Incentives and benefits

Under the Commonwealth’s RET, the generation and sale of renewable energy will be subsidised by an annual amount of $2.8 billion up to the year 2030. Subsidies comprise attractive feed-in tariffs as well as other incentive mechanisms. 

In 2015, the SEA announced a scheme to gradually increase electricity tariffs to meet the cost of power generation of 29 fils/kWh. The new tariffs became effective starting March 2016 for residential, commercial, and industrial consumers. Bahraini nationals holding an EWA single account are exempt from the tariff increases and continue to pay electricity tariffs of 3 fils/kWh. [1]

[1] No. (5).

General: In Belgium, the most important subsidy mechanism is a green certificate scheme. This includes a guaranteed minimum price mechanism, where electricity network operators are required to purchase the green certificates at a guaranteed minimum price, subject to generation type and location of the asset. It should be observed that there are four parallel schemes of RSE support in Belgium. This results from the division of competences when it comes to renewable energy.

Belgium's political system is a federal system comprising a federal government level, as well as three regions (Flanders, Wallonia and the Brussels-Capital Region, with mostly economical competences) and three communities (the Flemish Community, the Wallonia-Brussels Community (formerly the French-speaking community) and the German-speaking community, with cultural and language linked competencies such as education). The competence to regulate renewable energy belongs to the regions (i.e. Flanders, Wallonia and Brussels Capital), rather than the federal government. In relation to renewable energy, the federal government is (only) competent to regulate the major infrastructures for energy storage, the transmission of electricity through grids with a voltage higher than 70 kV, the transmission network tariffs, the commodity tariffs for off-takers and the production of energy in Belgium's territorial waters and its exclusive economic zone in the North Sea.

Federal level: On the federal level, a green certificates scheme applies in order to support offshore wind energy installations. In respect of this sector, it should be noted that the Federal Parliament adopted a new Act establishing a tender procedure for new concessions for offshore wind farms, whose operators will then be eligible for support. To date, the key modalities for this tender have not yet been elaborated in Royal and Ministerial Decrees.

In addition, companies can reduce their taxable profits with an increased investment deduction for energy saving and energy recovery investments.

Flemish Region: A green certificates scheme applies in order to support renewable energy installations in the Flemish Region. Regularly – including recently for projects receiving permits from 2020 onwards, the subsidy levels and periods are adjusted downwards for new projects.

The green certificates scheme does not apply to all renewable energy technologies, however. Certain types of renewable energy will (depending on their capacity) not be eligible for the green certificates scheme but will receive subsidies depending on the type and capacity of the renewable energy installation. These subsidies are distributed by means of "calls for proposals". This is, for example, the case for photovoltaic installations with a capacity between 40 kW and 2 MW, and for wind turbines on land with a capacity between 10 kW and 300 kW.

Brussels Capital Region: A green certificates scheme applies in order to support renewable energy installations in the Brussels Capital Region. The Coalition Agreement for the new Brussels Region government states that by 2024 (i.e. the end of the current legislature), the green certificates scheme and the percentage of certificates allocated will be readjusted, taking into account the reduction of the cost of renewable energy systems. In addition, supplementary subsidies are offered to companies willing to invest in "green" projects, subject to the applicant meeting certain requirements.

Walloon Region: A green certificates scheme applies in order to support renewable energy installations in the Walloon Region. In addition, a wide range of support, including energy bonuses, investment aid for cogeneration plants or processing plants, tax deductions for investments, is offered.

None as yet.

In the past few years, to promote the development and the competitiveness of the renewable sources, the federal government granted a subsidy for small hydro, solar, wind, biomass and qualified cogeneration projects in the form of a discount of 50% in transmission and distribution tariffs (TUST and TUSD, respectively). However, considering the goal has already been attained, in 2021, Federal Law No. 14,120/2021 was enacted and terminated the grant of such discounts for future generation projects, creating a transition regime.

The projects that already benefitted from TUST or TUSD discount will retain the benefit until the end of their respective authorization grant (in the event of renewal of the grant, the discount will not be renewed). As for new projects, the law established that (i) if the authorization request was filed before ANEEL until March 2, 2022, and (ii) the power plant achieved commercial operation within 48 months counted from the issuance of the relevant authorization grant, then the project could still benefit from the discount. New projects that do not comply with both of these criteria are not entitled to the discount.

Without prejudice to the above, additional transition rules are still under discussion by the sector's authorities.

NCRE plants that generate less than 9 MW are completely exempt from paying tolls for using the main electrical transmission system, and NCRE plants that generate more than 9 MW but less than 20 MW are partially exempted.

There are benefits for investors importing capital goods for energy projects over USD5 million, which will be exempt from VAT, subject to the prior approval of the Chilean Ministry of Finance. In addition, the Chilean VAT Law establishes a benefit for companies that invest in fixed assets (eg solar and wind energy plants). In this regard, the company is entitled to a reimbursement in cash of VAT paid on the acquisition of goods and services that compose fixed assets.

No subsidies are applicable to the generation and sale of renewable energy. 

Law 1715 of 2014 covers the support schemes for renewable energy projects which include the following tax benefits:

• income deduction for a period ≤ 15 years on 50% of the investment made;
• VAT exclusion;
• exemption from payment of customs tariff duties; and
• accelerated depreciation of assets.

It also allows the release of surplus energy into the network for all self-generators. 

Finally, the General Regime of the Tax Statute includes the following tax benefits:

• discount for investments in control, conservation and improvement of the environment;
• VAT exclusion on imports of environmental control systems, monitoring systems and environmental programs;
• income exemption from the sale of energy generated from renewable energy projects; and
• VAT exclusion on the sale of electricity and provision of public energy service.

Until 2020, it was possible to use a subsidy from the Renewable Energy Support Programme. This programme focused on energy efficiency, energy development infrastructure and renewable energy sources, promoting introduction of new technologies in the field of energy management and secondary raw materials.

A subsidy programme called Renewable Energy Sources is available from 2022. Through this programme, Czech companies can receive subsidies to build renewable energy sources. Subsidies can be obtained for wind or small hydropower plants, projects related to the use of biomass energy. The aim of the programme is to support the production and distribution of energy from renewable sources. Support will be given to installations with the highest efficiency and without a negative impact on the electricity grid.

No subsidies are currently applicable for generation and sale of renewable energy. 

Not applicable.

Energy aid is granted for investment and study projects in renewable energy and energy efficiency. The support is particularly targeted at sectors outside the emissions trading scheme, such as renewable energy projects in transport, small-scale production and energy efficiency projects. The number of authorisations for energy aid is confirmed annually in the budget process and by Parliament.

The feed-in-tariff subsidy scheme was replaced by a premium auction scheme for 1.4 TWh of new capacity, which was executed through the auction process finalized in March 2019. Currently, there are no plans for new production subsidy schemes related to renewable energy production or new tendering rounds under the premium system in Finland.

Before the emergence of corporate PPAs, renewable energy was promoted through two mechanisms:

• the feed-in tariff (FiT) mechanism, where a producer could sell its production to an electricity supplier at a fixed price for a long-term period; and
• call for tenders awarding long term contracts at a fixed price.

The FiT mechanism was replaced mainly by the contract for difference support mechanism. 

The contract for difference mechanism takes the form of the payment of a fee corresponding to the difference between the market price and the target rate set by the contract, for a maximum of 20 year term. The fee is paid by EDF OA or any obliged purchaser when the market price is lower than the target rate, and when the market price is higher than the target rate, the producer must pay the difference between the two rates to EDF OA or the obliged purchaser. The producer who benefits from the contract for difference system will therefore be entitled to sell its electricity on the markets (i) directly, (ii) by means of an aggregator or (iii) by a  power purchase agreement (PPA). The contract for difference mechanism protects the producer from market price variations because producers will receive or pay the difference between a target rate and the market price.  

The allocation of this support mechanism is made through an “open gate” system (guichet ouvert) or by a tendering process.  

The open gate system allows any producer meeting the specific requirements defined by the DGEC (Direction Générale de l’Energie et du Climat) and published on the CRE (Commission Regulation de l’Energie) website to benefit from the contract for difference mechanism. The call for tenders is a more competitive and complex system for producers.

The main subsidy or financial support for generating and selling electricity from renewable energy sources is by way of the payment of a "market premium" and, in exceptional cases, by way of a fixed feed-in tariff. In cases where an installation operator does not claim any financial support, there is the opportunity to obtain guarantees of origin (Herkunftsnachweise – GoO).

The following subsidies are provided to RES producers: Feed in Premium, Feed in Tariffs and auctions. In relation to auctions, 4 GW of renewable projects will be auctioned in Greece until the end of 2025. Power generators are also driven to corporate offtake to satisfy investors’ appetite that can’t be satisfied only through the applicable subsidy schemes.

The RESS schemes are the current schemes by which Ireland supports renewable generation. The support takes the form of a floating feed-in premium (similar to a contract for differences) which is allocated by means of a pay as bid auction. To date there have been two RESS auctions with results of the second RESS auction (RESS 2) confirmed in June 2022. A third RESS auction (RESS 3) is to take place in September/October 2023. There is also a separate RESS scheme for offshore wind (ORESS) and four projects were successful in the first ORESS auction which took place in May 2023. 

Before the RESS, Ireland provided support by means of the three Renewable Energy Feed-In Tariff (REFIT) schemes which provided a floor price which was set at a single level for all participating projects. These schemes closed to new applicants in 2015, but projects will continue to receive support which endures for 15 years or until the fixed end date for each scheme.

The New RES Decree aims to support, for the three-year period 2019-2021, the production of electricity through plants powered by renewable sources.

The sources contemplated by the New RES Decree are: onshore wind, hydroelectric, plants fuelled by landfill and gas residues from purification processes, and photovoltaic (except for plants located in agricultural lands).

On the other hand, the following sources are excluded: offshore wind, biogas plants, geothermic, biomass and bio liquid plants, oceanic and thermodynamic solar plants. These exclusions are justified by the need to provide for different and separate incentive schemes for those sources that still maintain profiles of innovation and low diffusion, while maintaining higher costs.

Even the New RES Decree, although it provides for registers and auctions until 2021, introduces a safeguard principle represented by the indicative overall annual maximum cost for incentives of 5.8 billion Euro. This is the same threshold set by the 2016 Decree, which will continue to apply to plants registered in a useful position in the rankings formed as a result of the relative auction and register procedures.

Solar energy will compete, both for the auctions and the registers, with the wind power plants. The base tariffs are EUR 105.00 for solar and EUR 150.00 for wind (for plants from 1 to 100 kW), EUR 90.00 (for plants from 100 kW to 1 MW) and EUR 70.00 (above 1 MW). The New RES Decree, unlike the 2016 Decree, eliminates direct access to the incentives for small power plants.

Biogas plants can have access to the incentive regime of the Ministerial Decree 23 June 2016 provided that: (i) they have a power up to 300 kW; (ii) they are managed by farmers or by agricultural companies; (iii) the biogas is produced from by-products for at least the 80%; (iv) the thermal energy produced is used for self-consumption. Plants with a power up 100 kW can have a direct access to the incentive regime, whereas plants with a power up to 300 kW shall undergo a competitive procedure and be enrolled in specific registers that will be opened from 10 April 2019 to 9 June 2019.

While many subsidies have been the subject of recent potential revision, there are currently still various tax incentives for involvement in renewable energy, including:

• VAT exemption on specialized equipment for the development and generation of solar and wind energy, including deep cycle batteries which use or store solar power;
• VAT exemption on inputs or raw materials supplied to solar equipment manufacturers for the manufacture of solar equipment or deep cycle-sealed batteries which exclusively use or store solar power;
• exemption from tax on interests to be paid on loan from foreign sources for investing in the energy sector - pursuant to Legal Notice 91 of 2015;
• exemption from tax on payments made to a non-resident for services rendered under a power purchase agreement - pursuant to Legal Notice 165 of 2015; and
• exemption from payment of stamp duty on instruments executed in respect of loans from foreign sources received by investors in the energy sector.

There are no subsidies in Mexico for renewable generation or sale of electricity. As mentioned above, there are some advantages given to Self-Supply projects in the transmission of electricity from renewable sources.

No subsidies are applicable.

The subsidies applicable to the generation and sale of renewable energy are as follows:

• financing through public funds and low-interest loans or government loan guarantees;
• tax incentives intended to promote the domestic production of equipment under a special investment regime, e.g., an industrial free zone;
• direct subsidies (e.g., discounts) to new and renewable energy equipment users on purchasing such equipment.

SDE+ (Stimulation of Sustainable Energy Production)

This operating feed-in tariff subsidy was designed to bridge the price gap between grey and green electricity. It compensated for the cost differential between the market price and the cost price of generating sustainable energy. The SDE+ was highly popular and instrumental in facilitating various renewable energy projects across the country.

SDE++

Having replaced SDE+ in the summer of 2020, SDE++ expands on its predecessor by allocating subsidies based on reduced emissions rather than generated kWh of electricity. This provides a more holistic approach to climate change mitigation while supporting various forms of renewable energy and CO_² reduction techniques.

Energy Investment Tax Reduction (EIA)

This scheme allows companies to deduct 55% of their investment costs from their fiscal profits. The EIA aims to spur investments in renewable energy and energy-efficient technologies.

Upscaling fully-renewable hydrogen production via electrolysis (OWE) subsidy

Expected in September 2023 , this new subsidy program focuses on businesses that develop hydrogen production plants using electricity from solar or wind. The electrolysers must have a capacity between 0.5 to a maximum of 50 MW. Importantly, this subsidy is not expected to be used cumulatively with the SDE++ and is scheduled for application from the second half of October.

Demonstration Energy and Climate Innovation grant (DEI+)

This grant is targeted at demonstration projects that are innovative and aim to reduce carbon emissions at a low cost. Eligible innovations include, but are not limited to, hydrogen, green chemistry, energy efficiency, and various forms of renewable energy. It’s important to note that the installations must be "new," and not more than two previous subsidies should have been allocated for the same. Projects with a primary objective of cost reduction, where subsidy based on SDE++ is possible, are excluded.

New Zealand does not have a subsidy regime applicable to the generation and sale of renewable energy.

No direct subsidies are currently available for the generation and sale of renewables except for the electrical certificates awarded to generators commissioned before the end of 2021. The current power price situation (as of 2023) has resulted in financial support for power consumed by end users at their permanent residence.

The RER premium is a subsidy created by Legislative Decree No. 1002 that is given within the framework of public tenders carried out by OSINGERMIN to contract energy from RER generators. 

There is a guaranteed income in energy tenders. It does not include the delivery of (i) energy committed to third parties and (ii) energy that can be purchased in the SEIN itself.

Formula:

Income from Energy Sales + Additional Price Paid to Winning Bidders (“Premium”) = Guaranteed Income.

The first main support system for RES generators in Poland was the system of “green certificates.” Green certificates confirmed generation of a given volume of electric energy from renewable energy sources. Green certificates constituted property rights with certain financial value (determined by the demand set by the respective regulation in the form of the quota obligation levied on the sale of electric energy to final customers, with some exceptions, and the supply resulting volume of generation) and can be traded on the Polish Power Exchange. This system has been in place since 1 October 2005 and will continue for older installations (generating electric energy before 1 July 2016).

The following support systems are currently in force in Poland:

• Auction system – the auction system for renewable energy sources in the form of CfD.

• Guarantees of origin (GOO) – awarded to generators for generation of given volume of electric energy indicated in the document in electronic form certifying to the final customer that the environmental values resulting from avoided greenhouse gas emissions and the quantity of electricity fed into the grid specified in such a guarantee have been produced by a renewable energy installation.

  They allow the generator to earn additional income and are often the subject of PPAs.

• FiT/FiP tariff scheme – the FiP system applies to biogas plants and small hydropower plants with an installed electrical capacity of up to 1 MW, while the FiT system can cover installations up to 500 kW.

Guaranteed remuneration schemes, notably Feed in Tariffs (FiT) awarded before the entry into force of Decree-Law no. 15/2022, dated January 14, 2022, remain applicable to existing power production projects for the relevant attributed timeframe. The current framework enacted by Decree-Law no. 15/2022, does not allow for guaranteed remuneration schemes.

Other current mechanisms include contracts for differences (CfD).

Besides financial incentives, renewable energy developers benefit from priority of access to the grid.

Coming soon.

The Department of Minerals and Energy ("DoME") established the Renewable Energy Finance and Subsidy Office, whose mandate includes:

• the management of renewable energy subsidies; and
• offering advice to developers and other stakeholders on renewable energy finance and subsidies. This includes information on the size of awards, eligibility, procedural requirements, and opportunities for accessing finance from other sources.

The subsidy is milestone driven, and the milestones are set out in a subsidy agreement to be entered into been the DoME and the recipient of the subsidy (the key milestones being financial close, construction and commissioning etc). The subsidy takes the form of a grant and is "once-off" in that it is a single disbursement linked to a construction milestone, and is provided on the basis that if any subsequent milestones are not met, the DoME may request that the grant be paid back.

We have not been involved in any projects which, to our knowledge, have benefited from the subsidy.

As a preliminary remark, please note that the current (electricity production) remuneration scheme does not provide for any feed-in tariff system.

Since 2014, the main strategy to support the production and consumption of renewable energy in Spain comprises a public auction of a certain level of installed power with the right to the Specific Remuneration Scheme. This scheme means that the relevant facilities will receive the market price plus an additional remuneration which is aimed to guarantee a "reasonable return" on the investment.

As previously indicated in section 7 above, of Royal Decree Law 6/2022 has amended the remuneration parameters applicable to the Specific Remuneration Scheme. 

As mentioned above in 7, Royal Decree-Law 23/2020 has added a new provision related to the remuneration of renewable energy production facilities. According to this provision, to promote predictability and stability in income and financing of new electricity production facilities from renewable energy sources, the government will develop a new remuneration framework for the generation of electricity from such sources, based on the long-term recognition of a fixed price for energy, through competitive procedures (ie public auctions).

This new renewable economic regime (REER) was approved by the Royal Decree 960/2020. The REER is granted by means of public auctions which distinguish between different technologies and establishes the auctioning criteria based on the price per unit of electricity expressed in EUR/MWh with certain adjustments based on market participation.

The next auction of 520 MW for solar thermoelectric, biomass, distributed photovoltaic and other technologies is expected to take place in October 2022. 

Additionally, the Administration may grant subsidies for the construction of energy generation infrastructures, at the central, regional and local level, and that certain tax advantages can be obtained for such constructions.

Finally, in addition to pure financial incentives, other policies that promote the development of renewable energies in Spain are the following:

• priority of access to the grid – renewable energy generators have priority over other operators to access and connect to transmission and distribution networks; and
• priority of dispatch of electricity generated in the wholesale market – under equal market conditions renewable energy generators have priority over other conventional generators to deliver their electricity in the wholesale market.

The Government through various agencies (county administrative boards, the Energy Agency, the National Agricultural Agency) operate several different schemes for the construction of photovoltaic installations, electricity storage and wind power. The regulatory environment and the amounts available under these schemes change rapidly.

In addition to the subsidies relating to the actions concerned by "the scheme for energy management" provided by Decree No. 2005-2234, there are other subsidies granted by the Tunisian Investment Fund (TIF) created by Law 2016-71 of September 30, 2016. These premiums are:

• Premium of the increase of the added value and competitiveness: equal to 15% of the investment cost, is capped at TND1 million.
• Regional development premium (depends on the development area): it includes two categories:
  • Areas of the "1st group": 15% of the investment cost, capped at TND1.5 million.
  • Areas of the "2nd group": 30% of the investment cost, capped at TND3 million.
• Premium for the development of employability (depending on the development zone): Coverage (for 3 to 10 years) of employer's charges, it is not capped, as well as coverage (for 1 to 3 years) of a part (50%) of salaries, to the extent of TND250 / monthly salary.
• Sustainable development premium equal to 50% of the value of the approved investment components, capped at TND300,000. 

The benefit of PV and wind concession projects to the FTI aid remains to be confirmed according to the modalities written in the concession agreement specific to each project. 

Moreover, the TIF can participate in the capital of the project company with the following participation rates:

• Maximum 60% of the capital - ceiling of TND2 million if the cost of the project is equal or lower than TND2 million.
• Maximum 30% of the capital – ceiling of TND2 million if the cost of the project is higher than TND2 million. 

Other premiums and incentives are provided for energy production projects from renewable energy, which are of national interest, (whose investment cost exceeds TND50 million, or create at least 500 jobs for 3 years).

The projects benefit from the Tunisian Investment Fund of:

• a deduction of profits from the corporate tax base within the limit of ten years;
• an investment premium within the limit of the third of the investment cost including the expenses of the works of intramural infrastructures with a ceiling of TND30 million; and
• the participation of the state in the assumption of responsibility of the expenses of the infrastructure's works. 

There are also bonuses granted by the Energy Transition Fund (ETF), which are the following:

• For self-consumption projects with an installed capacity of more than 1.5 kW: a premium of TND1200 /kW installed (ceiling of TND3,000 for residential and TND5,000 otherwise).
• For rural electrification and pumping installations with an installed capacity of more than 10 kW: subsidy of TND1,000 /kW installed (ceiling of TND50,000).
• For the other projects: subsidy of 20% of the investment (ceiling of TND200,000).
• For intangible investments: a premium for feasibility studies related to renewable energy self-generation projects. This premium is of an amount of 70% of the investment with a ceiling of TND30,000.

VAT Exempt status:

• 1 (sc) the supply of deep cycle batteries, composite lanterns, and raw materials for the manufacture of deep cycle batteries and composite lanterns,
• (t) the supply of photosensitive semiconductor devices, including photovoltaic devices, whether or not assembled in modules or made into panels; light emitting diodes; solar water heaters, solar refrigerators and solar cookers.
• (dda) the supply of any goods and services to the contractors and subcontractors of  hydro-electric power, solar power, geothermal power or biogas and wind energy projects 
• Zero-Rated Supplies

Net metering is the policy tool most often adopted by governments in the region as a means to encourage self-generation.

The primary subsidy for generators with capacity above 5 MW is the Renewable Obligation, however, this was closed to new participants on 31 March 2017 applies. To continue the support of low-carbon electricity generation, the Government introduced contracts for difference (CfDs) for eligible generators, with the fixed "strike" price being set by auction. The successful bidder enters into a contract with the Low Carbon Contracts Company (LCCC) for a 15 year period.

See discussion above regarding federal tax credits. In addition, some states also have tax credits or other incentives available to support the generation or consumption of renewable power or the development and use of related technologies like energy storage.

Please refer to Political and financial incentives.