United States Renewable Energy Continues to Surge: Using the System that Poland Wants to Abandon

About 30 states in the United States use a "residential portfolio system for renewable energy, a quota system set by the public utility commission in the state which requires a fixed percent renewable electricity. This is sustained by certificates, as in Poland. Unlike Poland, co-firing biomass with coal is not traditionally popular. The United States has reached 14% renewable energy remarkably in a huge market when conventional electricity is much cheaper than in Europe.

The pace of RES growth continues in 2015. The U.S. Energy Information Agency estimates that renewables will contribute to a majority of the electricity production growth in 2015.

Even low natural gas prices have not affected RES growth. The major loser has been coal-fired plants. The lesson of RES growth without a significant impact on consumer prices (Livermore National Laboratory) has been generally lost to Europe, Competition among electricity producers is enhanced by RES development which helps to offset the effect of the subsidies. (see numerous U.S. EIA studies).[1]

Poland (and the European Commission in part)[2] have embraced an alternative model. One that looks to auctions for RES as the principal support scheme. This ill-advised move is unlikely to provide for the development of a strong RES sector at lower long-prices. See Mott, "NEW STATE AID GUIDELINES FOR RENEWABLE ENERGY ONLY DISCOURAGE COMPETITION, GREEN ENERGY AND ENERGY SECURITY, publication pending 2015.][3] Auctions do, however, reward market power and are the good way to perpetuate the dominance in the market of larger players.

Poland has the option to continue the certificate program after it is adjusted to meet competition concerns. This will have to be done retroactively to fix the current system in any event. Those changes could still be used in future support even under the Guidelines from Brussels. This would also be far more easy to implement than what is now planned.

Certificate values can be adjusted by coefficients to avoid over-compensation and provide fair support across technologies. See IEO Report (2013). Their use in the United States demonstrates that moderate levels of support can be used to create a large amount of RES without affecting consumer prices.   

Poland remains unwilling to learn from the past and seems unable to break the political cartel supporting the state-owned utility interests. Some RES sectors will still thrive and have niches in the new system, but the broad-based development of RES in Poland will be unnecessarily hampered by the political climate for the foreseeable future. 


[1] When most of the support, as in Poland, goes to existing facilities (old hydro and co-fired coal plants) no new capacity is created and no new supply of electricity is established. There is no positive effect on competition and all of the support must be directly transferred to end users.

[2] A majority of the European Community institutions favor the move toward distributed energy, built on RES technologies. See Report of the European Economic and Social Committee (2014). Lobbying by the large utilities in Europe (Eurelectric) led to the DG Competition favoring auctions in their guidelines (which will be challenged in a number of ways).  

[3] Available now on request.


Popular posts from this blog

Hitting Reality: Polish Energy Policy Meets the Facts

New Rules on Polish Auctions for Biogas

Renewable Energy in Poland Slowed Down by Auction Mechanism