Renewable Energy Sector in Belarus: Will the state keep purchasing power from renewable energy sources at increased rates?

14.02.2017

Recently a Ministry of Energy official announced, in the course of a discussion held at the lower chamber of the Belarus’s parliament, that in the nearest future SPA Belenergo (state-run energy monopolist in Belarus) would not be able to purchase energy produced from the renewable energy sources (RES)  at the increased rates. Taking into account all RES-based capacities to be launched by 2020 in accordance with existing investment projects and allocated quotas, Belenergo’s costs associated with purchase of power produced by such capacities would be too high. In this connection Ministry of Energy insists on keeping the overall RES power capacities at the level 563 mW, out of which 158 mW should be launched within quotas, including previously distributed, and 405 mW – under existing investment agreements.

Overview of legal regime for RES projects in Belarus

In 2015-2016, Belarus government has become more selective in supporting RES projects.

The legal framework for RES projects is based on the following cornerstones:

 - The government has undertaken to buy 100 % renewable energy from its suppliers at increased rates.

 - Ministry of Economy adopts  increase coefficients that apply to the standard electricity rates. The coefficients differ based on types of RES (hydro, wind, sun, etc), periods of exploitation of stations (first 10 years are the most beneficial), stations’ capacity.

 - As a general rule, the supplier of renewable energy may apply the increase coefficients once its project was accepted by authorities. These authorities on annual basis establish the aggregate quotas (in mW) for 3 subsequent years for various types of RES projects in Belarus and then via contest select the projects that may be implemented within the provided quotas.

The general trend of 2015-2016 was decrease of overall quota amount and coefficients for certain types of RES (sun, wind). On the opposite, the coefficients for hydro energy projects increased in 2016 vs 2015.

Without quotas any new RES plants and capacities may be launched in Belarus  either for own use (without application of increased tariff rates) or under investment contracts, if such contracts were signed and registered before May 2015.

What comes next?

Existing legal regime for RES projects in Belarus is often criticized by investors, by Ministry of Nature and Environment Protection, environmental organizations, which consider the legal framework to be not enough supportive for development of the sector.   The discussion on the future of renewable energy sector is ongoing.

Although the above referred statements of the Ministry of Energy do not directly affect status-quo of existing projects in renewable energy sector, they may evidence that existing regime for RES projects in Belarus is not supported by the country’s economic capacity. In the near future, we might see either revision of the increased coefficients, or new RES projects being barred by limited quotas. If increase coefficients are revised, effect on implemented projects should be assessed on a case by case basis.

 Author: Tatsiana Shyshkarova, head of Energy & Utilities Sector Group in Belarus

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