Mott's Blog

Any day now we expect the European Commission, DG Competition, to announce its decision of the Polish green certificate system as state aid.  Several issues will be addressed and possibly some complex cost recovery issues raised but not entirely answered. The thrust of the complaint in SA 37244 was that support of co-firing was too much and was out of line with the cost of production via that technology. This fact was admitted by the Ministry of Economy and even the former Prime Minister's website. In addition, the support for old hydro plants that were built many years ago was attacked as illegal or incompatible with the rules, since the law precludes providing operating support for projects already fully depreciated.  Much of the law is set out in earlier posts on this blog. Taking the incontrovertible facts about co-firing and old hydro, it appears that co-firing might get a 50% retroactive*  reduction (maybe more?) of aid already provided in line with the adjust...

At this point, there is a real shortage of organizations and people who want to discuss the European Commission enforcement case on green certificates and their review of the new law in Poland. Due to lack of sponsors and reluctance of folks to even agree to discuss the topics, the planned event to publicly explore all this stuff has to be cancelled. I am, however, able to discuss the issues and review what the decision means with individual clients willing to retain me for this purpose.  The consequences of the EC action will be sweeping and complex. I am sure that the professional conference companies will schedule something on these issues in the coming months, but they will likely have speakers without much in-depth knowledge of the subject and/or speakers not willing to honestly discuss the implications and issues.  

On March 16, 2016, a conference on the meaning of the European Commission's new decision on Polish green certificates as state aid and the prospects for its decision on the new RES law will be held in Warsaw. Readers of this blog already know the issues and the possible consequences. The conference will feature the leaders in the RES sector, the complainant in the case before the Commission, the Polish Government (invited), and the major utilities in Poland (invited). THE IMPACT OF STATE AID ENFORCEMENT ON POLISH RENEWABLE ENERGY ___________________________ An In-Depth Seminar on the Legal and Practical Problems Facing Polish Energy March 16, 2016   Hilton Hotel Warsaw The lack of notification and approval of the existing Green Certificate program has caused the European Commission to investigate its lawfulness and compatibility with the EU Treaty. See Case SA 37244. Major parts of the support system (co-firing ...

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 European Commission's Directorate General for Competition is about to announce a decision on the Polish Green Certificate matter, SA.37224 (2013/CP). The complaint to the Commission alleged that the certificates were state aid and had to be notified and approved as such under the European Treaty, Articles 107 and 108. This same viewpoint was internally expressed to the Minister of Economy in 2013 by the head of the Office of Competition and Consumer Protection in Poland. The Commission has apparently told UOKiK that it contends that the certificates are state aid. [An obvious point since every certificate program since 2001 has been classified as state aid by the Commission]. See references in " Why Poland Urgently Needs a New Green Certificate Law," gramwzielone.com [PL]. [ English version] . The Commission has the authority to declare state aid unlawful and is required to do so if it is not notified. The failure to notify means that the certificates are null a...

My speech at PowerGen 2015 in Amsterdam has gotten some substantial press  here and here. My thesis is that the large conventional utilities prevailed on the Commission to restrict renewable and distributed energy in important ways that favor their interests. This includes the requirement that everything above 500 kW be connected to the grid (restricting distributed energy on many types). The requirement that every project over 1 MW compete in an auction, where large utilities have shown historical dominance and market power (replacing guaranteed support systems that have nurtured a decentralized power model in Europe). And finally an incomprehensible provision that takes away the renewable energy classification for green energy that is stored and used later (potentially devastating to efforts to encourage the critical development of energy storage in Europe). The auction system is proven to be a "box of lose gears" that does not produce a predictable amount of renewa...