Mott's Blog

Ninety-nine percent of the Polish Government has been lying to us or is so uninformed that they do not know the difference. Poland's state support of renewable energy from 2005 to date (old law and new law) are state aid under the European Treaty. No doubts and no qualifications. The only Polish leader who was honest and professional in their opinion on this was Malgorzata Krasnodebska-Tomkiel, head of the Office of Competition and Consumer Protection (UOKiK), for several years.[1] Before the Prime Minister fired her and replaced her with an English teacher, she also was clear that elements of the new law were also state aid. Tomkiel was fired on a Monday that followed the Friday on which the Prime Minister's office received notice of the complaint about the green certificate system from the Commission. This does not mean that the aid under the old law or new law is wrong,, only that it has to be reviewed for consistency with state aid rules designed to minimize the distort...

While the Commission communicated to the Polish Government in 2013  that it considered the Polish Green Certificates to be state aid, requiring notification of the Commission and approval under the 2008 guidelines, the Polish Government has repeatedly denied this fact. Now in the new law on RES, Article 39.2 requires that certificates and other forms of support be added together to determine if the state aid limits on support for an individual project would be exceeded. This reflects the fact that the Polish Government has known for years that the Green Certificates are state aid. The Commission has decided that green certificates are state aid in every case before it (earlier based on the substitution fees in various Member State laws and later on the certificate as a valuable asset itself). See  DOUBLING DOWN ON A JUNK POKER HAND: THE POLISH GOVERNMENT APPARENTLY INTENDS TO IGNORE ITS TREATY OBLIGATIONS ON STATE AID , Mott's Blog, June 7, 2014 (detailed references and...

The ongoing discussion about trying to block the prosumer support in the final law due to "state aid" issues is about an hypocritical as it gets. PO spokesmen raised this earlier and it appears that the President of Poland may not take the bait. A good decision, since the entire Polish support system has been operating illegally for nine years and the Government has known this for at least three years now. Similarly, we have been seeing a big bluff on whether the new law must be notified to Brussels. Everyone privately knows that it must be notified, reviewed and approved. For several reasons, it does not meet the block grant exemption from notification. Most obviously, it continues support in the form of Green Certificates which the European Commission has advised informally to UOKiK are state aid. Aid up to 2017 must be levelized by technology and certainly all of the technologies including in the Polish National Action Plan for 2020 will have to be included. Other ...

We finally, it appears at least, have a new law on renewable energy in Poland. The process has been ugly, ignorant and often deceitful. Like all efforts at government control of economic activity, it will be full of unintended consequences. The day of reckoning in Brussels has been postponed until now, but not canceled.  The two biggest issues facing the country in RES are first the transition from one support system to another (understanding that many facilities will continue to have Green Certificates, that the quota system remains in place,  and that auctions in 2016 or 2017 may do relatively little to affect the mix of RES in 2020). This issue also has the enormous problem of revolving around unnotified unlawful state aid in the form of the certificates. This year, Poland will likely get the final notice from the Commission that this has to stop, meaning that another piece of legislation trying to retroactively adjust the current system to EU law will be required. This...

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 ...

The Great Polish Train Wreck of 2015? At this point the Polish Government has apparently made a decision to not notify the Commission on the Green Certificate system. Since there is absolutely no doubt that it does constitute state aid and the Commission has informally signaled that to the Government, it is probably a good time to ask what will happen next. This will be such a disaster that the Government will have to back off its current stance. There is simply no alternative. State aid that is done without notification is unlawful and must be recovered from the recipients.  See CELF case (C-199/06) European Court of Justice, February 12, 2008. .   “ In cases where Member States do not notify the Commission of its plans to grant or alter aid prior to such aid being put into effect, the aid is unlawful in relation to Community law from the time that it is granted.”   Notice From The Commission , “Towards an effective implementation of Commission decisions orderin...

August in Poland. The politicians are doing what they do best... taking a break. During this period of inattention, it might be useful to compare what the Polish legislature  is doing on renewable energy compared to the French legislature in the same situation (albeit less severe in France). The French did not notify Brussels of their wind tariff in their renewable energy law.When the preliminary memo came out that the European Court was getting ready to find the wind tariff to be state aid, everyone was quite attentive to the possible consequences. Unnotified and unapproved state aid is illegal in the European Union .  Legal commentators noted that once the case got back to the national, French court, it " essentially has no choice but to cancel the preferential feed-in tariffs to wind power producers agreed to in 2008, likely resulting in massive refunds for consumers. France can expect down-stream lawsuits from wind power producers as a result of government FIT adjus...