COMPETITIVE BIDDING RULES FOR RENEWABLE SOURCES OF ENERGY INSTALLATIONS REGULATIONS *

SOURCES OF ENERGY INSTALLATIONS

SUBSIDIARY LEGISLATION 545.31

COMPETITIVE BIDDING RULES FOR RENEWABLE

SOURCES OF ENERGY INSTALLATIONS

REGULATIONS *

7th March, 2017

LEGAL NOTICE 76 of 2017, as amended by Legal Notices 251 of 2018

169 of 2020 and 282 of 2021.

The title of these regulations is the Competitive Bidding

Rules for Renewable Sources of Energy Installations Regulations.

(1)

Unless otherwise stated in these regulations,

the definitions in the Public Finance Management Act shall apply.

(2)

In these regulations, unless the context otherwise requires

"annual threshold" means the cap in kWh for the payment of

the awarded bid price per kWh for the period of time commencing on

the 1st January and ending on the 31st December of each year;

"approved renewable energy installation" means a new solar

photovoltaic installation or new wind energy installation with a

capacity of 1000kW or more and granted financial support for the

first time pursuant to a competitive bidding process, and excludes

solar photovoltaic installations and new wind energy installations that

benefit or have benefited from any other support including support on

the initial capital investment;

"awarded bid price per kWh" means the bid price per kWh

offered by a successful bidder whose offer is selected pursuant to a

competitive bidding process;

"bid price per kWh" means price per kWh offered by a bidder

in a competitive bidding process;

"commissioned" means the first time a renewable energy

installation is put into operation, following the establishment of

operational readiness by the warranted electrical engineer certifying

the installation;

"competitive bidding process" means a non-discriminatory

bidding process that provides for the participation of a sufficient

number of undertakings and where the support is granted on the basis

of the bid submitted by the bidder. In addition, the volume related to

the bidding process shall be a binding constraint leading to a situation

where not all bidders can receive support;

"Contracting Authority" means the entity issuing and

administering the competitive bidding process;

*Repealed by Legal Notice 22 of 2023.

SOURCES OF ENERGY INSTALLATIONS

"DC" means direct current;

"distribution" means the transport of electricity on high

voltage, medium voltage and low voltage distribution systems with a

view to its delivery to consumers, but not including supply;

"distribution system" means all the interconnected technical

facilities used for conveying electricity to final customers;

"distribution system operator" shall have the same meaning as

under the Electricity Market Regulations;

"electricity from renewable energy sources" means electricity

produced by plants using only renewable energy sources, as well as

the share in terms of calorific value of energy produced from

renewable energy sources in hybrid plants which also use

conventional energy sources. It includes renewable electricity used

for filling storage systems, but excludes electricity produced as a

result of storage systems;

"eligible renewable energy installation" means a new solar

photovoltaic installation or new wind energy installation with a

capacity of 1000kW or more applying to be granted financial support

for the first time pursuant to a competitive bidding process, and

excludes solar photovoltaic installations and new wind energy

installations that benefit or have benefited from any other support

including support on the initial capital investment;

"force majeure" means acts of God, strikes, lock-outs or other

industrial disturbances, acts of the public enemy, wars, whether

declared or not, blockades, insurrection, riots, pandemics, landslides,

earthquakes, storms, direct lighting strikes, floods, washouts, civil

disorder, explosions and other similar unforeseeable events, which by

the exercise of all due diligence cannot be overcome and which, in

the view of the Contracting Authority prevent a successful bidder

from adhering to his obligations due to causes beyond his reasonable

control;

"full load hours" means the equivalent number of hours in a

calendar year during which the renewable energy installation

produces at its full nominal or kW capacity;

"generation" means the production of electricity;

"guaranteed period" means the period of time indicated in the

relevant competitive bidding process during which the awarded bid

system operator from a qualifying renewable energy installation is

guaranteed;

"kW" means kiloWatt and in the context of these regulations

shall be taken to refer to the nominal capacity of the renewable

SOURCES OF ENERGY INSTALLATIONS

energy installation, which in the case of a solar photovoltaic

installation is equal to the total DC peak power of the installation;

"kWh" means kilo Watt hour(s);

"metering equipment" means the electricity meters provided

by the distribution system operator including smart meters, any

voltage and current transformers and any other associated equipment

and wiring required to measure the quantity of electricity supplied or

exported;

"Minister" means the Minister responsible for Energy;

"new solar photovoltaic installation" means a solar

photovoltaic installation which has never been used for the

generation of electricity in whole or in part and which is installed by

a successful bidder after the conclusion of a competitive bidding

process;

"new wind energy installation" means a wind energy

installation which has never been used for the generation of

electricity in whole or in part and which is installed by a successful

bidder after the conclusion of a competitive bidding process;

"performance bond" means the performance bond to be

provided by a successful bidder to the Contracting Authority pursuant

to regulation 10;

"premium" means the difference between the awarded bid

payable only when the awarded bid price per kWh is higher than the

proxy for the market price per kWh and the proxy for the market

"proxy for the market price" means the average of the

estimated variable cost of meeting the demand forecast for a given

year from locally generated conventional and imported electricity,

with the demand assumption excluding that portion of the forecast

demand which is not expected to be met by conventional and

imported electricity;

"renewable energy sources" means renewable non-fossil

energy sources, that is, wind, solar (solar thermal and solar

photovoltaic), and geothermal energy, ambient energy, tide, wave and

other ocean energy, hydropower, biomass, landfill gas, sewage

treatment plant gas and biogas;

"smart meters" shall have the same meaning as in the

Electricity Supply Regulations;

"solar photovoltaic installation" means a solar photovoltaic

system that generates electricity exclusively from solar radiation and

consisting of all accessories including

SOURCES OF ENERGY INSTALLATIONS

(a)

an array or arrays of photovoltaic modules that

collect and absorb sunlight for conversion into electricity;

(b)

an inverter or inverters;

(c)

associated balance of system components,

including wiring, conduits, switchgear, protection equipment,

ancillary equipment and any other part of the installation

necessary for the production and conveyance of electricity up

to the metering equipment supplied by the distribution system

operator;

"successful bidder" means a bidder whose offer is selected

pursuant to a competitive bidding process;

"supply" means the sale or retail, including resale, of

electricity to customers;

"wind energy installation" means an installation that converts

wind energy into electricity and shall include the tower on which the

wind turbine is mounted, a rotor and the nacelle which houses the

equipment, including the generator, that converts the mechanical

energy in the spinning rotor into electricity and any other ancillary

equipment necessary to connect to the grid.

(1)

The purpose of these regulations is to introduce

the competitive bidding process as the method to determine the fixed

distribution system operator from approved renewable energy

installations and hence to promote and support the generation of

electricity from renewable energy sources.

(2) These regulations shall apply only to renewable energy

produced from renewable energy installations installed in Malta,

Gozo and other islands of the Maltese Archipelago, including the

territorial waters thereof.

(3) These regulations shall not apply to undertakings in

difficulty as defined by the Guidelines on State aid for Rescuing and

Restructuring non-financial Undertakings in difficulty (2014/C 249/

01).

The price per kWh to be paid for electricity generated

and sold to the distribution system operator from eligible renewable

energy installations shall be determined through a competitive

bidding process

Provided that the payment of any price per kWh to an

undertaking that has benefited from earlier unlawful aid granted by

Malta and declared incompatible by a Decision of the European

Commission shall be suspended until such time as that undertaking

has reimbursed the total amount of unlawful and incompatible aid

SOURCES OF ENERGY INSTALLATIONS

and the corresponding recovery interest.

(1)

The awarded bid price per kWh resulting

pursuant to a competitive bidding process shall be paid in each

calendar year up to a capped amount of units of electricity generated

and sold to the distribution system operator and payable for the

guaranteed period.

(2) The awarded bid price per kWh shall be determined by

"pay-as-bid" such that the successful bidders shall be paid, for the

electricity generated and sold to the distribution system operator from

an approved renewable energy installation, the awarded bid price per

kWh based on their actual bid.

(3) The bidder shall submit the bid price per kWh for each

eligible renewable energy installation as required in the competitive

bidding process.

(4) The awarded bid price per kWh shall only be applicable

to a successful bidder and only in respect of the renewable energy

installation as described in the bid including the capacity offered in

the bid (in kW), only as part of the competitive bidding process. The

capacity associated with the bid price shall be deemed to be equal to

Offered kW x Full Load Hours

(5) Without prejudice to sub-regulation (4), the ownership

of an approved renewable energy installation selected pursuant to a

competitive bidding process may be transferred to a third party and

subject to the third party obtaining the necessary permits,

authorisation and licences, as may be applicable.

(6) The awarded bid price per kWh with respect to an

approved renewable energy installation shall be payable for the actual

number of units of electricity generated by such installation and sold

to the distribution system operator, up to the annual threshold

calculated as offered kW x Full Load Hours

Provided that the number of assumed full load hours in

the case of a solar photovoltaic installation shall be equal to 1600

hours

Provided further that in the case of other types of

renewable energy installations, such as wind energy, the number of

full load hours which shall determine the annual threshold for the

payment of the awarded price per kWh, shall be specified in the terms

and conditions applicable in the relevant competitive bidding

process.

(7) Any units generated above the amount calculated in sub-

regulation (6) of this regulation in any calendar year shall be

purchased by the distribution system operator and paid at the proxy

SOURCES OF ENERGY INSTALLATIONS

for the market price per kWh only, without the payment of the

premium.

(8) The successful bidders shall not be entitled to tradeable

guarantees of origin or other tradeable certificates for the electricity

sold to the distribution system operator.

(9) Without prejudice to sub-regulations (4) and (5), an

approved renewable energy installation may be relocated to an

alternative site subject to obtaining the necessary permits,

authorisations and licenses as may be applicable, and subject to the

conditions laid down in the competitive bidding procedure

The competitive bidding process shall include an

administratively established cap on the maximum bid price per kWh

that bidders may offer. The cap may consist of one maximum bid

categories.

(1)

An approved renewable energy installation shall

be fully commissioned as described in the bid, including the capacity

offered in the bid, and an application to connect the installation to the

distribution system shall be submitted to the distribution system

operator within eighteen (18) months that shall be reckoned as from

the date of the letter of award issued by the Contracting Authority to

the successful bidder to secure the eligibility of the awarded bid price

per kWh.

(2) If the successful bidder fails to comply with sub-

regulation (1), the time to commission and apply to connect said fully

commissioned approved renewable energy installation to the

distribution system as indicated in sub-regulation (1) may be

extended once only by six (6) months by means of a request in

writing to the Contracting Authority, which request shall be made in

the format required by the Contracting Authority

Provided that, if an extension is availed of, the price

that shall be payable to the successful bidder for electricity generated

and sold to the distribution system operator for the particular

approved renewable energy installation shall be equivalent to the

awarded bid price per kWh, less €0.005/kWh for all electricity

generated and sold to the distribution system operator up to the

amount indicated in regulation 5(6), for the guaranteed period.

(3) The request in writing for an extension to the

Contracting Authority indicated in sub-regulation (2) shall reach the

Contracting Authority no later than one (1) month before the lapse of

the eighteen (18) month deadline indicated in sub-regulation (1)

Provided that, should an extension be requested but not

availed of, the reduction in the bid price established in the proviso to

sub-regulation (2) shall not be applicable.

SOURCES OF ENERGY INSTALLATIONS

(4) The time necessary for the successful bidders to obtain

the necessary authorisations, licences and permits as applicable, shall

not suspend the running of the time periods established in sub-

regulations (1) and (2), being the maximum time within which an

approved renewable energy installation shall be fully commissioned

and an application to connect the installation to the distribution

system shall be submitted to the distribution system operator, for the

award pursuant to the competitive bidding process to remain valid.

Failure to comply with sub-regulations (1) and (2), when a request for

an extension has been made, shall lead to the automatic withdrawal of

the award and the forfeiture of the performance bond

Provided that, a verified event of force majeure may be

invoked by a successful bidder, in line with the provisions related

thereto included in the invitation for bids of the relevant competitive

bidding process, to request a suspension of the time periods

established in sub-regulations (1) and (2), which request may be

granted at the Contracting Authority’s discretion.

The launch of each competitive bidding process, as well

as the maximum capacity in kW as determined by the Minister for

each competitive bidding process, shall be made public by means of a

Government Notice published in the Gazette.

(1)

The process shall be carried out through a

competitive bidding process

Provided that the competitive bidding process shall be

compliant with the fundamental rules and principles of the Treaty on

the Functioning of the European Union regarding equality,

transparency, proportionality and prohibiting discrimination on

grounds of nationality and the European Commission’s Guidelines on

State Aid for environmental protection and energy 2014-2020.

(2) The invitation for bids shall also include terms and

conditions which shall constitute an integral part of the contract with

the successful bidder. The form of contract to be entered into shall

also be specified in the invitation for bids.

(1)

The successful bidder shall be required to

provide a performance bond issued in favour of the Contracting

Authority. The value of the performance bond and the deadline for its

submission shall be included in the invitation for bids of the relevant

competitive bidding process.

(2) Without prejudice to the terms and conditions applicable

to the relevant competitive bidding process, the performance bond

shall be forfeited by a bidder, inter alia, if the bidder fails to satisfy

the conditions in regulation 7.

(3)

In the case when the capacity of an approved renewable

SOURCES OF ENERGY INSTALLATIONS

energy installation as installed and connected to the grid is lower than

the capacity allocated during the bidding process, the forfeiture of the

performance bond shall be in accordance with the terms and

conditions established for such purpose by the relevant competitive

bidding process.

Bids which are deemed as being administratively

compliant shall be ranked according to the bid price per kWh with the

lowest bid price per kWh being given the first preference. The bid

installation kW capacity shall be selected pursuant to the competitive

bidding process, starting from the lowest bid offered, and provided

that the kW available for allocation in the particular competitive

bidding process is not exceeded.

The letter of award to the successful bidder shall

include, but not be limited to, the following

(a)

details of the bidder;

(b)

awarded bid price per kWh;

(c)

capacity in kW and threshold on the units of

electricity for which the bid price per kWh may be paid in each

calendar year for the guaranteed period.

The Contracting Authority shall publish on its website

the results of each competitive bidding process, including the

awarded bid price per kWh for each successful bidder for each

approved renewable energy installation and the corresponding

capacity in kW, as established in the competitive bidding process.

The successful bidder shall bear the costs of connection

of the approved renewable energy installation to the nearest suitable

point of connection to the distribution system. The costs for

connection to the distribution system shall be determined by the

distribution system operator in accordance with the Electricity

Supply Regulations.

(1)

The letter of award issued to a successful bidder

pursuant to a competitive bidding process shall only grant to that

successful bidder the right to be paid the price per kWh and shall not

be, nor shall it be deemed to grant or constitute, an automatic

authorisation to construct an approved renewable energy installation

or give any right for the issue of any authorisation, licence or permit

which may be required. Excepting any permit which may be required

by the provisions of regulation 18, the successful bidder shall be

responsible to obtain any relevant permits, authorisations and

licences within the time-frames established in regulation 7. The

successful bidder shall submit applications for permits, authorisations

and licences in accordance with the applicable laws and procedures

with a view to obtaining such permits, authorisations and licences.

SOURCES OF ENERGY INSTALLATIONS

Any cost related to obtaining the required permits, authorisations,

license shall be borne by the successful bidder.

(2) The issue of the letter of award shall not grant the

successful bidder any right to damages or compensation if any of the

permits, authorisations and licences required are not issued for any

reason whatsoever. The performance bond shall be forfeited in favour

of the Contracting Authority in any such cases.

(1)

The awarded bid price per kWh shall become

applicable as from the date of installation of the metering equipment

by the distribution system operator and shall continue to be

applicable for the duration of the guaranteed period.

(2) Payment of the awarded bid price per kWh shall be

based on actual meter readings obtained from the metering equipment

referred to in sub-regulation (1) and capped to a maximum kW and

units of electricity according to the letter of award.

A competitive bidding process for the award of support

for eligible renewable energy installations with capacity of 1000kW

or more shall be launched as determined by the Minister for such

capacity as indicated in the relevant competitive bidding process.

Without prejudice to the generality of the foregoing, the

terms and conditions of a competitive bidding process made public

and published in the Gazette, and applicable to wind installations

shall require as a pre-requisite in any such competitive bidding

process the issue of the applicable Planning Permit as may be

required by law.

The Public Contracts Review Board established by

regulation 80 of the Public Procurement Regulations shall have

jurisdiction to hear and determine complaints submitted by any

person having or having had an interest in competitive bidding

process made under these regulations and in accordance with the

procedures laid down in those regulations.