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Friday, June 24, 2016

Lack of Energy Diversity Cripples Polish Electricity Supply

With 85% of the electricity in Poland supplied by coal, the country is in a unique position of vulnerability in Europe. While the use of coal throughout Europe is declining sharply, it is not changing significantly in Poland. Couple this fact with the steady decline in the profitability of operating coal plants,(1) and you can see nothing to suggest a very bright energy future in Poland under this policy. Recent changes in Poland also seem to clearly have stopped major new wind and PV energy capacity.


What we now see in the interim in Poland are the consequences of a lack of energy diversity in the supply.  For the second summer in a row, the coal plants are struggling due to schedule maintenance in the warm weather but also due to low water levels. While the wind can also be lower in these hot and dry months, our neighbors with extensive PV capacity are seeing a nice natural balancing with the hot and clear weather. Poland does not have that asset.

Even the long-term strategy of meeting the EU renewable energy targets in 2020 and 2030 is linked now strongly to co-firing biomass in coal plants. This could be as much as 75% of the total RES in 2020 planned by the new government.  Except if the coal plants themselves fail, then the co-firing as a RES source fails as well. Given so many old coal plants must be closed by the final deadline for meeting EU emission requirements, this is a very poor long-term gamble for RES capacity. In the short-term, it also means that disruption of the coal-fired plants like we have seen due to water problems, will also stop production of co-fired biomass energy. New coal plants hoped for construction in the near-term are also having difficulty securing financing from private equity and all forms of debt funding.

The surest way to drown in the ocean is to try to consistently swim against the current. The force of nature is just bigger than you are and it is a contest that you cannot win.

In the same way, fighting against the long-term economic and technological trends in energy seems like a likely way to end up dead in the water.

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(1) The UBS study in 2015 pointed to massive closures of coal-fired plants in Europe and very limited profitability of plants still operating. Bloomberg has reported a general trend to phase out coal plants in Europe.


UPDATE: Monday, June 27, 2016: The peak power load was even greater on Friday. The cooling water problem limited coal-fired power plants operations. All of Poland's neighbors did not have the problem and their prices were much lower, since they all have much higher penetration of PV in their energy mix.








Wednesday, June 15, 2016

Poland Used Up Its Energy Transformation Funding to Prolong Dependence on Coal

A new report from the very credible Client Earth group answers the question "why can't Poland get money from the EU to fund the transition away from coal to cleaner technologies?"

"As many as 70 per cent. projects implemented by energy companies in exchange for the free allocation of emission of greenhouse gases include carbon infrastructure, and only 10 percent.investments in renewable energy sources.However, the purpose negotiated by the Polish government called "derogation" .... was to be the modernization of the outdated energy sector and diversification of sources of supply. Investment in the coal could be affected by serious problems after 2020, when the price of allowances will begin to grow - comments by ClientEarth Foundation, Lawyers for the Earth."

The total funding up to 2020 was 4.5 billion EURO! Instead of spending the support, as intended by the EU, on de-carbonization, Poland spent it mostly on projects to support the existing coal energy infrastructure. Poland is still left with a bunch of very old coal-fired power plants (30 years old plus) that cannot produce economical electricity or meet EU mandatory emissions standards. No intelligent business would have made the same decisions.




Now that Poland is getting into a corner on carbon emissions, the EU Industrial Emissions Directive, and the Renewable energy Directive (all of which now involve billions of Euro is penalties and costs to the Polish economy due to the continued heavy use of coal), Poles are screaming to change the rules. The morality and equity of this position is very dubious after taking billions of Euro to make the changes and blowing the money. Poland's behavior toward coal is pretty much that of an alcoholic.... a substance abuser that cannot stop and will use everything around them to feed the habit.


Monday, June 13, 2016

RES Market in Poland: Biomass and Biogas New Favorites - Wind and PV Seem Doomed

The biggest development in the renewable energy prospective market in Poland is the new amendment in the Sejm, which has passed the committee and appears to be sailing for rapid rubber-stamping by the rest of the government in Warsaw.

The single biggest characteristic of the law is the emergence of separate technology "baskets" for renewable energy auctions. The Polish Government figured out that it can control the mix of technologies by setting the size of the baskets as well as the reference prices (maximum allowed support in the form of a contract for the difference). Regardless of any other developments, it appears that this procedure will be used to skew the support away from PV and wind to biogas and biomass.

The characteristic being used to "make the cut" is the stability and reliability of the renewable energy source. The intermittent nature of PV and wind have led the Polish Government to put them into a less desirable category in baskets which can be limited by size and level of support in any future auctions. The amended bill is not available yet as this is written, but the basic approach is set out in the draft proposal introduced a few weeks ago. The net reason has been referred to by Grzegorz Wiśniewski from the Polish Institute for Renewable Energy as the end of PV and wind energy in Poland ("ustawa o OZE i ustawa „antywiatrakowa” zamykają możliwości realizacji programów inwestycyjnych w fotowoltaice i energetykę wiatrową"). 

While there are objectionable provision to the new laws that will likely be reversed by the European Commission if they are not taken out in subsequent proceedings in Poland, the basic matrix of using separate technology baskets and references prices has been approved by the Commission for auctions in other countries. I do not believe that this mechanism really does anything to satisfy the competition provisions of the European Treaty, but the Commission has pushed it, 

In Poland, the effects will be widespread. Wind and PV investors that have been quite active are starting to fold up their tents. The under current here is that these are mainly foreign firms and the new government has made no secret of its skepticism about encouraging foreign investment in Polish energy. The allegations that a 15% or even 25% RES share of electricity that relied mainly upon wind and PV will introduce really serious grid instability has been taken as a truism and not critically evaluated. Even the experience in Germany where the share is over 40% does not necessarily provide support for this assumption. 



We nevertheless are where we are. Until 2020 arrives and the RES target is missed, it is unlikely that there will be a major change in the support for new projects. The existing system will inevitably see changes with the EC decision in SA 37244, the pending state aid case on green certificates. But that system will cut off July 1, 2016, unless a dramatic political change occurs and it is extended. The extension of that law is probably the only viable means to assure Poland meets its 2020 commitment. The auctions will be delay construction until the last minute and seem to clearly not portend enough RES capacity to satisfy the requirement.

Biogas will do well under the new rules and will remain one of the few technologies that has enough support to justify new projects. The auction mechanism itself will restrict biogas development to some extent, knocking out the smaller developers and speculators. Small farm projects will also struggle with the proposed reference price (550 PLN/MWhr), especially with their limited co-generation potential. Biogas will also become more critical as the Circular Economy package gets approved and implemented, pushing organic wastes into biogas and away from landfills and incinerators. See presentations from Waste Management in the Circular Economy 2016, European Academy Conference, May 12-13, 2016, Berlin.

UPDATE: As of June 23, 2016, the new amendments are headed to the President of Poland for signature. I still expect something from the European Commission on green certificates. The net results will be a sharp decline in interest in wind and PV in Poland. Some complicated issues on co-firing including, not only the state aid issue, but the technically costs of going to higher biomass percentages of fuel as well as legal issues on burning waste. I am speculating that the inclusion of waste wood by the government may be a sign that they got feedback from the Commission that the reference price for co-firing in an auction will be lower than they wanted. I have no doubt whatsoever that the Polish Government is trying to push as much co-firing as possible, but there are limits that may impede this from going the way they want. Among other items mentioned above, some of the old plants that have been the biggest co-firers will be closed after 2020. The local biomass rule will likely be challenged by someone and could continue uncertainty over co-firing well past 2020.




Wednesday, June 08, 2016

Major German Grid Operator Shoots Down Argument that Renewables Cannot be Integrated into the Grid


This is heresy in the utility business and they are supposed to keep exaggerating the adverse effects of renewable energy on the grid. But Boris Schucht, CEO of 50Hertz Transmission GmbH since 2010, is remarkably candid in his interview this week: "There are a certain number of myths in the energy industry. One of them is that we need more flexibility in the system to integrate renewables, like energy storage, interruptible loads or backup power plants. That’s a myth. We have a lot more flexibility than we need and a huge amount of potential."

He advocates some changes but is not repeating the doomsday scenarios echoed by Eurolectric's lobbyists. On days of excess energy, he says Germany can just export to Poland. If Poland is below the renewable energy target in 2020, it will have no choice but to take German wind electricity, even if that means replacing Polish coal plant electricity output. The decision for Poland is not whether we have renewable energy or not, but whether it will be Polish or German.  Few politicians here understand this.

Tuesday, June 07, 2016

Where is that Reliable Coal Energy When We Need it? Poland faces Energy Shortage

We are constantly lectured in Poland about how reliable the conventional energy system is and how unreliable renewable energy is.  Reality, however, suggests that our neighboring countries with diversified energy supplies are much more secure, much more reliable and now actually cheaper.


While Poland struggles with a 30-year old energy infrastructure, built by the communists who seemed incapable of building a reliable automobile, our neighbors have shifted to a large mix of renewable energy technologies that add alternative sources of power that generally compliment each other.

As energy storage is also deployed all around us, the future of electricity supply seems to be alluding Poland. The government seems locked into 1960s thinking about these issues.

Now a new report indicates that energy shortages may again appear in Poland in the late summer. Because, guess what, coal is unreliable under certain weather conditions (hot weather, high demand, and low water levels).

Not only are we seeing the cost of new coal plants grow larger than onshore wind, but without the line of investors and banks willing to fund them, but now we seem to be experiencing the negative side of a lack of energy diversification.


Tuesday, May 31, 2016

"Market power": Capacity Markets Are Not Cost Effective

We are often told in Poland by advocates of coal that renewable energy is too expensive. They ignore the fact that onshore wind is cheaper than new coal plants right now and that PV will be cheaper during the investment life of any new coal plant planned today.

The cost of renewable energy support in Poland is about 7 PLN per month on an average consumer bill of 153 PLN. Most of this has gone to electricity producers who would have generated the electricity without support (old hydro and co-firing). Had new capacity in RES been supported, the impact on consumers is normally cut in half by pressure of prices due to increased supply.

Now we are told that consumers must pay to have old coal-plants standing by on the few days a year when extra power is needed. Studies in the United States have demonstrated that this is the most expensive way possible to meet peak demand. See U.S. Electric Power Research Institute (2013).*

Now, however, the cost impact on consumers is being finally discussed in Poland. Consumers will face an increase in bills of 18-50% to allow the big utilities to keep old coal plants on stand-by for peak demand. This is many times the impact of RES support on consumers and one would have hoped that the government would have carefully evaluated alternative schemes to deal with peak demand.  But I cannot seem to find the studies or reports or references generated during this major policy development.

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* Germany is reporting to have saved billions of Euro on electricity transmission costs by its moves into energy storage. This savings is not even factored into most analysis of energy storage vs "peaker" plants.


UPDATE: The cost of storage in 2015 is generally quoted as $.20 per kWhr. This price is falling rapidly (about 15% a year). The comparison should be between the peak rate of electricity and the lowest demand period. Poland has already hit this level last summer for a period. The next comparison should be the cost of the peak energy  from a "capacity market" system. I believe that this will exceed the storage cost in the near term. See Energy Strategies paper. It is hard to find data that is transparent, i.e. it is mostly reported as a surcharge on the rate per kWhr in monthly bills. The impact on monthly bills is huge! The DG Competition will require that all technologies compete in "capacity markets." This includes energy storage which competed unsuccessfully in the UK auction last year.  By next year, I expect that energy storage in many places will be competitive in this auctions, which is why Eurolectric successfully lobbied to get stored energy to lose its renewable energy support under the guidelines from the European Commission. This is not a law and will likely be challenged - most Member States have not adopted this stupid rule.

UPDATE 2: In the UK, about one billion GB a year will be passed on to consumers by 2019 for a "capacity market."  Despite the real need for a peak power reserve, only 1% of the capacity market will be linked to demand response.   This is an outrageous waste of the public's money!


Tuesday, May 24, 2016

PERVERSE INCENTIVES AND ENERGY PROBLEMS



We live in a strange time and place. Electricity in Poland is much cheaper than it was a few years ago, but the experts are projecting power shortages in the near future. The rules of supply and demand seem suspended by the regulatory and political situation. The low price of electricity in Poland is stopping new construction and investment for multiple possible sources.

Polish government officials do not want us to follow the road of Germany and develop a higher percent of renewables. They say it is too expensive and unreliable. Yet German electricity is cheaper than Polish power and has far, far fewer outages.

The Polish Government objects to adding too much to the price of electricity to support renewable energy, but proposes to continue to use most of the support for the existing production of electricity with only a small partial switch to biomass to make it "green." This does not create any new electricity and detailed studies show that it is 100% transferred to end-users [where support for new RES production ends up increasing all the supply of electricity and has only a fractional impact on end-user prices]. Let's use the most expensive option in the name of saving money!

Irrational policies founded on half-truths and misrepresentations are not unique in politics throughout the world, but they seem to be a well-developed specialty in Poland.


Wednesday, May 18, 2016

Reality Hits Polish Government Plans for Renewable Energy

The Polish law on renewable energy has been a moving target for years. Originally, the law was deliberately delayed to allow the state-owned energy companies to keep receiving support which the European Commission would have stopped if the new law had been notified under the treaty. Now the delays are being triggered by the new government's efforts to amend the program on the fly.

The government has convinced itself that what RES capacity is already done and more co-firing will be all that we need. Some additional biogas plant construction (actually a lot in real terms) is strongly supported in their mix. But the classic RES technologies are on their black list. They have been completely persuaded by the coal lobby that these technologies are too unreliable to be major parts of the energy mix.


The factual basis for their assumptions is being broadly challenged by the RES sector. Poland will not meet the 2020 target without a serious program that includes the full mix of RES technologies. The need to start addressing the 2030 goal is also closer than it looks. The need to expand the energy production sector by any means to avoid black-outs in next few years also strongly suggests that new electricity generation supported by investors (RES) should be promoted, while the government remains free to consider its fantasy of major new coal blocks filling the void.

Many of the old coal-fired plants that have been co-firing will be offline in 2017-2020. A lot of these are the biggest co-firers. Unless they are operating in 2020, nothing that has been done will count toward the target. A lot of the new coal-fired plant construction is a bit delusional - the financing is just not there for this technology when coal plants are closing all over Europe. The debt and equity markets obviously know this, even if the Polish Government pretends not to notice. Expansion of co-firing will be quite problematic, even assuming that the support scheme to do it gets by the European Commission state aid review.

Now we are seeing the deadlines for the PiS amendment to the law start to drag out. A big part o this is undoubtedly feedback from the Commission looking at the new law. The gap between installations covered by the current law (green certificates) and facilities that will be constructed based on the auctions is growing. This is the period when facilities cannot qualify under the old law and cannot get support under the new law. I predicted that it would be 24 months or more and that may be charitable. Continuation of a modified green certificate program approved by the Commission is probably the only viable alternative remaining to meet the 2020 target. This would have to be tweaked to add correction coefficients by technology to reflect their actual cost of production. See prior posts on Mott's Blog. This RES deficit will be especially true when the accumulated green certificates are largely voided by the Commission's action in the enforcement case SA 37244.

The whole situation is made much, much more difficult by the lack of transparency surrounding the legislative process. This has been endemic from the start of the RES legal changes in 2010. Rather than incorporate a bit of reality testing into the internal process, the Polish politicians run into the back office and create their plan. When it hits the streets, they are confronted with all of the realities that they avoided, ignored or were ignorant of when they made their clandestine plan. Real world economics and compliance with European and Polish law apparently only get any attention after the proposal is made in public. Since these twin pillars dictate almost everything that happens in the RES market, the plans seldom bear any relationship to what can actually happen.

The growing bunker mentality of the government, especially vis-a-vis Brussels will only make the problem more acute. While life creates the opportunity of experience, it only promotes forward progress when the right lessons are learned. Transparency and open discussion to flush out the facts is not obviously one of the lessons that is being learned here.




Monday, April 25, 2016

PiS Changes in RES Law Will Promote Co-firing, Biomass and Biogas

Leaked information published in Poland today suggests that the PiS Government will fundamentally change the nature of renewable energy support contained in the prior government's version of the new law.
 'State support in the form of a contract does not have to get the source of the most cost-effective, but the disposition by the greatest number of hours per year. Among the defined limit at the auction they would have been performed in a specific order: the renewable energy sources for power exhibiting the best stability, but not necessarily the cheapest, and finally to the least controllable and disposable.... This means opening up  co-firing  [eg. coal and biomass from wood], will take precedence. Then the next blocks will be biomass and biogas, as well as clusters, also considered self-sufficient and stable systems - indicates our source close to the government sources, and knowing the draft amendment. - If a designated pool of energy ordered by the government will be something else, only they will be held auctions for wind power and solar." Rzeczpospolita, April 25, 2016.
This is serve several purposes that are important for the new government's policies. (1) It will effectively control the technology mix of new RES construction by setting up technology baskets for the auctions that can regulate how much of each technology receives support. This will effectively control wind energy development, even if the land use law gets reversed or tied up in EC proceedings. (2) Technology baskets have been approved by the European Commission for other Member States, so this bypasses the state aid obstacle in theory. However, the maximum price of the co-firing auction will be controversial if it exceeds the real cost of production and results in over-compensation for co-firing (the historical situation). Presumably, the Polish Government will clear the price with the Commission in the course of the current DG Competition review.  (3) The revenue from the new support for co-firing may be an effective offset to the refunds of illegal aid for co-firing since 2005 when it was over-compensated. See pending case SA 37244. It is also speculated that it is a reward for the state-owned energy companies supporting the insolvent state coal mines.  See Grzegorz Wisniewski comments in Rzeczpospolita. (4) The policy can arguably be supported by the need to limit intermittent RES sources that have caused problems in other countries. The issue will only be if the government interest in stability of the system is sufficient to pass muster with the European Commission. The fact that other Member States have been able to conduct approved auctions that are technology-specific and basically ration technologies by basket size seems to indicate that this is possible.
The implications for biogas are probably good. A  separate technology basket will greatly help projects win support. The issue will be the reference price and whether the unnecessary restrictions on projects (size below 1 MW and organic waste substrate restrictions) are removed in the new proposal.  
Another change will be the shift to allow wood to be used in co-firing, not just biomass from agriculture. This is expected to raise wood prices in the Polish market with some adverse effects on smaller users of biomass.
Controversies will still exists with the changes. The major issue remaining will be how the auction reference prices are set and whether doing these changes "on the fly" will result in killing many projects except for co-firing. 


Monday, April 18, 2016

Polish Politicians Promise of Clean Coal Technologies is Bogus

The Polish politicians now reluctantly accept that they have to make noises like burning coal and lignite can be "clean." Every week, we heard a new speech about Poland jumping into "clean coal technologies." The rationale for this energy policy - ignoring the political motives- is that Poland has a lot of coal and that it is cheaper than greener and newer technologies. Both arguments are superficial at best and are fundamentally wrong.

First, "clean coal technologies" are not cheap. They are actually more expensive than other more modern renewable energy alternatives. Details for the United States which has been the global leader in trying to develop "clean coal technologies" clearly show the empty promise of this approach. A report of the results in the US indicates:

  • Duke Energy’s 595 megawatt Edwardsport Integrated Gasification Combined Cycle(IGCC) plant in Indiana. The world’s first large scale IGCC plant. The carbon capture and storage component of the project was dropped part way through construction, although the plant could be upgraded with carbon capture and storage in the future. Online date: June 2013. Forecast cost: $1.985 billion. Actual cost: $3.55 billion. Cost per unit of capacity: $6,000 per kilowatt.
  • The Southern Company’s 582 megawatt Kemper plant in Mississippi. The world’s first large scale IGCC plant with CCS. The carbon dioxide will be injected underground in a nearby oil field. Online date: first half of 2016. Initial forecast cost: $2.4 billion. Revised forecast: $6.2 billion. Cost per unit of capacity: over $10,000 per kilowatt.
  • SaskPower’s 110 megawatt Boundary Dam Project in Saskatchewan. The world’s first post-combustion coal-fired CCS project. The plant takes the flue gas from a pre-existing coal power plant and strips out the carbon dioxide. The carbon dioxide will be injected in a nearby oil field. Online date: late 2014. Actual cost: C$1.467 billion. Cost per unit of capacity: over US$12,000 per kilowatt (at today’s exchange rate).
The three plants received either direct government subsidies, or have been authorized by the government to recover costs from their captive customers—a sort of off-the-government’s books subsidy.
To put the plants’ costs in perspective, the graph below compares the capital cost per kilowatt of these plants with the capital costs of other technologies as estimated by the US Energy Information Administration: 


The above costs are US-based, so natural gas is very inexpensive and a domestic resource. But it is hard to argue that the comparative disparity in costs for clean coal will be any better in Poland. Polish politicians advocating this course here are actually promoting the energy plan that will have the most adverse economic consequences on Polish end-users.

The argument that Poland has coal and therefore it is better to use it is equally fallacious. Poland also has wind, sunshine, organic waste and other things that can produce energy cheaper and cleaner than "clean coal technologies."   Theoretically, Poland could make a lot of buggy whips as well, but that does not mean that such an endeavor would be prudent or sound.

In the end, watching the Polish politicians struggling to find a way to justify the impossible premise of keeping dependence on coal reminds me of Dr. Samuel Johnson's remark about dogs who can walk on only their hind legs. "One wonders not so much about how they do it as why they bother."

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There is an abundance of published reports and professional opinions on this subject and no real room for doubt about the conclusions.

Thursday, April 07, 2016

The Continued Uncertainty in Polish Renewable Energy



Never make predictions, especially about the future.   
  
                                                                  Casey Stengel

By now everyone's predictions on the state of the renewable energy support system in Poland are wrong. The new government has gone back to square one and is working on an overhaul of the law passed last April. The European Commission is finalizing a decision on the green certificate program, including support for co-firing and old hydro, and - at the same time - looking into the law passed last April. It is likely that the Commission is discussing the changes in the new law with the Polish Government right now. Adding to the confusion, much of the RES that the new government in Warsaw seems to like is also problematic.

     Whether by the controversial law on land use planning - mandating an offset of wind farms from buildings and conservation areas that precludes most locations in Poland from being used for wind energy - or by simply limiting the basket of technology-specific support that will be auctioned under new rules to be announced soon, the Polish Government has successfully blocked wind energy from serious expansion in Poland.

     The talk about geothermal energy by the new government seems to be not grounded in any reality that I know of. Our firm looked into geothermal combined heat and power plants in Poland in 2009-2011. The "low enthalpy" geothermal water present in Poland creates a serious inefficiency in the generators used in that sector, i.e. organic Rankin cycle equipment. Higher temperature water may be present, but the network of wells is very sketchy and the expense of going 3000-4000 meters just to check availability and feasibility is prohibitive. The generation equipment is also 30% more expensive in Europe than in the United States (which leads the world in geothermal development).

    The co-firing of biomass with coal has been the predominant form of RES in Poland. This is because of its cheap cost, the lack of a need for major facility modification or new equipment, and the large number of coal-fired plants subject to green energy obligations. Co-firing so dominated the sector that it made attainment of the quotas relatively easy but drove the price of the market-based green certificates into the cellar. The EC in case SA 37244 is expected to rule on whether the support for co-firing (which was the same as most expensive technologies) violated the state aid rules. These rules have generally required that state support be correlated to the cost of production of the renewable energy by technology. The new law had proposed co-firing be restricted and receive 50% of the support it historically got. The EC must rule on this issue and any Polish Government plan to increase co-firing will have to be approved before-the-fact. There are good arguments that co-firing is over-compensated even at 50%.

     I am, of course, quite happy that the Polish Government has again announced its broad support for biogas. However, I have doubts that they understand enough about the industry to provide the right incentives. The Polish Biogas Association has filed detailed comments on what needs to happen to make the sector healthy and growing. The level of proposed support in the last public document was a maximum auction price of 500 PLN/MWhr, which may be adequate for some projects, but will not support most of the typical Polish projects unless they also receive substantial grants.

     It is now 2016 and a typical RES projects requires a good deal of front-end work in the climate of excessive Polish red-tape. A fast track to get a project ready to build is 24 months and a more likely scenario is 36 months. Construction ranges from nine to twelve months. So we are looking at about three to four years for new projects to get approvals, documentation, design, construction and commissioning. With no auction likely this year, this means that unless the green certificate program is extended with EC approval of changes, it is nearly certain that Poland will not meet the 2020 targets.

     The problem with co-firing goes well beyond the issue of how much state support it can receive and satisfy the EC. The biggest co-firing plants are also the ones operating on "borrowed time" under various extensions of EU mandates that will close them. A very large amount of capacity is scheduled to close before 2020.  Funding for new coal blocks is problematic at this point. Most of the traditional sources of equity and debt are out of the coal business at this point. The announced objective of the EC to get the CO2 fees over 20 Euro per ton simply adds to the abysmal situation for coal in Europe right now. Even at 10 Euro, Polish experts have indicated that it is not economically practical to operate coal plants. Many of the plants that the government assumes will be co-firing will not be built at all.....certainly not before 2020.  Those that are built will be in a precarious financial condition that will jeopardize their continued operations. This might even be good news for meeting CO2 reductions, but it will be a disaster if the major RES technology supported by the government is co-firing with coal.

     The delays by the former government, intended to allow maximum support for co-firing for as long as possible, have left the new government will little room to maneuver. Instead of tweaking the system to meet their policy preferences, they are looking at fundamental changes in the support system and technology mix. There is unlikely to be enough time for this effort and still remain anywhere near on track for 2020 and even 2030 at this point.

   The only alternative that works is to revise the green certificate program adjusted to meet EC requirements. Any auctions for new projects by technology could occur as optional support to developers who want a 15 years guaranteed return. The references prices should reflect the same level of cost of production as the certificate coefficients.

     The PBA recommendations on biogas would allow biogas projects to be developed continuously over this period, including both larger waste-related plants and smaller farm plants.  There are many good reasons to encourage biogas plants in Poland and not all of them have to do with RES policy.

Thursday, March 17, 2016

Polish Government Plan to Make State-owned Firms Shoulder Bankrupt Coal Mines


The new government announced plans to compel other state-owned companies to kick in funding to bankrupt coal-mines also owned by the government. Since it costs more to mine the coal than its market value (and Polish coal is notoriously poor in quality), this is the classic maxim of throwing good money after bad. Or maybe the black hole of Poland?


Animation here.

Wednesday, March 02, 2016

Polish Biogas Association Comments on What Needs to be Done to Promote Biogas in Poland

The new government in Poland has announced its intention to much more actively promote and support biogas development. We are excited by this change in attitude and are trying to provide them with accurate information and policy suggestions to make it happen.

The details have been provided today by the Polish Biogas Association. We basically argue against using auctions for biogas and other smaller RES projects (citing a lot of studies and data). PBA also asks that the current system be fixed by providing a weighted certificate value based on the cost of production of the various technologies (as will be required by the European Commission in their review of the certificate program). We think that program should be continued for several years, even to 2020, to assure that there is a continuous construction of new facilities of all types.  The new auctions will not occur this year at this point and if they go ahead next year with two to four years to wait before new projects that win support can be built, Poland will be totally unable to meet the 2020 targets,

PBA also provides details on the definition of what feed-stock can be used and argues for the use of everything that the EU includes in its regulatory definitions. These centralized anaerobic digestion plants managing organic waste provide the best option of their handling and should not receive lower support than farm biogas plants.

It remains to be seen whether the government is serious or really understands what needs to happen, but this is more optimism than the sector has had in years.