Mott's Blog

Today the Polish Government starts its first auction for renewable energy support. The principal focus will be existing installations that now have an option to opt for a contract-for-the-difference to replace green certificate support (now special blue certificates for biogas). Some new facilities will also bid in another category. Most of the facilities participating with have grants for their projects - either already built or already contracted. This means that their bids must be lowered to meet state aid ceilings imposed by the EU. Accordingly, the bids today may not be very predictive of future bids in auctions where far fewer projects will have this condition.  I do expect that the number of projects bid will be lower than the government predicted. The hurdles of going into a project without a guarantee of support are quite significant and everywhere else they have reduced participation levels of small project developers.  The "competitive" nature of t...

My paper was just published in the Journal of Sustainable Development in Africa.  There will also tentatively be a two-day conference on the subject in Cape Town on October 15th (to be confirmed). The goal is to bring together stakeholders for a detailed frank discussion of what the barriers are to improving waste management and what solutions might work.

My blog is approaching 270,000 views.  I want to thank all readers and encourage people to pass on the links to stories that interest you. I will continue to call the shots as I see them and try to provide links to good information, facts and actual data.

The big plan to save coal energy in Poland - which is dying here as it is all over Europe - includes plans to allow coal plants to receive subsidies while they are not operating, just so they will be available when needed. This is a terrible plan on many levels, i.e. coal plants have slow "ramp-up" times and cannot quickly respond to peak power demands. They also are very uneconomic to run at lower than 75-80% utilization rates. U.S. studies showed even at higher prices a few years ago, that energy storage was more cost-effective than fossil-fuel peak plants. And now the EU seems poised to set a CO2 limit on plants used for reserve power that would preclude coal altogether.   "Capacity mechanisms will not be used as a backdoor subsidy of high-polluting fossil fuels; that would go against our climate objectives," EU Commissioner for Climate Action and Energy Miguel Arias Canete told Reuters .  "It is necessary to include strict environmental criteria in suc...

As Poland approaches its first auctions for support for renewable energy, I am reminded of a serious criticism of this approach which I discussed earlier when the European Commission caved into the pressure from big utilities and adopted this as the preferred method of support.  See  Mott, " The European Commission's Mismanagement of State Aid Rules for Renewable Energy, " PowerGen Europe 2015.    For there to be competition in the bids for support, which is the principal factor distinguishing the auction mechanism, that has to be a lot of losing bids. The EC suggests about 50% losing bids. Without losing bids, the auctions serve no purpose that could not be achieved by simply using the support caps directly as a feed-in tariff. Why should we worry about losing bids?* Because each losing bid represents a project that could be built in the opinion of its developer and its equity and debt funding organizations. This is renewable energy capacity that is "shovel r...

The latest news from Chile emphasizes the key fault of auctions of renewable energy support- artificially low prices in project bids that later cannot be actually built. Banks in Chile are reluctant now to finance projects that have unrealistically low prices for electricity as they are so risky. "Auction systems as a mechanism to support investment in photovoltaics, which implement other countries, leads - as intended - to lower energy prices, which offer investors in auctions. Prices for the bid winners, however, are sometimes so low that the implementation of the projects may seem questionable." Gramwzielone. October 24, 2016. Typically, speculative bids are made with the hope that project costs will decline over the schedule to actually commit and build the projects. The penalties for under-bidding in this fashion can never be large enough to require the developer to actually build a project at his bid price if it will lose money for years. The basic problem describ...

The reform of the Emission Trading Scheme that basically taxes carbon dioxide emissions has been controversial. Now a compromise appears nearly certain to pass. It continues some free allowances (which have crippled the price support for allowances to date), but it tightens the rules on financial support for new coal projects. It will be interesting to see the effects on Poland. I doubt anything but major brownouts and the huge increase in imported electricity from our neighbors will move the government to look at reality.

     While the European Governments are pushing for ever higher renewable energy quotas, the total rate of renewable energy investment in Europe has flattened out.     "Experts said that investors did not have confidence in European policymakers’ support systems for renewables." EuroActive (2015). "Low-carbon energy" investment in Europe in 2015 dropped by more than half. The Guardian , March 23, 2016. European countries are in transition to support for renewable energy by reverse auctions. Renewable Energy Policy Network, " Global Stats Report: Renewable Energy 2016 ." Auctions in practice have always been problematic, producing an unpredictable amount of capacity due to limited bids and/or limited build-outs by winning bids. See Mott, " The European Commission's Mismanagementof State Aid Rules for Renewable Energy, " PowerGen Europe 2015. A group monitoring the achievement of the Eu 2020 RES targets noted when the guidelines on suppor...

Poland has brought a lawsuit to try to get the EU to make the emissions policies subject to the unanimous consent provisions of the European Treaty. No one outside of Poland gives this lawsuit much chance. The new Polish Government also has pushed for loopholes in the climate provisions for EU CO2 reductions by 2030. The creative use of the forestry provisions threatened to allow Member States to create paper credits for CO2 reduction that basically scammed the system. The use of planting trees to create credits under the Kyoto Protocol was widely criticized by the Left. LINK . New EU earlier proposals have also drawn criticism:  "But Kyoto’s accounting rules and its use of a ‘business as usual’ baseline have left it open to abuse. By overstating their “business as usual” logging, governments can scoop up millions of euros worth of carbon credits by simply not hitting their timber-felling targets." EuroActiv.com. Studies have also shown that, for Poland, the cost of ...

The Polish coal sector uses an astounding 70% of all of the water annually used in Poland, according to a new report.   Massive amounts of water are used for cooling at coal-fired energy plants. So when there is a period of low water levels in our rivers and lakes, as we have experienced for the last two summers, there is a huge risk of power outages. Polish electricity is "down" about ten times more each year than Germany (where Polish politicians love to assert that the system is unreliable). The level of water consumption by energy in Poland is five times the average level in Europe and ten times the global number. Id . This is a very unsustainable situation: "Water absorption coal-based energy is one of its biggest drawbacks. In terms of the abundance of water, we are in the European Union on the fifth place from the end, before the Czech Republic, Denmark, Cyprus and Malta. Moreover, Poland has one of the lowest of renewable water resources in the world per ...

The last two governments in Poland have echoed a nationalistic theme on energy policy to the effect that Poland should be free to make its own choices on its energy mix. Coal is historically the overwhelmingly dominant source of power and should remain so as a national prerogative. If all of our neighbors want to have green energy as a big part of their mix, that is their choice, but not Poland's.  This is basically and fundamentally flawed logic. A new NGO study by HEAL , however, brings all of this rhetoric into focus: Poland does not own the atmosphere and has no legal, moral and philosophical right to poison its neighbors. If the shoe was on the other foot and Poland's neighbors were doing this to Poland, we can imagine the outrage of the more nationalistic Polish political voices. Unfortunately, the Polish power plants excel in emissions to the whole of Europe, causing each year more than 5,800 premature deaths, including 4690 overseas. The deterioration of health ca...

With 85% of the electricity in Poland supplied by coal, the country is in a unique position of vulnerability in Europe. While the use of coal throughout Europe is declining sharply, it is not changing significantly in Poland. Couple this fact with the steady decline in the profitability of operating coal plants,(1) and you can see nothing to suggest a very bright energy future in Poland under this policy. Recent changes in Poland also seem to clearly have stopped major new wind and PV energy capacity. What we now see in the interim in Poland are the consequences of a lack of energy diversity in the supply.  For the second summer in a row, the coal plants are struggling due to schedule maintenance in the warm weather but also due to low water levels. While the wind can also be lower in these hot and dry months, our neighbors with extensive PV capacity are seeing a nice natural balancing with the hot and clear weather. Poland does not have that asset. Even the long-term st...

A new report from the very credible Client Earth group answers the question "why can't Poland get money from the EU to fund the transition away from coal to cleaner technologies?" " As many as 70 per cent.  projects implemented by energy companies in exchange for the free allocation of emission of greenhouse gases include carbon infrastructure, and only 10 percent. investments in renewable energy sources. However, the purpose negotiated by the Polish government called " derogation" ....  was to be the modernization of the outdated energy sector and diversification of sources of supply.  Investment in the coal could be affected by serious problems after 2020, when the price of allowances will begin to grow  -  comments by ClientEarth Foundation, Lawyers for the Earth ." The total funding up to 2020 was 4.5 billion EURO! Instead of spending the support, as intended by the EU, on de-carbonization, Poland spent it mostly on projects to support the exis...

The biggest development in the renewable energy prospective market in Poland is the new amendment in the Sejm, which has passed the committee and appears to be sailing for rapid rubber-stamping by the rest of the government in Warsaw. The single biggest characteristic of the law is the emergence of separate technology "baskets" for renewable energy auctions. The Polish Government figured out that it can control the mix of technologies by setting the size of the baskets as well as the reference prices (maximum allowed support in the form of a contract for the difference). Regardless of any other developments, it appears that this procedure will be used to skew the support away from PV and wind to biogas and biomass. The characteristic being used to "make the cut" is the stability and reliability of the renewable energy source. The intermittent nature of PV and wind have led the Polish Government to put them into a less desirable category in baskets which can be l...

This is heresy in the utility business and they are supposed to keep exaggerating the adverse effects of renewable energy on the grid. But Boris Schucht, CEO of 50Hertz Transmission GmbH since 2010, is remarkably candid in his interview this week: " There are a certain number of myths in the energy industry. One of them is that we need more flexibility in the system to integrate renewables, like energy storage, interruptible loads or backup power plants. That’s a myth. We have a lot more flexibility than we need and a huge amount of potential." He advocates some changes but is not repeating the doomsday scenarios echoed by Eurolectric's lobbyists. On days of excess energy, he says Germany can just export to Poland. If Poland is below the renewable energy target in 2020, it will have no choice but to take German wind electricity, even if that means replacing Polish coal plant electricity output. The decision for Poland is not whether we have renewable energy or not, ...

We are constantly lectured in Poland about how reliable the conventional energy system is and how unreliable renewable energy is.  Reality, however, suggests that our neighboring countries with diversified energy supplies are much more secure, much more reliable and now actually cheaper. While Poland struggles with a 30-year old energy infrastructure, built by the communists who seemed incapable of building a reliable automobile, our neighbors have shifted to a large mix of renewable energy technologies that add alternative sources of power that generally compliment each other. As energy storage is also deployed all around us, the future of electricity supply seems to be alluding Poland. The government seems locked into 1960s thinking about these issues. Now a new report indicates that energy shortages may again appear in Poland in the late summer. Because, guess what, coal is unreliable under certain weather conditions (hot weather, high demand, and low water levels). ...

We are often told in Poland by advocates of coal that renewable energy is too expensive. They ignore the fact that onshore wind is cheaper than new coal plants right now and that PV will be cheaper during the investment life of any new coal plant planned today. The cost of renewable energy support in Poland is about 7 PLN per month on an average consumer bill of 153 PLN. Most of this has gone to electricity producers who would have generated the electricity without support (old hydro and co-firing). Had new capacity in RES been supported, the impact on consumers is normally cut in half by pressure of prices due to increased supply. Now we are told that consumers must pay to have old coal-plants standing by on the few days a year when extra power is needed. Studies in the United States have demonstrated that this is the most expensive way possible to meet peak demand. See U.S. Electric Power Research Institute (2013).* Now, however, the cost impact on consumers is being finally d...

We live in a strange time and place. Electricity in Poland is much cheaper than it was a few years ago, but the experts are projecting power shortages in the near future. The rules of supply and demand seem suspended by the regulatory and political situation. The low price of electricity in Poland is stopping new construction and investment for multiple possible sources. Polish government officials do not want us to follow the road of Germany and develop a higher percent of renewables. They say it is too expensive and unreliable. Yet German electricity is cheaper than Polish power and has far, far fewer outages. The Polish Government objects to adding too much to the price of electricity to support renewable energy, but proposes to continue to use most of the support for the existing production of electricity with only a small partial switch to biomass to make it "green." This does not create any new electricity and detailed studies show that it is 100% transferred to...

The Polish law on renewable energy has been a moving target for years. Originally, the law was deliberately delayed to allow the state-owned energy companies to keep receiving support which the European Commission would have stopped if the new law had been notified under the treaty. Now the delays are being triggered by the new government's efforts to amend the program on the fly. The government has convinced itself that what RES capacity is already done and more co-firing will be all that we need. Some additional biogas plant construction (actually a lot in real terms) is strongly supported in their mix. But the classic RES technologies are on their black list. They have been completely persuaded by the coal lobby that these technologies are too unreliable to be major parts of the energy mix. The factual basis for their assumptions is being broadly challenged by the RES sector. Poland will not meet the 2020 target without a serious program that includes the full mix of RES ...

Leaked information published in Poland today suggests that the PiS Government will fundamentally change the nature of renewable energy support contained in the prior government's version of the new law.  'State support in the form of a contract does not have to get the source of the most cost-effective, but the disposition by the greatest number of hours per year.  Among the defined limit at the auction they would have been performed in a specific order: the renewable energy sources for power exhibiting the best stability, but not necessarily the cheapest, and finally to the least controllable and disposable....  This means opening up  co-firing  [eg.  coal and biomass from wood], will take precedence.  Then the next blocks will be biomass and biogas, as well as clusters, also considered self-sufficient and stable systems - indicates our source close to the government sources, and knowing the draft amendment. - If a designated  pool of ene...

The Polish politicians now reluctantly accept that they have to make noises like burning coal and lignite can be "clean." Every week, we heard a new speech about Poland jumping into "clean coal technologies." The rationale for this energy policy - ignoring the political motives- is that Poland has a lot of coal and that it is cheaper than greener and newer technologies. Both arguments are superficial at best and are fundamentally wrong. First, "clean coal technologies" are not cheap. They are actually more expensive than other more modern renewable energy alternatives . Details for the United States which has been the global leader in trying to develop "clean coal technologies" clearly show the empty promise of this approach. A report of the results in the US indicates: Duke Energy’s 595 megawatt  Edwardsport Integrated Gasification Combined Cycle (IGCC) plant in Indiana. The world’s first large scale IGCC plant. The carbon capture and stor...

Never make predictions, especially about the future.                                                                          Casey Stengel By now everyone's predictions on the state of the renewable energy support system in Poland are wrong. The new government has gone back to square one and is working on an overhaul of the law passed last April. The European Commission is finalizing a decision on the green certificate program, including support for co-firing and old hydro, and - at the same time - looking into the law passed last April. It is likely that the Commission is discussing the changes in the new law with the Polish Government right now. Adding to the confusion, much of the RES that the new government in Warsaw seems to like is also problematic.      Whether by the c...