Mott's Blog

Some really bad things will start to happen as the auction in Poland for renewable energy support gets closer. Despite the long discussion over the new law and the guidelines from Brussels (which were relatively rushed through without full consideration of their consequences), there are some real problems looming. First, the auctions to be competitive under EC policy should have at least as many losers as winners. This allegedly allows for competition in the bids for support. The reality is that the small auction (below 1 MW) will have much larger support offered than will be covered by bids. There will be no serious competition and the reference prices will set the limits. That, of course, could be done without an auction and would achieve a much higher rate of quality projects. But the large auction (over 1 MW) is likely to have many more bids than awards. Thus, the EC rule of thumb of 50% losers may occur. That means that 50% of the projects ready to go in Poland will not procee...

I have put together this interesting graphic to depict what the different assumptions about support mean in the new Polish law being debated now. This does not reflect the value of heat sales or support for co-generation, which are critical to having a profitable project. It does show the relative inefficiency of smaller projects. The graphic also clearly illustrates the problem of buying substrates (such as grain or silage) and their very high contribution to the end price per kWhr. The values used cover a variety of scenarios. The 1.4 correction factor was the original Ministry of Economy proposal. The 2 factor is slightly lower than the IEO report recommended last year. The auction value would be the reference price (maximum in the auction) which will be lower somewhat, but not significantly since there will be too few projects below 1 MW to create real competition in the bidding as the proposal now stands. It is questionable whether the Polish proposed auctions can be approved ...