Mott's Blog

I have been accepted to present a speech at PowerGen 2015 in June in Amsterdam. I will be speaking on the European Commission State Aid Guidelines for Renewable Energy, published in July of this year. My speech, "The European Commission's Mismanagement of State Aid Rules for Renewable Energy," will present the results of my research from an upcoming article in the European Energy Journal . My thesis is that the new rules have been designed to support the large utilities and actually will reduce competition and hurt distributed energy. Investment in renewable energy in Europe has dropped by 44% this year, due to changes in the support schemes and added uncertainty among investors. But most Member States are not on target to meet the 2020 mandatory goals. The state aid rules are one of the biggest culprits. By giving auctions for support a huge preference, the Commission has sent the sector into a turmoil of instability. History shows the biggest beneficiaries in ...

Today, new disclosures show that the Polish Government is still getting enforcement questions from the DG Competition on the co-generation program. Last year, the Commission told UOKiK that the co-generation certificates were state aid . See UOKiK, November 28, 2013 . UOKiK also acknowledges in the same correspondence to the Minister of Economy that the Commission maintains that the Green Certificates are state aid as well. The continued assumption of the Polish Government is that changes in the current programs of support which might be exempt from notification under the GBER regulation as to new aid in the future, will somehow how cure unlawful aid in the past. This is totally inaccurate and has positively no legal support. The Polish Government notified the Commission of the co-generation law in 2013 and did not receive a quick answer that it was "not state aid." The Commission came back with detailed questions aimed at getting the information necessary to determine ...

Changes in the draft Polish Renewable Energy Law are starting to make it look pretty good. They have apparently agreed to "banding" auctions by technology. This allows biogas to compete more effectively. The legislators also seemed to have agreed to raise the biogas plant size to 1.5 MW, before it has to compete with cheaper technologies in auctions. I am waiting for the results on the definition of allowable substrates before the champagne comes out. The bill also has to actually pass the fill committee, the lower house of Parliament, and then be approved by the Polish Senate. This will open new support prospectively for biogas via auctions. Unfortunately, the auction mechanism will be tough on farm plants and smaller developers. We have fought for a more stable support system - including fixing Green Certificates, which is still possible through action by the European Commission. But the hope that a viable support mechanism for organic waste biogas plants in Polan...

We are on the final leg of what I call the "Polish Internal Draft RES law," which should be distinguished from the final one that will have to reflect concerns from Brussels. At this stage, the Polish Government has been all over the map in what they claim about the costs of RES. First, Mr. Tusk told us that the delay of the new RES law was good, because it was saving Polish consumers a lot of money in additional electricity costs.[1] This is rather an amazing contention, since the rest of the government has repeated told us that the new RES law will save money and lower support paid out! [2] Which is it? Tusk's explanation for the delay is inaccurate and very misleading. The new Polish draft is an attempt to lower support of most renewable energy technologies. While support for biogas would increase substantially,[3] generally the amount paid for wind and co-firing, the two biggest items would go down. How much co-firing can receive will likely be decided in B...

The Government is coming to the realization that the proposed auction system will not provide enough stable support to meet the biogas goals projected in the national plan . See  graph below.  See comments of the Polish Biogas Association on the July 2014 draft.   The additional biogas energy hoped for 2030 will also be problematic.        The initial solution in the July 2014 draft was to use a small auction for projects under 1 MW. The problem is that most agricultural biogas plants in Poland and biogas plants that are necessary to handle organic waste under other EU rules are normally over 1 MW to be economically efficient. The auction itself also poses real problems for biogas projects, which have never been effectively supported by this mechanism. See Del Rio (2013); ECOP FYS (2014).      The new proposal to have a separate auction for agricultural biogas is an improvement. But this option will face majo...

I am happy to invite any companies to one of two events that CHWMEG is hosted on December 1st (Dublin) and then on December 4th (Warsaw). CHWMEG is the largest waste stewardship organization in the world with 250 members and over 600  affiliated  companies. We focus of waste producers, i.e. manufacturers in pharmaceuticals,  chemicals , petroleum, aircraft,  electronics , automotive, etc.  The seminar focuses on recent changes in European regulations, case studies, enforcement and litigation. All issues directly  related  to producers of industrial waste.  These sessions will both be one-day in length and will offer updates on new regulations and legal developments in the EU. The Warsaw seminar will focus on the “newer” Member States in the East.  You will also have an opportunity to ask questions of a first-rate panel of experts, since we have built a good deal of discussion time into the schedules. Please consider yourself invi...

Increasingly it appears that the new law on renewable energy will not be in effect until substantially later than the latest government prediction. This is no surprise, since the government has been promising a new law within six months for the last two years.  Final approval by both houses of Parliament will go over into 2015, an election year, which will make final consensus difficult. The final figures for renewable energy production and investment for 2014 will reflect the uncertainty and doubts in the market. Perhaps the fact that investors are lined up to invest in Poland in this sector (perhaps as in no other sector) and are only blocked by the government, will leak into the elections themselves. The fact that electricity bills for everyone are higher than legally permitted by the inclusion of subsidies for co-firing and old hydro would seem to be a political liability. Much of this support does nothing to help compliance with the 2020 target, since it is either superfl...

This is a classic case of political leaders in need of a headline and not a real agreement. The details are discussed in Mr. Krauthammer's excellent article, linked here . If you believe in the climate alarmism, then this is not a real deal. If you are like me and hope that at least carbon is a good surrogate for really harmful pollutants, then it is still a bad deal.

The first really good news for Polish biogas in a while happened yesterday. The Parliamentary subcommittee has revised the draft law on renewable energy to provide for separate auctions for biogas. This will mean that biogas projects up to 1 MW will only compete with other biogas projects for support. The big issue will be how big the bundle is for biogas in the auctions. The 2030 energy plan is showing a doubling of biogas from the 2020 target to the level in 2030 in Poland. This is very optimistic given the past experience.  We are working on the 1 MW limit in Brussels. It is quite arbitrary and anti-competitive, although it ironically was suggested by the DG Competition.  A practical ceiling based on the market and the objectives of other European legislation (the Landfill Directive, the Revised Waste Framework Directive, etc.) would be 2-5 MW. Above this level would trigger comp etition with other RES technologies that have lower costs per kWhr. So the cap is the...

A new report noted that lithium-ion battery prices continue to fall and that U.S. growth in total energy storage is expected to increase by tenfold by 2018. See GramZielone.p l. So far, Poland has not benefited from these trends. The deployment of energy storage on an individual and even grid-scale could provide huge savings to Poles, currently locked into providing peak electricity demand from coal-fired power plants. In Poland where electricity prices are higher than the US. the incremental benefit of storage would actually be greater.

An expert at the International Renewable Energy Agency, recently wrote: "Regulatory stability, transparency and the investors’ perception about the  fairness of the process are pre-conditions for the success of an auction." It remains hard to see how Poland will meet any of those criteria on its present trajectory.

First, it is not clear what will happen when the US, China and India refuse to agree to new mandatory GHG targets in the next UN meeting. The EU may reconsider its new 40% GHG reduction target for 2030. Second, Poland got some concessions, but there are important caveats. First, the total amount of concessions to "reduce dependence on carbon energy" in Poland is about 8 billion Euro. That is somewhere between 10-15% of what is necessary to modernize the conventional power system and to meet the current EU renewable energy targets (not including new efforts on RES for 2030). So there is still a major burden on the Polish energy price structure to come up with funds for new investments in both conventional energy and RES. The annual shortfall will have to be made up by at least a 50% increase in the price of electricity over this period. The increases will likely start after the Parliamentary elections. Third, the organization handing out the cash from the first deal change...

As the Government in Poland makes glorious plans for shale gas in the country's long-term energy plan pipe-dream, the actual number of a ctive wells in exploration drops to 13  (a 50% reduction from last year). The Government plan for was 80 wells this year. By contrast, the United States has 27,000 active wells.   " Experts say that around 300 test wells are needed to get a proper estimate of Poland's gas reserves."   The major international oil companies have generally pulled out of Poland. The leading political party has long held out to the public that shale gas would be a critical part of  Poland's energy mix . Now the Ministry of Economy at least concedes that it is uncertain. But the politicians have not taken it out of their election speeches. The only plan is to remain dependent on coal and lignite with the illusory promise that Poland will somehow make deep-mined coal competitive with surface-mined imports . This premise is essential farc...

ANALYZING THE TRUE  COST OF RENEWABLE ENERGY Randy Mott, Vice president, Polish Biogas Association      After over three years of debate and discussion and multiple versions of the proposed law and its regulatory impact, the Polish Government has never provided a realistic economic analysis of the impact of support for renewable energy . The simplistic model used by the government simply adds up the support for various types of renewable energy and creates a static total price tag. “Savings” and “optimization” are only viewed as a function of their measurement on the total price tag. There is abundant actual evidence that a reasonable support system on the Polish current model can be effective without having major price impacts .  The actual economic cost of renewable energy on end-users, which is what the government professes to care about, cannot be viewed as simply the total value of the support. The new capacity created by renewable energy affe...