New draft law more damaging says industry

POLAND: A new version of Poland's draft renewable energy law, although at first welcomed by the industry, has been strongly criticised by the Polish Wind Industry Association (PWIA) for not guaranteeing any stability for the wind energy sector.

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PWIA's president Krzysztof Prasalek, who initially supported the economy ministry's latest shift towards more wind-friendly policies, has expressed disappointment with the second version of the draft renewable energy law. Published in July, the draft at first sight seemed to include what had been lacking in the first draft, published in December 2011 - a guaranteed electricity price, stable income from green certificates for 15 years and an obligation on electricity sellers to buy renewable electricity.

"But now, after analysing the draft provision I find it even more damaging for the wind developers than the previous version," Prasalek told Windpower Monthly.

Price fixing

Although the draft introduces a guaranteed electricity price for wind farms of PLN 199/MWh (EUR48.50/MWh), it actually forbids the wind electricity producers to sell it at higher prices. If they do, they will lose the right to receive green certificates. This means they will sell electricity only to one of four Polish power groups, all of them controlled by the state.

"The ministry simply wants to prevent the industry from selling the electricity on the free market," Prasalek said. "What is also damaging is that this provision refers to existing wind power plants as well. Wind farm owners, who now sell electricity on the free market, will have to terminate their existing contracts with clients."

Another disappointment is that the new draft excludes developers from expected future electricity price growth, which most experts predict could as much as double by 2020. The new law offers wind farm owners EUR49/MWh in 2013, and although this price will be inflated annually, it is unlikely to be as much as the free market price.

A further part of the draft, which has angered the industry, is its introduction of a new green certificate support scheme. The draft divides wind farms into four groups, each receiving different levels of support. Onshore installations up to 200kW will benefit from a feed-in tariff of PLN 650/MWh but only until the end of 2027, meaning that only those coming online before the end of 2013 will receive support for 15 years while wind farms of greater capacity will be supported until the end of 2035.

Meanwhile, onshore wind farms of between 200-500kW capacity coming online in 2013 or 2014 will receive 1.2 green certificates per megawatt-hour and those launched in 2017 will receive 1.125 certificates.

Onshore wind installations of capacity greater than 500kW, which will come online in years 2012-13, will get only 0.9 and those launched in 2017 will receive 0.825 of a certificate per megawatt-hour.

Offshore benefit

The draft seems to be most generous for offshore wind farm developers, which will receive 1.8 green certificates for each megawatt-hour of electricity. Given that theoretically green certificates' value is set in the draft at EUR70 on top of the EUR49 base price, offshore wind stations can count on EUR175/MWh while onshore between 200 and 500kW will get EUR133 and farms of greater capacity will receive EUR112/MWh.

But the problem is the certificates' price in the draft is not a minimum guaranteed value, but in fact a maximum value. This is because it depends entirely on demand from electricity sellers, who are obliged to secure the set proportion of their sales from renewable sources. If they fail to do so, they either have to buy the green certificates or pay a penalty fee called Ozj. And the draft sets the Ozj value at PLN 288 meaning that no electricity seller will pay for certificates since it can simply pay the penalty instead.

This ceiling on the green certificate price will never be lifted as the economy ministry has not introduced a provision inflating the Ozj value in the draft. This can be read as a move against the wind industry as in the current support scheme the Ozj is inflated annually. Moreover the level of the obligation imposed on electricity sellers is still unknown as it is to be set by the economy ministry separately from the draft. "This draft does not guarantee us any minimal income. It only guarantees that we will not earn more than the ministry wants," Prasalek said.

EUR48.5/MWh - Guaranteed price for wind farms, and top sale price allowed on market.

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