Decree No. 449 on the Mechanism for the Promotion of Renewable Energy on the Wholesale Electricity and Market

The Decree No. 449 established mechanism supports renewable electricity deployment through capacity markets. Selected renewable power projects receive capacity payments for a period of 15 years for maintaining readiness to generate electricity on demand. In the case when power plants will not be able to meet previously agreed availability requirements, their capacity remuneration levels will be reduced accordingly.

Auctions are being held on an annual basis to award these capacity remuneration contracts. For now, only wind, solar PV and small hydropower plants are eligible to participate and biomass is excluded from the support.

In order to be eligible to participate in the auctions, proposed projects must be equal to or exceed 5 MW; hydropower plants cannot be larger than 25 MW.

Contracts are awarded to projects with the lowest capital costs. Eligible proposals also have to comply with high local content requirements:

Projects selected through the auction system are to sign “Agreements for the Supply of Capacity” where the price level of RES capacity and the duration of capacity supply are specified. As mentioned above, the price for the RES capacity can be lowered in cases when the plant is unable to provide agreed power capacity. 

The Decree No. 449 and the Art. 32 of the Federal Electricity Law guarantee priority purchase for the renewable power.

In order to control the increase of newly added renewable generation capacities, and thus the mechanism’s impact on electricity prices and the costs of the mechanism, the Resolution No. 861 of May 2013 has been adopted. The Resolution established yearly limits for new renewable generation capacity up to 2020 (expressed in MW):