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Showing posts from January, 2017

Polish Auction Not Exempt from Typical Problems

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The first Polish auction had, of course, major technical problems. But it is worth looking at whether it avoided the classic failures of RES auctions elsewhere (as discussed in numerous posts on this blog). See also Mott, "The European Commission's Mismanagementof State Aid Rules for Renewable Energy" (2015).

First, the problem for small projects is that much of the costs of initial development is actually about the same as for projects fifty or a hundred times as large. The front-end costs must be absorbed by the developer before the auction and before he is assured of getting any support. This typically has killed small projects in auctions. Often there are no bids at all. Poland experienced this in some degree as the bids made for small projects were lower than the allocated volume of RES support offered.

Second, projects are under-bid. The developer puts in a price that is very low and then hopes that the financing will be there and that the costs by the time of cons…

First RES Auction in Poland: Problems and Opportunities

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The first RES auction in Poland had problems and bidders could not complete their offers online. But the Ministry has decided to go ahead and award support from those bids that were received. Some issues arise since the bidding was arbitrarily cut-off due to technical problems and because the number of bids seems to be less than the support that was awarded. See European Commission, State Aid Guidelines for environmental Protection, 2014,Sec. 1.3(19)(43). Bidders had to consider state aid density in their bids and count any grants received to avoid a total amount of support that exceeded the EC guidelines. This is a complex calculation, but the results of the auction seem to reflect that it did not constrain bids by very much. Seven biogas plants bid and won with prices from 502-504 PLN/MWhr. The reference price is 550 PLN. PV plants bid and won many more awards in the up to 1 MW general category. Prices for those winning bids are not yet clear from the published information. My take…