Polish industry in bankruptcy warning

POLAND: Polish renewable energy companies have warned of a likely wave of bankruptcies in the sector resulting from a recent revamp of the national renewable energy law.

Poland is becoming an increasingly risky investment, the Polish wind association said (pic: Invenergy)
Poland is becoming an increasingly risky investment, the Polish wind association said (pic: Invenergy)

The Polish senate passed an update to the law last week that ties the amount of the so-called substitution fee to the market price of green certificates.

The fee is paid by companies failing to produce a certain amount of green certificates, which are traded by power companies to prove that some of the energy they transmit or distribute comes from renewable sources.

Green certificates have lost about 90% of their value in the past few years due to oversupply. According to the new bill, the substitution fee must not exceed 125% of the certificates' market price.

The substitution fee – designed to encourage the purchasing of renewable power – is currently set at a fixed level of just over PLN 300/MWh (€70.6/MWh).

Hedging against volatility in green certificate prices, many renewable energy companies have their sales contract indexed to the fixed amount of the substitution fee.

These companies are now concerned that energy purchasers will insist on renegotiating these contracts. Moreover, they argue that the new law will limit the potential for growth in green certificate prices.

"[The changes in the law] constitute yet another proof of how unstable the regulations concerning renewable energy are, how unpredictable state actions are, and how risky investing in renewable energy sources is Poland has become," a statement from the Polish Wind Energy Association said.

Polish renewable energy companies have been hit by regulation under the administration of the conservative Law and Justice Party.

In a controversial change last year, new wind developments were restricted to locations not closer to residential areas than the ten-fold height of a wind turbine.

First published on Ends Europe

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