PiS Changes in RES Law Will Promote Co-firing, Biomass and Biogas

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 energy ordered by the government will be something else, only they will be held auctions for wind power and solar." Rzeczpospolita, April 25, 2016.
This is serve several purposes that are important for the new government's policies. (1) It will effectively control the technology mix of new RES construction by setting up technology baskets for the auctions that can regulate how much of each technology receives support. This will effectively control wind energy development, even if the land use law gets reversed or tied up in EC proceedings. (2) Technology baskets have been approved by the European Commission for other Member States, so this bypasses the state aid obstacle in theory. However, the maximum price of the co-firing auction will be controversial if it exceeds the real cost of production and results in over-compensation for co-firing (the historical situation). Presumably, the Polish Government will clear the price with the Commission in the course of the current DG Competition review.  (3) The revenue from the new support for co-firing may be an effective offset to the refunds of illegal aid for co-firing since 2005 when it was over-compensated. See pending case SA 37244. It is also speculated that it is a reward for the state-owned energy companies supporting the insolvent state coal mines.  See Grzegorz Wisniewski comments in Rzeczpospolita. (4) The policy can arguably be supported by the need to limit intermittent RES sources that have caused problems in other countries. The issue will only be if the government interest in stability of the system is sufficient to pass muster with the European Commission. The fact that other Member States have been able to conduct approved auctions that are technology-specific and basically ration technologies by basket size seems to indicate that this is possible.
The implications for biogas are probably good. A  separate technology basket will greatly help projects win support. The issue will be the reference price and whether the unnecessary restrictions on projects (size below 1 MW and organic waste substrate restrictions) are removed in the new proposal.  
Another change will be the shift to allow wood to be used in co-firing, not just biomass from agriculture. This is expected to raise wood prices in the Polish market with some adverse effects on smaller users of biomass.
Controversies will still exists with the changes. The major issue remaining will be how the auction reference prices are set and whether doing these changes "on the fly" will result in killing many projects except for co-firing. 


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