Polish renewable producers face lack of support next year

Green energy producers in Poland are likely to speed up investments to take advantage of an existing subsidy system or face losing money under new auctions next year, analysts and market sources told ICIS.

A new system is likely to start next year, with companies competing in auctions to sell renewable power at set prices for 15 years, instead of receiving green certificates per MWh produced.

The Polish government approved the renewable law that triggers the change on 8 April. A 12-month countdown to implementation will start as soon as the European Commission has given the green light.

Current producers and those that finalise projects in time will have two options once the new law comes into place.

Option one is to stay under the current system and earn one green certificate for every MWh produced. The producers make money by selling these certificates to other energy producers that need to meet government-mandated renewable generation targets.

Option two is to take part in auctions, bidding to get the guaranteed price. The renewable investors posting the lowest bids will get the 15-year guarantee.

Any renewable plants built after the law is in place can only take part in auctions and risk losing out on any subsidies if they place no winning bids there.

One trader active on the Polish power market said the new proposals puts the profitability of any new green projects under question. “The current support system ensures that anybody will get a certificate for every 1MWh produced from any type of renewables and you can trade it on the market. The auction will ask for the lowest price, therefore limit profits for the generators,” he said.

A spokesman for CEZ Polska previously said the price of green certificates was high enough to given the company a return of their renewable investments ( see EDEM 20 January 2014 ).

CEZ Polska did not respond to questions how a switch to auctions would affect this return, but at the time the spokesman said he was concerned about the change.

Another reason renewable energy producers will rush to finish projects before the law comes into place it the fact that the grid operator is likely to limit the amount of intermittent power that can be sold on the grid. The chief of the Polish economic chamber of renewable energy, Michal Siembab, said this will limit selling opportunities particularly for wind farms.

“If the facility produces up to 4,000MWh from their installed capacity each year, they might have a problem to sell that power to the grid. This means only the co-firing and other stable renewables can benefit from auctions,” he said.

Energy regulator URE will hold the new auctions and is set to issue detailed instructions for participants by 30 November 
every year.

There will be separate auctions for producers with installed capacity under or above 1MW. Karolina Zagrodna