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Poland

Poland

Industry takes heart from legislative push -- Poland at a standstill

While yet more bullish plans for wind development in Poland were announced in 2004 -- with projects totalling some 4-5 GW now slated for the northern region alone -- the regulatory climate still looks less than ideal for making them happen. The publication of the government's new 20 year energy plan appears to have done little to improve prospects. Indeed, 2004 was another drought year for Poland's wind sector. With no turbines installed since the end of 2002, total installed capacity remains around 60 MW.

A series of ten wind plant totalling 300 MW, announced in 2003 for development along the Baltic Sea coast between Sczcecin and Gdansk by Eternegy Polska, have so far failed to materialise. Eternegy Polska is the Polish arm of Germany's Eternegy, a wind developer owned by municipal utility MVV Energie. Nor has there been any progress on the 60 MW plant planned for Kolobrzeg, (also known as Skrobotowo) and first pitched in 2002 as a joint implementation project under the first round of the Dutch government's carbon credit purchase program, ERUPT.

Despite the lack of activity, Poland's government is confident of improvement this year. Targets for renewables to supply 7.5% of the country's energy by 2010 and 14% by 2020 have again been confirmed in the energy plan, "Poland's Energy Policy until 2025." To meet the 2010 target, energy companies have been under an obligation to source an increasing percentage of their power from renewables since May 2003. This was set at 2.84% in 2004 and at 3.1% for 2005. A 3.6% obligation for 2006, set under a 2003 mandate, remains, but for the following years it has been increased. For 2007 the increase is to 4.35% from 4.2%, for 2008 to 5.4% from 5% and to 7% from 6% for 2009. Moreover, an additional obligation for power companies to source 9% of their supplies from renewables from 2012 to 2014 has been introduced.

network priority

As part of its renewed commitment to make sure these obligations are met, the government amended the energy law in spring 2004, giving priority to renewable energy in the transmission network and introducing certificates of origin for renewables. It also firmed up penalties for companies failing to meet their renewables quotas. The penalty is now set at no less than double the average renewable energy price of the previous year multiplied by the volume of missing energy. Another option being debated in parliament is the introduction of green certificate trading to make it easier for utilities to reach the targets.

But while government is trying to improve the market structure, many of the causes of the country's poor wind development progress remain. These include the high cost of connecting wind plant to the grid, the difficulty of competing against very low electricity prices and, the biggest hurdle, currency problems associated with acquiring bankable power purchase agreements (PPAs). Without sound contracts, there can be no project finance. While wind power investors prefer PPA pricing based on the euro, developers and utilities are reluctant to shoulder the exchange rate risk -- and no agreements are made. Without the bank guarantees PPAs provide, developers have no access to additional finance on offer from the Polish Ecofund and the National Fund for Environment Protection and Water Economy.

Nonetheless, developers remain optimistic. While the government's policy changes failed to make a visible impact in 2004, the hope is they soon will. "We can expect up to three wind farms totalling 100 MW online in Poland this year," says Anna Paslawska of Polish wind developer EPA. The company will be behind at least one of these, she says. Her view is backed by Adam Smiarowski of developer Energetyka Polska, who says his company has several projects in development. Another project pencilled in for completion this year is the 50 MW Tymien wind farm to be developed by EEZ, a company associated with developer Energia Eco (Windpower Monthly, February 2005). It will comprise 25 Vestas 2 MW turbines.

American developers also see potential in Poland. In November, US Windfarming revealed plans for a 100 MW wind/hydrogen project in the Baltic Coast area. To be developed and owned by an international co-operative comprising both US and international partners, a PPA has already been agreed with the state-owned electrical utility. "Contracts for the purchase of the hydrogen produced are in negotiations," US Windfarming adds. The Polish government will provide $10 million once finance is in place.

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