Lithuanian government criticised over offshore wind auction proposals

4C Offshore | Tom Russell
By: 16/11/2021 WindEurope
Trade organisation WindEurope has criticised the Lithuanian government's proposed new auction rules for the development of offshore wind. According to WindEurope, the new rules will jeopardise the delivery of projects at the lowest cost for society.

The Committees of Economic Affairs and Environment in the Lithuanian Parliament have recommended changes to the auction design which would support only part of the electricity produced by the winning bidders, instead of to the whole output of the wind farms concerned.

If finally adopted into law, the changes would result in project developers having to compete in the auction not only on the lowest price, but also on the lowest volume of electricity to be supported. WindEurope stated that this would bring additional risk to the project developers, which it believes would result in higher bidding prices in the auctions. It would mean that much of the output of the winning wind farm(s) would not be covered by a Contract for Difference (CfD), which would increase the financing costs for the rest of the wind farm and result in higher total lifetimes costs.

The Energy Minister’s original proposals to the parliament had a favourable assessment of the two-sided CfD model as the mechanism the be awarded in the auction. WindEurope outlined that the 2-sided CfD as originally proposed is the best form of revenue stabilisation mechanism to minimise the total societal costs of offshore wind.

WindEurope urges Lithuania to remove the changes to the auction rules and maintain the Ministry’s proposals of auctioning a double-sided CfD based solely on a strike price.