Re-Writing the Polish RES Law

It will be necessary to re-write the Polish Renewable Energy Law that was adopted in April 2015 to meet the objections of the European Commission. Major provisions that will have to be changed to meet the Commission's consistent position in approving other certificate schemes include the following:

1. Prevention of Over-Accumulation:  This will require that certificates be used in a fixed time period. This could theoretically wipe out almost all of the accumulated certificates now being held. Note: the old hydro certificates will be null and void in any event under the depreciation rule. The co-firing certificates will otherwise likely be valued at 50% or less, even if they are allowed to accumulate.

2. Correction coefficients: The value of the certificates will have to be adjusted by the cost of production of electricity for each technology. The adjustment must assure that there is no over-compensation of technologies such as co-firing. Arguably, only the technologies in the National Action Plan will need to be covered. There should also be no under-compensation for the same legal reasons.

3. Retroactivity: The changes will have to cover the period from October 1, 2005 to date. This means several things that will make it more complex. The changes in production cost over time will have to be roughly included, i.e. PV and onshore wind support in 2005 will have a different cost of production than 2015. The value of certificates being held by various parties will be affected in that if they are older than the accumulation period, they will end up void. If they have a value more than or less than the base certificate value (substitution fee for that year), they will have to be adjusted.

4. Effective dates:  Since there is no RES support system in place now, I recommend that the new Green Certificate law run at least through 2018. A provision to start having auctions on large projects like wind farms earlier could be included, but experience has shown that these auctions should probably be technology-specific and incremental. Do them a few in a row to obtain the experience and refine the procedures. There should be no auctions for projects under 2 MW.

5. Compensation:  It might be possible to use the excess amounts of support awarded (like to old hydro) to pay off the under-compensated producers, like biogas and PV. The incompatible aid received by the old hydro producers and co-firers must be recovered under EU rules. That fund could be used to compensate the producers with higher costs of production who received discounted certificates from the distorted market. Otherwise, those parties can claim against the Government of Poland for unfair competition.

This will be as mess to work out. It is unlikely that any one in the government will have a handle on these issues and be able to address the Commission's concerns in any reasonable time-frame. But while the process is pending, there will be no support for renewable energy and no ability to use green certificates for compliance with the quotas.

My recommendation is to form a group in the renewable energy sector to put together a proposal and then obtain agreement on the package with PKEE (the big guys). I am happy to be involved and to use the experience and information that I have gained over the last several years on these issues. Interested parties should contact me to discuss the logistics and funding. randymott (at) ceeres.pl.

If this process takes years or even six months, the results will be financially devastating to both green energy and conventional energy in Poland.


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