Legal guarantees for producers of energy from renewable energy sources in Belarus
Introduction
Nowadays a development of renewable energy sources (solar, wind, geothermal, natural water flows, fuel wood and other biomass, biogas and other energy sources that do not belong to the non-renewable) is stimulated in Belarus.
Particularly the Law of the Republic of Belarus as of 27.12.2010 № 204-W "On Renewable Energy Sources" guarantees investors the following:
- state power supply company will purchase all proposed energy produced from renewable energy sources;
- energy will be paid at special rates, which can be both below and above a market price (tariff) for energy for end users in Belarus.
Economic efficiency
The rate at which the state buys energy from producers through the power supplying company is defined by the following formula:
The rate = Tariff for end users X Multiplier.
Multiplier depends on:
- conditions of building energy-generating plant «within the quota» or «outside the quota»;
- a type of renewable energy;
- energy-generating plant capacity.
A criterion “building energy-generating plants «within the quota» or «outside the quota»” is considered to be a key factor in rate determination.
A definition of “a quota” for construction of energy-generating plants from renewable energy sources was introduced in 2015 with the adoption of the Edict of the President of the Republic of Belarus as of 18.05.2015 № 209 "On the Use of Renewable Energy" (hereinafter "Edict № 209").
After the adoption of Edict № 209 the government annually (on the period of three years) sets the amount of a total capacity of energy-generating plants that are planned to be constructed (“within a quota”). For energy produced by such energy-generating plants the state guarantees investor to buy the power at the higher rate.
The state is still ready to buy power energy from facilities constructed “outside the quota”, but for lower rates.
Quotas are distributed among investors on a competitive basis taking into account various factors: the effectiveness of the equipment, its capacity, etc. It should be noted that the rates’ ranges are not too significant: e.g. 113.22 MW in 2019 (distributed in 2016).
The necessity to introduce quotas was provoked by the fact that during the years 2012-2015 the sphere of alternative energy in Belarus has attracted a significant number of foreign investors. With the arrival of investors and construction of new energy-generating plants, the state started purchasing considerable volume of energy at the rate well above the market price for consumers. As a result the expenses of the state on renewable energy purchase have considerably increased.
It is necessary to consider that rates for green energy in Belarus today are among the most attractive in Europe, even taking into account their decline in the years 2015-2016:
| Type of energy |
Tariff for end users (Euro*) |
Multiplier (for power from 300 kW to 2 MW) | The rate (Euro) |
|---|---|---|---|
| Solar energy | 0,11 | 1,70 | 0,19 |
| Hydroelectric power | 0,11 | 1,25 | 0,14 |
| Biogas energy | 0,11 | 1,15 | 0,13 |
|
Any in the construction of plants «outside the quota» |
0,11 | 0,70 | 0,08 |
* According to the exchange rate of the National Bank of the Republic of Belarus as for November 1, 2016.
NB: there a lot of projects in Belarus that started before setting quotas and which have received benefits in the higher multiplier (on the average 2,7) fixed for 10 years.
Conclusion
Despite the introduction of quotas, the market of renewable energy sources in Belarus is still interesting for investors.
The most significant risk for investors is that the rate can change. In spite of the fact the multiplayer is considered to be unchanged for 10 years, still a tariff for end users may be reduced (e.g. because of taking into exploitation the Belarusian nuclear power plant), which, at the end of the day, influences a rate size for the investor.
