Showing posts from 2018

Polish Government Has Systematically Under-Estimated the Difficulty of Switching Support Systems

When the Polish Government began years ago to start the notion of completely changing the support system to an auction and away from Green Certificates, several of us raised issues about the difficulty in making a transition.

The European Commission's movement to auctions was largely sparked by the big utilities - who have huge advantages in this system. See comments of Polish Biogas Association. Smaller projects have disproportionately higher front-end costs and historically do poorly in auction systems wherever they are introduced.

To offset this problem, the Polish law has been amended to provide guarantee support for small biogas projects under 1 MW at a rate that is 90% of the reference price in the auctions. This is an excellent provision, although it is set at a level that is too low to optimize biogas development in Poland across many projects. [We suggested a 2 MW cap]. Most biogas projects selected under the old system were over 1 MW due to improved efficiencies at that …

Energy Storage Set to Change the Energy Sector

I have been joining many others in predicting that energy storage will change forever the electricity sector. As its costs sharply decrease every year, we are seeing more and more projects.

The underlying dynamic is that the grid's electricity capacity is used very inefficiently.

This is as famous duck curve, which shows how the capacity is under-utilized over much of the day:

Source: Stanford University, California Independent System Operator (CAISO)'s "duck curve" (2016).

The average utilization ate for the grid's capacity is about 55%. A large chunk of the generation capacity is only used a fraction of the year. This is highly inefficient and expensive to energy consumers.

Energy storage breaks this pattern by flattening the curve, allowing electricity produced in low demand periods to be available in high demand periods.

Energy storage is now a market reality and will be an increasingly important part of the grid as well as individual end-user energy strategie…

Polish Legislature Passes New RES law: Great News for Biogas

I have argued for several years that auctions are singularly ill-suited for biogas projects. The upfront cost of developing a biogas project is proportionally more than other RES technologies, so the risk of not obtaining support at the completion of project development is very high. See discussion on Polish Biogas Association on support mechanisms.  In English here. More discussion here.

Now the new government has recognized this and provides for biogas plants up to 1 MW to receive an guaranteed level of support. The reference prices have now also been adjusted to allow for profitable biogas projects that are well-structured and utilize heat. See Polish Biogas Association comments on reference prices 2015.  The direct sale of electricity is also allowed for these small projects which enormously incentivizes cooperation with food and meat plants that can provide their wastes in a nearby biogas plant. The full legislative text will be finalized shortly.

The critical issue now is the le…

New Rules on Polish Auctions for Biogas

The shape of the RES amendments now proceeding in the legislature in Poland reflects what I predicted. This is the first set of rules to have been scrutinized by the European Commission DG Competition on state aid and the changes are generally better for RES developers. There is strong support for biogas in both pricing and procedures.

The reference price in the auction is quite acceptable, especially for projects that use waste feed stock and have heat sale contracts. The apparent shift in calculating state aid deductions from the energy price awarded will put plants without government grants on equal footing in the bidding.

These amendments were required by the European Commission to allow the auctions to proceed under compliance with EU state aid rules. This is the first major adjustment of the Polish system to comply.  It also adds some wind capacity to the auctions and signals a change in the dogmatic position on wind, which the European Commission no doubt found objectionable.  …

Finally? A Signal that Maybe Reality Matters, Even in Poland

The Polish Minister of Energy has finally started talking about a compromise between renewable energy and coal.    The driver is apparently the new public concerns over air pollution, which has got to the point where some days you cannot exercise outside in Poland.

There is finally some talk of a transition from predominantly coal supplied electricity. But the government still does not discuss in real terms the economic and technological changes occurring in the energy market. The cost of coal - not even considering the external costs - is getting to be more expensive than RES technologies as the latter are rapidly going down.

The additional cost trend in energy storage is also not fully appreciated in Poland. 

Critical thinking requires that energy projects be considered over their projected useful life, not just at today's prices. Private investors think in this manner, but many governments do not. The Polish distrust of business runs deep in the culture despite the conversion …

Dramatic Changes in Costs Shifting the Debate on Renewable Energy

The standard refrain from opponents of renewable energy is that it is expensive and too variable for a stable grid. These arguments have always been exaggerated, so several European countries have high RES penetration without serious problems. But now the arguments against RES have an obviously expiring shelve life. They have simply been out-paced by technological and economic developments.

    The latest news comes from a new January 2018 report by the International Renewable Energy Agency (IRENA).  Their conclusions:

Renewable power generation costs continue to fall and are already very competitive to meet needs for new capacity.Competitive procurement – including auctions – accounts for a small fraction of global renewable energy deployment. Yet these mechanisms are very rapidly driving down costs in new markets..Global competition is helping to spread the best project development practices, reducing technology and project risk and making renewables more cost-competitive than e…

Renewable Energy in Poland Slowed Down by Auction Mechanism

When Poland announced the cut-off of green certificates for new installations and the plans to move to auctions, I predicted that there would be a major gap in development of renewable energy sources. The problem is that the auction has to provide a lengthy window for facilities to actually start producing electricity. Cutting off new certificates along with their market demise meant that there would not be actual new production coming on line in the transition period. This situation has occurred now and new RES is only a trickle into the grid.
This will not be alleviated by the existing system of certificates, since the huge over-supply can be used to meet the RES quotas. So Polish electricity producers can meet the RES requirement by stockpiled certificates without any new actual green electricity production. This is fine for the immediate legal environment, i.e. they can be in compliance with the law. 
But Poland has a national target for RES for 2020 that cannot be meet by stockp…