Croatia: first market premium auction — biogas won 8.7 MW at HRK 1476.66 per MWh

The Croatian energy market operator HROTE announced on 22 July 2022 the results of the first premium auction for renewable sources (one auction with separate pools for wind, solar, geothermal, small hydropower and biogas). In the biogas category all seven bids submitted were successful, and a total of 8.7 MW was awarded from a pool of 16.7 MW. The average winning reference price was HRK 1476.66 per MWh, slightly below the cap of HRK 1482.23/MWh.

Results for biogas

The euro conversions come from the Balkan Green Energy News report and correspond to the July 2022 market exchange rate (about HRK 7.51/EUR; the fixed rate of 7.5345 applies from 2023). The premium is the difference between this reference price and the market price. The average winning bid was 99.6% of the cap, which means that participants practically did not lower the price: there was no price competition, because the capacity awarded did not exceed the pool. About 52% of the quota earmarked for biogas was used.

Who won

The list of winners shows that small producers linked to agriculture and food processing dominated this category: Dominik B, Novčić više (two installations), Širjan, Stočar, Mesna industrija Natura and Veterinarska ambulanta Martes. Biogas installations at farms and meat processing plants use waste and by-products, and selling electricity with a premium improves their economics.

How the premium works

According to the European Commission, the Croatian premium is awarded exclusively in auctions that HROTE organises at least once a year. It is a one-sided sliding premium (similar to a contract for difference): it is a top-up to the current market price of energy, with a floor price but no cap. Contracts last 12 years. A bid may not exceed the maximum reference value set in the auction for the given group of installations.

Significance of the result

The auction of July 2022 was the first in which Croatian biogas generators could apply for a 12-year premium. The awarding of all seven bids shows that in this category interest did not exceed the pool, and the unused 8 MW of the 16.7 MW remained undistributed. For small installations at farms and meat processing plants this means predictable revenue for twelve years, fixed in the bid and not subject to price variation.

Conversion

The cap of HRK 1482.23/MWh is about EUR 197 per MWh, i.e. about PLN 925/MWh at an exchange rate of about PLN 4.70 per euro (indicative, July 2022). This is the reference price of the bid; the premium is the difference between it and the market price.