is returned.

If there are two different technologies behind one connection point, then two different bid forms must be submitted for the same production device. The capacities and the quantity of energy produced by each technology must be shown.

According to the notice of a reverse auction and section 11 of Government of the Republic Regulation No. 86 of 7 November 2019, the owner of the production device or the person authorised to use it at the time of commencement of production must be the person who submitted the bid, i.e. the owner should not change before the commencement of production.

We further note that if the winner of a reverse auction transfers the production device used in the reverse auction before it generates energy in the annual volume specified in the Government of the Republic order approving the results of the reverse auction, there is no basis for returning the security deposit (subsection 59⁷ (5) of the Electricity Market Act) and the security deposit passes to the State on the basis of clause 59⁷ (6) 1) of the Electricity Market Act.

Before commencement of production, the bidder declared the winner of the reverse auction must submit to the organiser of the reverse auction, by the 20th date of each quarter, an overview of the status of the construction of the production device declared successful in the reverse auction and the expected date of commencement of production.

Pursuant to subsection 59⁴ (12) of the Electricity Market Act, the Government of the Republic may revoke the administrative order of the Government of the Republic if the winner of a reverse auction does not comply with the conditions prescribed in the auction. The order may also be revoked if, at the latest 18 months after the issuing of the order, the winner has not obtained a building permit for the generating installation and has not concluded a connection contract for connecting the installation to the network.

The 18-month deadline has been established to ensure the timely commencement of production of new generating capacities. The wording of subsection 59⁴ (12) of the Electricity Market Act gives the Government of the Republic discretion in revoking an administrative order. Therefore, if the winner of a reverse auction can demonstrate good progress, proving that the work is on schedule and that it can commence production on time, there is no need to revoke the administrative order in respect of the respective winner, even if the construction permit and connection contract have not been reached within the prescribed 18 months.

What happens if the production device is built partially outside the registered immovables listed in the bid?

According to subsection 12 (5) of the regulation on reverse auction, in the case of a new production device, the bidder shall report the address and nominal capacity of the production device to be built and, if available, the EIC codes of the production device and the metering point. In other words, when making a bid, it must be clear where the production device is to be built. The Government of the Republic has the right to declare the results of the reverse auction invalid with respect to the respective bidder if the winner of a reverse auction does not meet the conditions prescribed in the reverse auction.

What happens if the production device is not built on all the registered immovables listed in the bid? Is it permissible to include registered immovables from another project, e.g. those located in another local government, as a backup option in the bid?

According to subsection 12 (5) of the regulation on reverse auction, in the case of a new production device, the bidder shall report the address and nominal capacity of the production device to be built and, if available, the EIC codes of the production device and the metering point. In other words, when making a bid, it must be clear where the production device is to be built. The Government of the Republic has the right to declare the results of the reverse auction invalid with respect to the respective bidder if the winner of a reverse auction does not meet the conditions prescribed in the reverse auction.

If the bid indicates more than one registered immovable as the location of the production device (potential registered immovables where the production device is to be built/expanded if possible), it must be taken into account that the same registered immovables cannot be used in different bids, and all the locations indicated in the bid must meet the conditions of the reverse auction, including that work related to the relevant project or activity must not have commenced there before the winner of the reverse auction is determined. If the winner of a reverse auction meets the conditions prescribed in the decision of the Government of the Republic, i.e. generates the prescribed quantity of energy at the location listed in the same order, it is not important whether or not a production device is built on any of the registered immovables specified in the bid.

We would like to clarify that if we add a registered immovable to the bid this year, but for some reason cannot reach an agreement with the landowner, can another developer who can reach an agreement with the landowner also add this registered immovable to their bid in the next reverse auction?

It is possible to submit registered immovables included in the current bid for the next reverse auction, provided that it is proven that the production device is new, or a new electrical installation is built to an existing production device, and the offered production device meets the conditions of the new reverse auction announced.

Do registered immovables have to be under the same legal entity?

No, they do not.

The bidder declared the winner of a reverse auction is obligated to commence production with the production device presented in the bid by the start date of production specified in the notice of the reverse auction. What is considered the start date of production?

According to subsection 25 (2) of the regulation on reverse auction (The conditions and rules of a reverse auction for the production of energy from renewable energy sources and in efficient co-generation mode), the start of production is deemed to be the start of production for the purposes of subsection 108 (3) of the Electricity Market Act. In other words, the start of production is considered to be the date on which a compliant production device first supplies electricity to the network or direct line.

What happens if the start date of production is exceeded, and under what conditions is an additional deadline for the start of production granted? Will the deadline be extended even if the production device has not yet entered into a network contract or if the connection point is not yet ready and it is not possible to commence with energisation?

Clause 59⁸ (4) 4) of the Electricity Market Act and subsection 28 (1) of the regulation on reverse auction provide for the same principle: if the winner of a reverse auction has not commenced with production by the specified deadline, the winner may be given a six-month period to eliminate the deficiencies, i.e. to commence with production, provided that the production device is ready by the deadline for the start of production specified in the notice. For the purposes of both provisions, the readiness of the production device means that the production device is only lacking a grid connection and in other respects, the production device is fully complete. Both examples allow for an additional deadline if there is no network contract or if the connection point has not been completed.

According to subsection 28 (1) of the regulation on reverse auction, if a non-conformity of the bidder or production device becomes apparent with regard to the successful bidder after the receipt of the administrative order specified in subsection 23 (1) or (2) or the bidder does not meet the production volume provided for in the administrative order specified in section 23, the entity carrying out the reverse auction shall give the bidder a six-month period to eliminate the non-conformity, unless the non-conformity cannot be eliminated. The entity carrying out the reverse auction shall grant the bidder the additional deadline specified in the first sentence to eliminate the non-conformity only if the production device is ready by the start date of production specified in the notice but is not connected to the network. If the non-conformity specified in subsection 28 (1) of the regulation on reverse auction cannot be eliminated or if the non-conformity is not eliminated within the deadline set by the entity carrying out the reverse auction, the Government of the Republic has the right to revoke the administrative order specified in subsection 23 (1) or (2) with respect to the respective bidder.

How exactly is support calculated – is the offered quantity calculated from 1 January of each year and is the support valid until the offered quantity is met? For example, if we offer 10 GWh and the production device generates this amount in the first four months of the year, do we understand it correctly that we will not receive any more support for the rest of the year? Does the amount generated during negative electricity prices also count towards this amount or not?

The quantity of electricity offered is for one calendar year; if the quantity of electricity offered is generated in the first four months of a year, no support is paid for a larger quantity of electricity in the respective year.  Please note that the winner of a reverse auction is obligated to generate at least 50% of the annual amount of electricity offered in the first and fourth quarters of the year. According to clause 59¹ (2) 4) of the Electricity Market Act, no support is paid during hours with a negative exchange price, but the quantity of electricity generated during that time is included in the total quantity of electricity generated.

How is the required 50% distributed between the first and fourth quarters? Is it okay if all 50% are in either the first or fourth quarter? If production starts after the second month, how is the required 50% of production distributed proportionally between the first and fourth quarters?

The notice of a reverse auction provides that the winner of a reverse auction is obligated to generate at least 50% of the annual amount of electricity offered in the first and fourth quarters of the year. So, yes, all 50% can be produced only in the first quarter, or only in the fourth quarter, because the notice of a reverse auction does not specify how the respective quantity should be divided between the first and fourth quarters.

According to subsection 26 (2) of the regulation on reverse auction, if production commences after the second month of the calendar year, the producer is obligated to produce the respective proportion of the annual amount of energy specified in the bid in the first calendar year of the start of production. The principle of the obligation to produce a proportion arising from subsection 26 (2) of the regulation on reverse auction also applies to the quantity of energy for the first and fourth quarters indicated in the bid.

For example, if a bidder who offers 10 GWh commences production on 15 March 2024:

• the proportional production obligation for the respective year is 7.98 GWh (i.e. 292/366 = 79.8% of the total offered annual amount of electricity of 10 GWh);
• the proportional production obligation for the first and fourth quarters is at least 2.98 GWh (i.e. 109/183 = 59.6% of the offered quantity of electricity for the first and fourth quarters of 5 GWh).

What happens if, in any year during the 12-year period, the winner of a reverse auction fails to fulfil the obligation to produce the annual amount of electricity or at least 50% of the annual amount of electricity in the first and fourth quarters of the year?

If, in any calendar year during the 12-year period, the winner of a reverse auction does not meet the total volume or the 50% requirement for the first and fourth quarters, the payment of support is suspended until the deficiencies are eliminated. The opportunity is also given to eliminate deficiencies in accordance with the principles set out in Chapter 7 of the regulation on reverse auction. According to the first sentence of subsection 28 (1) of the regulation on reverse auction, if the winner of a reverse auction fails to meet the production volume (including the quarterly production volume), a six-month period is given to eliminate the non-conformity. In the case of a six-month deadline, the fulfilment of the production obligation is assessed proportionally – i.e. if the winner of a reverse auction fails to meet the required production volume for a calendar year or the first and fourth quarters in one calendar year, in order to eliminate the deficiencies, at least 50% of the offered production for a calendar year (e.g. 5 GWh in the case of a 10 GWh bid) should be produced in the first six months of the next calendar year as well as at least 50% of the required volume for the first and fourth quarters (in the same example, 50% of 5 GWh, i.e. 2.5 GWh). If the winner of a reverse auction does not eliminate the deficiencies within the prescribed deadline, the Government of the Republic has the right to declare the results of the reverse auction invalid with respect to the respective bidder.

How is it calculated whether the winner of a reverse auction fulfils the obligation to produce at least 50% of the offered annual amount of electricity in the first and fourth quarters of the year; when is the fulfilment of the obligation assessed?

Both the notice of a reverse auction and clause 23 (3) 4) and Chapter 7 of the regulation set out that the objective is based on the amount of energy produced in a calendar year. This means that the calculation is based on the annual production volume presented in the bid. For example, if a producer has promised to produce 10 GWh per year in their bid, the maximum amount of energy produced in the second and third quarters for which they will receive support is up to 5 GWh. The producer must also ensure that at least 5 GWh is produced in the first and fourth quarters. The fulfilment of the production obligation, including the production obligation for the first and fourth quarters, is assessed at the end of the calendar year.

Section 28 of the regulation on reverse auction allows the bidder to be granted a six-month deadline to eliminate the non-conformity in the event of a failure to fulfil the production obligation. If a producer fails to meet the obligation to produce at least 50% of the proposed annual amount of electricity in the first and fourth quarters and the producer is given a six-month deadline to eliminate the non-conformity, how is it possible to fulfil the total electricity production obligation for the first and fourth quarters of the following calendar year within the six-month deadline?

In this case, it is planned to amend the regulation on reverse auction in such a way that it will be possible to give a deadline until the end of the calendar year to eliminate the deficiency in the event of failure to fulfil the production obligation, including 50% of the production obligation for the first and fourth quarters.

Until such time that the regulation is amended, a six-month deadline is given to eliminate the non-conformity and the fulfilment of the production obligation is assessed proportionally – i.e. if the winner of a reverse auction fails to meet the required production volume for a calendar year or the first and fourth quarters in one calendar year, in order to eliminate the deficiencies, at least 50% of the offered production for a calendar year (e.g. 5 GWh in the case of a 10 GWh bid) should be produced in the first six months of the next calendar year as well as at least 50% of the required volume for the first and fourth quarters (in the same example, 50% of 5 GWh, i.e. 2.5 GWh).

Can the payment of support be suspended for the second and third quarters based on subsection 28 (3) of the regulation on reverse auction if 50% of the offered annual amount of electricity has not been produced by the end of the first quarter of the current year?

Payment of support in the second and third quarters is not suspended if 50% of output was not produced in the first quarter, as the 50% obligation can be fulfilled in both the first and fourth quarters and the calculation is based on the calendar year.

Sent letters receive an automatic notification of the receipt of the bid. Only members of the committee formed separately for the respective auction at Elering AS have access to the submitted bids and the e-mail address for submitting bids, and only they will later engage in activities related to the evaluation of bids. It is not possible to monitor the opening of bids, but the committee will prepare a report of all submitted bids, which will be published on the website of the entity carrying out the reverse auction within five working days following the preparation thereof.