THE PROPOSED LAW CREATES UNECESSARY BARRIERS TO BIOGAS DEVELOPMENT
The Polish Government continues to talk about biogas development, especially in rural areas at the community level, without regard for the provisions of the law that they have proposed. There is simply no way the draft as proposed will result in the large number of biogas projects still suggested as the government’s goal. Ironically , the changes necessary to make the law truly pro-biogas are not extensive and will actually have a positive economic impact on consumers and the public. Why these changes cannot be done by amendment still remains a mystery.
The Polish Government continues to talk about biogas development, especially in rural areas at the community level, without regard for the provisions of the law that they have proposed. There is simply no way the draft as proposed will result in the large number of biogas projects still suggested as the government’s goal.
The first problem is the auction mechanism for biogas projects. There is absolutely no evidence whatsoever that an auction will work for biogas projects. The Polish Biogas Association and the European Biogas Association have detailed how biogas has had a terrible record in auctions in the past. The unpredictability of operating costs and their higher level for biogas anaerobic digestion plants makes doing ten or fifteen year bids nearly impossible. The additional burden of the auction, including complete project development and permits, has also proven to be too great for small and medium sized businesses to compete in the process. These are empirical facts based on studies of many countries.
The Polish law will require 2 to 3 years of project development to secure the prequalification requirements, such as a building permit, with no information on what the reference price will be in the eventual auction until well after these costs must be incurred. Then one must add on the penalties for bidding, winning and not delivering the project or the required level of electricity. The whole process creates more barriers to RES development, as noted by the URE comments on the draft law.
In fact, the new EU Guidelines for State Aid for renewable energy indicate that small projects should not be done in auctions. See paragraph 127. The 1 MW cut-off is also arbitrary in both the EU document and the Polish law. Both will be challenged in court. A level of 2-6 MW would achieve the same objective for pushing big projects into competitive bidding, but would still allow small projects to be feasible with a stable support system.
Green Certificates weighted by actual costs of production would allow biogas to develop and would not have a serious impact on energy end-users. In fact, the evidence is that biogas (after support) can supply electricity and heat to Polish end-users cheaper than coal plants. This is partially true because biogas electricity can avoid the current high costs of transmission by direct connection to local plants. This is clearly a key type of distributed energy and it is equally obvious the Polish Government has ignored it.
Continuing biogas development under the “levelized” Green Certificate system would allow for direct electricity sales and lower costs to electricity users.
The technical constraints on biogas in the law are also totally unnecessary. Biogas plants should be able to take household food wastes, green cuttings, enzymes to improve performance, and some amount of sewage sludge. All of these are used as feedstock in Western Europe and there are many advantages. Production of biogas from substrates that are not purchased and do not compete with the development of food is a huge advantage. This requires plants over 1 MW that can afford the pretreatment and additional equipment necessary, but it is quite feasible if the law allowed it. Taking wastes that local communities will otherwise have to spend substantial money to manage is a clear benefit. None of this is possible in Poland, since the biogas policy is being set by the Ministry of Agriculture and is focused only on biogas plants on farms. The biggest loser is the rural communities that have waste resources that could be used for local energy production and lower waste management cost to their constituents.
The proposed system will likely not provide for any biogas projects – even assuming that they can successfully bid in auctions – until 2017 or 2018. The legislative delay in Poland will be followed by a long delay in European Commission review, especially since major parts of the proposed law violate EU rules. In this interim, biogas development may be crippled by the inability to keep legal agreements on substrate, land and heat sales in effect for prolonged periods. Biogas that can be used to meet the 2020 target will have to be supported by Green Certificates, which means that the current system needs immediate repairs for Poland to meet its EU obligations.
Meeting the 2020 target will be based on Green Certificate support. The law needs to go further to repair Green Certificates by levelizing their value and eliminating support for co-firing. These issues will ultimately resolved in Brussels, not Warsaw. But our politicians could go a long way toward respectability if they anticipated EU law in their actions instead of ignoring it.