Renewable Energy Update from Poland
There are still some issues to be decided on the shape of the new law on renewable energy. The biggest one for us in the biogas sector is the reference prices, since it is widely expected that the under 1 MW small auction for projects with more than 4000 MWhr/MW a year will be under-subscribed. The Deputy Minister of Economy gave a 500-600 PLN/MWhr cost estimate in the Parliamentary debates, but this is lower than the Institute for Renewable Energy estimates of the cost of production in their 2013 report commissioned by the same Ministry. He also predicted that all small projects that pre-qualify and bid within the maximum reference price should receive support.
This would mean a base price of 190 PLN/MWhr plus the factor times 300 PLN. Since the final law only provides for under 1 MW in practice, the figures would be: 200-500 kW = well over 1000 PLN; 500-1000 kW = 970 PLN. These figures are consistent with numerous studies of the costs of production and are much higher than the Deputy Minister's statement.
Clearly the fate of small biogas projects in the 250-350 kW range depends on getting more support than 500-600 PLN.
If you add the 120 PLN/MWhr for co-generated heat, the gap narrows, but most farm-based plants cannot achieve the necessary high utilization rate to be eligible for co-generation support.
Unfortunately, the reference prices will not be announced until a few months before the auction. So projects that cannot survive on 500-600 PLN/MWhr (the low figure) will be difficult to plan and develop...at least for the first auction. The possibility of grants may be useful to bridge some of the gap, but they present coordination issues with the auction timetable and also cannot be expected to cover enough projects to meet the expected total power sought by the Government.
On that subject, it seems optimistic to expect an auction in 2016. If the natural course of events is assumed, it will be in 2017. This means that it will be even larger and the under 1 MW share will be even more stressed to find bidders in my opinion.
The schedule for transition to the new law seems problematic for most developers. This is especially true since so many small operations have reduced their development efforts in light of the long delay and low Green Certificate prices.
Every sector of renewable energy has its own issues with the law and the transition period. The net result is the virtual impossibility of Poland meeting the 2020 target. It remains quite possible that there will have to be supplemental legislation to address the problems, which might include extending the certificate program in the interim and conforming it to state aid rules.