Poland’s new RE law to boost PV, but boom and bust fears exist

The Polish government is currently preparing a host of new energy regulations, slated for introduction at the beginning of 2013. As part of the new package, the regulations on renewable energy sources (RES) will be specified in a separate Act – the Renewable Energy, or RES Law.
At the end of this July, the Polish Ministry of Economy published and presented its latest, modified draft of the RES Law. The new version includes numerous and significant changes to both existing RES regulation, and the first draft of the RES Law, which was published at the beginning of this year. Specifically, the amendments include changes to existing renewable electricity support schemes, and a simplification of the administrative process regarding the operation of small RES systems.
Feed-in tariff
If the current draft of the RES Law comes into force, there will be independent schemes for supporting the generation of electricity from RES. For photovoltaics, this will mean the introduction of a feed-in tariff (FIT) for photovoltaic plants smaller than 100 kW – a clear sign that the Polish government wants to support smaller energy producers. The amount of this tariff is quite lucrative and considerably higher than the current tariff in Germany.
Currently, the FIT will amount to 1.1 PLN/kWh or €0.27/kWh. One of the remarkable differences to similar support schemes is that the duration of support is not limited to a certain number of years, starting from the date of the plant’s commissioning. Instead, the tariff for all eligible plants will end 15 years from the introduction of the RES Law, in 2027.
The quota obligation scheme with Green Certificates (GCs) is expected to remain the main support mechanism for renewable energy plants over 100 kW. However, the amount of certificates per MWh will differ according to the technology used. Until now, every RES plant received 1 GC for each MWh of electricity produced. This promoted the deployment of the most cost-competitive and mature technologies, meaning other, more costly renewable energy technologies were not deployed.
The new RES Law is meant to mitigate this situation. The Polish Ministry of Economy has said it will introduce so called "correction rates", which determine the number of GCs issued, depending on the specific technology. Another factor for the correction rate will be the amount of installed capacity and the date of the plant’s commissioning. The correction rates for 2013 are expected to range from 0.3 per MWh for biomass co-firing in coal power plants, to 2.85 for photovoltaic plants larger than 100 kW.
Overall, the amount of GCs new RES plants receive will gradually decrease. The duration of support has also been shortened to 15 years from the date of commission for all RES plants, apart from co-firing plants, for which support has been cut to just 5 years. The support of RES plants through the certificates will end on December 31, 2035; for co-firing plants at the end of 2020.
While support schemes based on a quota system usually suffer from uncertainty considering the possible profit in the long term, in the short-term, the expected returns can be easily calculated: In 2013, 1 MWh generated in a photovoltaic plant larger than 100 kW will be worth of 2.85 GCs. Based on current GC prices, this will result in €0.177/kWh. On top of this, an additional €0.05/kWh can be obtained for the generated electricity. The resulting combined revenue of €0.22/kWh is considerably higher than the €0.11 /kWh photovoltaic plant operators can expect from the current support scheme in 2012.
Conservative capacity targets
The Polish government said it expects 50 MW of new photovoltaic plants to be grid connected in 2013. Until 2020, it predicts that annual growth will not reach more than 90 MW, and cumulative capacity 600 MW. Already, these low figures have been branded too conservative and underestimate the ability of the photovoltaics industry for rapid deployment, as seen in other markets.
Polish photovoltaics expert, Stanis?aw Pietruszko, who has been integral in the introduction of the FIT for over 7 years, expects 50 MW to be installed in the first 2 months of 2013 alone. He says in anticipation of the new, attractive law, the domestic industry has already established a pipeline of pre-developed projects. However, the Polish Ministry of Economy has not yet introduced any mechanism to cap the support of RES, meaning such unplanned and sudden growth may have very negative consequences.
This then begs the question: Can the Polish government manage to avoid a boom and bust cycle and support a sustainable development instead?
Read the full article on Poland’s photovoltaics industry in the October edition of pv magazine.
Edited by Becky Beetz.
About the author
Anna Poblocka is one of the project managers at the Policy Consulting Unit at eclareon consultants, a Berlin-based consultancy firm focused on Renewable Energies. She is mainly responsible for analyzing the support schemes and the legal framework for photovoltaics in Eastern European countries. She has built up extensive knowledge on the Polish market and, based on the draft law, has prepared an extensive market report on the new the regulations and their impact on future market development. In addition, she was responsible for the RES Integration Report on Poland that analyses the progress and barriers to the integration of renewable energy sources into the electricity grid and market.