Unsubsidized solar projects proliferate in Poland

Poland is seeing an increasing number of unsubsidized solar projects as it moves in leaps and bounds towards a target of 7.8GW of solar capacity this decade, as outlined in its National Plan for Energy and Climate. With the country backing solar through an auction scheme and incentives for rooftop PV, this week also brought a few new subsidy-free announcements.

Swiss energy company Axpo has signed a power purchase agreement (PPA) for the electricity to be generated by nearly 300MWp of solar projects in Poland which are being developed by domestic company R.Power Group. The projects range in capacity from 300kWp to 30MWp and will be put into operation gradually, with full production expected by mid-next year.

Local subsidiary Axpo Polska will buy the full output of the solar plants from this year to 2026 and will act as balancing agent for the project portfolio. Axpo will also provide R.Power Group access to price hedging instruments to ensure the bankability of the clean power sites.

A separate Polish deal was announced by Norwegian hydropower business Statkraft and Danish renewables developer Better Energy. A 10-year PPA contract will ensure the construction of a 36MW solar park in Resko, western Poland. That project is slated to start operation next year.

The latest announcements indicate the business case for grid parity solar in Poland, according to the companies concerned.

“Few things are more important in our common fight against climate change than adding new affordable and renewable energy to the electricity grid, which is exactly what Statkraft makes possible through this deal,” said Rasmus Lildholdt Kjær, CEO of Better Energy. “It is also wise for energy consumers to demand additional renewable energy through a fixed-price power purchase agreement that serves as a hedge against higher energy prices.”

Post-industrial sites

Elsewhere, Polish power company Tauron Polska Energia has completed the installation of its third PV project, its largest to date. The 8MW Choszczno II solar array, in the West Pomeranian Voivodeship of northwestern Poland, is said to be able to satisfy the electric demand of around 3,500 households.

The project sits next to the 6MW Choszczno I solar plant commissioned last year. Tauron had previously built a 5MW solar farm on a disused coal site in Jaworzno. That was the first project developed under Tauron's program for PV deployment in post-industrial areas, which envisages the construction of solar projects with a total capacity of around 150MW.

“We currently have three photovoltaic farms with a [total] capacity of 19MW, and in the near future we will start the construction of another farm, this time in Silesia,” said Artur Michałowski, acting CEO of Tauron Polska Energia. By 2025, the power company plans to have 1.6GW of installed renewables capacity.

This week also brought the announcement of plans for what was described as the largest on-site PV project in Poland to date. Local developer Quanta Energy is gearing up to install PV on the roofs of 10 logistics parks belonging to MLP Group, which specializes in the construction and management of warehouse centers, and is targeting zero-emission operations. The Quanta project will have a total generation capacity of 5.93MWp, most of which will be used for self-consumption.

Work has begun, involving a special lightweight installation design due to the limited load-bearing capacity of the warehouse roofs. With the project slated for completion within 14 months, its estimated revenue – based on current wholesale energy prices – is expected to amount to around PLN4 million (€883,000), according to the project's backers.

The numbers

Quanta Energy president Piotr Grzybczak said environmental, social and governance requirements have greatly increased the use of green energy by Polish companies but solar also offers an excellent business case. “The rates of return are in the region of 20%, based on energy prices for 2022, and corporate projects have pay-off periods ranging from five to seven years. These returns are quite different from what we saw only three years ago,” he said. “Energy prices for 2022 across Europe, including [in] Poland, have risen by up to 50-100% depending on the time of purchase. This growth has been driven by several factors, including the rising prices of CO₂ emissions – which recently have topped €82 per ton; the unprecedented spike in energy demand seen in 2021; [and] the surging gas prices.”

Grzybczak added: “In addition, the capacity fee [levied on non-household electricity consumers as part of their bills], introduced in January 2021, will go up in 2022 from PLN76.20 (€16.82) to PLN102.60 (€22.64) per megawatt-hour, and we also expect a slight increase in [grid] distribution fees. Against this backdrop, solar power systems offer the most effective solution to the problem of rising energy costs.”

Solar boom

Poland uses coal to generate around 70% of its electricity but its solar fleet has grown rapidly in recent years. The nation is expected to reach 10GW of solar this year, according to research body the Instytut Energetyki Odnawialnej, which would significantly top the country's 2030 target.

Analysts expect the country's total PV capacity to grow from around 6.3GW today to 30GW by 2030, despite an anticipated contraction in the distributed generation segment of the solar market. Last year's growth, which saw the addition of around 2GW of small-scale, residential, rooftop PV, came as the result of an end-of-year rally as net metering rules and incentives expired. As a result, the upward trend for Polish PV in the coming years is expected to be maintained by utility scale developments.