To stimulate the renewable energy sources developments feed-in tariffs are provided for electric power produced by legal entities and individual entrepreneurs not integrated into the “BelEnergo” State Production Association and supplied by energy utilities integrated into this Association. In its next relevant resolution (No.29 of Apr 2, 2014), the Ministry of Economy revised the set tariffs, and will be further adjusting them to current situation in energy. The feed-in tariff is provided if there are no state subsidi
The tariffs for electricity produced from RES are set based on electric energy tariffs for industrial and equivalent consumers with the connected capacity of up to 750 kVA that are indexed to the USD exchange rate, using multiplying factors differentiated depending on the type of a renewable energy source:
The feed-in tariff model attempts to reflect similar system practiced in many EU countries, e.g., in Germany. Under Belarusian circumstances such feed-in tariff model is unlikely viable because it exposes projects to both commodity price risk and currency risk. The weakest principle put as a basis for tariff determination is its direct link to the one-part tariff rate, which is in turn directly bound to the price of imported fuel (i.e., the natural gas). It is also important that the SPA BelEnergo shall pay to independent RES energy producer in Belarusian roubles, and this poses a threat of another risk associated with volatility of local currency and unstable regulations in the local exchange market. Although the tariff paid in roubles shall, according to the said provisions, be a pro rata function to the currency exchange rate, in case of Belarus there is always a risk associated with either time gaps between stock exchange sessions and decision of the commodity market regulator or introduction of multiple exchange rates by the National Bank. As a result, tariffs expressed in hard currency have quite large variations (±15%).
The project owner also has the right to negotiate a tariff other than stipulated by the said model. This option can be chosen and fixed in the Investment Agreement with the Government. Such option of case-by-case ad-hoc agreements is considered as a good alternative to the established feed-in tariff model. These agreements can provide an investor with a more tailored approach until there is further enabling legislation. The current RES Law also allows for the continued use of investment agreements. The disadvantage is that in the situation of accelerated number of such agreements the procedure becomes more time consuming and less transparent, increasing thereby risks.
There is another risk laid in the currently exercised model. As it is said above the feed-in tariff is directly pinned with the one-part tariff for industries. The latter is significantly distorted by cross-subsidy approach. There is the risk that the feed-in tariff may decrease in the course of the elimination of current cross-subsidization arrangements. The Government is planning to eliminate these rates in the near future. If the cross-subsidy is eliminated, the feed-in tariff will lose up to 12% of its value.
Direct mechanisms supporting the RES developments are established in the № 204-Z “On Renewable Energy Sources”, adopted Dec 27, 2010 (hereinafter is referred as the RES Law). and stipulated by the Law of the Republic of Belarus “On Energy Conservation”, where some of the provisions envisage that users and producers of fuel and energy resources while conducting energy conservation activities may be provided with state support. The main support is:
- A system of certification for the origin of energy produced from RES
- Protection of RES developers and RES energy producers against unfair competition
- Producers from RES are guaranteed to access the power grid at the nearest possible connection point. The SPA BelEnergo must provide this connection pay for all costs to enable the connection.
- Guaranteed off-take for 20-years from SPA BelEnergo for RES projects that produce a Certificate of Origin.
- The RES Law guarantees that the SPA BelEnergo must purchase the renewable energy. The SPA BelEnergo shall pay, in Belarusian roubles, to independent energy producers for the electricity produced from RES, and for the first ten years the rate shall be set using the one-part energy tariff established for industries multiplied by a multiplying factor, which depends on a RES category. After ten years the rate shall be set lower but still using a stimulating ratio. This is designed as a floating rate.
- The Ministry of Natural Resources and Environmental Protection identified all potential renewable energy sites in Belarus and provides a cadastre with this information. Any energy producer can also provide their own independent identification of sites for the possible location of plants for the use of RES.
- Land tax exemption is guaranteed for the land occupied by RES installations and facilities, as well as for the land occupied during their construction. For RES the reduced environmental tax rate is applied (from 20% to 50% of the established base rate).The VAT for importable goods is exempted for equipment and spare parts acquired or purchased for RES installations and facilities.
The total annual budget of public funds in programmes supporting RES development exceeds 1,2 billion dollars (30-40% of total investments). Additional financing constitutes commercial credits, loans and other borrowings (ca. 20%) and equity capital (40-50%). The system of state financial support in the country is regulated by the government’s Law on Budget and Resolutions on the implementation of the Law on Budget for corresponding years. State investments in RES technologies is important when the energy sector experiences an evolution from low-cost organizational and economic measures to more expensive ones with longer payback periods. In addition to the said direct subsidies to support extended introduction of RES technologies, the state use other economic instruments, fiscal/financial incentives, tax relief and special feed-in tariffs.
Last update: 09 2019