News

February 2015

Open Area Tender Act - Renaissance for solar parks?

The Open Area Tender Act became effective on 12 February 2015. Open area power plants will now only receive EEG funding, if the operator successfully participate in tendering procedures and is granted a funding permission by the Federal Network Agency.

In this Newsletter, we want to inform you about the main components of the Open Area Tender Act and highlight its ten essential elements. Please don´t hesitate to contact us is you have any further questions:

  1. First tender deadline is 15 April 2015. The Federal Network Agency will announce tendering procedures six to nine weeks before a tender deadline. On 15 April 2015, 150 MW will be put out for tender. Further deadlines this year are 1 August (150 MW) and 1 December (200 MW).
  2. Eligible are natural persons, partnerships and legal entities. The offer must include a capacity of at least 100 kW and not exceeding 10 MW and indicate a concrete location.
  3. The participants are placing a confidential bid as to the applicable value of the market premium. Only the price is decisive for the bid´s acceptance. To preclude strategic bids and over funding, a maximum price is set matching the value of roof systems with a maximum capacity of 1 MW at the time of the tender deadline.
  4. The area settings remain unaltered. Photovoltaic systems can be installed in sealed areas, conversion areas and a hard shoulder of 110 m alongside the autobahn and rail lines, as long as the systems are installed within an area with an approved development plan. Starting 2016, even photovoltaic systems owned by the federal government or owned and administered by the Federal Authority for Real Property Administration (Bundesanstalt für Immobilienaufgaben BimA) at the time of the resolution regarding the enactment of a development plan are eligible for grants. Additionally, ten systems on arable land will be funded in each 2016 and 2017, provided that they are located in a “disadvantaged area” according to EU-Agricultural Legislation.
  5. With the bid, a security payment of EUR 4 per kilowattt (10 MW = EUR 40,000) must be deposited to display the seriousness of the tender and to collateralise possible penalty payments to the transmission systems operator. The security payment halves, when a resolution on the disclosure or the development plan has already been adopted.
  6. The acceptance of a bid is subject to the condition subsequent, that a second security payment of EUR 50 per kilowatt (10 MW = EUR 500.000) is deposited with the Federal Network Agency within 10 business days. The second security payment also halves with an advance in the planning process. To ensure the realisation of the project and to collateralise possible penalty payments, the acceptance of the bid fully terminates if the second security payment is not deposited with the Federal Network Agency timely and in the proper form. The 10 business days constitute a limitation period so that a restitution in integrum is debarred.
  7. The level of funding is based on the tender made („pay as bid”). With the tendering process in August and December 2015, a uniform pricing procedure will be trialed, ensuring that all successful bidders receive the same acceptance amount matching the highest successful bid.
  8. If the bidder cannot keep to the location indicated in the tender, it is permissible to install the system in another area. In this case, the applied value will be reduced by 0.3 cents per kilowatt. A reduction of 0.3 cents per kilowatt is also designated, if the system is not taken into operation within 18 months after the public announcement of the accepted bid.
  9. The EEG-funding requires a funding permission by the Federal Network Agency that can be applied for after the bid was accepted and the system was taken into operation. The applicant must be identical with the bidder and the facility operator. Consequently, a system can only be disposed of after commissioning. The trading with the acceptance of bids is prohibited according to Art. 17 of the Open Area Tender Act. After the funding was granted, it is subject to the provisions of the EEG.
  10. The Act provides penalty regulations to ensure the realisation of the funded solar power plants. According to Art. 30 of the Open Area Tender Act, the successful bidder must effect penalty payments to the transmission systems operator if:
  • the bidder does not deposit the second security payment within 10 business days
  • the bidder rejects the acceptance of his bid
  • the bidder has not put into effect an amount exceeding 5 % regardung an accepted bid
  • the Federal Network Agency withdrew their acceptance
  • the bidder does not apply for a funding permission within two years after the public announcement of the acceptance of the bid

If the second security payment is not deposited timely, the penalty payment matches the first security payment. In all other cases, the amount of the penalty payment is based on the rejected, withdrawn or not realised bidding amount multiplied by EUR 50 per kilowatt.

Conclusion

Potential bidders and financing banks should closely review the chances of realising a solar power plant before entering the tendering process, since a first security payment of EUR 4 per kilowatt must be deposited with the bid and a second security payment of EUR 50 per kilowatt must be deposited within 10 days after the bid was accepted. This is to collateralise possible penalty payments payable if the funding permission is not applied for within 24 month. If the system is not commissioned timely, the bid is terminated and a penalty payment due.

It also has to be ensured, that the system can be installed on the area stated in the bid within 18 month. The applied value will be reduced about 0.3 cents per kilowatt, if the system is installed on another area or taken into operation later than 18 month after the acceptance of the bid.

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