Regarding the impact of electricity price cap on Ignitis Group
The parliament of the Republic of Lithuania (hereinafter – the Parliament) on 15 December 2022 passed a legislation, in accordance with Council of the European Union’s regulation, establishing an EUR 180 per MWh price cap for producers generating electricity from wind, solar, geothermal, hydropower, biomass, waste, nuclear energy, lignite, crude petroleum products, peat. According to the assessment of AB “Ignitis grupė” (hereinafter – the Group), such legislation will not have a significant effect on the Group’s performance.
On 6 October 2022, the Council of the European Union adopted Regulation (EU) 2022/1854 on an emergency intervention to address high energy prices. In order to introduce the regulation into national law, which would detail the provisions of Regulation (EU) 2022/1854 and determine specific implementation and application model, the Parliament has passed a law “On the implementation of Regulation (EU) 2022/1854” and a law amending the Law on Corporate Income Tax of the Republic of Lithuania which will enter into force on 1 January 2023. The laws stipulate temporary legal regulation, which will apply only while the Regulation (EU) 2022/1854 is in effect – until 30 June 2023 with an option to extend the regulation until 31 December 2023 (with exceptions).
The law of the Republic of Lithuania “On the implementation of Regulation (EU) 2022/1854” details the implementation of the mandatory cap of 180 EUR/MWh on market revenues established in Article 6(1) of the Regulation (EU) 2022/1854:
- revenue surplus shall be collected from producers who generate electricity from the sources referred to in Article 7(1) of Regulation (EU) 2022/1854, i.e., wind energy, solar energy (solar thermal and solar photovoltaic), geothermal energy, hydropower without reservoir, biomass fuel (solid or gaseous biomass fuels), excluding biomethane, waste, nuclear energy, lignite, crude petroleum products, peat;
- it also details the main principles for determining and calculating revenue surplus as well as other principles.
A detailed methodology for determining market revenue and calculating revenue surplus as well as revenue surplus declaration form and declaration frequency will be introduced by the National Energy Regulatory Council by the end of December 2022.
The Group notes that the aforementioned legislation shall not apply to the electricity generated and transmitted by Kruonis PSHP and Elektrėnai complex. Additionally, the majority of electricity the Group is planning to generate and sell in 2023 which is subject to this regulation due to the aforementioned legislation is under power purchase agreements (PPA). The price of such agreements usually does not exceed 180 EUR/MWh. Due to the reasons above, the Group does not expect a significant impact on its performance after the aforementioned regulation enters into force.
For additional information, please contact:
Communications
Artūras Ketlerius
